EXCELSIOR DIRECTIONAL HEDGE FUND OF FUNDS (TE), LLC
000 XXXX XXXXX XXXX
XXXXXXXX, XX 00000
UST Securities Corp.
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Re: APPOINTMENT OF UST SECURITIES CORP. AS PLACEMENT AGENT
Ladies and Gentlemen:
Pursuant to the terms of this agreement (the "Agreement"), Excelsior
Directional Hedge Fund of Funds (TE), LLC (the "Company"), a Delaware limited
liability company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a non-diversified, closed-end management investment
company, hereby agrees with UST Securities Corp. ("UST") as follows
1. COMPANY OFFERING.
The Company proposes to issue and to sell its limited liability
company interests ("Interests") in accordance with a Confidential Memorandum
issued by the Company, dated May 2007, as amended or supplemented from time to
time (the "Confidential Memorandum").
2. DEFINITIONS.
All capitalized terms used in this Agreement that are not separately
defined herein shall have the respective meaning set forth in the Confidential
Memorandum, which together with the limited liability company agreement of the
Company and the subscription agreement of the Company, as each may be amended
from time to time, constitute the offering documents of the Company
(collectively, the "Offering Documents").
3. PLACEMENT OF INTERESTS.
(a) Subject to the terms and conditions set forth herein,
the Company hereby appoints UST as its placement agent in connection with the
placement of Interests. Subject to the performance in all material respects by
the Company of its obligations hereunder, and to the completeness and accuracy
in all material respects of all of the representations and warranties of the
Company contained herein, UST hereby accepts such agency and agrees on the terms
and conditions herein set forth to offer Interests to qualified subscribers. UST
shall have the right hereunder to retain other securities dealers ("Sub-Agents")
to conduct such solicitation and agrees to use all reasonable efforts to assist
the Company in obtaining performance by each subscriber. Each Sub-Agent shall
give UST in a separate Sub-Agency Agreement representations and warranties
substantially similar to those contained in Section 8 of this Agreement. UST
agrees (and will ensure that each Sub-Agent agrees) that Interests shall be
offered and sold only in accordance with the terms and conditions set forth in
this Agreement (or Sub-Agency Agreement) and the Offering Documents. UST shall
not have any liability to the
Company in the event that any subscriber fails to consummate the purchase of
Interests for any reason other than UST's willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties hereunder.
(b) The offers and sales of Interests are to be effected pursuant
to the exemption from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), pursuant to Section 4(2) thereof and
Regulation D under the Securities Act. Both UST and the Company have established
the following procedures in connection with the offer and sale of Interests and
agree that UST will make offers or sales of any Interests in compliance with
such procedures:
(i) Offers and sales of Interests will be made only in
compliance with Regulation D under the Securities Act and only to investors
that qualify as "accredited investors," as defined in Rule 501(a) under the
Securities Act, and as "qualified clients," as defined in Rule 205-3 under
the Investment Advisers Act of 1940, as amended.
(ii) No sale of Interests to any one investor will be for
less than the minimum denominations as may be specified in the Confidential
Memorandum or as otherwise approved by the Board of Managers of the Company
(the "Board").
(iii) No offer or sale of any Interest shall be made in any
state or jurisdiction, or to any prospective investor located in any state
or jurisdiction, where such Interests have not been registered or qualified
for offer and sale under applicable state securities laws unless such
Interests are exempt from the registration or qualification requirements of
such laws.
(c) For purposes of the offering of Interests, the Company
has furnished to UST copies of the Offering Documents which UST shall furnish to
prospective investors. Additional copies of the Offering Documents will be
furnished to UST by the Company in such numbers as UST may reasonably request
for purposes of the offering. UST is authorized to furnish to prospective
purchasers only such information concerning the Company and the offering as may
be contained in the Offering Documents or any written supplements thereto, and
such other materials as UST has prepared and which comply with applicable laws
and regulations, including the rules of the National Association of Securities
Dealers, Inc. (the "NASD").
4. SUBSCRIPTIONS FOR INTERESTS
(a) The Company may from time to time, in the sole
discretion of the Board, offer Interests to potential investors for purchase.
(b) All subscriptions for Interests and payments by
subscribers of subscription amounts for Interests shall be made pursuant to the
terms and conditions set forth in the Offering Documents.
(c) All payments received by UST hereunder for
subscriptions in the name and on behalf of the Company shall be handled by UST
in accordance with the terms of the subscription documentation.
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(d) If an offering is not completed in accordance with
the conditions set forth in the Offering Documents, the Company may terminate
the offering. In such case, UST will instruct the Company's escrow agent to
return all subscription payments to investors.
(e) In an offering, the minimum initial and additional
investment requirements shall be such amounts as are specified in the
Confidential Memorandum. All subscriptions for Interests in an offering and
payments therefor shall be made pursuant to the terms and conditions set forth
in the Confidential Memorandum, and subscriptions shall be subject to acceptance
by UST as agent for the Company, as described in Section 5 below.
