Exhibit 2(k)(1)
FORM OF
ADMINISTRATION, ACCOUNTING AND INVESTOR SERVICES AGREEMENT
THIS AGREEMENT is made as of ___________, 2007 by and between MAGNETAR
SPECTRUM FUND, a Delaware business trust (the "Fund"), and PFPC INC., a
Massachusetts corporation ("PFPC").
W I T N E S S E T H :
WHEREAS, the Fund is registered as a closed-end, non-diversified
management investment company under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Fund wishes to retain PFPC to provide administration,
accounting and investor services provided for herein, and PFPC wishes to furnish
such services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "Authorized Person" means any officer of the Fund and any other
person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund. An
Authorized Person's scope of authority may be limited by setting
forth such limitation in a written document signed by both parties
hereto.
(c) "Change of Control" means a change in ownership or control (not
including transactions between wholly owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(d) "Oral Instructions" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be
an Authorized Person. PFPC may, in its sole discretion in each
separate instance, consider and rely upon instructions it receives
from an Authorized Person via electronic mail as Oral Instructions.
(e) "Manager" means Magnetar Financial LLC, the investment adviser to
the Fund.
(f) "Organizational Documents" means the Fund's Declaration of Trust,
Bylaws and Registration Statement filed with the Securities and
Exchange Commission.
(g) "Board of Trustees" means the board of trustees of the Fund.
(h)"SEC" means the Securities and Exchange Commission.
(i) "Securities Laws" means the 1933 Act, the 1934 Act and the 1940 Act.
(j) "Shares" means the shares of beneficial interest of any series or
class of the Fund.
(k) "Written Instructions" means (i) written instructions signed by an
Authorized Person (or a person reasonably believed by PFPC to be an
authorized person) and received by PFPC or (ii) trade instructions
transmitted (and received by PFPC) by means of an electronic
transaction reporting system, access to which requires use of a
password or other authorized identifier. The instructions may be
delivered electronically (with respect to sub-item (ii) above) or by
hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. Appointment. The Fund hereby appoints PFPC to provide administration,
accounting and investor services to the Fund, in accordance with the terms
set forth in this Agreement. PFPC accepts such appointment and agrees to
furnish such services. PFPC shall be under no duty to take any action
hereunder on behalf of the Fund except as
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specifically set forth herein or as may be specifically agreed to by PFPC
and the Fund in a written amendment hereto. PFPC shall not bear, or
otherwise be responsible for, any fees, costs or expenses charged by any
third party service providers engaged by the Fund or engaged by any other
third party service provider to the Fund.
3. Instructions.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instruction or Written
Instruction it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to
this Agreement. PFPC may assume that any Oral Instruction or Written
Instruction received hereunder is not in any way inconsistent with
the provisions of the Organizational Documents or this Agreement or
of any vote, resolution or proceeding of the Fund's Board of
Trustees , unless and until PFPC receives Written Instructions to
the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions (except where such Oral Instructions are given by
PFPC or its affiliates) so that PFPC receives the Written
Instructions as promptly as practicable and in any event by the
close of business on the day after such Oral Instructions are
received. The fact that such confirming Written Instructions are not
received by PFPC or differ from the Oral Instructions shall in no
way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions or PFPC's ability
to rely upon such Oral Instructions.
4. Right to Receive Advice.
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(a) Advice of the Fund. If PFPC is in doubt as to any action it should
or should not take, PFPC may request directions or advice, including
Oral Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any question of
law pertaining to any action it should or should not take, PFPC may
request advice from counsel of its own choosing (who may be counsel
for the Fund, the Fund's investment adviser or PFPC, at the option
of PFPC).
(c) Conflicting Advice. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC receives
from the Fund, and the advice it receives from counsel, PFPC may
rely upon and follow the advice of counsel after PFPC has discussed
the matter with the Fund and the Fund's counsel and the conflict is
not resolved.
(d) No Obligation to Seek Advice. Nothing in this section shall be
construed so as to impose an obligation upon PFPC to seek such
directions or advice or Oral Instructions or Written Instructions.
5. Records; Visits.
(a) The books and records pertaining to the Fund, which are in the
possession or under the control of PFPC, shall be the property of
the Fund. Such books and records shall be prepared and maintained as
required by the 1940 Act and other applicable securities laws, rules
and regulations. The Fund and Authorized Persons, at the Fund's
expense, shall have access to such books and records at all times
during PFPC's normal business hours, including access through
on-site visits at the location where the Fund's records are
maintained by PFPC at the
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Fund's expense. Upon the reasonable request of the Fund, copies of
any such books and records shall be provided by PFPC to the Fund or
to an Authorized Person, at the Fund's expense. Any such books and
records may be maintained in the form of electronic media and stored
on any magnetic disk or tape or similar recording method.
