INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT dated this 3rd day of January, 2005,
between HATTERAS INVESTMENT PARTNERS LLC, a Delaware limited liability company
(the "Investment Manager"), and HATTERAS MASTER FUND, L.P. a Delaware limited
partnership (the "Master Fund"). All terms not defined herein shall have the
meanings ascribed to them in the Limited Partnership Agreement of the Master
Fund (the "Master Partnership Agreement")
WHEREAS, the Master Fund is registered with the Securities and Exchange
Commission (the "SEC") as a closed-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Investment Manager is engaged principally in the business
of rendering investment management services and is registered with the SEC as an
investment adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Master Fund desires to retain the Investment Manager to
render investment advisory services to the Master Fund in the manner and on the
terms and conditions hereinafter set forth;
WHEREAS, the Investment Manager is willing to render such services
and/or engage others to render such services to the Master Fund; and
WHEREAS, the Master Fund serves as the "master" portfolio for one or
more "feeder" funds (each, a "Fund" and collectively, the "Feeder Funds") that
invest all or substantially all of their assets in the Master Fund and that have
the same investment objective and policies as the Master Fund.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of the Investment Manager. The Master Fund hereby appoints
the Investment Manager to act as investment adviser and provide investment
advisory services to the Master Fund, subject to the supervision of the Master
Fund's board of directors (the "Board of Directors"), for the period and on the
terms and conditions set forth in this Agreement. The Investment Manager accepts
such appointment and agrees to render the services and to assume the obligations
set forth in this Agreement commencing on its effective date for the
compensation herein provided.
2. Responsibilities of the Investment Manager.
(a) Investment Program. The Investment Manager shall: (i) furnish
continuously an investment program for the Master Fund; (ii) determine
(subject to the overall supervision and review of the Board of
Directors) what investments shall be purchased, held, sold or
exchanged by the Master Fund and what portion, if any, of the assets
of the Master Fund shall be held uninvested; and (iii) make changes in
the investments of the Master Fund. The Investment Manager also shall
manage, supervise and conduct the other affairs and business of the
Master Fund and matters incidental thereto, subject always to the
control of the Board of Directors and to the provisions of the
organizational documents of the Master Fund, the Registration
Statement of the Master Fund and its securities, including the
offering documents and Registration Statements of the funds listed on
Exhibit A hereto (collectively, the "Feeder Funds"), and the 1940 Act,
in each case as from time to time amended and in effect. Subject to
the foregoing, with the consent of the holders of interests in the
Feeder Funds, the Investment Manager shall have the authority to
engage one or more sub-advisers in connection with the management of
the Master Fund, which sub-advisers may be affiliates of the
Investment Manager.
(b) Authority of the Investment Manager. In connection with its
obligations hereunder, the Investment Manager will have the authority
for and in the name of the Master Fund:
(i) to invest and re-invest the Master Fund's assets
(including determining the size, timing, price and counterparty
of such transactions) primarily in interests in (A) private
investment vehicles, including limited partnerships, limited
liability companies and similar entities (the "Advisor Funds")
managed by asset managers (the "Advisors"); (B) separate accounts
managed by Advisors ("Accounts"); and (C) other instruments
including liquid short-term investments not prohibited for
investment by the offering documents, limited partnership
agreements or articles of association of any of the Feeder Funds
(together with the Advisor Funds, Accounts and the instruments
described in this paragraph, the "Securities") and to pay the
fees and costs associated with such Securities;
(ii) to be responsible for the selection of, monitoring of,
and allocation of certain of the Master Fund's assets in the
Securities;
(iii) directly or through the Advisor Funds or Accounts, to
purchase, hold, sell, transfer, exchange, mortgage, pledge,
hypothecate and otherwise act to acquire and dispose of and
exercise all rights, powers, privileges, and other incidents of
ownership or possession with respect to Securities held or owned
by the Master Fund;
(iv) directly or through the Advisor Funds or Accounts, to
acquire a long position or a short position with respect to any
Securities and to make purchases or sales increasing, decreasing
or liquidating such position or changing from a long position to
a short position or from a short position to a long position,
without any limitation as to the frequency of the fluctuation in
such position or as to the frequency of the changes in the nature
of such positions;
(v) directly or through the Portfolio Funds or Accounts, to
purchase Securities for investment and to make such
representations to the seller of such Securities, and to other
persons, that the Investment Manager may deem proper in such
circumstances, including the representation that such Securities
