EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE CRM FUNDS
AND
CRM ADVISORS, LLC
THIS AGREEMENT is made as of the 29th day of September, 1995, by and between THE
CRM FUNDS, a Delaware business trust which may issue one or more series and
classes of shares of beneficial interest (the "Trust"), on behalf of The CRM
Small Cap Value Fund (the "Fund"), and CRM ADVISORS, LLC, a New York limited
liability company (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended; and
WHEREAS, the Trust wishes to retain the Adviser to act as investment
adviser with respect to shares of the Fund, and the Adviser is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt whereof
is hereby acknowledged, it is agreed between the parties hereto as follows:
SECTION 1. APPOINTMENT. The Trust hereby appoints the Adviser, and the
Adviser hereby undertakes, to act as investment adviser of the Fund and, subject
to the supervision of the Trust's Board of Trustees, to direct the investments
of the Fund in accordance with the investment objectives, policies, and
limitations provided in the Fund's Prospectus (as defined herein) or other
governing instruments, as amended from time to time, under the 1940
Act and rules thereunder, and such other limitations as the Fund may impose by
notice in writing to the Adviser.
SECTION 2. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser
with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser to provide certain advisory services to the Trust and
approving this agreement;
(b) The Trust's Trust Instrument and all amendments thereto;
(c) The Trust's By-Laws and all amendments thereto;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") and under the 1940 Act (File
Nos. 33-91498 and 811-9034), as filed with the Securities and Exchange
Commission (the "Commission") relating to the Trust's shares of beneficial
interest, no par value ("Shares"), and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission; and
(f) The Trust's most recent prospectus and statement of additional
information and all amendments and supplements thereto (the "Prospectus").
The Trust will furnish the Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
SECTION 3. INVESTMENT ADVISORY SERVICES. On behalf of the Fund, the
Adviser is authorized, in its discretion and without prior consultation with the
Fund, to buy, sell, lend and otherwise trade, consistent with the Fund's then
current investment objective, policies
and restrictions, any stocks, bonds and other securities and investment
instruments subject to the control and direction of the Trust's Board of
Trustees.
The Adviser shall furnish such reports, evaluations, information or
analyses to the Trust with respect to the Fund as the Trust's Board of Trustees
may request from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Trust's Board of Trustees with respect
to Trust policies, and shall carry out such policies as are adopted by the
Trustees. The Adviser shall, subject to review by the Board of Trustees,
furnish such other services as the Adviser shall from time to time determine to
be necessary or useful to perform its obligations under this Agreement,
including but not limited to, the appointment and supervision of any
sub-adviser.
The Adviser shall place all orders for the purchase and sale of portfolio
securities for the Fund with brokers or dealers selected by the Adviser, which
may include brokers or dealers affiliated with the Adviser to the extent
permitted by the 1940 Act. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the Fund and
at commission rates which are reasonable in relation to the benefits received.
In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) to the Fund and/or the other accounts over
which the Adviser or its affiliates exercise investment discretion. The Adviser
is authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction
if the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in terms of
either that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Board of Trustees shall periodically review
the commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Trust or the Fund.
SECTION 4. COMPENSATION. As compensation for the services which the
Adviser is to provide or cause to be provided pursuant to Paragraph 3, the Fund
shall pay to the Adviser out of Fund assets an annual fee equal to 0.75% of the
average daily net asset value of the Fund (computed in the manner set forth in
the Fund's most recent Prospectus and determined as of the close of business on
each business day throughout the month) which shall be accrued daily and paid in
arrears on the first business day of every month. The fee for any partial month
under this agreement shall be calculated on a proportionate basis. In the event
that the total expenses of the Fund exceed the limits on investment company
expenses imposed by any state or any regulatory authority of any jurisdiction in
which shares of such Fund are qualified for offer and sale, the Adviser will
bear the amount of such excess, except: (i) the Adviser shall not be required
to bear such excess to an extent greater than the compensation due to the
Adviser for the period for which such expense limitation is required to be
calculated unless such state or regulatory authority shall so require, and (ii)
the Adviser shall not be required to bear the
expenses of the Fund to an extent which would result in the Trust's inability to
qualify as a regulated investment company under the provisions of Subchapter M
of the federal Internal Revenue Code of 1986, as amended.
SECTION 5. INTERESTED PERSONS. It is understood that the Trustees,
officers and shareholders of the Trust are or may be or become interested
persons of the Adviser as directors, officers or otherwise and that directors,
officers and shareholders of the Adviser are or may be or become similarly
interested persons of the Trust.
SECTION 6. PAYMENT OF EXPENSES. The Fund will pay, or contract with
persons not parties to this Agreement to pay for, all its expenses other than
those expressly stated to be payable by the Adviser hereunder, which expenses
payable by the Fund shall include, without limitation, (i) interest and taxes;
(ii) brokerage commissions and other costs in connection with the purchase or
sale of securities and other investment instruments, which the parties
acknowledge might be higher than other brokers would charge if the Fund pays a
broker which provides research services to the Adviser for use in rendering
services to the Fund; (iii) fees and expenses of the Fund's Trustees; (iv) legal
and audit expenses; (v) administrator, custodian, pricing and bookkeeping,
registrar and transfer agent fees and expenses; (vi) compensation of the Trust's
officers and employees who are not employees of the Adviser, the distributor or
their respective affiliates and the costs of other personnel performing services
for the Trust; (vii) fees payable under this Advisory Agreement and the
Administration and Distribution Agreements; (viii) fees and expenses related to
the registration and qualification of the Trust and the Fund's shares for
distribution under state and federal securities laws; (ix) expenses of printing
and mailing reports and notices and proxy material to shareholders of the
Fund; (x) all other expenses incidental to holding meetings of the Fund's
shareholders, including proxy solicitations therefor; (xi) expenses of
typesetting for printing Prospectuses and supplements thereto; (xii) expenses of
printing and mailing Prospectuses and supplements thereto sent to existing
shareholders; (xiii) insurance premiums for fidelity bonds and other coverage to
the extent approved by the Board of Trustees; (xiv) association membership dues
authorized by the Board of Trustees; and (xv) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust is a party (or the Fund's assets are subject)
and any legal obligation which the Trust may have to indemnify the Trust's
Trustees and officers with respect thereto.
