ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Agreement") is made and entered into this 19th day
of July, 2006, by and between the Hatteras Multi-Strategy 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 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 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 # 9871418340
Ref: Hatteras Multi-Strategy 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.
(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 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.
(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
All deliveries and notices hereunder to the Fund shall be in writing and shall
be sent or delivered to:
Hatteras Multi-Strategy TEI Fund, LP
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 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 TEI FUND, LP
By: /s/J. Xxxxxxx Xxxxxx
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Title: Director
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UMB BANK, N.A., AS ESCROW AGENT
By: /s/K. Xxxxx Xxxxxxx
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Title: Vice President
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UMB FUND SERVICES, INC.
By: /s/Xxxxxxxxx Xxx Xxxxxxx
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Title: Senior Vice President and General Counsel
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