THE PILLAR FUNDS
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this _____ day of __________, 2001, by and between The
Pillar Funds, a Massachusetts business trust (the "Trust"), and Fleet Investment
Advisors Inc. (the "Adviser"), a wholly-owned subsidiary of FleetBoston.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares, each having its own investment
policies; and
WHEREAS, the Trust has retained SEI Mutual Fund Services, Inc. (the
"Administrator") to provide administration of the Trust's operations, subject to
the control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services with respect to its Balanced Fund, Equity Growth Fund, Equity
Income Fund, Equity Index Fund, Equity Value Fund, Fixed Income Fund, High Yield
Bond Fund, Institutional Select Money Market Fund, Intermediate-Term Government
Securities Fund, International Equity Fund, Mid Cap Fund, New Jersey Municipal
Securities Fund, Pennsylvania Municipal Securities Fund, Prime Obligation Money
Market Fund, Tax-Exempt Money Market Fund, U.S. Treasury Securities Money Market
Fund, U.S. Treasury Securities Plus Money Market Fund and such other portfolios
as the Trust and the Adviser may hereafter agree upon from time to time (the
"Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained,
and intending to be legally bound, the parties hereto agree as follows:
1. APPOINTMENT AND DUTIES OF ADVISER. The Trust hereby appoints
the Adviser to provide investment advisory services to the
Portfolios for the period and on the terms set forth in this
Agreement.
A. The Adviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein
provided. In the event that the Trust establishes one or more
additional portfolios in the future with respect to which it
desires that the Adviser furnish investment advisory services
hereunder, the Trust so shall notify the Adviser in writing.
If the Adviser is willing to render such services under this
Agreement, it shall notify the Trust in writing whereupon such
portfolio shall become a Portfolio hereunder and shall be
subject to the provisions of this Agreement to the same extent
as the Portfolios named above in the recitals except to the
extent that said provisions (including those relating to the
compensation payable by the Trust to the Adviser) are modified
with respect to such Portfolios in writing by Trust and the
Adviser.
B. Subject to supervision by the Trust's Board of Trustees,
the Adviser shall manage the investment operations of the
Portfolios and the composition of the Portfolios, including
the purchase, retention and disposition thereof, in accordance
with the Portfolios' investment objectives, policies and
restrictions as stated in the Portfolios' Prospectus (such
Prospectus and the Statement of Additional Information, as
currently in effect and as amended or supplemented from time
to time, being herein called the "Prospectus"), and subject to
the following:
(1) The Adviser shall determine from time to time what
investments and securities will be purchased,
retained or sold by the Portfolios, and what portion
of the assets will be invested or held uninvested in
cash.
(2) In the performance of its duties and obligations
under this Agreement, the Adviser shall act in
conformity with the Trust's Declaration of Trust and
By-Laws and the Prospectus and with the instructions
and directions of the Board of Trustees of the Trust
and will conform to and comply with the requirements
of the 1940 Act, the Internal Revenue Code of 1986,
and all other applicable federal and state laws and
regulations, as each is amended from time to time.
The Adviser agrees, at its own expense, to render the services
and to provide the office space, furnishings and equipment and
the personnel required by it to perform the services on the
terms and for the compensation provided herein.
C. It is understood that the Adviser may from time to time
employ or associate with itself such person or persons as the
Adviser may believe to be particularly fitted to assist in the
performance of this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the
Adviser and that any person providing investment advisory
services to the Portfolios shall be approved in accordance
with the provisions of the 1940 Act. Each such sub-adviser is
hereinafter referred to as a "Sub-Adviser".
Notwithstanding the approval of any such Sub-Adviser(s),
however, in carrying out its obligations hereunder the Adviser
shall in all events:
(a) determine, either in its sole discretion or jointly with
the Sub-Adviser(s), country and regional investment allocation
guidelines for the Portfolios, as well as investment hedging
guidelines, if any;
(b) establish and monitor general investment criteria and
policies for the Portfolios;
(c) review investments in the Portfolios on a periodic basis
for compliance with the Portfolios' investment objective,
policies and restrictions as stated in the Prospectus;
(d) review on a periodic basis the policies established by the
Sub-Adviser(s) for the Portfolios with respect to the
placement of orders for the purchase and sale of Portfolios
securities;
(e) review, monitor, analyze and report to the Board of
Trustees on the performance of the Sub-Adviser(s);
(f) furnish to the Board of Trustees or the Sub-Adviser(s),
reports, statistics and economic information as may be
requested; and
(g) recommend, either in its sole discretion or in conjunction
with the Sub-Adviser(s), potential changes in investment
policy.
