EXHIBIT EX99.h3a
ACCOUNTING SERVICES AGREEMENT
This ACCOUNTING SERVICES AGREEMENT is made as of this 30th day of July,
2008 (the "Agreement") between World Funds Trust (the "Trust"), a statutory
trust duly organized and existing under the laws of the state of Delaware, and
Commonwealth Fund Accounting, Inc. ("CFA"), a corporation duly organized as a
corporation in accordance with the laws of the Commonwealth of Virginia.
WITNESSETH THAT:
WHEREAS, the Trust is a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of one or more series portfolios (the "Funds"), each of which
may consist of one or more classes of shares of beneficial interest;
WHEREAS, the Trust desires to appoint CFA as its Accounting Services Agent
to maintain and keep current the books, accounts, records, journals or other
records of original entry relating to the business of the Trust as set forth in
Schedule B of this Agreement (the "Accounts and Records") and to perform certain
other functions in connection with such Accounts and Records; and
WHEREAS, CFA is willing to perform such functions upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. Appointment. The Trust hereby appoints CFA as its Accounting
Services Agent on behalf of the Trust, and CFA hereby accepts such appointment,
to furnish the Funds listed on Schedule A, as such schedule may be amended from
time to time, with accounting services as set forth in this Agreement.
Section 2. Duties. CFA shall perform or supervise the performance of
others of the services set forth in Schedule B hereto. CFA shall provide the
Trust with all necessary office space, equipment, personnel, facilities and
compensation for providing such services. CFA may sub-contract with third
parties to perform certain of the services to be performed by CFA hereunder;
PROVIDED, however, that CFA shall remain principally responsible to the Trust
for the acts and omissions of such other entities.
Except with respect to CFA's duties as set forth in this Agreement, and
except as otherwise specifically provided herein, the Trust assumes all
responsibility for ensuring that each Fund complies with all applicable
requirements of the Securities Act of 1933, as amended, the 1940 Act and any
other laws, rules and regulations, or interpretations thereof, of governmental
authorities with jurisdiction over each Fund.
Section 3. Compensation and Expenses. The Trust agrees to pay CFA
compensation for its services as set forth in Schedule A attached hereto, or as
shall be set forth in amendments to such schedule approved by the Board of
Trustees of the Trust (the "Board") and CFA. Fees will begin to accrue for each
Fund on the latter of the date of this Agreement or the date of commencement of
operations of the Fund. If fees begin to accrue in the middle of a month or if
this Agreement terminates before the end of any month, all fees for the period
from that date to the end of that month or from the beginning of that month to
the date of termination, as the case may be, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement with respect to a
Fund, the Fund shall pay to CFA such compensation as shall be payable prior to
the effective date of termination.
In addition, the Trust shall reimburse CFA from the assets of each Fund
certain reasonable expenses incurred by CFA on behalf of each Fund individually
in connection with the performance of this Agreement. Such out-of-pocket
expenses shall include, but not be limited to: documented fees and costs of
obtaining advice of Fund counsel or accountants in connection with its services
to each Fund; postage; long distance telephone; special forms required by each
Fund; any economy class travel which may be required in the performance of its
duties to each Fund; and any other extraordinary expenses it may incur in
connection with its services to each Fund, provided that such extraordinary
expenses must be approved by the Board of Trustees of the Trust prior to any
reimbursement.
All fees and reimbursements are payable in arrears on a monthly basis and
the Trust, on behalf of the applicable Fund, agrees to pay all fees and
reimbursable expenses within five (5) business days following receipt of the
respective billing notice.
Section 4. Trust Reports to CFA. The Trust shall furnish or otherwise make
available to CFA such copies of each Fund's prospectus, statement of additional
information, financial statements, proxy statements, shareholder reports, each
Fund's net asset value per share, declaration, record and payment dates, amounts
of any dividends or income, special actions relating to each Fund's securities
and other information relating to the Trust's business and affairs as CFA may,
at any time or from time to time, reasonably require in order to discharge its
obligations under this Agreement. CFA shall maintain such information as
required by regulation and as agreed upon between the Trust and CFA. The Trust
will complete all necessary prospectus and compliance reports, as well as
monitoring the various limitations and restrictions.
