FORM OF CUSTODIAN AGREEMENT
This Agreement dated as of October 1, 2003, is between Advisory Hedged
Opportunity Fund, a Delaware statutory trust, (the "Trust") and American Express
Trust Company, a corporation organized under the laws of the State of Minnesota
with its principal place of business at Minneapolis, Minnesota (the
"Custodian").
WHEREAS, the Trust desires that its securities and cash be hereafter held and
administered by Custodian pursuant to the terms of this Agreement.
WHEREAS, the Custodian has at least the minimum qualifications required by
Section 17(f)(1) of the Investment Company Act of 1940, as amended (the "1940
Act"), to act as custodian of the portfolio securities of the portfolio
securities, assets and cash of the Trust.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the Trust
and the Custodian agree as follows:
Section 1. Definitions
The word "securities" as used herein shall be construed to include, without
being limited to, shares, stocks, treasury stocks, including any shares of
beneficial interest of the Trust, notes, bonds, debentures, evidences of
indebtedness, options to buy or sell stocks or stock indexes, certificates of
interest or participation in any profit-sharing agreements, collateral trust
certificates, preorganization certificates or subscriptions, transferable
shares, investment contracts, voting trust certificates, certificates of deposit
for a security, fractional or undivided interests in oil, gas or other mineral
rights, or any certificates of interest or participation in, temporary or
interim certificates for, receipts for, guarantees of, or warrants or rights to
subscribe to or purchase any of the foregoing, acceptances and other obligations
and any evidence of any right or interest in or to any cash, property or assets
and any interest or instrument commonly known as a security. In addition, for
the purpose of this Custodian Agreement, the word "securities" also shall
include other instruments in which the Trust may invest including currency
forward contracts and commodities such as interest rate or index futures
contracts, margin deposits on such contracts or options on such contracts.
The words "custodian order" shall mean a request for direction, including a
computer printout directed to the Custodian and signed in the name of the Trust
by any two individuals designated in the current certified list referred to in
Section 2.
The word "facsimile" shall mean an exact copy or likeness that is electronically
transmitted for instant reproduction.
Section 2. Names, Titles and Signatures of Authorized Persons
The Trust will certify to the Custodian the names and signatures of its present
officers and other designated persons authorized on behalf of the Trust to
direct the Custodian by custodian order as herein before defined. The Trust
agrees that whenever any change occurs in this list it will file with the
Custodian a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Trust as having been duly adopted by the Trust's board of
Trustees (the "Board") or the Executive Committee of the Board designating those
persons currently authorized on behalf of the Trust to direct the Custodian by
custodian order and upon such filing (to be accompanied by the filing of
specimen signatures of the designated persons) the persons so designated in such
resolution shall constitute the current certified list. The Custodian is
authorized to rely and act upon the names and signatures of the individuals as
they appear in the most recent certified list from the Trust which has been
delivered to the Custodian as herein above provided.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, with other banks having
not less than two million dollars aggregate capital, surplus and undivided
profits for the custody of securities. Any such bank selected by the Custodian
to act as subcustodian shall be deemed to be the agent of the Custodian.
The Custodian also may enter into arrangements for the custody of securities
entrusted to its care through foreign branches of U.S. banks; through foreign
banks, banking institutions or trust companies; through foreign subsidiaries of
U.S. banks or bank holding companies; or through foreign securities depositories
or clearing agencies (hereinafter also called, collectively, the "Foreign
Subcustodian") or indirectly through an agent, established under the first
paragraph of this section, if and to the extent permitted by Section 17(f) of
the 1940 Act and the rules promulgated by the Securities and Exchange Commission
(the "SEC") thereunder, or any "no-action" letter received from the staff of the
SEC. To the extent the existing provisions of the Custodian Agreement are
consistent with the requirements of such Section, rules, order or no-action
letter, they shall apply to all such foreign custodianships. To the extent such
provisions are inconsistent with or additional requirements are established by
such section, rules, order or no-action letter, the requirements of such
section, rules, order or no-action letter will prevail and the parties will
adhere to such requirements; provided, however, in the absence of notification
from the Trust of any changes or additions to such requirements, the Custodian
shall have no duty or responsibility to inquire as to any such changes or
additions.
