INTERIM INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of this 30th day of September,
2009, by and between PNC Alternative Strategies
Master Fund LLC, a Delaware limited liability
company (the Company), and PNC Capital Advisors,
LLC, a Delaware limited liability company (the
Manager).
Duties of Manager.
The Company hereby appoints the Manager to act as
investment manager to the Company, for the period
and on the terms set forth in this Agreement,
pursuant to the policies set forth in the Companys
registration statement, including the information
therein incorporated by reference, filed with the
Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the 1940
Act), (the Registration Statement), and in the
Companys Limited Liability Company Agreement (the
LLC Agreement), as the LLC Agreement may be amended
from time to time with notice to the Manager. The
Manager specifically acknowledges its obligations as
set forth in the Registration Statement and the LLC
Agreement, provided that the Manager shall not be
obligated to follow any amendment to the policies to
the Company or the LLC Agreement that increases its
obligations, responsibilities or liabilities
thereunder until it has received actual notice of
such amendment and has agreed thereto in writing.
The Company employs the Manager to formulate a
continuing investment program in accordance with the
investment objective and strategies set forth in the
Registration Statement and to manage the investment
and reinvestment of the assets of the Company, to
continuously review, supervise and administer the
investment program of the Company, to determine in
its discretion the securities to be purchased or
sold and the portion of the Companys assets to be
held uninvested, to provide the Company with records
concerning the Managers activities which the Company
is required to maintain and, upon request, to render
regular reports to the Companys officers and Board
of Directors (the Board) concerning the Managers
discharge of the foregoing responsibilities. Without
limiting the generality of the foregoing, the
Manager is specifically authorized to invest the
Companys assets (which may constitute, in the
aggregate, all of the Companys assets) in
unregistered investment funds or other investment
vehicles and registered investment companies
(Investment Funds) that are managed by investment
managers (Investment Managers). The Manager shall
discharge the foregoing responsibilities subject to
the control of the officers and the Board, and in
compliance with the objectives, policies and
limitations set forth in the Registration Statement,
as the same may be amended or supplemented from time
to time with notice to the Manager, and applicable
laws and regulations.
Without limiting the foregoing, the Manager
acknowledges its responsibility and agrees to
conduct proper due diligence on the Investment Funds
and Investment Managers as is required by its
fiduciary role, including, without limitation,
reviewing the valuation procedures of each
Investment Fund and making a determination that such
Investment Fund complies with the valuation
procedures adopted by the Company.
The Manager accepts such employment and agrees to
render the services and to provide, at its own
expense, the office space, furnishings and equipment
and the personnel required by it to perform the
services on the terms and for the compensation
provided herein.
The Manager is fully authorized to delegate any and
all obligations under this Agreement to qualified
third parties, provided (i) the Manager takes
responsibility for the selection of such delegatee
(subject to the approval of the Board and further in
accordance with the requirements of the 1940 Act);
(ii) the Manager reviews the activities of such
delegatee to ensure compliance with the investment
objective and strategies of the Company, as set
forth in the Registration Statement; and (iii) the
Manager updates the Board with respect to the
performance and activities of the delegatee, and
makes recommendations whether or not to terminate
such delegatee to the Board.
Portfolio Transactions.
To the extent applicable, the Manager is authorized
to select the brokers or dealers that will execute
the purchases and sales of securities for the
Company and is directed to use its best efforts to
obtain the best available price and most favorable
execution, except as prescribed herein.
The Manager will promptly communicate to the
officers and the Board such information relating to
portfolio transactions as they may reasonably
request.
Compensation of the Manager.
For the services to be rendered by the Manager as
provided in Section 1 of this Agreement, the Company
shall pay the Manager, pursuant to the LLC
Agreement, at the end of each quarter a management
fee (the Management Fee). The Management Fee
received by the Manager from the Company is equal to
0.3125% (approximately 1.25% on an annualized basis)
of the Companys net assets. The Management Fee will
be computed based on the capital account of each
member of the Company as of the end of business on
the last business day of each quarter in the manner
set out in the LLC Agreement.
The Management Fee provided above shall be computed
on the basis of the period ending on the last
business day prior to the termination or redemption
date subject to a pro rata adjustment based on the
number of days elapsed in the current fiscal quarter
as a percentage of the total number of days in such
quarter.
All compensation earned by the Manager under this
Agreement shall be held in an interest-bearing
escrow account with the Companys custodian. If the
majority of the Companys outstanding voting
securities approve a new advisory agreement with the
Manager by the end of the 150-day period that this
Agreement is effective, the Manager will be paid the
amount in the escrow account (including interest
earned). If a majority of the Companys outstanding
voting securities do not approve a new advisory
agreement with the Manager, the Manager will be
paid, out of the escrow account the lesser of (i)
the Managers investment management and research
costs incurred in performing the Agreement (plus
interest earned on that amount while in escrow) or
(ii) the total amount in the escrow account (plus
interest earned). Subject to these provisions, the
compensation of the Manager for its services under
this Agreement shall be calculated and paid by the
Company in accordance with the foregoing provisions
of this Section.
