ESCROW AGREEMENT
This ESCROW AGREEMENT (the “Agreement”)
is made and entered into this ___ day of ________, 2009, by and between
Hatteras Global Private Equity Partners Institutional, LLC, a Delaware limited
liability company (the “Fund”), UMB Fund Services, Inc., as recordkeeper
(“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 liability
company 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 units of limited liability company interests in the Fund
(“Units”) in reliance on exemptions provided in the Securities Act of 1933 and
state securities laws for transactions not involving any public offering;
and
WHEREAS, the Fund accepts subscription
proceeds for Units, accepts requests for the repurchase of Units and makes
distributions as described in the Fund’s Confidential Private Placement
Memorandum dated January 5, 2009 and any successor thereto;
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:
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1.
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Appointment
and Delegation.
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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 recordkeeper, to provide
instructions to the Escrow Agent on the Fund’s behalf in accordance with the
terms of this Agreement.
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2.
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Procedures.
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(a) The Fund will establish an escrow
account with the Escrow Agent consisting of four (4) segregated sub-accounts,
the Subscription Sub-Account, the Repurchase Sub-Account, the Income 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 Units by the Fund from its subscribers
(“Repurchase Proceeds”) will be deposited into the Repurchase Sub-Account, less
a withholding amount (the “Holdback Amount”), such amount typically being 5% of
the repurchase 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
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 the form of a cash letter, the Escrow Agent
shall promptly (but in no event later than the close of business on the day of
receipt of such Purchase Reversal Letter in accordance with subparagraph (d) or
Paragraph 4) 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 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 earnings. All investment earnings on
the Escrow Accounts shall be transferred on the first business day of each month
to the Income Sub-Account. In turn, the earnings will be swept to the
Fund’s custody account on the first business day of the month. Notwithstanding
the foregoing, until the date of the Fund’s initial closing no amounts will be
invested in the UMB Money Market Special Account and no investment earnings will
be earned or credited for amounts held in any Escrow
Accounts.
(f) The Fund may from time to time deposit
Repurchase Proceeds in the Repurchase Sub-Account. After UMBFS has received
written confirmation from the Fund of the value of Units being repurchased for
any applicable period for which repurchases occur, UMBFS will deliver to the
Escrow Agent a cash letter to disburse the Repurchase Proceeds, if any, on
deposit in custody, and a cash letter 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 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 specifying the corrective action to be
taken.
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(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
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.
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3.
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Compensation.
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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 $5.00 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.
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4.
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Payment
Procedures.
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(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:
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UMB Bank, N.A., Kansas City,
Missouri
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ABA #
000000000
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A/C #
______________________
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A/C Name: Trust
Clearing
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FFC A/C#
____________________
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Attn: Xxxx
Xxxxxxx
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(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:
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UMB Bank, N.A., Kansas City,
Missouri
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ABA
#000000000
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A/C #
987-173-7748
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Attn: Financial
Control
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(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. 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.
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5.
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Representations.
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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 Limited Liability Company Agreement or any provision of any agreement,
instrument, judgment, injunction or order applicable to or binding upon
it.
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6.
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Miscellaneous.
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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 except such claims which are occasioned by its fraud, bad
faith, reckless disregard of its duties, gross negligence or willful
misconduct;
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(e) have no liability or duty to inquire
into the terms and conditions of any subscriptions for Units, 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;
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(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;
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(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 in writing and shall be sent or delivered to:
UMB Bank, N.A., as Escrow
Agent
Attn: Xxxx X. Xxxxxxx, M/S
1020409
0000 Xxxxx Xxxxxxxxx, 0xx Xxxxx
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 Global Private Equity Partners
Institutional, LLC Attn: J. Xxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx
000
Xxxxxxx, XX 00000
All deliveries and notices hereunder to
UMBFS shall be in writing and shall be sent or delivered to:
UMB Fund Services,
Inc.
Attn: Xxxxxxx X. Xxxxxx
Xxxxxx
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx
X
Xxxxxxxxx, 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.
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(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.
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7.
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Tax
Reporting.
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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
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.
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HATTERAS GLOBAL
PRIVATE
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EQUITY
PARTNERS
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INSTITUTIONAL,
LLC
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By:
___________________________
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Title:__________________________
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UMB BANK, N.A., AS ESCROW
AGENT
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By:
___________________________
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Title:__________________________
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UMB FUND SERVICES,
INC.
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By:
___________________________
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Title:__________________________
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