FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of the ___ day of ____________, 2007 by and
between CORNERSTONE PROGRESSIVE RETURN FUND (the "Fund"), a Delaware business
trust having its principal place of business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, and _________________ ("Fund Accountant"), a ________ organized
under the laws of _________ and having its principal place of business at
_____________________.
WHEREAS, the Fund is a closed-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund desires that Fund Accountant perform certain fund
accounting services for the Fund; and
WHEREAS, Fund Accountant is willing to perform such services on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. RETENTION OF FUND ACCOUNTANT.
The Fund hereby retains Fund Accountant to act as the fund accountant
of the Fund and to furnish the Fund with the services as set forth below. Fund
Accountant hereby accepts such employment to perform such duties.
(a) MAINTENANCE OF BOOKS AND RECORDS.
Fund Accountant shall maintain and keep current the accounts, books,
records and other documents relating to the Fund's financial and
portfolio transactions as may be required by the rules and
regulations of the Securities and Exchange Commission (the "SEC")
adopted under Section 31(a) of the 1940 Act. Fund Accountant shall
cause the subject records of the Fund to be maintained and preserved
pursuant to the requirements of the 1940 Act.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES.
In addition to the maintenance of the books and records specified
above, Fund Accountant shall perform the following accounting
services daily for the Fund:
(i) Calculate the net asset value per share utilizing prices
obtained from the sources described in subsection 1(b)(ii)
below;
(ii) Obtain security prices from independent pricing services, or
if such quotes are unavailable, then obtain such prices from
the Fund's investment adviser or its designee, as approved
by the Fund's Board of Directors (hereafter referred to as
"Directors");
(iii) Verify and reconcile with the Fund's custodian all daily
trade activity;
(iv) Compute, as appropriate, the Fund's net income and capital
gains, dividend payables, dividend factors, yields, and
weighted average portfolio maturity;
(v) Review daily the net asset value calculation and dividend
factor (if any) for the Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations, and
distribute net asset values and yields to NASDAQ;
(vi) Determine unrealized appreciation and depreciation on
securities held by the Fund;
(vii) Amortize premiums and accrete discounts on securities
purchased at a price other than face value, if requested by
the Fund;
(viii) Update fund accounting system to reflect rate changes, as
received from the Fund's investment adviser, on variable
interest rate instruments;
(ix) Post Fund transactions to appropriate categories;
(x) Accrue expenses of the Fund according to instructions
received from the Fund's administrator; (xi) Determine the
outstanding receivables and payables for all (1) security
trades, (2) Fund share transactions and (3) income and
expense accounts;
(xii) Provide accounting reports in connection with the Fund's
regular annual audit and other audits and examinations by
regulatory agencies; and
(xiii) Provide such periodic reports as the parties shall agree
upon.
(c) ADDITIONAL ACCOUNTING SERVICES.
Fund Accountant shall also perform the following additional
accounting services for the Fund:
(i) Provide monthly (or as frequently as may reasonably be
requested by the Fund or the Fund's investment adviser) a
set of financial statements for the Fund as described below,
upon request of the Fund:
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Security Purchases and Sales Journals
Portfolio Holdings Reports
(ii) Provide accounting information for the following:
(A) federal and state income tax returns and federal excise
tax returns;
(B) the Fund's semi-annual reports with the SEC on Form
N-SAR; (C) the Fund's annual, semi-annual and quarterly
(if any) shareholder reports;
(D) registration statements on Form N-1A and other filings
relating to the registration of shares;
(E) Fund Accountant's monitoring of the Fund's status as a
regulated investment company under Subchapter M of the
Internal Revenue Code, as amended;
(F) annual audit by the Fund's auditors; and
(G) examinations performed by the SEC.
(d) SPECIAL REPORTS AND SERVICES.
(i) Fund Accountant may provide additional special reports upon
the request of the Fund or the Fund's investment adviser,
which may result in an additional charge, the amount of
which shall be agreed upon in advance in writing between the
parties.
(ii) Fund Accountant may provide such other similar services with
respect to the Fund as may be reasonably requested by the
Fund, which may result in an additional charge, the amount
of which shall be agreed upon in advance in writing between
the parties.
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2. SUBCONTRACTING.