Other Services.
It is understood by both parties that the Manager
will also be retained to serve in other capacities
for the Company, through separate contracts, and
shall be compensated for such additional services in
accordance with the terms set forth thereunder.
Such other responsibilities may include, but are not
limited to, serving in a management role pursuant to
the LLC Agreement and serving as Administrator
pursuant to the Administrative Services Agreement.
Reports.
The parties agree to furnish to each other current
prospectuses, proxy statements, reports to partners,
certified copies of their financial statements, and
such other information with regard to their affairs
as each may reasonably request in connection with
this Agreement.
The Manager shall submit and present to the Board
reports of the assets of the Company, the value of
such assets, and the performance of the Investment
Funds on a quarterly basis. All investment
information supplied by the Manager to the Board is
confidential and is to be used by the Company for
internal purposes only. Upon termination of this
Agreement, the Manager shall promptly, upon demand,
return to the Company all records (or copies of such
records) that the Company reasonably believes are
necessary in order to discharge the Managers
responsibilities to the Company.
Status of Manager.
The services of the Manager to the Company are not
to be deemed exclusive, and the Manager shall be
free to render similar services to others.
Liability of Manager.
In the absence of willful misfeasance, bad faith or
gross negligence on the part of the Manager, in
performance of its obligations and duties hereunder,
the Manager shall not be subject to any liability
whatsoever to the Company, or to any member of the
Company (each, a Member, and collectively, the
Members) for any error of judgment, mistake of law
or any other act or omission in the course of, or
connected with, rendering services hereunder
including, without limitation, for any losses that
may be sustained in connection with the purchase,
holding, redemption or sale of any security on
behalf of the Company.
Indemnification.
To the fullest extent permitted by law, the Company
shall, subject to Section 8(c), indemnify the
Manager (including for this purpose each officer,
director, partner, principal, employee or agent of,
or any person who controls, is controlled by or is
under common control with, the Manager, and their
respective executors, heirs, assigns, successors or
other legal representatives) (each such person being
referred to as an indemnitee) against all losses,
claims, damages, liabilities, costs and expenses
arising by reason of being or having been Manager to
the Company, or the past or present performance of
services to the Company in accordance with this
Agreement by the indemnitee, except to the extent
that the loss, claim, damage, liability, cost or
expense was caused by reason of willful misfeasance,
bad faith or gross negligence of the duties involved
in the conduct of the indemnitees office. These
losses, claims, damages, liabilities, costs and
expenses include, but are not limited to, amounts
paid in satisfaction of judgments, in compromise, or
as fines or penalties, and counsel fees and
expenses, incurred in connection with the defense or
disposition of any action, suit, investigation or
other proceeding, whether civil or criminal, before
any judicial, arbitral, administrative or
legislative body, in which the indemnitee may be or
may have been involved as a party or otherwise, or
with which such indemnitee may be or may have been
threatened, while in office or thereafter. The
rights of indemnification provided under this
Section 8 are not to be construed so as to provide
for indemnification of an indemnitee for any
liability (including liability under U.S. federal
securities laws which, under certain circumstances,
impose liability even on persons that act in good
faith) to the extent that indemnification would be
in violation of applicable law, but shall be
construed so as to effectuate the applicable
provisions of this Section 8.
Expenses, including counsel fees and expenses,
incurred by any indemnitee (but excluding amounts
paid in satisfaction of judgments, in compromise, or
as fines or penalties) may be paid from time to time
by the Company in advance of the final disposition
of any action, suit, investigation or other
proceeding upon receipt of an undertaking by or on
behalf of the indemnitee to repay to the Company
amounts paid if a determination is made that
indemnification of the expenses is not authorized
under Section 8(a) of this Agreement, so long as (i)
the indemnitee provides security for the
undertaking, (ii) the Company is insured by or on
behalf of the indemnitee against losses arising by
reason of the indemnitees failure to fulfill his,
her or its undertaking, or (iii) a majority of the
directors (each, a Director, and collectively, the
Directors) of the Company who are not interested
persons (as that term is defined in the 0000 Xxx) of
the Company (Independent Directors) (excluding any
Director who is or has been a party to any other
action, suit, investigation or other proceeding
involving claims similar to those involved in the
action, suit, investigation or proceeding giving
rise to a claim for advancement of expenses under
this Agreement) or independent legal counsel in a
written opinion determines based on a review of
readily available facts (as opposed to a full trial-
type inquiry) that reason exists to believe that the
indemnitee ultimately shall be entitled to
indemnification.