(b) PFPC shall keep the following records:
(i) all books and records with respect to the Fund's books of
account; and
(ii) records of the Fund's securities transactions.
6. Confidentiality. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer
profiles, customer lists, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Fund or PFPC and their respective subsidiaries and
affiliated companies; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable
and secret in the sense that its confidentiality affords the Fund or PFPC
a competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential. (Pursuant to
Section 7(d), the Fund hereby designates all non-public data provided by
the Fund to PFPC prior to the execution of this Agreement as Confidential
Information). Notwithstanding the foregoing, information shall not be
Confidential Information and shall not be subject to such confidentiality
obligations if: (a) it is already known to the
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receiving party at the time it is obtained; (b) it is or becomes publicly
known or available through no wrongful act of the receiving party; (c) it
is rightfully received from a third party who, to the best of the
receiving party's knowledge, is not under a duty of confidentiality; (d)
it is released by the protected party to a third party without
restriction; (e) it is requested or required to be disclosed by the
receiving party pursuant to a court order, subpoena, governmental or
regulatory agency request or law (provided the receiving party will
provide the other party written notice of the same, to the extent such
notice is permitted); (f) it is relevant to the defense of any claim or
cause of action asserted against the receiving party; (g) it is Fund
information provided by PFPC in connection with an independent third party
compliance or other review so long as such independent third party has
agreed to maintain such Fund information confidentially; (h) release of
such information is necessary or desirable in connection with PFPC's
provision of services under this Agreement; or (i) it has been or is
independently developed or obtained by the receiving party. The provisions
of this Section 6 shall survive termination of this Agreement for a period
of three (3) years after such termination.
7. Liaison with Accountants. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide account analyses, fiscal
year summaries, and other audit-related schedules with respect to the
Fund. PFPC shall take all reasonable action in the performance of its
duties under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion, as
required by the Fund.
8. Liaison with Fund's Chief Compliance Officer. In connection with the
Fund's obligations under rule 38a-1 of the 1940 Act, PFPC shall (i)
provide, via internet access or otherwise, its policies and procedures
related to the services that it is required to perform pursuant to this
Agreement and summaries thereof; (ii) provide notification (via
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e-mail or otherwise) of updates to its aforementioned policies and
procedures; and (iii) upon request provide periodic certifications with
respect to its aforementioned policies and procedures.
9. PFPC System. PFPC shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable
or copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC in connection
with the services provided by PFPC to the Fund.
10. Disaster Recovery. PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provisions
for emergency use of electronic data processing equipment to the extent
appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. Provided that PFPC has taken such
reasonable steps, PFPC shall have no liability with respect to the loss of
data or service interruptions caused by equipment failure, provided such
loss or interruption is not caused by PFPC's own willful misfeasance,
fraud, bad faith, gross negligence or reckless disregard of its duties or
obligations under this Agreement.
11. Compensation.
(a) As compensation for services set forth herein that are rendered by
PFPC during the term of this Agreement, the Fund will pay to PFPC a
fee or fees as may be agreed to in writing by the Fund and PFPC.
(b) The undersigned hereby represents and warrants to PFPC that (i) the
terms of this Agreement, (ii) the fees and expenses associated with
this Agreement, and (iii)
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any benefits accruing to PFPC or to the adviser or sponsor to the
Fund in connection with this Agreement, including but not limited to
any fee waivers, conversion cost reimbursements, up front payments,
signing payments or periodic payments made or to be made by PFPC to
such adviser or sponsor or any affiliate of the Fund relating to
this Agreement have been fully disclosed to the Board of Trustees of
the Fund and that, if required by applicable law, such Board of
Trustees has approved or will approve the terms of this Agreement,
any such fees and expenses, and any such benefits.
(c) Notwithstanding the limitation of liability provisions of this
Agreement or the termination of this Agreement, the Fund shall
remain responsible for paying to PFPC the fees set forth in the
applicable fee letter.