Fund Accountant may, at its expense and, upon written notice to the
Fund and the Fund's non-objection in writing thereto, subcontract with any
entity or person concerning the provision of the services contemplated
hereunder; provided, however, that Fund Accountant shall not be relieved of any
of its obligations under this Agreement by the appointment of such subcontractor
and, provided further, that Fund Accountant shall be responsible, to the extent
provided in Section 7 hereof, for all acts of such subcontractor as if such acts
were its own.
3. COMPENSATION.
The Fund shall pay for the services to be provided by Fund Accountant
under this Agreement in accordance with, and in the manner set forth in,
Schedule A attached hereto, as such Schedule may be amended from time to time.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, Fund Accountant's
compensation for that part of the month in which the Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of Fund Accountant's compensation for the preceding month
shall be made promptly.
4. REIMBURSEMENT OF EXPENSES.
In addition to paying Fund Accountant the fees described in Schedule A
attached hereto, the Fund agrees to reimburse Fund Accountant for its reasonable
out-of-pocket expenses in providing services hereunder, including without
limitation the following, all of which shall be passed through to the Fund at
cost:
(a) All freight and other delivery and bonding charges incurred by
Fund Accountant in delivering materials to and from the Fund;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by Fund
Accountant in communication with the Fund, the Fund's investment
adviser or custodian, dealers or others as required for Fund
Accountant to perform the services to be provided hereunder;
(c) The cost of obtaining security market quotes;
(d) All expenses incurred in connection with any custom programming
or systems modifications required to provide any special reports
or services requested by the Fund, provided, however, that any
such expenses shall have been approved in advance in writing by
the Fund;
(e) Any expenses Fund Accountant shall incur at the written direction
of an officer of the Fund thereunto duly authorized other than an
employee or other affiliated person of Fund Accountant who may
otherwise be named as an authorized representative of the Fund
for certain purposes; and
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(f) Any additional expenses reasonably incurred by Fund Accountant in
the performance of its duties and obligations under this
Agreement whenever such expenses are not otherwise properly borne
by Fund Accountant as part of its duties and obligations under
this Agreement.
5. EFFECTIVE DATE.
This Agreement shall become effective as of the date first written
above (the "Effective Date").
6. TERM OF THIS AGREEMENT.
The term of this Agreement shall continue in effect, unless earlier
terminated by either party hereto as provided hereunder, for a period of two
years. Thereafter, unless otherwise terminated as provided herein, this
Agreement shall be renewed automatically for successive one-year periods.
This Agreement may be terminated without penalty: (i) by provision of
sixty (60) days' written notice; (ii) by mutual agreement of the parties; or
(iii) for "cause" (as defined herein) upon the provision of thirty (30) days'
advance written notice by the party alleging cause.
For purposes of this Agreement, "cause" shall mean: (i) a material
breach of this Agreement that has not been remedied within thirty (30) days
following written notice of such breach from the non-breaching party, (ii) a
series of negligent acts or omissions or breaches of this Agreement which, in
the aggregate, constitute in the reasonable judgment of the Fund, a serious
failure to perform satisfactorily Fund Accountant's obligations hereunder; (iii)
a final, unappealable judicial, regulatory or administrative ruling or order in
which the party to be terminated has been found guilty of criminal or unethical
behavior in the conduct of its business; or (iv) financial difficulties on the
part of the party to be terminated which are evidenced by the authorization or
commencement of, or involvement by way of pleading, answer, consent or
acquiescence in, a voluntary or involuntary case under Title 11 of the United
States Code, as from time to time is in effect, or any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or the modification or alteration of the rights of
creditors.
Notwithstanding the foregoing, after such termination for so long as
Fund Accountant, with the written consent of the Fund, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due Fund Accountant and unpaid by the Fund upon
such termination shall be immediately due and payable upon and notwithstanding
such termination. Unless this Agreement has been terminated for "cause" (as
defined herein), Fund Accountant shall be entitled to collect from the Fund, in
addition to the compensation described in Schedule A, the amount of all of Fund
Accountant's cash disbursements for services in connection with Fund
Accountant's activities in effecting such termination, including without
limitation, the delivery to the Fund and/or its designees of the Fund's
property, records, instruments and documents.
7. STANDARD OF CARE.
The duties of Fund Accountant shall be confined to those expressly set
forth herein, and no implied duties are assumed by or may be asserted against
Fund Accountant hereunder. Fund Accountant shall be obligated to exercise care
and diligence in the performance of its duties hereunder and to act in good
faith in performing the services provided for under this Agreement. Fund
Accountant shall be liable for any damages arising directly or indirectly out of
Fund Accountant's failure to perform its duties under this Agreement to the
extent such damages arise directly or indirectly out of Fund Accountant's
willful misfeasance, bad faith, negligence in the performance of its duties, or
reckless disregard of it obligations and duties hereunder. (As used in this
Article 7, the term "Fund Accountant" shall include directors, officers,
employees and other agents of Fund Accountant or of any subcontractor of Fund
Accountant as well as Fund Accountant itself and any such subcontractor.)
