INVESTMENT ADVISORY AGREEMENT Strategic Latin America Fund
Strategic Latin America Fund
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 23rd day of July, 2014 by and between the World Funds Trust, a Delaware statutory trust (the “Trust”), on behalf of the Trust’s Strategic Latin America Fund series (the “Fund”) and Strategic Asset Management, Ltd. (the “Advisor”).
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, registered as such under the Investment Company Act of 1940 (the “Investment Company Act”); and
WHEREAS, the Fund is a series of the Trust having separate assets and liabilities; and
WHEREAS, the Advisor is registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”) and is engaged in the business of supplying investment advice as an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render advice and services to the Fund pursuant to the terms and provisions of this Agreement, and the Advisor desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties to this Agreement, intending to be legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISOR. The Trust hereby employs the Advisor and the Advisor hereby accepts such employment, to render investment advice and related services with respect to the assets of the Fund for the period and on the terms set forth in this Agreement, subject to the supervision and direction of the Trust’s Board of Trustees (the “Board of Trustees”).
2. DUTIES OF ADVISOR.
(a) General
Duties. The Advisor shall act as investment adviser to the Fund and shall supervise
investments of the Fund on behalf of the Fund in accordance with the investment
objectives, policies and restrictions of the Fund as set forth in the Fund’s
and Trust’s governing documents, including, without limitation, the Trust’s
Agreement and Declaration of Trust and By-Laws; the Fund’s prospectus, statement
of additional information and undertakings; and such other limitations, policies
and procedures as the Trustees may impose from time to time in writing to the Advisor
(collectively, the “Investment Policies”). In providing such services,
the Advisor shall at all times adhere to the provisions and restrictions contained
in the federal securities laws, applicable state securities laws, the Internal Revenue
Code of 1986, the Uniform Commercial Code and other applicable law. |
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Without limiting
the generality of the foregoing, the Advisor shall: (i) furnish the Fund with advice
and recommendations with respect to the investment of the Fund’s assets and
the purchase and sale of portfolio securities for the Fund, including the taking
of such steps as may be necessary to implement such advice and recommendations (i.e.,
placing the orders); (ii) manage and oversee the investments of the Fund, subject
to the ultimate supervision and direction of the Trust’s Board of Trustees;
(iii) vote proxies for the Fund, file ownership reports under Section 13 of the
Securities Exchange Act of 1934 (the “1934 Act”) for the Fund, and take
other actions on behalf of the Fund; (iv) maintain the books and records required
to be maintained by the Fund except to the extent arrangements have been made for
such books and records to be maintained by the administrator or another agent of
the Fund; |
(v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund’s assets which the Fund’s
administrator or distributor or the officers of the Trust may reasonably request;
and (vi) render to the Trust’s Board of Trustees such periodic and special
reports with respect to the Fund’s investment activities as the Board may reasonably
request, including at least one in-person appearance annually before the Board of
Trustees. |
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(b) Brokerage.
The Advisor shall be responsible for decisions to buy and sell securities for the
Fund, for broker-dealer selection, and for negotiation of brokerage commission rates,
provided that the Advisor shall not direct orders to an affiliated person of the
Advisor without general prior authorization to use such affiliated broker or dealer
from the Trust’s Board of Trustees. The Advisor’s primary consideration
in effecting a securities transaction will be execution at the most favorable price.
In selecting a broker-dealer to execute each particular transaction, the Advisor
may take the following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and difficulty
in executing the order; and the value of the expected contribution of the broker-dealer
to the investment performance of the Fund on a continuing basis. The price to the
Fund in any transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio execution
services offered. |
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Subject to
such policies as the Board of Trustees of the Trust may determine and consistent
with Section 28(e) of the 1934 Act, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Fund to pay a broker or dealer that provides
(directly or indirectly) brokerage or research services to the Advisor an amount
of commission for effecting a portfolio transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction, if the
Advisor determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such broker
or dealer, viewed in terms of either that particular transaction or the Advisor’s overall responsibilities with respect to the Trust. Subject to the same policies
and legal provisions, the Advisor is further authorized to allocate the orders placed
by it on behalf of the Fund to such brokers or dealers who also provide research
or statistical material, or other services, to the Trust, the Advisor, or any affiliate
of either. Such allocation shall be in such amounts and proportions as the Advisor
shall determine, and the Advisor shall report on such allocations regularly to the
Trust, indicating the broker-dealers to whom such allocations have been made and
the basis therefor. |
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On occasions
when the Advisor deems the purchase or sale of a security to be in the best interest
of the Fund as well as of other clients, the Advisor, to the extent permitted by
applicable laws and regulations, may aggregate the securities to be so purchased
or sold in order to obtain the most favorable price or lower brokerage commissions
and the most efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by the Advisor in the manner it considers to be the most equitable and consistent