12. Standard of Care/Limitations of Liability.
(a) PFPC shall be under no duty to take any action hereunder on behalf
of the Fund except as specifically set forth herein or as may be
specifically agreed to by PFPC and the Fund in a written amendment
hereto. PFPC shall be obligated to exercise care and diligence in
the performance of its duties hereunder. Subject to the terms of
this Section 12, PFPC shall be liable to the Fund (or any person or
entity claiming through the Fund) for damages only to the extent
caused by PFPC's own willful misfeasance, bad faith, negligence or
reckless disregard of its duties under this Agreement.
(b) Notwithstanding anything in this Agreement (whether contained
anywhere in Sections 14-16 or otherwise) to the contrary, the Fund
hereby acknowledges and agrees that (i) PFPC, in the course of
providing tax-related services or calculating
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and reporting portfolio performance hereunder, may rely upon PFPC's
reasonable interpretation of tax positions or its interpretation of
relevant circumstances (as determined by PFPC) in providing such tax
services and in determining methods of calculating portfolio
performance to be used, and that (ii) PFPC shall not be liable for
losses or damages of any kind associated with such reliance except
to the extent such loss or damage is due to PFPC's gross negligence
or willful misconduct.
(c) Notwithstanding anything in this Agreement to the contrary, without
limiting anything in the immediately preceding sentence, the Fund
hereby acknowledges and agrees that PFPC shall not be liable for any
losses or damages of any kind associated with any tax filings with
which PFPC has assisted in any way except to the extent such loss or
damage is due to PFPC's gross negligence or willful misconduct;
provided, however, that PFPC shall not be found to have been grossly
negligent for losses or damages associated with areas of
responsibility that the judiciary, regulators (or other governmental
officials) determine would otherwise apply to PFPC (or similar
service providers) and which, as of the date hereof, have yet to be
identified by such parties as areas for which PFPC (or any similar
service provider) is (or would be) responsible.
(d) To the extent caused by PFPC's own negligence, PFPC cumulative
liability to the Fund and any person or entity claiming through the
Fund for any loss, claim, suit, controversy, breach or damage of any
nature whatsoever (including but not limited to those arising out of
or related to this Agreement) and regardless of the form of action
or legal theory ("Loss") shall not exceed $1,000,000.
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(e) PFPC shall not be liable for damages (including without limitation
damages caused by delays, failure, errors, interruption or loss of
data) occurring directly or indirectly by reason of circumstances
beyond its reasonable control, including without limitation acts of
God; action or inaction of civil or military authority; national
emergencies; public enemy; war; terrorism; riot; fire; flood;
catastrophe; sabotage; epidemics; labor disputes; civil commotion;
interruption, loss or malfunction of utilities, transportation,
computer or communications capabilities; insurrection; elements of
nature; non-performance by a third party; failure of the mails; or
functions or malfunctions of the internet, firewalls, encryption
systems or security devices caused by any of the above.
(f) PFPC shall not be under any duty or obligation to inquire into and
shall not be liable for the validity or invalidity, authority or
lack thereof, or truthfulness or accuracy or lack thereof, of any
instruction, direction, notice, instrument or other information
which PFPC reasonably believes to be genuine. PFPC shall not be
liable for any damages that are caused by actions or omissions taken
by PFPC in accordance with Written Instructions or advice of counsel
as provided in this Agreement. PFPC shall not be liable for any
damages arising out of any action or omission to act by any prior
service provider of the Fund or for any failure to discover any such
error or omission.
(g) Neither PFPC nor its affiliates shall be liable for any
consequential, incidental, exemplary, punitive, special or indirect
damages, whether or not the likelihood of such damages was known by
PFPC or its affiliates.
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(h) No party may assert a cause of action against PFPC or any of its
affiliates that allegedly occurred more than twenty-four (24) months
immediately prior to the filing of the suit (or, if applicable,
commencement of arbitration proceedings) alleging such cause of
action.
(i) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(j) This Section 12 shall survive termination of this Agreement.
13. Indemnification. The Fund agrees to indemnify, defend and hold harmless
PFPC and its affiliates and their respective directors, trustees,
officers, agents and employees ("PFPC Indemnified Party") from all claims,
suits, actions, damages, losses, liabilities, obligations, costs and
reasonable expenses (including attorneys' fees and court costs, travel
costs and other reasonable out-of-pocket costs related to dispute
resolution) ("Losses") arising directly or indirectly from any action
taken or omitted to be taken by PFPC which PFPC takes in good faith in
connection with the provision of services to the Fund. No PFPC Indemnified
Party shall be indemnified by the Fund against any Loss caused by a PFPC
Indemnified Party's own willful misfeasance, bad faith, gross negligence
or reckless disregard in the performance of PFPC's activities under this
Agreement. This Section 13 shall survive termination of this Agreement.