are purchased by the Fund for investment and not with a view to
their sale or other disposition;
(vi) directly or through the Advisor Funds or Accounts, to
vote and exercise all other rights in connection with Securities
purchased on behalf of the Master Fund;
(vii) with the oral or written approval of the general
partner of the Master Fund, to borrow or raise monies from time
to time without limit as to amount or manner and time of
repayment, and to issue, accept, endorse and execute promissory
notes or other evidences of indebtedness, and to secure the
payment of any such borrowings, and of the interest thereon, by
mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the properties of the Master Fund whether at
the time owned or thereafter acquired;
(viii) to lend, with or without security, any of the
Securities, funds or other properties which are from time to time
owned or held by the Master Fund;
(ix) to engage personnel, whether part-time or full-time,
and attorneys, administrators, consultants, independent
accountants, sub-advisers, auditors or such other persons as the
Investment Manager may deem necessary or advisable;
(x) to issue orders and directions to any bank, brokerage,
or other financial institution at which the Master Fund maintains
a general account with respect to the disposition and application
of monies or Securities of the Master Fund from time to time held
by such institution;
(xi) directly or through the Advisor Funds or Accounts, to
open, maintain, conduct and close accounts, including margin and
custodial accounts, with brokers, dealers, banks, counterparties
and futures commission merchants, which power shall include the
authority to issue all instructions and authorizations to
brokers, dealers, banks, counterparties and futures commission
merchants regarding the Securities and/or money therein; to pay,
or authorize the payment and reimbursement of, commissions,
markups or markdowns that may be in excess of the lowest rates
available that are paid to brokers, dealers, banks,
counterparties and futures commission merchants who execute
transactions for the account of the Master Fund and who supply or
pay for (or rebate to the Master Fund for payment of) the cost of
brokerage or research services (such as custodial services, news
and quotation equipment and publications) utilized by the Master
Fund;
(xii) to combine purchase or sale orders on behalf of the
Master Fund together with other accounts to whom the Investment
Manager provides investment services or accounts of affiliates of
the Investment Manager (the "Other Accounts") and allocate the
Securities or other assets so purchased or sold among such
accounts;
(xiii) to enter into any other contracts or agreements in
connection with any of the foregoing activities, including
contracts or agreements with Persons, firms or corporations with
which a principal of the Investment Manager is affiliated;
(xiv) to do such other acts as are delegated to the
Investment Manager by the Board or the general partner of the
Master Fund; and
(xv) to do all things necessary and appurtenant to any of
the foregoing.
As to any matter not expressly provided for by this Agreement, the
Investment Manager shall be in all cases fully protected in acting or in
refraining from acting hereunder until it shall receive assurances to its
reasonable satisfaction that it and its affiliates, members and employees shall
be fully indemnified by the Master Fund to its satisfaction against any and all
liability and expense that may be incurred by it by reason of taking, continuing
to take or failing to take any such action.
(c) Administrative Services. The Investment Manager shall render
to the Master Fund management and administrative assistance in
connection with the operation of the Master Fund that shall include:
(i) compliance with all reasonable requests of the Master Fund for
information, including information required in connection with the
Master Fund's filings with the SEC, other federal and state regulatory
organizations, and self-regulatory organizations, and (ii) such other
services as the Investment Manager shall from time to time determine
to be necessary or useful to the administration of the Master Fund.
(d) Reports. The Investment Manager will submit such periodic
reports to the Master Fund regarding the Investment Manager's
activities hereunder as the Master Fund may reasonably request.
(e) Books and Records. The Investment Manager will maintain or
cause to be maintained for the Master Fund all books, records, reports
and any other information required under the 1940 Act, to the extent
that such books, records, reports and other information are not
maintained or furnished by the custodian, transfer agent,
administrator, sub-administrator or other agent of the Master Fund.
3. Reimbursement by the Fund. The Investment Manager may retain, in
connection with its responsibilities hereunder, the services of others to assist
in the investment advice to be given to the Master Fund. Payment for any such
services shall be assumed by the Investment Manager, and the Master Fund shall
not have any liability therefore; provided, however, that the Investment Manager
may in its discretion, on behalf of the Master Fund, retain the services of
independent third party professionals, legal advisers, accountants, consultants
and other professionals in connection with the services provided by the
Investment Manager pursuant to this Agreement.