SECTION 7. NON-EXCLUSIVE SERVICES. The services of the Adviser to the
Fund are not to be deemed exclusive and the Adviser shall be free to render
similar services to others and engage in other activities. The Adviser shall be
free to enter into other agreements with the Fund and the Trust for providing
additional services to the Fund and the Trust which are not covered by this
Agreement, and to receive additional compensation for such services. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser, neither
the Adviser nor any of its directors, officers, shareholders, agents, or
employees shall be liable or responsible to the Fund or the Trust or to any
shareholder of the Fund or the Trust 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.
SECTION 8. TERM OF AGREEMENT.
(a) The Trust represents that this Agreement as it pertains to the
Fund has been approved by the Board of Trustees and shareholders pursuant to
Section 15 of the 1940 Act. This Agreement as it pertains to the Fund shall
become effective on the date hereof and shall remain in effect for a period of
two years from such date, and thereafter for successive twelve-month periods
with respect to the Fund; provided, however, that such continuance is
specifically approved at least annually by the Board of Trustees of the Trust or
by a majority vote of the holders of the outstanding voting securities (as
defined in the 0000 Xxx) of the Fund, and, in either case, by a majority of the
Board of Trustees of the Trust, who have no direct or indirect financial
interest in this Agreement and who are not interested persons, as defined in the
1940 Act, of any such party, who cast their vote in person at a meeting called
for the purpose of voting on such approval; provided further, however, that if
the continuation of this Agreement is not approved as to the Fund, the Adviser
may continue to render the Fund the services described herein in the manner and
to the extent permitted by the 1940 Act and the rules and regulations
thereunder. This Agreement may be terminated (i) by the Trust with respect to
the Fund at any time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities (as so defined) of the Fund, or by
a vote of the majority of the Board of Trustees of the Trust on sixty days'
written notice to the Adviser; or (ii) by the Adviser with respect to the Fund
on sixty days' written notice to the Trust.
This Agreement may be amended at any time with the approval of the Trustees
of the Trust, provided, however, that any material amendments of the terms
hereof will become effective only upon approval as provided in the first proviso
of Section 8(a) hereof.
SECTION 9. NO ASSIGNMENT. This Agreement may not be assigned, sold or
in any manner hypothecated or pledged by either party hereto and this agreement
shall terminate automatically in the event of any such assignment, sale,
hypothecation or pledge. The terms "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations promulgated by the
Commission thereunder.
SECTION 10. NOTICES. All notices and other communications, including
Written Instruction (collectively referred to as "Notice" or "Notices" in this
Paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex, or facsimile sending device. Notices shall be addressed (a) if to the
Adviser at the Adviser's address, 000 Xxxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx
Xxxx; (b) if to the Trust, at the address of the Trust; or (c) if to neither of
the foregoing, at such other address as shall have been notified to the sender
of any such Notice or other communication. A Notice may be mailed, in which
case it shall be deemed to have been given three days after it is sent, or if
sent by facsimile sending device, it shall be deemed to have been given
immediately, or if sent by messenger, it shall be deemed to have been given on
the day it is delivered, or if sent by confirming telegram, cable, telex, and
facsimile sending device it shall be deemed to have been given immediately. All
postage, cable, telex, or facsimile sending device charges arising from the
sending of a Notice hereunder shall be paid by the sender.
SECTION 11. NON-EXCLUSIVE USE OF THE NAME "CRM." The Trust acknowledges
that it adopted its name through the permission of the Adviser. The Adviser
hereby consent to the non-exclusive use by the Trust of the name "CRM" only so
long as the
Adviser serves as the Fund's adviser. The Trust covenants and agrees to
protect, exonerate, defend, indemnify and hold harmless the Adviser, its
shareholders, officers, directors, agents and employees from and against any and
all costs, losses, claims, damages or liabilities, joint or several, including
all legal expenses, which may arise or have arisen out of the Trust's use or
misuse of the name "CRM", or out of any breach of or failure to comply with this
Section 11.
SECTION 12. FURTHER ACTIONS. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
SECTION 13. AMENDMENTS. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 15. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of New York.
SECTION 16. LIMIT OF LIABILITY. The Adviser acknowledges the limitation
of shareholder liability set forth in the Trust's Declaration of Trust. The
obligations of the Trust under this Agreement shall not be binding upon the
Trustees individually or upon holders of shares of the Trust individually but
shall be binding only upon the assets and property of the Trust, and upon the
Trustees insofar as they hold title thereto.
SECTION 18. DEFINITIONS. The terms "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act, as
now in effect or as hereafter amended, and subject to such orders as may be
granted by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers designated below on the day and year first above written.
THE CRM FUNDS, ON BEHALF OF CRM ADVISORS, LLC
The CRM Small Cap Value Fund
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------- ------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. XxXxxxx
Title: President Title: President
