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CORNERSTONE PROGRESSIVE RETURN FUND
_______ Common Shares of Beneficial Interest
$15.00 per Share
UNDERWRITING AGREEMENT
Dated: _______, 2007
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TABLE OF CONTENTS
Page
SECTION 1. Representations and Warranties....................................2
SECTION 2. Sale and Delivery to Underwriter; Closing........................12
SECTION 3. Covenants of the Fund and the Adviser............................13
SECTION 4. Payment of Expenses..............................................15
SECTION 5. Conditions of Underwriter's Obligations..........................16
SECTION 6. Indemnification..................................................20
SECTION 7. Contribution.....................................................22
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery............................................23
SECTION 9. Termination of Agreement.........................................23
SECTION 10. Notices 24
SECTION 11. Parties 24
SECTION 12. Governing Law and Time..........................................24
SECTION 13. Effect of Headings..............................................24
SECTION 14. Definitions.....................................................25
SECTION 15. Absence of Fiduciary Relationship...............................27
EXHIBITS
Exhibit A - Initial Securities to be Sold
Exhibit B - Form of Opinion of Fund Counsel- To be provided
Exhibit C - Form of Opinion of Adviser Counsel- To be provided
Exhibit D - Price-Related Information
i
CORNERSTONE PROGRESSIVE RETURN FUND
_______ Shares of Beneficial Interest
UNDERWRITING AGREEMENT
_______, 2007
First Dominion Capital Corp.
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, Xx 00000
Ladies and Gentlemen:
Cornerstone Progressive Return Fund, a Delaware statutory trust (the
"Fund"), and Cornerstone Advisors, Inc, a North Carolina corporation (the
"Adviser"), confirm their respective agreements with First Dominion Capital
Corp. (the "Underwriter") with respect to the issue and sale by the Fund of a
total of up to _______ common shares of beneficial interest, no par value per
share (the "Initial Securities"), and the purchase by the Underwriter of any of
such Initial Securities, and with respect to the grant by the Fund to the
Underwriter of the option described in Section 2(b) hereof to purchase all or
any part of _______ additional common shares of beneficial interest to cover
over-allotments, if any. The Initial Securities to be purchased by the
Underwriter and all or any part of the _______ common shares of beneficial
interest subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities." Certain
terms used in this Agreement are defined in Section 15 hereof.
The Fund understands that the Underwriter proposes to make a public
offering of the Securities as soon as the Underwriter deems advisable after this
Agreement has been executed and delivered.
The Fund has entered into (i) an Investment Management Agreement with
the Adviser dated as of June 7, 2007, (ii) a Custody Agreement with _______
dated as of _______, (iii) a Stock Transfer Agency Agreement with _______ dated
as of _______, (iv) an Administration Agreement with _______ dated as of _______
and (v) a Fund Accounting Agreement with __________ dated as of __________ and
such agreements are herein referred to as the "Investment Management Agreement,"
the "Custodian Agreement", the "Transfer Agency Agreement," the "Administration
Agreement" and the "Accounting Agreement" respectively. Collectively, the
Investment Management Agreement, the Custodian Agreement, the Transfer Agency
Agreement, the Administration Agreement, and the Accounting Agreement are herein
referred to as the "Fund Agreements." The Adviser has entered into a Structuring
Fee Agreement with the Underwriter dated as of _______ (the "Structuring Fee
Agreement"). In addition, the Fund has adopted a dividend reinvestment plan
pursuant to which holders of common shares of beneficial interest shall have
their dividends automatically reinvested in additional common shares of
beneficial interest of the Fund unless they elect to receive such dividends in
cash, and such plan is herein referred to as the "Dividend Reinvestment Plan."
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The Fund has prepared and filed with the Commission a registration
statement (file numbers 333-14290 and 811-22066) on Form N-2, including a
related preliminary prospectus (including the statement of additional
information incorporated by reference therein), for registration under the Act
of the offering and sale of the Securities, and of the Fund under the 1940 Act .
The Fund has filed one or more amendments thereto, including a related
preliminary prospectus (including the statement of additional information
incorporated by reference therein), each of which has previously been furnished
to you.
The Fund will next file with the Commission one of the following:
either (1) prior to the effective date of the registration statement, a further
amendment to the registration statement (including the form of final prospectus
(including the statement of additional information incorporated by reference
therein)) or (2) after the effective date of the registration statement, a final
prospectus (including the statement of additional information incorporated by
reference therein) in accordance with Rules 430A and 497. In the case of clause
(2), the Fund has included or incorporated by reference in the Registration
Statement, as amended at the effective date, all information (other than Rule
430A Information) required by the 1933 Act and the 1940 Act and the Rules and
Regulations to be included in the registration statement and the Prospectus. As
filed, such amendment and form of final prospectus (including the statement of
additional information incorporated by reference therein), or such final
prospectus (including the statement of additional information incorporated by
reference therein), shall contain all Rule 430A Information, together with all
other such required information, and, except to the extent the Underwriter shall
agree in writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the Applicable Time or, to the extent not
completed at the Applicable Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest preliminary
prospectus) as the Fund has advised you, prior to the Applicable Time, will be
included or made therein.
SECTION 1. Representations and Warranties.
(a) REPRESENTATIONS AND WARRANTIES BY THE FUND, AND THE ADVISER. The
Fund, and the Adviser, jointly and severally, represent and warrant to each
Underwriter as of the date hereof, as of the Applicable Time, as of the Closing
Date referred to in Section 2(c) hereof, and as of each Option Closing Date (if
any) referred to in Section 2(b) hereof, and agree with the Underwriter, as
follows:
(1) Compliance with Registration Requirements. The Securities
have been duly registered under the 1933 Act and the Fund has been duly
registered as an investment company under the 1940 Act pursuant to the
Registration Statement. Each of the Initial Registration Statement and
any Rule 462(b) Registration Statement has become effective under the
1933 Act and the 1940 Act, and no stop order suspending the
effectiveness of the Initial Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act or the 1940
Act, and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Fund or the Adviser, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. The
Preliminary Prospectus and the Prospectus complied when filed with the
Commission in all material respects with the requirements of the 1933
Act, the 1940 Act and the Rules and Regulations. The Preliminary
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Prospectus and the Prospectus and any amendments or supplements thereto
delivered to the Underwriter for use in connection with the offering of
the Securities each was identical to the electronically transmitted
copy thereof filed with the Commission pursuant to XXXXX, except to the
extent permitted by Regulation S-T.
