1
UNDERWRITING AGREEMENT
This Agreement, dated as of November 13, 2000, is made by and between
Metropolitan West Funds, a Delaware business trust (the "Fund") operating as an
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "Act"), and PFPC Distributors, Inc. ("PFPC
Distributors"), a corporation duly organized and existing under the laws of the
Commonwealth of Massachusetts (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Fund is authorized to issue separate series of shares
representing interests in separate investment portfolios (the "Series"), which
Series are identified on Schedule "A" attached hereto, and which Schedule "A"
may be amended from time to time by mutual agreement among the Parties; and
WHEREAS, PFPC Distributors is a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") and a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Parties are desirous of entering into an agreement
providing for the distribution by PFPC Distributors of the shares of the Fund
(the "Shares").
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
1. Appointment
The Fund hereby appoints PFPC Distributors as its principal agent for
the distribution of the Shares, and PFPC Distributors hereby accepts
such appointment under the terms of this Agreement. The Fund agrees
that it will not sell any Shares to any person except to fill orders
for the Shares received through PFPC Distributors, provided, however,
that the foregoing exclusive right shall not apply to: (a) Shares
issued or sold in connection with the merger or consolidation of any
other investment company with the Fund or the acquisition by purchase
of otherwise of all or substantially all of the assets of any
investment company or substantially all of the outstanding shares of
any such company by the Fund; (b) Shares which may be offered by the
Fund to its stockholders for reinvestment of cash distributed from
capital gains or net investment income of the Fund; or (c) Shares which
may be issued to shareholders of other funds who exercise any exchange
privilege set forth in the Fund's Prospectus. Notwithstanding any other
provision hereof, the Fund may terminate, suspend, or withdraw the
offering of the Shares whenever, in its sole discretion, it deems such
action to be desirable.
- 1 -
2
2. Sale and Repurchase of Shares
(a) PFPC Distributors is hereby granted the right, as agent for
the Fund, to sell Shares to the public against orders received
at the public offering price as defined in the Fund's
Prospectus and Statement of Additional Information.
(b) PFPC Distributors will also have the right to take, as agent
for the Fund, all actions which, in PFPC Distributors'
judgment, and subject to the Fund's reasonable approval, are
necessary to carry into effect the distribution of the Shares.
(c) PFPC Distributors will act as agent for the Fund in connection
with the repurchase of Shares by the Fund upon the terms set
forth in the Fund's Prospectus and Statement of Additional
Information.
(d) The net asset value of the Shares shall be determined in the
manner provided in the then current Prospectus and Statement
of Additional Information relating to the Shares, and when
determined shall be applicable to all transactions as provided
in the Prospectus. The net asset value of the Shares shall be
calculated by the Fund or by another entity on behalf of the
Fund. PFPC Distributors shall have no duty to inquire into, or
liability for, the accuracy of the net asset value per Share
as calculated.
(e) On every sale, PFPC Distributors shall promptly pay to the
Fund the applicable net asset value of the Shares.
(f) Upon receipt of purchase instructions, PFPC Distributors will
transmit such instructions to the Fund or its transfer agent
for registration of the Shares purchased.
(g) Nothing in this Agreement shall prevent PFPC Distributors or
any affiliated person (as defined in the Act) of PFPC
Distributors from acting as underwriter for any other person,
firm or corporation (including other investment companies), or
in any way limit or restrict PFPC Distributors or such
affiliated person from buying, selling or trading any
securities for its or their own account or for the account of
others for whom it or they may be acting, provided, however,
that PFPC Distributors expressly agrees that it will not for
its own account purchase any Shares of the Fund except for
investment purposes, and that it will not for its own account
dispose of any such Shares except by redemption of such Shares
with the Fund, and that it will not undertake in any
activities which, in its judgment, will adversely affect the
performance of its obligations to the Fund under this
Agreement.
- 2 -
3
3. Rules of Sale of Shares
PFPC Distributors does not agree to sell any specific number of Shares
and serves only in the capacity of Statutory Underwriter. The Fund
reserves the right to terminate, suspend or withdraw the sale of its
Shares for any reason deemed adequate by it, and the Fund reserves the
right to refuse at any time or times to sell any of its Shares to any
person for any reason deemed adequate by it.
