AMENDED DISTRIBUTION AGREEMENT
THIS AGREEMENT, made as of July 29, 2004, as amended July 31, 2007, by and
between Commonwealth Cash Reserve Fund, Inc. (the "Corporation"), a corporation
organized under the laws of the Commonwealth of Virginia, and PFM Fund
Distributors, Inc. (the "Distributor"), a corporation organized under the laws
of the State of Pennsylvania.
WHEREAS, the Corporation is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and is currently offering shares ("Shares") of
investment portfolios of the Corporation, and are registered under the
Securities Act of 1933 with the Securities and Exchange Commission ("SEC")
pursuant to the Corporation's Registration Statement on Form N-lA, as amended
(the "Registration Statement"); and
WHEREAS, the SNAP(R) Fund (the "Fund") is a series of the Corporation.
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby, the Corporation and
Distributor agree as follows:
1. Service as Distributor
1.1. The Distributor will act on behalf of the Corporation for the
distribution of the Fund's Shares covered by the Registration Statement under
the Securities Act of 1933, as amended (the "1933 Act"). The Distributor will
have no liability for payment for the purchase of Shares sold pursuant to this
Agreement or with respect to redemptions or repurchases of Shares.
1.2. The Distributor agrees to use such efforts as is deemed
appropriate by the Distributor to solicit orders for the sale of the Shares and
to undertake such advertising and promotion and other activities as it believes
reasonable in connection with such solicitation. The Corporation understands
that the Distributor may serve as the distributor of the shares of other
investment companies and series thereof (collectively, the "Companies"),
including Companies having investment objectives similar to those of the
Corporation. The Corporation further understands that investors and potential
investors in the Corporation may invest in shares of such other Companies. The
Corporation agrees that the Distributor's duties to such Companies shall not be
deemed in conflict with its duties to the Corporation under this paragraph 1.2.
1.3. The Distributor shall, at its own expense, finance appropriate
activities which it deems reasonable which are primarily intended to result in
the sale of the Shares, including, but not limited to, the payment of
compensation to brokers, dealers and other financial institutions which make
shares available to their customers (collectively, "Dealers"); the payment of
compensation to sales personnel of the Distributor; the costs of printing and
mailing of prospectuses, annual reports and other periodic reports to other than
current shareholders; and the costs of printing, distributing and publishing
sales literature and advertising material.
1.4. All activities by the Distributor and its agents and employees,
as distributor of the Shares, shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted by the SEC and the National Association of Securities Dealers.
1.5. The Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the transfer agent for the Corporation.
1.6. Whenever in its judgment such action is warranted by unusual
market, economic or political conditions, the Corporation may decline to accept
any orders for, or make any sales of, the Shares until such time as the
Corporation deems it advisable to accept such orders and to make such sales.
1.7. The Corporation agrees at its own expense to execute any and
all documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as the Distributor may designate.
1.8. The Corporation shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Corporation and the Shares as the Distributor may reasonably request; and the
Corporation warrants that the statements contained in any such information shall
fairly show or represent what they purport to show or represent. The Corporation
shall also furnish the Distributor upon request with: (a) audited annual
statements and unaudited semi-annual statements of the Fund's books and accounts
prepared by the Corporation, (b) quarterly earnings statements prepared by the
Corporation, (c) a monthly itemized list of the securities comprising the
portfolio of the Fund, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional information
regarding the financial condition of the Corporation and the Fund as the
Distributor may reasonably request.
