ESCROW AGREEMENT
This ESCROW AGREEMENT (the “Agreement”) is made and entered into this 30th day of
November, 2006, by and between the Hatteras Multi-Strategy Institutional TEI Fund, LP, a Delaware
limited partnership (the “Fund”), UMB Fund Services, Inc., as transfer agent (“UMBFS”) and UMB
Bank, N.A., a national banking association organized and existing under the laws of the United
States of America, as escrow agent (the “Escrow Agent”).
WITNESSETH:
WHEREAS, the Fund is a limited partnership which is registered as a closed-end, non-diversified
investment company under the provisions of the Investment Company Act of 1940, and is authorized to
offer and sell limited partnership interests in the Fund (“Interests”); and
WHEREAS, the Fund accepts subscription proceeds for Interests on the first business day of each
month and accepts requests for the repurchase of Interests on the last business day of each
quarter; and
WHEREAS, the Fund desires to appoint UMB Bank, N.A. as escrow agent for the purpose of holding
investment proceeds tendered by investors prior to the time such funds are transferred to the Fund
for investment.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Appointment and Delegation.
The Fund hereby appoints UMB Bank, N.A. as Escrow Agent, on the terms set forth in this
Agreement. UMB Bank, N.A. hereby agrees to serve as Escrow Agent on the terms set forth in this
Agreement. The Fund hereby authorizes UMBFS, in its capacity as transfer agent, to provide
instructions to the Escrow Agent on the Fund’s behalf in accordance with the terms of this
Agreement.
2. Procedures.
(a) The Fund will establish an escrow account with the Escrow Agent consisting of three (3)
segregated sub-accounts, the Subscription Sub-Account, the Repurchase Sub-Account and the Holdback
Sub-Account. Purchase payments periodically received by UMBFS (the “Purchase Proceeds”) will be
deposited into the Subscription Sub-Account. Proceeds from periodic repurchases of Interests by the
Fund from its subscribers (“Repurchase Proceeds”) will be deposited into the Repurchase
Sub-Account, less a ten percent (10%) withholding (the “Holdback Amount”), if applicable. Any
Holdback Amount will be deposited into the Holdback Sub-Account (the Subscription Sub-Account, the
Repurchase Sub-Account and the Holdback Sub-Account shall be referred to collectively as the
“Escrow Accounts”).
(b) Simultaneously with any deposit of Purchase Proceeds, UMBFS will deliver to the Escrow
Agent a cash letter in the form of Exhibit A hereto (the “Cash Deposit Letter”) confirming the
amount of the Purchase Proceeds so delivered. In the event the Fund or UMBFS provides written
notice to the Escrow Agent that an underlying purchase order has been revoked in accordance with
the terms of the Fund’s Confidential Memorandum or other offering document, the Escrow Agent shall
promptly (but in no event later than the close of business on the day of receipt of a cash letter
from UMBFS in the form of Exhibit F hereto (the “Purchase Reversal Letter”)) transfer from the
Subscription Sub-Account the Purchase Proceeds specified in the Purchase Reversal Letter to UMBFS
in accordance with the payment procedures in Paragraph 4. The Escrow Agent shall have no duty or
obligation with respect to the collection of any Purchase Proceeds.
(c) On the last business day of each calendar month, UMBFS will deliver to the Escrow Agent a
cash letter in the form of Exhibit B hereto instructing the Escrow Agent to disburse the Purchase
Proceeds, if any, on deposit (the “Cash Disbursement Letter”).
(d) The Escrow Agent shall provide the Fund and UMBFS with a statement of the assets held and
transactions of the Escrow Accounts on a monthly basis and shall provide electronic access on a
daily basis. At the Escrow Agent’s request, UMBFS shall provide periodic summaries of Escrow
Account activity.
(e) The Escrow Agent shall invest all amounts deposited in the Escrow Accounts with it
hereunder, and earnings thereon, if any, in the UMB Money Market Special Account. All monies must
be deposited to the Escrow Accounts prior to 4:00 p.m. CT in order to receive credit for that day’s
interest earnings. All investment earnings on the Escrow Accounts shall be transferred on the
first business day of each month to an account designated in writing by UMBFS, as agent for the
Fund.
(f) The Fund may from time to time deposit Repurchase Proceeds in the Repurchase Sub-Account.
On the last business day of each calendar quarter during which repurchases occur, UMBFS will
deliver to the Escrow Agent a cash letter in the form of Exhibit C hereto to disburse the
Repurchase Proceeds, if any, on deposit in custody, and a cash letter in the form of Exhibit D
hereto to move the Repurchase Proceeds out of the Repurchase Sub-Account for disbursement to
investors (each, a “Repurchase Disbursement Letter”).
(g) On an annual basis, UMBFS will deliver to the Escrow Agent a cash letter in the form of
Exhibit D hereto to disburse the Holdback Amount, if any, on deposit in the Holdback Sub-Account
(the “Holdback Disbursement Letter”).
(h) In the event an adjustment needs to be made in connection with any money movement
hereunder, UMBFS shall deliver to the Escrow agent a cash letter in the form of Exhibit E hereto
specifying the corrective action to be taken.