14. Description of Accounting Services on a Continuous Basis. PFPC will
perform the following accounting services with respect to each portfolio:
(i) Journalize investment, capital and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received from
the investment adviser for the portfolio (the "Adviser");
(iii) Maintain individual ledgers for investment securities;
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(iv) Maintain historical tax lots for each security;
(v) Record and reconcile corporate action activity and all
other capital changes;
(vi) Reconcile cash and investment balances of the Fund with the
Fund's custodian(s), and provide the Adviser with the
beginning cash balance available for investment purposes.
(vii) Calculate contractual expenses, including management fees
and incentive allocation, as applicable, in accordance with
the Fund's confidential memorandum;
(ix) Post to and prepare the Statement of Assets and Liabilities
and the Statement of Operations in U.S. dollar terms;
(x) Monitor the expense accruals and notify an officer of the
Fund of any proposed adjustments;
(xi) Control all disbursements and authorize such disbursements
from the Fund's account with the custodian(s) upon Written
Instructions;
(xii) Calculate capital gains and losses;
(xiii) Determine net income;
(xiv) Determine applicable foreign exchange gains and losses on
payables and receivables;
(xv) Obtain daily security market quotes and currency exchange
rates from independent pricing services approved by the
Adviser, or if such quotes are unavailable, then obtain
such prices from the Adviser, and in either case calculate
the market value of the Fund's investments in accordance
with the applicable valuation policies or guidelines
provided by the Fund to PFPC, provided that PFPC does not
inform the Fund that it is either unable or unwilling to
comply with such policies or procedures;
(xvi) Transmit or mail a copy of the daily portfolio valuation to
the Adviser;
(xvii) Arrange for the computation of the net asset value in
accordance with the provisions of the Fund's Organizational
Documents and confidential memorandum; and
(xviii) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity
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as well as compute and monitor dividend payments.
15. Description of Administration Services on a Continuous Basis. PFPC will
perform the following administration services if required with respect to
each portfolio:
(i) Prepare monthly security transaction listings;
(ii) Supply various normal and customary Fund statistical data
as requested on an ongoing basis;
(iii) Prepare for execution and file the Fund's Federal and state
tax returns; prepare a fiscal tax provision in coordination
with the annual audit; prepare an excise tax provision; and
prepare all relevant 1099 calculations;
(iv) Prepare income and capital gain distributions;
(v) Prepare and file (or coordinate this filing of) the Fund's
Annual and Semi-Annual Reports with the SEC on Form N-SAR
via XXXXX;
(vi) Prepare, coordinate with the Fund's counsel and coordinate
the filing with the SEC: Form N-CSR; Form N-Q; Form N-PX
(provided that the Fund's voting records are delivered to
PFPC in the format required by PFPC); and Schedule T/O and
any amendments thereto in connection with periodic tender
offers;
(vii) Coordinate with the Fund's counsel all periodic tender
offers and repurchases of shares, including the printing,
mailing, tracking of periodic tender offers and the
tabulation of tender offer results;
(viii) If the chief executive officer or chief financial officer
of the Fund is required to provide a certification as part
of the Fund's Form N-CSR or Form N-Q filing pursuant to
regulations promulgated by the SEC under Section 302 of the
Xxxxxxxx-Xxxxx Act of 2002, PFPC will provide (to such
person or entity as agreed between the Fund and PFPC) a
sub-certification in support of certain matters set forth
in the aforementioned certification, such sub-certification
to be in such form and relating to such matters as agreed
between the Fund and PFPC from time to time, PFPC shall be
required to provide the sub-certification only during the
terms of the Agreement and only if it receives such
cooperation as it may request to perform its investigations
with respect to the sub-certification. For clarity, the
sub-certification is not itself a certification under the
Xxxxxxxx-Xxxxx Act of 2002 or under any other regulatory
requirements;
(ix) Coordinate printing and distribution of the Fund's annual
and semi-annual shareholder reports;
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(x) Periodically report compliance testing to the Fund's Chief
Compliance Officer regarding investment restrictions based
on the 1940 Act and any restrictions imposed on regulated
investment companies by the Internal Revenue Code and/or
Internal Revenue Service; and
(xi) Perform such additional administrative duties relating to
the administration of the Fund as may subsequently be
agreed upon in writing between the Fund and PFPC.
All regulatory services are subject to the review and approval of Fund counsel.