with its fiduciary obligations to the Fund and to such other clients. |
3. REPRESENTATIONS OF THE ADVISOR.
(a) The Advisor
shall use its best judgment and efforts in rendering the advice and services to
the Fund as contemplated by this Agreement. |
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(b) The Advisor
shall maintain all licenses and registrations necessary to perform its duties hereunder
in good order. |
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(c) The Advisor
shall conduct its operations at all times in conformance with the Advisers Act,
the Investment Company Act, and any other applicable state and/or self-regulatory
organization regulations. |
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(d) The Advisor
shall maintain errors and omissions insurance in an amount at least equal to that
disclosed to the Board of Trustees in connection with their approval of this Agreement. |
4. INDEPENDENT CONTRACTOR. The Advisor shall, for all purposes herein, be deemed to be an independent contractor, and shall, unless otherwise expressly provided and authorized to do so, have no authority to act for or represent the Trust or the Fund in any way, or in any way be deemed an agent for the Trust or for the Fund. It is expressly understood and agreed that the services to be rendered by the Advisor to the Fund under the provisions of this Agreement are not to be deemed exclusive, and the Advisor shall be free to render similar or different services to others so long as its ability to render the services provided for in this Agreement shall not be impaired thereby.
5. ADVISOR’S PERSONNEL. The Advisor shall, at its own expense, maintain such staff and employ or retain such personnel and consult with such other persons as it shall from time to time determine to be necessary to the performance of its obligations under this Agreement. Without limiting the generality of the foregoing, the staff and personnel of the Advisor shall be deemed to include persons employed or retained by the Advisor to furnish statistical information, research, and other factual information, advice regarding economic factors and trends, information with respect to technical and scientific developments, and such other information, advice and assistance as the Advisor or the Trust’s Board of Trustees may desire and reasonably request and any compliance staff and personnel required by the Advisor.
6. EXPENSES.
(a) With respect
to the operation of the Fund, the Advisor shall be responsible for (i) the Fund’s organizational expenses; (ii) providing the personnel, office space and equipment
reasonably necessary for the operation of the Fund; (iii) the expenses of printing
and distributing extra copies of the Fund’s prospectus, statement of additional
information, and sales and advertising materials (but not the legal, auditing or
accounting fees attendant thereto) to prospective investors (but not to existing
shareholders) to the extent such expenses are not covered by any applicable plan
adopted pursuant to Rule 12b-1 under the Investment Company Act (each, a “12b-1
Plan”); (iv) the costs of any special Board of Trustees meetings or shareholder
meetings convened for the primary benefit of the Advisor; and (v) any costs of liquidating
or reorganizing the Fund (unless such cost is otherwise allocated by the Board of
Trustees). If the Advisor has agreed to limit the operating expenses of the Fund,
the Advisor also shall be responsible on a monthly basis for any operating expenses
that exceed the agreed upon expense limit. |
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(b) The Fund
is responsible for and has assumed the obligation for payment of all of its expenses,
other than as stated in Subparagraph 6(a) above, including but not limited to: fees
and expenses incurred in connection with the issuance, registration and transfer
of its shares; brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other property
of the Trust for the benefit of the Fund including all fees and expenses of its
custodian, shareholder services agent and accounting services agent; interest charges
on any borrowings; costs and expenses of pricing and calculating its daily net asset
value and of maintaining its books of account required under the Investment Company
Act; taxes, if any; a pro rata portion of expenditures in connection with meetings
of the Fund’s shareholders and the Board of Trustees that are properly payable
by the Fund; salaries and expenses of officers of the Trust, including without limitation
the Trust’s Chief Compliance Officer, and fees and expenses of members of the
Board of Trustees or members of any advisory board or committee who are not members
of, |
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affiliated
with or interested persons of the Advisor; insurance premiums on property or personnel
of the Fund which inure to its benefit, including liability and fidelity bond insurance;
the cost of preparing and printing reports, proxy statements, prospectuses and statements
of additional information of the Fund or other communications for distribution to
existing shareholders which are covered by any 12b-1 Plan; legal, auditing and accounting
fees; all or any portion of trade association dues or educational program expenses
determined appropriate by the Board of Trustees; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under applicable
securities laws; all expenses of maintaining and servicing shareholder accounts,
including all charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring expenses,
except as herein otherwise prescribed. |
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(c) The Advisor
may voluntarily or contractually absorb certain Fund expenses. |
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(d) To the
extent the Advisor incurs any costs by assuming expenses which are an obligation
of the Fund as set forth herein, the Fund shall promptly reimburse the Advisor for
such costs and expenses, except to the extent the Advisor has otherwise agreed to
bear such expenses. To the extent the services for which the Fund is obligated to
pay are performed by the Advisor, the Advisor shall be entitled to recover from
the Fund to the extent of the Advisor’s actual costs for providing such services.
