EXHIBIT A
THE WORLD FUNDS, INC.
FORM OF INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") dated this of ____ day of
__________, 2012 by and between THE WORLD FUNDS, INC., a Maryland corporation
(herein called the "Fund"), and TOREADOR RESEARCH & TRADING, LLC, a Delaware
Limited Liability Company (the "Advisor") a registered investment adviser under
the Investment Advisers Act of 1940, as amended.
WHEREAS, the Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of shares, each having its own investment policies;
and;
WHEREAS, the Fund desires to retain the Advisor to furnish investment
advisory and management services to certain portfolios of the Fund, subject to
the control of the Fund's Board of Directors, and the Advisor is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be bound, it is agreed between the parties hereto as
follows:
1. Appointment. The Fund hereby appoints the Advisor to act as the adviser
to the TOREADOR INTERNATIONAL FUND a series of the Fund (the "Portfolio") for
the period and on the terms set forth in this Agreement. The Advisor accepts
such appointment and agrees to furnish the services herein set forth, for the
compensation herein provided.
2. Duties of the Advisor. The Fund employs the Advisor to manage the
investments and reinvestment of the assets of the Portfolio, and to continuously
review, supervise, and administer the investment program of the Portfolio, to
determine in its discretion the securities to be purchased or sold, to provide
the Fund and Commonwealth Shareholder Services, Inc. (the "Administrator") with
records concerning the Advisor's activities which the Fund is required to
maintain, and to render regular reports to the Fund's Officers and Board of
Directors and to the Administrator concerning the Advisor's discharge of the
foregoing responsibilities.
The Advisor shall discharge the foregoing responsibilities subject to the
control of the Fund's Board of Directors and in compliance with such policies as
the Board may from time to time establish, and in compliance with the
objectives, policies, and limitations for the Portfolio as set forth in its
Prospectus and Statement of Additional Information, as amended from time to
time, and applicable laws and regulations. The Fund will instruct each of its
agents and contractors to co-operate in the conduct of the business of the
Portfolio.
The Advisor accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings, and equipment
and the personnel required by it to perform the services on the terms and for
the compensation provided herein.
3. Portfolio Transactions. The Advisor is authorized to select the brokers
and dealers that will execute the purchases and sales of portfolio securities
for the Portfolio and is directed to use its best efforts to obtain the best
price and execution for the Portfolio's transactions in accordance with the
policies of the Fund as set forth from time to time in the Portfolio's
Prospectus and Statement of Additional Information. The Advisor will promptly
communicate to the Fund and to the Administrator such information relating to
portfolio transactions as they may reasonably request.
It is understood that the Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Fund or be in breach of
any obligation owing to the Fund under this Agreement, or otherwise, by reason
of its having directed a securities transaction on behalf of the Fund to an
unaffiliated broker-dealer in compliance with the provisions of Section 28(e)
of the Securities Exchange Act of 1934 or as described from time to time by the
Portfolio's Prospectus and Statement of Additional Information. Subject to the
foregoing, the Advisor may direct any transaction of the Portfolio to a broker
which is affiliated with the Advisor in accordance with, and subject to, the
policies and procedures approved by the Board of Directors of the Fund pursuant
to Rule 17e-1 under the 1940 Act. Such brokerage services are not deemed to be
provided under this Agreement.
4. Compensation of the Advisor. For the services to be rendered by the
Advisor under this Agreement, the Portfolio shall pay to the Advisor, and the
Advisor will accept as full compensation a fee, accrued daily and payable as
accrued, at an annual rate of 1.15%.
All rights of compensation under this Agreement for services performed as of
the termination date shall survive the termination of this Agreement.
5. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with the management of the Fund.
