ADVISORY AGREEMENT
AGREEMENT, made as of _____________ between COMMONWEALTH CASH RESERVE
FUND, INC. (herein called the "Company"), and PUBLIC FINANCIAL MANAGEMENT,
INC. (the "Adviser").
WHEREAS, the Company is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Company desires to appoint the Adviser as investment
adviser to its investment portfolio (the "Fund");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Delivery of Documents. The Company has furnished the Adviser with
copies properly certified or authenticated of each of the following:
(a) The Company's Articles of Incorporation, as filed with the
Clerk of the State Corporation Commission of the Commonwealth of
Virginia on December 8, 1986 and all amendments thereto (such Articles
of Incorporation, as presently in effect and as it shall from time to
time be amended, is herein called the "Articles of Incorporation");
(b) The Company's Bylaws, and amendments thereto (such Bylaws,
as presently in effect and as it shall from time to time be amended, is
herein called the "Bylaws");
(c) Resolution of the Company's Board of Directors authorizing
the appointment of the Adviser and approving this Agreement;
(d) The Company's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission
("SEC") on December 11, 1986 and all amendments thereto;
(e) The Company's Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") (File No.33-10754) and
under the 1940 Act as filed with the SEC on December 11, 1987, and all
amendments thereto; and
(f) The Company's most recent Prospectus and Statement of
Additional Information (such Prospectus, and Statement of Additional
Information as presently in effect and all amendments and supplements
thereto are herein called the "Prospectus").
The Company will furnish the Adviser from time to time with copies of
all amendments of or supplements to the foregoing.
2. Services. The Company hereby appoints the Adviser to act as
investment adviser to the Fund for the period and on the terms set forth in
this Agreement. Intending to be legally bound, the Adviser accepts such
appointment and agrees to furnish the services required herein to the Fund
with compensation as hereinafter provided.
Subject to the supervision of the Company's Board of Directors the
Adviser will provide with respect to the Fund a continuous investment program,
including investment research and management with respect to all securities
and investments and cash equivalents in such Fund. The Adviser will compute
the Net Asset Value and daily net income of the Fund at the times and in the
manner set forth in the Prospectus and resolutions of the Company's Board of
Directors applicable to the Fund. The Adviser will determine from time to
time what securities and other investments will be purchased, retained or sold
by the Fund. The Adviser will provide the services under this Agreement in
accordance with the Fund's investment objective, policies and restrictions as
stated in the Prospectus and resolutions of the Company's Board of Directors
applicable to the Fund.
3. Covenants by Adviser. The Adviser agrees with respect to the
services provided to the Fund that it:
(a) will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission;
(b) will use the same skill and care in providing such services
as it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(c) will not make loans to any person to purchase or carry Fund
shares, or make loans to the Fund;
(d) will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any broker or
dealer. In placing orders with brokers and dealers, the Adviser will
attempt to obtain the best net price and the most favorable execution of
its orders. Consistent with this obligation, when the execution and
price offered by two or more brokers or dealers are comparable, the
Adviser may, in its discretion, purchase and sell portfolio securities
from and to brokers and dealers who provide the Company with research
advice and other services. In no instance will portfolio securities be
purchased from or sold to the Adviser, any sub-advisor, the
Administrator, the Distributor, or an affiliated person of the Fund, the
Adviser, any sub-adviser, or the Distributor;
(e) will maintain all books and records with respect to the
securities transactions for the Fund to the extent agreed upon between
the Company and the Advisor, keep the Company's books of account with
respect to the Fund and furnish the Company's Board of Directors with
such periodic and special reports as the Board may reasonably request
with respect to the Fund;
(f) will treat confidentially and as proprietary information of
the Company all records and other information relative to the Company
and prior, present or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior notification
to and approval in writing by the Company, which approval shall not be
unreasonably withheld and may not be withheld and will be deemed granted
where the Adviser 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
Company).
4. Services Not Exclusive. The services furnished by the Adviser
hereunder are deemed not to be exclusive, and the Adviser shall be free to
furnish similar services to others so long as its services under this
Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any of such records upon the Company's
request. The Adviser further agrees to maintain the records required by the
following sections of Rule 31 under the Investment Company Act of 1940:
31a-l(a);
31a-l(b)(1), (2), (3), (5), through (12);
31a-2(a)(1) except as it refers to 31a-l(b)(4);
31a-2(a)(2);
31a-2(e);
31a-3.
6. Expenses. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions,
if any) purchased for the Fund.
For the services provided and the expenses assumed with respect to
the Fund pursuant to this Agreement, the Company will pay the Adviser from the
assets belonging to the Fund and the Adviser will accept as full compensation
therefor a fee, computed daily and paid monthly, at an annual rate of .12 of
1% of the first $200 million of average daily net assets of the Fund, .10 of
1% of the average daily net assets over $200 million but under $400 million,
.09 of 1% of the average daily net assets over $400 million but under $600
million, and .08 of 1% of the average daily net assets over $600 million.
If in any fiscal year the aggregate expenses of the Fund (as
defined under the securities regulations of any state having jurisdiction over
the Company) exceed the expense limitations of any such state, the Adviser
will waive fees to the extent required to attain compliance. The obligation
of the Adviser to waive fees to the Company hereunder is limited in any fiscal
year to the amount of its fee hereunder for such fiscal year, provided,
however, that notwithstanding the foregoing, the Adviser shall waive or
reimburse the Company for such excess expenses regardless of the amount of
fees paid to it during such fiscal year to the extent that the securities
regulations of any state having jurisdiction over the Company so require.
Such expense waiver or reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
7. Limitation of Liability. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation
for services or loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
Any person, even though also an officer, partner, employee, or agent of the
Adviser, who may be or become an officer, Director, employee or agent of the
Company, shall be deemed, when rendering service to the Company or acting on
any business of the Company (other than services or business in connection
with Adviser's duties as investment adviser hereunder), to be rendering such
services to or acting solely, for the Company and not as an officer, partner,
employee or agent or one under the control or direction of the Adviser even
though paid by it.
8. Duration and Termination. This Agreement will become effective as
of the date first written above, and shall continue in effect for a period of
two years. Thereafter if not terminated, this Agreement shall continue in
effect with respect to the Fund for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Company's Board of Directors who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval; (b) and by a majority of
the Company's Board or by vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by the Company (by
vote of the Company's Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund), or by the Adviser on sixty days'
written notice. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall
have the same meaning of such terms in the 1940 Act.)
9. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, except by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. No material amendment of this
Agreement shall be effective with respect to the Fund until approved by vote
of a majority of the outstanding voting securities of the Fund.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Virginia law.
11. Names. The names "Commonwealth Cash Reserve Fund, Inc." and
"Directors of Commonwealth Cash Reserve Fund, Inc." refer respectively to the
Company created and the Directors as Directors but not individually or
personally, acting from time to time under the Articles of Incorporation dated
December 2, 1986, which is hereby referred to and a copy of which is on file
at the office of the Clerk of the State Corporation Commission of the
Commonwealth of Virginia and the principal office of the Company. The
obligations of "Commonwealth Cash Reserve Fund, Inc." entered into in the name
or on behalf thereof by any of the Directors, representatives or agents are
made not individually, but in such capacities, and are not binding upon any of
the Directors, Shareholders, or representatives of the Directors personally,
but bind only the Company's Property, and all persons dealing with any class
of shares of the Company must look solely to the Company's Property belonging
to such class for the enforcement of any claims against the Company.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their Officers designated below as of the day and year first above
written.
COMMONWEALTH CASH RESERVE FUND, INC.
BY:
PUBLIC FINANCIAL MANAGEMENT, INC.
BY:
