ADMINISTRATION, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
Exhibit (k)(1)
ADMINISTRATION, FUND ACCOUNTING AND RECORDKEEPING AGREEMENT
THIS AGREEMENT is made as of this 30th day of November, 2006, by and between
Hatteras Multi-Strategy Institutional TEI Fund, L.P., a Delaware limited partnership (the “Fund”),
and UMB Fund Services, Inc., a Wisconsin corporation (the “Administrator”).
WHEREAS, the Fund is a limited partnership which is registered as a closed-end,
non-diversified management investment company under the provisions of the Investment Company Act of
1940 (the “1940 Act”); and
WHEREAS, the Fund is authorized to offer and sell limited partnership interests in the Fund
representing interests in a separate portfolio of securities and other assets (the “Interests”) in
reliance on exemptions provided in the Securities Act of 1933 (the “Securities Act”) and state
securities laws for transactions not involving any public offering; and
WHEREAS, in pursuit of its investment objective, the Fund will invest its assets primarily in
private investment funds (“Portfolio Funds”); and
WHEREAS, the Fund and the Administrator desire to enter into an agreement pursuant to which
the Administrator shall provide certain administration, fund accounting and recordkeeping services
to the Fund.
NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto, intending to be legally bound, do hereby agree as follows:
1. Appointment
The Fund hereby appoints the Administrator as administrator, fund accountant and record
keeper of the Fund for the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to render the services herein set forth, for the compensation
herein provided.
2. Services
(a) Subject to the direction and control of the Fund and utilizing information provided by
the Fund and its agents and service providers, the Administrator will provide the services listed
on Schedule A hereto. The duties of the Administrator shall be confined to those expressly
set forth therein, and no implied duties are assumed by or may be asserted against the
Administrator hereunder. The Fund agrees not to make any modifications to its registration
statement or adopt any policies that would materially affect the obligations and responsibilities
of the Administrator hereunder without the prior written approval of the Administrator, which
approval shall not be unreasonably withheld.
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(b) Hatteras Investment Partners LLC (the “Manager”), the manager of the Fund, shall use
reasonable efforts to cause the investment adviser(s) and sub-advisers (each a “Portfolio
Manager”), prime broker and/or custodian, legal counsel, independent accountants and other service
providers and agents, past or present, for the Fund to cooperate with the Administrator and to
provide the Administrator with such information, documents and advice relating to the Fund as
necessary and/or appropriate or as requested by the Administrator, in order to enable the
Administrator to perform its duties hereunder. In connection with its duties hereunder, the
Administrator shall (without investigation or verification) be entitled and is hereby instructed
to, rely upon any and all oral or written instructions, advice, information or documents provided
to the Administrator by an officer or representative of the Manager or the Fund or by any of the
aforementioned persons. The Administrator shall be entitled to rely on any document that it
reasonably believes to be genuine and to have been signed or presented by the proper party. Fees
charged by such persons shall not be an expense of the Administrator. The Administrator shall not
be held to have notice of any change of authority of any officer, agent, representative or employee
of the Manager, the Fund, investment adviser(s), Portfolio Managers or service provider until
receipt of written notice thereof from the Fund. As used in this Agreement, the term “Investment
Adviser” includes all Portfolio Managers or persons performing similar services.
(c) At any time, the Administrator may request instructions from the Fund with respect to any
matter arising in connection with this Agreement. If such instructions are not received within a
reasonable time, the Administrator may seek advice from legal counsel for the Fund at the expense
of the Fund, or its own legal counsel at its own expense, and it shall not be liable for any
action taken or not taken by it in good faith in accordance with such instructions or in
accordance with advice of counsel.
(d) The Administrator hereby agrees that all records which it maintains for the Fund pursuant
to its duties hereunder are the property of the Fund and further agrees to surrender promptly to
the Fund any of such records upon the Manager’s request.
(e) It is understood that in determining security valuations, the Administrator employs one
or more pricing services, as directed by the Fund, to determine valuations of portfolio securities
for purposes of calculating net asset values of the Fund. The Fund shall identify to the
Administrator the pricing service(s) to be utilized on behalf of the Fund. The Administrator shall
price the securities and other holdings of the Fund for which market quotations or prices are
available by the use of such services. For those securities where prices are not provided by the
pricing service(s) utilized by the Administrator, the Fund shall approve, in good faith, the
method for determining the fair value of the securities. The Fund’s investment adviser shall
determine or obtain the valuation of the securities in accordance with those procedures and shall
deliver to the Administrator the resulting prices for use in its calculation of net asset values.
With respect to the underlying Portfolio Funds in which the Fund invests, the Administrator shall
price such investments based on the valuations provided to it by the Manager and/or the Portfolio
Managers. The Administrator is authorized to rely on the prices provided by such service(s) or by
the Fund’s investment adviser(s), Portfolio Managers or other authorized representative of the
Fund without investigation or verification.