Section 5. Maintenance of Records. CFA shall create and maintain all
records required by applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act and the rules
thereunder, as they may be amended from time to time, pertaining to the various
functions CFA performs under this Agreement and which are not otherwise created
or maintained by another party pursuant to contract with the Trust. All such
records shall be the property of the Trust and will be preserved, maintained and
made available in accordance with Section 31 of the 1940 Act and the rules
thereunder, and will be surrendered promptly to the Fund on and in accordance
with the Trust's request. The Trust and the Trust's authorized representatives
shall have access to CFA's records relating to the services to be performed
under this Agreement at all times during CFA's normal business hours. Upon the
reasonable request of the Trust, copies of any such records shall be provided
promptly by CFA to the Trust or the Trust's authorized representatives.
Section 6. Reliance on Trust Instructions and Experts. CFA may rely upon
the written advice of the Trust and upon statements of the Trust's legal
counsel, accountants and other persons believed by it in good faith to be expert
in matters upon which they are consulted, and CFA shall not be liable for any
actions taken in good faith upon such statements.
Section 7. Standard of Care. CFA shall be under no duty to take any action
on behalf of a Fund except as necessary to fulfill its duties and obligations as
specifically set forth herein or as may be specifically agreed to by CFA in
writing. CFA shall at all times act in good faith and agrees to use its best
effect within reasonable limits to ensure the accuracy of all services performed
under this Agreement, but assumes no responsibility for any loss arising out of
any act or omission in carrying out its duties hereunder, except a loss
resulting from CFA's, its employees' or its agents' willful misfeasance, bad
faith or gross negligence in the performance of CFA's duties under this
Agreement, or by reason of reckless disregard of CFA's, its employees' or its
agents' obligations and duties hereunder. Notwithstanding the foregoing, the
limitation on CFA's liability shall not apply to the extent any loss or damage
results from any fraud committed by CFA or any intentionally bad or malicious
acts (that is, acts or breaches undertaken purposefully under circumstances in
which the person acting knows or has reason to believe that such act or breach
violates such person's obligations under this Agreement or can cause danger or
harm) of CFA.
Without limiting the generality of the foregoing or of any other provision
of this Agreement, (i) CFA shall not be liable for losses beyond its control,
provided that CFA has acted in accordance with the standard of care set forth
above; and (ii) CFA shall not be liable for (A) the validity or invalidity or
authority or lack thereof of any oral or written instructions provided by the
Fund, notice or other instrument which conforms to the applicable requirements
of this Agreement, and which CFA reasonably believes to be genuine; or (B)
subject to Section 25, delays or errors or loss of data occurring by reason of
circumstances beyond CFA's control, including fire, flood, catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
Section 8. Limitation of Liability Regarding CFA. CFA shall not be liable
for any actions taken in good faith reliance upon any authorized written
instructions or any other document reasonably believed by CFA to be genuine and
to have been executed or signed by the proper person or persons. CFA shall not
be held to have notice of any change of authority of any officer, employee or
agent of the Trust until receipt of notification thereof by the Trust.
CFA shall not be liable for the errors of other service providers of the
Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by CFA) and errors in information provided by an
investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
With respect to a Fund that does not value its assets in accordance with
Rule 2a-7 under the 1940 Act (a money market fund), notwithstanding anything to
the contrary in this Agreement, CFA shall not be liable to the Trust or any
shareholder of the Trust for (i) any loss to the Trust if a NAV Difference for
which CFA would otherwise be liable under this Agreement is less than $0.01 per
Fund share or (ii) any loss to a shareholder of the Trust if the NAV Difference
for which CFA would otherwise be liable under this Agreement is less than or
equal to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the
Trust is less than or equal to $10. Any loss for which CFA is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
For purposes of this Agreement: (i) the NAV Difference shall mean the
difference between the NAV at which a shareholder purchase or redemption should
have been effected ("Recalculated NAV") and the NAV at which the purchase or
redemption is effected; (ii) NAV Differences and any CFA or other responsible
party liability therefrom are to be calculated each time a Fund's (or class's)
NAV is calculated; (iii) in calculating any NAV Difference for which CFA would
otherwise be liable under this Agreement for a particular NAV error, Fund losses
and gains shall be netted; and (iv) in calculating any NAV Difference for which
CFA would otherwise be liable under this Agreement for a particular NAV error
that continues for a period covering more than one NAV determination, Fund
losses and gains for the fund's fiscal year shall be netted.
