b'SchedulesSCHEDULE 1 SCHEDULE 2 6. VAT Investment Objectives and Fees and expenses in respect Fees described are exclusive of any applicable VAT.Restrictions of the Fundof the Fund7. Other notes on fees Mercias fees are charged on the net subscription available for investment. Investment Objectives of the Fund1. Adviser Fee 1.To offer investors the opportunity to invest in EIS- 8. Expenses An Adviser Fee may be payable to the financial intermediary qualifying Companies and SEIS-qualifying Companiesor regulated adviser of an Investor. Upon instruction fromThe Fund Manager shall be entitled to charge each Investee seeking expansion, development and early stage capitalthe Investor, this fee can be charged directly by the financialCompany a pro rata proportion of expenses reasonably which will not typically be traded on the Official List of theintermediary or regulated adviser or deducted from theincurred by the Fund Manager in respect of the monitoring of London Stock Exchange.Investors Subscription.the relevant investment. To generate capital gains and provide Investors with 2.The Fund Manager will bear any legal, accounting and the Tax Advantages associated with EIS and SEIS2. Initial feeother fees incurred by the fund in connection with potential Investments. There is a 2% Initial Fee, which will be reduced to 1% forInvestments which do not proceed to completion and existing investors.may retain for its own benefit any arrangement fees and Investment Restrictions of the Fund 3. Annual Chargesdirectors or monitoring fees which it receives in connection 1.In carrying out its duties hereunder in respect of the Fund,with Investments and any fees for services relating to fund A 1.75% charge per annum for the Fund Managers Annualraising and corporate advisory services, accounts, company regard shall be had, and all reasonable steps taken,Management Charge will be payable for the first six years.secretary, legal advice and assistance in maintaining EIS or by the Fund Manager to comply with such policies orSEIS status. restrictions as are required in order to attract EIS ReliefA 0.25% charge per annum custodian and administration fee and SEIS Relief as may be prescribed by HMRC from timewill be charged for the first six years. to time.The default position is for three years fees to be withheld 2.In particular, but without prejudice to the generality offrom the initial subscription, however other arrangementsthe above statements, the restrictions for the Fund are asare available, and subsequent years fees to be invoiced in follows:advance. Dividend income from portfolio companies, where aInvestments will only be made after the Closing Dateavailable, will be used to cover the annual charges.bInvestments shall be in securities of companies theAny annual charges which are invoiced but not paid on theFund Manager reasonably believes are Qualifyingagreed timescale, will accrue interest on a daily basis at a rate Companies under the existing EIS and SEIS guidelinesequivalent of 4% above the base rate, as defined by the Bank cNo more than 30 per cent of the Subscription of theof England. We have the right to refuse further investment fromInvestor will be invested in any one Investee Companyinvestors who do not pay their fees on the agreed timescale. 3. Investors should be aware that the Funds Investments4. Dealing Chargewill include non-Readily Realisable Investments. ThereA 0.35% dealing charge is payable upon each investment and is a restricted market for such Investments and it mayup to 0.35% on exit (in each case) of original net subscription. therefore be difficult to deal in the Investments or to obtain reliable information about their value.5. Fund Managers performance fee 4.In the event of a gradual realisation of Investments prior The Fund Manager will receive an incentive fee of 20% to termination of the Fund under Clause 17.1, the cashof the amount of cumulative cash returned to the Fund proceeds of realised EIS investments may be placed onfrom Investments which is in excess of the amount of the deposit or invested in fixed interest government securitiesnet subscription invested into Investee Companies. For or other investments of a similar risk profile. Proceeds willclarification, once the Investor has received the first 100p per 1 be paid out on termination of the Fund or in instalmentsinvested (gross of any tax relief), any additional distributable in advance of termination, as determined by the Fundcash will be paid as to 80% to the Investor and 20% to the Manager. Fund Manager. This performance fee is paid at Fund level, as opposed to being payable on each company sold. 46 47'