5. ACCEPTANCE OF SUBSCRIPTIONS.
(a) UST is appointed as agent of the Company for purposes
of determining whether to accept subscriptions for Interests. Subscriptions
shall be accepted only if the investor: (a) has supplied, or in the case of an
additional subscription by an existing member of the Company ("Member"),
previously supplied, to UST, either directly or indirectly, properly completed
subscription documentation; (b) has made proper payment for Interests; and (c)
UST has made a determination, using such reasonable procedures adopted by UST,
that the investor meets all eligibility requirements for the purchase of
Interests. Subscriptions shall not be accepted if it appears to UST that
subscription documentation has not been properly completed, in which case UST
shall use reasonable efforts to obtain properly completed subscription
documentation.
(b) Properly completed subscription documentation shall
be promptly transmitted to the administrator for the Company.
(c) United States Trust Corporation and its affiliates
("U.S. Trust") may, from time to time, receive subscriptions for Interests
directly from investors, in which case U.S. Trust will provide UST with such
originals and copies of the subscription documentation as UST may require.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to UST that:
(a) The Company has been duly formed and is validly
existing as a limited liability company in good standing under the laws of the
State of Delaware with all requisite power and authority, all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies, and all necessary rights,
licenses and permits from other parties, to conduct its business as described in
the Confidential Memorandum.
(b) Interests to be or which may be issued by the Company
have been duly authorized for issuance and sale and, when issued and delivered
by the Company, Interests will conform to all statements relating thereto
contained in the Confidential Memorandum.
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(c) The issue and sale of Interests and the execution,
delivery and performance of the Company's obligations under the Confidential
Memorandum will not result in the violation of any applicable law.
(d) The Company will apply the proceeds from the sale of
Interests for the purposes set forth in the Confidential Memorandum.
(e) The Confidential Memorandum will not contain an untrue
statement of any material fact or omit to state any material fact necessary in
order to make statements therein in light of the circumstances under which they
were made, not misleading.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming UST's execution hereof, will constitute a
valid and binding agreement of the Company.
7. COVENANTS OF THE COMPANY.
The Company covenants and agrees with UST as follows:
(a) UST shall be furnished with such documents and opinions
as UST may require from time to time for the purpose of enabling UST to pass
upon the issuance and sale of Interests as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained;
and all proceedings taken by the Company and in connection with the issuance and
sale of Interests as herein contemplated shall be satisfactory in form and
substance to UST.
(b) If an event occurs which in the opinion of counsel to
the Company materially affects the Company and which should be set forth in an
amendment or supplement to the Confidential Memorandum in order to make the
statements therein not misleading in light of the circumstances under which they
are made, the Company will notify UST as promptly as practical of the occurrence
of such event and will prepare and furnish to UST copies of an amendment or
supplement to the Confidential Memorandum in such reasonable quantities as UST
may request, in order that the Confidential Memorandum will not contain any
untrue statement of any material fact or omit to state a material fact which in
the opinion of such counsel is necessary to make the statements therein not
misleading in light of the circumstances under which they are made.
8. REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT AGENT.
UST represents and warrants that:
(a) UST is duly authorized to enter into and perform, and
has duly executed and delivered, this Agreement.
(b) UST has and will maintain all licenses and
registrations necessary under applicable law and regulations (including the
rules of the NASD) to provide the services required to be provided by UST
hereunder.
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(c) UST has not and will not solicit any offer to buy or
offer to sell Interests in any manner which would be inconsistent with
applicable laws and regulations (including, but not limited to, applicable
anti-money laundering laws and regulations), or with the procedures for
solicitations contemplated by the Confidential Memorandum, and this Agreement or
by any form of general solicitation or advertising, including, but not limited
to, any advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio or
conduct any seminar or meeting whose attendees have been invited by any general
solicitation or advertising.
(d) UST will furnish to each subscriber of Interests,
identified either by UST or the Company, a copy of the Offering Documents prior
to such person's admission as a Member.
(e) UST will maintain the confidentiality of investor
information in a manner consistent with the privacy policy adopted by the
Company pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as amended.
(f) UST agrees that each Sub-Agency Agreement between UST
and a Sub-Agent will contain provisions requiring that the Sub-Agent: (1) keep
records (and make them available to UST) of the Offering Documents distributed
to all persons; (2) have reasonable procedures regarding the control and
distribution of the Offering Documents; (3) not create or use offering materials
for distribution to or use by prospective purchasers of Interests, other than
the Offering Documents furnished by the Company and such other materials as UST
has supplied or authorized for use; and (4) adopt and adhere to reasonable
procedures designed to ensure that the offering of Interests is made only in
accordance with the provisions of Section 3 relating to the offering of
Interests and clauses (a) through (d) of this Section 8, in the case of the
Sub-Agent as if the Sub-Agent were the placement agent.