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate account or accounts in
the name of the Trust or cause its agent to open and maintain such account
or accounts subject only to checks, drafts or directives by the Custodian
pursuant to the terms of this Agreement. The Custodian or its agent shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Trust. The Custodian or
its agent shall make payments of cash to or for the account of the Trust
from such cash only:
(a) for the purchase of securities for the portfolio of the Trust upon
the receipt of such securities by the Custodian or its agent unless
otherwise instructed on behalf of the Trust;
(b) for the purchase or redemption of shares of beneficial interest of
the Trust;
(c) for the payment of interest, dividends, taxes, management fees, or
operating expenses (including, without limitation thereto, fees for
legal, accounting and auditing services);
(d) for payment of distribution fees, commissions, or redemption fees,
if any;
(e) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Trust held by,
or to be delivered to, the Custodian;
(f) for payments in connection with the return of securities loaned by
the Trust upon receipt of such securities or the reduction of
collateral upon receipt of proper notice;
(g) for payments for other proper corporate purposes; or
(h) upon the termination of this Agreement.
Before making any such payment for the purposes permitted under these
items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1) of this
section, the Custodian shall receive and may rely upon a custodian order
directing such payment and stating that the payment is for such a purpose
permitted under these items (a), (b), (c), (d), (e), (f) or (g) or, where
appropriate, a trade affirmation report, and that in respect to item (g),
a copy of a resolution of the Board or of the Executive Committee signed
by an officer of the Trust and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose to be a proper corporate purpose, and naming the person or persons
to whom such payment is made. Notwithstanding
the above, for the purposes permitted under items (a) or (f) of paragraph
(1) of this section, the Custodian may rely upon a facsimile order.
(2) The Custodian is hereby appointed the attorney-in-fact of the Trust to
endorse and collect all checks, drafts or other orders for the payment of
money received by the Custodian for the account of the Trust and drawn on
or to the order of the Trust and to deposit same to the account of the
Trust pursuant to this Agreement.
Section 5. Receipt of Securities
Except as permitted by the second paragraph of this section, the Custodian or
its agent shall hold in a separate account or accounts, and physically
segregated at all times from those of any other persons, firms or corporations,
pursuant to the provisions hereof, all securities received by it for the account
of the Trust. The Custodian shall record and maintain a record of all
certificate numbers, if applicable. Securities so received shall be held in the
name of the Trust, in the name of an exclusive nominee duly appointed by the
Custodian or in bearer form, as appropriate.
Subject to such rules, regulations or guidelines as the SEC may adopt, the
Custodian may deposit all or any part of the securities owned by the Trust in a
"securities depository" which includes any system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the SEC under the Securities Exchange Act
of 1934, or such other person as may be permitted by the Commission, pursuant to
which system all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities.
All securities are to be held or disposed of by the Custodian for, and subject
at all times to the instructions of, the Trust pursuant to the terms of this
Agreement. The Custodian shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such securities, except pursuant
to the directive of the Trust and only for the account of the Trust as set forth
in Section 6 of this Agreement.
Section 6. Transfer, Exchange, and Delivery of Securities
The Custodian shall have sole power to release or deliver any securities of the
Trust held by it pursuant to this Agreement. The Custodian agrees to transfer,
exchange or deliver securities held by it or its agent hereunder only:
(a) for sales of such securities for the account of the Trust, upon
receipt of payment therefore;
(b) when such securities are called, redeemed, repurchased, retired or
otherwise become payable;
(c) for examination upon the sale of any such securities in accordance
with "street delivery" custom which would include delivery against
interim receipts or other proper delivery receipts;
(d) in exchange for or upon conversion into other securities alone or
other securities and cash whether pursuant to any plan of;
(e) merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(f) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;
(g) upon conversion of such securities pursuant to their terms into
other securities;
(h) upon exercise of subscription, purchase or other similar rights
represented by such securities; for loans of such securities by the
Trust upon receipt of collateral; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a), (b), (c), (d),
(e), (f), (g) and (h), securities or cash received in exchange therefore shall
be delivered to the Custodian, its agent, or to a securities depository. Before
making any such transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Trust requesting such transfer, exchange
or delivery and stating that it is for a purpose permitted under Section 6, or,
where appropriate, a trade affirmation report, (whenever a facsimile is
utilized, the Trust will also deliver an original signed custodian order) and,
in respect to item (i), a copy of a resolution of the Board or of the Executive
Committee of the Board of Trustees signed by an officer of the Trust and
certified by its Secretary or an Assistant Secretary, specifying the securities,
setting forth the purpose for which such payment, transfer, exchange or delivery
is to be made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom such transfer, exchange or delivery of such
securities shall be made.
Section 7. Custodian's Acts Without Instructions
Unless and until the Custodian receives a contrary custodian order from the
Trust, the Custodian shall or shall cause its agent to:
(a) present for payment all coupons and other income items held by the
Custodian or its agent for the account of the Trust which call for
payment upon presentation and hold all cash received by it upon such
payment for the account of the Trust;
(b) present for payment all securities held by it or its agent which
mature or when called, redeemed, retired or otherwise become
payable;
(c) ascertain all stock dividends, rights and similar securities to be
issued with respect to any securities held by the Custodian or its
agent hereunder, and to collect and hold for the account of the
Trust all such securities; and
(d) ascertain all interest and cash dividends to be paid to security
holders with respect to any securities held by the Custodian or its
agent, and to collect and hold such interest and cash dividends for
the account of the Trust.
Section 8. Voting and Other Action
Neither the Custodian nor any nominee of the Custodian shall vote any of the
securities held hereunder by or for the account of the Trust. The Custodian
shall promptly deliver to the Trust all notices, proxies and proxy soliciting
materials with relation to such securities such proxies to be executed by the
registered holder of such securities (if registered otherwise than in the name
of the Trust) but without indicating the manner in which such proxies are to be
voted.
Custodian shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Custodian
from issuers of the securities being held for the Trust. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Trust all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer.
Section 9. Transfer Taxes
The Trust shall pay or reimburse the Custodian for any transfer taxes payable
upon transfers of securities made hereunder, including transfers resulting from
the termination of this Agreement. The Custodian shall execute such certificates
in connection with securities delivered to it under this Agreement as may be
required, under any applicable law or regulation, to exempt from taxation any
transfers and/or deliveries of any such securities which may be entitled to such
exemption.
Section 10. Custodian's Reports
The Custodian shall furnish the Trust as of the close of business each day a
statement showing all transactions and entries for the account of the Trust. The
books and records of the Custodian pertaining to its actions as Custodian under
this Agreement and securities held hereunder by the Custodian shall be open to
inspection and audit by officers of the Trust, internal auditors employed by the
Trust's investment adviser, and independent auditors employed by the Trust. The
Custodian shall furnish the Trust in such form as may reasonably be requested by
the Trust a report, including a list of the securities held by it in custody for
the account of the Trust, and identification of any subcustodian and
identification of such securities held by such subcustodian, as of the close of
business of the last business day of each month, which shall be certified by a
duly authorized officer of the Custodian. It is further understood that
additional reports may from time to time be requested by the Trust. Should any
report ever be filed with any governmental authority pertaining to lost or
stolen securities, the Custodian will concurrently provide the Trust with a copy
of that report.
The Custodian also shall furnish such reports on its systems of internal
accounting control as the Trust may reasonably request from time to time.
Section 11. Concerning the Custodian
For its services hereunder the Custodian shall be paid such compensation at such
times as may from time to time be agreed on in writing by the parties hereto in
a Custodian Fee Agreement.