At the respective times the Initial Registration Statement,
any Rule 462(b) Registration Statement and any post-effective
amendments thereto became or become effective and at the Closing Date
(and, if any Option Securities are purchased, at the applicable Option
Closing Date), the Initial Registration Statement, any Rule 462(b)
Registration Statement will, and the 1940 Act Notification when
originally filed with the Commission and any amendments and supplements
thereto did or will, comply in all material respects with the
requirements of the 1933 Act, the 1940 Act and the Rules and
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, as of
its date, at the Closing Date (and, if any Option Securities are
purchased, at the applicable Option Closing Date), and at any time when
a prospectus is required by applicable law to be delivered in
connection with sales of Securities, included or will include an untrue
statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Preliminary Prospectus and the information included on Exhibit D
hereto, all considered together (collectively, the "General Disclosure
Package") did not or will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the Fund
makes no representations or warranties as to the information contained
in or omitted from the Preliminary Prospectus or the Prospectus in
reliance upon and in conformity with information furnished in writing
to the Fund by or on behalf of the Underwriter specifically for
inclusion therein, it being understood and agreed that the only such
information furnished by the Underwriter consists of the information
described as such in Section 6(b) hereof.
The Fund's registration statement on Form 8-A under the 1934 Act
is effective.
(2) Independent Accountants. Xxxx, Xxxxxx & Xxxxx LLP has audited
and certified the financial statements and supporting schedules
included in the Registration Statement, the Preliminary Prospectus and
the Prospectus, and are independent public accountants as required by
the 1933 Act, the 1940 Act and the Rules and Regulations.
(3) Financial Statements. The financial statements of the Fund
included in the Registration Statement, the Preliminary Prospectus and
the Prospectus, together with the related schedules (if any) and notes,
present fairly the financial position of the Fund at the dates
indicated and the results of operations and cash flows of the Fund for
the periods specified; and all such financial statements have been
prepared in conformity with GAAP applied on a consistent basis
throughout the periods involved and comply with all applicable
accounting requirements under the 1933 Act, the 1940 Act and the Rules
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and Regulations. The supporting schedules, if any, included in the
Registration Statement present fairly, in accordance with GAAP, the
information required to be stated therein, and the other financial and
statistical information and data included in the Registration
Statement, the Preliminary Prospectus and the Prospectus are accurately
derived from such financial statements and the books and records of the
Fund.
(4) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Preliminary Prospectus
and the Prospectus, except as otherwise stated therein, (A) there has
been no Fund Material Adverse Effect and (B) there have been no
transactions entered into by the Fund which are material with respect
to the Fund other than those in the ordinary course of its business as
described in the Preliminary Prospectus and the Prospectus.
(5) Good Standing of the Fund. The Fund has been duly formed and
is validly existing in good standing as a statutory trust under the
laws of the State of Delaware and has power and authority to own, lease
and operate its properties and to conduct its business as described in
the Registration Statement, the Preliminary Prospectus and the
Prospectus and to enter into and perform its obligations under this
Agreement and the Fund Agreements; and the Fund is duly qualified to
transact business and is in good standing under the laws of each
jurisdiction which requires qualification.
(6) No Subsidiaries. The Fund has no subsidiaries.
(7) Investment Company Status. The Fund is duly registered under
the 1940 Act as a closed-end, diversified management investment company
under the 1940 Act, the Rules and Regulations, and the 1940 Act
Notification has become effective. The Fund has not received any notice
from the Commission pursuant to Section 8(e) of the 1940 Act with
respect to the 1940 Act Notification or the Registration Statement.
(8) Officers and Trustees. No person is serving or acting as an
officer, trustee or investment adviser of the Fund except in accordance
with the provisions of the 1940 Act and the Rules and Regulations and
the Advisers Act. Except as disclosed in the Registration Statement,
the Preliminary Prospectus and the Prospectus, no trustee of the Fund
is (A) an "interested person" (as defined in the 0000 Xxx) of the Fund
or (B) an "affiliated person" (as defined in the 0000 Xxx) of the
Underwriter. For purposes of this Section 1(a)(8), the Fund and the
Adviser shall be entitled to rely on representations from such officers
and trustees. In acting upon this Agreement and other matters
considered by the trustees, the trustees who are not interested persons
have had independent counsel as required by the Rules and Regulations
under the 0000 Xxx.
(9) Capitalization. The authorized, issued and outstanding common
shares of beneficial interest of the Fund are as set forth in the
Preliminary Prospectus and in the Prospectus. All issued and
outstanding common shares of beneficial interest of the Fund have been
duly authorized and validly issued and are fully paid and
non-assessable and have been offered and sold or exchanged by the Fund
in compliance with all applicable laws (including, without limitation,
federal and state securities laws); none of the outstanding common
shares of beneficial interest of the Fund was issued in violation of
the preemptive or other similar rights of any security holder of the
Fund.
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(10) Power and Authority. The Fund has full power and authority
to enter into this Agreement and the Fund Agreements; the execution and
delivery of, and the performance by the Fund of its obligations under
this Agreement and the Fund Agreements have been duly and validly
authorized by the Fund; and this Agreement and the Fund Agreements have
been duly executed and delivered by the Fund and constitute the valid
and legally binding agreements of the Fund, enforceable against the
Fund in accordance with their terms, except as rights to indemnity and
contribution may be limited by federal or state securities laws and
subject to the qualification that the enforceability of the Fund's
obligations hereunder and thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other
laws relating to or affecting creditors' rights generally and by
general equitable principles.
(11) Agreements' Compliance with Law. This Agreement and each of
the Fund Agreements comply in all material respects with all applicable
provisions of the 1940 Act, the 1940 Act Rules and Regulations, the
Advisers Act and the Advisers Act Rules and Regulations.
(12) Absence of Defaults and Conflicts. The Fund is not (i) in
violation of its Declaration of Trust or bylaws, (ii) in breach or
default in the performance of the terms of any indenture, contract,
lease, mortgage, declaration of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which its property is subject or
(iii) in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to the Fund or of any decree
of the Commission, the NASD, any state securities commission, any
foreign securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official having
jurisdiction over the Fund.
(13) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Fund, threatened, against or affecting the Fund
which is required to be disclosed in the Preliminary Prospectus and
Prospectus (other than as disclosed therein), or that could reasonably
be expected to result in a Material Adverse Effect, or that could
reasonably be expected to materially and adversely affect the
properties or assets of the Fund or the consummation of the
transactions contemplated in this Agreement or the performance by the
Fund of its obligations under this Agreement or the Fund Agreements;
the aggregate of all pending legal or governmental proceedings to which
the Fund is a party or of which any of its property or assets is the
subject which are not described in the Preliminary Prospectus or the
Prospectus or to be filed as an exhibit to the Registration Statement
that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Fund Material Adverse Effect.
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(14) Accuracy of Descriptions and Exhibits. The statements set
forth under the headings "Description of Capital Structure,"
"Anti-Takeover Provisions in the Declaration of Trust" and "Federal
Income Tax Matters" in the Preliminary Prospectus and the Prospectus
and "Taxes" in the Statement of Additional Information, insofar as such
statements purport to summarize certain provisions of the 1940 Act, the
Delaware Statutory Trust Act, the Fund's Declaration of Trust, U.S.
federal income tax law and regulations or legal conclusions with
respect thereto, fairly and accurately summarize such provisions in all
material respects; all descriptions in the Registration Statement, the
Preliminary Prospectus and the Prospectus of any Fund documents are
accurate in all material respects; and there are no franchises,
contracts, indentures, mortgages, deeds of trust, loan or credit
agreements, bonds, notes, debentures, evidences of indebtedness, leases
or other instruments or agreements required to be described or referred
to in the Registration Statement, the Preliminary Prospectus or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations which have not been so described and
filed as required.
