EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of __________________, by
and between American Express Financial Corporation ("AEFC") and Advisory Hedged
Opportunity Fund (the "Trust").
WHEREAS, the Trust is a Delaware statutory trust organized under a
Declaration of Trust ("Declaration of Trust"), and is registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as a closed-end
management investment company;
WHEREAS, the Trust and AEFC have entered into an Investment Management
Services Agreement ("Management Agreement"), pursuant to which AEFC will render
investment advisory services to the Trust for compensation based on the value of
the month-end net assets of the Trust;
WHEREAS, the Trust and AEFC have entered into an Administrative
Services Agreement ("Administrative Agreement"), pursuant to which AEFC will
render administrative services to the Trust for compensation based on the value
of month-end assets of the Trust;
WHEREAS, the Trust and AEFC have determined that it is appropriate and
in the best interests of the Trust and its shareholders to maintain the expenses
of the Trust at the Maximum Annual Operating Expense Limit (as hereinafter
defined);
NOW THEREFORE, the parties hereto agree as follows:
I. Expense Limitation.
1.1. Applicable Expense Limit. To the extent that the aggregate
expenses of every character incurred by the Trust in a fiscal year, including
but not limited to administrative services fees and investment management fees
of AEFC and fees and expenses of American Express Financial Advisors, Inc. under
any Plan and Agreement of Distribution (but excluding extraordinary and
non-recurring expenses)("Trust Operating Expenses"), exceed the Maximum Annual
Operating Expense Limit, as defined in Section 1.2 below, such excess amount
("Excess Amount") shall be the liability of AEFC.
1.2. Maximum Annual Operating Expense Limit. The Maximum Annual
Operating Expense Limit of the Trust shall be 1.50 percent annually. This amount
shall be accrued monthly, based on a percentage of the monthly net assets of the
Trust, determined at month-end by adding subscriptions then subtracting
repurchases from the prior month-end balance.
1.3. Method of Computation. To determine AEFC's liability with respect
to the Excess Amount, each month the Trust Operating Expenses shall be
annualized as of the last day of the month. If the annualized Trust Operating
Expenses for any month exceed the Maximum Annual Operating Expense Limit, AEFC
shall first waive or reduce its advisory fees and
administrative services fees for such month by an amount sufficient to reduce
the annualized Trust Operating Expenses to an amount no higher than the Maximum
Annual Operating Expense Limit. If the amount of the waived or reduced advisory
fees and administrative services fees for any such month is insufficient to pay
the Excess Amount, AEFC may also remit to the Trust for the benefit of the Trust
an amount that, together with the waived or reduced advisory fees and
administrative services fees, is sufficient to pay such Excess Amount.
1.4. Year-End Adjustment. If necessary, on or before the last business
day of the first month of each fiscal year, an adjustment payment shall be made
by the appropriate party in order that the amount of the advisory fees and
administrative services fees waived or reduced and other payments remitted by
AEFC to the Trust with respect to the previous fiscal year shall equal the
Excess Amount.
II. Term and Termination Agreement.
This Agreement shall continue in effect for one year from the date this
Agreement and shall thereafter automatically renew for one-year terms. This
Agreement may be terminated by either party hereto, without payment of any
penalty, upon thirty (30) days' prior written notice to the other party at its
principal place of business; provided that, in the case of termination by the
Trust, such action shall be authorized by resolution of a majority of the
Trustees who are not interested persons, within the meaning of the 1940 Act, of
the Trust or by a vote of a majority of the outstanding voting securities of the
Trust.
III. Miscellaneous.
3.1. Captions. The captions in this Agreement are included for
convenience of reference only and in no other way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
3.2. Interpretation. Nothing herein contained shall be deemed to
require the Trust to take any action contrary to the Trust's Declaration of
Trust or Bylaws, or any applicable statutory or regulatory requirement to which
it is subject or by which it is bound, or to relieve or deprive the Trust's
Board of Trustees of its responsibility for and control of the conduct of the
affairs of the Trust.
3.3. Definitions. Any question of interpretation of any term or
provision of this Agreement, including but not limited to the advisory services
fee or administrative services fee, the computations of net asset values, and
the allocation of expenses, having a counterpart in or otherwise derived from
the terms and provisions of the Management Agreement and Administrative
Agreement or the 1940 Act, shall have the same meaning as and be resolved by
reference to such Management Agreement and Administrative Agreement or the 1940
Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
respective officers thereunto duly authorized, as of the day and year first
above written.
ADVISORY HEDGED OPPORTUNITY FUND
By:
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NAME:
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TITLE:
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AMERICAN EXPRESS FINANCIAL CORPORATION
By:
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NAME:
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TITLE:
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