SUBMANAGEMENT AGREEMENT
SUBMANAGEMENT AGREEMENT, dated as of October 22, 1997, by and between
Domini Social Investments LLC, a Massachusetts limited liability company ("DSI"
or the "Manager"), and Mellon Equity Associates, a Pennsylvania business trust
("Mellon" or the "Submanager").
WITNESSETH:
WHEREAS, the Domini Social Index Portfolio (the "Portfolio") engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (collectively with the
rules and regulations promulgated thereunder, the "1940 Act"); and
WHEREAS, DSI has entered into a Management Agreement (the "Management
Agreement") with the Portfolio wherein DSI has agreed to serve as Manager to the
Portfolio; and
WHEREAS, as permitted by Section 1(A) of the Management Agreement, DSI
wishes to subcontract some of the performance of its obligations thereunder to
Mellon, and Mellon desires to accept such obligations on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. APPOINTMENT OF MELLON. In accordance with and subject to the
Management Agreement between the Portfolio and the Manager, the Manager hereby
retains Mellon to act as the Submanager for the Portfolio for the period and on
the terms set forth in this Agreement. The Submanager accepts such appointment
and agrees to provide an investment program for the Portfolio for the
compensation provided by this Agreement.
2. DUTIES OF THE SUBMANAGER. The Submanager shall provide the Portfolio
and the Manager with such investment advice and supervision as the Manager may
from time to time consider necessary for the proper supervision of such portion
of the Portfolio's investment assets as the Manager may designate from time to
time. Notwithstanding any provision of this Agreement, the Manager shall retain
all rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment activities relating to the Portfolio. The Submanager shall
furnish continuously an investment program and shall determine from time to time
what securities shall be purchased, sold or exchanged and what portion of the
assets of the Portfolio allocated by the Manager to the Submanager shall be held
uninvested, subject always to the restrictions of the Portfolio's Declaration of
Trust, dated June 7, 1989, and By-laws, as each may be amended from time to time
(respectively, the "Declaration" and the "By-Laws"), the provisions of the 1940
Act, and the then-current registration statement of the Portfolio and, subject
further, to the Submanager notifying the Manager in advance of the Submanager's
intention to purchase any securities except insofar
as the requirement for such notification may be waived or limited by
the Manager, it being understood that the Submanager shall be responsible for
compliance with any restrictions imposed in writing by the Manager from time to
time in order to facilitate compliance with the above-mentioned restrictions and
such other restrictions as the Manager may determine. Further, the Manager or
the Trustees of the Portfolio may at any time, upon written notice to the
Submanager, suspend or restrict the right of the Submanager to determine what
securities shall be purchased or sold on behalf of the Portfolio and what
portion, if any, of the assets of the Portfolio allocated by the Manager to the
Submanager shall be held uninvested. The Submanager shall also, as requested,
make recommendations to the Manager as to the manner in which proxies, voting
rights, rights to consent to corporate action and any other rights pertaining to
the Portfolio's portfolio securities shall be exercised. Should the Board of
Trustees of the Portfolio or the Manager at any time, however, make any definite
determination as to investment policy applicable to the Portfolio and notify the
Submanager thereof in writing, the Submanager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked.
The Submanager shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above and, in particular, to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers selected by
it, and to that end the Submanager is authorized as the agent of the Portfolio
to give instructions to the custodian or any subcustodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
The Submanager will advise the manager on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Submanager, the Manager or respective "affiliated person" thereof
exercises investment discretion. The Submanager is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Submanager determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities
which the Submanager, the Manager and any "affiliated person" thereof have with
respect to accounts over which they exercise investment discretion. In making
purchases or sales of securities or other property for the account of the
Portfolio, the Submanager may deal with itself or with the Trustees of the
Portfolio or the Portfolio's underwriter or distributor to the extent such
actions are permitted by the 1940 Act. The Board of Trustees of the Portfolio,
in its discretion, may instruct the Submanager to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees if it determines that the use of such brokers and/or dealers
is in the best interest of the Portfolio.
