PRINCIPAL UNDERWRITER AGREEMENT August 24, 2016 Amended as of July 14, 2017
August 24, 2016
Amended as of July 14, 2017
THIS AGREEMENT, dated as of the date(s) noted above, 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 listed in Schedule A 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.
The services that FDCC will perform pursuant to this appointment are described more
specifically in Schedule B. 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. |
| 2. | Sale and Repurchase of Shares. |
| (a) | FDCC will
have the right, as agent for the Funds, to enter into agreements with brokers, dealers
and other financial intermediaries (generally, “Financial Intermediary”)
against orders therefore 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 Financial Intermediary
with whom FDCC has a 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. |
| First Dominion Capital Corp. | World Funds Trust – 1 |
| (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 principal underwriter 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. | |
This Agreement
is not a firm commitment underwriting and, as a result, 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 Financial Intermediaries with whom FDCC has a 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 Financial
Intermediaries 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 or any Financial Intermediaries to make,
in connection with any sale or solicitation of a sale of the Shares, any representations
or statement (whether orally or in writing) concerning the Shares except those contained
in the then current prospectus and statement of additional information or as may
otherwise be permitted under applicable law covering the Shares. 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. |
| First Dominion Capital Corp. | World Funds Trust – 2 |
| 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) | For its services
as principal underwriter for the Funds, FDCC shall be entitled to receive the fees
set forth in Schedule C. |
||
| (b) | FDCC is authorized
to collect the gross proceeds derived from the sale of the Shares, remit the net
asset value thereof to the Funds upon receipt of the proceeds and retain the sales
charge, if any. |
||
| (c) | FDCC may receive
from each Fund a distribution fee and/or service fee at the rates under terms of
and conditions of any distribution plans (“Plans”) adopted by each class
of a Fund, as such Plans are in effect from time to time, and subject to any further
limitations of such fees as the Trust’s Board of Trustees may impose. In circumstances
described in the foregoing sentence, FDCC shall not be entitled to receive the amount
payable under the Plans. This provision shall not limit the Trust from entering
into an agreement with a financial intermediary directly, regardless of whether
FDCC is also a party to such agreement, pursuant to which the Trust compensates
the financial intermediary with fees payable pursuant to the Plans |
||
| (d) | FDCC shall
reallow any or all of the sales charge, distribution fee and service fee that it
has received under this Agreement to a Financial Intermediary as it may from time
to time determine in accordance with a schedule set forth in the Registration Statement
of the Fund or as otherwise negotiated by FDCC. Payment of any sales charge shall
be the sole obligation of FDCC. Notwithstanding the foregoing, FDCC may not reallow
to any financial intermediary for shareholder services an amount in excess of 0.25%
of the average annual net asset value of the shares with respect to which said intermediary
provides shareholder services |
||
| (e) | 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, employees other agents who are employed or designated as officers by
FDCC, the Fund, and/or affiliated entities of the Funds. To the extent that FDCC
employs or retains 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 unless specifically approved by the Board of Trustees.
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 |
| First Dominion Capital Corp. | World Funds Trust – 3 |
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 continue in effect for a period no more than two years from the date of its
execution with respect to each Fund, only so long as such continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund. This Agreement will terminate automatically,
without the payment of any penalty, in the event of its assignment. Either the Trust
or FDCC may at any time terminate this Agreement on ninety (90) days’ written
notice delivered or mailed by registered mail, postage prepaid, to the other party.