(15) Absence of Further Requirements. (A) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, domestic or foreign, and (B) no authorization, approval, vote
or other consent of any other person or entity, is necessary or
required for the performance by the Fund of its obligations under this
Agreement or the Fund Agreements, for the offering, issuance, sale or
delivery of the Securities hereunder, or for the consummation of any of
the other transactions contemplated by this Agreement or the Fund
Agreements, in each case on the terms contemplated by the Registration
Statement, the Preliminary Prospectus and the Prospectus, except such
as have been already obtained and under the 1933 Act, the 1940 Act, the
Rules and Regulations, the rules and regulations of the NASD and the
AMEX and such as may be required under state securities laws.
(16) Non-Contravention. Neither the execution, delivery or
performance of this Agreement, the Fund Agreements nor the consummation
by the Fund of the transactions herein or therein contemplated (i)
conflicts or will conflict with or constitutes or will constitute a
breach of the Declaration of Trust or bylaws of the Fund, (ii)
conflicts or will conflict with or constitutes or will constitute a
breach of or a default under, any agreement, indenture, lease or other
instrument to which the Fund is a party or by which it or any of its
properties may be bound or (iii) violates or will violate any statute,
law, regulation or filing or judgment, injunction, order or decree
applicable to the Fund or any of its properties or will result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Fund pursuant to the terms of any agreement
or instrument to which the Fund is a party or by which the Fund may be
bound or to which any of the property or assets of the Fund is subject.
(17) Possession of Licenses and Permits. The Fund has such
licenses, permits, and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its property and to
conduct its business in the manner described in the Preliminary
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Prospectus and the Prospectus; the Fund has fulfilled and performed all
its material obligations with respect to such permits and no event has
occurred which allows or, after notice or lapse of time, would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the Fund under any such permit, subject in
each case to such qualification as may be set forth in the Preliminary
Prospectus and the Prospectus; and, except as described in the
Preliminary Prospectus and the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Fund.
(18) Distribution of Offering Material. The Fund has not
distributed and, prior to the later to occur of (i) the Closing Date
and (ii) completion of the distribution of the Securities, will not
distribute any offering material in connection with the offering and
sale of the Securities other than the Registration Statement, the
Preliminary Prospectus, the Prospectus, the sales material or other
materials permitted by the Act, the 1940 Act or the Rules and
Regulations.
(19) Absence of Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
(debt or equity) (A) registered pursuant to the Registration Statement
or included in the offering contemplated by this Agreement or (B)
otherwise registered by the Fund under the 1933 Act or the 1940 Act.
There are no persons with tag-along rights or other similar rights to
have any securities (debt or equity) included in the offering
contemplated by this Agreement or sold in connection with the sale of
Securities by the Fund pursuant to this Agreement.
(20) AMEX. The Securities are duly listed and admitted and
authorized for trading, subject to official notice of issuance and
evidence of satisfactory distribution, on the AMEX.
(21) NASD Matters. All of the information provided to the
Underwriter or to counsel for the Underwriter by the Fund, its officers
and Trustees in connection with letters, filings or other supplemental
information provided to NASD Regulation Inc. pursuant to the NASD's
conduct rules is true, complete and correct.
(22) Tax Returns. The Fund has filed all tax returns that are
required to be filed and has paid all taxes required to be paid by it
and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any
such tax, assessment, fine or penalty that is currently being contested
in good faith by appropriate actions and except for such taxes,
assessments, fines or penalties the nonpayment of which would not,
individually or in the aggregate, have a Fund Material Adverse Effect.
(23) Subchapter M. The Fund is currently in compliance with the
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") to qualify as a regulated investment company under
the Code and intends to direct the investment of the net proceeds of
the offering of the Securities in such a manner as to comply with the
qualification requirements of, and will thereafter conduct its business
in accfordance with the requirements of Subchapter M of the Code.
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(24) Insurance. The Fund's fidelity bond required by Rule 17g-1
of the 1940 Act Rules and Regulations and its trustees and
officers/errors and omissions insurance policy are in full force and
effect; the Fund is in compliance with the terms of such policy and
fidelity bond in all material respects; and there are no claims by the
Fund under any such policy or fidelity bond as to which any insurance
company is denying liability or defending under a reservation of rights
clause; the Fund has not been refused any insurance coverage sought or
applied for; and the Fund has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Fund
Material Adverse Effect, except as set forth in or contemplated in the
Preliminary Prospectus and Prospectus (exclusive of any supplement
thereto).
(25) Accounting Controls and Disclosure Controls. The Fund
maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorizations and
with the investment objectives, policies and restrictions of the Fund
and the applicable requirements of the 1940 Act, the 1940 Act Rules and
Regulations and the Code; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and
to maintain asset accountability to calculate net asset value and to
maintain material compliance with the books and records requirements
under the 1940 Act and the 1940 Act Rules and Regulations; (C) access
to assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The Fund
employs "disclosure controls and procedures" (as such term is defined
in Rule 30a-3 under the 1940 Act); such disclosure controls and
procedures are effective.
(26) Compliance with the Xxxxxxxx-Xxxxx Act. There is and has
been no failure on the part of the Fund or any of the Fund's trustees
or officers, in their capacities as such, to comply with any provision
of the Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated in
connection therewith, including Sections 302 and 906 related to
certifications.
(27) Fund Compliance with Policies and Procedures. The Fund has
adopted and implemented written policies and procedures reasonably
designed to prevent violation of the Federal Securities Laws (as that
term is defined in Rule 38a-1 under the 0000 Xxx) by the Fund,
including policies and procedures that provide oversight of compliance
for each investment adviser, administrator and transfer agent of the
Fund.
(28) Absence of Manipulation. The Fund has not taken and will not
take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security to
facilitate the sale or resale of the Securities, and the Fund is not
aware of any such action taken or to be taken by any affiliates of the
Fund, other than such actions as taken by the Underwriter that are
affiliates of the Fund, so long as such actions are in compliance with
all applicable law.
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(29) Statistical, Demographic or Market-Related Data. Any
statistical, demographic or market-related data included in the
Registration Statement, the Preliminary Prospectus or the Prospectus is
based on or derived from sources that the Fund believes to be reliable
and accurate and all such data included in the Registration Statement,
the Preliminary Prospectus or the Prospectus accurately reflects the
materials upon which it is based or from which it was derived.