1.9. The Corporation represents to the Distributor that all
Registration Statements and prospectuses filed by the Corporation with the SEC
under the 1933 Act with respect to the Shares have been prepared in conformity
with the requirements of said Act and the rules and regulations of the SEC
thereunder. As used in this Agreement, the term "Registration Statement" shall
mean any Registration Statement and any prospectus and any statement of
additional information relating to the Corporation filed with the SEC and any
amendments or supplements thereto at any time filed with the SEC. Except as to
information included in the Registration Statement in reliance upon information
provided to the Corporation by the Distributor or any affiliate of the
Distributor, the Corporation represents and warrants to the Distributor that:
any Registration Statement, when such Registration Statement becomes effective,
will contain statements required to be stated therein in conformity with the
1933 Act and the rules and regulations of the SEC thereunder; all statements of
fact contained in any such Registration Statement will be true and correct when
such Registration Statement becomes effective; and no Registration Statement
when such Registration Statement becomes effective will 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 the Shares. The Corporation, may but shall not be obligated to,
propose from time to time such amendment or amendments to any Registration
Statement and such supplement or supplements to any prospectus as, in the light
of future developments, may, in the opinion of the Corporation's counsel, be
necessary or advisable. The Corporation shall promptly notify the Distributor of
any advice given to it by its counsel regarding the necessity or advisability of
amending or supplementing such Registration Statement. If the Corporation shall
not propose such amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Corporation of a written request from the
Distributor to do so, the Distributor may, at its option, terminate this
Agreement. The Corporation shall not file any amendment to any Registration
Statement or supplement to any prospectus without giving the Distributor
reasonable notice thereof in advance; provided, however, that nothing contained
in this Agreement shall in any way limit the Corporation's right to file at any
time such amendments to any Registration Statements and/or supplements to any
prospectus, of whatever character, as the Corporation may deem advisable, such
right being in all respects absolute and unconditional.
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1.10. The Corporation authorizes the Distributor and Dealers to use
any prospectus or statement of additional information in the form furnished from
time to time in connection with the sale of the Shares. The Corporation agrees
to indemnify and hold harmless the Distributor, its officers, directors, and
employees, and any person who controls the Distributor within the meaning of
Section 15 of the 1933 Act, 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 legal fees incurred in
connection therewith) which the Distributor, its officers, directors, employees
or any such controlling person may incur under the 1933 Act, under any other
statute, at common law or otherwise, arising out of or based upon:
(a) any untrue statement, or alleged untrue statement, of a
material fact contained in the Corporation's Registration Statement, prospectus,
statement of additional information, or sales literature (including amendments
and supplements thereto), or
(b) any omission, or alleged omission, to state a material
fact required to be stated in the Corporation's Registration Statement,
prospectus, statement of additional information or sales literature (including
amendments or supplements thereto), necessary to make the statements therein not
misleading, provided, however, that insofar as losses, claims, damages,
liabilities or expenses arise out of or are based upon any such untrue statement
or omission or alleged untrue statement or omission made in reliance on and in
conformity with information furnished to the Corporation by the Distributor or
its affiliated persons for use in the Corporation's Registration Statement,
prospectus, or statement of additional information or sales literature
(including amendments or supplements thereto), such indemnification is not
applicable.
The Distributor, its officers, directors, and employees, and any
such controlling person, as aforesaid, shall notify the Corporation of any
action brought against the Distributor, its officers, directors or employees, or
any such controlling person, such notification to be given by letter or by
telegram addressed to the Corporation and sent to the Corporation by the person
against whom such action is brought, within 10 days after the summons or other
first legal process shall have been served. The failure to notify the
Corporation of any such action shall not relieve the Corporation from any
liability which the Corporation may have to the person against whom such action
is brought by reason of any such untrue, or allegedly untrue, statement or
omission, or alleged omission, otherwise than on account of the Corporation's
indemnity agreement contained in this paragraph 1.10. The Corporation will be
entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Corporation and approved by the
Distributor, which approval shall not unreasonably be withheld. In the event the
Corporation elects to assume the defense of any such suit and retain counsel of
good standing approved by the Distributor, the defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them; but in case the Corporation does not elect to assume the defense of any
such suit, or in case the Distributor reasonably does not approve of counsel
chosen by the Corporation, or in case there is a conflict of interest between
the Corporation or the Distributor, the Corporation will reimburse the
Distributor, its officers, directors and employees, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by the Distributor or them. The Corporation's
indemnification agreement contained in this paragraph 1.10 and the Corporation'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
the Distributor, its officers, directors and employees, or any controlling
person, and shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to the Distributor's benefit, to the benefit of
its several officers, directors and employees, and their respective estates, and
to the benefit of the controlling persons and their successors. The Corporation
agrees promptly to notify the Distributor of the commencement of any litigation
or proceedings against the Corporation or any of its officers or directors in
connection with the issue and sale of any Shares.