As to the disposition of any action, suit,
investigation or other proceeding (whether by a
compromise payment, pursuant to a consent decree or
otherwise) without an adjudication or a decision on
the merits by a court, or by any other body before
which the proceeding has been brought, that an
indemnitee is liable to the Company or its Members
by reason of willful misfeasance, bad faith or gross
negligence of the indemnitees office,
indemnification shall be provided in accordance with
Section 8(a) of this Agreement if (i) approved as in
the best interests of the Company by a majority of
the Independent Directors (excluding any Director
who is or has been a party to any other action,
suit, investigation or other proceeding involving
claims similar to those involved in the action,
suit, investigation or proceeding giving rise to a
claim for indemnification under this Agreement) upon
a determination based upon a review of readily
available facts (as opposed to a full trial-type
inquiry) that the indemnitee acted in good faith and
in the reasonable belief that the actions were in
the best interests of the Company and that the
indemnitee is not liable to the Company or its
Members by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the
duties involved in the conduct of the indemnitees
office, or (ii) the Directors secure a written
opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a
full trial-type inquiry) to the effect that
indemnification would not protect the indemnitee
against any liability to the Company or its Members
to which the indemnitee would otherwise be subject
by reason of willful misfeasance, bad faith or gross
negligence.
Any indemnification or advancement of expenses made
in accordance with this Section 8 shall not prevent
the recovery from any indemnitee of any amount if
the indemnitee subsequently is determined in a final
judicial decision on the merits in any action, suit,
investigation or proceeding involving the liability
or expense that gave rise to the indemnification or
advancement of expenses to be liable to the Company
or its Members by reason of willful misfeasance, bad
faith or gross negligence. In any suit brought by an
indemnitee to enforce a right to indemnification
under this Section 8 it shall be a defense that, and
in any suit in the name of the Company to recover
any indemnification or advancement of expenses made
in accordance with this Section 8 the Company shall
be entitled to recover the expenses upon a final
adjudication from which no further right of appeal
may be taken that, the indemnitee has not met the
applicable standard of conduct described in this
Section 8. In any suit brought to enforce a right to
indemnification or to recover any indemnification or
advancement of expenses made in accordance with this
Section 8, the burden of proving that the indemnitee
is not entitled to be indemnified, or to any
indemnification or advancement of expenses, under
this Section 8 shall be on the Company (or on any
Member acting derivatively or otherwise on behalf of
the Company or its Members).
An indemnitee may not satisfy any right of
indemnification or advancement of expenses granted
in this Section 8 or to which he, she or it may
otherwise be entitled except out of the assets of
the Company, and no Member shall be personally
liable with respect to any such claim for
indemnification or advancement of expenses.
The rights of indemnification provided in this
Section 8 shall not be exclusive of or affect any
other rights to which any person may be entitled by
contract or otherwise under law. Nothing contained
in this Section 8 shall affect the power of the
Company to purchase and maintain liability insurance
on behalf of the Manager or any indemnitee.
Duration and Termination.
This Agreement will become effective as of the date
first written above and will continue in effect for
a period of 150 days unless sooner terminated as
provide herein.
(b) This Agreement may be terminated by the Company
at any time, without payment of any penalty, on 10
days written notice to the Manager (a) upon the vote
of a majority of the Board or (b) by vote of a
majority of the outstanding voting securities of the
Company. If the Board officially considers
terminating this Agreement at any Board meeting, the
Company agrees to provide the Manger with written
notice that such matter has been officially
considered by the Board. This Agreement may be
terminated by the Manager at any time, without the
payment of any penalty, upon 30 days written notice
to the Company. This Agreement will terminate
automatically in the event of its assignment.
Definitions.
As used in this Agreement, the terms assignment,
interested persons, and a vote of a majority of the
outstanding voting securities shall have the
respective meanings set forth in Section 2(a)(4),
Section 2(a)(19) and Section 2(a)(42) of the 1940
Act.
Amendment of Agreement.
This Agreement may be amended by mutual consent, but
the consent of the Manager must be approved (a) by
vote of a majority of those members of the Board who
are not parties to this Agreement or interested
persons of any such party, cast in person at a
meeting called for the purpose of voting on such
amendment, and (b) by vote of a majority of the
outstanding voting securities of the Company.
Severability.
If any provisions 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.
Applicable Law.
This Agreement shall be construed in accordance with
the laws of the State of Delaware, provided,
however, that nothing herein shall be construed in a
manner inconsistent with the 1940 Act.
Notices.
Any notice under this Agreement shall be given in
writing and deemed to have been duly given when
delivered by hand or facsimile or five days after
mailed by certified mail, post-paid, by return
receipt requested to the other party at the
principal office of such party.
Counterparts.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an
original.
Form ADV; Company Changes.
The Company acknowledges receiving Part II of the
Managers Form ADV.
Company Obligations.
The parties to this Agreement agree that the
obligations of the Company under this Agreement
shall not be binding upon any of the Directors,
Members or any officers, employees or agents,
whether past, present or future, of the Company,
individually, but are binding only upon the assets
and property of the Company.
[Signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly
authorized officers as of the day and year first
written above.
PNC CAPITAL ADVISORS, LLC
___/s/Xxxxx X.
McCreadie________________________________________
Name: Xxxxx X. XxXxxxxxx
Title: President
PNC ALTERNATIVE STRATEGIES MASTER FUND LLC
___/s/Xxxxxxxx X.
Spratley________________________________________
Name: Xxxxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
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