EXHIBIT B
OFFER TO PURCHASE
HATTERAS MULTI-STRATEGY TEI FUND, L.P.
8540 Colonnade Center Drive
Suite 401
Raleigh, North Carolina 27615
OFFER TO PURCHASE UNITS
DATED MARCH 30, 2009
LETTERS OF TRANSMITTAL MUST BE
RECEIVED BY UMB FUND SERVICES, INC.
BY APRIL 24, 2009.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN STANDARD TIME, ON APRIL 24, 2009,
UNLESS THE OFFER IS EXTENDED
To the Partners of
Hatteras Multi-Strategy TEI Fund, L.P.:
Hatteras Multi-Strategy TEI Fund, L.P., a closed-end, non-diversified,
management investment company organized as a Delaware limited partnership (the
"Fund"), is offering to purchase for cash on the terms and conditions set out in
this offer to purchase (this "Offer to Purchase") and the related Letter of
Transmittal (which, together with this Offer to Purchase, constitutes the
"Offer") an amount of Units, including fractions thereof, with an aggregate net
asset value up to approximately 5.00% of the net assets of the Fund. The Fund
seeks to achieve its investment objective by investing substantially all of its
assets in the Hatteras Multi-Strategy Offshore Fund, LDC, a Cayman Islands
limited duration company with the same investment objective as the Fund (the
"Offshore Fund"). The Offshore Fund will in turn invest substantially all of its
assets in Hatteras Master Fund, L.P., a Delaware limited partnership (the
"Master Fund"). The Offshore Fund serves solely as an intermediate entity
through which the Fund will invest in the Master Fund. The Offshore Fund makes
no independent investment decisions and has no investment or other discretion
over any investable assets. The investment manager of the Master Fund is
Hatteras Investment Partners, LLC (the "Investment Manager"). The Offer is being
made pursuant to tenders by partners of the Fund ("Partners") at a price equal
to the net asset value of the tendered Units as of June 30, 2009 (or at a later
date determined by the Fund if the Offer is extended) (in each case, the
"Repurchase Date"), less any Repurchase Fee (as defined below) due to the Fund
in connection with the repurchase. As used in the Offer, the term "Unit" or
"Units" refers to the limited partnership units in the Fund representing
beneficial Units in the Fund, and includes all or any portion of a Partner's
Units, including fractions thereof, as the context requires. Partners that
desire to tender Units for purchase must do so by 12:00 midnight, Eastern
Standard Time on April 24, 2009 (the "Initial Notice Due Date"), subject to any
extension of the Offer made in the absolute discretion of the Fund's Board of
Directors. The later of the Initial Notice Due Date or the latest time and date
that the Fund designates as the deadline for Partners to tender Units for
purchase is called the "Notice Due Date" and is the date upon which the Offer
expires. If the Fund elects to extend the tender period, the net asset value of
the Units tendered for purchase will be determined at the close of business on a
day determined by the Fund and notified to the Partners. The Offer is being made
to all Partners and is not conditioned on any minimum amount of Units being
tendered, but is subject to certain conditions described below. Units are not
traded on any established trading market and are subject to strict restrictions
on transferability pursuant to
the Fund's Amended and Restated Agreement of Limited Partnership dated as of
November 2, 2008 (as it may be amended, modified or otherwise supplemented from
time to time, the "Partnership Agreement").
Partners should realize that the value of the Units tendered in the Offer
likely will change between February 28, 2009 (the last time net asset value was
calculated) and the Repurchase Date when the value of the Units tendered to the
Fund for purchase will be determined. Partners tendering their Units should also
note that they will remain Partners in the Fund, with respect to the Units
tendered and accepted for purchase by the Fund, through the Repurchase Date,
when the net asset value of their Units is calculated. Any tendering Partners
that wish to obtain the estimated net asset value of their Units should contact
the Tender Offer Administrator at UMB Fund Services, Inc., the Fund's
Administrator, at (800) 504-9070 or at Hatteras Multi-Strategy TEI Fund, L.P.,
c/o UMB Fund Services, Inc. at P.O. Box 1623, Milwaukee, Wisconsin 53201-1623,
Attention: Tender Offer Administrator, Monday through Friday, except holidays,
during normal business hours of 9:00 a.m. to 5:00 p.m. (Eastern Standard Time).
