INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, dated as of November 28, 2006, by and
among GREEN CENTURY CAPITAL MANAGEMENT, INC., a Massachusetts corporation
having its principal place of business in Boston, Massachusetts (the
"Adviser"), MELLON EQUITY ASSOCIATES, LLP, a Pennsylvania limited liability
partnership, (the "Subadviser"), and GREEN CENTURY FUNDS, a Massachusetts
business trust (the "Trust") on behalf of Green Century Equity Fund.
WHEREAS, the Adviser has been organized to operate as an investment adviser
registered under the Investment Advisers Act of 1940 and has been retained by
the Trust to provide investment advisory services to the Trust, an open-end,
diversified management investment company registered under the Investment
Company Act of 1940, as amended (collectively with the rules and regulations
promulgated thereunder, in each case as in effect from time to time, the "1940
Act"); and
WHEREAS, the shares of beneficial interest (par value $0.01 per share) of
the Trust are divided into two separate series, Green Century Balanced Fund
(the "Balanced Fund") and Green Century Equity Fund (the "Equity Fund" or the
"Fund"); and
WHEREAS, the Adviser desires to retain the Subadviser to furnish it with
portfolio management services in connection with the Adviser's investment
advisory activities on behalf of the Equity Fund, and the Subadviser is willing
to furnish such services to the Adviser and the Trust;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. Employment of the Subadviser. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Adviser, attached
hereto as Exhibit A (the "Advisory Agreement"), the Adviser hereby appoints the
Subadviser to perform the portfolio management services described herein for
the investment and reinvestment of the assets of the Fund, subject to the
direction and supervision of the Adviser and the Trust's Board of Trustees, for
the period and on the terms hereinafter set forth. The Subadviser accepts such
employment and agrees to furnish the services described herein in accordance
with the terms of this Agreement and applicable law. The Subadviser shall for
all purposes herein be deemed to be an independent contractor and shall, except
as expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser.
2. Obligations of and Services to be Provided by the Subadviser.
(a) The Subadviser undertakes to provide the following services and to
assume the following obligations with respect to the Fund:
(1) The Subadviser, subject to and in accordance with the Fund's
investment objective, policies and restrictions as stated in the
Trust's Registration Statement(s) under the Securities Act of 1933
(the "1933 Act"), as it may be amended from time to time and as
adopted by the Trust's Board of Trustees from time to time, and
the overall supervision of the Trust's Board of Trustees and the
Adviser, shall maintain a continuing investment program for the
Fund, including investment research and management with respect to
the investment and
reinvestment of the assets of the Fund, and shall take such steps
as may be reasonably necessary to implement the same. The
Subadviser shall make all trades for the Fund, engage in other
actions as related to the Fund, and maintain the portfolio of the
Fund at all times in compliance with the 1933 Act, the 1940 Act,
and all applicable laws and regulations. Should the Trust's Board
of Trustees at any time establish an investment policy with
respect to the Fund and notify the Subadviser thereof in writing,
the Subadviser shall be bound by such determination for the
period, if any, specified in such notice or until notified in
writing by the Board of Trustees that such policy has been revoked.
(2) The Subadviser may not consult with any other subadviser to the
Fund concerning transactions in securities or other assets for the
Fund.
(3) In connection with the purchase and sale of portfolio investments
of the Fund, the Subadviser shall arrange for the transmission to
the Adviser and the Trust's portfolio accountant, on a daily
basis, of such confirmations, trade tickets or other documentation
as may be necessary to enable the Adviser to perform its advisory
and administrative responsibilities. The Subadviser shall render
such reports to the Adviser, any subadministrator and/or to the
Trust's Board of Trustees concerning compliance, the investment
activities and portfolio composition of the Fund, in such forms
and at such intervals, as the Adviser or the Trust's Board of
Trustees may from time to time reasonably require.