In determining the Advisor’s actual costs, the Advisor may take into account
an allocated portion of the salaries and overhead of personnel performing such services. |
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(e) The Advisor
may not pay fees in addition to any Fund distribution or servicing fees to financial
intermediaries, including without limitation banks, broker-dealers, financial advisors,
or pension administrators, for sub-administration, sub-transfer agency or any other
shareholder servicing or distribution services associated with shareholders whose
shares are held in omnibus or other group accounts, except with the prior authorization
of the Trust’s Board of Trustees. Where such arrangements are authorized by
the Trust’s Board of Trustees, the Advisor shall report regularly to the Trust
on the amounts paid and the relevant financial institutions. |
7. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) The Fund
shall pay to the Advisor, and the Advisor agrees to accept, as full compensation
for all services furnished or provided to such Fund pursuant to this Agreement,
an annual management fee at the rate set forth in Schedule A to this Agreement. |
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(b) The management
fee shall be accrued daily by the Fund and paid to the Advisor on the first business
day of the succeeding month. |
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(c) The initial
fee under this Agreement shall be payable on the first business day of the first
month following the effective date of this Agreement and shall be prorated as set
forth below. If this Agreement is terminated prior to the end of any month, the
fee to the Advisor shall be prorated for the portion of any month in which this
Agreement is in effect which is not a complete month according to the proportion which
the number of calendar days in the month during which the Agreement is in effect bears
to the number of calendar days in the month, and shall be payable within ten (10)
days after the date of termination. |
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(d) The fee
payable to the Advisor under this Agreement will be reduced to the extent of any
receivable owed by the Advisor to the Fund and as required under any expense limitation
applicable to the Fund. |
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(e) The Advisor
voluntarily may reduce any portion of the compensation or reimbursement of expenses
due to it pursuant to this Agreement and may agree to make payments to limit the
expenses which are the responsibility of the Fund under this Agreement. Any such
reduction or payment shall be applicable only to such specific reduction or payment
and shall not constitute an agreement to reduce any future compensation or reimbursement
due to the Advisor hereunder or to continue future payments. Any such reduction
will be agreed to prior to accrual of the related expense or fee and will be estimated
daily and reconciled and paid on a monthly basis. |
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(f) Any such
reductions made by the Advisor in its fees or payment of expenses which are the
Fund’s obligation are subject to reimbursement by the Fund to the Advisor,
if so requested by the Advisor, in subsequent fiscal years if the aggregate amount
actually paid by the Fund toward the operating expenses for such fiscal year (taking
into account the reimbursement) does not exceed the applicable limitation on Fund
expenses. Under the expense limitation agreement, the Advisor may recoup reimbursements
made in any fiscal year of the Fund over the following three fiscal years. Any such
reimbursement is also contingent upon Board of Trustees review and approval at time
the reimbursement is made. Such reimbursement may not be paid prior to the Fund’s payment of current ordinary operating expenses. |
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(g) The Advisor
may agree not to require payment of any portion of the compensation or reimbursement
of expenses otherwise due to it pursuant to this Agreement. Any such agreement shall
be applicable only with respect to the specific items covered thereby and shall
not constitute an agreement not to require payment of any future compensation or
reimbursement due to the Advisor hereunder. |
8. NO SHORTING; NO BORROWING. The Advisor agrees that neither it nor any of its officers or employees shall take any short position in the shares of the Fund. This prohibition shall not prevent the purchase of such shares by any of the officers or employees of the Advisor or any trust, pension, profit-sharing or other benefit plan for such persons or affiliates thereof, at a price not less than the net asset value thereof at the time of purchase, as allowed pursuant to rules promulgated under the Investment Company Act. The Advisor agrees that neither it nor any of its officers or employees shall borrow from the Fund or pledge or use the Fund’s assets in connection with any borrowing not directly for the Fund’s benefit. For this purpose, failure to pay any amount due and payable to the Fund for a period of more than thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH TRUST’S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing herein contained shall be deemed to require the Trust or the Fund to take any action contrary to the Trust’s Agreement and Declaration of Trust, By-Laws, or any applicable statute or regulation, or to relieve or deprive the Board of Trustees of its responsibility for and control of the conduct of the affairs of the Trust and Fund. In this connection, the Advisor acknowledges that the Trustees retain ultimate plenary authority over the Fund and may take any and all actions necessary and reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Advisor agrees to supply such information to the Fund’s administrator and to permit such compliance inspections by the Fund’s administrator as shall be reasonably necessary to permit the administrator to satisfy its obligations and respond to the reasonable requests of the Board of Trustees.
