WORLD FUNDS TRUST EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of July 23, 2014 by and between Strategic Asset Management, Ltd. (the "Adviser") and World Funds Trust (the "Trust") ("Agreement"), on behalf of the series of the Trust set forth in Schedule A attached hereto (each a "Fund," and collectively, the "Funds").
WHEREAS, the Trust is a Delaware statutory trust, and is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end management investment company of the series type, and each Fund is a series of the Trust;
WHEREAS, the Trust and the Adviser have entered into an Advisory Agreement dated July 23, 2014 ("Advisory Agreement"), pursuant to which the Adviser provides investment management services to each Fund for compensation based on the value of the average daily net assets of each such Fund;
WHEREAS, the Trust and the Adviser have determined that it is appropriate and in the best interests of each Fund and its shareholders to maintain the expenses of each Fund at a level below the level to which each such Fund would normally be subject in order to maintain each Fund’s expense ratio at the Maximum Annual Operating Expense Limit (as hereinafter defined) specified in Schedule A hereto;
NOW THEREFORE, the parties hereto agree as follows:
| 1. | Expense Limitation. |
| a. | Applicable
Expense Limit. To the extent that the aggregate expenses of every character
incurred by a Fund in any fiscal year, including but not limited to investment advisory
fees of the Adviser (but excluding interest, distribution fees pursuant to Rule
12b-1 Plans, taxes, acquired fund fees and expenses, brokerage commissions, dividend
expenses on short sales, and other expenditures which are capitalized in accordance
with generally accepted accounting principles and other extraordinary expenses not
incurred in the ordinary course of such Fund’s business) ("Fund Operating Expenses"),
exceed the Maximum Annual Operating Expense Limit, as defined in Section 1.2 below,
such excess amount (the "Excess Amount") shall be the liability of the Adviser. |
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| b. | Maximum
Annual Operating Expense Limit. The Maximum Annual Operating Expense Limit with
respect to each Fund shall be the amount specified in Schedule A based on a percentage
of the average daily net assets of each Fund. |
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| c. | Method
of Computation. To determine the Adviser’s liability with respect to the
Excess Amount, each month the Fund Operating Expenses for each Fund shall be annualized
as of the last day of the month. If the annualized Fund Operating Expenses for any
month of |
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a Fund exceed
the Maximum Annual Operating Expense Limit of such Fund, the Adviser shall first
waive or reduce its investment advisory fee for such month by an amount sufficient
to reduce the annualized Fund Operating Expenses to an amount no higher than the
Maximum Annual Operating Expense Limit. If the amount of the waived or reduced investment
advisory fee for any such month is insufficient to pay the Excess Amount, the Adviser
may also remit to the appropriate Fund or Funds an amount that, together with the
waived or reduced investment advisory fee, is sufficient to pay such Excess Amount. |
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| d. | Year-End
Adjustment. If necessary, on or before the last 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 investment advisory fees waived or reduced and other payments
remitted by the Adviser to the Fund or Funds with respect to the previous fiscal
year shall equal the Excess Amount. |
| 2. | Reimbursement of Fee Waivers and Expense Reimbursements. |
| a. | Reimbursement. If, during any fiscal quarter in which the Advisory Agreement is still in effect,
the estimated aggregate Fund Operating Expenses of such Fund for the fiscal quarter
are less than the Maximum Annual Operating Expense Limit for that quarter, the Adviser
shall be entitled to reimbursement by such Fund, in whole or in part as provided
below, of the investment advisory fees waived or reduced and other payments remitted
by the Adviser to such Fund pursuant to Section 1 hereof. The total amount of reimbursement
to which the Adviser may be entitled ("Reimbursement Amount") shall equal, at any
time, the sum of all investment advisory fees previously waived or reduced by the
Adviser and all other payments remitted by the Adviser to the Fund, pursuant to
Section 1 hereof, during any of the previous three (3) fiscal years, less any reimbursement
previously paid by such Fund to the Adviser, pursuant to this Sections 2.1, with
respect to such waivers, reductions, and payments. The Reimbursement Amount shall
not include any additional charges or fees whatsoever, including, e.g., interest
accruable on the Reimbursement Amount. To the extent any reimbursement is made pursuant
to this Section 2.1, such reimbursement shall not cause the Fund Operating Expenses
to exceed the Maximum Annual Operating Expense Limit that was in place at the time
the Adviser waived or reduced its advisory fees or reimburse other expenses of the
Fund. |