16. Description of Investor Services on a Continuous Basis. PFPC will perform
the following functions:
(i) Maintain the register of shareholders and enter on such
register all issues, transfers and repurchases of Shares in
the Fund;
(ii) Arrange for the calculation of the issue and repurchase
prices of Shares in the Fund in accordance with the Fund's
Organizational Documents;
(iii) Allocate income, expenses, gains and losses to individual
shareholders' capital accounts in accordance with the
Fund's Organizational Documents;
(iv) Mail and/or electronically distribute monthly Fund
statements to investors;
(v) Coordinate with the Fund and/or its counsel periodic tender
offers and repurchases of Shares, including printing,
mailing and tracking periodic tender offers and tabulation
of results; and
(v) Receive, process and maintain subscription agreements and
requests for redemptions (with Adviser's consent). For the
avoidance of doubt, the parties understand and agree that
PFPC's processing of subscription documents shall be
limited to its review of such documents for completion
only; nothing in this Agreement shall be construed as
imposing upon PFPC any obligation to conduct a substantive
review of subscription applications on behalf of the Fund
(for compliance with SEC Regulation D or otherwise) as PFPC
expressly disavows any power or authority to approve new
investors in the Fund. As between PFPC and the Fund, the
Fund shall be solely responsible for customer suitability
review, due dilgence and "know your customer" information
requirements with respect to Fund shareholders, in
accordance with all applicable laws, rules and regulations.
17. Description of AML/CIP Services.
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(a) General Description. PFPC has in place programs to ensure compliance
with Section 352 of the USA PATRIOT Act and 31 CFR ss. 103.130
dealing with anti-money laundering ("AML") programs, Section 326 of
the USA PATRIOT Act dealing with Customer Identification Programs
("CIP"), Office of Foreign Asset Control ("OFAC") economic sanctions
programs, and 31 CFR ss. 103.15 dealing with the filing of
Suspicious Activity Reports ("SARs"). PFPC has agreed to assist the
Fund in meeting its goals of voluntary compliance with Section 352
of the USA PATRIOT Act, Section 326 of the USA PATRIOT Act and 31
CFR ss. 103.130 dealing with AML programs, CIP, with respect to its
voluntary compliance with 31 CFR ss. 103.15 dealing with the filing
of SARs, and in complying with OFAC economic sanctions programs as
set forth herein.
(b) Section 352 of the USA PATRIOT Act and 31 CFR ss. 103.15. With
respect to assisting the Fund in its compliance with Section 352 of
the USA PATRIOT Act and 31 CFR ss. 103.15, PFPC shall:
(i) establish and implement written internal policies,
procedures and controls reasonably designed to ensure
compliance by the Fund and its service providers with all
applicable Bank Secrecy Act ("BSA") regulatory requirements
and to help prevent the Fund from engaging in criminal
activity including money laundering or assisting in
terrorist financing;
(ii) provide for independent compliance testing, by an employee
who is not responsible for the operation of PFPC's AML
program, or alternatively by an outside party, of PFPC's
established anti-money laundering policies and procedures
employed on behalf of the Fund;
(iii) designate a person or persons responsible for implementing
and monitoring the operation and internal controls of
PFPC's AML program established on behalf of the Fund and to
oversee compliance by the Fund's service providers; and
(iv) provide ongoing training of PFPC personnel relating to
compliance with BSA requirements and the prevention of
money-laundering and terrorist financing activity on behalf
of the Fund.
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(c) Section 352 of the USA PATRIOT Act. With respect to its assistance
to the Fund under Section 352 of the USA PATRIOT Act, PFPC shall,
upon the reasonable request of the Fund, provide to the Fund:
(i) a copy of PFPC's written AML policies and procedures
(it being understood such information is to be considered
confidential and treated as such and afforded all
protections provided to confidential information under
this Agreement);
(ii) at the option of PFPC, a copy of a written assessment or
report prepared by the party performing the independent
testing for compliance, or a summary thereof, or a
certification that the findings of the independent party
are satisfactory; and
(iii) a summary of the AML training provided for appropriate
personnel. PFPC agrees to permit inspections relating to
its AML program by governmental departments or regulatory
agencies with appropriate jurisdiction and to make
available to examiners such information and records
relating to its AML program as such examiners shall
reasonably request.
