INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT dated and effective as of June
7, 2007 between Cornerstone Progressive Return Fund, a Delaware
statutory trust (herein referred to as the "Fund"), and CORNERSTONE
ADVISORS, INC., a corporation duly organized under the laws of North
Carolina (herein referred to as the "Investment Manager").
1. APPOINTMENT OF INVESTMENT MANAGER. The Investment Manager hereby
undertakes and agrees, upon the terms and conditions herein set forth, to
provide overall investment management services for the Fund, and in connection
therewith to (i) supervise the Fund's investment program, including advising and
consulting with the Fund's Board of Trustees regarding the Fund's overall
investment strategy; (ii) make, in consultation with the Fund's Board of
Trustees, investment strategy decisions for the Fund; (iii) manage the investing
and reinvesting of the Fund's assets; (iv) place purchase and sale orders on
behalf of the Fund; (v) advise the Fund with respect to all matters relating to
the Fund's use of leveraging techniques; (vi) provide or procure the provision
of research and statistical data to the Fund in relation to investing and other
matters within the scope of the investment objective and limitations of the
Fund; (vii) monitor the performance of the Fund's outside service providers,
including the Fund's administrator, transfer agent and custodian; (viii) be
responsible for compliance by the Fund with U.S. federal, state and other
applicable laws and regulations; and (ix) pay the salaries, fees and expenses of
such of the Fund's directors, officers or employees who are directors, officers
or employees of the Investment Manager or any of its affiliates, except that the
Fund will bear travel expenses or an appropriate portion thereof of directors
and officers of the Fund who are directors, officers or employees of the
Investment Manager, to the extent that such expenses relate to attendance at
meetings of the Board of Trustees or any committees thereof. The Investment
Manager may delegate any of the foregoing responsibilities to a third party with
the consent of the Board of Trustees.
2. EXPENSES. In connection herewith, the Investment Manager agrees to
maintain a staff within its organization to furnish the above services to the
Fund. The Investment Manager shall bear all expenses arising out of its duties
hereunder.
Except as provided in Section 1 hereof, the Fund shall be responsible
for all of the Fund's expenses and liabilities, including expenses for legal,
accounting and auditing services; taxes and governmental fees; dues and expenses
incurred in connection with membership in investment company organizations; fees
and expenses incurred in connection with listing the Fund's shares on any stock
exchange; costs of printing and distributing shareholder reports, proxy
materials, prospectuses, stock certificates and distribution of dividends;
charges of the Fund's custodians and sub-custodians, administrators and
sub-administrators, registrars, transfer agents, dividend disbursing agents and
dividend reinvestment plan agents; payment for portfolio pricing services to a
pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission; expenses of registering or qualifying securities of the
Fund for sale in the various states; freight and other charges in connection
with the shipment of the Fund's portfolio securities; fees and expenses of
non-interested directors or non-interested members of any advisory or investment
board, committee or panel of the Fund; fees and expenses of any officers and
interested directors of the Fund who are not affiliated with the Investment
Manager, the Fund's administrator or their respective affiliates; travel
expenses or an appropriate portion thereof of directors and officers of the
Fund, or members of any advisory or investment board, committee or panel of the
Fund, to the extent that such expenses relate to attendance at meetings of the
Board of Trustees or any committee thereof, or of any such advisory or
investment board, committee or panel; salaries of shareholder relations
personnel; costs of shareholders meetings; insurance; interest; brokerage costs;
and litigation and other extraordinary or non-recurring expenses.
3. TRANSACTIONS WITH AFFILIATES. The Investment Manager is authorized
on behalf of the Fund, from time to time when deemed to be in the best interests
of the Fund and to the extent permitted by applicable law, to purchase and/or
sell securities in which the Investment Manager or any of its affiliates
underwrites, deals in and/or makes a market and/or may perform or seek to
perform investment banking services for issuers of such securities. The
Investment Manager is further authorized, to the extent permitted by applicable
law, to select brokers (including any brokers affiliated with the Investment
Manager) for the execution of trades for the Fund.
4. BEST EXECUTION; RESEARCH SERVICES. The Investment Manager is
authorized, for the purchase and sale of the Fund's portfolio services, to
employ such dealers and brokers as may, in the judgment of the Investment
Manager, implement the policy of the Fund to obtain the best results taking into
account such factors as price, including dealer spread, the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities and the firm's risk in positioning the securities
involved. Consistent with this policy, the Investment Manager is authorized to
direct the execution of the Fund's portfolio transactions to dealers and brokers
furnishing statistical information or research deemed by the Investment Manager
to be useful or valuable to the performance of its investment advisory functions
for the Fund. It is understood that in these circumstances, as contemplated by
Section 28(e) of the Securities Exchange Act of 1934, the commissions paid may
be higher than those that the Fund might otherwise have paid to another broker
if those services had not been provided. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Investment Manager. It is understood that the expenses of the Investment Manager
will not necessarily be reduced as a result of the receipt of such information
or research. Research services furnished to the Investment Manager by brokers
who effect securities transactions for the Fund may be used by the Investment
Manager in servicing other investment companies and accounts that it manages.
Similarly, research services furnished to the Investment Manager by brokers who
effect securities transactions for other investment companies and accounts that
the Investment Manager manages may be used by the Investment Manager in
servicing the Fund. It is understood that not all of these research services are
used by the Investment Manager in managing any particular account, including the
Fund.
