EXHIBIT EX99.e1
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT is made as of the 30th day of July, 2008, by and between
the World Funds Trust, an open-end management investment company (the "Trust"),
and First Dominion Capital Corp., a Virginia corporation ("FDCC").
WHEREAS, FDCC is a broker-dealer registered with the Securities and
Exchange Commission (the "Commission") and a member of the Financial Industry
Regulatory Authority ("FINRA"), formerly known as the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust is authorized to offer shares of beneficial interest
(the "Shares") in one or more separate series (each a "Fund" and together the
"Funds"), each with one or more separate classes of Shares; and
WHEREAS, the Trust wishes to retain FDCC to provide statutory principal
underwriting services to the Funds, all as more specifically described in this
Agreement, and FDCC is willing to furnish such services; and
WHEREAS, the Board of Trustees of the Trust has approved such engagement:
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, and for good consideration, the receipt and
sufficiency of which is acknowledged by both parties, the parties, intending to
be legally bound, hereby agree as follows:
1. Appointment.
The Trust hereby engages FDCC as the Funds' exclusive agent for the distribution
of the Shares, and FDCC hereby accepts such appointment under the terms of this
Agreement. While this Agreement is in force, the Trust shall not sell any Shares
except on the terms set forth in this Agreement. Notwithstanding any other
provision hereof, the Trust may terminate, suspend or withdraw the offering of
Shares whenever, in each entity's sole discretion, it deems such action to be
desirable.
FDCC shall perform the services set forth in this Agreement and as further set
forth in Schedule A to this Agreement. Schedule A to this Agreement may be
amended from time to time by written agreement of the parties.
2. Sale and Repurchase of Shares.
(a) FDCC will have the right, as agent for the Funds, to enter into dealer
agreements with responsible investment brokers and dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering price
(as defined in subparagraph 2(d) hereof) stated in each Fund's currently
effective Registration Statement on Form N-1A under the Act and the Securities
Act of 1933, as amended, including the then current prospectus and statement of
additional information (the "Registration Statement"). Upon receipt of an order
to purchase Shares from a dealer with whom FDCC has a dealer agreement, FDCC
will promptly cause such order to be filled by the appropriate Fund.
(b) FDCC will also have the right, as agent for the Funds, to sell such Shares
to the public against orders therefor at the public offering price.
(c) FDCC will also have the right to take, as agent for the Funds, all actions
which, in FDCC's reasonable judgment, are necessary to carry into effect the
distribution of the Shares.
(d) The public offering price for the Shares of each Fund shall be the
respective net asset value of the Shares of that Fund then in effect, plus any
applicable sales charge determined in the manner set forth in the Registration
Statement or as permitted by the Act and the rules and regulations of the
Commission promulgated thereunder. In no event shall any applicable sales charge
exceed the maximum sales charge permitted by the Rules of the FINRA Rulebook.
(e) The net asset value of the Shares of each Fund shall be determined in the
manner provided in the Registration Statement, and when determined shall be
applicable to transactions as provided for in the Fund's Registration Statement.
The net asset value of the Shares of each Fund shall be calculated by the
applicable Fund or its authorized designee on behalf of the Fund. FDCC shall
have no duty to inquire into or liability for the accuracy of the net asset
value per Share as calculated.
(f) On every sale, the applicable Fund shall receive the applicable net asset
value of the Shares promptly, but in no event later than the third business day
following the date on which FDCC shall have received an order for the purchase
of the Shares.
(g) Upon receipt of purchase instructions, FDCC will transmit such instructions
to the applicable Fund or its authorized transfer agent for registration of the
Shares purchased.
(h) Nothing in this Agreement shall prevent FDCC or any affiliated person (as
defined in the Act) of FDCC from acting as FDCC or distributor for any other
person, firm or corporation (including other investment companies) or in any way
limit or restrict FDCC or any such affiliated person from buying, selling or
trading any securities for its or their own account or for the accounts of
others from whom it or they may be acting; provided, however, that FDCC
expressly represents that it will undertake no activities which, in its
reasonable judgment, will adversely affect the performance of its obligations to
the Funds under this Agreement.