(30) Advertisements. All advertising, sales literature or other
promotional material (including "prospectus wrappers", "broker kits",
"road show slides" and "road show scripts"), whether in printed or
electronic form, authorized in writing by or prepared by or at the
direction of the Fund or the Adviser for use in connection with the
offering and sale of the Securities (collectively, "sales material")
complied and comply in all material respects with the applicable
requirements of the 1933 Act, the 1940 Act, the Rules and Regulations
and the rules and interpretations of the NASD and if required to be
filed with the NASD under the NASD's conduct rules were provided to
Xxxxxxxxx Xxxxxxx, LLP, counsel for the Underwriter, for filing. No
sales material contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) REPRESENTATIONS AND WARRANTIES BY THE ADVISER. The Adviser
represents and warrants to the Underwriter as of the date hereof, as of the
Applicable Time, as of the Closing Date and as of each Option Closing Date (if
any), and agrees with the Underwriter, as follows:
(1) Investment Manager Status. The Adviser is duly registered as
an investment adviser under the Advisers Act and it not prohibited by
the Advisers Act, the 1940 Act, the Advisers Act Rules and Regulations
or the 1940 Act Rules and Regulations from acting under the Investment
Management Agreement, the Administration Agreement or the Structuring
Fee Agreement as contemplated by the Preliminary Prospectus and the
Prospectus.
(2) Capitalization. The Adviser has the financial resources
available to it necessary for the performance of its services and
obligations as contemplated in the Preliminary Prospectus and the
Prospectus and under this Agreement and the Advisory Agreement, the
Administration Agreement and the Structuring Fee Agreement.
(3) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Preliminary Prospectus
and the Prospectus, except as otherwise stated therein, (A) there has
been no Adviser Material Adverse Effect and (B) there have been no
transactions entered into by the Adviser which are material with
respect to the Adviser other than those in the ordinary course of its
business as described in the Preliminary Prospectus and the Prospectus.
(4) Good Standing. The Adviser has been duly formed and is
validly existing in good standing as a corporation under the laws of
the State of North Carolina and has power and authority to own, lease
and operate its properties and to conduct its business as described in
the Registration Statement, the Preliminary Prospectus and the
Prospectus and to enter into and perform its obligations under this
- 9 -
Agreement, the Fund Agreements and the Structuring Fee Agreement; and
the Adviser is duly qualified to transact business and is in good
standing under the laws of each jurisdiction which requires
qualification.
(5) Power and Authority. The Adviser has full power and authority
to enter into this Agreement, the Advisory Agreement, the
Administration Agreement and the Structuring Fee Agreement; the
execution and delivery of, and the performance by the Adviser of its
obligations under this Agreement, the Advisory Agreement and the
Structuring Fee Agreement have been duly and validly authorized by the
Adviser; and this Agreement, the Advisory Agreement and the Structuring
Fee Agreement have been duly executed and delivered by the Adviser and
constitute the valid and legally binding agreements of the Adviser,
enforceable against the Adviser in accordance with their terms, except
as rights to indemnity and contribution may be limited by federal or
state securities laws and subject to the qualification that the
enforceability of the Adviser's obligations hereunder and thereunder
may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other laws relating to or affecting
creditors' rights generally and by general equitable principles.
(6) Description of the Adviser. The description of the Adviser
and its business and the statements attributable to the Adviser in the
Preliminary Prospectus and Prospectus complied and comply in all
material respects with the provisions of the 1933 Act, the 1940 Act,
the Advisers Act, the 1940 Act Rules and Regulations and the Advisers
Act Rules and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(7) Non-Contravention. Neither the execution, delivery or
performance of this Agreement, the Advisory Agreement or the
Structuring Fee Agreement nor the consummation by the Fund or the
Adviser of the transactions herein or therein contemplated (i)
conflicts or will conflict with or constitutes or will constitute a
breach of the Organizational Documents of the Adviser, (ii) conflicts
or will conflict with or constitutes or will constitute a breach of or
a default under, any agreement, indenture, lease or other instrument to
which the Adviser is a party or by which it or any of its properties
may be bound or (iii) violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree
applicable to the Adviser or any of its properties or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Adviser pursuant to the terms of any
agreement or instrument to which the Adviser is a party or by which the
Adviser may be bound or to which any of the property or assets of the
Adviser is subject.
(8) Agreements' Compliance with Laws. This Agreement, the
Advisory Agreement and the Structuring Fee Agreement comply in all
material respects with all applicable provisions of the 1940 Act, the
1940 Act Rules and Regulations, the Advisers Act, and the Advisers Act
Rules and Regulations.
- 10 -
(9) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge
of the Adviser, threatened, against or affecting the Adviser which is
required to be disclosed in the Preliminary Prospectus and Prospectus
(other than as disclosed therein), or that could reasonably be expected
to result in an Adviser Material Adverse Effect, or that could
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Adviser of its
obligations under this Agreement, the Advisory Agreement or the
Structuring Fee Agreement; the aggregate of all pending legal or
governmental proceedings to which the Adviser is a party or of which
any of its property or assets is the subject which are not described in
the Preliminary Prospectus or the Prospectus, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in an Adviser Material Adverse Effect.
(10) Absence of Further Requirements. (A) No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, domestic or foreign, and (B) no authorization, approval, vote
or other consent of any other person or entity, is necessary or
required for the performance by the Adviser of its obligations under
this Agreement, the Advisory Agreement or the Structuring Fee
Agreement, except such as have been already obtained under the 1933
Act, the 1940 Act, the Rules and Regulations, the rules and regulations
of the NASD and the AMEX and such as may be required under state
securities laws.
(11) Possession of Permits. The Adviser has such licenses,
permits and authorizations of governmental or regulatory authorities
("permits") as are necessary to own its property and to conduct its
business in the manner described in the Preliminary Prospectus and the
Prospectus; the Adviser has fulfilled and performed all its material
obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of
the rights of the Adviser under any such permit.
(12) Adviser Compliance with Policies and Procedures. The Adviser
has adopted and implemented written policies and procedures under Rule
206(4)-7 of the Advisers Act reasonably designed to prevent violation
of the Advisers Act and the Advisers Act Rules by the Adviser and its
supervised persons.
(13) Absence of Manipulation. The Adviser has not taken and will
not take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security to
facilitate the sale or resale of the Securities, and the Adviser is not
aware of any such action taken or to be taken by any affiliates of the
Adviser, other than such actions as taken by the Underwriter that are
affiliates of the Adviser, so long as such actions are in compliance
with all applicable law.
(c) CERTIFICATES. Any certificate signed by any officer of the Fund or
the Adviser and delivered to the Underwriter or to counsel for the Underwriter
shall be deemed a representation and warranty by the Fund or the Adviser, as the
case may be, to each Underwriter as to the matters covered thereby.
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SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Fund agrees to sell the Underwriter, and the Underwriter agrees to
purchase from the Fund on a "best efforts basis," at a purchase price of $15.00
per share, the Initial Securities. The Fund is advised that the Underwriter
intends to (i) make a public offering of such Securities as soon after the
Applicable Time as is advisable and (ii) initially to offer the Securities upon
the terms set forth in the Preliminary Prospectus and the Prospectus. In the
event all the Initial Securities are not fully subscribed, the Underwriter is
authorized to make sales to stand-by purchasers as that term is defined in NASD
Rule 2790.