(f) The Fund’s Manager and investment adviser(s) have and retain primary responsibility for
all compliance matters relating to the Fund, including but not limited to compliance with all
applicable
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provisions of the Securities Act, the 1940 Act, the Securities Exchange Act of 1934, state
securities laws, the Internal Revenue Code of 1986, as amended, the USA PATRIOT Act of 2002, the
Xxxxxxxx-Xxxxx Act of 2002 and the policies and limitations of the Fund relating to the portfolio
investments as set forth in the Private Offering Memorandum dated December 6, 2006, and any
successor thereto (the “Offering Memorandum”). The Administrator’s monitoring and other functions
hereunder shall not relieve the Manager and the investment adviser(s) of their primary day-to-day
responsibility for assuring such compliance.
(g) The Fund hereby certifies that it has undertaken (or will undertake in a timely manner)
all
filings and other actions necessary to permit the Fund to lawfully offer and sell Interests in the
Fund without registration under the Securities Act and the applicable securities laws of each
state and territory in which the Fund intends to offer and sell Interests. Except as otherwise
noted on Schedule A hereto, the Fund is not delegating to the Administrator any
responsibility to monitor or otherwise take any actions with respect to the qualification for or
maintenance of any applicable Federal or state securities law exemptions.
(h) The Administrator shall maintain a disaster recovery and business continuity plan and
adequate and reliable computer and other equipment necessary and appropriate to carry out its
obligations under this Agreement. Upon the Fund’s reasonable request, the Administrator shall
provide supplemental information concerning the aspects of its disaster recovery and business
continuity plan that are relevant to the services provided hereunder.
3. Fees; Delegation; Expenses
(a) In consideration of the services rendered pursuant to this Agreement, the Fund will pay
the
Administrator a fee, computed and payable monthly based on monthly net assets, plus
out-of-pocket
expenses, each as provided in Schedule B hereto. In addition, to the extent that the
Administrator
corrects, verifies or addresses any prior actions or inactions by the Fund or by any other
service provider,
the Administrator shall be entitled to additional fees as provided in Schedule B.
Fees shall be adjusted
in accordance with Schedule B or as otherwise agreed to by the parties from time to
time. The parties
may amend this Agreement to include fees for any additional services requested by the Fund,
enhancements to current services, or to add funds for which the Administrator has been
retained. The
Fund agrees to pay the Administrator’s then current rate for additional services provided, or
for
enhancements to existing services currently provided, after the execution of this Agreement.
(b) For the purpose of determining fees payable to the Administrator, net asset value shall
be
computed in accordance with the Fund’s Limited Partnership Agreement, the Offering Memorandum
and
the resolutions of the Fund, if any. The fee for the period from the day of the month charges
begin
accruing under this Agreement until the end of that month shall be pro-rated according to the
proportion
that such period bears to the full monthly period. Upon any termination of this Agreement
before the
end of any month, the fee for such part of a month shall be pro-rated according to the
proportion which
such period bears to the full monthly period and shall be payable upon the date of
termination of this
Agreement. Should the Fund be liquidated, merged with or acquired by another fund or
investment
company, any accrued fees shall be immediately payable.
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(c) The Administrator will bear all expenses incurred by it in connection with the performance
of its services under Section 2, except as otherwise provided herein. The Administrator shall not
be required to pay or finance any costs and expenses incurred in the operation of the Fund,
including, but not limited to: taxes; interest; brokerage fees and commissions; salaries, fees and
expenses of the Manager or any officers; any Securities and Exchange Commission (the “Commission”)
fees and state Blue Sky fees; advisory fees; charges of custodians, prime brokers, transfer agents,
dividend disbursing and accounting services agents and other service providers; security pricing
services; insurance premiums; outside auditing and legal expenses, including but not limited to
attorneys’ fees incurred in connection with responding to or complying with SEC or other regulatory
investigations, inquiries or subpoenas; costs of organization and maintenance of corporate
existence; taxes and fees payable to federal, state and other governmental agencies; preparation,
typesetting, printing, proofing and mailing of prospectuses, statements of additional information,
Offering Memoranda or notices, forms or applications and proxy materials for regulatory purposes
and for distribution to prospective or current limited partners; preparation, typesetting,
printing, proofing and mailing and other costs of shareholder reports; expenses in connection with
the electronic transmission of documents and information including electronic filings with the
Commission and the states; research and statistical data services; expenses incidental to holding
meetings of the Fund’s limited partners and Manager; fees and expenses associated with internet,
e-mail and other related activities; expenses incurred for distribution of Interests and
extraordinary expenses. The Administrator shall not be required to pay any Blue Sky fees or take
any related Blue Sky actions except as set forth on Schedule A, and then not unless and
until it has received the amount of such fees from the Fund.
