ADVISORY AGREEMENT
AGREEMENT, made as of , between
COMMONWEALTH CASH RESERVE FUND, INC. (herein called the
"Company"), and PFM ASSET MANAGEMENT LLC (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
as it shall from time to time be amended, is herein called the
"Articles of Incorporation");
(b) The Company's By-laws, and amendments thereto
(such By-laws, as presently in effect and as it shall from time
to time be amended, is herein called the "By-laws")
(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 the 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-adviser, the Administrator, the Distributor, or an
affiliated person of the Fund, the Adviser, any sub-adviser,
or the Distributor; except as permitted under the 1940 Act;
(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;all in the manner required under Rules 31a-2
and 31a-3:
31a-1(a);
31a-1 (b) (1), (2), (3), (5), through (11).
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 of $400 million and over 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 expenses 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 or its obligations and duties under the 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 the Agreement, the terms "majority of the
outstanding voting securities," "interested person" 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 be 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 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;
PFM ASSET MANAGEMENT LLC
BY
