THE PILLAR FUNDS
DISTRIBUTION AND SERVICE AGREEMENT
Class B Shares
THIS AGREEMENT is made as of the 20th day of February, 1997, between
The Pillar Funds, a Massachusetts business trust (the "Trust"), and SEI
FINANCIAL SERVICES COMPANY, a Pennsylvania corporation (the "Distributor").
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended ("1940 Act"), and its shares are registered with the SEC under
the Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
WHEREAS, the Trust desires to appoint the Distributor to act as
distributor and shareholder servicing agent for the Class B Shares of the
Trust's portfolios, as now in existence or hereinafter created from time to time
(collectively, the "Shares"), in accordance with the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and Distributor hereby agree as follows:
ARTICLE 1. Distribution Activities.
A. Sale of Shares. The Trust grants to the Distributor the
exclusive right to sell Shares of each portfolio of the Trust (each a
"Portfolio"), at net asset value in accordance with the current prospectus for
the Shares, as agent and on behalf of the Trust, during the term of this
Agreement and subject to the registration requirements of the 1933 Act, the
rules and regulations of the SEC and the laws governing the sale of securities
in the various states.
B. Solicitation of Sales. In consideration of these rights
granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, in connection with the distribution
of Shares; provided, however, that the Distributor shall not be prevented from
entering into like arrangements with other issuers. The provisions of this
paragraph do not obligate the Distributor to register as a broker or dealer
under the Blue Sky Laws of any jurisdiction when it determines it would be
uneconomical for it to do so or to maintain its registration in any jurisdiction
in which it is now registered nor obligate the Distributor to sell any
particular number of Shares.
1
C. Authorized Representations. The Distributor is not
authorized by the Trust to give any information or to make any representations
other than those contained in the current registration statements and
prospectuses of the Trust with respect to the Shares filed with the SEC or
contained in Shareholder reports or other material that may be prepared by or on
behalf of the Trust for the Distributor's use. The Distributor may prepare and
distribute sales literature and other material as it may deem appropriate,
provided that such literature and materials have been approved by the Trust
prior to their use.
D. Registration of Shares. The Trust agrees that it will take
all action necessary to register Shares under the federal and state securities
laws so that there will be available for sale the number of Shares the
Distributor may reasonably be expected to sell and to pay all fees associated
with said registration. The Trust shall make available to the Distributor such
number of copies of its currently effective prospectus and statement of
additional information as the Distributor may reasonably request. The Trust
shall furnish to the Distributor copies of all information, financial statements
and other papers which the Distributor may reasonably request for use in
connection with the distribution of Shares of the Trust.
ARTICLE 2. Shareholder Servicing Activities.
A. Appointment. The Trust hereby appoints the Distributor as
servicing agent for the Shares of each Portfolio, as agent and on behalf of the
Trust in accordance with and during the term of this Agreement, and the
Distributor hereby accepts such appointment.
B. Shareholder Servicing Activities. As servicing agent for
the Shares of each Portfolio, and in consideration of the compensation payable
pursuant to Article 4 hereof, the Distributor shall provide personal, continuing
services to investors in the Shares of each Portfolio, including but not limited
to providing ongoing servicing and/or maintenance of shareholder accounts with
respect to the Shares of the Portfolios, responding to inquiries of the holders
of Shares regarding their ownership of Shares or their accounts with the Trust,
and providing administrative or accounting services with respect to the Shares
of the Portfolios not otherwise provided by other agents of the Trust.
Notwithstanding the foregoing, if the National Association of Securities
Dealers, Inc. ("NASD") adopts a definition of "service fee" for purposes of
Section 2830(d) of the Conduct Rules that differs from the definition of
shareholder servicing activities in this paragraph, or if the NASD adopts a
related definition intended to define the same concept, the definition of
shareholder servicing activities in this paragraph shall be automatically
amended, without further action of the parties, to conform to such NASD
definition.
ARTICLE 3. Compensation for Distribution Activities.
A. As compensation for providing distribution services
pursuant to Article 1 hereof, the Distributor shall receive:
(1) In respect of the Shares of each Portfolio,
pursuant to the Trust's
2
Distribution and Service Plan with respect to the Class B Shares adopted by such
class in accordance with Rule 12b-1 under the 1940 Act (the "Distribution
Plan"), a fee in connection with distribution-related services provided in
respect of such class, calculated and payable monthly as soon as practicable
after the end of the calendar month within which such fee accrues, but in any
event prior to the tenth day following the end of such calendar month, at the
annual rate of .75% of the value of the average daily net assets of such Shares.