(d) Except as otherwise specified, fees payable hereunder shall be calculated in arrears and
billed on a monthly basis. The Fund agrees to pay all fees within thirty days of receipt of each
invoice or other method of notification of payment due the Administrator. The Administrator
retains the right to charge interest in the amount of 1 percent per month on any amounts that
remain unpaid beyond such thirty day period.
4. Proprietary and Confidential Information
The Administrator agrees on behalf of itself and its employees to treat confidentially and
as proprietary information of the Fund all records relative to the Fund and its business, not to
use such records and information for any purpose other than performance of its responsibilities
and duties hereunder, and not to disclose such information except where the Administrator may be
exposed to civil or criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities or court process, when subject to governmental or
regulatory audit or investigation, or when so requested by the Fund. In case of any requests or
demands for inspection of the records of the Fund, the Administrator will endeavor to notify the
Manager promptly and to secure instructions from a representative of the Manager as to such
inspection, unless prohibited by law from making such notification. Records and information which
have become known to the public through no action or inaction of the Administrator or any of its
employees, agents or representatives, and information which was already in the possession of the
Administrator prior to the date hereof, shall not be subject to this paragraph.
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5. Limitation of Liability
(a) The Administrator shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this Agreement relates,
except for a loss resulting from the Administrator’s willful misfeasance, bad faith or gross
negligence in the performance of its duties or from reckless disregard by it of its obligations and
duties under this Agreement. Furthermore, the Administrator shall not be liable for (i) any action
taken or omitted to be taken in accordance with or in reliance upon written or oral instructions,
advice, data, documents or information (without investigation or verification) received by the
Administrator from or on behalf of the Manager or an officer or representative of the Fund, or from
a representative of any of the parties referenced in Section 2, (ii) its reliance on the security
valuations without investigation or verification provided by pricing service(s), the Fund’s
Manager, a Portfolio Manager or other representatives of the Fund, (iii) any liability arising from
the offer or sale of any Interest by the Fund in reliance on exemptions from registration under the
Securities Act and the applicable securities laws of each state and territory in which the Fund
intends to offer and sell Interests, or (iv) any action taken or omission by the Fund, the Manager,
investment adviser(s), Portfolio Mangers or any past or current service provider.
(b) The Administrator assumes no responsibility hereunder, and shall not be liable, for any
default,
damage, loss of data or documents, errors, delay or any other loss whatsoever caused by
events beyond
its reasonable control. The Administrator will, however, take all reasonable steps to
minimize service
interruptions for any period that such interruption continues beyond its control.
(c) The Fund agrees to indemnify and hold harmless the Administrator, its employees, agents,
officers, directors, affiliates and nominees (collectively, the “Indemnified Parties”) from
and against any
and all claims, demands, actions and suits, and from and against any and all judgments,
liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of every nature and
character which
may be asserted against or incurred by any Indemnified Party or for which any Indemnified
Party may be
held liable (a “Claim”) arising out of or in any way relating to (i) the Administrator’s
actions or
omissions, (ii) the Administrator’s reliance on, implementation of or use of (without
investigation or
verification) advice, instructions, requests, directions, information, data, records and
documents received
by the Administrator from any party referenced in Section 2 hereof or other representative of
the Fund,
(iii) any breach of any of the Fund’s obligations, representations or warranties hereunder,
or (iv) any
action taken by or omission of the Fund, its Manager, any Portfolio Managers, investment
adviser(s) or
any past or current service provider. The Indemnified Parties shall not be indemnified to the
extent a
Claim resulted from the Administrator’s or the Indemnified Parties’ willful misfeasance, bad
faith, or
gross negligence in the performance of the Administrator’s duties hereunder or from reckless
disregard
by the Administrator of its obligations and duties hereunder.
(d) The Administrator agrees to indemnify and hold harmless the Fund, its employees, officers
and directors (collectively, the “Fund Indemnified Parties”) from and against any and all
claims,
demands, actions and suits, and from and against any and all judgments, liabilities, losses,
damages,
costs, charges, reasonable counsel fees and other expenses of every nature and character
which may be
asserted against or incurred by any Fund Indemnified Party or for which any Fund Indemnified
Party
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may be held liable, arising out of or in any way relating to the Administrator’s willful
misfeasance, bad faith or gross negligence in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(e) In no event and under no circumstances shall either party, its affiliates or any of its or
their officers, directors, members, agents or employees be liable to anyone, including, without
limitation, the other party, under any theory of tort, contract, strict liability or other legal or
equitable theory for lost profits, exemplary, punitive, special, indirect or consequential damages
for any act or failure to act under any provision of this Agreement regardless of whether such
damages were foreseeable and even if advised of the possibility thereof. The indemnity and defense
provisions set forth in this Section 5 shall indefinitely survive the termination and/or assignment
of this Agreement.
