Exhibit 2(k)2
FORM OF
PLACEMENT AGENCY AGREEMENT
MAGNETAR SPECTRUM FUND
This Placement Agreement (the "Agreement") dated as of [_____], 2007 by
and among Magnetar Spectrum Fund (the "Fund"), a Delaware statutory trust
operating (or intending to operate) as a closed-end, non-diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
(the "Placement Agent"), a Delaware corporation operating as a broker-dealer and
registered as such with the Securities and Exchange Commission ("SEC") and the
Financial Industry Regulatory Authority, Inc. ("FINRA").
WHEREAS
(A) The Fund issues common shares of beneficial interests ("Shares"),
pursuant to the Fund's registration statement on Form N-2 dated
December [___], 2007, as amended or supplemented from time to time
(the "Memorandum").
(B) The Fund desires to appoint the Placement Agent as placement agent
with respect to the Shares, and the Placement Agent is willing to
accept such appointment.
NOW IT IS AGREED AS FOLLOWS:
1. Placement of Shares
(a) Subject to the terms and conditions set forth herein, the Fund
appoints the Placement Agent as its non-exclusive placement agent in connection
with the placement of Shares, and the Placement Agent hereby accepts such
appointment and agrees to use its commercially reasonable efforts to offer and
sell Shares to investors whom the Placement Agent reasonably believes meet the
eligibility requirements set forth in the Memorandum. Unless otherwise agreed by
the parties, the Fund and/or Magnetar Financial LLC, the Fund's investment
adviser (the "Investment Adviser"), and/or PFPC, Inc., the Fund's administrator
(the "Administrator"), shall be responsible for reviewing each Subscription
Agreement (as defined below) to confirm that it has been completed in accordance
with the instructions thereto and that each has been completed by or on behalf
of an "Eligible Investor" as described in the Memorandum. The Fund and/or the
Administrator, in its or their sole discretion, may return to the Placement
Agent any Subscription Agreement that is not completed to its or their
satisfaction and shall be under no obligation to accept any Subscription
Agreement. The Placement Agent is not obligated to sell any specific number of
Shares or to purchase any Shares for its own account. The Fund shall be entitled
to appoint additional placement agents.
(b) In offering subscriptions for Shares, the Placement Agent shall act
solely as the agent of the Fund and not as principal.
(c) Prior to forwarding a Subscription Agreement to the Fund and/or the
Administrator for acceptance, the Placement Agent shall use its reasonable
efforts to determine that the subscriber for Shares has a legitimate source of
funds, that the investor's identity has been reasonably verified in order to
prevent money-laundering activities, and that there is no reason to suspect such
subscriber of money laundering activities, and that in forwarding the
Subscription Agreement the Placement Agent is compliant with the program
described in Section 5(h).
(d) For purposes of the offering of Shares, the Fund has furnished to the
Placement Agent copies of the offering memorandum (the "Memorandum") and
subscription documentation (the "Subscription Agreement"). Additional copies of
such documents will be furnished to the Placement Agent at no cost to the
Placement Agent in such numbers as reasonably requested. The Placement Agent is
authorized to furnish to prospective subscribers for Shares such information
concerning the Fund and the offering as may be contained in the Memorandum, the
Fund's formation documents, or any other documents, including sales material, if
approved in writing by the Fund (collectively with the Memorandum, formation
documents and Subscription Agreement, the Fund's "Offering
Documents"). The Placement Agent shall assist the Administrator in maintaining a
record of each prospective investor to whom the Placement Agent furnishes
Offering Documents.
(e) The Placement Agent acknowledges that Shares will be offered and sold
only as set forth in the Memorandum and the Fund's formation documents,
including, without limitation, with respect to the commencement of the offering,
pricing of Shares, handling of investor funds, subscription dates and investor
eligibility and accreditation standards. The Placement Agent further
acknowledges that Shares will be offered and sold pursuant to the exemption from
the registration requirements of the Shares Act of 1933, as amended (the "1933
Act"), set forth in Section 4(2) and/or Regulation D under the 1933 Act, and
that neither the Placement Agent nor its employees or any agents thereof shall
make any offer or sale of Shares in a manner that would require the Shares to be
registered under the 1933 Act.
(f) The Fund may suspend or terminate the offering of Shares at any time
as to specific classes of investors, as to specific jurisdictions or otherwise.
The Fund will use its reasonable best efforts to provide the Placement Agent
with not less than 30 days' prior written notice of any such suspension or
termination. Upon notice to the Placement Agent of the terms of such suspension
or termination, the Placement Agent shall suspend solicitation of subscriptions
for Shares in accordance with such terms until the Fund notifies the Placement
Agent that such solicitation may be resumed.
