DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 1st day of July 2005, 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, which are registered under the
Securities Act of 1933, as amended, (the "1933 Act") 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 Commonwealth Cash Reserve Fund ("CCRF Prime Portfolio") and
CCRF Federal Portfolio (each a "Fund" and collectively the "Funds") are each 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 each Fund's Shares covered by the Registration Statement under
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 it deems
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 Section 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; except as may otherwise be agreed to
by the Corporation and permitted under a Plan of Distribution adopted by the
Corporation in accordance with Rule 12b-1 under the 1940 Act.
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 NASD.
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 each 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 each Fund, (d) monthly balance sheets as soon as practicable after
the end of each quarter, and (e) from time to time such additional information
regarding the financial condition of the Corporation and each 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
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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.
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
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agreement contained in this Section 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 Section 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.
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 either 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
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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 Section 1.11.
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 Section 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.
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 each Fund's custodian account, (b) that the
Dealer will notify the transfer agent for the Corporation of the
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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 each Fund and
sell Shares of each Fund to individual investors. The Distributor shall enter
into selling agreements only with Dealers that are either members in good
standing of the NASD 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.
1.15 The Distributor agrees to provide the Corporation, not less
frequently than quarterly at the written request of the Corporation, the
information required by Rules 12b-1(b)(3) and 12b-1(d) of the 1940 Act for each
Fund having shares outstanding during the reporting period.
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.
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(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, PFM Fund Distributors, 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.
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 CCRF Prime
Portfolio and the CCRF Federal Portfolio
By: _____________________________________
Name:
Title: President
PFM Fund Distributors, Inc.
By: _____________________________________
Name:
Title:
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