(4) The Subadviser shall have the authority and discretion to select
brokers and dealers to execute the Fund's portfolio transactions
and for the selection of the markets on or in which the
transactions will be executed. In connection with the selection of
such brokers or dealers and the placing of such orders, the
Subadviser is directed to seek for the Fund, in its best judgment,
prompt best available execution in an effective manner. The
Subadviser may not use commissions paid to broker-dealers in
connection with the purchase or sale of Fund securities to
generate so-called "soft dollars". Broker-dealers that sell shares
of the Fund or any other fund for which the Subadviser acts as
investment adviser or subadviser shall only receive orders for the
purchase or sale of the Fund's portfolio securities to the extent
that the placing of such orders is in compliance with applicable
law and the rules of the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. In
connection with the placement of orders for the execution of
portfolio transactions, and subject to the direction and
supervision of the Adviser and the Trust's Board of Trustees, the
Subadviser shall create and maintain all necessary brokerage
records of the Trust in accordance with all applicable laws, rules
and regulations, including but not limited to records required by
Section 31(a) of the 0000 Xxx.
(5) All records maintained by the Subadviser on behalf of the Adviser
or the Fund (including, without limitation, records maintained and
preserved by the Subadviser pursuant to Rule 31a-1 and Rule 31a-2
adopted under the 0000 Xxx) shall be the property of the Adviser
or the Trust, as applicable, and shall be available for inspection
and use by (or surrendered to) the SEC, the Trust or any person
retained by the Trust promptly upon request. Where applicable,
such records shall be maintained by the Subadviser for the periods
and in the places required by Rule 31a-1 and Rule 31a-2 under the
1940 Act, as applicable.
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(6) The Subadviser shall not have any responsibility for determining
the manner in which voting rights shall be exercised.
(7) The assets of the Fund shall be held by one or more financial
institutions designated by the Fund in a custodial capacity (the
"Custodian") in an account which the Fund has directed the
Custodian to open. All transactions will be consummated by payment
to or delivery by the Custodian for the Fund or such depositories
or agents as may be designated by the Custodian of all cash and/or
securities due to or from the Fund, and the Subadviser shall not
have possession or custody thereof or any responsibility or
liability with respect thereto. The Subadviser shall advise the
Custodian, the Trust's portfolio accounting agent and the Adviser
daily of all investments placed by its broker/dealers pursuant to
procedures agreed upon by the Subadviser and the Adviser. The
Adviser and the Trust shall issue to the Custodian such
instructions, and hereby authorize the Subadviser to issue to the
Custodian such instructions, as may be appropriate in connection
with the settlement of transactions initiated by the Subadviser.
The Adviser shall cause the Custodian to accept instructions from
the Subadviser with respect to Fund assets and transactions by the
Fund in the performance of the Subadviser's duties hereunder. The
Adviser shall use its best efforts to cause the Custodian to
provide the Subadviser with any such information and reports
concerning the Fund or its assets as the Subadviser may from time
to time reasonably request, provided that neither the Adviser nor
the Fund shall be required to provide additional compensation to
the Custodian to provide any such information or report. The
Subadviser shall have no liability or obligation to pay the cost
of such Custodian or for any of its services.
(b) The Subadviser represents to the Adviser and the Trust that it will
disclose to the Adviser and the Trust promptly after it has knowledge
of any significant change or variation in its management structure or
personnel which will affect the Fund or any significant change or
variation in its management style or investment philosophy which will
affect the Fund. The Subadviser shall promptly advise the Adviser of
any change in the membership of its partnership. In addition, the
Subadviser represents to the Adviser and the Trust that it will
similarly disclose to the Trust and the Adviser, promptly after it has
knowledge, of the existence of any pending or threatened significant
legal or regulatory action or proceeding which in the discretion of
the Subadviser would have a material adverse affect on its ability to
provide services under this Agreement , provided that such information
is permitted to be disclosed by the Subadviser pursuant to applicable
law.
(c) The Subadviser agrees that it will not deal with itself, or with the
Trustees of the Trust or with the Adviser, or the Fund's principal
underwriter or distributor as principals in making purchases or sales
of securities or other property for the account of the Fund, except as
permitted by the 1940 Act, will not take a long or short position in
the shares of the Fund except as permitted by the Trust's Declaration
of Trust, and will comply with all other applicable provisions of the
Trust's Declaration of Trust and By-Laws and any current Prospectus or
Statement of Additional Information of the Fund.