(i) FDCC, as agent of and for the account of the Funds, may repurchase the
Shares at such prices and upon such terms and conditions as shall be specified
in the Registration Statement.
3. Sale of Shares by the Fund.
Each Fund reserves the right to issue any Shares at any time directly to the
holders of Shares ("Shareholders"), to sell Shares to its Shareholders or to
other persons at not less than net asset value and to issue Shares in exchange
for substantially all the assets of any corporation or trust or for the shares
of any corporation or trust.
4. Basis of Sale of Shares.
FDCC does not agree to sell any specific number of Shares. FDCC, as agent for
the Funds, undertakes to sell Shares on a best efforts basis only against orders
therefor.
5. Rules of FINRA, etc.
(a) FDCC will conform its activities to the Rules of FINRA and the securities
laws of the Commission and any jurisdiction in which it sells, directly or
indirectly, any Shares.
(b) FDCC will require each dealer with whom FDCC has a dealer agreement to
conform to the applicable provisions hereof and the Registration Statement with
respect to the public offering price of the Shares, and neither FDCC nor any
such dealers shall withhold the placing of purchase orders so as to make a
profit thereby.
(c) The Trust agrees to furnish to FDCC sufficient copies of any agreements,
plans or other materials it intends to use in connection with any sales of
Shares in reasonably adequate time for FDCC, on behalf of any applicable Fund,
to file and clear them with the proper authorities before they are put in use,
and not to use them until so filed and cleared.
(d) FDCC, at its own expense, will qualify as dealer or broker, or otherwise,
under all applicable state or federal laws required in order that Shares may be
sold in such states as may be mutually agreed upon by the parties.
(e) FDCC shall not make, or permit any representative, broker or dealer to make,
in connection with any sale or solicitation of a sale of the Shares, any
representations concerning the Shares except those contained in the then current
prospectus and statement of additional information covering the Shares and in
printed information approved by the Funds as information supplemental to such
prospectus and statement of additional information. Copies of the then effective
prospectus and statement of additional information and any such printed
supplemental information will be supplied to FDCC in reasonable quantities upon
request.
6. Records to be Supplied by the Trust
The Funds shall furnish to FDCC copies of all information, financial
statements and other papers which FDCC may reasonably request for use in
connection with the distribution of the Shares, and this shall include, but
shall not be limited to, one certified copy, upon request by FDCC, of all
financial statements prepared for the Funds by independent public accountants.
7. Fees and Expenses.
(a) The Funds will not bear any costs or expenses incurred with respect to
distribution of shares, as such term is defined in Section 12(b) of the Act and
related rules, except to the extent the Funds are permitted to do so by
applicable law.
(b) For its services to the Funds as exclusive agent for the distribution of
Shares as set forth in this Agreement, FDCC shall be paid the fees and expenses
as set forth in Schedule B to this Agreement. Schedule B to this Agreement may
be amended from time to time by written agreement of the parties.
(c) FDCC may from time to time employ or associate with such person or persons
as may be appropriate to assist FDCC in the performance of this Agreement. Such
person or persons may be officers and employees who are employed or designated
as officers by FDCC, the Fund, and/or affiliated entities of the Funds. To the
extent that FDCC employs such persons, FDCC shall pay the compensation of such
person or persons for such employment, and no obligation will be incurred by or
on behalf of the Fund in such respect. Persons who become associated with FDCC
as registered representatives or in like fashion shall not be compensated by
FDCC other than pursuant to a separate agreement, if any.