Notwithstanding the foregoing, the Portfolio shall pay the expenses and costs of
the Portfolio for the following:
a) Taxes;
b) Brokerage fees and commissions with regard to portfolio transactions;
c) Interest charges, fees and expenses of the custodian of the securities;
d) Fees and expenses of the Fund's transfer agent and the Administrator;
e) Its proportionate share of auditing and legal expenses;
f) Its proportionate share of the cost of maintenance of corporate
existence;
g) Its proportionate share of compensation of directors of the Fund who
is not interested persons of the Advisor as that Term is defined by
law;
h) Its proportionate share of the costs of corporate meetings;
i) Federal and State registration fees and expenses incident to the sale
of shares of the Portfolio;
j) Costs of printing and mailing Prospectuses for the Portfolio's Shares,
reports and notices to existing shareholders;
k) The Advisory fee payable to the Advisor, as provided in paragraph 4
herein;
l) Costs of recordkeeping (other than investment records required to be
Maintained by the Advisor), and daily pricing;
m) Distribution expenses in accordance with any Distribution Plan as and
If approved by the shareholders of the Portfolio; and
n) Expenses and taxes incident to the failure of the Portfolio to Qualify
as a regulated investment company under the provisions of the
Internal Revenue Code of 1986, as amended, unless such expenses And/or
taxes arise from the negligence of another party.
6. Reports. The Fund and the Advisor agree to furnish to each other, if
applicable, current information required for the preparation by such parties of
prospectuses, statements of additional information, proxy statements, reports to
shareholders, certified copies of their financial statements, and to furnish to
each other such other information and documents with regard to their affairs as
each may reasonably request.
7. Status of the Advisor. The services of the Advisor to the Fund are not
to be deemed exclusive, and the Advisor shall be free to render similar
services to others so long as its services to the Fund are not impaired
thereby. Pursuant to comparable agreements, the Fund may also retain the
services of the Advisor to serve as the investment advisor of other series of
the Fund.
8. Books and Records. In compliance with the requirements of the 1940 Act,
the Advisor hereby agrees that all records which it maintains for the Fund are
the property of the Fund, and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request. The Advisor further agrees to
preserve for the periods prescribed by the 1940 Act, and the rules or orders
thereunder, the records required to be maintained by the 1940 Act.
9. Limitation of Liability of Advisor. The duties of the Advisor shall be
confined to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Advisor hereunder. The Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or negligence on the part of the Advisor in the performance of its duties
or from reckless disregard by it of its obligations and duties under this
Agreement. (As used in this Paragraph 9, the term "Advisor" shall include
directors, officers, employees and other corporate agents of the Advisor as well
as that corporation itself).
10. Permissible Interests. Directors, agents, and shareholders of the Fund
are or may be interested in the Advisor (or any successor thereof) as directors,
officers, or shareholders, or otherwise; directors, officers, agents, and
shareholders of the Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Fund as a shareholder or otherwise. In addition,
brokerage transactions for the Fund may be effected through affiliates of the
Advisor if approved by the Fund's Board of Directors, subject to the rules and
regulations of the Securities and Exchange Commission, and the policies and
procedures adopted by the Fund.
11. License of Advisor's Name. The Advisor hereby authorizes the Fund to
use the name "Toreador International Fund" for the Portfolio. The Fund agrees
that if this Agreement is terminated it will promptly redesignate the name of
the Portfolio to eliminate any reference to the name "Toreador International
Fund" or any derivation thereof unless the Advisor waives this requirement in
writing.
12. Duration and Termination. This Agreement shall become effective on the
date first above written subject to its approval by the shareholders of the
Portfolio and unless sooner terminated as provided herein, shall continue in
effect for two (2) years from that date. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such continuance is
specifically approved annually (a) by the vote of a majority of those members of
the Fund's Board of Directors who are not parties to this Agreement or
interested persons of any such party (as that term is defined in the 1940 Act),
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by vote of either the Board of Directors or of a majority of the
outstanding voting securities (as that term is defined in the 0000 Xxx) of the
Portfolio. Notwithstanding the foregoing, this Agreement may be terminated by
the Portfolio or by the Fund at any time on sixty (60) days written notice,
without the payment of any penalty, provided that termination must be authorized
either by vote of the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Portfolio or by the Advisor on sixty (60)
days written notice. This Agreement will automatically terminate in the event of
its assignment (as that term is defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act).
14. Notice. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
address stated below, or at such other address as either party may advise in
writing:
a) To the Fund at: 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
b) To the Advisor at: 0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
16. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Maryland, and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
17. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
TOREADOR RESEARCH & TRADING, LLC
BY:_____________________________
THE WORLD FUNDS, INC.
BY:_____________________________
Xxxx Xxxxx, III
Chairman