(d) Section 326 of the USA PATRIOT Act. With respect to assisting the
Fund in its compliance with Section 326 of the USA PATRIOT Act, PFPC
will undertake the following:
(i) Implement procedures under which new accounts in the Fund
will not be opened unless PFPC has obtained the name, date
of birth (for U.S. natural persons only), address and
government-issued identification number (collectively, the
"Data Elements") for each corresponding New Customer ("New
Customer") (as defined in 31 CFR ss. 103.131); similar
procedures will be put in place for non-U.S. natural
persons to provide sufficient information to reasonably
verify the identity of the customer;
(ii) Use the collected Data Elements to attempt to reasonably
verify the identity of each New Customer promptly before,
or within a reasonable time after, each corresponding new
account is opened. Methods may consist of non-documentary
methods (for which PFPC may use unaffiliated information
vendors to assist with such verifications) and documentary
methods (as permitted by 31 CFR ss.103.131), and may
include procedures under which PFPC personnel perform
enhanced due
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diligence to verify the identities of Customers the
identities of whom were not successfully verified through
the first-level (which will typically be reliance on
results obtained from an information vendor) verification
process(es) or for higher risk customers;
(iii) Record the Data Elements and maintain records relating to
verification of new Customers consistent with 31 CFR
ss.103.131(b)(3); and
(iv) Regularly report to the Fund about measures taken under
(i)-(ii) above and report of account opening with respect
to any account PFPC has been unable to verify so that the
Fund may decide whether to undertake additional
verification or close the account.
Notwithstanding anything to the contrary, and without expanding the
scope of the express language above, PFPC will not be required to
collect the Data Elements for (or verify) prospective New Customers
(or accounts) beyond the requirements of relevant regulations (for
example, PFPC will not verify Customers opening accounts through
NSCC, if applicable), and PFPC will not be required to perform any
task that need not be performed for the Fund to be in compliance
with relevant regulations if the Fund was subject to mandatory
rather than voluntary compliance with the regulations.
(e) OFAC Obligations. To assist the Fund in complying with any Office of
Foreign Asset Control ("OFAC") obligations with respect to accounts
of New Customers and existing investors in the Funds, PFPC checks
account registration information against:
(i) the OFAC List of Specially Designated Nationals and other
economic sanctions lists administered by OFAC, and
(ii) the list of Blocked Countries administered by OFAC;
(iii) or any other economic sanctions programs administered by
OFAC;
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(iv) If PFPC confirms the authenticity of any resulting match
against the lists and programs in (i-iii) above, it will
promptly contact OFAC, notify the Fund and will assist the
Fund in taking appropriate steps to block any transaction
or attempted transaction involving the customer involved.
(f) SAR Filings. To assist the Fund in complying with 31 CFR ss. 103.15
with respect to the filing of SARs, unless prohibited by applicable
law, PFPC agrees that it will refer suspicious activity to the Fund
to assist with the Fund's Suspicious Activity Reporting obligations
and use reasonable efforts to consult with the Fund's AML Compliance
Officer or other designee prior to contacting law enforcement
authorities or filing a SAR. Notwithstanding the foregoing, the Fund
agrees that PFPC reserves the sole discretion to independently
contact law enforcement or file a SAR as part of its own suspicious
activity reporting obligations and further reserves the sole
discretion to independently file a SAR on its own behalf if it deems
it appropriate. The Fund authorizes PFPC, as its agent, to share
information about potentially suspicious activities with other
financial institutions pursuant to Section 314(b) of the USA PATRIOT
Act, provided, however, that PFPC shall notify the Fund promptly of
such information sharing and PFPC will take measure to ensure that
the information is safeguarded from further disclosure.
(g) Information Available Upon Request. PFPC shall take all reasonable
action in the performance of its duties under this Agreement to make
any information reasonably requested by the Fund available to the
Fund, its Authorized Persons and/or any duly authorized
representatives of the Fund (as designated in writing by the Fund to
PFPC) at the expense of the Fund (it being understood that such
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information is to be considered confidential and treated as such and
afforded all protections provided to Confidential Information under
this Agreement).
(h) Assistance to PFPC. In connection with services provided by PFPC to
the Fund, the Fund will provide, or reasonably cooperate and assist
PFPC in obtaining, such information and documentation as PFPC may
reasonably request (it being understood that such information is to
be considered confidential and treated as such and afforded all
protections provided to Confidential Information under this
Agreement).
