Exhibit (k)(5)
D&O/E&O INSURANCE AGREEMENT
AGREEMENT made as of January __, 2005 (except as otherwise indicated
below) by and among the investment companies listed on Schedule A hereto
(collectively, the "Funds"), together with certain other insured parties listed
on Schedule B hereto (the "Manager") which, together with the Funds, are
hereinafter collectively referred to as the "Assureds".
1. Each of the Funds and their respective Directors and General Partners
(collectively the "Directors") and Officers, and each of the Managers are
jointly insured under a directors & officers/errors & omissions liability
insurance policy issued by Lloyd's of London (the "Policy") which provided an
$5,000,000 limit of liability (subject to exclusions and deductibles) during the
period commencing January __, 2005; (the "Policy Year"); and
2. The premium for the Policy, including tax, shall be allocated among
Hatteras Multi-Strategy Fund I, L.P., Hatteras Multi-Strategy Fund II, L.P.,
Hatteras Diversified Strategies Fund LP and Hatteras Diversified Strategies
Offshore Fund Ltd. pro rata in accordance with each Fund's investment in
Hatteras Master Fund, L.P. (the "Master Fund"). All additional costs of the
Policy, including the requirements to post a reserve premium, shall be allocated
among the Funds in the same ratio as the allocation of the Policy premium under
this Agreement. Notwithstanding anything to the contrary, the premium allocation
to each such Fund shall be determined, and revised as appropriate, in compliance
with part (d)(7)(ii) of Rule 17d-1 under the Investment Company Act of 1940, as
amended.
3. In the event losses covered by the Policy ("Covered Losses") are
suffered by one or more Funds that exceeds the aggregate limit of liability of
the Policy (whether or not Covered Losses are suffered by one or more of the
Managers), the limit on the amount retained by a Fund from its recovery shall be
such Fund's pro rata allocation of coverage, determined in accordance with each
Fund's investment in the Master Fund.
4. In the event Covered Losses are suffered by one or more of the Funds
and by one or more of the Managers which exceed the aggregate limit of liability
for the Policy Year, any diminution of recovery caused by exceeding the
Policies' aggregate limits of liability shall be borne by the Managers before
being borne pro rata by the Funds.
5. The amount an Assured may recover shall be adjusted if necessary to
reflect the fact that there is no priority in time of any claim or recovery.
Each Assured agrees to refund all or any portion of any recovery in excess of
its Allocation of Coverage if necessary to allow another Assured to recover its
Allocation of Coverage.
6. The allocation of recovery among the Managers shall be determined by
Hatteras Investment Partners LLC ("Hatteras").
7. An investment company (a "New Fund") having an investment adviser or
subadvisor that is, or is affiliated with, Hatteras and having the same Board of
Directors as the Funds, may become a named insured under the Policy. Such New
Fund shall be deemed to be added to Schedule A and the Directors and Officers of
the New Fund may become named insureds; provided that the New Fund causes this
Agreement to be signed on its behalf as of the
date it agrees to the terms and conditions of this Agreement. A party that is an
affiliate, or an affiliate of an affiliate, of Coast (a "New Manager") may
become a named insured under the Policy. Such New Manager shall be deemed to be
added to Schedule B; provided that the New Manager causes this Agreement to be
signed on its behalf as of the date it agrees to the terms and conditions of
this Agreement.
8. Each of the Assureds understands and agrees that the obligations of the
Assureds under this Agreement are not binding upon any beneficial owner or
Director of any Assured personally, but bind only the Assureds and their
respective property. Each of the Assureds represents that it has notice of the
provisions of the Agreements of Limited Partnership of the Assureds organized as
Delaware limited partnerships and the Limited Liability Company Agreement of the
Assured organized as a Delaware limited liability company disclaiming
shareholder, director, limited partner and general partner liability for acts or
obligations of such Assureds.
* * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HATTERAS INVESTMENT MANAGEMENT LLC
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
HATTERAS DIVERSIFIED STRATEGIES FUND LP
By: Hatteras Investment Management LLC,
its General Partner
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
HATTERAS DIVERSIFIED STRATEGIES OFFSHORE FUND LTD.
By: Hatteras Investment Management LLC,
its General Partner
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
HATTERAS MULTI-STRATEGY FUND I, L.P.
By: Hatteras Investment Management LLC,
its General Partner
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
HATTERAS MULTI-STRATEGY FUND II, L.P.
By: Hatteras Investment Management LLC,
its General Partner
By:_____________________________________
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
SCHEDULE A - FUNDS
Hatteras Master Fund, L.P.
Hatteras Multi-Strategy Fund I, L.P.
Hatteras Multi-Strategy Fund II, L.P.
Hatteras Diversified Strategies Fund LP
Hatteras Diversified Strategies Offshore Fund Ltd.
By:_____________________________________
SCHEDULE B - THE MANAGERS
Hatteras Investment Partners LLC