(i) Prior to delivery to it or its designated agents of the Purchase Proceeds or Repurchase
Proceeds, the Fund or its agents shall have no title, right, claim, lien or any other interest in
the
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funds held in escrow hereunder, and such funds shall under no circumstances be available to the
Fund or its agents or their creditors for payment or reimbursement for liabilities or indebtedness.
3. Compensation.
For its services hereunder, the Escrow Agent shall be entitled to a one-time account
acceptance fee of $500, plus an annual escrow fee of $600 for the Escrow Accounts and transaction
fees of $5 per deposit and/or distribution. In addition to the foregoing fees, all reasonable
out-of-pocket expenses relating to the administration of this Agreement and the Escrow Accounts
such as, but not limited to, wire fees, postage, shipping, courier, telephone and facsimile charges
will be paid directly by the Fund.
4. Payment Procedures.
(a) Whenever payments are required to be made to the Escrow Agent under this Agreement, such
payments shall be made by electronic transfer per the following instructions:
UMB Bank, N.A., Kansas City, Missouri
ABA # 10100695
A/C # 9800006823
A/C Name: Trust Clearing
Ref: Hatteras Multi-Strategy Institutional TEI Fund, LP
Attn: Xxxxx Xxxxx, ext. 3019
ABA # 10100695
A/C # 9800006823
A/C Name: Trust Clearing
Ref: Hatteras Multi-Strategy Institutional TEI Fund, LP
Attn: Xxxxx Xxxxx, ext. 3019
(b) Whenever payments are required to be made by the Escrow Agent to UMBFS under this
Agreement, such payments shall be made by electronic transfer per the following instructions:
UMB Bank, N.A., Kansas City, Missouri
ABA #10100695
A/C # 0000000000
Ref: Hatteras Multi-Strategy Institutional TEI Fund, LP
ABA #10100695
A/C # 0000000000
Ref: Hatteras Multi-Strategy Institutional TEI Fund, LP
(c) Every cash letter delivered to the Escrow Agent hereunder pursuant to Paragraph 2 shall
bear the signature of two (2) authorized UMBFS signers. If requested by UMBFS, each cash letter
shall also bear the countersignature of one (1) authorized Fund signer. In connection with the
execution of this Agreement, UMBFS shall deliver to the Escrow Agent, and the Fund shall deliver to
UMBFS, a list of authorized signers, together with a certificate of incumbency and specimen
signatures, in the forms attached hereto as Exhibits G and H. The party providing such
certificate may provide an updated certificate evidencing the appointment, removal or change of
authority of any authorized signer, it being understood that the party relying on such certificate
shall not be held to have notice of any change in the authority of any authorized signer until
receipt of written notice thereof.
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(d) A cash letter must be received by the Escrow Agent by 3:00 p.m. CT on the day such cash
letter is transmitted in order for the instructions contained in such cash letter to be honored on
that day.
5. Representations.
The Fund represents and warrants as follows:
(a) it is duly organized and in good standing under the laws of the State of Delaware and all
necessary action has been taken by it and it is duly authorized to enter into this Agreement;
(b) its Tax Identification Number is 00-0000000;
(c) this Agreement and all other documents related to the transactions described herein have
been duly executed and delivered by the Fund and constitute the legal, valid and binding
obligations of the Fund, enforceable in accordance with their respective terms;
(d) the execution, delivery and performance of this Agreement and all other documents related
to the transactions described herein by the Fund do not and will not breach or violate or cause a
default under its Trust Instrument or By-Laws or any provision of any agreement, instrument,
judgment, injunction or order applicable to or binding upon it.
