FORM OF DISTRIBUTION AGREEMENT
This Agreement, dated as of _________2003, is by and between Advisory Hedged
Opportunity Fund, a Delaware statutory Trust (the "Trust"), and American Express
Financial Advisors Inc., a Delaware corporation ("AEFA").
Part One: DISTRIBUTION OF SECURITIES
(1) The Trust covenants and agrees that, during the term of this agreement and
any renewal or extension, AEFA shall have the exclusive right to act as
principal underwriter for the Trust and to offer for sale and to distribute
any and all shares of beneficial interest issued or to be issued by the
Trust.
The exclusive right to act as principal underwriter will not apply to
transactions by the Trust at net asset value as permitted by the currently
effective prospectus and statement of additional information (the
"prospectus") or to transactions by the Trust that do not involve sales to
the general public, including transactions between the Trust and its
shareholders only, transactions involving the reorganization of the Trust
and transactions involving the merger, consolidation or acquisition of
assets with another corporation or trust.
(2) AEFA hereby covenants and agrees to act as the principal underwriter of the
shares of beneficial interest issued and to be issued by the Trust during
the period of this agreement and agrees to offer for sale such shares as
long as such shares remain available for sale, unless AEFA is unable or
unwilling to make such offer for sale or sales or solicitations therefore
legally because of any federal, state, provincial or governmental law, rule
or agency or for any financial reason. AEFA agrees to use its best efforts
with reasonable promptness to effect sales of shares of the Trust but is
not obligated to sell any specific number of shares.
(3) With respect to the offering for sale and sale of shares to be issued by
the Trust, it is mutually understood and agreed that such shares are to be
sold on the following terms:
(a) AEFA has the right, as principal, to buy from the Trust the shares
needed to fill unconditional orders placed with AEFA by investors or
selling dealers (as defined below). The price AEFA will pay to the
Trust is the net asset value, determined as set forth in the currently
effective prospectus.
(b) The shares will be resold by AEFA to investors at the public
offering price, determined as set forth in the currently
effective prospectus, or to selling dealers having agreements
with AEFA upon the terms and conditions set forth in section
3(f). The price the Trust shall receive for all Shares purchased
from it shall be the net asset value used in determining the
public offering price applicable to the sale of such shares,
except with respect to shares sold during the initial offering
period, as defined in the prospectus, which shall be offered and
sold at the price set forth therein. Without limiting the
foregoing, AEFA agrees to: (i) sell Shares only to an
investor who is an "Eligible Investor" as that term is defined in
the prospectus; (ii) obtain and comply with any investor
certification requirements set forth in the Trust's prospectus;
and (iii) impose the requirements set forth in (i) and (ii) of
this paragraph as a condition of the sales activity of any
selling dealer or other person with whom AEFA enters into an
agreement with respect to the Shares. Shares may be sold to
certain groups or in certain transactions without a sales charge
or at a reduced sales charge, as described in the currently
effective prospectus.
(c) AEFA also has the right, as agent for the Trust, to sell shares
at the public offering price or at net asset value to certain
persons and upon certain conditions as the Trust may from time to
time determine.
(d) The Trust or its transfer agent shall be promptly advised of all
orders received.
(e) The net asset value of the shares will be determined by the Trust
or any agent of the Trust in accordance with the method set forth
in the currently effective prospectus. In the event of a period
of emergency, the computation of the net asset value for the
purpose of determining the number of shares or fractional shares
to be acquired may be deferred until the close of business on the
first full business day following the termination of the period
of emergency. A period of emergency shall have the meaning as
interpreted by the SEC under the Investment Company Act of 1940.
(f) AEFA is authorized to enter into agreements with broker-dealers
that are lawfully registered under federal law and any applicable
state law or with other institutions lawfully able to distribute
securities ("Selling Dealers") providing for the Selling Dealers
to obtain unconditional orders for purchases of the Trust's
shares from investors, provided, however, that AEFA may in its
discretion refuse to accept orders for shares from any particular
applicant and may provide similar discretion to Selling Dealers.
AEFA will determine the portion of the sales charge that may be
allocated to the Selling Dealers. Shares sold to Selling Dealers
are for resale only at the public offering price determined as
set forth in the currently effective prospectus.
(4) The Trust agrees to make prompt and reasonable effort to do any and all
things necessary, in the opinion of AEFA to have and to keep the Trust and
the shares properly registered or qualified in all appropriate
jurisdictions and, as to shares, in such amounts as AEFA may from time to
time designate in order that the Trust's shares may be offered or sold in
such jurisdictions.
(5) The Trust agrees that it will furnish AEFA with information with respect to
the affairs and accounts of the Trust, and in such form as AEFA may from
time to time reasonably require
and further agrees that AEFA, at all reasonable times, shall be permitted
to inspect the books and records of the Trust.
(6) AEFA agrees to indemnify and hold harmless the Trust and each person who
has been, is, or may hereafter be a Trustee of the Trust against expenses
reasonably incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of them may be
a party, which arises out of or is alleged to arise out of any
misrepresentation or omission to state a material fact, or out of any
alleged misrepresentation or omission to state a material fact, on the part
of AEFA or any agent or employee of AEFA or any other person for whose acts
AEFA is responsible or is alleged to be responsible, unless such
misrepresentation or omission was made in reliance upon information
furnished by the Trust. AEFA also agrees likewise to indemnify and hold
harmless the Trust and each such person in connection with any claim or in
connection with any action, suit or proceeding which arises out of or is
alleged to arise out of AEFA's (or an affiliate of AEFA's) failure to
exercise reasonable care and diligence with respect to its services
rendered. The term "expenses" includes amounts paid in satisfaction of
judgments or in settlements that are made with AEFA's consent. The
foregoing rights of indemnification shall be in addition to any other
rights to which the Trust or a director may be entitled as a matter of law.
(7) AEFA agrees to cause to be delivered to each purchaser a prospectus or
circular to be furnished by the Trust in the form required by the
applicable federal laws or by the acts or statutes of any applicable state,
province or country.
(8) In connection with the repurchase of shares, AEFA will act as agent of the
Trust. Any outstanding shares may be tendered for repurchase as set forth
in the then-effective prospectus, and the Trust agrees to repurchase such
shares in accordance with the terms and conditions of the then-effective
prospectus. The Trust will pay the amount of the repurchase price to
shareholders on such terms and dates as set forth in the then-effective
prospectus.
(9) AEFA and the Trust agree to use their best efforts to conform with all
applicable state and federal laws and regulations relating to any rights or
obligations under the terms of this agreement.
Part Two: ALLOCATION OF EXPENSES AND COMPENSATION
(1) Except as provided by this Agreement or any other agreement between the
parties, AEFA covenants and agrees that during the period of this agreement
it will pay or cause to be paid all expenses incurred by AEFA in the
offering for sale or sale of each class of the Trust's shares.
(2) AEFA's compensation as principal underwriter shall be that part of the
sales charge (as set forth in the Trust's current prospectus and statement
of additional information) retained by AEFA.
Part Three: MISCELLANEOUS
(1) AEFA shall be deemed to be an independent contractor and, except as
expressly provided or
authorized in this agreement, shall have no authority to act for or
represent the Trust.
(2) AEFA shall be free to render to others services similar to those rendered
under this agreement.
(3) Neither this agreement nor any transaction pursuant hereto shall be
invalidated or in any way affected by the fact that trustees, officers,
agents and/or shareholders of the Trust are or may be interested in AEFA as
directors, officers, shareholders or otherwise; that directors, officers,
shareholders or agents of AEFA are or may be interested in the Trust as
trustees, officers, shareholders or otherwise; or that AEFA is or may be
interested in the Trust as shareholder or otherwise, provided, however,
that neither AEFA nor any officer or director of AEFA or any officers or
trustees of the Trust shall sell to or buy from the Trust any property or
security other than a security issued by the Trust, except in accordance
with a rule, regulation or order of the Securities and Exchange Commission.
(4) For the purposes of this agreement, a "business day" shall have the same
meaning as is given to the term in the By-laws of the Trust.
(5) Any notice under this agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the parties to this agreement at each
company's principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to the other.
(6) AEFA agrees that no officer, director or employee of AEFA will deal for or
on behalf of the Trust with himself as principal or agent, or with any
corporation or partnership in which he may have a financial interest,
except that this shall not prohibit:
(a) Officers, directors and employees of AEFA from having a financial
interest in the Trust or in AEFA.
(b) The purchase of securities for the Trust, or the sale of
securities owned by the Trust, through a security broker or
dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of AEFA, provided
such transactions are handled in the capacity of broker only and
provided commissions charged do not exceed customary brokerage
charges for such services.
(c) Transactions with the Trust by a broker-dealer affiliate of AEFA
if allowed by rule or order of the SEC and if made pursuant to
procedures adopted by the Board of Trustees.
(7) AEFA agrees that, except as otherwise provided in this agreement, or as may
be permitted consistent with the use of a broker-dealer affiliate of AEFA
under applicable provisions of the federal securities laws, neither it nor
any of its officers, directors or employees shall at any time during the
period of this agreement make, accept or receive, directly or indirectly,
any fees, profits or emoluments of any character in connection with the
purchase or sale of
securities (except securities issued by the Trust) or other assets by or
for the Trust.
(8) This agreement may not be amended or modified in any manner except by a
written agreement executed by both parties.
(9) This agreement is governed by the laws of the State of Minnesota.
Part Four: TERMINATION
(1) This Agreement shall become effective on the date first set forth above and
unless terminated earlier, shall continue for a period two years after such
date; and shall continue from year to year unless and until terminated by
AEFA or the Trust, except that such continuance shall be specifically
approved at least annually by a vote of a majority of the Board of Trustees
who are not parties to this agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and by a majority of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Trust. As used in this
paragraph, the term "interested person" shall have the meaning as set forth
in the 1940 Act.
(2) This agreement may be terminated by AEFA or the Trust at any time by giving
the other party sixty (60) days written notice of such intention to
terminate.
(3) This agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in the
1940 Act.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing agreement on
the date and year first above written.
ADVISORY HEDGED OPPORTUNITY FUND
By: _____________________
NAME: _____________________
TITLE: _____________________
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By: _____________________
NAME: _____________________
TITLE: _____________________