4. Expenses of the Fund. The Master Fund shall bear full responsibility for
the following fees and expenses, although the Investment Manager may pay certain
expenses of the Master Fund in its absolute discretion:
(a) custodian and sub-custodian fees, if any, for its Securities;
(b) administrator's fees and disbursements;
(c) tax preparation and auditor's fees;
(d) taxes other than those incurred in connection with facilities and
services rendered by the Investment Manager at the Investment Manager's
expense;
(e) legal fees and disbursements;
(f) auditing fees and disbursements;
(g) organization and conduct of meetings of the limited partners and
the preparation and distribution of all reports and other communications
with limited partners;
(h) calculation of the net asset value of the Master Fund and the
capital account of each limited partner of the Master Fund, in a manner
determined pursuant to the Master Partnership Agreement;
(i) investment expenses (e.g., expenses which are directly related to
the investment of the Master Fund's assets, including, but not limited to,
brokerage commissions, interest expense and consulting and other
professional fees relating to Securities, including management and
performance-based fees and expenses of the Advisor Funds and Accounts); and
(j) other operations and expenses not related to functions assumed by
the Investment Manager hereunder.
5. Expenses of the Investment Manager. Subject to Section 3 and Section 4
herein, the Investment Manager will render the services set forth in Section 2
of this Agreement at its own expense, including without limitation, the salaries
of employees necessary for such services, the rent and utilities for the
facilities provided, and other advisory and operating expenses, except as
assumed by the Master Fund under this Agreement or the Master Partnership
Agreement or provided for pursuant to the permitted use of soft dollar
arrangements. The Investment Manager may pay certain expenses of the Master Fund
in its sole discretion.
6. Fees.
(a) Subject to the following Section 6(c), as compensation for its
provision of the services hereunder, the Master Fund will pay to the
Investment Manager a monthly investment management fee (the "Management
Fee") equal to 1/12th of 1.00% (1.00% on an annualized basis) of the
aggregate value of its net assets determined as of each month end. The
Management Fee will be computed based on the net assets of the Master Fund
as of the last day of each month, and will be due and payable in arrears
within five business days after the end of each month. Notwithstanding the
foregoing, any changes to the compensation to the Investment Manager set
forth in any offering document of the Master Fund shall not be binding on
the Investment Manager, unless agreed to in writing by the Investment
Manager.
(b) The Investment Manager, in its sole discretion, may vary, defer or
waive, by rebate or otherwise, all or part of any fees payable under
Section 6(a) in accordance with applicable law. Profits derived by the
Investment Manager, including from such fees, may be used for any lawful
purpose, including payments to any other person in the sole discretion of
the Investment Manager.
(c) If the Investment Manager shall serve hereunder for less than the
whole of any month, the fee hereunder shall be prorated according to the
proportion that such period bears to the full month (based on the aggregate
value of its net assets determined as of the date of cessation) and shall
be payable within five business days after the cessation of the Investment
Manager's services hereunder. The value of the net assets of the Master
Fund shall be determined pursuant to the applicable provisions of the
Master Partnership Agreement, valuation procedures, and Registration
Statement of the Master Fund, each as amended from time to time. If the
determination of the net asset value of the Master Fund has been suspended
for a period including the end of any month when the Investment Manager's
compensation is payable pursuant to this paragraph, then the Investment
Manager's compensation payable with respect to such month shall be computed
on the basis of the value of the net assets of the Master Fund as last
determined (whether during or prior to such month).
(d) Each payment for services to the Investment Manager shall be
accompanied by a report of the Master Fund, prepared either by the
administrator hired by the Master Fund or by an independent certified
public accountant or an attorney which shall show the amount properly
payable to the Investment Manager under this Agreement, and the manner of
computation thereof.
7. Selection of Brokers. Except for investments made directly in Securities
by the Investment Manager on behalf of the Master Fund, the Master Fund and the
Investment Manager will have no direct control over the selection of brokers.
