EXHIBIT EX-99.H4A
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of July 30th, 2008 by and between
Commonwealth Capital Management, LLC (the "Adviser") and World Funds Trust (the
"Trust") ("Agreement"), on behalf of each 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 30th 2008 ("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.
1.1. 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, taxes,
brokerage commissions, 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.
1.2. 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.
1.3. 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 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.
1.4. 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.
2.1. 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.
2.2. 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.
2.3. 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 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.
2.4. 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.
This Agreement shall continue in effect with respect to each Fund until July 31,
2010 and shall thereafter continue in effect with respect to each Fund from year
to year provided such continuance is specifically approved by a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
"interested persons" of the Trust or any other party to this Agreement, as
defined in the 1940 Act ("Non-Interested Trustees"). Nevertheless, this
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.
4.1. 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.
4.2. 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.
4.3. 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 0000 Xxx.
4.4. 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:
---------------------------
Name: Xxxxxxxx X. Xxxxx, III
Title: Chairman
Commonwealth Capital Management, LLC
By:
---------------------------
Name: Xxxx Xxxxx, III
Title: President
A-2
1-WA/2860268.3
Schedule A
to the
Expense Limitation Agreement (the "Agreement")
between
World Funds Trust (the "Trust")
and
Commonwealth Capital Management, LLC
Dated as of October 1, 2008
This Agreement relates to the following series (each a "Fund") and classes of
the Trust:
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Fund/Class Maximum Annual
Operating Expense
Limit
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Commonwealth Small Cap Fund 1.49%
Institutional Shares
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Commonwealth Small Cap Fund
Platform Shares 1.74%
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Commonwealth Small Cap Fund
Class A Shares 1.74%
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Commonwealth Small Cap Fund 2.49%
Class C Shares
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Commonwealth Quantitative Fund 1.49%
Institutional Shares
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----------------------------------------------------------------------
Commonwealth Quantitative Fund 1.74%
Platform Shares
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----------------------------------------------------------------------
Commonwealth Quantitative Fund 1.74%
Class A Shares
----------------------------------------------------------------------
----------------------------------------------------------------------
Commonwealth Quantitative Fund 2.49%
Class C Shares
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----------------------------------------------------------------------
Frantzen Small Cap Growth Fund 1.49%
Institutional Shares
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----------------------------------------------------------------------
Frantzen Small Cap Growth Fund 1.74%
Platform Shares
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----------------------------------------------------------------------
Frantzen Small Cap Growth Fund 1.74%
Class A Shares
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Frantzen Small Cap Growth Fund 2.49%
Class C Shares
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----------------------------------------------------------------------
Frantzen Large Cap Growth Fund 1.29%
Institutional Shares
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----------------------------------------------------------------------
Frantzen Large Cap Growth Fund 1.54%
Platform Shares
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----------------------------------------------------------------------
Frantzen Large Cap Growth Fund 1.54%
Class A Shares
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Frantzen Large Cap Growth Fund 2.29%
Class C Shares
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----------------------------------------------------------------------
Frantzen Growth and Income Fund 1.29%
Institutional Shares
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Frantzen Growth and Income Fund 1.54%
Platform Shares
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Frantzen Growth and Income Fund 1.54%
Class A Shares
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Frantzen Growth and Income Fund 2.29%
Class C Shares
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