(b) OPTION SECURITIES. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Fund
hereby grants an option to the Underwriter to purchase up to _______ Option
Securities at the same purchase price per share as the Underwriter shall pay for
the Initial Securities. Said option may be exercised only to cover
over-allotments in the sale of the Initial Securities by the Underwriter. Said
option may be exercised in whole or in part at any time and from time to time on
or before the 45th day after the date of the Prospectus upon written or
telegraphic notice by the Underwriter to the Fund setting forth the number of
shares of the Option Securities as to which the Underwriter is exercising the
option and the settlement date. Any such time and date of delivery (an "Option
Closing Date") shall be determined by the Underwriter, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Date, as hereinafter defined.
(c) PAYMENT. Payment of the purchase price for the Initial Securities,
and delivery of the related closing certificates therefor, shall be made at such
other place as shall be agreed upon by the Underwriter and the Fund, at 9:00
A.M. (Eastern time) on _______, 2007 (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriter and the Fund (such
time and date of payment and delivery being herein called "Closing Date").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriter, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at such other place as
shall be agreed upon by the Underwriter and the Fund, on each Option Closing
Date as specified in the notice from the Underwriter to the Fund.
Delivery of the Securities shall be made to the Underwriter upon the
purchase price thereof to or upon the order of the Fund by Federal Funds wire
transfer payable in same-day funds to an account specified by the Fund. Delivery
of the Initial Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company unless the Underwriter shall
otherwise instruct.
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(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Underwriter may request in writing at least one
full business day before the Closing Date or the relevant Option Closing Date,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Underwriter in the City of New York not later than noon (Eastern Time) on the
business day prior to the Closing Date or the relevant Option Closing Date, as
the case may be.
SECTION 3. Covenants of the Fund and the Adviser. The Fund and the
Adviser, jointly and severally, covenant with the Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Fund, subject to Section 3(a)(ii), will comply with the requirements of Rule
430A and will notify the Underwriter immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes, or of any examination pursuant to Section 8(e) of the 1940 Act
concerning the Registration Statement and (v) if the Fund becomes the subject of
a proceeding under Section 8A of the 1933 Act in connection with the offering of
the Securities. The Fund will use its best efforts in connection with the
offering of the Securities to prevent the issuance of any stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) FILING OF AMENDMENTS. The Fund will give the Underwriter notice of
its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)) or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, whether pursuant to the 1933 Act
or otherwise, or will furnish the Underwriter with copies of any such documents
within a reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file or use any such document to which the Underwriter
or counsel for the Underwriter shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Fund has furnished or will
deliver to the Underwriter and counsel for the Underwriter, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith) and signed copies of all
consents and certificates of experts. The copies of the Registration Statement
and each amendment thereto furnished to the Underwriter will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
- 13 -
(d) DELIVERY OF PROSPECTUSES. The Fund has delivered to the
Underwriter, without charge, as many copies of each preliminary prospectus
prepared prior to the date of this Agreement as the Underwriter reasonably
requested, and the Fund hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Fund will furnish to the Underwriter, without
charge, such number of copies of the documents constituting the General
Disclosure Package prepared on or after the date of this Agreement and the
Prospectus (and any amendments or supplements thereto) as the Underwriter may
reasonably request. The Preliminary Prospectus and the Prospectus and any
amendments or supplements thereto furnished to the Underwriter is or will be, as
the case may be, identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Fund will comply
with the 1933 Act, the 1940 Act and the Rules and Regulations so as to permit
the completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Securities
(including, without limitation, pursuant to Rule 172), any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriter or for the Fund, to amend the Registration Statement
or amend or supplement the Prospectus in order that the Prospectus will not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act, the 1940 Act or the Rules and
Regulations, the Fund will promptly prepare and file with the Commission,
subject to Section 3(b) hereof, such amendment or supplement as may be necessary
to correct such statement or omission or to make the Registration Statement or
the Prospectus comply with such requirements, and the Fund will furnish to the
Underwriter such number of copies of such amendment or supplement as the
Underwriter may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Fund will use its best efforts, in
cooperation with the Underwriter, to qualify, if necessary, the Securities for
offering and sale under the applicable securities laws of states of the United
States, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands
as the Underwriter may designate and to maintain such qualifications in effect
for a period of not less than one year from the date of this Agreement;
provided, however, that the Fund shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.
(g) RULE 158. The Fund will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its security
holders as soon as practicable an earnings statement for the purposes of, and to
provide to the Underwriter the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
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(h) USE OF PROCEEDS. The Fund will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(i) REPORTING REQUIREMENTS. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act, the 1940 Act or the
Rules and Regulations, will file all documents required to be filed with the
Commission pursuant to the 1933 Act, the 1940 Act or the Rules and Regulations
within the time periods required by the 1934 Act, the 1940 Act or the Rules and
Regulations.
(j) SUBCHAPTER M. The Fund will use its best efforts to comply with the
requirements of Subchapter M of the Code to qualify as a regulated investment
company under the Code, and to maintain such qualification.
(k) ABSENCE OF MANIPULATION. The Fund and the Adviser have not taken
and will not take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Securities, and the Fund and the Adviser are not aware of
any such action taken or to be taken by any affiliates of the Fund or the
Adviser, other than such actions as taken by the Underwriter that are affiliates
of the Fund or the Adviser, so long as such actions are in compliance with all
applicable law.
(l) RESTRICTION ON SALE OF SECURITIES. The Fund will not, without the
prior written consent of the Underwriter, offer, sell, contract to sell, pledge,
or otherwise dispose of, or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Fund or any affiliate of the Fund or any person in privity
with the Fund, directly or indirectly, including the filing (or participation in
the filing) of a registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act, any
other Securities or any securities convertible into, or exercisable, or
exchangeable for, Securities; or publicly announce an intention to effect any
such transaction for a period of 180 days following the Execution Time,
provided, however, -------- ------- that the Fund may issue and sell Securities
pursuant to any dividend reinvestment plan of the Fund in effect at the
Execution Time.
SECTION 4. Payment of Expenses.