The Custodian shall not be liable for any action taken in good faith upon any
custodian order or facsimile herein described, trade affirmation report, or
certified copy of any resolution of the Board or of the Executive Committee of
the Board, and may rely on the genuineness of any such document which it may, in
good faith, believe to have been validly prepared or executed.
The Trust agrees to indemnify and hold harmless the Custodian and its nominee
from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or its nominee in
connection with the performance of this Agreement, except such as may arise from
the Custodian's or its nominee's own negligent action, negligent failure to act
or willful misconduct. The Custodian is authorized to charge any account of the
Trust for such items. In the event of any advance of cash for any purpose made
by the Custodian resulting from orders or instructions of the Trust, or in the
event that the Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Trust shall be security
therefore.
The Custodian shall maintain a standard of care equivalent to that which would
be required of a bailee for hire and shall not be liable for any loss or damage
to the Trust resulting from participation in a securities depository unless such
loss or damage arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its failure to
enforce effectively such rights as it may have against any securities depository
or from use of an agent, unless such loss or damage arises by reason of any
negligence, misfeasance, or willful misconduct of officers or employees of the
Custodian, or from its failure to enforce effectively such rights as it may have
against any agent.
Section 12. Termination and Amendment of Agreement
The Trust and the Custodian mutually may agree from time to time in writing to
amend, to add to, or to delete from, any provision of this Agreement.
The Custodian may terminate this Agreement by giving the Trust ninety days'
written notice of such termination by registered mail addressed to the Trust at
its principal place of business.
The Trust may terminate this Agreement at any time by written notice thereof
delivered, together with a copy of the resolution of the Board authorizing such
termination and certified by the Secretary of the Trust, by registered mail to
the Custodian.
Upon such termination of this Agreement, assets of the Trust held by the
Custodian shall be delivered by the Custodian to a successor custodian, if one
has been appointed by the Trust, upon receipt by the Custodian of a copy of the
resolution of the Board certified by the Secretary, showing appointment of the
successor custodian, and provided that such successor custodian is a bank or
trust company, organized under the laws of the United States or of any State of
the United States, having not less than two million dollars aggregate capital,
surplus and undivided profits. Upon the termination of this Agreement as a part
of the transfer of assets, either to a successor custodian or otherwise, the
Custodian will deliver Securities held by it hereunder, when so authorized and
directed by resolution of the Board, to a duly appointed agent of the successor
custodian or to the appropriate transfer agents for transfer of registration and
delivery as directed. Delivery of assets on termination of this Agreement shall
be effected in a reasonable, expeditious and orderly manner; and in order to
accomplish an orderly transition from the Custodian to the successor custodian,
the Custodian shall continue to act as such under this Agreement as to assets in
its possession or control. Termination as to each security shall become
effective upon delivery to the successor custodian, its agent, or to a transfer
agent for a
specific security for the account of the successor custodian, and such delivery
shall constitute effective delivery by the Custodian to the successor under this
Agreement.
In addition to the means of termination herein before authorized, this Agreement
may be terminated at any time by the vote of a majority of the outstanding
shares of the Trust and after written notice of such action to the Custodian.
Section 13. General
Nothing expressed or mentioned in or to be implied from any provision of this
Agreement is intended to, or shall be construed to give any person or
corporation other than the parties hereto, any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any covenant, condition or
provision herein contained, this Agreement and all of the covenants, conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns.
This Agreement shall be governed by the laws of the State of Minnesota.
This Agreement supersedes all prior agreements between the parties.
IN WITNESS WHEREOF, the Trust and the Custodian have caused this agreement to be
executed as of the date first above written by their respective officers
thereunto duly authorized.
ADVISORY HEDGED OPPORTUNITY FUND
By: _______________________________
Name: _______________________________
Title: _______________________________
AMERICAN EXPRESS TRUST COMPANY
By: _______________________________
Name: _______________________________
Title: _______________________________