9. COMPENSATION OF PLACEMENT AGENT.
(a) UST shall not be entitled to receive any compensation
from the Company for the services provided hereunder and instead UST shall be
compensated for its services by U.S. Trust Hedge Fund Management, Inc.
("USTHFMI"), the Company's manager, in accordance with the terms of an agreement
entered into between UST and USTHFMI or an affiliate thereof.
(b) Pursuant to the terms of each Sub-Agency Agreement
between UST and a Sub-Agent, a Sub-Agent may receive from UST either a one-time
fee or an ongoing fee based upon the value of Interests purchased by investors
that it introduces to the Company or based upon the initial contribution amount
made by such investors in the Company. The Company will not be liable to
Sub-Agents for payment of any fees pursuant to Sub-Agency Agreements or for
reimbursement of any expenses incurred by Sub-Agents in connection with services
provided pursuant to Sub-Agency Agreements.
(c) Except as may otherwise be agreed to in writing by
the Company, UST shall be responsible for the payment of all costs and expenses
incurred by UST in
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connection with the performance of its obligations under this Agreement,
including the costs associated with the preparation, printing and distribution
of any sales materials.
10. INDEMNIFICATION.
The parties agree to indemnify each another as follows:
(a) The Company agrees to indemnify and hold harmless UST
and its affiliates and their respective directors, officers or employees,
executors, heirs, assigns, successors or other legal representatives (the "UST
Indemnitees"), against any and all losses, liabilities, claims, damages and
expenses whatsoever (including, but not limited to, attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which UST or the UST Indemnitees may become subject under the
Securities Act, the Securities Exchange Act of 1934 (the "Exchange Act") or any
other law or statute in any jurisdiction, insofar as such losses, liabilities,
claims, damages or expense (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Confidential Memorandum or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; PROVIDED, HOWEVER, that the Company will not
be liable in any such case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by UST or through UST expressly for the use
therein; and further provided that this indemnity shall not protect UST or any
other person who may otherwise be entitled to indemnity hereunder from or
against any liability to which UST or they would be subject by reason of UST's
own or their own willful misfeasance, bad faith, gross negligence or reckless
disregard of UST's or their duties hereunder. Any determination by the Company
to indemnify UST for the foregoing liabilities shall be made in accordance with
the requirements of Section 17 of the 1940 Act, as interpreted by the Securities
and Exchange Commission. This indemnity will be in addition to any liability
which the Company may otherwise have to UST under this Agreement.
(b) UST agrees to indemnify and hold harmless the Company
and its affiliates and each of their respective directors, officers or employees
and its executors, assigns, successors or other legal representatives (the "U.S.
Trust Group Indemnitees"), against any losses, liabilities, claims, damages and
expenses whatsoever (including, but not limited to, attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which the Company or the U.S. Trust Group Indemnitees may become
subject under the Securities Act, the Exchange Act or any other law or statute
in any jurisdiction, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) that may arise out of or are based upon
any breach of any representation or warranty of UST contained herein or any
untrue statement or alleged untrue statement of a material fact relating to UST
contained in the Confidential Memorandum or any amendment or supplement thereto,
or arise out of or are based
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upon the omission or alleged omission to state therein a material fact relating
to UST required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished by UST to the
Company expressly for use therein. This indemnity shall not protect the Company
or the U.S. Trust Group Indemnitees from or against any liability to which the
Company or the U.S. Trust Group Indemnitees would be subject by reason of their
own willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties hereunder. This indemnity will be in addition to any liability
which UST may have to the Company under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any other
liability which it may have under this Section 10 (except to the extent that it
has been prejudiced in any material respect by such failure) or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party; PROVIDED, HOWEVER, that if, in the judgment of such
indemnified party, a conflict of interest exists where it is advisable for such
indemnified party to be represented by separate counsel, the indemnified party
shall have the right to employ separate counsel in any such action, in which
event the fees and expenses of such separate counsel shall be borne by the
indemnifying party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of counsel, the indemnifying party shall not
be liable to such indemnified party under such subsections for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party or
parties shall not be liable for the expenses of more than one such separate
counsel representing the indemnified parties under subparagraph (a) of this
Section 10 who are parties to such action), (ii) the indemnifying party or
parties shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party or parties have
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party or parties; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii). No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
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11. CONFIDENTIAL INFORMATION.