11. ADVISOR’S LIABILITIES AND INDEMNIFICATION.
(a) The Advisor
shall have responsibility for the accuracy and completeness (and liability for the
lack thereof) of the statements in the Fund’s offering materials (including
the prospectus, the |
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statement
of additional information, advertising and sales materials), except for information
supplied by the administrator or the Trust or another third party for inclusion
therein. |
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(b) The Advisor
shall be liable to the Fund for any loss (including brokerage charges) incurred
by the Fund as a result of any improper investment made by the Advisor in contradiction
of the Investment Policies. |
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(c) In the
absence of willful misfeasance, bad faith, negligence, or reckless disregard of
the obligations or duties hereunder on the part of the Advisor, the Advisor shall
not be subject to liability to the Trust or the Fund or to any shareholder of the
Fund for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or sale
of any security by the Fund. Notwithstanding the foregoing, federal securities laws
and certain state laws impose liabilities under certain circumstances on persons
who have acted in good faith, and therefore nothing herein shall in any way constitute
a waiver or limitation of any rights which the Trust, the Fund or any shareholder
of the Fund may have under any federal securities law or state law. |
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(d) Each party
to this Agreement shall indemnify and hold harmless the other party and the shareholders,
directors, officers and employees of the other party (any such person, an “Indemnified
Party”) against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating and defending any alleged loss, liability, claim,
damage or expenses and reasonable counsel fees incurred in connection therewith)
arising out of the Indemnifying Party’s performance or non-performance of any
duties under this Agreement; provided, however, that nothing herein shall be deemed
to protect any Indemnified Party against any liability to which such Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless disregard
of obligations and duties under this Agreement. |
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(e) No provision
of this Agreement shall be construed to protect any Trustee or officer of the Trust,
or officer of the Advisor, from liability in violation of Sections 17(h) and (i)
of the Investment Company Act. |
12. NON-EXCLUSIVITY; TRADING FOR ADVISOR’S OWN ACCOUNT. The Trust’s employment of the Advisor is not an exclusive arrangement. The Trust may from time to time employ other individuals or entities to furnish it with the services provided for herein. Likewise, the Advisor may act as investment adviser for any other person, and shall not in any way be limited or restricted from buying, selling or trading any securities for its or their own accounts or the accounts of others for whom it or they may be acting; provided, however, that the Advisor expressly represents that it will undertake no activities which will adversely affect the performance of its obligations to the Fund under this Agreement; and provided further that the Advisor will adhere to a code of ethics governing employee trading and trading for proprietary accounts that conforms to the requirements of the Investment Company Act and the Advisers Act and has been approved by the Board of Trustees.
13. TRANSACTIONS WITH OTHER INVESTMENT ADVISERS. The Advisor is not an affiliated person of any investment adviser responsible for providing advice with respect to any other series of the Trust, or of any promoter, underwriter, officer, director, member of an advisory board or employee of any other series of the Trust. The Advisor shall not consult with the investment adviser of any other series of the Trust concerning transactions for the Fund or any other series of the Trust.
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14. TERM.