5. REMUNERATION. In consideration of the services to be rendered by
the Investment Manager under this Agreement, the Fund shall pay the Investment
Manager a monthly fee in United States dollars for the previous month at an
annual rate of one (1.00%) percent of the Fund's average weekly net assets. If
the fee payable to the Investment Manager pursuant to this paragraph 5 begins to
accrue before the end of any month or if this Agreement terminates before the
end of any month, the fee for the period from such date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs. For purposes of
calculating each such monthly fee, the value of the Fund's net assets shall be
computed at the time and in the manner specified in the Registration Statement.
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6. REPRESENTATIONS AND WARRANTIES. The Investment Manager represents
and warrants that it is duly registered and authorized as an investment adviser
under the Investment Advisers Act of 1940, as amended, and the Investment
Manager agrees to maintain effective all requisite registrations, authorizations
and licenses, as the case may be, until the termination of this Agreement.
7. SERVICES NOT DEEMED EXCLUSIVE. The services provided hereunder by
the Investment Manager are not to be deemed exclusive and the Investment Manager
and any of its affiliates or related persons are free to render similar services
to other and to use the research developed in connection with this Agreement for
other clients or affiliates. Nothing herein shall be construed as constituting
the Investment Manager an agent of the Fund.
8. LIMIT OF LIABILITY. The Investment Manager shall exercise its best
judgment in rendering the services in accordance with the terms of this
Agreement. The Investment Manager shall not be liable for any error of judgment
or mistake of law or for any act or omission or any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Investment
Manager against any liability to the Fund or its shareholders to which the
Investment Manager would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Agreement
("disabling conduct"). The Fund will indemnify the Investment Manager against,
and hold it harmless from, any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses), including any amounts
paid in satisfaction of judgments, in compromise or as fines or penalties, not
resulting from disabling conduct by the Investment Manager. Indemnification
shall be made only following: (i) a final decision on the merits by a court or
other body before whom the proceeding was brought that the Investment Manager
was not liable by reason of disabling conduct, or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that the
Investment Manager was not liable by reason of disabling conduct by (a) the vote
of a majority of a quorum of directors of the Fund who are neither "interested
persons" of the Fund nor parties to the proceeding ("disinterested non-party
directors"), or (b) an independent legal counsel in a written opinion. The
Investment Manager shall be entitled to advances from the Fund for payment of
the reasonable expenses (including reasonable counsel fees and expenses)
incurred by it in connection with the matter as to which it is seeking
indemnification in the manner and to the fullest extent permissible under law.
Prior to any such advance, the Investment Manager shall provide to the Fund a
written affirmation of its good faith belief that the standard conduct necessary
for indemnification by the Fund has been met and a written undertaking to repay
any such advance if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the following additional
conditions shall be met: (a) the Investment Manager shall provide a security in
form and amount acceptable to the Fund for its undertaking; (b) the Fund is
insured against losses arising by reason of the advance; or (c) a majority of a
quorum of disinterested non-party directors, or independent legal counsel, in a
written opinion, shall have determined, based on a review of facts readily
available to the Fund at the time the advance is proposed to be made, that there
is reason to believe that the Investment Manager will ultimately be found to be
entitled to indemnification.
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9. DURATION AND TERMINATION. This Agreement shall have an initial term
beginning June 7, 2007 and ending June 6, 2009, and then shall continue in
effect thereafter for successive annual periods, but only so long as such
continuance is specifically approved at least annually by the affirmative vote
of (i) a majority of the members of the Fund's Board of Trustees who are not
parties to this Agreement or "interested persons" (as defined in the Investment
Company Act of 1940 (the "1940 Act")) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) the Fund's
Board of Trustees or the holders of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund.
Notwithstanding the above, this Agreement (a) may nevertheless be
terminated at any time, without penalty, by the Fund's Board of Trustees, by
vote of holders of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of the Fund or by the Investment Manager, upon sixty (60) days'
written notice delivered to each party hereto, and (b) shall automatically be
terminated in the event of its assignment (as defined in the 1940 Act). Any such
notice shall be deemed given when received by the addressee.
10. GOVERNING LAW. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of New York, provided,
however, that nothing herein shall be construed as being inconsistent with the
1940 Act.
11. NOTICES. Any notice hereunder shall be in writing and shall be
delivered in person or by facsimile (followed by delivery in person) to the
parties at the addresses set forth below:
IF TO THE FUND:
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Cornerstone Progressive Return Fund
c/o Cornerstone Advisors, Inc.
Xxx Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
IF TO THE INVESTMENT MANAGER:
CORNERSTONE ADVISORS, INC
Xxx Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
or to such other address as to which the recipient shall have informed the other
party in writing.
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Unless specifically provided elsewhere, notice given as provided
above shall be deemed to have been given, if by personal delivery, on the day of
such delivery, and, if by facsimile and mail, on the date on which such
facsimile or mail is sent.
12. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto caused their duly authorized signatories
to execute this Agreement as of the day and year first written above.
CORNERSTONE PROGRESSIVE RETURN FUND
By: /s/ XXXXX X. XXXXXXXX
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Name: Xxxxx X. Xxxxxxxx
Title: Chairman of the Board
CORNERSTONE ADVISORS, INC
By: /S/ XXXX X. XXXXX
-----------------------
Name: Xxxx X. Xxxxx
Title:
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