In selecting brokers or dealers to execute transactions directly, the
Investment Manager may not necessarily solicit competitive bids and may not have
an obligation to seek the lowest available commission cost. It may not be the
practice of the Investment Manager to negotiate "execution only" commission
rates, and thus the Investment Manager may be deemed to be paying for research
and other services provided by the broker which are included in the commission
rate. Research furnished by brokers may include, but is not limited to, written
information and analyses concerning specific securities, companies or sectors;
market, financial and economic studies and forecasts; financial publications;
statistic and pricing services, as well as discussions with research personnel,
along with hardware, software, databases and other technical and
telecommunication services and equipment (including updates, improvements and
repairs of same) utilized in the investment management process. Research
services obtained by the use of commissions arising from the Master Fund's
direct portfolio transactions may be used by the Investment Manager in its other
investment activities. To the extent the Investment Manager utilizes commissions
to obtain items which would otherwise be an expense of the Investment Manager,
such use of commissions in effect constitutes additional compensation to the
Advisor. Section 28(e) of the Securities Exchange Act of 1934, as amended,
permits the payment of a rate of commissions in excess of the amount another
broker would have charged to obtain "research and execution" services, which may
result in higher transaction costs than would otherwise be obtainable.
8. Status of the Investment Manager. The Investment Manager shall for all
purposes be an independent contractor and not an agent or employee of the Master
Fund. The Investment Manager shall have no authority to act for, represent, bind
or obligate the Fund except as provided herein.
9. Exculpation; Indemnification. None of the Investment Manager or its
officers, principals, members, shareholders, directors, partners, employees,
agents, members, affiliates or the legal representatives of any of them or
managers, members or affiliates (each, an "Indemnified Person") shall be liable
for any acts or omissions or any error of judgment or for any loss suffered by
the Master Fund in connection with the subject matter of this Agreement, except
for loss resulting from willful misfeasance, bad faith or gross negligence in
the performance by such Indemnified Person of obligations and duties hereunder.
To the fullest extent permitted by law, the Master Fund shall indemnify each
Indemnified Person out of the assets of the Master Fund from and against any and
all costs, losses, claims, damages, amounts paid in settlement, judgment or
expense, liabilities, joint or several, including, without limitation, legal
fees or other expenses reasonably incurred in the investigation or defense of
any action, suit or proceeding (including civil, criminal, administrative or
investigative proceedings) to which an Indemnified Person may be a party or
otherwise be involved with or with which an Indemnified Person shall be
threatened, resulting in any way from the performance or non-performance of
their duties hereunder, except those resulting from the willful misfeasance,
gross negligence or bad faith of such Indemnified Person. The Master Fund shall
advance to or reimburse an Indemnified Person (to the extent that the Master
Fund has available assets and need not borrow to do so) reasonable attorney's
fees and other costs and expenses incurred in connection with defense of any
action or proceeding arising out of such performance or non-performance. The
Investment Manager agrees, and each other Indemnified Person will agree, that in
the event it receives any such advance, it shall reimburse the Master Fund for
such fees, costs and expenses to the extent that it shall be determined that it
was not entitled to indemnification under this Section 9. Notwithstanding the
foregoing, nothing in this Section 9 shall be deemed to constitute a waiver of
any rights the Master Fund may have under U.S. federal securities laws (which
may impose liability, under certain circumstances, even on persons who act in
good faith).
10. Services Not Exclusive. The services of the Investment Manager to the
Master Fund hereunder are not to be deemed exclusive, and the Investment Manager
shall be free to render similar services to others so long as its services
hereunder are not impaired thereby. In addition, the parties may enter into
agreements pursuant to which the Investment Manager provides administrative or
other non-investment advisory services to the Master Fund, and may be
compensated for such other services.
11. Conflicts of Interest. Whenever the Master Fund and one or more other
accounts or investment companies managed or advised by the Investment Manager or
an Advisor have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures approved
by the Board of Directors and believed by the Investment Manager or the Advisor
to be equitable to each entity. Similarly, opportunities to sell Securities
shall be allocated in accordance with procedures approved by the Board of
Directors and believed by the Investment Manager or the Advisor to be equitable.
The Master Fund recognizes that in some cases this procedure may adversely
affect the size of the position that may be acquired or disposed of for the
Master Fund. In addition, the Master Fund acknowledges that any member,
director, officer, or persons employed by the Investment Manager, its
affiliates, or an Advisor, who may also be a member, director, officer, or
person employed by the Master Fund, to assist in the performance of the
Investment Manager's or the Advisor's duties hereunder will not devote their
full time to such service and nothing contained herein shall be deemed to limit
or restrict the right of the Investment Manager or any affiliate of the
Investment Manager or an Advisor to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