(g) The Fund will furnish the Placement Agent with such documents as it
may reasonably require, from time to time, for the purpose of enabling it to
evaluate the issuance and sale of Shares as contemplated in this Agreement and
related proceedings, or in order to evidence the accuracy of any of the
representations and warranties, or the fulfillment of any of the conditions
contained in this Agreement; and all proceedings taken by the Fund and in
connection with the issuance and sale of Shares as contemplated in this
Agreement will be satisfactory in form and substance to the Placement Agent.
(h) The Fund will promptly take all such actions as are reasonably
necessary to qualify the Shares as a private placement under the U.S. federal
and state securities laws, "blue sky" laws and the laws of any other non-U.S.
jurisdictions in which the Shares are offered and will comply with such laws so
as to permit such offers and sales. The Fund will file in a timely manner with
the SEC and/or each state or non-U.S regulatory authority any notices or other
filings with respect to the Shares required by the rules promulgated under
Regulation D of the Securities Act and/or applicable state or non-U.S. laws or
regulations and will upon request furnish to the Placement Agent a signed copy
of each such notice or filing promptly after its submission. The Fund agrees
that it will provide to the Placement Agent a list of the jurisdictions in which
the Fund will be marketed and the Fund shall be responsible for qualifying the
Shares under state securities laws, "blue sky" laws or non-U.S. securities laws
as necessary in such jurisdictions. Notwithstanding anything to the contrary
contained in this Agreement, (i) in the case of any non-U.S. jurisdiction in
which Shares are to be offered, the Fund agrees to provide the Placement Agent
with legal advice and information regarding the procedures to be followed in
connection with marketing the Shares in such non-U.S. jurisdiction, and (ii) the
Placement Agent and its affiliates shall not be liable for any act or omission
taken or omitted to be taken in reliance upon such advice and procedures, and,
in accordance with Section 6 hereof, the Placement Agent and its affiliates
shall be indemnified by the Fund for any loss or liability incurred by it in
connection therewith.
(i) This Agreement is not a commitment, express or implied, on the part of
the Placement Agent or its affiliates to purchase, underwrite or place the
Shares and it is acknowledged that the Placement Agent's efforts to place the
Shares will be made on a commercially reasonable efforts basis. The Placement
Agent's obligations under this Agreement are subject to: (i) satisfactory
completion of such investigation of and inquiry regarding the Fund and its
principals as the Placement Agent reasonably deems necessary; and (ii) in the
Placement Agent's determination, the absence of any material adverse change in
the financial markets, or in the financial condition, operations or prospects of
the Fund.
2. Handling of Orders
(a) For purposes of this Agreement, purchasers of Shares whose
subscriptions were solicited by the Placement Agent and accepted by the Fund are
referred to herein as the "Placement Agent's Subscribers."
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(b) All properly presented and accepted subscriptions for the purchase of
Shares will be executed at the offering price per Share as described in the
Memorandum.
(c) The procedures relating to soliciting and the handling subscriptions
for Shares will be subject to the terms of the Memorandum and the Operating
Procedures set forth in Appendix A hereto.
(d) Payments for Shares shall be made as specified in the Memorandum and
Subscription Agreement.
(e) The Placement Agent will not at any time be responsible for performing
recordkeeping or accounting services with respect to the Fund, except as
described in Section 1(d) hereof. The Fund shall promptly inform the Placement
Agent of the Fund's Net Assets and Net Asset Value per Share (and/or in certain
instances estimated Net Asset Values) as soon as reasonably practicable
following their calculation. The Placement Agent is authorized to communicate
such calculations to each of the Placement Agent's Subscribers. In the event
that estimated Net Asset Values are provided in lieu of Net Asset Values, the
Placement Agent shall make appropriate disclosures to the Placement Agent's
Subscribers.
3. Fees and Expenses
(a) The Placement Agent is entitled to charge a placement fee to each
investor of $100 per transaction as specified in the Memorandum upon acceptance
of the investor's subscription for Shares by the Administrator; provided that
the Placement Agent shall have the authority to waive or reduce the placement
fee in particular cases, at its sole discretion as generally described in the
Memorandum.
(b) The Fund will bear all legal, accounting, printing and other expenses
in connection with the offering and sale of the Shares, if such expenses are not
borne by a purchaser of the Shares. It also is understood that the Placement
Agent and its affiliates will not be responsible for any fees or commissions
payable to financial or other advisors utilized or retained by the Fund or by
any offeree of the Shares. The Fund agrees to bear directly all costs relating
to the commercial printing of the Offering Documents. In no event will the
Placement Agent or its affiliates be responsible for expenses incurred in
connection with the issue and sale of the Shares.