Partners desiring to tender all or some of their Units in accordance with
the terms of the Offer should complete and sign the enclosed Letter of
Transmittal and send or deliver it to UMB Fund Services, Inc. in the manner set
out below.
IMPORTANT
NONE OF THE FUND, HATTERAS INVESTMENT MANAGEMENT LLC (THE "GENERAL
PARTNER"), THE INVESTMENT MANAGER OR THE FUND'S BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY PARTNER WHETHER TO TENDER OR REFRAIN FROM TENDERING UNITS.
PARTNERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER UNITS, AND, IF THEY
CHOOSE TO DO SO, THE AMOUNT OF THEIR UNITS TO TENDER.
BECAUSE EACH PARTNER'S INVESTMENT DECISION IS A PERSONAL ONE, BASED ON
FINANCIAL CIRCUMSTANCES, NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY
RECOMMENDATION ON BEHALF OF THE FUND AS TO WHETHER PARTNERS SHOULD TENDER UNITS
PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED ON AS
HAVING BEEN AUTHORIZED BY THE FUND, THE FUND'S GENERAL PARTNER, THE INVESTMENT
MANAGER, OR THE FUND'S BOARD OF DIRECTORS.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED ON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR ON
THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Questions and requests for assistance and requests for additional copies of
the Offer may be directed to:
Hatteras Multi-Strategy TEI Fund, L.P.
c/o UMB Fund Services, Inc.
P.O. Box 1623
Milwaukee, WI 53201-1623
Attention: Tender Offer Administrator
Phone: (800) 504-9070
Fax: (816) 860-3138
(ii)
TABLE OF CONTENTS
1. Summary Term Sheet...................................................... 1
2. Background and Purpose of the Offer..................................... 2
3. Offer to Purchase and Price............................................. 3
4. Amount of Tender........................................................ 4
5. Procedure for Tenders................................................... 4
6. Withdrawal Rights....................................................... 5
7. Purchases and Payment................................................... 5
8. Certain Conditions of the Offer......................................... 6
9. Certain Information About the Fund...................................... 6
10. Certain Federal Income Tax Consequences................................. 7
11. Miscellaneous........................................................... 8
(iii)
1. SUMMARY TERM SHEET
This Summary Term Sheet highlights certain information concerning the
Offer. To understand the Offer fully and for a more complete discussion of the
terms and conditions of the Offer, please read carefully this entire Offer to
Purchase and the related Letter of Transmittal. Section references are to this
Offer to Purchase.
- - The Fund (referred to as "we" or the "Fund" in this Summary Term Sheet) is
offering to purchase Units in an amount up to approximately 5.00% of the
net assets of the Fund (or $14,000,000 as of February 28, 2009). We will
purchase your Units at their net asset value (that is, the value of the
Fund's total assets minus its total liabilities, including accrued fees and
expenses, multiplied by the proportionate number of Units in the Fund you
desire to tender, after giving effect to all allocations, including any
incentive allocation) calculated as of the Repurchase Date, less any
Repurchase Fee (defined below) due to the Fund in connection with the
repurchase. The net asset value of Units will be calculated for this
purpose as of June 30, 2009 or, if the Offer is extended, as of any later
Repurchase Date. The Offer will remain open until 12:00 midnight, Eastern
Standard Time, on April 24, 2009 (or if the Offer is extended, until any
later Notice Due Date), at which time the Offer is scheduled to expire.
- - The Fund reserves the right to adjust the Repurchase Date to correspond
with any extension of the Offer. The Fund will review the net asset value
calculation of the Units during the Fund's audit for the fiscal year ending
on March 31, 2010, which the Fund expects will be completed within 60 days
of the fiscal year-end, and that net asset value will be used to determine
the final amount paid for tendered Units. Because the Fund's current fiscal
year will end on March 31, 2010, the Fund expects that the audit will be
completed by the end of May 2010.