4. Rules of NASD, etc.
(a) PFPC Distributors will conform to the Conduct Rules of the
NASD and the securities laws of any jurisdiction in which it
directly or indirectly sells any Shares.
(b) PFPC Distributors will require each dealer with whom PFPC
Distributors has a selling agreement to conform to the
applicable provisions of the Prospectus, with respect to the
public offering price of the Shares, and PFPC Distributors
shall not cause the Fund to withhold the placing of purchase
orders so as to make a profit thereby.
(c) The Fund agrees to furnish PFPC Distributors sufficient copies
of any and all: agreements, plans, communications with the
public or other materials which the Fund intends to use in
connection with any sales of Shares, in adequate time for PFPC
Distributors to file and clear such materials with the proper
authorities before they are put in use. PFPC Distributors and
the Fund may agree that any such material does not need to be
filed subsequent to distribution. In addition, the Fund agrees
not to use any such materials until so filed and cleared for
use, if required, by appropriate authorities as well as by
PFPC Distributors.
(d) PFPC Distributors, at its own expense, will qualify as a
dealer or broker, or otherwise, under all applicable state or
federal laws required in order that the Shares may be sold in
such states as may be mutually agreed upon by the Parties.
(e) PFPC Distributors shall remain registered with the SEC and a
member of the NASD for the term of this Agreement.
(f) PFPC Distributors shall not, in connection with any sale or
solicitation of a sale of the Shares, make or authorize any
representative, service organization, broker or dealer to make
any representations concerning the Shares, except those
contained in the Prospectus offering the Shares and in
communications with the public or sales materials approved by
PFPC Distributors as information supplemental to such
Prospectus. Copies of
- 3 -
4
the Prospectus will be supplied by the Fund to PFPC
Distributors in reasonable quantities upon request.
(g) PFPC Distributors shall only be authorized to make
representations in respect of the Fund consistent with the
then current Prospectus, Statement of Additional Information,
and other written information provided by the Fund or its
agents to be used explicitly with respect to the sale of
Shares.
5. Records to be Supplied by the Fund
The Fund shall furnish to PFPC Distributors copies of all information,
financial statements and other papers which PFPC Distributors may
reasonably request for use in connection with the underwriting of the
Shares including, but not limited to, one certified copy of all
financial statements prepared for the Fund by its independent public
accountants.
6. Expenses
(a) The Fund will bear the following expenses:
(i) preparation, setting in type, and printing of
sufficient copies of the Prospectus and Statement of
Additional Information for distribution to
shareholders, and the cost of distribution of same to
the shareholders;
(ii) preparation, printing and distribution of reports and
other communications to shareholders;
(iii) registration of the Shares under the federal
securities laws;
(iv) qualification of the Shares for sale in the
jurisdictions as directed by the Fund;
(v) maintaining facilities for the issue and transfer of
the Shares;
(vi) supplying information, prices and other data to be
furnished by the Fund under this Agreement; and
(vii) any original issue taxes or transfer taxes applicable
to the sale or delivery of the Shares or certificates
therefor.
(b) PFPC Distributors agrees to pay all of its own expenses in
performing its obligations hereunder.
- 4 -
5
7. Term
(a) The term of this Agreement shall commence immediately upon the
consummation of the acquisition of Provident Distributors,
Inc. by PFPC Distributors, Inc. or one of its subsidiaries
which the parties anticipate to occur on or about December 31,
2000 (the "Effective Date").
(b) This Agreement shall remain in effect for one (1) year from
the Effective Date. This Agreement shall continue thereafter
for periods not exceeding one (1) year, if approved at least
annually (i) by a vote of a majority of the outstanding voting
securities of each Series, or (ii) by a vote of a majority of
the Board Members of the Fund who are not parties to this
Agreement (other than as Board Members of the Fund) or
interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(c) This Agreement (i) may be terminated at any time without the
payment of any penalty, either by a vote of the Trustees of
the Fund or by a vote of a majority of the outstanding voting
securities of each Series with respect to such Series, on
sixty (60) days' written notice to PFPC Distributors; and (ii)
may be terminated by PFPC Distributors on sixty (60) days'
written notice to the Fund with respect to any Series.