(d) The Subadviser may manage other portfolios and expects that the Fund
and other portfolios it manages will, from time to time, purchase or
sell the same securities. Consistent with the Subadviser's fiduciary
duties to the Fund and applicable law, the Subadviser may aggregate
orders for the purchase or sale of securities on behalf of the
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Fund with orders on behalf of other portfolios the Subadviser
manages. Securities purchased or proceeds of securities sold
through aggregated orders are allocated to the account of each
portfolio managed by the Subadviser that bought or sold such
securities at the average execution price. If less than the total
of the aggregated orders is executed, purchased securities or
proceeds will generally be allocated pro rata among the
participating portfolios in proportion to their planned
participation in the aggregated orders.
(e) The Adviser understands and agrees that the Subadviser and its
officers, affiliates and employees perform investment advisory and
investment management services for various clients other than the
Adviser and the Fund.
3. Expenses. During the terms of this Agreement, the Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement.
The Subadviser shall not be obligated to pay any expenses of or for the Trust,
the Fund or the Adviser that are not expressly assumed by the Subadviser.
4. Compensation. The Adviser agrees to pay the Subadviser as full
compensation for the services to be rendered and expenses to be borne by the
Subadviser a fee equal on an annual basis to the greater of $50,000 or 0.08% of
the value of the average daily net assets of the Fund up to but not including
$100 million, 0.05% of the average daily net assets of the Fund from and
including $100 million up to but not including $500 million, 0.02% of the
average daily net assets of the Fund from and including $500 million up to but
not including $1 billion and 0.01% of the average daily net assets of the Fund
equal to or in excess of $1 billion. Such fee shall be accrued daily and
payable following the end of each calendar quarter.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of the close of regular trading on
the New York Stock Exchange (currently, 4:00 p.m. Eastern Time) on each day on
which the net asset value of the Trust is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act. The value of the net assets of the
Fund shall always be determined pursuant to the applicable provisions of the
Declaration of Trust and the Fund's then current prospectus and statement of
additional information. If the determination of net asset value does not take
place for any particular day, then for the purposes of this Section 4, the
value of the net assets of the Fund last determined shall be deemed to be the
value of its net assets as of the close of regular trading on the New York
Stock Exchange, or as of such other time as the value of the net assets of the
Fund's portfolio may be lawfully determined on that day. If the Trust
determines the value of the net assets of the Fund more than once on any day,
then the last such determination thereof on that day shall be deemed to be the
sole determination thereof on that day for the purposes of this Section 4.
5. Renewal and Termination. This Agreement shall continue in effect with
respect to the Fund, unless sooner terminated as hereinafter provided, for a
period of two years from the date hereof and indefinitely thereafter if its
continuance after such two year period shall be "specifically approved at least
annually" by "vote of a majority of the outstanding voting securities" of the
Fund or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not "interested persons" of the Adviser, the
Subadviser or the Trust, cast at a meeting called for the purpose of voting on
such approval as provided under the 1940 Act.
This Agreement may be terminated at any time, with respect to the Fund,
without payment of any penalty, (i) by the Trust's Board of Trustees or by the
"vote of a majority of the outstanding voting securities" of the Fund, upon not
more than 60 days' nor less than 30 days' prior
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written notice to the Adviser and Subadviser, (ii) by the Adviser upon not more
than 60 days' nor less than 30 days' prior written notice to the Trust and the
Subadviser, or (iii) by the Subadviser upon not less than 180 days' prior
written notice to the Trust and the Adviser. This Agreement will terminate
automatically upon any termination of the Advisory Agreement between the Trust
and the Adviser or in the event of its "assignment".
The terms "specifically approved at least annually", "interested persons",
"vote of a majority of the voting securities", and "assignment" 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 SEC under the 1940 Act.
6. Standard of Care. The Subadviser may rely on information reasonably
believed by it to be accurate and reliable. Neither the Subadviser nor its
officers, directors, or employees shall be subject to any liability for any act
or omission, or error of judgment or for any loss suffered by the Trust, the
Fund or the Adviser in the course of, connected with, or arising out of any
services to be rendered hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security, except by reason of willful
misfeasance, bad faith or negligence on the part of the Subadviser in the
performance of its duties, violation of law, or by reason of reckless disregard
on the part of the Subadviser of its obligations and duties under this
Agreement.