- - A Partner may tender all or some of its Units. If a Partner tenders some of
its Units in an amount that would cause the Partner's remaining Units to
have a net asset value of less than $100,000, the General Partner, reserves
the right to reduce the amount to be repurchased from the Partner so that
the required minimum account balance is maintained or to repurchase the
remainder of the Partner's Units in the Fund. See Section 4.
- - A Partner who tenders Units prior to holding such Units for 12 consecutive
months may be subject to a "Repurchase Fee" payable to the Fund equal to
5.00% of the amount requested to be purchased, to be netted against
withdrawal proceeds.
- - If you tender your Units and we purchase those Units, we will issue you a
non-interest bearing, non-transferable promissory note (the "Note")
entitling you to an amount equal to the net asset value of the Units
tendered (valued in accordance with the Partnership Agreement) determined
as of June 30, 2009 (or if the Offer is extended, the net asset value
determined on the Repurchase Date), less any Repurchase Fee due to the Fund
in connection with the repurchase.
- - The Note will entitle you to an initial payment in cash (valued according
to the Partnership Agreement) equal to at least 95% (100% in the case of a
Partner tendering less than all its Units) of the unaudited net asset value
of the Units, less any Repurchase Fee due to the Fund in connection with
the repurchase (the "Initial Payment"). The Fund may take up to 90 days
after the Repurchase Date to make the Initial Payment.
- - In the case of a Partner tendering all of its Units, the Note will also
entitle the Partner to receive a contingent payment (the "Post-Audit
Payment") equal to the excess, if any, of (1) the net asset value of the
Units tendered and purchased as of the Repurchase Date (as it may be
adjusted based upon the
next annual audit of the Fund's financial statements), less any Repurchase
Fee due to the Fund in connection with the repurchase, over (2) the Initial
Payment. The Post-Audit Payment will be payable promptly after the
completion of the Fund's next annual audit. The Note will be held by UMB
Fund Services, Inc. (referred to herein as "UMBFS" or the "Administrator")
on your behalf. Upon a written request by you to UMBFS, UMBFS will mail the
Note to you at the address for you as maintained in the books and records
of the Fund. See Section 7.
- - If we accept the tender of your Units, we will pay you the proceeds from
one or more of the following sources: cash on hand, proceeds from the sale
of a portion of the Fund's Interest in the Master Fund or borrowings. The
purchase amount will be paid entirely in cash. See Section 7.
- - If you desire to tender Units for purchase, you must do so by 12:00
midnight, Eastern Standard Time, on April 24, 2009 (or if the Offer is
extended, by any later Notice Due Date), at which time the Offer is
scheduled to expire. Until that time, you have the right to change your
mind and withdraw any tenders of your Units. Units withdrawn may be
re-tendered, however, provided that such tenders are made before the Notice
Due Date by following the tender procedures described herein. If the Fund
has not yet accepted your tender of Units on or prior to May 22, 2009
(i.e., the date 40 business days from the commencement of the Offer), you
will also have the right to withdraw the tender of your Units after such
date. See Section 6.
- - If you would like us to purchase your Units, you should complete, sign and
either (i) mail (via certified mail, return receipt requested) or otherwise
deliver the Letter of Transmittal, enclosed with the Offer, to Hatteras
Multi-Strategy TEI Fund, L.P., c/o UMB Fund Services, Inc. at P.O. Box
1623, Milwaukee, Wisconsin 53201-1623, Attention: Tender Offer
Administrator; or (ii) fax it to UMBFS at (816) 860-3138, Attention: Tender
Offer Administrator, so that it is received before 12:00 midnight, Eastern
Standard Time, on April 24, 2009. IF YOU CHOOSE TO FAX THE LETTER OF
TRANSMITTAL, YOU MUST MAIL THE ORIGINAL LETTER OF TRANSMITTAL TO UMBFS
PROMPTLY AFTER YOU FAX IT (ALTHOUGH THE ORIGINAL, IF FAXED, DOES NOT HAVE
TO BE RECEIVED BY MAIL BEFORE 12:00 MIDNIGHT, EASTERN STANDARD TIME, ON
APRIL 24, 2009). See Section 5. The value of your Units may change between
February 28, 2009 (the last time net asset value was calculated) and the
Repurchase Date when the value of the Units being purchased will be
determined. See Section 3.