(d) This Agreement shall automatically terminate in the event of
its assignment, as defined in the Act.
8. Liability of PFPC Distributors
(a) PFPC Distributors, its directors, officers, employees,
shareholders and agents shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the
Fund in connection with the performance of this Agreement,
except a loss resulting from a breach of PFPC Distributors'
obligations pursuant to Section 4 of this Agreement (Rules of
NASD), a breach of fiduciary duty with respect to the receipt
of compensation for services or a loss resulting from willful
misfeasance, bad faith or negligence on the part of PFPC
Distributors in the performance of its obligations and duties
or by reason of its reckless disregard of its obligations and
duties under this Agreement. PFPC Distributors agrees to
indemnify and hold harmless the Fund and each person who has
been, is, or may hereafter be a Trustee, officer, or employee
of the Fund against expenses 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 any
misrepresentation or omission to state a material fact, on the
part of PFPC Distributors or any agent of employee of PFPC
Distributors or any of the
- 5 -
6
persons for whose acts PFPC Distributors is responsible or is
alleged to be responsible unless such misrepresentation or
omission was made in reliance upon written information
furnished to PFPC Distributors by the Fund. PFPC Distributors
also agrees to indemnify and hold harmless the 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 PFPC Distributors' failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with the purchase and sale of Shares.
The foregoing rights of indemnification shall be in addition
to any other rights to which the Fund or any such person shall
be entitled to as a matter of law.
(b) The Fund agrees to indemnify and hold harmless PFPC
Distributors against any and all liability, loss, damages,
costs of expenses (including reasonable counsel fees) which
PFPC Distributors may incur or be required to pay hereafter,
in connection with any action, suit or other proceeding,
whether civil or criminal, before any court or administrative
or legislative body, in which PFPC Distributors may be
involved as a party or otherwise or with which PFPC
Distributors may be threatened, by reason of the offer or sale
of the Fund's Shares by persons other than PFPC Distributors
or its representatives, prior to the execution of this
Agreement. If a claim is made against PFPC Distributors as to
which PFPC Distributors may seek indemnity under the Section,
PFPC Distributors shall notify the Fund promptly after any
written assertion of such claim threatening to institute an
action or proceeding with respect thereto and shall notify the
Fund promptly of any action commenced against PFPC
Distributors within 10 days time after PFPC Distributors shall
have been served with a summons or other legal process, giving
information as to the nature and basis of the claim. Failure
to notify the Fund shall not, however, relieve the Fund from
any liability which it may have on account of the indemnity
under this Section 8(b) if the Fund has not been prejudiced in
any material respect by such failure. The Fund shall have the
sole right to control the settlement of any such action, suit
or proceeding subject to PFPC Distributors approval, which
shall not be unreasonably withheld. PFPC Distributors shall
have the right to participate in the defense of an action or
proceeding and to retain its own counsel, and the reasonable
fees and expenses of such counsel shall be borne by the Fund
(which shall pay such fees, costs and expenses at least
quarterly) if:
(i) PFPC Distributors has received an opinion of
counsel stating that the use of counsel
chosen by the Fund to represent PFPC
Distributors would present such counsel with
a conflict of interest:
- 6 -
7
(ii) the defendants in, or targets of, any such
action or proceeding include both PFPC
Distributors and the Fund, and legal counsel
to PFPC Distributors shall have reasonably
concluded that there are legal defenses
available to it which are different from or
additional to those available to the trust
or which may be adverse to or inconsistent
with defenses available to the Fund (in
which case the Fund shall not have the right
to direct the defense of such action on
behalf of PFPC Distributors); or
(iii) the Fund shall authorize PFPC Distributors
to employ separate counsel at the expense of
the Fund.
(c) Any person, even though also a director, officer, employee,
shareholder or agent of PFPC Distributors who may be or become
an officer, director, trustee, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting
on any business of the Fund (other than services or business
in connection with PFPC Distributors' duties hereunder), to be
rendering such services to or acting solely for the Fund and
not as a director, officer, employee, shareholder or agent, or
one under the control or direction of PFPC Distributors even
though receiving a salary from PFPC Distributors.