(c) In addition to any fee payable to the Placement Agent hereunder, the
Fund hereby agrees, from time to time promptly upon request, to reimburse the
Placement Agent and its affiliates for all reasonable out-of-pocket expenses
incurred by the Placement Agent in connection with, or arising out of, the
Placement Agent's activities and those of its affiliates and agents under or
contemplated by this Agreement (including, without limitation, fees, costs and
expenses associated with the preparation, mailing and delivery of the Offering
Documents and with reviewing the qualifications of prospective investors) on the
condition that the Placement Agent informs the Fund at such time as the expenses
amount to [$25,000] and thereafter in [$10,000] increments. The Fund shall not
be required to reimburse the Placement Agent for expenses to the extent that
they exceed [$50,000] except with the prior approval of the Fund, not to be
unreasonably withheld. The Placement Agent shall provide to the Fund an invoice
reflecting the reimbursable expenses, together with reasonable supporting
documentation evidencing such expenses, upon reasonable request by the Fund. All
payments to be made pursuant to this Agreement shall be made promptly after
receipt of an invoice therefore. All dollar limits contemplated by this Section
3(c) shall not be calculated to include any corresponding expense incurred by
the Placement Agent in connection with the Placement Agent's corresponding
agreement with Magnetar Spectrum Master Fund, LP.
(d) Subject to the aggregation contemplated by the last sentence of the
preceding Section 3(c), it is understood that to the extent any out-of-pocket
expenses incurred by the Placement Agent are incurred in connection with both
the performance of services hereunder and the performance of services for other
clients of the Placement Agent or other the Placement Agent business, such
expenses will be apportioned between the Fund and such other business in good
faith and in a commercially reasonable manner.
4. Additional Representations, Warranties and Covenants of the Fund
The Fund hereby represents, warrants and covenants to the Placement Agent
that:
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(a) The Fund has been duly formed under the laws of the State of Delaware
and has the power and authority to effect the offering of its Shares and conduct
its business as described in the Memorandum. All necessary filings, consents and
other actions necessary to qualify the offering of Shares in each applicable
jurisdiction and to conduct the business of the Fund as described in the
Memorandum have been, or will timely be, made or taken.
(b) The Fund intends to engage in business as a closed-end,
non-diversified management investment company and is registered as such under
the 1940 Act. The Fund will be in compliance with the applicable laws, rules and
regulations of all jurisdictions in which the Shares are offered, or in which
the Fund otherwise conducts business including any applicable anti-money
laundering laws and regulations. The Fund may rely on the Placement Agent's
performance of any anti-money laundering obligations imposed upon the Placement
Agent by law or regulation.
(c) The sale of Shares and the execution, delivery and performance of this
Agreement, and the Fund's conduct of business as described in the Memorandum
will not result in the material violation of any applicable law.
(d) The Fund will use the proceeds from the sale of Shares for the
purposes set forth in the Memorandum.
(e) Shares to be or which may be issued by the Fund have been duly
authorized for issuance and sale and, when issued and delivered by the Fund,
will conform in all material respects to all statements relating thereto
contained in the Memorandum.
(f) The Memorandum and any selling materials prepared or approved by the
Fund do not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If, at any time after the commencement of the offering of Shares
and prior to the termination of such offering, an event occurs that in the
opinion of counsel to either the Placement Agent or the Fund materially affects
the Fund and that should be set forth in an amendment or supplement to the
Memorandum in order to make the statements in the Memorandum not misleading in
light of the circumstances under which they are made, the Fund will as promptly
as practicable prepare and furnish to the Placement Agent copies of an amendment
or supplement to the Memorandum, in such reasonable quantities as it may
request, in order that the Memorandum will not contain any untrue statement of
any material fact or omit to state a material fact that in the opinion of such
counsel is necessary to make the statements in the Memorandum not misleading in
light of the circumstances under which they are made.
(g) This Agreement has been duly authorized, executed and delivered by the
Fund and, upon execution by the Placement Agent, will constitute a valid and
binding agreement of the Fund.
(h) Upon the Placement Agent's request, the Fund will make available to
the Placement Agent any information pertaining to the Fund reasonably requested
by any prospective investor.
The foregoing covenants and representations shall be true and correct as
of the date hereof and for so long as the Agreement remains in effect and the
Placement Agent's Subscribers are invested in the Fund. The Fund agrees to
notify the Placement Agent, in writing, if, during that time, any of the
representations or warranties made by the Fund in this section become inaccurate
or untrue, and of the facts relating thereto.
5. Additional Representations, Warranties and Covenants of the Placement
Agent.
The Placement Agent hereby represents and warrants to the Fund as follows:
(a) The Placement Agent will comply with all applicable laws and
regulations in connection with its activities as placement agent, including,
but, not limited to, laws, rules and regulations in any non-U.S. jurisdiction in
which Shares are to be offered.
