Exhibit (e)
THE CRM FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made the 1st day of February, 1999, between The CRM Funds
(the "Trust"), a business trust organized under the laws of the State of
Delaware with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, and Forum Fund Services, LLC (the "Distributor"), a Delaware limited
liability company with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust desires that the Distributor, as principal
underwriter, offer the Shares of the Trust representing interests in each of the
classes now existing or in the future created in each of the separate investment
portfolios of the Trust as listed from time to time on Schedule A hereto (each a
"Portfolio" and, collectively, the "Portfolios") and the Distributor is willing
to act as principal underwriter on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Distributor, and the Distributor hereby
agrees, to act as distributor of the Shares for the period and on the terms set
forth in this Agreement. In connection therewith, the Trust has delivered to the
Distributor copies of its Trust Instrument and Bylaws, the Trust's Registration
Statement and all amendments thereto filed pursuant to the Securities Act of
1933, as amended (the "Securities Act") or the 1940 Act (the "Registration
Statement") and the current Prospectus and Statement of Additional Information
of each Portfolio (collectively, as currently in effect and as amended or
supplemented, the "Prospectus") and shall promptly furnish the Distributor with
all amendments of or supplements to the foregoing.
SECTION 2. DISTRIBUTION SERVICES
Subject to the direction and control of the board of trustees of the
Trust (the "Board"), the Distributor shall serve as distributor of the Shares.
(a) As agent of and sole distributor for the Trust, the Distributor
shall offer, and solicit offers to subscribe to, the unsold balance of Shares as
shall then be effectively registered under the Securities Act and applicable
state securities laws. All subscriptions for Shares obtained by the Distributor
shall be directed to the Trust for acceptance and shall not be binding on the
Trust until accepted by it. The Distributor shall have no authority to make
binding subscriptions on behalf of the Trust. The Trust reserves the right to
sell Shares directly to investors through subscriptions received by the Trust.
The Distributor's rights hereunder shall not apply to Shares issued in
connection with (i) the merger or consolidation of the Trust or its series or
classes with any other investment company or series or class thereof, (ii) the
Trust's acquisition by purchase or otherwise of all or substantially all of the
assets or stock of any other investment company, or (iii) the reinvestment in
Shares by the Trust's shareholders of dividends or other distributions or any
other offering by the Trust of securities to its shareholders.
(b) The Distributor shall use its best efforts to obtain subscriptions
to Shares upon the terms and conditions contained herein and in the Prospectus,
including the offering price. The Distributor shall send to the Trust promptly
all subscriptions placed with the Distributor. The Trust shall advise the
Distributor in its capacity as distributor of the approximate net asset value
per Share at any time requested by the Distributor which is a net asset value
determination time as disclosed in the Prospectus and at such other times as it
shall have been determined. The Trust shall furnish the Distributor from time to
time, for use in connection with the offering of Shares, such other information
with respect to the Trust and Shares as the Distributor may reasonably request.
The Trust shall supply the Distributor with such copies of the Prospectus as the
Distributor may request. The Distributor may use its employees, agents and other
persons who need not be its employees, at its cost and expense, to assist it in
carrying out its obligations hereunder, but no such employee, agent or other
person shall be deemed to be an agent of the Trust or have any rights under this
Agreement.
(c) The Trust reserves the right to suspend the offering of Shares at
any time, in the absolute discretion of the Board, and upon notice of such
suspension the Distributor shall cease to offer Shares.
(d) The Trust and the Distributor will cooperate with each other in
taking such action as may be necessary to qualify Shares for sale under the
securities laws of such states as the Trust may designate, provided that the
Distributor shall not be required to register as a broker-dealer or file a
consent to service of process in any such state. The Trust shall pay all fees
and expenses of registering Shares under the Securities Act and of registering
or qualifying Shares and the Trust's qualification under applicable state
securities laws. The Distributor shall pay all expenses relating to its
broker-dealer qualification.
(e) The Trust represents that its Registration Statement and Prospectus
under the Securities Act have been or will be, as the case may be, carefully
prepared in conformity with the requirements of the Securities Act and the rules
and regulations of the Securities and Exchange Commission (the "Commission")
thereunder. The Trust represents and warrants that its Registration Statement
and Prospectus contain or will contain all statements required to be stated
therein in accordance with the Securities Act and the rules and regulations of
the Commission thereunder, and that all statements of fact contained or to be
contained therein are or will be true and correct at the time indicated or on
the effective date as the case may be; and that the Trust's Registration
Statement and Prospectus, when they shall become effective or be authorized for
use, will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of Shares. The Trust will from time to
time file such amendment or amendments to its Registration Statement and
Prospectus as, in the light of future developments, shall, in the opinion of the
Trust's counsel, be necessary in order to have such Registration Statement and
Prospectus at all times contain all material facts required to be stated therein
or necessary to make any statements therein not misleading to a purchaser of
Shares, but, if the Trust shall not file such amendment or amendments within
fifteen days after receipt of a written request from the Distributor to do so,
the Distributor may, at its option, terminate this Agreement immediately. The
Trust shall not file any amendment to its Registration Statement and Prospectus
without giving the Distributor reasonable notice thereof in advance; provided,
however, that nothing in this Agreement contained shall in any way limit the
Trust's right to file at any time such amendments to its Registration Statement
and Prospectus, of whatever character, as it deems advisable, such right being
in all respects absolute and unconditional. The Trust represents and warrants
that any amendment to its Registration Statement and Prospectus hereafter filed
will, when it becomes effective, contain all statements required to be stated
therein in accordance with the 1940 Act and the rules and regulations of the
Commission thereunder, that all statements of fact contained therein will, when
the same shall become effective, be true and correct and that no such amendment,
when it becomes effective, will include an untrue statement of a material fact
or will omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading to a purchaser of Shares.