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Without limiting the generality of the foregoing or any other provision
of this Agreement, (i) Fund Accountant shall not be liable for losses beyond its
reasonable control, provided that Fund Accountant has acted in accordance with
the standard of care set forth above; and (ii) Fund Accountant shall not be
liable for the validity or invalidity or authority or lack thereof of any
instruction, notice or other instrument that Fund Accountant reasonably believes
to be genuine and to have been signed or presented by a duly authorized
representative of the Fund (other than an employee or other affiliated persons
of Fund Accountant who may otherwise be named as an authorized representative of
the Fund for certain purposes).
Fund Accountant may apply to the Fund at any time for instructions and
may consult with counsel for the Fund or its own counsel and with accountants
and other experts with respect to any matter arising in connection with Fund
Accountant's duties hereunder, and Fund Accountant shall not be liable or
accountable for any action taken or omitted by it in good faith in accordance
with instruction or with the reasonable opinion of counsel for the Fund, Fund
accountants or other experts retained by the Fund qualified to render such
opinion.
8. INDEMNIFICATION.
The Fund agrees to indemnify and hold harmless Fund Accountant from and
against any and all actions, suits, claims, losses, damages, costs, charges,
reasonable counsel fees and disbursements, payments, expenses and liabilities
(including reasonable investigation expenses) (collectively, "Losses") arising
directly or indirectly out of any action or omission to act which Fund
Accountant takes (i) at any request or on the direction of or in reliance on the
reasonable advice of the Fund, (ii) upon any instruction, notice or other
instrument that Fund Accountant reasonably believes to be genuine and to have
been signed or presented by a duly authorized representative of the Fund (other
than an employee or other affiliated person of Fund Accountant who may otherwise
be named as an authorized representative of the Fund for certain purposes) or
(iii) on its own initiative, in good faith and in accordance with the standard
of care set forth herein, in connection with the performance of its duties or
obligations hereunder; provided, however that the Fund shall have no obligation
to indemnify or reimburse Fund Accountant under this Article 8 to the extent
that Fund Accountant is entitled to reimbursement or indemnification for such
Losses under any liability insurance policy described in this Agreement or
otherwise.
Fund Accountant shall not be indemnified against or held harmless from
any Losses arising directly or indirectly out of Fund Accountant's own willful
misfeasance, bad faith, negligence in the performance of its duties, or reckless
disregard of its obligations and duties hereunder. (As used in this Article 8,
the term "Fund Accountant" shall include directors, officers, employees and
other agents of Fund Accountant as well as Fund Accountant itself.)
The Fund and its officers, employees, shareholders and agents shall not
be liable for, and Fund Accountant shall indemnify and hold the Fund harmless
from and against, any and all claims made by third parties, including costs,
expenses (including reasonable attorneys' fees), losses, damages, charges,
payments and liabilities of any sort or kind, which result from a negligent act,
or omission to act, or bad faith by Fund Accountant in the performance of its
duties hereunder.
9. RECORD RETENTION AND CONFIDENTIALITY.
Fund Accountant shall keep and maintain on behalf of the Fund all
books and records which the Fund and Fund Accountant is, or may be, required to
keep and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the 1940 Act, relating
to the maintenance of books and records in connection with the services to be
provided hereunder. Fund Accountant further agrees that all such books and
records shall be the property of the Fund and to make such books and records
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available for inspection by the Fund or by the SEC at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Fund and its shareholders; except when requested to divulge such
information by duly-constituted authorities or court process.
10. FORCE MAJEURE.
Fund Accountant assumes no responsibility hereunder, and shall not be
liable, for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control, including acts of civil or military
authority, national emergencies, fire, flood, catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
11. RIGHTS OF OWNERSHIP; RETURN OF RECORDS.
All records and other data are the exclusive property of the Fund and
all such records and data will be furnished to the Fund in appropriate form as
soon as practicable after termination of this Agreement for any reason. Fund
Accountant may at its option at any time, and shall promptly upon the Fund's
demand, turn over to the Fund and cease to retain Fund Accountant's files,
records and documents created and maintained by Fund Accountant pursuant to this
Agreement which are no longer needed by Fund Accountant in the performance of
its services or for its legal protection. If not so turned over to the Fund,
such documents and records will be retained by Fund Accountant for six years
from the year of creation. At the end of such six-year period, such records and
documents will be turned over to the Fund unless the Fund authorizes in writing
the destruction of such records and documents.