(d) The Fund agrees to indemnify and hold harmless PFPC
Distributors, and each person who controls PFPC Distributors
within the meaning of Section 15 of the Securities Act of
1933, as amended (the "Securities Act"), or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable
investigative, legal and other expenses incurred in connection
therewith) to which they, or any of them, may become subject
under the Act, the Securities Act, the Exchange Act or other
federal or state law or regulations, at common law or
otherwise insofar as such losses, claims, damages or
liabilities (or actions, suits or proceedings in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in a
Prospectus, Statement of Additional Information, supplement
thereto, sales literature (or other written information)
prepared by the Fund and furnished by the Fund to PFPC
Distributors for PFPC Distributors' use hereunder,
disseminated by the trust or which arise out of or are based
upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading.
Such indemnity shall not, however, inure to the benefit of
PFPC Distributors (or any person controlling PFPC
Distributors) on account of
- 7 -
8
any losses, claims, damages or liabilities (or actions, suits
or proceedings in respect thereof) arising from the sale of
the Shares of the Fund to any person by PFPC Distributors (i)
if such untrue statement or omission or alleged untrue
statement or omission was made in the Prospectus, Statement of
Additional Information, or supplement, sales or other
literature, in reliance upon and in conformity with
information furnished in writing to the Fund by PFPC
Distributors specifically for use therein or (ii) if such
losses, claims, damages or liabilities arise out of or are
based upon an untrue statement or omission or alleged untrue
statement or omission found in any Prospectus, Statement of
Additional Information, supplement, sales or other literature,
subsequently corrected, but negligently distributed by PFPC
Distributors and a copy of the corrected Prospectus was not
delivered to such person at or before the confirmation of the
sale to such person
(e) PFPC Distributors shall not be responsible for any damages,
consequential or otherwise, which the Fund may experience, due
to the disruption of the distribution of Shares caused by any
action or inaction of any registered representative or
affiliate of PFPC Distributors or of PFPC Distributors itself.
(f) Notwithstanding anything in this Agreement to the contrary, in
no event shall any party to this Agreement, its affiliates or
any of its or their directors, trustees, officers, employees,
agents or subcontractors be liable for lost profits,
exemplary, punitive, special, incidental, indirect or
consequential damages.
9. Amendments
No provision of this Agreement may be amended or modified in any manner
whatsoever, except by a written agreement properly authorized and
executed by the Parties.
10. Section Headings
Section and paragraph headings are for convenience only and shall not
be construed as part of this Agreement.
11. Reports
PFPC Distributors shall prepare reports for the Board of the Fund, on a
quarterly basis, showing such information as, from time to time, shall
be reasonably requested by the Board.
- 8 -
9
12. Severability
If any part, term or provision of this Agreement is held by any court
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not
affected, and the rights and obligations of the Parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid
provided that the basic agreement is not thereby substantially
impaired.
13. Governing Law
This Agreement shall be governed by the laws of the State of Delaware
and the exclusive venue of any action arising under this Agreement
shall be the City of Wilmington, State of Delaware.
14. Authority to Execute
The Parties represent and warrant to each other that the execution and
delivery of this Agreement by the undersigned officer of each Party has
been duly and validly authorized; and, when duly executed, this
Agreement will constitute a valid and legally binding and enforceable
obligation of each Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
by their duly authorized officer, of the day and year first above written.
PFPC DISTRIBUTORS, INC.
/s/
-----------------------------
By: Xxxx X. Xxxxxxx
Title: President
METROPOLITAN WEST FUNDS
/s/
-----------------------------
By: Xxxxx X. Dubchansky
Title: President
- 9 -
10
SCHEDULE A
IDENTIFICATION OF SERIES
Below are listed the Series and Classes of Shares to which services under this
Agreement are to be performed as of the Effective Date of this Agreement:
Metropolitan West Total Return Bond Fund-Class M
Metropolitan West Total Return Bond Fund-Class I
Metropolitan West Low Duration Bond Fund-Class M
Metropolitan West Low Duration Bond Fund-Class I
Metropolitan West Short Term Investment Fund
Metropolitan West AlphaTrak 500 Fund
This Schedule "A" may be amended from time to time by agreement of the Parties.
Dated: November 13, 2000
- 10 -