Section 9. Limited Recourse. CFA hereby acknowledges that the Funds'
obligations hereunder with respect to the Shares are binding only on the assets
and property belonging to the Funds. The obligations of the parties hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Funds personally, but shall bind only the property of
the Funds. The execution and delivery of this agreement by such officers shall
not be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the Funds' property.
Notwithstanding any other provision of this Agreement, the parties agree
that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Series and that no Series
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
Section 10. Indemnification by the Funds. Each Fund shall indemnify CFA
and hold it harmless from and against any and all losses, damages and expenses,
including reasonable attorneys' fees and expenses, incurred by CFA that result
from: (i) any claim, action, suit or proceeding in connection with CFA's entry
into or performance of this Agreement with respect to such Fund; or (ii) any
action taken or omission to act committed by CFA in the performance of its
obligations hereunder with respect to such Fund; or (iii) any action of CFA upon
instructions believed in good faith by it to have been executed by a duly
authorized officer or representative of the Trust with respect to such Fund; or
(iv) any error, omission, inaccuracy or other deficiency of any information
provided to CFA by the Trust, or the failure of the Trust to provide or make
available any information requested by CFA knowledgeably to perform its
functions hereunder; PROVIDED, that CFA shall not be entitled to such
indemnification in respect of actions or omissions constituting gross
negligence, bad faith or willful misfeasance in the performance of its duties,
or by reckless disregard of such duties, on the part of CFA or its employees,
agents or contractors.
Section 11. Indemnification by CFA. CFA shall indemnify each Fund and hold
it harmless from and against any and all losses, damages and expenses, including
reasonable attorneys' fees and expenses, incurred by such Fund which result
from: (i) CFA's failure to comply with the terms of this Agreement with respect
to such Fund; or (ii) CFA's lack of good faith in performing its obligations
hereunder with respect to such Fund; or (iii) CFA's gross negligence or
misconduct or that of its employees, agents or contractors in connection
herewith with respect to such Fund.
In order that the indemnification provisions contained in Sections 10 and
11 shall apply, upon the assertion of an indemnification claim, the party
seeking the indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The Trust shall have the option to
participate with CFA in the defense of such claim or to defend against said
claim in its own name or that of CFA. The party seeking indemnification shall in
no case confess any claim or make any compromise in any case in which the other
party may be required to indemnify it except with the indemnifying party's
written consent, which consent shall not be unreasonably withheld.
Section 12. Confidentiality. CFA agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Trust and its Shareholders received by CFA in connection with this
Agreement, including any non-public personal information as defined in
Regulation S-P, and that it shall not use or disclose any such information
except for the purpose of carrying out the terms of this Agreement; PROVIDED,
however, that CFA may disclose such information as required by law or in
connection with any requested disclosure to a regulatory authority with
appropriate jurisdiction after prior notification to the Trust.
Upon termination of this Agreement, CFA shall return to the Trust all
copies of confidential or non-public personal information received from the
Trust hereunder, other than materials or information required to be retained by
CFA under applicable laws or regulations. CFA hereby agrees to dispose of any
"consumer report information," as such term is defined in Regulation S-P.
Section 13. Holidays. Except as required by laws and regulations governing
investment companies, nothing contained in this Agreement is intended to or
shall require CFA, in any capacity hereunder, to perform any functions or duties
on any holiday or other day of special observance on which CFA is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day on which both the Trust and CFA
are open. CFA will be open for business on days when the Trust is open for
business and/or as otherwise set forth in each Fund's prospectus(es) and
Statement(s) of Additional Information.
Section 14. Termination. This Agreement shall remain in effect with
respect to each Fund until terminated.
This Agreement may be terminated by either party at any time, without the
payment of a penalty upon ninety (90) days' written notice to other party. Any
termination shall be effective as of the date specified in the notice or upon
such later date as may be mutually agreed upon by the parties. Upon notice of
termination of this Agreement by either party, CFA shall promptly transfer to
the successor administrator the original or copies of all books and records
maintained by CFA under this Agreement including, in the case of records
maintained on computer systems, copies of such records in machine-readable form,
and shall cooperate with, and provide reasonable assistance to, the successor
administrator in the establishment of the books and records necessary to carry
out the successor administrator's responsibilities. If this Agreement is
terminated by the Trust, the Trust shall be responsible for all reasonable
out-of-pocket expenses or costs associated with the movement of records and
materials to the successor administrator. Additionally, CFA reserves the right
to charge for any other reasonable expenses associated with such termination.