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(b) The Placement Agent has full power and authority to enter into, and to
perform its obligations under, this Agreement.
(c) The execution of this Agreement by the Placement Agent has been
validly authorized.
(d) In selling Shares, the Placement Agent will solicit offers to buy
Shares only in compliance with the procedures described in the Memorandum and in
accordance with this Agreement (including, but not limited to, compliance with
Section 4(2) of the Shares Act and Regulation D thereunder). Neither the
Placement Agent nor any other persons authorized by the Placement Agent will
give any information or make any representations, other than those contained in
the Memorandum and any other Offering Documents specifically approved by the
Fund.
(e) The Placement Agent will arrange that each purchaser of Shares, and
each prospective purchaser identified by the Placement Agent, receives a copy of
the Offering Documents.
(f) With respect to any information about the Placement Agent, the
Memorandum and any selling materials do not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If, at any time after
the commencement of the offering of Shares and prior to the termination of such
offering, an event occurs that in the opinion of counsel to either the Placement
Agent or the Fund materially affects the Fund and that should be set forth in an
amendment or supplement to the Memorandum in order to make the statements in the
Memorandum not misleading in light of the circumstances under which they are
made, the Placement Agent will, if such event concerns the business or affairs
of the Placement Agent as described therein, as promptly as practicable prepare
and furnish to the Fund with appropriate information in order to prepare an
amendment or supplement to the Memorandum in order that the Memorandum will not
contain any untrue statement of any material fact or omit to state a material
fact that in the opinion of such counsel is necessary to make the statements in
the Memorandum not misleading in light of the circumstances under which they are
made.
(g) The Placement Agent will distribute to each person to whom the
Placement Agent has furnished a copy of the Memorandum and/or other applicable
written offering document any amendment or supplement thereto provided to the
Placement Agent by the Fund as may be applicable to such person.
(h) The Placement Agent will not, at any time, offer to sell Shares by any
form of general solicitation or advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television, radio or the
internet or seminar or meeting whose attendees have been invited by general
solicitations or advertising.
(i) The Placement Agent acknowledges that transfers of Shares (and their
repurchase by the Fund) are restricted as described in the Memorandum.
(j) The Placement Agent represents that it has an anti-money laundering
program, including customer identification procedures, in place reasonably
designed to comply with the USA Patriot Act.
(k) The Placement Agent agrees that any "nonpublic personal information,"
as defined in Section 248.3(t) of Regulation S-P provided by the Fund to the
Placement Agent is for the specific purpose of permitting the Placement Agent to
perform the services as set out in this Agreement. With respect to such
information, the Placement Agent agrees to comply with Regulation S-P and the
Xxxxx-Xxxxx-Xxxxxx Act and will not disclose any non-public personal information
received in connection with this Agreement, to any other party, except to the
extent necessary to carry out the services set out in this Agreement or as
otherwise permitted under Regulation S-P or the Xxxxx-Xxxxx-Xxxxxx Act.
(l) The Placement Agent maintains all licenses and registrations necessary
under applicable law and regulations (including, without limitation, the rules
of the FINRA to provide the services required to be provided by the Placement
Agent under this Agreement and shall comply with FINRA Conduct Rules in
providing services to the Fund under this Agreement.
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(m) The Placement Agent shall file, as necessary, with FINRA all sales
materials authorized by the Fund (as used by the Placement Agent or identified
by the Fund to the Placement Agent if not prepared initially by the Placement
Agent) for use in the offering of the Shares.
The representations and warranties set forth in this section are
continuing during the term of this Placement Agreement and for so long as the
Placement Agent's Subscribers are invested in the Fund. The Placement Agent
agrees to notify the Fund, in writing, if, during that time, any of the
representations or warranties made by the Placement Agent in this section become
inaccurate or untrue, and of the facts relating thereto.