2. PORTFOLIO TRANSACTIONS. The Adviser shall place orders with or
through such persons, brokers or dealers to carry out the
policy with respect to brokerage set forth in the Portfolios'
Registration Statement and Prospectus or as the Board of
Trustees may direct from time to time, in conformity with
federal securities laws. In providing the Portfolios with
investment advisory services, the Adviser shall give primary
consideration to securing the most favorable price and
efficient execution. Within the framework of this policy, the
Adviser may consider the financial responsibility, research
and investment information and other services provided by
brokers or dealers who may effect or be a party to any such
transaction or other transactions to which the Adviser's other
clients may be a party. It is understood that it is desirable
for the Portfolios that the Adviser have access to
supplemental investment and market research and security and
economic analysis provided by brokers who may execute
brokerage transactions at higher cost to the Portfolios than
may result when allocating brokerage to other brokers on the
basis of seeking the most favorable price and efficient
execution. Therefore, the Adviser is authorized to place
orders for the purchase and sale of securities for the
Portfolios with such brokers, subject to review by the Trust's
Board of Trustees from time to time with respect to the extent
and continuation of this practice. It is understood that the
services provided by such brokers may be useful to the Adviser
(or a Sub-Adviser) in connection with the Adviser's (or
Sub-Adviser's) services to other clients.
On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of the Portfolios as well
as other clients of the Adviser, the Adviser, to the extent
permitted by applicable laws and regulations, may, but shall
be under no obligation to, aggregate the securities to be so
purchased or sold in order to obtain the most favorable price
or lower brokerage commissions and efficient execution. In
such event, allocation of the securities so purchased or sold,
as well as the expenses incurred in the transaction, shall be
made by the Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligation to the
Portfolios and to such other clients.
3. COMPENSATION OF THE ADVISER. For the services to be rendered
by the Adviser as provided in Sections 1 and 2 of this
Agreement, the Trust shall pay to the Adviser compensation at
the rate specified in the Schedule(s) which are attached
hereto and made a part of this Agreement. Such compensation
shall be paid to the Adviser at the end of each month, and
calculated by applying a daily rate, based on the annual
percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net
assets for the month involved.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the
termination of this Agreement.
4. OTHER EXPENSES. The Adviser shall pay all expenses of
preparing (including typesetting), printing and mailing
reports, prospectuses, statements of additional information,
and sales literature to prospective clients to the extent
these expenses are not borne by the Trust under a distribution
plan adopted pursuant to Rule 12b-1.
5. EXCESS EXPENSES. If the expenses for the Portfolios for any
fiscal year (including fees and other amounts payable to the
Adviser, but excluding interest, taxes, brokerage costs,
litigation, and other extraordinary costs) as calculated every
business day would exceed the expense limitations imposed on
investment companies by any applicable statute or regulatory
authority of any jurisdiction in which Shares of the
Portfolios are qualified for offer and sale, the Adviser shall
bear such excess cost.
However, the Adviser shall not bear expenses of the Portfolios
which would result in the Portfolios' inability to qualify as
a regulated investment company under provisions of the
Internal Revenue Code. Payment of expenses by the Adviser
pursuant to this Section 5 shall be settled on a monthly basis
(subject to fiscal year end reconciliation) by a reduction in
the fee payable to the Adviser for such month pursuant to
Section 3 and, if such reduction shall be insufficient to
offset such expenses, by reimbursing the Trust.
6. REPORTS. The Trust and the Adviser agree to furnish to each
other, if applicable, current prospectuses, proxy statements,
reports to shareholders, certified copies of their financial
statements, and such other information with regard to their
affairs as each may reasonably request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust
are not to be deemed exclusive, and the Adviser shall be free
to render similar services to others so long as its services
to the Trust are not impaired thereby. The Adviser shall be
deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority
to act for or represent the Trust in any way or otherwise be
deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2 promulgated under the Investment Company Act of 1940
which are prepared or maintained by the Adviser on behalf of
the Trust are the property of the Trust and shall be
surrendered promptly to the Trust on request.
