EXHIBIT B
OFFER TO PURCHASE
HATTERAS MASTER FUND, L.P.
8540 Colonnade Center Drive
Suite 401
Raleigh, North Carolina 27615
OFFER TO PURCHASE INTERESTS
DATED MARCH 30, 2009
LETTERS OF TRANSMITTAL MUST BE
RECEIVED BY UMB FUND SERVICES, INC.
BY APRIL 27, 2009.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN STANDARD TIME, ON APRIL 27, 2009,
UNLESS THE OFFER IS EXTENDED
To the Partners of
Hatteras Master Fund, L.P.:
Hatteras Master 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 Interests or portions of Interests up to $62,000,000 of the net assets of the
Fund. 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 Interests
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"). As used in the Offer, the term
"Interest" or "Interests" refers to the limited partnership interests in the
Fund representing beneficial interests in the Fund, and includes all or any
portion of a Partner's Interest as the context requires. Partners that desire to
tender an Interest for purchase must do so by 12:00 midnight, Eastern Standard
Time on April 27, 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 an Interest 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
Interests 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 Interests being
tendered, but is subject to certain conditions described below. Interests 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 July 1, 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 Interests 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 Interests
tendered to the Fund for purchase will be determined. Partners tendering their
Interest should also note that they will remain Partners in the Fund, with
respect to the Interest tendered and accepted for purchase by the Fund, through
the Repurchase Date, when the net asset value of their Interest is calculated.
Any tendering Partners that wish to obtain the estimated net asset value of
their Interests should contact the Tender Offer Administrator at UMB Fund
Services, Inc., the Fund's Administrator, at (800) 504-9070 or at Hatteras
Master 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 any portion of their Interest 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"), HATTERAS INVESTMENT PARTNERS LLC (THE "INVESTMENT MANAGER") OR THE
FUND'S BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY PARTNER WHETHER TO
TENDER OR REFRAIN FROM TENDERING INTERESTS. PARTNERS MUST MAKE THEIR OWN
DECISIONS WHETHER TO TENDER INTERESTS, AND, IF THEY CHOOSE TO DO SO, THE PORTION
OF THEIR INTERESTS 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
INTERESTS 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 ITS 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 Master 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........................................................ 3
5. Procedure for Tenders................................................... 4
6. Withdrawal Rights....................................................... 4
7. Purchases and Payment................................................... 5
8. Certain Conditions of the Offer......................................... 5
9. Certain Information About the Fund...................................... 6
10. Certain Federal Income Tax Consequences................................. 7
11. Miscellaneous........................................................... 7
(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 Interests in an amount up to $62,000,000 of the net
assets of the Fund. We will purchase your Interests 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 interest in the Fund you desire to tender, after giving
effect to all allocations, including any incentive allocation) calculated
as of the Repurchase Date. The net asset value of Interests 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 27, 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 Interests 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 Interests. 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 its entire Interest or a portion of its Interest. See
Section 4.
- - If you tender your Interest and we purchase that Interest, 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 Interest
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).
- - 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 its entire Interest) of the unaudited net asset
value of the Interest (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 its entire Interest, 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
Interest 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), 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 Interest, we will pay you the proceeds from
one or more of the following sources: cash on hand, proceeds from the sale
of securities held by the Fund, withdrawal proceeds from investment funds
in which the Fund invests, or borrowings. The purchase amount will be paid
entirely in cash. See Section 7.
- - If you desire to tender an Interest for purchase, you must do so by 12:00
midnight, Eastern Standard Time, on April 27, 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 Interest. Interests 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 an Interest on or prior to May 25, 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 Interest after such
date. See Section 6.
- - If you would like us to purchase your Interest, 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 Master 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 27, 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 27, 2009). See Section 5. The value of your Interests may change
between February 28, 2009 (the last time net asset value was calculated)
and the Repurchase Date when the value of the Interests being purchased
will be determined. See Section 3.
- - As of February 28, 2009, the net asset value of the Fund was
$1,220,789,760. If you would like to obtain the estimated net asset value
of your Interest, 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
Interests 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 Interests 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 that the Fund offer to repurchase Interests from Partners quarterly
each year. The Fund commenced operations on January 3, 2005 and has made fifteen
previous offers to purchase Interests from Partners since inception.
Because there is no secondary trading market for Interests and transfers of
Interests 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 Interests, or portions of them, on a quarterly basis
each year, the Board of Directors is under no obligation to follow such
recommendations.