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| b. | Board Review. No Reimbursement Amount will be paid to the Adviser if the Trust’s Board
of Trustees determines that the payment of the Reimbursement Amount is not in the
best interests of shareholders. |
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| c. | Method
of Computation. To determine each Fund’s accrual, if any, to reimburse
the Adviser for the Reimbursement Amount, each month the Fund Operating Expenses
of each Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses of a Fund for any month are less than the Maximum Annual
Operating Expense Limit of such Fund, such Fund shall accrue into its net asset
value an amount payable to the Adviser sufficient to increase the annualized Fund
Operating Expenses of that Fund to an amount no greater than the Maximum Annual
Operating |
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Expense Limit
of that Fund, provided that such amount paid to the Adviser will in no event exceed
the total Reimbursement Amount. For accounting purposes, amounts accrued pursuant
to this Section 2 shall be a liability of the Fund for purposes of determining the
Fund’s net asset value. |
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| d. | Payment
and Year-End Adjustment. Amounts accrued pursuant to this Agreement shall be
payable to the Adviser as of the last day of each month. If necessary, on or before
the last day of the first month of each fiscal year, an adjustment payment shall
be made by the appropriate party in order that the actual Fund Operating Expenses
of a Fund for the prior fiscal year (including any reimbursement payments hereunder
with respect to such fiscal year) do not exceed the Maximum Annual Operating Expense
Limit. |
| 3. | Term and Termination of Agreement. |
| a. | This Agreement
shall continue in effect with respect to the Fund until January 31, 2016 and shall
thereafter continue in effect with respect to each Fund from year to year for successive
one-year periods provided that Agreement may be terminated by either party hereto,
without payment of any penalty, upon ninety (90) days’ prior written notice
to the other party at its principal place of business; provided that, in the case
of termination by the Adviser, such action shall be authorized by resolution of
a majority of the Non- Interested Trustees of the Trust or by a vote of a majority
of the outstanding voting securities of the Trust. |
| 4. | Miscellaneous. |
| a. | 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. |
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| b. | Interpretation. Nothing herein contained shall be deemed to require the Trust or the Funds
to take any action contrary to the Trust’s Agreement and Declaration of Trust
or by-laws, as amended from time to time, 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 or the Funds. The parties to this Agreement
acknowledge and agree that all litigation arising hereunder, whether direct or indirect,
and of any and every nature whatsoever shall be satisfied solely out of the assets
of the affected Fund and that no Trustee, officer or holder of shares of beneficial
interest of the Fund shall be personally liable for any of the foregoing liabilities.
The Trust’s Agreement and Declaration of Trust is on file with the Secretary
of State of the State of Delaware. The Agreement and Declaration of Trust and by-laws
describe in detail the respective responsibilities and limitations on liability
of the Trustees, officers, and holders of shares of beneficial interest. |
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| c. | Definitions. Any question of interpretation of any term or provision of this Agreement,
including but not limited to the investment advisory 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 Advisory Agreement or the 1940 Act,
shall have the same meaning as and be resolved by reference to such Advisory Agreement
or the 1940 Act. |
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| d. | Enforceability. Any term or provision of this Agreement which is invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms or provisions of this Agreement or affecting the validity or enforceability
of any of the terms or provisions of this Agreement in any other jurisdiction. |
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their behalf by their duly authorized officers as of the date first above written.
| World Funds Trust, on behalf of each Fund Listed on Schedule A | |
| By: ___/s/ Xxxx Xxxxx, III_________________ | |
| Name: Xxxx Xxxxx, III | |
| Title: Chairman | |
| Strategic Asset Management, Ltd. | |
| By: ____/s/ Xxxxxxxx Alvarez________________ | |
| Name: Xxxxxxxx Xxxxxxx | |
CEO |
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| SCHEDULE A |
| to the |
| EXPENSE LIMITATION AGREEMENT (the "Agreement") |
| between |
| WORLD FUNDS TRUST (the "Trust") |
| and |
| Strategic Asset Management, Ltd. |
Dated as of July 23, 2014
This Agreement relates to the following Funds of the Trust:
| Maximum Annual | ||
| Fund | Operating Expense | |
| Limit | ||
| Strategic Latin America Fund | 1.55% | |
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