(a) This Agreement
shall become effective at the time the Fund commences operations pursuant to an
effective amendment to the Trust’s Registration Statement under the Securities
Act of 1933 and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect thereafter
for additional periods not exceeding one (l) year so long as such continuation is
approved at least annually by (i) the Board of Trustees or by the vote of a majority
of the outstanding voting securities of the Fund and (ii) the vote of a majority
of the Trustees of the Trust who are not parties to this Agreement nor interested
persons thereof, cast in person at a meeting called for the purpose of voting on
such approval. The terms “majority of the outstanding voting securities”
and “interested persons” shall have the meanings set forth in the Investment
Company Act. |
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(b) The Fund
may use the name “Strategic Latin America Fund” or any name derived from
or using the name “Strategic Latin America” only for so long as this Agreement
or any extension, renewal or amendment hereof remains in effect. Within sixty (60)
days from such time as this Agreement shall no longer be in effect, the Fund shall
cease to use such a name or any other name connected with the Advisor. |
15. TERMINATION; NO ASSIGNMENT.
(a) This Agreement
may be terminated by the Trust on behalf of the Fund at any time without payment
of any penalty, by the Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund, upon sixty (60) days’ written notice to the
Advisor, and by the Advisor upon sixty (60) days’ written notice to the Fund.
In the event of a termination, the Advisor shall cooperate in the orderly transfer
of the Fund’s affairs and, at the request of the Board of Trustees, transfer
any and all books and records of the Fund maintained by the Advisor on behalf of
the Fund. |
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(b) This Agreement
shall terminate automatically in the event of any transfer or assignment thereof,
as defined in the Investment Company Act. |
16. NONPUBLIC PERSONAL INFORMATION. Notwithstanding any provision herein to the contrary, the Advisor agrees on behalf of itself and its managers, members, officers, and employees (1) to treat confidentially and as proprietary information of the Trust (a) all records and other information relative to the Fund’s prior, present, or potential shareholders (and clients of said shareholders) and (b) any Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation S-P (“Regulation S-P”), promulgated under the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (the “G-L-B Act”); and (2) except after prior notification to and approval in writing by the Trust, not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, or as otherwise permitted by Regulation S-P or the G-L-B Act, and if in compliance therewith, the privacy policies adopted by the Trust and communicated in writing to the Advisor. Such written approval shall not be unreasonably withheld by the Trust and may not be withheld where the Advisor may be exposed to civil or criminal contempt or other proceedings for failure to comply after being requested to divulge such information by duly constituted authorities.
17. ANTI-MONEY LAUNDERING COMPLIANCE. The Advisor acknowledges that, in compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and any implementing regulations thereunder (together, “AML Laws”), the Trust has adopted an Anti-Money Laundering Policy. The Advisor agrees to comply with the Trust’s Anti-Money Laundering Policy and the AML Laws, as the same may apply to the Advisor, now and in the future. The Advisor further agrees to provide to the Trust and/or the administrator such reports, certifications and contractual assurances as may be reasonably
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requested by the Trust. The Trust may disclose information regarding the Advisor to governmental and/or regulatory or self-regulatory authorities to the extent required by applicable law or regulation and may file reports with such authorities as may be required by applicable law or regulation.
18. CERTIFICATIONS; DISCLOSURE CONTROLS AND PROCEDURES. The Advisor acknowledges that, in compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”), and the implementing regulations promulgated thereunder, the Trust and the Fund are required to make certain certifications and have adopted disclosure controls and procedures. To the extent reasonably requested by the Trust, the Advisor agrees to use its best efforts to assist the Trust and the Fund in complying with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and implementing the Trust’s disclosure controls and procedures. The Advisor agrees to inform the Trust of any material development related to the Fund that the Advisor reasonably believes is relevant to the Fund’s certification obligations under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
19. SEVERABILITY. If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise rendered invalid, the remainder of this Agreement shall not be affected thereby.
20. CAPTIONS. The captions in this Agreement are included for convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to the conflict of laws principles of Delaware or any other jurisdiction; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act and the Advisers Act and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all on the day and year first above written.
WORLD FUNDS TRUST
On behalf of
the
Strategic Latin America Fund
By:____/s/ ▇▇▇▇ ▇▇▇▇▇, III_________
Name: ▇▇▇▇ ▇▇▇▇▇, III
Title: Chairman
Strategic Asset Management, Ltd.
By: __/s/ ▇▇▇▇▇▇▇▇ Alvarez_________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CEO
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SCHEDULE A
Series or Fund of World Funds Trust Annual Fee Rate
Strategic Latin America Fund – 1.10% of average daily net assets
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