- - As of February 28, 2009, the net asset value of the Fund was $277,598,022.
If you would like to obtain the estimated net asset value of your Units,
which we calculate from time to time, based upon the information we receive
from the managers of the investment funds in which we invest, you may
contact the Tender Offer Administrator at UMBFS at (800) 504-9070 or at the
address listed on the cover page of the Letter of Transmittal, Monday
through Friday, except holidays, during normal business hours of 9:00 a.m.
to 5:00 p.m. (Eastern Standard Time). See Section 3.
2. BACKGROUND AND PURPOSE OF THE OFFER.
The purpose of the Offer is to provide liquidity to the Partners that hold
Units in the Fund, as contemplated by and in accordance with the procedures set
out in the Fund's registration statement on Form N-2 (as it may be amended,
modified or otherwise supplemented from time to time, the "Registration
Statement"), and the Partnership Agreement. The Registration Statement and the
Partnership Agreement provide that the board of directors of the Fund (the
"Board of Directors") has the discretion to determine whether the Fund will
purchase Units from time to time from Partners pursuant to written tenders, and
that one of the factors the Board of Directors will consider in making such
determination is the recommendations of the General Partner and the Investment
Manager. The Registration Statement also states that the General Partner of the
Fund and the Investment Manager expect that they will recommend to the Board of
Directors
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that the Fund offer to repurchase Units from Partners quarterly each year. The
Fund commenced operations on April 1, 2005 and has made thirteen previous offers
to purchase limited partnership interests from Partners since inception.
Because there is no secondary trading market for Units and transfers of
Units are prohibited without prior approval of the General Partner, the Board of
Directors has determined to cause the Fund to make the Offer, after
consideration of various matters, including but not limited to those set out in
the Registration Statement and the Partnership Agreement and the recommendations
of the General Partner and the Investment Manager. While the General Partner and
the Investment Manager intend to recommend to the Board of Directors that the
Fund offer to repurchase Units, on a quarterly basis each year, the Board of
Directors is under no obligation to follow such recommendations.
The purchase of Units pursuant to the Offer will have the effect of
increasing the proportionate interest in the Fund of Partners that do not tender
Units. Partners that retain their Units may be subject to increased risks due to
the reduction in the Fund's aggregate assets resulting from payment for the
Units tendered. These risks include the potential for greater volatility due to
decreased diversification. The Fund believes; however, that this result is
unlikely given the nature of the Fund's investment program. A reduction in the
aggregate assets of the Fund may result in Partners that do not tender Units
bearing higher costs to the extent that certain expenses borne by the Fund are
relatively fixed and may not decrease if assets decline. These effects may be
reduced or eliminated to the extent that additional subscriptions for Units are
made by new and existing Partners from time to time. Payment for Units purchased
pursuant to the Offer may also require the Fund to tender a portion of its
Interest in the Master Fund via the Offshore Fund. Such a tender by the Fund
could result in the Investment Manager being required to raise cash to
accommodate the tender by liquidating portfolio holdings in the Master Fund
earlier than the Investment Manager would otherwise have caused these holdings
to be liquidated, potentially resulting in losses or increased investment
related expenses for the Master Fund. In addition to its own operating expenses,
the Fund bears a pro rata portion of the operating expenses of the Offshore Fund
and the Master Fund.
Units that are tendered to the Fund in connection with the Offer will be
retired, although the Fund may issue Units from time to time in transactions not
involving any public offering, conducted pursuant to Rule 506 of Regulation D
under the Securities Act of 1933, as amended, in accordance with the
Registration Statement. The Fund currently expects that it will accept
subscriptions for Units as of the first day of each month, but is under no
obligation to do so, and may do so more frequently as determined by the General
Partner.
The tender of Units by a Partner will not affect the record ownership of
such Partner for purposes of voting or entitlement to any distributions payable
by the Fund unless and until such Units are purchased. You should also realize
that although the Offer is scheduled to expire on April 24, 2009 (unless it is
extended), you remain a Partner of the Fund with respect to the Units you
tendered that is accepted for purchase by the Fund through the Repurchase Date.
3. OFFER TO PURCHASE AND PRICE.
The Fund will, on the terms and subject to the conditions of the Offer,
purchase an amount of Units up to approximately 5.00% of the net assets of the
Fund that are tendered by Partners by 12:00 midnight, Eastern Standard Time, on
April 24, 2009 (or if the Offer is extended, by any later Notice Due Date), and
not withdrawn (as provided in Section 6 below) prior to the Notice Due Date. The
Fund reserves the right to extend, amend or cancel the Offer as described in
Sections 4 and 8 below. The value of the Units tendered for purchase will be
their net asset value as of June 30, 2009 or, if the Offer is extended, as of
any later Repurchase Date, payable as set out in Section 7. The determination of
the net asset value of Units as of the
3
Repurchase Date is subject to adjustment based upon the results of the next
annual audit of the Fund's financial statements.
4. AMOUNT OF TENDER.
Subject to the limitations set out below, a Partner may tender all or some
of its Units. If a Partner tenders some of its Units in an amount that would
cause the remaining Units to have a net asset value of less than $100,000, the
General Partner reserves the right to reduce the amount to be repurchased from
the Partner so that the required minimum account balance is maintained or to
repurchase the remainder of the Partner's Units in the Fund. The Offer is being
made to all Partners of the Fund and is not conditioned on any minimum amount of
Units being tendered.
If the amount of Units that are properly tendered pursuant to the Offer and
not withdrawn pursuant to Section 6 below is less than or equal to approximately
5.00% of the net assets of the Fund (or such greater amount as the Fund may
elect to purchase pursuant to the Offer), the Fund will, on the terms and
subject to the conditions of the Offer, purchase all of the Units so tendered
unless the Fund elects to cancel or amend the Offer, or postpone acceptance of
tenders made pursuant to the Offer, as provided in Section 8 below. If Units in
excess of approximately 5.00% of the net assets of the Fund are duly tendered to
the Fund prior to the Notice Due Date and not withdrawn prior to the Notice Due
Date pursuant to Section 6 below, the Fund will in its sole discretion either
(a) accept the additional Units permitted to be accepted pursuant to Rule
13e-4(f)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); (b) extend the Offer, if necessary, and increase the amount of Units that
the Fund is offering to purchase to an amount it believes sufficient to
accommodate the excess Units tendered as well as any Units tendered during the
extended Offer; or (c) accept Units tendered prior to the Notice Due Date and
not withdrawn prior to the Notice Due Date for payment on a pro rata basis based
on the aggregate net asset value of tendered Units. The Offer may be extended,
amended or canceled in other circumstances described in Section 8 below.
5. PROCEDURE FOR TENDERS.
Partners wishing to tender Units pursuant to this Offer to Purchase should
send or deliver by April 24, 2009 (or if the Offer is extended, by any later
Notice Due Date) a completed and executed Letter of Transmittal to UMBFS, to the
attention of the Tender Offer Administrator, at the address set out on the first
page of the Letter of Transmittal, or fax a completed and executed Letter of
Transmittal to UMBFS, also to the attention of the Tender Offer Administrator,
at the fax number set out on the first page of the Letter of Transmittal. The
completed and executed Letter of Transmittal must be received by UMBFS, either
by mail or by fax, no later than 12:00 midnight, Eastern Standard Time, on April
24, 2009 (or if the Offer is extended, no later than any later Notice Due Date).
The Fund recommends that all documents be submitted to UMBFS via certified
mail, return receipt requested, or by facsimile transmission. A Partner choosing
to fax a Letter of Transmittal to UMBFS must also send or deliver the original
completed and executed Letter of Transmittal to UMBFS promptly thereafter.
Partners wishing to confirm receipt of a Letter of Transmittal may contact UMBFS
at the address or telephone number set out on the first page of the Letter of
Transmittal. The method of delivery of any documents is at the election and
complete risk of the Partner tendering Units, including, but not limited to, the
failure of UMBFS to receive any Letter of Transmittal or other document
submitted by facsimile transmission. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Fund, in its sole discretion, and such determination will be
final and binding. The Fund reserves the absolute right to reject any or all
tenders determined by it not to be in appropriate form or the acceptance of or
payment for which would, in the opinion of counsel for the Fund, be unlawful.
The Fund also reserves the absolute right to waive any of the conditions of the
Offer or any defect in any tender with respect to any particular Units or any
particular Partner, and the Fund's interpretation of the terms and
4
conditions of the Offer will be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Fund will determine. Tenders will not be deemed to have been made until the
defects or irregularities have been cured or waived. None of the Fund, the
General Partner, the Investment Manager or the Board of Directors will be
obligated to give notice of any defects or irregularities in tenders, nor will
any of them incur any liability for failure to give such notice.
6. WITHDRAWAL RIGHTS.
Until the Notice Due Date, Partners have the right to change their minds
and withdraw any tenders of their Units. Units withdrawn may be re-tendered,
however, provided that such tenders are made before the Notice Date by following
the tender procedures described in Section 5. Pursuant to Rule 13e-4(f)(2)(ii)
of the Exchange Act, if the Fund has not yet accepted a Partner's tender of
Units on or prior to May 22, 2009 (i.e., the date 40 business days from the
commencement of the Offer), a Partner will also have the right to withdraw its
tender of Units after such date. To be effective, any notice of withdrawal must
be timely received by UMBFS at the address or fax number set out on the first
page of the Letter of Transmittal. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Fund, in its sole discretion, and such determination will be final and binding.
A tender of Units properly withdrawn will not thereafter be deemed to be
tendered for purposes of the Offer.
7. PURCHASES AND PAYMENT.
For purposes of the Offer, the Fund will be deemed to have accepted Units
that are tendered if and when it gives written notice to the tendering Partner
of its election to purchase such Units. As stated in Section 3 above, the amount
offered for the Units tendered by Partners will be the net asset value thereof
as of June 30, 2009, or if the Offer is extended, as of any later Repurchase
Date. The net asset value will be determined after all allocations to capital
accounts of the Partners required to be made by the Partnership Agreement have
been made, including any Repurchase Fee due to the Fund in connection with the
repurchase and any incentive allocation. The Fund will not pay interest on the
purchase amount.
For Partners that tender Units that are accepted for purchase, payment of
the purchase amount will consist of the Note, a non-interest-bearing
non-transferable promissory note. The Note will entitle the Partner to receive
the Initial Payment in an amount equal to at least 95% (100% in the case of a
Partner tendering less than all its Units) of the unaudited net asset value of
the Units tendered and accepted for purchase by the Fund, determined as of the
Repurchase Date, less any Repurchase Fee due to the Fund in connection with the
repurchase. The Fund may take up to 90 days after the Repurchase Date to make
the Initial Payment. In the case of a Partner tendering all of its Units, the
Note will also entitle the Partner to receive a contingent payment (the
"Post-Audit Payment") equal to the excess, if any, of (1) the net asset value of
the Units tendered and purchased as of the Repurchase Date (as it may be
adjusted based upon the next annual audit of the Fund's financial statements),
less any Repurchase Fee due to the Fund in connection with the repurchase, over
(2) the Initial Payment. The Post-Audit Payment will be payable promptly after
the completion of the Fund's next annual audit. It is anticipated that the
annual audit of the Fund's financial statements will be completed no later than
60 days after the fiscal year-end of the Fund.