6. Liability; Indemnification
(a) The Fund agrees to indemnify, defend and hold the Placement Agent and
its affiliates and their respective officers, directors, employees, agents,
representatives and controlling persons (within the meaning of Section 15 of the
1933 Act or Section 20 of the Securities Exchange Act of 1934 (the "1934 Act"))
free and harmless from and against any and all claims, demands, liabilities and
reasonable expenses (including the reasonable cost of investigation or defending
such claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which the Placement Agent and its affiliates and their
respective officers, directors, employees, agents and/or any such controlling
person may incur arising out of or based upon (i) any untrue statement of a
material fact or omission to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading contained in the
Memorandum or other Offering Documents (except to the extent such untrue
statement or omission was made in reliance on and in conformity with information
provided in writing to the Fund by the Placement Agent for inclusion in the
Memorandum or other Offering Documents); (ii) any material breach by the Fund of
any provision of this Agreement including any representation, warranty, covenant
or agreement set forth herein; (iii) any material violation of any applicable
law by the Fund or its officers, directors, employee, agents (other than the
Placement Agent), or representatives; (iv) any actions of the Fund and its
officers, directors, employees and agents relating to the sale of Shares,
including but not limited to any statements or representations, written or oral,
concerning the Fund that such a party makes to the Placement Agent and its
agents and representatives; (v) the actions of the Fund and its employees and
agents relating to the Fund's processing of Subscription Agreements and the
servicing of customer accounts; or (vi) any act or omission (other than any act
or omission, including communications, statements or representations, for which
the Placement Agent itself owes a duty of indemnification under Section 6(b))
made in respect of the Placement Agent's function as Placement Agent; provided,
however, that, in no event shall anything contained herein be so construed as to
protect the Placement Agent against any liability to which the Placement Agent
would otherwise be subject by reason of its gross negligence, willful
misfeasance or bad faith or reckless disregard of its obligations and duties
under this Agreement. The Fund's agreement to indemnify the Placement Agent, and
other indemnitees as aforesaid is expressly conditional upon the Fund being
promptly notified of any action brought against the Placement Agent, such
notification to be given by letter or facsimile addressed to the Fund at the
address set forth in this Agreement or other address communicated to the
Placement Agent in writing (but only to the extent that the Fund is prejudiced
by the failure to give prompt notice), and further conditional upon the
Placement Agent reasonably cooperating with the Fund with respect to any claim
or demand for which the Placement Agent seeks indemnity and promptly defending
such claims if the Fund reasonably requests. The Fund agrees to promptly notify
the Placement Agent of the commencement of any litigation proceeding against the
Fund or any of its officers or directors in connection with the issue and sale
of any Shares.
(b) The Placement Agent agrees to indemnify, defend and hold the Fund,
officers, directors, employees, agents, representatives and each controlling
person (within the meaning of Section 15 of the 1933 Act or Section 20 of the
0000 Xxx) free and harmless from and against any and all claims, demands,
liabilities and reasonable expenses (including the reasonable cost of
investigating or defending against such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Fund and its
affiliates and their respective officers, directors, employees, agents and/or
any such controlling persons may incur based upon (i) any material breach by the
Placement Agent of any provisions of this Agreement including representation,
warranty, covenant or agreement set out herein; (ii) any material violation of
applicable law by the Placement Agent, its officers, directors, employees and
agents relating to the sale of Shares; or (iii) any communications, statements
or representations by the Placement Agent and its officers, directors, employees
and agents relating to the sale of Shares that are inconsistent with the
Offering Documents, including but not limited to any statements or
representations, written or oral, concerning the Placement Agent that such party
makes to the Fund and its agents
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and representatives; provided, however, that, in no event shall anything
contained herein be construed as to protect the Fund, officers, directors,
employees, agents, representatives and each controlling person against any
liability to which any such party would otherwise be subject by reason of gross
negligence, willful misfeasance, bad faith or reckless disregard of its
obligations and duties under this Agreement. The Placement Agent's agreement to
indemnify any such party is expressly conditional upon the Placement Agent being
promptly notified of any action brought against any such party, such
notification to be given by letter or facsimile addressed to the Placement Agent
at the address set out in this Agreement or other address communicated to the
Fund in writing (but only to the extent that the Placement Agent is prejudiced
by the failure to give prompt notice), and further conditional upon any such
party reasonably cooperating with the Placement Agent with respect to any claim
or demand for which any such party seeks indemnity and promptly defending such
claims if the Placement Agent reasonably requests. The Placement Agent agrees to
promptly notify the Fund of the commencement of any litigation proceeding
against the Placement Agent or any of its officers or directors in connection
with the issue and sale of any Shares.
(c) If recovery is not available under the foregoing indemnification
provisions of this Section 6 for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution toward the amount paid or payable by such indemnified party as a
result of the liabilities, claims, costs (including attorneys fees and expenses)
damages and expenses referred to in Subsection (a) or (b) above. In determining
the amount of contribution to which the respective parties are entitled, there
shall be considered the relative benefits received by each party from the
offering of the Shares, the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any untrue statement or omission, and any
other equitable considerations appropriate under the circumstance.