(f) The Trust will indemnify, defend and hold the Distributor, its
several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the Securities Act (collectively, the
"Distributor Indemnitees"), free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which any Distributor Indemnitee may incur,
under the Securities Act, or under common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in the
Trust's Registration Statement and Prospectus under the Securities Act or
arising out of or based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, information furnished to the Trust in connection therewith by
or on behalf of Distributor; provided, however, that in no event shall anything
contained in this paragraph (f) be so construed as to protect the Distributor
against any liability to the Trust or its security holders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this Section 2. This
agreement to indemnify Distributor Indemnitees is expressly conditioned upon the
Trust being notified of any action brought against any Distributor Indemnitee,
such notification to be given by letter, facsimile transmission or telegram to
the Trust and referring to the person against whom such action is brought within
ten days after the summons or other first legal process shall have been served
on such person. The failure so to notify the Trust of any such action shall not
relieve the Trust from any liability which it may have to any Distributor
Indemnitee otherwise than on account of the indemnification provided for in this
paragraph (f). The Trust will be entitled to assume the defense of any suit
brought to enforce any such claim, and to retain counsel of good standing chosen
by it and approved by the Distributor, which approval shall not be withheld
unreasonably. In the event the Trust elects to assume the defense of any such
suit and retain counsel of good standing approved by the Distributor, the
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them. In the event the Trust does not elect to assume
the defense of any such suit, or in case the Distributor does not approve of
counsel chosen by the Trust or has been advised that it may have available
defenses or claims which are not available to or conflict with those available
to the Trust, the Trust will reimburse any Distributor Indemnitee named as
defendant in such suit for the reasonable fees and expenses of any counsel
retained by any such person. The indemnification provisions contained in this
paragraph (f) and the Trust's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Distributor Indemnitee and shall
survive the sale of any Shares made pursuant to subscriptions obtained by the
Distributor. The indemnification provisions of this paragraph (f) will inure
exclusively to the benefit of the Distributor Indemnitees and their respective
successors and assigns. The Trust agrees promptly to notify the Distributor of
the commencement of any litigation or proceeding against the Trust or any of its
trustees or officers in connection with the issue or sale of Shares.
(g) The Distributor agrees to indemnify, defend and hold the Trust, its
several officers and directors, and any person who controls the Trust within the
meaning of Section 15 of the Securities Act (collectively, the "Trust
Indemnitees"), free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which any Trust Indemnitee may incur under the Securities
Act, or under common law or otherwise, but only to the extent that such
liability or expense incurred by the Trust Indemnitees resulting from such
claims or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
the Distributor in its capacity as distributor to the Trust for use in the
Trust's Registration Statement or Prospectus under the Securities Act, or shall
arise out of or be based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement or Prospectus or necessary to make such information not misleading.
The Distributor's agreement to indemnify the Trust Indemnitees is expressly
conditioned upon the Distributor being notified of any action brought against a
Trust Indemnitee, such notification to be given by letter, facsimile
transmission or telegram addressed and referring to the person against whom such
action is brought within ten days after the summons or other first legal process
shall have been served on such person. The Distributor shall have a right to
control the defense of such action, with counsel of its own choosing,
satisfactory to the Trust, if such action is based solely upon such alleged
misstatement or omission on the Distributor's part, and in any other event the
Distributor and the Trust Indemnitees named shall each have the right to
participate in the defense or preparation of the defense of any such action. The
failure so to notify the Distributor of any such action shall not relieve the
Distributor from any liability which it may have to any Trust Indemnitee
otherwise than on account of the indemnification provisions in this paragraph
(g).
(h) The Trust shall advise the Distributor immediately: (i) of any
request by the Commission for amendments to the Trust's Registration Statement
or Prospectus or for additional information; (ii) in the event of the issuance
by the Commission of any stop order suspending the effectiveness of the Trust's
Registration Statement or Prospectus or the initiation of any proceedings for
that purpose; (iii) of the happening of any material event which makes untrue
any statement made in the Trust's Registration Statement or Prospectus or which
requires the making of a change in either thereof in order to make the
statements therein not misleading; and (iv) of all action of the Commission with
respect to any amendments to the Trust's Registration Statement or Prospectus
which may from time to time be filed with the Commission under the 1940 Act or
the Securities Act.
SECTION 3. STANDARD OF CARE
The Distributor shall use its best judgment and efforts in rendering
services to the Trust under this Agreement. The Distributor shall not be liable
to the Trust for any error of judgment or mistake of law, for any loss arising
out of any investment, or for any action or inaction of the Distributor in the
absence of bad faith, willful misconduct or gross negligence or based upon
information, instructions or requests with respect to a Portfolio made to the
Distributor by an officer of the Trust duly authorized. The Distributor shall
not be responsible or liable for any failure or delay in performance of its
obligations under this Agreement caused by circumstances beyond its reasonable
control.
SECTION 4. EXPENSES
Subject to any expense reimbursement arrangements between the
Distributor or others and the Trust, the Trust shall be responsible and assumes
the obligation for payment of all its expenses.
SECTION 5. COMPENSATION
(a) The Distributor shall be entitled to no compensation or
reimbursement of expenses for the distribution and service activities provided
by the Distributor pursuant to this Agreement, except to the extent such
compensation or reimbursement is provided, with respect to any Portfolio or any
class of a Portfolio, pursuant to a plan of distribution adopted under Rule
12b-1 under the 1940 Act.
(b) Notwithstanding anything in this Agreement to the contrary, the
Distributor and its affiliated persons may receive compensation or reimbursement
from the Trust with respect to (i) the provision of distribution and service
activities on behalf of the Portfolios in accordance with any distribution plan
adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act, (ii) the
provision of shareholder support or other services, (iii) the provision of
management services or (iv) service as a Trustee or officer of the Trust.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each
Portfolio on the date on which the Trust's Registration Statement relating to
the shares of the Portfolio becomes effective.
(b) This Agreement shall continue in effect for twenty-four months as
it pertains to a Portfolio and, thereafter, with respect to such Portfolio shall
continue in effect for successive twelve-month periods, provided that such
continuance is specifically approved at least annually (i) by the Board or by a
vote of a majority of the outstanding voting securities of the Portfolio and
(ii) by a vote of a majority of Trustees of the Trust (A) who are not parties to
this Agreement or interested persons of any such party and (B) with respect to
each class of a Portfolio, who do not have any direct or indirect financial
interest in any plan of distribution adopted under Rule 12b-1 under the 1940 Act
applicable to the class or in any agreements related to such plan, cast in
person at a meeting called for the purpose of voting on such approval. If the
continuation of this Agreement is not approved, the Distributor may continue to
render the services described herein in the manner and to the extent permitted
by the 1940 Act.
(c) This Agreement may be terminated at any time with respect to a
Portfolio, without the payment of any penalty, (i) by the Board or by a vote of
a majority of the outstanding voting securities of the Portfolio or, with
respect to each class of a Portfolio for which there is an effective plan of
distribution adopted under Rule 12b-1 under the 1940 Act, a majority of Trustees
of the Trust who do not have any direct or indirect financial interest in any
such plan or in any agreements related to such plan, on 60 days' written notice
to the Distributor or (ii) by the Distributor on 60 days' written notice to the
Trust. This Agreement shall automatically terminate in the event of its
assignment.
SECTION 7. ACTIVITIES OF DISTRIBUTOR
Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of its officers, directors or employees (whether or
not they are a director, officer, employee or other affiliated person of the
Trust) to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Portfolio shall
not be liable for any obligations of the Trust or of the Portfolios under this
Agreement, and the Distributor agrees that, in asserting any rights or claims
under this Agreement, it shall look only to the assets and property of the Trust
or the Portfolio to which the Distributor's rights or claims relate in
settlement of such rights or claims, and not to the Trustees of the Trust or the
shareholders of the Portfolios.
SECTION 9. CONFIDENTIALITY
The Distributor agrees to treat all records and other information
related to the Trust as proprietary information of the Trust and, on behalf of
itself and its employees, to keep confidential all such information, except that
the Distributor may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
the Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
SECTION 10. MISCELLANEOUS
(a) Except for Schedule A, no provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the 1940 Act,
by a vote of a majority of the outstanding voting securities of a Portfolio.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be 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.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(f) The terms "vote of a majority of the outstanding voting
securities," "interested person," "affiliated person" and "assignment" shall
have the meanings ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE CRM FUNDS
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▇▇▇▇ ▇. ▇▇▇▇▇▇
President
FORUM FUND SERVICES, LLC
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
THE CRM FUNDS
DISTRIBUTION AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
AS OF FEBRUARY 1, 1999
The CRM Small Cap Value Fund
The CRM Mid Cap Value Fund
The CRM Large Cap Value Fund
The CRM Value Fund
