EXHIBIT 6
THE CRM FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made the 19th day of November, 1996, 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 Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, XX
00000, and Forum Financial Services, Inc. (the "Distributor"), a corporation
organized under the laws of the State of Delaware with its principal place of
business at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000.
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
/s/ Xxxx X. Xxxxxx
--------------------------
Xxxx X. Xxxxxx
President
FORUM FINANCIAL SERVICES, INC.
/s/ Xxxx X. Xxxxxx
--------------------------
Xxxx X. Xxxxxx
President
THE CRM FUNDS
DISTRIBUTION AGREEMENT
SCHEDULE A
PORTFOLIOS OF THE TRUST
AS OF NOVEMBER 19, 1996
The CRM Small Cap Value Fund