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1.11. The Distributor agrees to indemnify and hold harmless the
Corporation, its several officers and directors and each person, if any, who
controls the Corporation or the Fund within the meaning of Section 15 of the
1933 Act against any loss, claims, damages, liabilities and expenses (including
the cost of any reasonable legal fees incurred in connection therewith) which
the Corporation, its officers, directors or any such controlling person may
incur under the 1933 Act, under any other statute, at common law or otherwise,
but only to the extent that such liability or expense incurred by the
Corporation, its officers or directors, or any controlling person resulting from
such claims or demands arose out of the acquisition of any Shares by any person
which may be based upon any untrue statement or alleged untrue statement of a
material fact contained in the Corporation's Registration Statement, prospectus
or statement of additional information (including amendments and supplements
thereto), or any omission, or alleged omission, to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance upon information
furnished or confirmed in writing to the Corporation by the Distributor or its
affiliated persons (as defined in the 1940 Act).
The agreement of the Distributor to indemnify the Corporation, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Distributor being notified of any action brought
against the Corporation, its officers or directors, or any such controlling
person, such notification to be given by letter or telegram addressed to the
Distributor at its principal office, and sent to the Distributor by the person
against whom such action is brought, within 10 days after the summons or other
first legal process shall have been served. The Distributor shall have the right
of first control of the defense of such action, with counsel of its own
choosing, satisfactory to the Corporation, if such action is based solely upon
such alleged misstatement or omission on the Distributor's part, and in any
other event the Corporation, its officers or directors or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure to so notify the Distributor of any
such action shall not relieve the Distributor from any liability that the
Distributor may have to the Corporation, its officers or directors, or to such
controlling person by reason of any such untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of the Distributor's
indemnity agreement contained in this paragraph 1.11.
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1.12. No Shares shall be offered by either the Distributor or the
Corporation under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Corporation if and
so long as effectiveness of the Registration Statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the 1933 Act, or if and so long as a current prospectus as required by Section
5(b)(2) of said Act is not on file with the SEC; provided, however, that nothing
contained in this paragraph 1.12 shall in any way restrict or have any
application to or bearing upon the Corporation's obligation to redeem Shares
tendered for redemption by any shareholder in accordance with the provisions of
the Corporation's Registration Statement, Articles of Incorporation, or bylaws.
1.13. The Corporation agrees to advise the Distributor as soon as
reasonably practical by a notice in writing delivered to the Distributor:
(a) of any request by the SEC for amendments to the
Registration Statement, prospectus or statement of additional information then
in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement, prospectus or
statement of additional information then in effect or the initiation by service
of process on the Corporation of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the Registration Statement, prospectus or
statement of additional information then in effect or that requires the making
of a change in such Registration Statement, prospectus or statement of
additional information in order to make the statements therein not misleading;
and
(d) of all actions of the SEC with respect to any amendments
to any Registration Statement, prospectus or statement of additional information
which may from time to time be filed with the SEC.
1.14. For purposes of this Section, informal requests by or acts of
the Staff of the SEC shall not be deemed actions of or requests by the SEC.