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The purchase of Interests pursuant to the Offer will have the effect of
increasing the proportionate interest in the Fund of Partners that do not tender
Interests. Partners that retain their Interests may be subject to increased
risks due to the reduction in the Fund's aggregate assets resulting from payment
for the Interests 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 Interests 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 Interests are made by new and existing Partners from time to time. Payment
for Interests purchased pursuant to the Offer may also require the Fund to
liquidate portfolio holdings earlier than the Investment Manager would otherwise
have caused these holdings to be liquidated, potentially resulting in losses or
increased investment related expenses.
Interests that are tendered to the Fund in connection with the Offer will
be retired, although the Fund may issue Interests 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 Interests 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 an Interest 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 Interest is purchased. You should also
realize that although the Offer is scheduled to expire on April 27, 2009 (unless
it is extended), you remain a Partner of the Fund with respect to the Interest
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 Interests up to $62,000,000 of the net assets of the Fund
that are tendered by Partners by 12:00 midnight, Eastern Standard Time, on April
27, 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 Interests 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 Interests as of the 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 its entire
Interest or a portion of its Interest. The Offer is being made to all Partners
of the Fund and is not conditioned on any minimum amount of Interests being
tendered.
If the amount of Interests that are properly tendered pursuant to the Offer
and not withdrawn pursuant to Section 6 below is less than or equal to
$62,000,000 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 Interests 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 Interests in excess of $62,000,000 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
3
in its sole discretion either (a) accept the additional Interests 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 Interests that the Fund is offering to purchase to an
amount it believes sufficient to accommodate the excess Interests tendered as
well as any Interests tendered during the extended Offer; or (c) accept
Interests 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 Interests. The Offer may be extended, amended or canceled in
other circumstances described in Section 8 below.
5. PROCEDURE FOR TENDERS.
Partners wishing to tender Interests pursuant to this Offer to Purchase
should send or deliver by April 27, 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 27, 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 an Interest, 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 Interest or any
particular Partner, and the Fund's interpretation of the terms and 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 Interests. Interests 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 an Interest on or prior to May 25, 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 its Interest 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 Interests properly withdrawn will not
thereafter be deemed to be tendered for purposes of the Offer.
4
7. PURCHASES AND PAYMENT.
For purposes of the Offer, the Fund will be deemed to have accepted
Interests that are tendered if and when it gives written notice to the tendering
Partner of its election to purchase such Interest. As stated in Section 3 above,
the amount offered for the Interests 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 Interests 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 its entire Interest) of the unaudited net asset
value of the Interest tendered and accepted for purchase by the Fund, determined
as of the Repurchase Date. 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
Interests, 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 Interest 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), 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.
The Fund will make payment for Interests it purchases pursuant to the Offer
from one or more of the following sources: cash on hand, proceeds from the sale
of securities held by the Fund, withdrawal proceeds from investment funds in
which the Fund invests, or borrowings. Upon its acceptance of tendered Interests
for repurchase, the Fund will maintain daily, as an entry on its books, a
distinct account consisting of (1) cash, (2) liquid securities, or (3) interests
in specific investment funds in which the Fund invests (or any combination of
them), 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 Interests tendered in connection with the Offer. However, depending
on the dollar amount of Interests 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 Interests, 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, withdrawal of capital
from the investment funds in which it invests or from the proceeds of the sale
of securities held by the 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
5
extension. In the event that the Fund elects to extend the tender period, the
net asset value of the Interests tendered for purchase will be determined as of
the later Repurchase Date. During any such extension, all Interests 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 Interests tendered pursuant to the
Offer; (b) to amend the Offer; and (c) to postpone the acceptance of Interests.
If the Fund determines to amend the Offer or to postpone the acceptance of
Interests 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 Interests
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 Interests 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 Interests 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
Interests of the Fund were first accepted for investment as of January 3, 2005.
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. Interests 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 Interests (other than the Fund's
intention to accept subscriptions for Interests on the first day of each month
and from time to time in the discretion of the General Partner), or the
disposition of Interests (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.
6
Other than the acceptance of subscriptions as of February 1, 2009 and March
1, 2009, there have been no transactions involving Interests 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 Interests 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 Interests by the Fund
pursuant to the Offer.
A Partner who sells all or part of the Partner's Interest 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 entire Interest at that time. The Partner's adjusted tax basis in the
Partner's Interest 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
Interest 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 Interest.
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 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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