8. Indemnification of the Funds.
FDCC agrees to indemnify and hold harmless the Funds and each person who has
been, is, or may hereafter be a trustee, officer, employee, shareholder or
control person of the Trust against any loss, damage or expense (including the
reasonable costs of investigation) reasonably incurred by any of them in
connection with any claim or in connection with any action, suit or proceeding
to which any of them may be a party, which arises out of or is alleged to arise
out of or is based upon any untrue statement or alleged untrue statement of a
material fact, or the omission or alleged omission to state a material fact
necessary to make the statements not misleading, on the part of FDCC or any
agent or employee of FDCC or any other person for whose acts FDCC is
responsible, unless such statement or omission was made in reliance upon written
information furnished by the Fund. FDCC likewise agrees to indemnify and hold
harmless each Fund and each such person in connection with any claim or in
connection with any action, suit or proceeding which arises out of or is alleged
to arise out of FDCC's failure to exercise reasonable care and diligence with
respect to its services, if any, rendered in connection with investment,
reinvestment, automatic withdrawal and other plans for Shares. The term
"expenses" for purposes of this and the next paragraph includes amounts paid in
satisfaction of judgments or in settlements which are made with FDCC's consent.
The foregoing rights of indemnification shall be in addition to any other rights
to which the Funds or each such person may be entitled as a matter of law.
9. Indemnification of FDCC.
Each Fund agrees to indemnify and hold harmless FDCC and each person who has
been, is, or may hereafter be a director, officer, employee, shareholder or
control person of FDCC against any loss, damage or expense (including the
reasonable costs of investigation) reasonably incurred by any of them in
connection with the matters to which this Agreement relates, including clerical
errors and mechanical failures, except a loss resulting from willful
misfeasance, bad faith or negligence, on the part of any of such persons in the
performance of FDCC's duties or from the reckless disregard by any of such
persons of FDCC's obligations and duties under this Agreement, for all of which
exceptions FDCC shall be liable to each Fund.
In order that the indemnification provisions contained in this Paragraph 9 shall
apply, it is understood that if in any case a Fund may be asked to indemnify
FDCC or any other person or hold FDCC or any other person harmless, such Fund
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that FDCC will use all
reasonable care to identify and notify a Fund promptly concerning any situation
which presents or appears likely to present the probability of such a claim for
indemnification against a Fund. The Funds shall have the option to defend FDCC
and any such person against any claim which may be the subject of this
indemnification, and in the event that either party so elects, it will so notify
FDCC, and thereupon the Trust shall take over complete defense of the claim, and
neither FDCC nor any such person shall in such situation initiate further legal
or other expenses for which it shall seek indemnification under this Paragraph
9. FDCC shall in no case confess any claim or make any compromise in any case in
which a Fund will be asked to indemnify FDCC or any such person except with the
appropriate Fund's written consent.
Notwithstanding any other provision of this Agreement, FDCC shall be entitled to
receive and act upon advice of counsel (who may be counsel for the Funds or its
own counsel) and shall be without liability for any action reasonably taken or
thing reasonably done pursuant to such advice, provided that such action is not
in violation of applicable federal or state laws or regulations.
10. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment. This Agreement may be amended only if
such amendment is approved (i) by FDCC, (ii) by the affirmative consent of the
Board of Trustees of the Trust, (iii) at a meeting of the Shareholders of the
Trust by the affirmative vote of a majority of the outstanding Shares, and (iv)
by a majority of the Trustees of the Trust who are not "interested persons", as
defined by the Act, of the Funds or of FDCC by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Trust or FDCC may at any time terminate this Agreement on sixty (60)
days' written notice delivered or mailed by registered mail, postage prepaid, to
the other party.
11. Effective Period of this Agreement.
This Agreement shall take effect on the date referenced above, and shall remain
in full force and effect until July 30th, 2010 (unless terminated automatically
as set forth in Paragraph 10), and from year to year thereafter, subject to
annual approval as set forth in Paragraph 10 above.
12. New Funds.
The terms and provisions of this Agreement shall become automatically applicable
to any additional Funds of the Trust established during the initial or renewal
term of this Agreement.
13. Successor Investment Fund.
Unless this Agreement has been terminated in accordance with Paragraph 10, the
terms and provisions of this Agreement shall become automatically applicable to
any investment company which is a successor to the Trust as a result of
reorganization, recapitalization or change of domicile.
14. Limitation of Liability.
It is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Funds, personally, but bind only the trust property of the
Funds. The execution and delivery of this Agreement have been authorized by the
Trust and signed by an officer of each Fund, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall 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 trust property of
the Funds.
