EXHIBIT 12-1
FORM OF TAX OPINION
June __, 2004
Investors First Fund, Inc.
383 Madison Avenue
New York, NY 10179
Cornerstone Strategic Value Fund, Inc.
383 Madison Avenue
New York, NY 10179
Gentlemen:
You have requested our opinion concerning certain federal
income tax consequences of the merger (the "Merger") of Investors First Fund,
Inc., a Maryland corporation ("MGC"), with and into Cornerstone Strategic Value
Fund, Inc., a Maryland corporation ("CLM"). The terms of the Merger are
described in the Merger Agreement and Plan of Reorganization dated June ____,
2004 (the "Agreement") by and between MGC and CLM. Our opinion is based upon our
understanding of the facts of and incident to the Merger, as are set forth in
the Agreement, and upon the condition that those facts are true, correct and
complete. Further, our opinion is issued in reliance upon the Officer's
Certificate of MGC and the Officer's Certificate of CLM relating to the truth,
correctness and completeness of those facts. All capitalized terms used herein,
unless otherwise specified, have the meanings assigned to them in the Agreement.
For the purpose of rendering our opinion, we have examined and are
relying upon (without any independent investigation or review thereof) the truth
and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in the following documents (including
all schedules and exhibits thereto): (a) the Agreement; (b) the Officer's
Certificates of CLM and MGC attached hereto; and (c) such other documents as we
have deemed necessary or appropriate as a basis for the opinion set forth below.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such copies. We have
further assumed that the Merger will be consummated in accordance with the
Agreement and will be effective under applicable state law. Finally, our opinion
is issued in reliance that all statements, descriptions and representations
contained in the above-referenced documents or otherwise made to us are true,
correct and complete.
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In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations and the pertinent judicial authorities and interpretive rulings of
the Internal Revenue Service (the "Service") and such other authorities as we
have considered relevant.
Based upon and subject to the foregoing, we are of the opinion that the
Merger will, under current law, constitute a tax-free reorganization pursuant to
Section 368(a) of the Code.
* * *
This letter represents our view of the proper U.S. federal income tax
treatment of the Merger based upon our analysis of the relevant U.S. federal
income tax authorities as of the date hereof. The opinion is not binding on the
Service or any court, and there can be no assurance that the Service or a court
of competent jurisdiction will not disagree with the opinion.
Our opinion is based upon the Code and its legislative history, the
Treasury Regulations, judicial decisions and current administrative rulings and
practices of the Service, all as in effect on the date of this letter. These
authorities may be amended or revoked at any time. Any changes may or may not be
retroactive and could cause this opinion to be or become incorrect, in whole or
in part. There is and can be no assurance that such legislative, judicial or
administrative changes will not occur in the future. We expressly disclaim any
obligation to update or modify this letter to reflect any developments that may
impact the opinion from and after the date of this letter.
We are expressing our opinion only as to matters expressly addressed
herein. We are not expressing any opinion as to any other aspects whether
discussed herein or not. No opinion should be inferred as to any other matters,
including without limitation, any other U.S. federal income tax issues with
respect to the Merger or any state, local or foreign tax treatment of the Merger
or any matter incidental thereto. In particular, but without limiting the
generality of the foregoing, we express no opinion regarding (i) whether and the
extent to which any MGC Stockholder who has provided or will provide services to
MGC or CLM will have compensation income under any provision of the Code; (ii)
the alternative minimum tax provisions (Sections 55, 56 and 57) of the Code or
the Treasury Regualations promulgated thereunder; (iii) the corporate-level tax
consequences of the Merger to CLM or MGC, including without limitation, the
recognition of any gain and the survival and/or availability, after the Merger,
of any of the federal income tax attributes or elections of MGC, after
application of any provision of the Code, as well as the Treasury Regulations
promulgated thereunder and judicial interpretations thereof; (iv) the basis of
the equity interest in MGC in the hands of CLM after the Merger; (v) the tax
consequences of any transaction in which capital stock in MGC or a right to
acquire capital stock in MGC was received; and (vi) the tax consequences of the
Merger (including the opinion set forth above) as applied to particular classes
of stockholders in MGC, such as dealers in securities, corporate stockholders
subject to the alternative minimum tax, and foreign persons.
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Our opinion is dependent upon the accuracy and completeness of the
facts and assumptions referenced above. We have relied upon those facts and
assumptions without any independent investigation or verification of their
accuracy or completeness. Any inaccuracy or incompleteness in our understanding
of the facts and assumptions could adversely affect the opinion expressed in
this letter.
This opinion is intended solely for each of your benefits and may not
be relied in any manner for any other purpose by any other person without our
express written consent.
Very truly yours,
BLANK ROME LLP
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