(d) Promptly after receipt by either party of notice of any claim or the
commencement of any action or proceedings with respect to which such party may
be entitled to be indemnified hereunder, the party claiming a right to
indemnification (the "Indemnified Party") will notify the other party (the
"Indemnifying Party") in writing of such claim or the commencement of such
action or proceedings, and the Indemnifying Party will assume the defense of
such action or proceeding and will employ counsel satisfactory to the
Indemnified Party and will pay the fees and expenses of such counsel as
incurred. Notwithstanding the preceding sentence, the Indemnified Party will be
entitled to employ counsel separate from the Indemnifying Party's counsel and
from any other party in such action if the Indemnified Party determines that a
conflict of interest exists which makes counsel chosen by the Indemnifying Party
not advisable or if the Indemnified Party reasonably determines that the
Indemnifying Party's assumption of the defense does not adequately represent the
Indemnified Party's interest. In such event the Indemnifying Party will pay the
fees and disbursements of such separate counsel, but in no event shall the
Indemnifying Party be liable for the fees and expenses of more than one counsel
(in addition to local counsel) for the Indemnified Party in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
(e) The Indemnifying Party agrees that it will not, without the prior
written consent of the Indemnified Party, settle any pending or threatened claim
or proceeding related to or arising out of such engagement or transactions or
conduct in connection therewith (whether or not the Indemnified Party is a party
to such claim or proceeding) unless such settlement includes a provision
unconditionally releasing the Indemnified Party from and holding the Indemnified
Party harmless against all liability in respect of claims by any releasing party
related to or arising out of such engagement or any transaction or conduct in
connection therewith. The Indemnifying Party will also promptly reimburse the
Indemnified Party for all reasonable expenses (including counsel fees) as they
are incurred by the Indemnified Party in connection with investigating,
preparing or defending, or providing evidence in, any pending or threatened
claim or proceeding in respect of which indemnification may be sought hereunder
(whether or not the Indemnified Party is a party to such claim or proceeding) or
in enforcing this Agreement.
(f) The provisions of this Section 6 shall survive termination of this
Agreement.
7. Use of Information
(a) The Fund will advise the Placement Agent promptly of: (i) the
occurrence of any event or the occurrence of any condition known to the Fund
referred to in paragraph 4(f), (ii) such other information concerning the
business and financial condition of the Fund as the Placement Agent may
reasonably from time to time request;
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(iii) the receipt by the Fund of any communication from the SEC, FINRA or any
securities commissioner or regulatory authority in any other state or non-U.S.
jurisdiction concerning the Fund or the offering of the Shares; and (iv) the
commencement of any lawsuit, proceeding or investigation to which the Fund is a
party or is subject relating to the offering of the Shares.
(b) The Placement Agent will advise the Fund promptly of (i) the
occurrence of any event or the occurrence of any condition known to the
Placement Agent referred to in paragraph 5(f), (ii) such other information
concerning the business and financial condition of the Placement Agent as the
Fund reasonably may from time to time request; (iii) the receipt by the
Placement Agent of any communication from the SEC, FINRA or any securities
commissioner or regulatory authority in any other state or non-U.S. jurisdiction
concerning the Fund or the offering of the Shares ; and (iv) the commencement of
any lawsuit, proceeding or investigation to which the Placement Agent is a party
or is subject, in each case, relating to the offering of the Shares.
(c) The Fund also agrees to provide the Placement Agent as soon as
reasonably practicable (i) copies of the trust agreements, side letters,
subscription agreements and any other similar agreements relating to the Fund,
(ii) copies of any financial reports of the Fund, (iii) all financial and other
information concerning the business, operations and financial condition of the
Fund as the Placement Agent may from time to time reasonably request, and (iv)
access to the officers, directors, employees, independent accountants and legal
counsel of the Fund.
(d) The Fund also agrees to provide the Placement Agent a copy of any
opinion of counsel furnished to purchasers of Shares substantively to the effect
that the offering and sale of the Shares are not required to be registered under
the U.S. Securities Act of 1933, as amended, along with a letter stating that
the Placement Agent may rely upon such opinion as though issued to the Placement
Agent as of such date. In rendering its opinion, such counsel may rely upon the
representations and warranties of the purchasers contained in the subscription
agreements and upon certificates from the Placement Agent and officers of the
Fund, or its affiliates, as to factual matters and representations, warranties
and covenants contained in this Agreement.
(e) The Fund also agrees to provide the Placement Agent a comfort letter
of counsel, as agreed upon by counsel to the Fund in a form to be mutually
agreed upon by such counsel and Placement Agent, related to the information
provided in the Registration Statement. In providing such letter, such counsel
may rely upon certificates from the officers of the Fund, any investment adviser
to the Fund, their affiliates, counsel to the Placement Agent or special tax
counsel to the Fund, in each case as appropriate, with respect to disclosure
contained in the Registration Statement.
(f) Neither the Fund nor the Placement Agent shall refer to each other's
roles in the offering and sale of Shares or terms or existence of this Agreement
without each other's prior written consent (other than to potential investors,
the Investment Adviser, the Administrator, or the representatives and agents of
any of these, on a need-to-know basis, for purposes of consummating the offering
and sale of Shares), unless in the reasonable opinion of counsel to the Fund or
counsel tot the Placement Agent such disclosure is required by applicable law or
regulation.