6. Term
(a) This Agreement shall become effective as of the date this Agreement is executed and shall
continue in effect until terminated as provided herein. Either party may terminate this Agreement
at any time by giving the other party a written notice not less than sixty (60) days prior to the
date the termination is to be effective.
(b) The terms of this Agreement shall not be waived, altered, modified, amended or
supplemented in any manner whatsoever except by a written instrument signed by the Administrator
and the Fund.
(c) Notwithstanding anything herein to the contrary, upon the termination of this Agreement
or the liquidation of the Fund, the Administrator shall deliver the records of the Fund in the
form maintained by the Administrator (to the extent permitted by applicable license agreements) to
the Fund or person(s) designated by the Fund at the Fund’s cost and expense, and thereafter the
Fund or its designee shall be solely responsible for preserving the records for the periods
required by all applicable laws, rules and regulations. The Administrator shall be entitled to
maintain a copy of such records for the sole purpose of defending itself against any action
arising under or as a result of this Agreement or as otherwise required or permitted by law. The
Fund shall be responsible for all expenses associated with the movement (or duplication) of
records and materials and conversion thereof to a successor fund accounting and administrative
services agent, including all reasonable trailing expenses incurred by the Administrator. In
addition, in the event of termination of this Agreement, or the proposed liquidation or merger of
the Fund, and the Fund requests the Administrator to provide additional services in connection
therewith, the Administrator shall provide such services and be entitled to such compensation as
the parties may mutually agree.
(d) Notwithstanding any other provision of this Agreement, in the event of an agreement to
enter into a transaction that would result in a Change of Control, as hereinafter defined, of the
Fund’s Manager, investment adviser or sponsor, the Fund’s ability to terminate this Agreement
pursuant to this Section 6 shall be suspended from the time of such agreement until eighteen
months after the Change of Control. For purposes of this Agreement, a “Change of Control” of the
Manager, investment adviser or
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sponsor means a change in ownership or control of more than fifty percent (50%) of the common
stock or shares of beneficial interest of such Manager, investment adviser or sponsor or its
parent company.
7. Non-Exclusivity
The services of the Administrator rendered to the Fund are not deemed to be exclusive. The
Administrator may render such services and any other services to others, including other
investment vehicles, including hedge funds.
8. Governing Law; Invalidity
This Agreement shall be governed by Wisconsin law, excluding the laws on conflicts of laws.
To the extent that the applicable laws of the State of Wisconsin, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall control, and nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule or order of the
Commission thereunder. Any provision of this Agreement which may be determined by competent
authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction. In such
case, the parties shall in good faith modify or substitute such provision consistent with the
original intent of the parties.
9. Notices
Any notice required or permitted to be given by either party to the other shall be in writing
and shall be deemed to have been given when sent by registered or certified mail, postage prepaid,
return receipt requested, as follows: Notice to the Administrator shall be sent to UMB Fund
Services, Inc., 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx X, Xxxxxxxxx, XX, 00000, Attention: Xxxxx X.
Xxxxxxx, with a copy to General Counsel, and notice to the Fund shall be sent to Hatteras
Multi-Strategy Institutional TEI Fund, L.P., 0000 Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxxxx.
10. Entire Agreement
This Agreement, together with the Schedules attached hereto, constitutes the entire Agreement
of the parties hereto.
11. Counterparts
This Agreement may be executed in any number of counterparts, each of which shall be deemed
to be an original agreement but such counterparts shall together constitute but one and the same
instrument.
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The facsimile signature of any party to this Agreement shall constitute the valid and binding
execution hereof by such party.
12. Amendments
This Agreement may be amended only by the written agreement of the parties hereto.
13. Assignment; Successors and Assigns
Neither party may assign this Agreement without the prior written consent of the other party;
provided, however, that the Administrator may assign its rights hereunder to any subsidiary or
affiliate with thirty (30) days’ prior written notice of such assignment. This Agreement shall be
binding upon and shall insure to the benefit of the parties hereto and their respective successors
and permitted assigns.
14. Legal Advice
Notwithstanding anything in this Agreement to the contrary, the services provided by the
Administrator hereunder do not constitute, nor shall they be construed as constituting, legal
advice or the provision of legal services for or on behalf of the Fund or any other person.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly
authorized officer as of the day and year first above written.
HATTERAS MULTI-STRATEGY INSTITUTIONAL TEI FUND, L.P.
(the “Fund”)
(the “Fund”)
By: Hatteras Investment Management LLC, General Partner
By:
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/s/ Xxxxx X. Xxxxxxx
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UMB FUND SERVICES, INC.
(“Administrator”)
(“Administrator”)
By:
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/s/ Xxxxx X. Xxxxxxx
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