(a) EXPENSES. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the word processing, printing and delivery to the Underwriter of
this Agreement, any Agreement among Underwriter and such other documents as may
be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriter, including any stock or other
- 15 -
transfer taxes and any stamp or other duties payable upon the sale, issuance or
delivery of the Securities to the Underwriter, (iv) the fees and disbursements
of the counsel, accountants and other advisors to the Fund, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriter in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplements
thereto, (vi) the printing and delivery to the Underwriter of copies of each
preliminary prospectus, the documents constituting the General Disclosure
Package, the Prospectus and the 1940 Act Notification, any sales material and
any amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriter of copies of the Blue Sky Survey and any supplements
thereto, (viii) the fees and expenses of the custodian and the transfer agent
and registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriter in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
transportation and other expenses incurred in connection with presentations to
prospective purchasers of the Securities, (xi) the fees and expenses incurred in
connection with the listing of the Securities on the AMEX and (xii) all other
costs and expenses incident to the performance by the Fund of its obligations
hereunder.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 5 or Section 9(a)(i) or
(v) hereof, the Fund and the Adviser, jointly and severally, agree that they
shall reimburse the Underwriter for all of its out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The obligations of
the Underwriter to purchase any of the Initial Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Fund and the Adviser contained
herein as of the Applicable Time, the Closing Date and any Option Closing Date
pursuant to Section 4 hereof, to the accuracy of the statements of the Fund and
the Adviser made in any certificates pursuant to the provisions hereof, to the
performance by the Fund and the Adviser of their respective covenants and other
obligations hereunder and to the following additional conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Date (or the applicable Option Closing Date,
as the case may be) no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or any
notice objecting to its use or order pursuant to Section 8(e) of the
1940 Act shall have been issued and proceedings therefor initiated or,
to the knowledge of the Fund, threatened by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to
the Underwriter. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 497
or a post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements
of Rule 430A.
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(b) OPINION OF COUNSEL FOR FUND. At the Closing Date, the
Underwriter shall have received the favorable opinion, dated as of the
Closing Date, of Blank Rome LLP, counsel for the Fund ("Fund Counsel"),
in form and substance satisfactory to counsel for the Underwriter,
substantially to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the Underwriter may reasonably request.
(c) OPINION OF COUNSEL FOR UNDERWRITER. At Closing Date, the
Underwriter shall have received the favorable opinion, dated as of
Closing Date, of Xxxxxxxxx Traurig, LLP, counsel for the Underwriter,
in form and substance satisfactory to the Underwriter. Insofar as the
opinion expressed above relates to or is dependent upon matters
governed by North Carolina law, Xxxxxxxxx Xxxxxxx, LLP will be
permitted to rely on the opinion of local North Carolina counsel for
the Adviser.
(d) CERTIFICATE OF THE FUND. At the Closing Date or the
applicable Option Closing Date, as the case may be, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectus or the General Disclosure
Package (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement), any Fund Material Adverse Effect, and,
at the Closing Date, the Underwriter shall have received a certificate
of the Chairman, the President, the Chief Executive Officer or an
Executive Vice President or Senior Vice President of the Fund and of
the Chief Financial Officer or Chief Accounting Officer of the Fund,
dated as of the Closing Date, to the effect that (i) there has been no
such Fund Material Adverse Effect, (ii) the representations and
warranties of the Fund in this Agreement are true and correct with the
same force and effect as though expressly made at and as of the Closing
Date, (iii) the Fund has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date under or pursuant to this Agreement, and (iv) no stop
order suspending the effectiveness of the Registration Statement or
order of suspension or revocation of registration pursuant to Section
8(e) of the 1940 Act has been issued, and no proceedings for that
purpose have been instituted or are pending or, to their knowledge, are
contemplated by the Commission.
(e) OPINION OF COUNSEL FOR THE ADVISER. At the Closing Date, the
Underwriter shall have received the favorable opinions, dated as of the
Closing Date, of Xxxxxx Xxxxx & Xxxxxxx LLP and ____________, each as
counsel for the Adviser, in form and substance satisfactory to counsel
for the Underwriter, substantially to the effect set forth in Exhibit C
hereto and to such further effect as counsel to the Underwriter may
reasonably request.
(f) CERTIFICATE OF THE ADVISER. At the Closing Date or the
applicable Option Closing Date, as the case may be, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectus or the General Disclosure
Package (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement), any Adviser Material Adverse Effect,
and, at the Closing Date, the Underwriter shall have received a
certificate of the Chairman, the President, the Chief Executive Officer
or an Executive Vice President or Senior Vice President of the Adviser
and of the Chief Financial Officer or Chief Accounting Officer of the
Adviser, dated as of the Closing Date, to the effect that (i) there has
been no such Adviser Material Adverse Effect, (ii) the representations
and warranties of the Adviser in this Agreement are true and correct
with the same force and effect as though expressly made at and as of
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the Closing Date, (iii) the Adviser has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Date under or pursuant to this Agreement,
and (iv) no stop order suspending the effectiveness of the Registration
Statement or order of suspension or revocation of registration pursuant
to Section 8(e) of the 1940 Act has been issued and no proceedings for
that purpose have been instituted or are pending or, to their
knowledge, are contemplated by the Commission.
(g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Underwriter shall have received from Xxxx, Xxxxxx &
Xxxxx LLP a letter, dated the date of this Agreement and in form and
substance satisfactory to the Underwriter, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to Underwriter with respect to the financial statements and
certain financial information of the Fund contained in the Registration
Statement or the Prospectus.
(h) BRING-DOWN COMFORT LETTER. At the Closing Date, the
Underwriter shall have received from Xxxx, Xxxxxx & Xxxxx LLP a letter,
dated as of the Closing Date and in form and substance satisfactory to
the Underwriter, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (g) of this Section,
except that the specified date referred to shall be a date not more
than three business days prior to the Closing Date.
(i) STRUCTURING FEE AGREEMENT. At the Closing Date, the Adviser
shall deliver to the Underwriter the Structuring Fee Agreement,
executed by the Adviser and dated as of the Closing Date, together with
reproduced copies of such agreement executed by the Adviser.
(j) NO OBJECTION. Prior to the date of this Agreement, NASD
Regulation Inc. shall have confirmed that it has no objection with
respect to the fairness and reasonableness of the underwriting terms
and arrangements.
(k) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event
that the Underwriter exercises its option provided in Section 2(b)
hereof to purchase all or any portion of the Option Securities on any
Option Closing Date that is after the Closing Date, the obligations of
the Underwriter to purchase the applicable Option Securities shall be
subject to the conditions specified in the introductory paragraph of
this Section 5 and to the further condition that, at the applicable
Option Closing Date, the Underwriter shall have received:
(1) Officers' Certificate. A certificate, dated such Option
Closing Date, to the effect set forth in, and signed by two of
the officers specified in, Section 5(d) hereof, except that the
references in such certificate to the Closing Date shall be
changed to refer to such Option Closing Date.
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(2) Opinion of Counsel for Fund. The favorable opinion of
Fund Counsel in form and substance satisfactory to counsel for
the Underwriter, dated such Option Closing Date, relating to the
Option Securities to be purchased on such Option Closing Date and
otherwise to the same effect as the opinion required by Section
5(b) hereof.
(3) Opinion of Counsel for Underwriter. The favorable
opinion of Xxxxxxxxx Traurig, LLP, counsel for the Underwriter,
dated such Option Closing Date, relating to the Option Securities
to be purchased on such Option Closing Date and otherwise to the
same effect as the opinion required by Section 5(c) hereof.
(4) Opinion of Counsel for the Adviser. The favorable
opinions of Xxxxxx Xxxxx & Xxxxxxx LLP and ___________, each as
counsel for the Adviser, dated such Option Closing Date, relating
to the Option Securities to be purchased on such Option Closing
Date and otherwise to the same effect as the opinion required by
Section 5(e) hereof.