(g) The Fund hereby authorizes the Placement Agent and its affiliates to
utilize the Offering Documents in connection with the offer and sale of the
Shares and recognizes and confirms that the Placement Agent and its affiliates
(i) will be relying solely on such information and other information available
from generally recognized public sources in performing the services contemplated
hereunder, (ii) will not independently verify the accuracy or completeness of
such information or make an independent appraisal of the Fund's prior
investments, business or assets and (iii) does not assume responsibility for and
may rely, without independent verification, on the accuracy and completeness of
any such information.
(h) The Fund acknowledges that the Placement Agent will be utilizing
marketing processes, standards and procedures designed and implemented by the
Placement Agent and its affiliates. The Fund agrees that the Offering Documents
used in the marketing of the Fund will contain the Placement Agent's name and/or
logo in a manner acceptable to the Placement Agent and that such materials will
be written and printed in a fashion acceptable to the Placement Agent.
8. Term and Termination
(a) This Agreement will become effective for all purposes as of [______],
2007 and will remain in effect for an initial term of two years from such date,
unless terminated in accordance with the terms of this Agreement. Thereafter,
this Agreement will continue in effect from year to year, provided that each
such
8
continuance is approved by the Fund's Board of Trustees, including the vote of a
majority of the Trustees who are not "interested persons" of the Fund within the
meaning of the 1940 Act.
(b) Either party may terminate this Agreement without cause, upon sixty
(60) days' prior written notice to the other party, or, if there has been a
material breach of any condition, warranty, representation or other term of this
Agreement by one party, by written notice to such breaching party at any time;
provided however, that if this Agreement is terminated as to a specific series
of Shares, this Agreement shall only be deemed terminated with respect to that
series. This Agreement shall terminate automatically in the event of its
"assignment" within the meaning of the 1940 Act.
(c) No such termination of the Placement Agent's engagement or this
Agreement shall affect the right of the Placement Agent to receive the fees,
indemnity, payments and reimbursements described in Sections 3 and 6 hereof.
9. Notices
Any notices under this Agreement shall be given in writing, sent by hand,
overnight courier, telecopier or certified or registered mail to the address set
forth below or to such other address as shall have been specified in writing to
the other party hereto, and shall be deemed to have been delivered effective at
the earlier of its receipt or within two (2) days after dispatch.
If to a the Fund:
Magnetar Spectrum Fund
c/o Magnetar Financial LLC
0000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
If to the Placement Agent:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.
Attn: Xxxxx Xxxxx, 00xx Xxxxx
0 Xxxxx Xxxxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000
xxxxx_xxxxx@xx.xxx
Fax: (000) 000-0000
10. Confidentiality.
(a) The Fund hereby acknowledges that it has received or will receive in
connection with the Placement Agent's obligations under this Agreement written
and/or oral confidential and proprietary information, including the names of the
Placement Agent's Subscribers (such information being referred to in this
Section 10 as "Customer Information") from the Placement Agent regarding those
customers of the Placement Agent that subscribe for Shares and that all such
Customer Information has been or will be furnished to it subject to the
provisions of this Section 10, Regulation S-P and the Xxxxx-Xxxxx-Xxxxxx Act.
The Fund agrees that it will use, and that it will ensure that all of its
affiliates and agents and other entities providing services with respect to the
Fund use, the Customer Information solely in connection with the subscription
for Shares by Customers, the booking of such Shares, the administration of the
Fund and the performance of their respective roles with respect to the Fund and
its Shares, and for no other purpose whatsoever. Furthermore, the Fund agrees
that it will not disclose or make available, and will ensure that none of its
affiliates or agents or other entities providing services with respect to the
Fund discloses or makes available, any Customer Information to any person or
entity that does not have a need to know such Customer Information in connection
with the foregoing.
9
(b) The Placement Agent acknowledges and agrees that the Fund and its
respective affiliates may disclose Customer Information or portions thereof (i)
at the request of a regulatory agency or in connection with an examination of
the Fund or such affiliate by regulatory examiners; (ii) pursuant to subpoena or
other legal process; (iii) at the express direction of any other authorized
government agency; (iv) to its internal or external attorneys or auditors; (v)
to others to whom the Fund or such affiliate is required to make such disclosure
by law or regulation, and in any of the circumstances mentioned in clauses (i),
(ii), (iii), or (v), the Fund shall (to the extent permitted by law) give the
Placement Agent reasonable prior notice of any such disclosure and shall, in any
event, advise the Placement Agent of any such disclosure to the extent permitted
by law.