3. ALLOCATION OF CHARGES AND EXPENSES. The Submanager shall
furnish at its own expense all necessary services, facilities and personnel in
connection with its responsibilities under Section 2 above. Except as provided
in the foregoing sentence, it is understood that the Portfolio will pay all of
its own expenses including, without limitation, organization costs of the
Portfolio; compensation of Trustees who are not "interested persons" of the
Portfolio; governmental fees; interest charges; loan commitment fees; taxes;
membership dues in industry associations allocable to the Portfolio; fees and
expenses of independent auditors, legal counsel and any transfer agent,
distributor, registrar or dividend disbursing agent of the Portfolio; expenses
relating to the issuance and redemption of beneficial interests in the Portfolio
and servicing investor accounts; expenses of preparing, typesetting, printing
and mailing investor reports, notices, proxy statements and reports to
governmental officers and commissions and to investors in the Portfolio;
expenses connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Portfolio, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Portfolio (including but not limited to the fees of independent
pricing services); expenses of meetings of the Portfolio's investors; and such
non-recurring or extraordinary expenses as may arise, including those relating
to actions, suits or proceedings to which the Portfolio may be a party and the
legal obligation which the Portfolio may have to indemnify its Trustees and
officers with respect thereto.
4. COMPENSATION OF THE SUBMANAGER. For the services to be rendered by
the Submanager hereunder, the Manager shall pay to the Submanager a fee computed
and paid monthly at an annual rate equal to 0.10% of the Portfolio's average
daily net assets for its then-current fiscal year. If Mellon serves as
Submanager for less than the whole of any period specified in this Section 4,
the compensation to Mellon, as Submanager, shall be prorated.
5. COVENANTS OF THE SUBMANAGER. The Submanager agrees that it will not
deal with itself, or with the Trustees of the Portfolio or the Portfolio's
principal underwriter or distributor, if any, as principals in making purchases
or sales of securities or other property, except as permitted by the 1940 Act,
will not take a long or short position in beneficial interests of the Portfolio,
except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and By-Laws and the then-current registration
statement of the Portfolio relative to the Submanager and its directors and
officers.
6. LIMITATION OF LIABILITY OF THE SUBMANAGER. The Submanager 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 in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Submanager" shall include directors, officers and employees of the
Submanager as well as the Submanager itself. The Portfolio is expressly made a
third party beneficiary of this Agreement and may enforce any obligations of the
Submanager under this Agreement and recover directly from the Submanager for any
liability the Submanager may have hereunder.
7. ACTIVITIES OF THE SUBMANAGER. The services of the Submanager to the
Portfolio are not to be deemed to be exclusive, the Submanager being free to
render investment advisory, administrative and/or other services to others. It
is understood that Trustees, officers and investors of the Portfolio or the
Manager are or may be or may become interested in the Submanager as directors,
officers, employees or otherwise and that directors, officers and employees of
the Submanager are or may become similarly interested in the Portfolio or the
Manager and that the Submanager may be or may become interested in the Portfolio
as an investor or otherwise.
8. DURATION, TERMINATION AND AMENDMENTS OF THIS AGREEMENT. This
Agreement shall become effective as of the day and year first above written,
shall govern the relations between the parties hereto thereafter and shall
remain in force until October 22, 1999, on which date it will terminate unless
its continuance after October 22, 1999 is "specifically approved at least
annually" (a) by the vote of a majority of the Trustees of the Portfolio who are
not "interested persons" of the Portfolio or of DSI or the Submanager at a
meeting specifically called for the purpose of voting on such approval and (b)
by the Board of Trustees of the Portfolio or by "vote of a majority of the
outstanding voting securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by (i) the Trustees of the Portfolio, (ii) the "vote of a majority of
the outstanding voting securities" of the Portfolio or (iii) DSI with the prior
consent of the Trustees of the Portfolio, in each case on not more than 60 days'
nor less than 30 days' written notice to the other party. This Agreement may be
terminated at any time without the payment of any penalty by the Submanager on
not less than 90 days' written notice to the Manager and the Trustees of the
Portfolio. This Agreement shall automatically terminate in the event of its
"assignment."
This Agreement constitutes the entire agreement between the parties and
may be amended only if such amendment is approved by the parties hereto, the
Trustees of the Portfolio and the "vote of a majority of the outstanding voting
securities" of the Portfolio (except for any such amendment as may be effected
in the absence of such vote without violating the 1940 Act or any exemptive
order granted thereunder).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person" and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the Act.
9. GOVERNING LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts; provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
MELLON EQUITY ASSOCIATES DOMINI SOCIAL INVESTMENTS LLC
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxx X. Xxxxxx
Title: Sr. Vice Presdient Title: Manager
DSI299B