(5) Certificate of the Adviser. A certificate, dated such
Option Closing Date, to the effect set forth in, and signed by
two of the officers specified in, Section 5(f) hereof, except
that the references in such certificate to the Closing Date shall
be changed to refer to such Option Closing Date.
(6) Bring-down Comfort Letter. A letter from Xxxx, Xxxxxx &
Xxxxx LLP, in form and substance satisfactory to the Underwriter
and dated such Option Closing Date, substantially in the same
form and substance as the letter furnished to the Underwriter
pursuant to Section 5(j) hereof, except that the "specified date"
in the letter furnished pursuant to this paragraph shall be a
date not more than five days prior to such Option Closing Date.
(l) ADDITIONAL DOCUMENTS. At the Closing Date and at each Option
Closing Date, counsel for the Underwriter shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, contained in this Agreement; and all proceedings taken by
the Fund and the Adviser in connection with the issuance and sale of
the Securities as herein contemplated and in connection with the other
transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Underwriter and counsel for the Underwriter.
(m) DELIVERY OF DOCUMENTS. The documents required to be delivered
by this Section 5 shall be delivered at the office of Xxxxxxxxx
Traurig, LLP, counsel for the Underwriter, at Two Commerce Square,
Suite 2700, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000, on the Closing
Date and at each Option Closing Date.
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(n) TERMINATION OF AGREEMENT. If any condition specified in this
Section 5 shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities on an Option Closing Date which is after
the Closing Date, the obligations of the Underwriter to purchase the
relevant Option Securities, may be terminated by the Underwriter by
notice to the Fund.
SECTION 6. Indemnification.
(a) INDEMNIFICATION BY THE FUND AND THE ADVISER. The Fund and the
Adviser, jointly and severally, agree to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus, any sales
material, the Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(e) below) any such settlement is effected
with the written consent of the Fund and the Adviser; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriter), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above,
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund or the
Adviser by the Underwriter expressly for use in the Registration Statement (or
any amendment thereto), or in any preliminary prospectus, any sales material,
the Preliminary Prospectus or the Prospectus (or any amendment or supplement
thereto).
- 20 -
(b) INDEMNIFICATION BY THE UNDERWRITER. The Underwriter agrees to
indemnify and hold harmless each of the Fund and the Adviser, each of their
directors, trustees, members, each of their officers who signed the Registration
Statement, and each person, if any, who controls the Fund or the Adviser within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section 6, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto), or any
preliminary prospectus, any sales material, the Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Fund or the Adviser by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus, any sales material, the Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto). The Fund
and the Adviser acknowledge that the statements set forth in the last paragraph
of the cover page regarding delivery of the Securities and, under the heading
"Underwriting", (i) the list the Underwriter and their respective participation
in the sale of the Securities, (ii) the sentences related to concessions and
reallowances and (iii) the paragraph related to stabilization, syndicate
covering transactions and penalty bids in any Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on behalf
of the Underwriter for inclusion in any Preliminary Prospectus or the
Prospectus.
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. Counsel to the indemnified parties shall be selected as follows:
counsel to the Underwriter and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall be selected by the Underwriter; counsel to the Fund, its directors,
trustees, members, each of its officers who signed the Registration Statement
and each person, if any, who controls the Fund within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall be selected by the Fund; and
counsel to each Adviser and each person, if any, who controls such Adviser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall be selected by such Adviser. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
the Underwriter and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, the fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for the Fund, each of their directors, trustees,
members, each of its officers who signed the Registration Statement and each
person, if any, who controls the Fund within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
each of the Advisers, and the fees and expenses of more than one counsel, in
each case 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. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
- 21 -
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION AND CONTRIBUTION.
The provisions of this Section 6 and in Section 7 hereof shall not affect any
agreements among the Fund and the Adviser with respect to indemnification of
each other or contribution between themselves.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Fund and the
Adviser on the one hand and the Underwriter on the other hand from the offering
of the Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Fund and the Adviser on the one hand
and of the Underwriter on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Fund and the Adviser on the one
hand and the Underwriter on the other hand in connection with the offering of
the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Fund and the Adviser as set forth on the cover of the Prospectus and the
compensation received pursuant to the Structuring Fee Agreement received by the
Underwriter, bear to the aggregate initial public offering price of the
Securities as set forth on such cover.
- 22 -
The relative fault of the Fund and the Adviser on the one hand and the
Underwriter on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Fund, by the Adviser or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Fund, the Adviser and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriter shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each trustees, officer, employee and agent of the Underwriter
shall have the same rights to contributions as the Underwriter, and each person
who controls the Fund or the Adviser within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, each officer of the Fund and the Adviser
and each trustee, director or member of the Fund and the Adviser shall have the
same rights to contribution as the Fund and the Adviser.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Fund or signed by or on behalf
of the Adviser submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriter or controlling person, or by or on behalf of the Fund, or by or on
behalf of the Adviser, and shall survive delivery of the Securities to the
Underwriter.
SECTION 9. Termination of Agreement.
(a) TERMINATION; GENERAL. The Underwriter may terminate this Agreement,
by notice to the Fund or the Adviser, at any time on or prior to the Closing
Date (and, if any Option Securities are to be purchased on an Option Closing
Date which occurs after the Closing Date, the Underwriter may terminate the
obligations of the Underwriter to purchase such Option Securities, by notice to
the Fund, at any time on or prior to such Option Closing Date) (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus or the General
Disclosure Package, any Fund Material Adverse Effect or Adviser Material Adverse
- 23 -
Effect, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Underwriter,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Fund has been suspended or materially limited by the Commission or the AMEX, or
if trading generally on the NYSE, AMEX or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any other
governmental authority, or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section 9, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 hereof shall survive such termination and remain in full force and
effect.
SECTION 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to First Dominion Capital Corp., 0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xx 00000; notices to the Fund and the Adviser
shall be directed to them at Xxx Xxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, XX
00000, Attention: President.
SECTION 11. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter, the Fund and the Adviser and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriter, the Fund and the Adviser and their respective successors and the
controlling persons and directors, officers, members and trustees referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriter,
the Fund and the Adviser and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from the Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 13. Effect of Headings. The Section and Exhibit headings herein
are for convenience only and shall not affect the construction hereof.
- 24 -
SECTION 14. Definitions. As used in this Agreement, the following terms
have the
respective meanings set forth below:
"Advisers Act" means the Investment Advisers Act of 1940, as amended.
"Advisers Act Rules and Regulations" means the rules and regulations of
the Commission under the Advisers Act.
"Adviser Material Adverse Effect" means a material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Adviser, whether or not arising in the ordinary course
of business.
"Agreement and Declaration of Trust" means the Agreement and
Declaration of Trust of Cornerstone Progressive Return Fund dated as of April
26, 2007.
"AMEX" means the American Stock and Options Exchange.
"Applicable Time" means the date and time that this Agreement is
executed and delivered by the parties hereto.