(c) Any advice, written or oral, provided by the Placement Agent or its
affiliates pursuant to this Agreement will be treated by the Fund as
confidential, the Fund agrees to cause its affiliates, directors, officers,
employees, agents and representatives to treat such advice as confidential, such
advice will be solely for the information and assistance of the Fund in
connection with the offering and sale of Shares and may not be quoted, nor will
any such advice or the name of the Placement Agent or its affiliates be referred
to, in any report, document, release or other communication, whether written
(including, without limitation, the Offering Documents) or oral, prepared,
issued or transmitted by the Fund or any affiliate, director, officer, employee,
agent or representative of any thereof, without, in each instance, the Placement
Agent's prior written consent (which shall not be unreasonably withheld).
(d) The provisions of this Section 10 shall not apply to information
concerning customers that is obtained in any manner other than pursuant to this
Agreement.
(e) The provisions of this Section 10 shall survive the termination of
this Agreement.
11. Delegation
The Placement Agent shall be entitled to delegate all or any of its
duties, functions or powers under this Agreement to another person or persons as
sub-agent or sub-agents subject to the approval of the Fund. The Placement Agent
shall be solely responsible, however, for the acts and omissions of any such
sub-agent and for the payment of any remuneration to such sub-agent.
12. Miscellaneous
(a) This Agreement is to be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to choice of law
principles, and the provisions of the 1940 Act (which provisions shall control
in the event of any conflict between the laws of the State of New York and the
1940 Act). Neither this Agreement nor any term hereof may be amended, changed,
waived, discharged or terminated except by an instrument in writing signed by
both parties.
(b) The Placement Agent and its subsidiaries, branches and affiliates are
involved in a wide range of Investment banking and other activities (including
investment management, corporate finance and securities issuing, trading and
research) from which conflicting interests, or duties, may arise. Information
which is held elsewhere within the Placement Agent and its affiliates but of
which none of the individuals involved in providing the services contemplated by
this engagement actually has (or without breach of internal procedures can
properly obtain knowledge), will not for any purpose be taken into account in
determining the Placement Agent's responsibilities to the Fund under this
engagement. The Placement Agent and its affiliates will not have any duty to
disclose to the Fund or utilize for the Fund's benefit any non-public
information acquired in, the course of providing services to any other person,
engaging in any transaction (on its own account or otherwise) or otherwise
carrying on its business. In addition, in the ordinary course of business, the
Placement Agent and its affiliates may trade the securities of the Fund and
purchase for its own account and for the accounts of customers, and may at any
time hold a long or short position in such securities.
(c) This Agreement sets forth the entire agreement between the parties
hereto and replaces and supersedes all other understandings, commitments, and
agreements relating to the subject matter hereof.
10
(d) If any provision of this Agreement is determined to be unenforceable,
the remaining provisions shall remain enforceable to the extent permissible.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same agreement.
(f) The parties to this Agreement agree that the obligations of the Fund
under this Agreement will not be binding upon any Directors or members of the
Fund, or upon any officers, employees or agents, whether past, present or
future, of the Fund, individually, but are binding only upon the assets and
property of the Fund.
IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
duly executed as of the date first above written.
MAGNETAR SPECTRUM FUND
By:
-------------------------------
Name:
Title:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX INCORPORATED
By:
-------------------------------
Name:
Title:
11
Appendix A
Operating Procedures
Unless otherwise agreed by the parties, the Fund agrees that it will not
accept any subscriptions for Shares directly from the Placement Agent's
Subscribers and that any such subscriptions must be made through the Placement
Agent.
Unless otherwise agreed by the parties, the Placement Agent will deliver
all Subscription Agreements to the Fund, and the Fund and/or the Administrator
will be responsible for reviewing all Subscription Agreements to confirm that
they have been completed in their entirety.
The Fund will be responsible for maintaining records of all Placement
Agent's Subscribers and for providing Placement Agent's Subscribers, on a timely
basis, with at least quarterly statements of subscriptions and repurchases, with
at least quarterly unaudited performance information for the Fund, with all Fund
reports, letters or other communications issued to the Fund's members and with
any supplements or amendments to the Memorandum. The Fund also will be
responsible for providing the Placement Agent's Subscribers with confirmations
of subscriptions and repurchases. To the extent authorized by the Placement
Agent's Subscribers, the Fund will simultaneously furnish Placement Agent as
well as each Placement Agent's Subscriber's financial consultant/adviser with a
copy of each such confirmation.
The Placement Agent's Subscribers must comply with all subscription and
repurchase procedures, including deadlines, set forth in the Memorandum or
otherwise communicated by the Fund to the Placement Agent with respect to the
transmission of subscription and repurchase requests.
The Placement Agent will provide to the Fund a list of the Placement
Agent's financial consultants/advisers and other appropriate parties who are to
receive copies of statements from the Fund.