The Note pursuant to which a tendering Partner will receive the Initial
Payment and, if applicable, Post-Audit Payment (together, the "Cash Payment")
will be held by UMBFS on behalf of the tendering Partner. Upon a written request
by a Partner to UMBFS, UMBFS will mail the Note to the Partner at the address of
the Partner as maintained in the books and records of the Fund. Any Cash Payment
due pursuant to the Note will be made by wire transfer directly to the tendering
Partner to an account designated by the Partner in the Letter of Transmittal.
5
The Fund will make payment for Units it purchases pursuant to the Offer
from one or more of the following sources: cash on hand, proceeds from the sale
of a portion of its interest in the Master Fund via the Offshore Fund, or
borrowings. Upon its acceptance of tendered Units for repurchase, the Fund will
maintain daily, as an entry on its books, a distinct account consisting of (1)
cash or (2) a portion of its Interest in the Master Fund, in an amount equal to
the aggregate estimated unpaid dollar amount of any Note, as described above.
None of the Fund, the Board of Directors, the General Partner, or the Investment
Manager have determined at this time to borrow funds to purchase Units tendered
in connection with the Offer. However, depending on the dollar amount of Units
tendered and prevailing general economic and market conditions, the Fund, in its
sole discretion, may decide to fund any portion of the amount offered for the
purchase of Units, subject to compliance with applicable law, through
borrowings. The Fund expects that the repayment of any amounts so borrowed will
be financed from additional funds contributed to the Fund by existing and/or new
Partners or from a tender of a portion of its Interest in the Master Fund via
the Offshore Fund.
The purchase amount will be paid entirely in cash.
8. CERTAIN CONDITIONS OF THE OFFER.
In the absolute discretion of the Board of Directors, the Fund reserves the
right, at any time and from time to time, to extend the period of time during
which the Offer is pending by notifying Partners of such extension. In the event
that the Fund elects to extend the tender period, the net asset value of the
Units tendered for purchase will be determined as of the later Repurchase Date.
During any such extension, all Units previously tendered and not withdrawn will
remain subject to the Offer. The Fund also reserves the right at any time and
from time to time up to and including acceptance of tenders pursuant to the
Offer: (a) to cancel the Offer in the circumstances set out in the following
paragraph and in the event of such cancellation not to purchase or pay for any
Units tendered pursuant to the Offer; (b) to amend the Offer; and (c) to
postpone the acceptance of Units. If the Fund determines to amend the Offer or
to postpone the acceptance of Units tendered, it will, to the extent necessary,
extend the period of time during which the Offer is open as provided above and
will promptly notify Partners.
The Fund may cancel the Offer, amend the Offer or postpone the acceptance
of tenders made pursuant to the Offer if: (a) the Fund would not be able to
liquidate portfolio securities in a manner that is orderly and consistent with
the Fund's investment objectives and policies in order to purchase Units
tendered pursuant to the Offer; (b) there is, in the judgment of the Board of
Directors, any (i) legal action or proceeding instituted or threatened
challenging the Offer or otherwise materially adversely affecting the Fund, (ii)
declaration of a banking moratorium by federal or state authorities or any
suspension of payment by banks in the United States or New York State that is
material to the Fund, (iii) limitation imposed by federal or state authorities
on the extension of credit by lending institutions, (iv) suspension of trading
on any organized exchange or over-the-counter market where the Fund has a
material investment, (v) commencement of war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States that is material to the Fund, (vi) material decrease in the net asset
value of the Fund from the net asset value of the Fund as of the commencement of
the Offer, or (vii) other event or condition that would have a material adverse
effect on the Fund or its Partners if Units tendered pursuant to the Offer were
purchased; (c) the Board of Directors determines that it is not in the best
interest of the Fund to purchase Units pursuant to the Offer; or (d) for any
other periods that the Securities and Exchange Commission (the "SEC") permits by
order for the protection of Partners.