Section 15. Notice. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing, and
shall be delivered in person or sent by first-class mail, postage prepaid, to
the respective parties at their last known address, except that oral
instructions may be given if authorized by the Board and preceded by a
certificate from the Trust's Secretary so attesting. Notices to the Trust shall
be directed 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxx, XX 00000 Attention: Xx.
Xxxxx Xxxxx; and notices to CFA shall be directed to: 0000 Xxxxx Xxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, Attention: Mr. Xxxx Xxxxx, III.
Section 16. Execution in Counterparts. 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.
Section 17. Assignment; Third Party Beneficiaries. This Agreement shall
extend to and shall be binding upon the parties hereto and their respective
successors and assigns; PROVIDED, however, that this Agreement shall not be
assignable by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
Section 18. Services Not Exclusive. The services of CFA to the Trust are
not deemed exclusive, and CFA shall be free to render similar services to
others, to the extent that such service does not affect CFA's ability to perform
its duties and obligations hereunder.
Section 19. Headings. All Section headings contained in this Agreement
are for convenience of reference only, do not form a part of this Agreement and
will not affect in any way the meaning or interpretation of this Agreement.
Words used herein, regardless of the number and gender specifically used, will
be deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine, or neuter, as the contract requires.
Section 20. Entire Agreement. This Agreement contains the entire
agreement between the parties hereto and supersedes all prior agreements,
understandings and arrangements to the subject matter thereof.
Section 21. Consequential Damages. Neither party to this Agreement
shall be liable to the other party for consequential damages under any
provision of this Agreement.
Section 22. Amendments. This Agreement may be amended from time to time
by a writing executed by the Trust and CFA. The compensation stated in Schedule
A attached hereto may be adjusted from time to time by the execution of a new
schedule signed by both of the parties.
Section 23. Waiver. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by written
instrument executed by such party. No failure of either party hereto to exercise
any power or right granted hereunder, or to insist upon strict compliance with
any obligation hereunder, and no custom or practice of the parties with regard
to the terms of performance hereof, will constitute a waiver of the rights of
such party to demand full and exact compliance with the terms of this Agreement.
Section 24. Severability. If any part, term or provision of this
Agreement is held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
Section 25. Force Majeure. In the event either party is unable to
perform its obligations under the terms of this Agreement because of acts of
God, acts of war or terrorism, strikes, equipment or transmission failure or
damage reasonably beyond its control, or other causes reasonably beyond its
control, such party shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes; provided,
however, that this provision shall not imply that CFA is excused from
maintaining reasonable business continuity plans to address potential service
outages.
Section 26. Survival. The obligations of Sections 3, 5, 6, 7, 8, 9, 10,
11, 12, 17, 20, 21, 23, 24, 25 and 27 shall survive any termination of this
Agreement.
Section 27. Governing Law. This Agreement shall be governed by and
construed to be in accordance with the laws of the State of Delaware, without
reference to choice of law principles thereof, and in accordance with the
applicable provisions of the 1940 Act. To the extent that the applicable laws of
the State of Delaware, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
WORLD FUNDS TRUST
By: /s/ Xxxxxxxx X. Xxxxx, III
-------------------------
Xxxxxxxx X. Xxxxx, III
Chairman
COMMONWEALTH FUND ACCOUNTING, INC.
By: /s/ Xxxx Xxxxx, III
--------------------------
Xxxx Xxxxx, III
Chief Executive Officer
Schedule A
to the
Accounting Services Agreement
between
World Funds Trust (the "Trust")
and
Commonwealth Fund Accounting, Inc. ("CFA")
Dated as of July 30th, 2008
Compensation to be Paid to CFA:
A. For accounting services, CFA shall be paid monthly at the following annual
rates:
Name of Fund Accounting Services Fee
Commonwealth Quantitative Fund 0.05% of daily net assets with a $20,000
annual minimum fee. 0.04% of daily net
assets on assets over $100 million.
B. It is anticipated that the Trust's security trading activity will remain on
average less than 100 trades per month, per Fund. Should the Trust's security
trading activity exceed an average of 100 trades per month per Fund , an
additional fee of $2.50 per trade (for trades in excess of 100 per month) may
apply.