7. Representations and Warranties. Each of the Adviser and the Subadviser
represents and warrants that: (a) the person(s) executing this Agreement on
behalf of such party has full power and authority to execute this Agreement on
behalf of such party and (b) such party's execution, delivery and performance
of this Agreement will be binding upon such party in accordance with the terms
hereof, and will not violate in any material respect any obligation by which
such party is bound, whether arising by contract, operation of law, or
otherwise. The Adviser acknowledges that it has received a copy of the
Subadviser's disclosure document under Rule 204-3 of the Investment Advisers
Act of 1940 at least 48 hours prior to executing this Agreement.
The Subadviser agrees to review written communications to Fund shareholders
and prospective investors relating to the Fund and the Subadviser's services
hereunder, including shareholder reports and proxy statements, as reasonably
requested by the Adviser. The Subadviser agrees to review the Fund's Prospectus
and the Statement of Additional Information as reasonably requested by the
Adviser to assure that the description therein of the investment policies and
strategies followed by the Subadviser in providing services hereunder for the
Fund is consistent with the policies and strategies the Subadviser uses or
intends to use and that the information therein concerning the Subadviser and
the services provided hereunder is accurate and complete.
The Subadviser agrees that during the term of this Agreement, including
renewals, and for a one year period following the termination of this
Agreement, the Subadviser will not, directly or indirectly, hire or attempt to
hire any present or former employees of the Adviser or solicit or encourage any
present employees of the Adviser to discontinue employment with the Adviser,
provided, however, that this prohibition shall bar the hiring of former
employees of the Adviser only during the first year following termination of
their employment with the Adviser.
8. Use of Names; References to the Subadviser. The Trustees of the Trust and
the Subadviser acknowledge that, in consideration of the Adviser's assumption
of organization and ongoing expenses of the Trust and of the Fund, the Adviser
has reserved for itself the right to the names "Green Century Funds", "Green
Century Balanced Fund", and "Green Century Equity Fund" (or any similar names)
and that use by the Trust of such names shall continue only with the continuing
consent of the Adviser, which consent may be withdrawn at any time, effective
immediately, upon written notice thereof
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to the Trust. The Subadviser hereby agrees that the Adviser may use the
Subadviser's name in the Fund's marketing or advertising materials with the
prior written consent of the Subadviser, which consent will not be unreasonably
withheld or delayed.
9. Assignment, Amendment of this Agreement. This Agreement may not be
transferred, assigned, sold or in any manner hypothecated or pledged by any
party hereto, except as permitted under the 1940 Act (including any exemptions
as may be granted by the SEC under the 1940 Act). No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective, with respect to the Fund, until approved by vote
of the holders of a majority of the outstanding voting securities of the Fund,
if such shareholder approval is required by the 1940 Act subject, however, to
such exemptions as may be granted by the SEC under the 1940 Act.
10. Severability. If any provision of this Agreement shall be held or made
invalid by a decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
11. Notices. Notices should be provided to the Subadviser at Xxx Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xx. 15258-0001 Attention: Xxxxxxx X. Xxxxxx,
President and CEO. Notices to the Adviser should be provided to Xx. Xxxxxxxx X.
Xxxxxx, Green Century Capital Management, Inc., 000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, XX 00000. Notices to the Trust should be provided to Xx. Xxxxxxxx
Xxxxxx, Green Century Funds, 000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000.
12. Miscellaneous. Each party agrees to perform such further acts and to
execute further documents as are necessary to effectuate the acts and execute
such purposes hereof. The Agreement shall be construed and enforced in
accordance with and governed by 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 and regulations of the SEC promulgated thereunder. Where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
altered by a rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect
of such rule, regulation or order. The captions in this Agreement are included
for convenience only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
[Signature page follows.]
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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.
Pursuant to the Trust's Declaration of Trust, dated as of July 1, 1991, the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of the Trust individually, but bind only the Trust estate.
GREEN CENTURY CAPITAL
MANAGEMENT,INC.
BY
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Xxxxx Xxxxxxxxx
President
MELLON EQUITY ASSOCIATES, LLP
BY
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GREEN CENTURY FUNDS
BY
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Xxxxxxxx X. Xxxxxx
President
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