JOINT LIABILITY INSURANCE AGREEMENT
The
Trustees of Hatteras 1099 Advantage Fund, Hatteras 1099 Advantage Institutional
Fund, and Managers of Hatteras Capital Investment Management, LLC (collectively,
the “Parties” or “Insureds,” and individually, a “Party” or “Insured”) have
approved the joint purchase of a trustees and officers professional liability
insurance policy (the “Policy”) issued by [__________________] (the
“Insurer(s)”) in the total coverage amount of [$________].
Under the
Investment Company Act of 1940, as amended (the “1940 Act”), a joint liability
insurance policy is permitted only if the conditions set forth in 1940 Act Rule
17d-1(d)(7) are met. Such conditions are explained in more detail in
1940 Act Release Nos. 10700 (May 16, 1979) and 10891 (October 4, 1979), in which
Rule 17d-1(d)(7) was proposed and adopted, respectively. This
Agreement confirms certain agreements among the Parties, which were taken into
account by the Trustees and Managers in approving the purchase of the Policy,
relevant to meeting such conditions.
Premium
Allocations. The Trustees and Managers of the Parties approved
the Policy through [______________] in consideration for the payment of an
aggregate premium of [$________]. The premium shall be allocated to
each of the Insureds fairly and reasonably in accordance with Rule 17d-1(d)(7),
which requires that the allocation of the premium to each of the Insureds be
based on the proportionate share of the sum of the premiums that would have been
paid if the insurance coverage were purchased separately by the
Insureds.
The
Insureds have been advised that the allocations of the aggregate premium should
be ___% (or $_______) to Hatteras 1099 Advantage Fund, ___% (or $_______) to
Hatteras 1099 Advantage Institutional Fund and ___% (or $_______) to Hatteras
Capital Investment Management, LLC. These percentages will be revised
as applicable based on the relative ______, 2009 net asset percentages for each
Party.
Other
Allocations. In no event shall any of the Insureds be deprived
of the benefit of the portion of the coverage of the Policy represented by the
portion of the aggregate premium it has paid. This benefit includes
the minimum coverage amount and, if unused by other Parties, excess coverage up
to the total coverage amount of [$__________]. In the event the
Insurer(s) pay the maximum coverage amount of [$__________] under the Policy,
any excess coverage paid by the Insurer(s) over the aggregate minimum coverage
amounts paid by the Insurer(s) to the Insureds making claims under the Policy
will be allocated to each such Insured in the same proportion that the
[_____________] net asset percentage of each such Insured bears to the aggregate
[_____________] net asset percentages of all Insureds making claims under the
Policy. Any payment made by the Insurer(s) shall be allocated
(including retroactive reallocation, if necessary) among the Insureds as
necessary. If claims are made against more than one of the Insureds
which are considered a single claim for purposes of the Policy and the
deductible is limited as a result, such deductible shall be allocated in a
manner similar to the allocation of any payments made by the Insurer(s), with
adjustment as appropriate to reflect the particulars of such
claims. It is the intent of the paragraph that none of the Insureds
shall effectively receive diminished insurance coverage by virtue of its
purchase of joint, as opposed to separate, insurance. For purposes of
this paragraph, the term “Insureds” means the aggregate of an Insured entity
named in the Policy issued by ___________ or Endorsements relating thereto and
such entity's existing or former Trustees, officers, partners or employees which
are Insureds as that term is defined in the Policy.
In the
event the Policy is amended, modified, supplemented, extended, continued or
renewed (and provided that each Insured has consented to such action), the
Policy as so amended, modified, supplemented, extended, contained or renewed
shall continue to be deemed the “Policy” for purposes of this Agreement and the
agreements set forth herein shall continue in effect with respect
thereto.
In view
of the conditions set forth in 1940 Act Rule 17d-1(d)(7), no amendment or
modification of this Agreement, and no consent of any Party contemplated by the
preceding paragraph thereof, shall be effective unless authorized by the
Trustees of such Party, including a majority of the Trustees who are not
“interested persons” thereof, as the case may be. A majority of the
Trustees who are not “interested persons” must determine at least annually that
the standards set forth in Rule 17d-1(d)(7) have been satisfied.
This
Agreement is executed by or on behalf of the Parties and the obligations
hereunder are not binding upon any of their respective Trustees, officers or
interest holders individually but are binding only upon the Parties and their
respective assets and property.
Each
Insured acknowledges receipt of this Agreement and confirms the agreements set
forth herein by signing the Agreement.
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HATTERAS
1099 ADVANTAGE FUND
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BY:
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[NAME
AND TITLE]
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DATE:
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HATTERAS
1099 ADVANTAGE
INSTITUTIONAL
FUND
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BY:
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[NAME
AND TITLE]
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DATE:
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HATTERAS
CAPITAL INVESTMENT
MANAGEMENT,
LLC
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BY:
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[NAME
AND TITLE]
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DATE:
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