(i) Scope of Duties. The Fund acknowledges and agrees that in accepting
the delegation hereunder, PFPC is agreeing to perform only those
duties that have been expressly delegated in this Section, as may be
amended from time to time by the parties, and is not undertaking and
shall not be responsible for any other aspect of the Fund's AML
program or for the overall compliance by the Fund with the USA
PATRIOT Act or for any other matters that have not been delegated
hereunder. The Fund shall be responsible for appointing its own
Anti-Money Laundering Reporting Officer (if such appointment is
required) and under no circumstances shall PFPC, PFPC's affiliates,
or any PFPC's employees, officers or directors, be responsible or
liable for the Fund's compliance with any anti-money laundering laws
and regulations of any jurisdiction in which the Fund operates
(other than as specifically described herein).
18. Duration and Termination.
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(a) This Agreement shall be effective on the date first written above
and unless terminated pursuant to its terms shall continue for a
period of one (1) years (the "Initial Term").
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year ("Renewal
Term") each, unless the Fund or PFPC provides written notice to the
other of its intent not to renew. Such notice must be received not
less than ninety (90) days prior to the expiration of the Initial
Term or the then current Renewal Term.
(c) In the event of termination, all expenses associated with movement
of records and materials and conversion thereof to a successor
administrator will be borne by the Fund and paid to PFPC prior to
any such conversion.
(d) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other
party (the "Non-Defaulting Party") may give written notice thereof
to the Defaulting Party, and if such material breach shall not have
been remedied within thirty (30) days after such written notice is
given, then the Non-Defaulting Party may terminate this Agreement by
giving thirty (30) days written notice of such termination to the
Defaulting Party. In all cases, termination by the Non-Defaulting
Party shall not constitute a waiver by the Non-Defaulting Party of
any other rights it might have under this Agreement or otherwise
against the Defaulting Party.
(e) Notwithstanding anything contained in this Agreement to the
contrary, if in connection with a Change in Control the Fund gives
notice to PFPC terminating PFPC as the provider of any of the
services hereunder or if the Fund otherwise
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terminates, without reasonable cause, this Agreement before the
expiration of the then-current Initial or Renewal Term ("Early
Termination"):
(1) PFPC Trust shall, if requested by the Fund, make a good faith
effort to facilitate a conversion to the Fund's successor
service provider including providing such data as may be
required in mutually acceptable format; provided that PFPC
does not guarantee that it will be able to effect a conversion
on the date(s) requested by the Fund.
(2) Before the effective date of the Early Termination, the Fund
shall pay to PFPC an amount equal to all fees and other
amounts ("Early Termination Fee") calculated as if PFPC were
to provide all services hereunder until the expiration of the
then-current Initial or Renewal Term. The Early Termination
Fee shall be calculated using the average of the monthly fees
and other amounts due to PFPC under this Agreement during the
last three calendar months before the date of the notice of
Early Termination (or if not given the date it should have
been given).
(3) The Fund expressly acknowledges and agrees that the Early
Termination Fee is not a penalty but reasonable compensation
to PFPC for the termination of services before the expiration
of the then-current Initial or Renewal Term.
(4) For purposes of Section 18(e), "Change in Control" means a
merger, consolidation, adoption, acquisition, change in
control, re-structuring, or re-organization of or any other
similar occurrence involving the Fund or any affiliate of the
Fund.
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(5) If the Fund gives notice of Early Termination after expiration
of the specified notice period to terminate this Agreement in
the ordinary course at the end of the then-current Initial or
Renewal Term, the references above to "expiration of the
then-current Initial or Renewal Term" shall be deemed to mean
"expiration of the Renewal Term immediately following the
then-current Initial or Renewal Term."
(6) If any of the Fund's assets serviced by PFPC under this
Agreement are removed from the coverage of this Agreement
("Removed Assets") and are subsequently serviced by another
service provider (including the Fund or an affiliate of the
Fund): (i) the Fund will be deemed to have caused an Early
Termination with respect to such Removed Assets as of the day
immediately preceding the first such removal of assets; and,
(ii) at, PFPC's option, either (a) the Fund will also be
deemed to have caused an Early Termination with respect to all
non-Removed Assets as of a date selected by PFPC Trust, or (b)
this Agreement will remain in full force and effect with
respect to all non-Removed Assets.
19. Change of Control. 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 of the Adviser or sponsor, the Fund's ability to
terminate the Agreement pursuant to Section 17 will be suspended from the
time of such agreement until two years after the Change of Control.