This Agreement may be amended only if such amendment is approved by the parties
hereto and in a manner consistent with applicable law. |
||
| 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 for a period of two (2) years thereafter (unless terminated automatically
as set forth in Paragraph 10), and shall continue from year to year thereafter,
subject to annual approval as required by the Act. |
||
| 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. |
| First Dominion Capital Corp. | World Funds Trust – 4 |
| 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 | ||||
| ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| Attn: President | ||||
| (b) | If to FDCC, to: | |||
| First Dominion Capital Corp. | ||||
| ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| 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. |
| First Dominion Capital Corp. | World Funds Trust – 5 |
| 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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | Date: July 14, 2017 | ||
| Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||
| Title: Treasurer | ||||
| FIRST DOMINION CAPITAL CORP. | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇, III | Date: July 14, 2017 | ||
| Print Name: ▇▇▇▇ ▇▇▇▇▇, III | ||||
| Title: President | ||||
| First Dominion Capital Corp. | World Funds Trust – 6 |
Schedule A
To the
Underwriter Agreement
Amended As of July 14, 2017
CBOE Vest S&P 500® Buffer Protect Strategy
Fund
CBOE Vest S&P 500® Buffer Protect Strategy (January) Fund
CBOE Vest
S&P 500® Buffer Protect Strategy (February) Fund
CBOE Vest S&P 500®
Buffer Protect Strategy (March) Fund
CBOE Vest S&P 500® Buffer Protect Strategy
(April) Fund
CBOE Vest S&P 500® Buffer Protect Strategy (May) Fund
CBOE
Vest S&P 500® Buffer Protect Strategy (June) Fund
CBOE Vest S&P 500®
Buffer Protect Strategy (July) Fund
CBOE Vest S&P 500® Buffer Protect Strategy
(August) Fund
CBOE Vest S&P 500® Buffer Protect Strategy (September) Fund
CBOE Vest S&P 500® Buffer Protect Strategy (October) Fund
CBOE Vest S&P 500® Buffer Protect Strategy (November) Fund
CBOE Vest S&P 500® Buffer
Protect Strategy (December) Fund
CBOE Vest Defined Distribution Strategy Fund
CBOE Vest S&P 500® Enhanced Growth Strategy Fund
CBOE Vest S&P 500®
Enhanced Growth Strategy (January) Fund
CBOE Vest S&P 500® Enhanced Growth
Strategy (February) Fund
CBOE Vest S&P 500® Enhanced Growth Strategy (March)
Fund
CBOE Vest S&P 500® Enhanced Growth Strategy (April) Fund
CBOE Vest
S&P 500® Enhanced Growth Strategy (May) Fund
CBOE Vest S&P 500® Enhanced
Growth Strategy (June) Fund
CBOE Vest S&P 500® Enhanced Growth Strategy
(July) Fund
CBOE Vest S&P 500® Enhanced Growth Strategy (August) Fund
CBOE Vest S&P 500® Enhanced Growth Strategy (September) Fund
CBOE Vest S&P 500® Enhanced Growth Strategy (October) Fund
CBOE Vest S&P 500® Enhanced
Growth Strategy (November) Fund
CBOE Vest S&P 500® Enhanced Growth Strategy
(December) Fund
CBOE Vest S&P 500® Dividend Aristocrats Target Income Fund
Cboe Vest S&P 500® Enhance and Buffer Fund
CBOE Vest Digital Coin Fund
| First Dominion Capital Corp. | World Funds Trust – 7 |
Schedule B
To the
Underwriter Agreement
Services
| I. | Underwriter services include: | |||
| A. | Preparation and execution of Underwriting, Selling Agreement, and Rule 12b-1 Distribution Plans. | |||
| • | Monitoring accruals | |||
| • | Monitoring expenses | |||
| • | 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. | |||
| • | U-4 Form and Fingerprint Submissions to FINRA | |||
| • | Supplying Series 6, 7, 24 and 63 written study material | |||
| • | Registration for Exam Preparation classes | |||
| • | 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. | |||
| H. | Maintaining records with respect to submissions to FINRA, dealer discounts and brokerage fees and commissions, and selling agreements. | |||
| I. | Maintaining an account with the National Securities Clearing Corporation’s Fund/SERV System | |||
| J. | Preparing reports for investment advisers to the Funds and other service providers to the Fund from time to time shall be reasonably requested; and | |||
| K. | Performing such other services as the Board of Trustees may request from time to time. | |||
| First Dominion Capital Corp. | World Funds Trust – 8 |
Schedule C
To the
Underwriter Agreement
| First Dominion Capital Corp. | World Funds Trust – 9 |