6. Miscellaneous.
It is understood and agreed, further, that the Escrow Agent shall:
(a) be under no duty to pay and transfer any monies hereunder, unless the same shall have been
first received by the Escrow Agent pursuant to the provisions of this Agreement;
(b) be under no duty to accept any information from any person or entity other than the Fund
or UMBFS, and then only to the extent and in the manner expressly provided for in this Agreement;
(c) act hereunder as a depository only and be protected in acting upon any written instruction
or notice provided by the Fund or UMBFS pursuant to this Agreement and the information contained
therein without responsibility to determine the validity or sufficiency of the same, and be
protected in acting upon any other notice, opinion, request, certificate, approval, consent or
other paper delivered to it and represented to it to be genuine and to be signed by the proper
party or parties;
(d) be indemnified and held harmless by the Fund against any claim made against it by reason
of its acting or failing to act in connection with any of the transactions contemplated hereby and
against any loss, liability, cost, suit or expense, including the expense of defending itself
against any claim of liability it may sustain in carrying out the terms of this Agreement
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except such claims which are occasioned by its fraud, bad faith, reckless disregard of its duties,
gross negligence or willful misconduct;
(e) have no liability or duty to inquire into the terms and conditions of any subscriptions
for Interests, and that its duties and responsibilities shall be limited to those expressly set
forth under this Agreement and are purely ministerial in nature;
(f) be permitted to consult with counsel of its choice, including in-house counsel, and shall
not be liable for any action taken, suffered or omitted by it in good faith in accordance with the
advice of such counsel, provided, however, that nothing contained in this Subparagraph (f), nor any
action taken by the Escrow Agent, or of any such counsel, shall relieve the Escrow Agent from
liability for any claims which are occasioned by its fraud, bad faith, reckless disregard of its
duties, gross negligence or willful misconduct, all as provided in Subparagraph (d) above;
(g) not be bound by any amendment or revocation of this Agreement, unless the same shall be in
writing and signed by all of the parties of this Agreement;
(h) be entitled to refrain from taking any action other than to keep all property held by it
in escrow hereunder until it shall be directed otherwise in writing by the Fund, or by a final
judgment by a court of competent jurisdiction, provided that it shall be uncertain as to its duties
and rights hereunder (including, without limitation, the receipt of conflicting instructions or
directions from any of the parties hereto or any third parties);
(i) have no liability for following the instructions herein contained or expressly provided
for, or written instructions given by, the Fund or UMBFS;
(j) have the right, at any time, to resign hereunder by giving written notice of its
resignation to the Fund at the address as set forth in Subparagraph (l) hereof, at least sixty (60)
days before the date specified for such resignation to take effect, and upon the effective date of
such resignation;
(i) | all cash and other funds and all other property then held by the Escrow Agent hereunder shall be delivered by it to such successor Escrow Agent as may be designated in writing by the Fund, whereupon the Escrow Agent’s obligations hereunder shall cease and terminate; | ||
(ii) | if no such successor Escrow Agent has been designated by such date, all obligations of the Escrow Agent hereunder shall, nevertheless, cease and terminate, and the Escrow Agent’s sole responsibility thereafter shall be to keep all property then held by it and to deliver the same to a person designated in writing by the Fund or in accordance with the directions of a final order or judgment of a court of competent jurisdiction; yet, if no such designation, order or judgment is received by Escrow Agent within sixty (60) days after its giving such resignation notice, it is unconditionally and irrevocably authorized and empowered to petition a court of competent jurisdiction for directions. |
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(k) be reimbursed by the Fund upon its request for all reasonable costs, fees, charges,
expenses, disbursements and advances incurred or made by it in accordance with any provision of
this Agreement, or as a result of the acceptance of this Agreement.
(l) all deliveries and notices to the Escrow Agent shall be effective upon receipt by the
Escrow Agent, if in writing, and shall be sent or delivered to:
UMB Bank, N.A., as Escrow Agent
Attn: Xxxxx Xxxxx, ext. 3019
0000 Xxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxx, ext. 3019
0000 Xxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
All deliveries and notices hereunder to the Fund shall be in writing and shall be sent or delivered
to:
Hatteras Multi-Strategy Institutional TEI Fund, LP
Attn: Xxxxxxx Xxxxxx
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxx
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
(m) Nothing in this Agreement is intended to or shall confer upon anyone other than the
parties hereto any legal or equitable right, remedy or claim. This Agreement shall be construed in
accordance with the laws of the State of Missouri and may be amended or settled only by a writing
executed by the parties thereto.
(n) This Agreement may be executed in multiple counterparts, each of which shall be regarded
for all purposes as an original, and such counterparts shall constitute but one and the same
instrument. In addition, the transaction described herein may be conducted and related documents
may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other
reproductions of original executed documents shall be deemed to be authentic and valid counterparts
of such original documents for all purposes, including the filing of any claim, action or suit in
the appropriate court of law.
(o) In order to comply with provisions of the USA PATRIOT Act of 2001, as amended from time to
time, Escrow Agent may request certain information and/or documentation to verify, confirm and
record identification of persons or entities who are parties to the Agreement.
7. Tax Reporting.
The parties hereto agree that for purposes of tax reporting, all interest or other income, if
any, attributable to the Escrow Accounts pursuant to this Agreement shall be allocable to the Fund.
The Fund agrees to provide the Escrow Agent with an Internal Revenue Service
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Form W-9 upon execution of this Agreement. The Fund understands that if such tax reporting
documentation is not so certified to the Escrow Agent, the Escrow Agent may be required by the
Internal Revenue Code, as amended from time to time, to withhold a portion of any interest or other
income earned on the investment of monies or other property held by the Escrow Agent pursuant to
this Agreement. The Escrow Agent will prepare and send notifications on Form 1099 for each
calendar year for which such Form is required during the term hereof.
IN WITNESS WHEREOF, the parties hereto have caused the Escrow Agreement to be executed by their
respective duly authorized officers.
HATTERAS MULTI-STRATEGY INSTITUTIONAL TEI FUND, LP |
||||
By: | /s/ J. Xxxxxxx Xxxxxx | |||
Title: | Treasurer | |||
UMB BANK, N.A., AS ESCROW AGENT | ||||
By: | /s/ Xxxx X. Xxxxxxxxx | |||
Title: | Vice President | |||
UMB FUND SERVICES, INC. | ||||
By: | /s/ Xxxxx X. Xxxxxxx | |||
Title: | Executive Vice President |
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