9. CERTAIN INFORMATION ABOUT THE FUND.
The Fund is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a closed-end, non-diversified, management investment
company. It is organized as a Delaware limited partnership. Subscriptions for
limited partnership interests in the Fund were first accepted for investment as
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of April 1, 2005. The Fund seeks to achieve its investment objective by
investing substantially all of its assets indirectly in the Master Fund through
the Offshore Fund. The principal office of the Fund is located at 8540 Colonnade
Center Drive, Suite 401, Raleigh, North Carolina 27615 and the telephone number
is (919) 846-2324. Units are not traded on any established trading market and
are subject to strict restrictions on transferability pursuant to the
Partnership Agreement.
None of the Fund, the General Partner, the Investment Manager or the Board
of Directors has any plans or proposals that relate to or would result in: (1)
an extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Fund; (2) any purchase, sale or transfer of a material amount of
assets of the Fund; (3) any material change in the present distribution policy
or indebtedness or capitalization of the Fund; (4) any change in the present
Board of Directors or in the management of the Fund including, but not limited
to, any plans or proposals to change the number or the term of members of the
Board of Directors, or to fill any existing vacancy on the Board of Directors or
to change any material term of the employment contract of any executive officer;
(5) any other material change in the Fund's corporate structure or business,
including any plans or proposals to make any changes in its investment policies,
for which a vote would be required by Section 13 of the 1940 Act; (6) the
acquisition by any person of additional Units (other than the Fund's intention
to accept subscriptions for Units on the first day of each month and from time
to time in the discretion of the General Partner), or the disposition of Units
(other than through periodic purchase offers, including the Offer); or (7) any
changes in the Partnership Agreement or other governing instruments or other
actions that could impede the acquisition of control of the Fund.
Other than the acceptance of subscriptions as of February 1, 2009 and March
1, 2009, there have been no transactions involving Units that were effected
during the past 60 days by the Fund, the General Partner, the Investment
Manager, any member of the Board of Directors or any person controlling the
Fund, the General Partner or the Investment Manager.
10. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion is a general summary of the federal income tax
consequences of the purchase of Units by the Fund for cash pursuant to the
Offer. Partners should consult their own tax advisors for a complete description
of the tax consequences to them of a purchase of their Units by the Fund
pursuant to the Offer.
A Partner who sells all or part of the Partner's Units to the Fund will
generally recognize income or gain only to the extent the amount of cash
received by the Partner exceeds the Partner's adjusted tax basis in the
Partner's investment at that time. The Partner's adjusted tax basis in the
Partner's Units will be reduced by the amount of any cash received by the
Partner from the Fund, and any excess of that cash over that basis will
generally constitute capital gain for the Partner. It is possible, however, that
Partners might recognize some ordinary income by reason of the sale, under
certain technical rules that apply to the extent a partner disposes of the
partner's share of "unrealized receivables" of a partnership (as defined in
Internal Revenue Code section 751). No loss will be recognized by a Partner on
such a sale to the Fund, except that a Partner who sells the Partner's entire
investment to the Fund may recognize a capital loss at the time of the
determination of the Post-Audit Payment to the extent the aggregate cash
received, and to be received, by the Partner is less than the Partner's adjusted
tax basis in the Units.
11. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from, Partners
in any jurisdiction in which the Offer or its acceptance would not comply with
the securities or other laws of such jurisdiction. The Fund is not aware of any
jurisdiction in which the Offer or tenders pursuant thereto would not be in
compliance with the laws of such jurisdiction. However, the Fund reserves the
right to exclude Partners from
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the Offer in any jurisdiction in which it is asserted that the Offer cannot
lawfully be made. The Fund believes such exclusion is permissible under
applicable laws and regulations, provided the Fund makes a good faith effort to
comply with any state law deemed applicable to the Offer.
The Fund has filed an Issuer Tender Offer Statement on Schedule TO with the
SEC, which includes certain information relating to the Offer. A free copy of
such statement may be obtained by contacting UMBFS at the address and telephone
number set out on the first page of the Letter of Transmittal or from the SEC's
internet web site, http://www.sec.gov. A copy may be inspected and copied at,
and, for a fee, may be obtained by mail from, the public reference office of the
SEC at 100 F Street, N.E., Washington, DC 20549.
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