20. Notices. All notices and other communications, including Written
Instructions but excluding Oral Instructions, shall be in writing or by
confirming telegram, cable, telex or
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facsimile sending device. If notice is sent by confirming telegram, cable,
telex or facsimile sending device, it shall be deemed to have been given
immediately. If notice is sent by first class mail, it shall be deemed to
have been given seven (7) days after it has been mailed. If notice is sent
by messenger, it shall be deemed to have been given on the day it is
delivered. Notices shall be addressed (a) if to PFPC, at 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx, XX 00000, attn: President (or such address as PFPC
may inform the Fund in writing); (b) if to the Fund, c/o Magnetar
Financial LLC, 0000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000
(or such address as the Fund may inform PFPC in writing); or (c) if to
neither of the foregoing, at such other address as shall have been
provided by like notice to the sender of any such notice or other
communication by the other party.
21. Amendments. This Agreement, or any term thereof, may be changed or waived
only by written amendment, signed by the party against whom enforcement of
such change or waiver is sought.
21. Delegation; Assignment. PFPC may assign its rights and delegate its duties
hereunder to any majority-owned direct or indirect subsidiary of PFPC or
of The PNC Financial Services Group, Inc., provided that PFPC gives the
Fund thirty (30) days' prior written notice of such assignment or
delegation.
22. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
23. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
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24. Miscellaneous.
(a) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof,
provided that the parties may embody in one or more separate
documents their agreement, if any, with respect to delegated duties.
(b) Non-Solicitation. During the term of this Agreement and for one year
thereafter, the Fund shall not (with the exceptions noted in the
immediately succeeding sentence) knowingly solicit or recruit for
employment or hire any of PFPC's employees, and the Fund shall cause
the Fund's sponsor and the Fund's affiliates to not (with the
exceptions noted in the immediately succeeding sentence) knowingly
solicit or recruit for employment or hire any of PFPC's employees.
To "knowingly" solicit, recruit or hire within the meaning of this
provision does not include, and therefore does not prohibit,
solicitation, recruitment or hiring of a PFPC employee by the Fund,
the Fund's sponsor or an affiliate of the Fund if the PFPC employee
was identified by such entity solely as a result of the PFPC
employee's response to a general advertisement by such entity in a
publication of trade or industry interest or other similar general
solicitation by such entity.
(c) No Changes that Materially Affect Obligations. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees not to
make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of PFPC hereunder without the prior written
approval of PFPC, which approval shall not be unreasonably withheld
or delayed.
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The scope of services to be provided by PFPC under this Agreement
shall not be increased as a result of new or revised regulatory or
other requirements that may become applicable with respect to the
Fund, unless the parties hereto expressly agree in writing to any
such increase.
(d) Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or
effect.
(e) Information. The Fund will provide such information and
documentation as PFPC may reasonably request in connection with
services provided by PFPC to the Fund.
(f) Governing Law. This Agreement shall be deemed to be a contract made
in Delaware and governed by Delaware law without regard to
principles of conflict of law.
(g) Partial Invalidity. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(h) Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as may be explicitly stated
in this Agreement, (i) this Agreement is not for the benefit of any
other person or entity and (ii) there shall be no third party
beneficiaries hereof.
(i) No Representations or Warranties. Except as expressly provided in
this Agreement, PFPC hereby disclaims all representations and
warranties, express or
-25-
implied, made to the Fund or any other person, including, without
limitation, any warranties regarding quality, suitability,
merchantability, fitness for a particular purpose or otherwise
(irrespective of any course of dealing, custom or usage of trade),
of any services or any goods provided incidental to services
provided under this Agreement. PFPC disclaims any warranty of title
or non-infringement except as otherwise set forth in this Agreement.
(j) Facsimile Signatures. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(k) Fund Disclaimer. It is expressly agreed that the obligations of the
Fund hereunder shall not be binding upon any of its Trustees,
shareholders, nominees, officers, agents or employees personally,
but shall bind only the property or assets of the Fund, as the case
may be.
(l) Legal Advice. Notwithstanding any provision hereof, the services of
PFPC are not, 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.
(m) Customer Identification Program Notice. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify,
and record certain information that identifies each person who
initially opens an account with that financial institution on or
after October 1, 2003. Certain of PFPC's affiliates are financial
institutions, and PFPC may, as a matter of policy, request (or may
have already requested) the Fund's name, address and taxpayer
identification number or other government-issued identification
number, and, if such party is a natural person, that party's date of
birth. PFPC may also ask (and may have already asked) for
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additional identifying information, and PFPC may take steps (and may
have already taken steps) to verify the authenticity and accuracy of
these data elements.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:
--------------------------------
Title:
-----------------------------
MAGNETAR SPECTRUM FUND
By:
--------------------------------
Title:
-----------------------------
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