12. REPRESENTATIONS OF THE FUND.
The Fund certifies to Fund Accountant that: (1) as of the close of
business on the Effective Date, the Fund has authorized unlimited shares, and
(2) this Agreement has been duly authorized by the Fund and, when executed and
delivered by the Fund, will constitute a legal, valid and binding obligation of
the Fund, enforceable against the Fund in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
13. REPRESENTATIONS OF FUND ACCOUNTANT.
Fund Accountant represents and warrants that: (1) the various
procedures and systems which Fund Accountant has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other cause
the records, and other data of the Fund and Fund Accountant's records, data,
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder, (2) this Agreement has been duly authorized by Fund Accountant and,
when executed and delivered by Fund Accountant, will constitute a legal, valid
and binding obligation of Fund Accountant, enforceable against Fund Accountant
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties, (3) it is duly registered with the
appropriate regulatory agency as a transfer agent and such registration will
remain in full force and effect for the duration of this Agreement, and (4) it
has and will continue to have access to the necessary facilities, equipment and
personnel to perform its duties and obligations under this Agreement.
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14. INSURANCE.
Fund Accountant shall furnish the Fund with pertinent information
concerning the professional liability insurance coverage that it maintains. Such
information shall include the identity of the insurance carrier(s), coverage
levels and deductible amounts. Fund Accountant shall notify the Fund should any
of its insurance coverage be canceled or reduced. Such notification shall
include the date of change and the reasons therefor. Fund Accountant shall
notify the Fund of any material claims against it with respect to services
performed under this Agreement, whether or not they may be covered by insurance,
and shall notify the Fund from time to time as may be appropriate of the total
outstanding claims made by Fund Accountant under its insurance coverage.
15. INFORMATION TO BE FURNISHED BY THE FUND.
The Fund has furnished to Fund Accountant the following:
(a) Copies of the Trust Instrument and of any amendments thereto,
certified by the proper official of the state in which such
document has been filed.
(b) Copies of the following documents:
(1) The Fund's Bylaws and any amendments thereto; and
(2) Certified copies of resolutions of the Directors covering
the approval of this Agreement, authorization of a specified
officer of the Fund to execute and deliver this Agreement
and authorization for specified officers of the Fund to
instruct Fund Accountant thereunder.
(c) A list of all the officers of the Fund, together with specimen
signatures of those officers who are authorized to instruct Fund
Accountant in all matters.
(d) Copies of the Prospectus and Statement of Additional Information
for the Fund.
16. AMENDMENTS TO AGREEMENT.
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.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and
Fund Accountant may conclusively assume that any special procedure which has
been approved by the Fund does not conflict with or violate any requirements of
its Trust Instrument or then current prospectus, or any rule, regulation or
requirement of any regulatory body.
17. COMPLIANCE WITH LAW.
Except for the obligations of Fund Accountant otherwise set forth
herein, the Fund assumes full responsibility for the preparation, contents and
distribution of the prospectus of the Fund as to compliance with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
the 1940 Act and any other laws, rules and regulations of governmental
authorities having jurisdiction. The Fund represents and warrants that no shares
of the Fund will be offered to the public until the Fund's registration
statement under the Securities Act and the 1940 Act has been declared or becomes
effective.
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18. NOTICES.
Any notice provided hereunder shall be sufficiently given when sent
by registered or certified mail to the party required to be served with such
notice, at the following address: if to the Fund, at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000; and if to Fund Accountant, at __________________; or at
such other address as such party may from time to time specify in writing to the
other party pursuant to this Section.
19. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
20. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of [New York] and the applicable provisions of the 1940 Act. To the extent
that the applicable laws of the State of Ohio, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
21. MULTIPLE ORIGINALS.
This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
CORNERSTONE PROGRESSIVE RETURN FUND
By:
---------------------------------
Name:
Title: President
[ ]
By:
---------------------------------
Name:
Title:
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SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT BETWEEN
CORNERSTONE PROGRESSIVE RETURN FUND
AND
[ ]
FEES AND EXPENSES
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