12. Duration and Termination.
(a) Duration. This Agreement shall become effective on the date first
set forth above, and shall remain in full force and effect until the date
which is two years after the effective date of this Agreement. Subsequent
to such initial period of effectiveness, this Agreement shall continue in
full force and effect, subject to Section 12(c), for successive one-year
periods so long as such continuance is approved at least annually: (i) by
either the Board of Directors or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of Fund; and (ii) in either
event, by the vote of a majority of the directors of the Master Fund who
are not parties to this Agreement or "interested persons" (as defined in
the 0000 Xxx) of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(b) Amendment. This Agreement may be amended only by the written
agreement of the parties. Any amendment shall be required to be approved by
the Board of Directors in accordance with the provisions of section 15(c)
of the 1940 Act and the rules and regulations adopted thereunder. If
required by the 1940 Act, any material amendment shall also be required to
be approved by such vote of partners of the Fund as is required by the 1940
Act and the rules and regulations thereunder.
(c) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board or by vote of a majority of
the outstanding voting securities (as defined in the 0000 Xxx) of the Fund,
or by the Investment Manager, in each case on not more than sixty (60)
days' nor less than thirty (30) days' prior written notice to the other
party.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the
1940 Act).
13. Use of Name. The Master Fund acknowledges that it adopted its name
through the permission of the Investment Manager. The Investment Manager hereby
consents to the non-exclusive use by the Master Fund of the name "Hatteras
Master Fund, L.P." only so long as the Investment Manager serves as the Master
Fund's Investment Manager. The Fund agrees to indemnify and hold harmless the
Investment Manager and its affiliates from and against any and all costs,
losses, claims, damages or liabilities, joint or several, including, without
limitation, attorneys' fees and disbursements, which may arise out of the Master
Fund's use or misuse of the name "Hatteras Master Fund, L.P." or out of any
breach of or failure to comply with this Section 13. In addition, the Master
Fund shall not approve or authorize the use or distribution in connection with
the sale of its securities of any literature or advertisement in which the
Investment Manger is named or referred to unless such literature or
advertisement shall first be submitted to the Investment Manager for its
approval with respect to matters concerning the Investment Manager.
14. Governing Law. Notwithstanding the place where this Agreement may be
executed by any of the parties thereto, the parties expressly agree that all
terms and provisions hereof shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to conflicts of law
principles.
15. Notices. Any notice, consent or other communication made or given in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or five days after mailed by certified mail,
return receipt requested, as follows:
If to the Investment Manager:
Hatteras Investment Management LLC
0000 Xxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Master Fund:
Hatteras Master Fund, L.P.
c/o Hatteras Investment Partners LLC
0000 Xxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
16. Entire Agreement. This Agreement contains all of the terms agreed upon
or made by the parties relating to the subject matter of this Agreement, and
supersedes all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.
17. No Waivers. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
18. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Master Fund, the Investment Manager, each
Indemnified Person and their respective successors and permitted assigns. Any
person that is not a signatory to this Agreement but is nevertheless conferred
any rights or benefits hereunder (e.g., officers and employees of the Investment
Manager that are entitled to indemnification) shall be entitled to such rights
and benefits as if such person were a signatory hereto, and the rights and
benefits of such person hereunder may not be impaired without such person's
express written consent. No party to this Agreement may assign or delegate,
except to an affiliate, by operation of law or otherwise, all or any portion of
its rights, obligations or liabilities under this Agreement without the prior
written consent of the other party to this Agreement.
19. Survival. The provisions of Sections 3, 4, 5, 6, 9 and 14 shall survive
the termination of this Agreement.
20. Headings. The headings contained in this Agreement are intended solely
for convenience and shall not affect the rights of the parties to this
Agreement.
21. Counterparts. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original, but all of which when taken together
shall be deemed to be one and the same instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above.
HATTERAS MASTER FUND, L.P.
By: Hatteras Investment Management LLC,
its General Partner
By: /s/Xxxxx X. Xxxxxxx
---------------------------------------
Name:Xxxxx X. Xxxxxxx
Title:Managing Member
HATTERAS INVESTMENT PARTNERS LLC
By: /s/Xxxxx X. Xxxxxxx
---------------------------------------
Name:Xxxxx X. Xxxxxxx
Title:President
EXHIBIT A
List of Feeder Funds
Hatteras Diversified Strategies Fund LP
Hatteras Diversified Strategies Offshore Fund LTD
Hatteras Multi-Strategy Fund I, L.P.
Hatteras Multi-Strategy TEI Fund, L.P.