"Commission" means the Securities and Exchange Commission.
"XXXXX" means the Commission's Electronic Data Gathering, Analysis and
Retrieval System.
"Fund Material Adverse Effect" means a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Fund, whether or not arising in the ordinary course of
business.
"GAAP" means generally accepted accounting principles.
"Initial Registration Statement" means the Fund's registration
statement (File Nos. 333-14290 and 811-22066) on Form N-2 (including the
statement of additional information incorporated by reference therein), as
amended (if applicable), at the time it became effective, including the Rule
430A Information.
"NASD" means the National Association of Securities Dealers, Inc.
"NYSE" means the New York Stock Exchange.
"Organizational Documents" means (a) in the case of a corporation, its
charter and by-laws; (b) in the case of a limited or general partnership, its
partnership certificate, certificate of formation or similar organizational
document and its partnership agreement; (c) in the case of a limited liability
company, its articles of organization, certificate of formation or similar
organizational documents and its operating agreement, limited liability company
agreement, membership agreement or other similar agreement; (d) in the case of a
trust, its certificate of trust, certificate of formation or similar
organizational document and its trust agreement or other similar agreement; and
(e) in the case of any other entity, the organizational and governing documents
of such entity.
- 25 -
"preliminary prospectus" means any prospectus (including the statement
of additional information incorporated by reference therein) used in connection
with the offering of the Securities that was used before the Initial
Registration Statement became effective, or that was used after such
effectiveness and prior to the execution and delivery of this Agreement, or that
omitted the Rule 430A Information or that was captioned "Subject to Completion".
"Preliminary Prospectus" shall mean the preliminary prospectus
(including the statement of additional information incorporated by reference
therein) dated _______ and any preliminary prospectus (including the statement
of additional information incorporated by reference therein) included in the
Registration Statement at the Applicable Time that omits Rule 430A Information.
"Prospectus" shall mean the prospectus (including the statement of
additional information incorporated by reference therein) relating to the
Securities that is first filed pursuant to Rule 497 after the Applicable Time.
"Registration Statement" means the Initial Registration Statement;
provided that, if a Rule 462(b) Registration Statement is filed with the
Commission, then the term "Registration Statement" shall also include such Rule
462(b) Registration Statement.
"Rule 172," "Rule 497," "Rule 430A," "Rule 433" and "Rule 462(b)" refer
to such rules under the 1933 Act.
"Rule 430A Information" means the information included in the
Prospectus that was omitted from the Initial Registration Statement at the time
it became effective but that is deemed to be a part of the Initial Registration
Statement at the time it became effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" means a registration statement
filed by the Fund pursuant to Rule 462(b) for the purpose of registering any of
the Securities under the 1933 Act, including the Rule 430A Information.
"Rules and Regulations" means, collectively, the 1933 Act Rules and
Regulations and the 1940 Act Rules and Regulations.
"Xxxxxxxx-Xxxxx Act" means the Xxxxxxxx-Xxxxx Act of 2002 and the rules
and regulations promulgated thereunder or implementing the provisions thereof.
"1933 Act" means the Securities Act of 1933, as amended.
"1933 Act Rules and Regulations" means the rules and regulations of the
Commission under the 1933 Act.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
- 26 -
"1934 Act Rules and Regulations" means the rules and regulations of the
Commission under the 1934 Act.
"1940 Act" means the Investment Company Act of 1940, as amended.
"1940 Act Notification" means a notification of registration of the
Fund as an investment company under the 1940 Act on Form N-8A, as the 1940 Act
Notification may be amended from time to time.
"1940 Act Rules and Regulations" means the rules and regulations of the
Commission under the 1940 Act.
All references in this Agreement to the Registration Statement, the
Initial Registration Statement, any Rule 462(b) Registration Statement, any
preliminary prospectus, the Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to XXXXX.
SECTION 15. Absence of Fiduciary Relationship. Each of the Fund and the
Adviser acknowledges and agrees that:
(a) the Underwriter is acting solely as an underwriter in connection
with the public offering of the Securities and no fiduciary, advisory or agency
relationship between the Fund or the Adviser, on the one hand, and the
Underwriter, on the other hand, has been or will be created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether or not
the Underwriter has advised or is advising the Fund or the Adviser on other
matters and the Underwriter has no obligation to the Fund or the Adviser with
respect to the transactions contemplated by this Agreement except the
obligations expressly set forth in this Agreement;
(b) the public offering price of the Securities and the price to be
paid by the Underwriter for the Securities set forth in this Agreement were
established by the Fund following discussions and arms-length negotiations with
the Underwriter;
(c) it is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement;
(d) in connection with each transaction contemplated by this Agreement
and the process leading to such transactions, the Underwriter is and has been
acting solely as principal and not as fiduciary, advisor or agent of the Fund or
the Adviser or any of their respective affiliates;
(e) the Underwriter has not provided any legal, accounting, regulatory
or tax advice to the Fund or the Adviser with respect to the transactions
contemplated by this Agreement and it has consulted its own legal, accounting,
regulatory and tax advisers to the extent it has deemed appropriate;
- 27 -
(f) it is aware that the Underwriter and its affiliates are engaged in
a broad range of transactions which may involve interests that differ from those
of the Fund and the Adviser, and that the Underwriter has no obligation to
disclose such interests and transactions to the Fund or the Adviser by virtue of
any fiduciary, advisory or agency relationship; and
(g) it waives, to the fullest extent permitted by law, any claims it
may have against the Underwriter for breach of fiduciary duty or alleged breach
of fiduciary duty and agrees that the Underwriter shall not have any liability
(whether direct or indirect, in contract, tort or otherwise) to it in respect of
such a fiduciary duty claim or to any person asserting a fiduciary duty claim on
its behalf or on behalf of the Fund or the Adviser.
[SIGNATURE PAGE FOLLOWS]
- 28 -
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Fund and the Adviser a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement among the Underwriter, the Fund and the Adviser in accordance
with its terms.
Very truly yours,
CORNERSTONE PROGRESSIVE RETURN FUND
By: ______________________________
Name:
Title:
CORNERSTONE ADVISORS, INC.
By: ______________________________
Name:
Title:
Agreed and Accepted:
FIRST DOMINION CAPITAL CORP.
By:
Name:
Title:
- 29 -
EXHIBIT A
Name of Underwriter Number of Initial Securities
-------------------------------------------------- -----------------------------
First Dominion Capital Corp. ___________
A-1
EXHIBIT B
FORM OF OPINION OF FUND COUNSEL
B-1
EXHIBIT C
FORM OF OPINIONS OF ADVISER'S COUNSEL
C-1
EXHIBIT D
PRICE-RELATED INFORMATION
CORNERSTONE PROGRESSIVE RETURN FUND
Public offering price: $15.00 per share
Underwriting discounts and commissions: $0.00 per share
Proceeds, before expenses to the Fund: $15.00 per share
Shares offered: ______
Over-allotment option: ______
D-1