UST will have access to and become acquainted with records of and
information relating to the Company, its investors and affiliates (collectively,
"Confidential Information"). Neither UST nor any of its officers, employees or
agents shall disclose any of the Confidential Information (including any client
list or other confidential information relating to the businesses of the Company
or its affiliates), directly or indirectly, or use them in any way, either
during the term of this Agreement or at any time thereafter, except as required
in the course of performing duties for the Company under this Agreement and
unless the disclosure of any such Confidential Information is otherwise
consented to, in writing, by the Company. As used in this Section 11 the term
"Confidential Information" does not include information that (a) becomes or has
been generally available to the public other than as a result of disclosure by
the Company; (b) was available to UST on a non-confidential basis prior to its
disclosure by the Company or any of its affiliates; or (c) is independently
developed or becomes available to UST on a non-confidential basis from a source
other than the Company or its affiliates.
12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The agreements, representations, warranties, indemnities and other
statements of the parties and their officers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
UST, or the Company, any members of the Board, directors or officers of any of
the foregoing or any person controlling any of the foregoing, and (iii)
acceptance of any payment for Interests hereunder. The provisions of this
Section 12 shall survive the termination or cancellation of this Agreement.
13. EFFECTIVE DATE AND TERM OF AGREEMENT.
This Agreement shall become effective for all purposes as of May 1,
2007 and shall remain in effect for an initial term of two years from such date.
Thereafter, this Agreement shall continue in effect from year to year, provided
that each such continuance is approved by the Board, including the vote of a
majority of the Board members who are not "interested persons," as defined by
the 1940 Act, of the Company, and the rules thereunder, of the Company.
14. TERMINATION.
This Agreement may be terminated as follows:
(a) Any party may terminate this Agreement without cause by
written notice to the other on not less than thirty (30) days notice, or, if
there has been a material breach of any condition, warranty, representation or
other term of this Agreement by the other, by written notice to such other at
any time.
(b) By written notice to the Company, UST may terminate
this Agreement at any time if (i) there has been, since the respective dates as
of which information is given in the Confidential Memorandum, any material
adverse change in the condition, financial or otherwise, of the Company, which
in UST's opinion, will make it inadvisable to proceed with the offering of
Interests; (ii) there has occurred any outbreak of hostilities or other domestic
or
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international calamity or crisis the effect of which on the financial markets is
so substantial and adverse as to make it, in UST's judgment, impracticable to
offer Interests or enforce contracts for the sale of Interests; and (iii) any
order suspending the sale of Interests shall have been issued by any
jurisdiction in which a sale or sales of Interests shall have been made, or
proceedings for that purpose shall have been initiated or, to the best knowledge
and belief of UST, shall be contemplated.
(c) This Agreement shall terminate automatically in the
event of its "assignment" as such term is defined by the 1940 Act and the rules
thereunder.
15. DELEGATION OF POWERS.
UST shall be entitled to delegate its duties, functions or powers
under this Agreement only to a Sub-Agent in accordance with the provisions of
this Agreement.
16. NOTICES.
All communications under this Agreement shall be given in writing,
sent by (i) telecopier, (ii) e-mail, or (iii) registered mail to the address set
forth below or to such other address as such party shall have specified in
writing to the other party hereto, and shall be deemed to have been delivered
effective at the earlier of its receipt or within two (2) days after dispatch.
If to the Placement Agent:
UST Securities Corp.
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Attn: Xxxxxx Xxxx
If to the Company:
Excelsior Directional Hedge Fund of Funds (TE), LLC
000 Xxxx Xxxxx Xx.
Stamford, CT 06905
Telephone: (000) 000-0000
Attn: Xxxxxx X. Xxxx
17. MISCELLANEOUS.
(a) This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall constitute one
and the same instrument. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns and no other person shall have any right or obligation hereunder.
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(b) This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof, and neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated except by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
18. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to the conflicts of laws
provisions thereof, and with the provisions of the 1940 Act. In the event of any
conflict between the provisions of the laws of New York and those of the 1940
Act, the 1940 Act provisions shall control.
19. The parties to this Agreement agree that the obligations of
the Company under this Agreement shall not be binding upon USTHFMI, any Board
members, Members or any officers, employees or agents, whether past, present or
future, of the Company or USTHFMI, individually, but are binding only upon the
assets and property of the Company.
20. This Agreement may be amended only by written agreement of the
parties hereto.
21. Capitalized terms not otherwise defined shall have the
meanings ascribed to them in the Confidential Memorandum.
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If the foregoing correctly sets forth our understanding with UST,
please indicate acceptance in the space provided below.
Very truly yours,
EXCELSIOR DIRECTIONAL HEDGE FUND OF FUNDS
(TE), LLC
By:
--------------------------------
Name:
Title:
Date:
-------------------------------
Agreed to and accepted:
UST SECURITIES CORP.
By:
----------------------------------
Name:
Title:
Date:
--------------------------------
Agreed to and accepted (with respect to Section 9(a) only):
U.S. TRUST HEDGE FUND MANAGEMENT, INC.
By:
----------------------------------
Name:
Title:
Date:
--------------------------------
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