1.14. The Distributor may enter into selling agreements with Dealers with
respect to the offering of the Shares to the public. Each such selling agreement
will provide (a) that all payments for purchases of Shares will be sent directly
from the Dealer to the Fund's custodian account, (b) that the Dealer will notify
the transfer agent for the Corporation of the purchase of Shares and (c) that,
if payment is not made with respect to purchases of Shares at the customary or
required time for settlement of the transaction, the Distributor will have the
right to cancel the sale of the Shares ordered by the Dealer, in which case the
Dealer will be responsible for any loss suffered by any Fund or the Distributor
resulting from such cancellation. The Distributor may also act as disclosed
agent for the Fund and sell Shares of the Fund to individual investors. The
Distributor shall enter into selling agreements only with Dealers that are
either members in good standing of the National Association of Securities
Dealers, Inc. or entities that are not required to be such members. All selling
agreements shall be in such form as is approved by the President of the
Corporation.
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2. Term
This Agreement shall become effective as of the date first written
above, and, unless sooner terminated as provided herein, shall continue for an
initial two year term from the date of its execution and shall continue in
effect from year to year thereafter, provided that such continuance is
specifically approved at least annually by (i) the Corporation's Board of
Directors or (ii) by a vote of a majority (as defined in the 1940 Act and Rule
18f-2 thereunder) of the outstanding voting securities of the Corporation, and
further provided that in either event the continuance is also approved by a
majority of the Directors who are not parties to this Agreement and who are not
interested persons (as defined in the 0000 Xxx) of any party to this Agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable without penalty, on at least sixty days'
written notice, by the Corporation's Board of Directors, by vote of a majority
(as defined in the 1940 Act and Rule 18f-2 thereunder) of the outstanding voting
securities of the Corporation, or by the Distributor. This Agreement shall
terminate automatically in the event of its assignment (as defined in the 1940
Act and the rules thereunder).
3. Limitation of Liability
(a) The Distributor shall not be liable to the Corporation for
any error of judgment or mistake of law or for any loss suffered by the
Corporation in connection with the performance of its obligations and duties
under this Agreement, except a loss resulting from the Distributor's willful
misfeasance, bad faith or gross negligence in the performance of such
obligations and duties, or by reason of its reckless disregard thereof. The
Corporation will indemnify the Distributor against and hold it harmless from any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit not
resulting from the willful misfeasance, bad faith or gross negligence of the
Distributor in the performance of such obligations and duties or by reason of
its reckless disregard thereof.
(b) In no event and under no circumstances shall either party
to this Agreement be liable to the other party for consequential or indirect
loss of profits, reputation or business or any other special damages under any
provision of this Agreement.
4. Notices
All notices and other communications (collectively referred to as a
"Notice" or "Notices" in this paragraph) hereunder shall be given in writing or
by telegram, cable, telex or facsimile sending device. Notices shall be
addressed (a) if to the Distributor at its principal place of business,
President, PFMAM, Inc. One Keystone Plaza - Xxxxx 000, X. Xxxxx & Xxxxxx
Xxxxxxx, Xxxxxxxxxx, XX 00000; (b) if to the Corporation, at its principal place
of business, Secretary, Commonwealth Cash Reserve Fund, Inc., P. O. Xxx 0000,
Xxxxxxxx, XX 00000-0000 or (c) if to neither of the foregoing, at such other
address as to which the sender shall have been notified by any such Notice or
other communication. The Notice may be sent by first-class mail, in which case
it shall be deemed to have been given three days after it is sent, or if sent by
telegram, cable, telex or facsimile sending device, it shall be deemed to have
been given immediately. Either party hereto may change the address to which
Notices to it shall be sent by giving Notice of such change to the other party.
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5. Further Actions
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
6. 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.
7. Governing State
This Agreement shall be governed by and its provisions shall be
construed in accordance with the laws of the Commonwealth of Virginia and the
applicable provisions of the 1940 Act. To the extent the provisions of Virginia
law conflict with the 1940 Act, the latter shall control.
8. Miscellaneous
This Agreement embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter thereof. 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 and shall inure
to the benefit of the parties hereto and their respective successors.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
COMMONWEALTH CASH RESERVE FUND, INC.,
ON BEHALF OF THE SNAP(R) FUND
By:
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Name:
Title: President
PFM Fund Distributors, Inc.
By:
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Name:
Title:
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