OMMONWEALTH CASH RESERVE FUND, INC.
SECOND OPERATING EXPENSES LIMITATION AGREEMENT
AGREEMENT, effective as of January 27, 2004 by and between COMMONWEALTH CASH
RESERVE FUND, INC., a corporation organized under the laws of the Commonwealth
of Virginia (the "Company"), on behalf of the CCRF Federal Portfolio (the
"Federal Portfolio"), a separate series of the Company and PFM Asset Management
LLC (the "Adviser").
WITNESSETH:
WHEREAS, the Adviser renders advice and services to the Federal Portfolio
pursuant to the terms and provisions of that Advisory Agreement approved by the
Company's Board of Directors ("Board") on April 30, 2003 ("Advisory Agreement");
and
WHEREAS, the Federal Portfolio, is responsible for, and has assumed the
obligation for, payment of certain expenses pursuant to the Investment
Management Agreements that have not been assumed by the Adviser; and
WHEREAS, the Adviser has, pursuant to an Operating Expenses Limitation
Agreement, which agreement was amended effective August 1, 2003 (collectively,
"Prior Limitation Agreement"), agreed to limit the current operating expenses of
the then existing series of shares of the Federal Portfolio ("Institutional
Shares") to an annual rate, expressed as a percentage of the Federal Portfolio's
average annual net assets, to .15% for the period ending July 31, 2004; and
WHEREAS, the Adviser desires to limit the current operating expenses of a
subsequently established series of shares of the Federal Portfolio ("Investor
Shares"); and
WHEREAS, the Company's Board of Directors and the Adviser have agreed to
terminate to the Prior Limitation Agreement and to enter into a Second Operating
Expense Limitation Agreement relating to both the Institutional Shares and the
Investors Shares;
NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties, intending to be legally bound hereby,
mutually agree as follows:
1. LIMIT ON OPERATING EXPENSES. The Adviser hereby agrees to limit the current
Operating Expenses of the Federal Portfolio's Institutional Shares to an annual
rate, expressed as a percentage of average annual net assets, of .15%. The
Adviser further agrees to limit the current Operating Expenses of the Federal
Portfolio's Investor Shares to an annual rate, expressed as a percentage of
average annual net assets, of .25%. In the event that the current Operating
Expenses of the Federal Portfolio, as accrued each month, exceed the limits set
forth herein, the Adviser will pay to the Federal Portfolio, on a monthly basis,
the excess expense within 30 days of being notified that an excess expense
payment is due.
2. DEFINITION. For purposes of this Agreement, the term "Operating Expenses"
with respect to the Federal Portfolio is defined to include all expenses
necessary or appropriate for the operation of the Federal Portfolio, including
the Adviser's fee under the Advisory Agreement and any fee payable under a Rule
12b-1 Plan or related agreement, but does not include any front-end or
contingent deferred loads, taxes, leverage interest, brokerage commissions,
expenses incurred in connection with any merger or reorganization, or
extraordinary expenses such as litigation.
3. TERM. This Agreement shall become effective as of the date first written
above and shall remain in effect for a period of not less than one year, unless
sooner terminated as provided in Paragraph 4 of this Agreement. This Agreement
shall continue in effect following its first anniversary only if approved by the
Adviser and the Board.
4. TERMINATION. This Agreement may not be terminated by the Adviser without the
consent of the
Board but will automatically terminate upon the termination of the Advisory
Agreement. This Agreement may be terminated at any time, and without payment of
any penalty, by the Board.
5. ASSIGNMENT. This Agreement and all rights and obligations hereunder may not
be assigned without the written consent of the other party.
6. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
7. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia without giving effect
to the conflict of laws principles thereof; provided that nothing herein shall
be construed to preempt, or to be inconsistent with, any federal law, regulation
or rule, including the Investment Company Act of 1940, as amended and the
Investment Advisers Act of 1940, as amended and any rules and regulations
promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested by their duly authorized officers, all on the day and year
first above written.
Commonwealth Cash Reserve Fund, Inc. PFM Asset Management, LLC
on behalf of the Federal Portfolio
By: ___________________________ By: ________________________
Title: ________________________ Title: _____________________
