INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT made as of the __th day of December,
2001, by and between MW Capital Management Funds, a Delaware business trust
(hereinafter called the "Trust"), on behalf of those series identified on
Appendix A hereto, which may be amended from time to time (hereinafter referred
to individually as the "International Value Fund") (hereinafter referred to
collectively as the "Funds") and Metropolitan West Capital Management, LLC, a
California limited liability corporation (hereinafter called the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is engaged
in the business of supplying investment advice, investment management and
administrative services, as an independent contractor; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Funds pursuant to the terms and provisions of this Agreement,
and the Adviser is interested in furnishing this advice and these services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Appointment of Adviser. The Trust hereby employs the Adviser and the
Adviser hereby accepts this employment, to render investment advice and
management services with respect to the assets of the Funds 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.
2. Duties of Adviser.
(a) General Duties. The Adviser shall act as investment adviser to the
Funds and shall supervise investments of the Funds on behalf of the
Funds in accordance with the investment objectives, programs and
restrictions of the Funds as provided in the Trust's governing
documents, including, without limitation, the Trust's Agreement and
Declaration of Trust and Bylaws, or otherwise and such other
limitations as the Trustees may impose from time to time in writing to
the Adviser. Without limiting the generality of the foregoing, the
Adviser shall: (i) furnish the Funds with advice and recommendations
with respect to the investment of each Fund's assets and the purchase
and sale of portfolio securities for the Funds, including the taking
of such other steps as may be necessary to implement such advice and
recommendations; (ii) furnish the Funds with reports, statements and
other data on securities, economic conditions and other pertinent
subjects which the Trust's Board of Trustees may reasonably request;
(iii) manage the investments of the Funds, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iv)
provide persons satisfactory to the Trust's Board of Trustees to act
as officers and employees of the Trust and the Funds (such officers
and employees, as well as certain trustees, may be trustees,
directors, officers, partners, or employees of the Adviser or its
affiliates) but not including personnel to provide administrative
services or distribution services to the Fund; and (v) render to the
Trust's Board of Trustees such periodic and special reports with
respect to each Fund's investment activities as the Board may
reasonably request.
(b) Brokerage. The Adviser shall place orders for the purchase and sale of
securities either directly with the issuer or with a broker or dealer
selected by the Adviser. In placing each Fund's securities trades, the
Adviser agrees to seek overall best execution. Within the framework of
this policy, the Adviser will consider favorability of price and
efficiency of execution and may consider the financial responsibility,
research and investment information, and other services provided by
brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the
Adviser may be a party.
It is also understood that it is desirable for the Funds that the
Adviser have access to investment and market research and securities
and economic analyses provided by brokers and others. It is also
understood that brokers providing such services may execute brokerage
transactions at a higher cost to the Funds than might result from the
allocation of brokerage to other brokers solely on the basis of
seeking the most favorable price and efficient execution. Therefore,
the purchase and sale of securities for the Funds may be made with
brokers who provide this research and analysis, subject to review by
the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice to determine whether each
Fund benefits, directly or indirectly, from this practice. It is
understood by both parties that the Adviser may select broker-dealers
for the execution of the Funds' portfolio transactions that provide
research and analysis as the Adviser may lawfully and appropriately
use in its investment management and advisory capacities, whether or
not such research and analysis may also be useful to the Adviser in
connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of one or more of the Funds as well as of
other clients, the Adviser, 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 this event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in
the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients.
(c) Administrative Services. The provision of administrative services, to
the extent not covered by subparagraphs (a) or (b) above, is not the
obligation of the Adviser under this Agreement.
3. Best Efforts and Judgment. The Adviser shall use its best judgment and
efforts in rendering the advice and services to the Funds as contemplated
by this Agreement.
4. Independent Contractor. The Adviser 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 Funds in any way, or in any way be deemed an
agent for the Trust or for the Funds. It is expressly understood and agreed
that the services to be rendered by the Adviser to the Funds under the
provisions of this Agreement are not to be deemed exclusive, and the
Adviser 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. Adviser's Personnel. The Adviser 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 Adviser shall
be deemed to include persons employed or retained by the Adviser 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 Adviser or the Trust's Board of Trustees may desire
and reasonably request.
6. Reports by Funds to Adviser. Each Fund will from time to time furnish to
the Adviser detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make
available to the Adviser such financial reports, proxy statements, legal
and other information relating to each Fund's investments as may be in its
possession or available to it, together with such other information as the
Adviser may reasonably request.
7. Expenses.
(a) With respect to the operation of each Fund, the Adviser is responsible
for (i) the compensation of any of the Trust's trustees, officers, and
employees who are affiliates of the Adviser (but not the compensation
of employees performing services in connection with expenses which are
the Fund's responsibility under Subparagraph 7(b) below), (ii) to the
extent not paid by a plan adopted under Rule 12b-1 under the
Investment Company Act, the expenses of printing and distributing the
Funds' prospectuses, statements 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), and (iii) providing office space and equipment
reasonably necessary for the operation of the Funds (but not space
used by other service providers to the Funds).
(b) Each Fund is responsible for and has assumed the obligation for
payment of all of its expenses, other than as stated in Subparagraph
7(a) above or to the extent not covered under a separate agreement for
administrative services, 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 Funds 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;
expenditures in connection with meetings of each Fund's Shareholders
and Board of Trustees that are properly payable by a Fund; salaries
and expenses of officers and fees and expenses of members of the
Trust's Board of Trustees or members of any advisory board or
committee who are not members of, affiliated with or interested
persons of the Adviser; insurance premiums on property or personnel of
each 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 a
Fund or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of obtaining and
maintaining any required registration or notification for its shares
for sale under federal and applicable state and foreign 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 Funds, if any; and all other charges and costs of its operation
plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) To the extent the Adviser incurs any costs by assuming expenses which
are an obligation of a Fund as set forth herein, such Fund shall
promptly reimburse the Adviser for such costs and expenses, except to
the extent the Adviser has otherwise agreed to bear such expenses. To
the extent the services for which a Fund is obligated to pay are
performed by the Adviser, the Adviser shall be entitled to recover
from such Fund to the extent of the Adviser's actual costs for
providing such services.
8. Investment Advisory Fee.
(a) Each Fund shall pay to the Adviser, and the Adviser agrees to accept,
as full compensation for all investment management and advisory
services furnished or provided to such Fund pursuant to this
Agreement, an advisory fee as set forth in the Fee Schedule attached
hereto as Appendix A, as may be amended in writing from time to time
by the Trust and the Adviser.
(b) The advisory fee shall be accrued daily by each Fund and paid to the
Adviser upon its request.
(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 before the end of any month, the fee to the Adviser
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.
(d) The Adviser 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 a 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 Adviser hereunder or to
continue future payments. Any such reduction will be agreed to before
the accrual of the related expense or fee and will be estimated daily
and reconciled and paid on a monthly basis.
(e) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant
to this Agreement before the time that compensation or reimbursement
has accrued as a liability of a Fund. 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 Adviser hereunder.
9. Fund Share Activities of Advisers' Partners, Officers and Employees. The
Adviser agrees that neither it nor any of its partners, officers or
employees shall take any short position in the shares of the Funds. This
prohibition shall not prevent the purchase of such shares by any of the
officers and partners or bona fide employees of the Adviser 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.
10. Conflicts with Trust's Governing Documents and Applicable Laws. Nothing
herein contained shall be deemed to require the Trust or the Funds to take
any action contrary to the Trust's Agreement and Declaration of Trust,
Bylaws, or any applicable statute or regulation, or to relieve or deprive
the Board of Trustees of the Trust of its responsibility for and control of
the conduct of the affairs of the Trust and the Funds.
11. Adviser's Liabilities.
(a) In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be subject to liability to the
Trust or the Funds or to any shareholder of the Funds 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 Funds.
(b) The Funds shall indemnify and hold harmless the Adviser, its members
and the shareholders, members, directors, officers and employees of
each of them (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 Indemnified 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.
(c) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or partner or officer of the Adviser,
from liability in violation of Sections 17(h) and (i) of the
Investment Company Act.
12. Non-Exclusivity. The Trust's employment of the Adviser is not an exclusive
arrangement, and the Trust may from time to time employ other individuals
or entities to furnish it with the services provided for herein. In the
event this Agreement is terminated with respect to either Fund, this
Agreement shall remain in full force and effect with respect to the other
Fund.
13. Term. This Agreement shall become effective on the date that is the latest
of (1) the execution of this Agreement, (2) the approval of this Agreement
by the Board of Trustees of the Trust and (3) the approval of this
Agreement by the shareholders of each Fund in a special meeting of
shareholders of the Fund or by unanimous written consent if that Fund has
no public shareholders. This Agreement 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 for each
Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of each 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.
14. Termination. This Agreement may be terminated by the Trust on behalf of
either or both of the Funds at any time without payment of any penalty, by
the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of a Fund, upon sixty (60) days' written
notice to the Adviser, and by the Adviser upon sixty (60) days' written
notice to a Fund.
15. Termination by Assignment. This Agreement shall terminate automatically if
it is transferred or assigned, as defined in the Investment Company Act.
16. Transfer or Assignment. This Agreement may not otherwise be transferred,
assigned, sold or in any manner hypothecated or pledged without the
affirmative vote or written consent of the holders of a majority of the
outstanding voting securities of each Fund.
17. 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.
18. Definitions. The terms "majority of the outstanding voting securities" and
"interested persons" shall have the meanings as set forth in the Investment
Company Act.
19. Notice of Declaration of Trust. The Adviser agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
assets, and that the Adviser shall not seek satisfaction of any such
obligation from the shareholders of the Funds nor from any trustee,
officer, employee or agent of the Trust or the Funds.
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 California without giving effect
to the conflict of laws principles thereof; 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 and attested by their duly authorized officers, all on the day and
year first above written.
MW Capital Management Funds Metropolitan West Capital Management, LLC
By: ____________________________ By: __________________________________
Title: __________________________ Title: _________________________________
Appendix A
Fund and Fee Schedule
Fund Effective Date Advisory Fee
---- -------------- ------------
Metropolitan West Capital Intrinsic
Value Equity Fund December __, 2001 0.80% of net assets per annum
Metropolitan West Capital International
Value Fund December __, 2001 1.00% of net assets per annum