15. Severability.
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
16. Questions of Interpretation.
(a) This Agreement shall be governed by the laws of the State of Delaware.
(b) Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the Act
shall be resolved by reference to such term or provision of the Act and to
interpretation thereof, if any, by the United States courts or in the absence of
any controlling decision of any such court, by rules, regulations or orders of
the Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
17. Notices.
Any notices under this Agreement shall be in writing, addressed and delivered or
mailed postage paid to the other party, with a copy to the Fund's counsel, at
such address as such other party may designate for the receipt of such notice.
Such notice will be effective upon receipt. Until further notice to the other
party, it is agreed that the address of each party for this purpose shall be:
(a) If to the Funds, to:
World Funds Trust
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: President
(b) If to FDCC, to:
First Dominion Capital Corp.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: President
18. Execution.
This Agreement may be executed by one or more counterparts, each of which shall
be deemed an original, but all of which together will constitute one in the same
instrument.
19. AML and Privacy.
FDCC represents that it is in compliance in all material respects, and will
continue to so comply, with all applicable laws and regulations relating to
guarding against terrorism and money laundering, and FDCC agrees to comply with
the Trust's anti-money laundering program to the extent applicable. FDCC also
agrees to comply with the Trust's privacy policies with respect to all
information obtained pursuant to this Agreement.
20. 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 Agreement requires.
21. Entire Agreement.
This Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect to
the subject matter hereof.
SIGNATURES
IN WITNESS WHEREOF, the Trust and FDCC have each caused this Agreement to be
signed in duplicate on their behalf, all as of the day and year first above
written.
WORLD FUNDS TRUST
By: /s/ Xxxxxxxx X. Xxxxx, III Date July 30, 2008
Print Name: Xxxxxxxx X. Xxxxx, III
Title: Chairman
FIRST DOMINION CAPITAL CORP.
By :/s/ Xxxx Xxxxx, III Date July 30, 2008
Print Name: Xxxx Xxxxx, III
Title: President
Schedule A
Services
I. Underwriter services include:
A. Preparation and execution of Underwriting, Selling Agreement, and Rule 12b-1
Distribution Plans.
o Monitoring accruals
o Monitoring expenses
o Disbursements for expenses and trail commissions
B. Provide Quarterly 12b-1 and/or Service Fee Reports to the Board of Trustees
of the Trust.
C. Review, recommend and submit sales materials to FINRA.
D. Initial FINRA Licensing and Transfers of Registered Representatives.
o U-4 Form and Fingerprint Submissions to FINRA o Supplying Series 6, 7, 24 and
63 written study material o Registration for Exam Preparation classes o Renewals
and Terminations of Representatives
E. Provide and regularly update written supervisory procedures and manuals for
registered representatives.
F. Ongoing compliance updates for representatives regarding sales practices,
written correspondence and other communication with the public.
G. Provide, monitor and ensure compliance with all FINRA Continuing Education
Requirements for registered representatives.
Schedule B
Fee Schedule
A. Underwriter Services
FDCC shall receive a fee of $25,000 per year per Fund of the Trust for services
rendered as principal underwriter, including primary licensing/regulatory agent
for FDCC personnel.
The fees for representing the Trust as principal underwriter include the
expenses and personnel required to maintain the various regulatory books and
records of FDCC and maintenance of shareholder files and records for all
transactions processed on behalf of the Funds. These fees also include the
regulatory requirements of all marketing related and distribution reports
including maintenance of records regarding individual transaction activities of
FDCC's registered representatives.
B. Representative Registration and Renewals
FDCC will maintain annual FINRA and state license renewals and perform the
monitoring required of representative activities as follows:
Up to 10 states - $2,000 per representative per Year All 50 states - $4,000 per
representative per Year
C. Miscellaneous/Out-of-Pocket Expenses
These expenses may include, but are not limited to: o Processing fees relating
to FINRA literature review submissions o Out-of-pocket expenses related to
submitting literature for review and communications costs connected with
communicating with FINRA; and o Mailing and communications expense related to
communicating with other regulatory bodies on behalf of the Trust , excluding
communication related to representative registration and renewals which is
provided for in B above.