9. LIMITATION OF LIABILITY OF ADVISER. The duties of the Adviser
shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the
Adviser hereunder. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission by the
Adviser or by any Sub-Adviser in carrying out its duties
hereunder or under any sub-investment advisory agreement,
except a loss resulting from the Adviser's own willful
misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard by the
Adviser of its obligations and duties hereunder, except as may
otherwise be provided under provisions of applicable state law
which cannot be waived or modified hereby. (As used in this
Paragraph 9, the term "Adviser" shall include directors,
officers, employees and other corporate agents (but not the
Sub-Adviser) of the Adviser as well as that corporation
itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of
the Trust are or may be interested in the Adviser (or any
successor thereof) as directors, partners, officers, or
shareholders, or otherwise; directors, partners, officers,
agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be
interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected
through affiliates of the Adviser if approved by the Board of
Trustees, subject to the rules and regulations of the
Securities and Exchange Commission.
11. DURATION AND TERMINATION. This Agreement shall become
effective as of the date hereof with respect to the Portfolios
listed in the recitals, and with respect to any additional
Portfolios added pursuant to Section 1 hereof, on the date of
receipt by the Trust of notice from the Adviser in accordance
with said Section that the Adviser is willing to serve as
investment adviser with respect to such Portfolios, provided
that this Agreement (as supplemented by the terms specified in
any notice and agreement pursuant to Section 1 hereof) has
been approved by the shareholders of the Portfolios in
accordance with the requirements of the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect
with respect to each Portfolio for two years. Thereafter, if
not terminated, this Agreement shall automatically continue in
effect as to a particular Portfolio 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 Trust's Board of Trustees 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, and
(b) by the Trust's Board of Trustees or by vote of a majority
of the outstanding voting securities of such Portfolio;
provided, however, that if the shareholders of the Portfolio
fail to approve the continuation of its Agreement as provided
herein, the Adviser may continue to serve hereunder in the
manner and to the extent permitted by the 1940 Act and rules
and regulations thereunder. The foregoing requirement that
continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with
the 1940 Act and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any
time, without the payment of any penalty, by vote of a
majority of the Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Portfolio on 60
days written notice to the Adviser, or by the Adviser at any
time, without the payment of any penalty, on 60 days written
notice to the Trust. This Agreement will automatically and
immediately terminate in the event of its assignment.
As used in this Section 11, the terms "assignment",
"interested persons", and a "vote of a majority of the
outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission under said
Act.
12. AMENDMENT. The terms or provisions of this Agreement may be
amended, modified or waived in writing if such amendment,
modification or waiver is approved by the affirmative vote or
action by written consent of the Board of Trustees of the
Trust and by the Adviser in accordance with the 1940 Act;
provided, that an amendment, modification or waiver shall also
be approved by the shareholders of the Trust if shareholder
approval is required by the 1940 Act and the rules and
regulations thereunder.
13. NOTICE. Any notice required or permitted to be given by either
party to the other shall be delivered or mailed: if to the
Trust, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇ and if to
the Adviser: at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Either
party may change its address for notices hereunder by giving
notice of such change to the other party in accordance with
this Section 13.
14. SEVERABILITY. 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.
15. GOVERNING LAW. This Agreement shall be construed in accordance
with laws of the Commonwealth of Massachusetts and the
applicable provisions of the 1940 Act. To the extent that the
applicable laws of the Commonwealth of Massachusetts, or any
of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees, and
is not binding upon any of the Trustees, officers, or shareholders of the Trust
individually but binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
The Pillar Funds Fleet Investment Advisors, Inc
By: By:
------------------------------- -------------------------------
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED _____________
BETWEEN
THE PILLAR FUNDS
AND
FLEET INVESTMENT ADVISORS INC.
Pursuant to Article 3, the Trust shall pay the Advisor compensation at an annual
rate as follows:
PORTFOLIO FEE (IN BASIS POINTS)
----------------------------------------------- --------------------------------
Balanced Fund 0.75%
Equity Growth Fund 0.75%
Equity Income Fund 0.75%
Equity Index Fund 0.75%
Equity Value Fund 0.75%
Fixed Income Fund 0.60%
High Yield Bond Fund 0.60%
Institutional Select Money Market Fund 0.10%
Intermediate-Term Government Securities Fund 0.60%
International Equity Fund 1.00%
Mid Cap Fund 0.75%
New Jersey Municipal Securities Fund 0.60%
Pennsylvania Municipal Securities Fund 0.60%
Prime Obligation Money Market Fund 0.35%
Tax-Exempt Money Market Fund 0.35%
U.S. Treasury Securities Money Market Fund 0.35%
U.S. Treasury Securities Plus Money Market Fund 0.15%