(2) All contingent deferred sales charges applied on
redemptions of Shares of such class, payable at such time as the redemption
proceeds in respect of the redemption giving rise to the contingent deferred
sales charge is paid to the redeeming shareholder; provided that whether and at
what rate a contingent deferred sales charge will be imposed with respect to a
redemption shall be determined in accordance with, and in the manner set forth
in, the Registration Statement registering the Shares then in effect with the
SEC.
B. Amounts payable to the Distributor under the Distribution
and Service Plan may exceed or be less than the Distributor's actual costs
incurred in connection with the distribution of the Shares of such class, as
described in Article 5 below. In the event such Distribution Expenses (as
defined in Article 5) exceed amounts payable to the Distributor under the
Distribution and Service Plan, the Distributor shall not be entitled to
reimbursement by the Trust.
C. The Distributor may reallow any or all of the distribution
fees and contingent deferred sales charges which it is paid under this Agreement
to such dealers as the Distributor may from time to time determine.
D. The Distributor may transfer its right to the payments
described in this Article 3 to third persons who provide funding to the
Distributor, provided that any such transfer shall not be deemed a transfer of
the Distributor's obligations under this Agreement. Upon receipt of direction
from the Distributor to pay such fees to a transferee, the Trust shall make
payment in accordance with such direction.
ARTICLE 4. Compensation for Shareholder Service Activities.
A. As compensation for providing shareholder services pursuant
to Article 2 hereof, the Distributor shall receive in respect of the Shares of
each Portfolio, pursuant to the Trust's Distribution and Service Plan with
respect to the Shares adopted by such class in accordance with Rule 18f-3 under
the 1940 Act (the "Service Plan"), a fee in connection with shareholder services
provided in respect of such class, calculated and payable monthly, at the annual
rate of .25% of the value of the average daily net assets of such Shares.
B. Amounts payable to the Distributor under the Distribution
and Service Plan may exceed or be less than the Distributor's actual costs
incurred in connection with the provision of shareholder services for the
Shares, as described in Article 5 below. In the event such
3
Shareholder Servicing Expenses (as defined in Article 5) exceed amounts payable
to the Distributor under the Distribution and Service Plan, the Distributor
shall not be entitled to reimbursement by the Trust.
C. The Distributor may reallow all or any part of, or pay
compensation from, the amounts payable to the Distributor under the Distribution
and Service Plan to such persons, including employees of the Distributor, and
institutions who respond to inquiries of holders of the Shares of the Portfolios
or provide other administrative or accounting services for the Shares, as the
Distributor may from time to time determine.
ARTICLE 5. Expenses. During the period of this Agreement, the Trust
shall pay or cause to be paid all expenses, costs and fees incurred by the Trust
which are not assumed by the Distributor. The Distributor shall pay all of its
own costs incurred in connection with the distribution of the Shares of each
Portfolio pursuant to Article 1 hereof ("Distribution Expenses"). The
Distributor shall also pay all of its own costs incurred in connection with
providing the personal, continuing services to shareholders of the Shares of
each Portfolio pursuant to Article 3 hereof ("Shareholder Servicing Expenses").
Distribution Expenses include, but are not limited to, the following expenses
incurred by the Distributor: initial and ongoing sales compensation (in addition
to sales loads) paid to investment executives of the Distributor and to other
broker-dealers and participating financial institutions which the Distributor
has agreed to pay; expenses incurred in the printing of prospectuses, statements
of additional information and reports used for sales purposes; expenses of
preparation and distribution of sales literature; expenses of advertising of any
type; an allocation of the Distributor's overhead; payments to and expenses of
persons who provide support services in connection with the distribution of
Trust shares; and other distribution-related expenses. Shareholder Servicing
Expenses include all expenses of the Distributor incurred in connection with
providing administrative or accounting services to shareholders of the Shares of
each Portfolio, including, but not limited to, an allocation of the
Distributor's overhead and payments made to persons, including employees of the
Distributor, who respond to inquiries of shareholders regarding their ownership
of Shares, or who provide other administrative or accounting services for the
Shares class not otherwise required to be provided by the applicable Portfolio's
investment adviser, transfer agent or other agent.