C. The Trust will pay CFA on a current and ongoing basis for CFA's reasonable
time and costs required for the correction of any errors or omissions, except
errors or omissions resulting from service providers affiliated with CFA, in the
Accounts and Records delivered, or the information provided, to CFA by the
Trust. Any such payment shall be in addition to the fees and charges described
above, provided that approval of the amount of such payments shall be obtained
in advance by CFA from the Trust if and when such additional charges would
exceed five percent of the usual charges payable for a period under this
Agreement.
D. Fund management will monitor the expense accrual procedures for accuracy and
adequacy based on outstanding liabilities monthly, and promptly communicate to
CFA any adjustment needed.
Schedule A
to the
Accounting Services Agreement
between
World Funds Trust (the "Trust")
and
Commonwealth Fund Accounting, Inc. ("CFA")
Dated as of July 30th, 2008
Compensation to be Paid to CFA:
A. For accounting services, CFA shall be paid monthly at the following annual
rates:
Name of Fund Accounting Services Fee
Commonwealth Small Cap Fund 0.05% of daily net assets with
a $20,000 annual minimum fee.
0.04% of daily net assets on
assets over $100 million.
B. It is anticipated that the Trust's security trading activity will remain on
average less than 100 trades per month, per Fund. Should the Trust's security
trading activity exceed an average of 100 trades per month per Fund, an
additional fee of $2.50 per trade (for trades in excess of 100 per month) may
apply.
C. The Trust will pay CFA on a current and ongoing basis for CFA's reasonable
time and costs required for the correction of any errors or omissions, except
errors or omissions resulting from service providers affiliated with CFA, in the
Accounts and Records delivered, or the information provided, to CFA by the
Trust. Any such payment shall be in addition to the fees and charges described
above, provided that approval of the amount of such payments shall be obtained
in advance by CFA from the Trust if and when such additional charges would
exceed five percent of the usual charges payable for a period under this
Agreement.
D. Fund management will monitor the expense accrual procedures for accuracy and
adequacy based on outstanding liabilities monthly, and promptly communicate to
CFA any adjustment needed.
Schedule B
to the
Accounting Services Agreement
between
World Funds Trust (the "Trust")
and
Commonwealth Fund Accounting, Inc. ("CFA")
Dated as of July 30th, 2008
Services to be Provided by CFA:
1. Subject to the direction and control of the Board of Trustees of the Trust
(the "Board"), CFA shall perform all accounting services with respect to each
Fund except those that are the specific responsibility of any other service
provider hired by the Trust, all in such manner and to such extent as may be
authorized by the Board.
2. CFA shall maintain and keep current the following Accounts and Records
relating to the business of the Trust, in such form as may be mutually agreed to
between the Trust and CFA, and as may be required by the Investment Company Act
of 1940, as amended (the "1940 Act"):
(a) Cash Receipts Journal
(b) Cash Disbursements Journal
(c) Dividends Paid and Payable Schedule
(d) Purchase and Sales Journals - Portfolio Securities
(e) Subscription and Redemption Journals
(f) Security Ledgers - Transaction Report and Tax Lot Report
(g) Broker Ledger - Commission Report
(h) Daily Expense Accruals
(i) Daily Interest Accruals
(j) Daily Trial Balance
(k) Portfolio Interest Receivable and Income Journal
(l) Listing of Portfolio Holdings showing cost, market value and percentage of
portfolio comprised of each security.
3. CFA shall perform ministerial calculations necessary to calculate the Trust's
net asset value daily, in accordance with the Trust's registration statement and
as follows:
(a) Portfolio investments for which market quotations are available to CFA by
use of an automated financial service (a "Pricing Service") shall be valued
based on the closing prices of the portfolio investment reported by such Pricing
Service, except where the Trust has given or caused to be given specific
instructions to utilize a different value.
(b) Notwithstanding any information obtained from a Pricing Service, all
portfolio securities shall be given such values as the Trust shall direct by
instructions from the Trust's Pricing Committee, including all restricted
securities and other securities requiring valuation not readily ascertainable
solely by the use of such a Pricing Service.
4. CFA will supply the Transfer Agent with daily NAV's for each portfolio by
6:00 p.m. EST.
5. It is the responsibility of CFA to be reconciled to the Custodian. CFA will
report any discrepancies to the Custodian, and shall report any unreconciled
items to the Trust.