In each year during which this Agreement remains in effect, the
Distributor will prepare and furnish to the Board of Trustees of the Trust, on a
quarterly basis, written reports complying with the requirements of Rule 12b-1
under the 1940 Act that set forth (i) the amounts expended under this Agreement
and the Distribution Agreement as Distribution Expenses for the Shares of each
Portfolio and the purposes for which those expenditures were made, and (ii) the
amounts expended under this Agreement and the Distribution and Service Plan as
Shareholder Servicing Expenses for the Shares of each Portfolio and the purposes
for which those expenditures were made.
ARTICLE 6. Indemnification of Distributor. The Trust agrees to
indemnify and hold harmless the Distributor and each of its directors and
officers and each person, if any, who
4
controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damages,
or expense and reasonable counsel fees and disbursements incurred in connection
therewith), arising by reason of any person acquiring any Shares, based upon the
ground that the registration statement, prospectus, Shareholder reports or other
information filed or made public by the Trust (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements made not
misleading. However, the Trust does not agree to indemnify the Distributor or
hold it harmless to the extent that the statements or omission was made in
reliance upon, and in conformity with, information furnished to the Trust by or
on behalf of the Distributor or for which the Distributor had responsibility to
verify.
In no case (i) is the indemnity of the Trust to be deemed to protect
the Distributor against any liability to the Trust or its Shareholders to which
the Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Trust to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph.
The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Trust agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers or Trustees
in connection with the issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Trust. The Distributor covenants and
agrees that it will indemnify and hold harmless the Trust and each of its
Trustees and officers and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act, against any loss,
5
liability, damages, claim or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith) based upon
the 1933 Act or any other statute or common law and arising by reason of any
person acquiring any Shares, and alleging a wrongful act of the Distributor or
any of its employees or alleging that the registration statement, prospectus,
Shareholder reports or other information filed or made public by the Trust (as
from time to time amended) included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order to
make the statements not misleading, insofar as the statement or omission was
made in reliance upon and in conformity with information furnished to the Trust
by or on behalf of the Distributor or for which the Distributor had
responsibility to verify.
In no case (i) is the indemnity of the Distributor in favor of the
Trust or any other person indemnified to be deemed to protect the Trust or any
other person against any liability to which the Trust or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Trust or upon any person (or after the
Trust or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Trust or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own expense,
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
The Distributor agrees to notify the Trust promptly of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any of the Trust's Shares.
ARTICLE 8. Effective Date. This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force for one
year from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Trustees of the Trust, or the vote of a majority of the outstanding voting
6
securities of the Shares of each Portfolio, and (ii) the vote of a majority of
those Trustees of the Trust who are not parties to this Agreement or the Trust's
Distribution Plan or Service Plan or interested persons of any such party
("Qualified Trustees"), cast in person at a meeting called for the purpose of
voting on the approval. This Agreement shall automatically terminate in the
event of its assignment. As used in this paragraph the terms "vote of a majority
of the outstanding voting securities", "assignment" and "interested person"
shall have the respective meanings specified in the 1940 Act. In addition, this
Agreement may at any time be terminated without penalty by the Distributor, by a
vote of a majority of Qualified Trustees or by vote of a majority of the
outstanding voting securities of the Shares class of any Portfolio upon not less
than sixty days prior written notice to the other party.
ARTICLE 9. Notices. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at Xxx Xxxxxxx Xxxxxx Xxxx, Xxxx, Xxxxxxxxxxxx, 00000;
and if to the Distributor, Xxx Xxxxxxx Xxxxxx Xxxx, Xxxx, Xxxxxxxxxxxx, 00000.
ARTICLE 10. Governing Law. This Agreement shall be construed in
accordance with the 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.
7
ARTICLE 11. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS, the Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
THE PILLAR FUNDS
By: /s/ Xxxxxx Xxxxx
-----------------------------
Attest: /s/ Xxxxxxxxx Xxxxxx
-------------------------
SEI FINANCIAL SERVICES COMPANY
By: /s/ Xxxx Xxxx
-----------------------------
Attest: /s/ Xxxxxxx Xxxxxxxxx
-------------------------
8
