Exhibit d(2)
SUBMANAGEMENT AGREEMENT
SUBMANAGEMENT AGREEMENT, dated as of May 1, 2000, by and between Domini
Social Investments LLC, a Massachusetts limited liability company ("DSI" or the
"Manager"), and South Shore Bank, an Illinois banking corporation ("SSB" or the
"Submanager").
W I T N E S S E T H:
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WHEREAS, Domini Social Investment Trust (the "Trust") 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, in each case as in effect from time to time,
the "1940 Act");
WHEREAS, DSI has entered into a Management Agreement (the "Management
Agreement") with the Trust wherein DSI has agreed to provide certain investment
advisory services for the series of the Trust designated as Domini Social Bond
Fund (the "Fund"); and
WHEREAS, as permitted by Section 1 of the Management Agreement, DSI wishes
to subcontract some of the performance of its obligations thereunder to SSB, and
SSB 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 SSB.
In accordance with and subject to the Management Agreement between the
Trust and the Manager with respect to the Fund, the Manager hereby retains SSB
to act as the Submanager for the Fund 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 Fund for the compensation provided by this
Agreement.
2. DUTIES OF THE SUBMANAGER.
The Submanager shall provide the Fund 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 Fund'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 Fund.
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 Fund allocated by the Manager to
the Submanager shall be held uninvested, subject always to the restrictions of
the Trust's Declaration of Trust, dated June 7, 1989, and By-laws, as each may
be amended and restated 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 Trust with respect to the Fund 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 Trust 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 Fund and what portion, if any, of the assets of the Fund 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 Fund's portfolio securities shall be exercised. Should
the Board of Trustees of the Trust or the Manager at any time, however, make any
definite determination as to an investment policy applicable to the Fund 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 Fund, 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 Fund's account with the brokers or dealers selected by it,
and to that end the Submanager is authorized as the agent of the Fund to give
instructions to the custodian or any subcustodian of the Fund as to deliveries
of securities and payments of cash for the account of the Fund. 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 Fund and/or the other accounts over which the
Submanager, the Manager or a 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 Fund 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. The Trustees of the Trust shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund. In making purchases or sales of securities or other
property for the account of the Fund, the Submanager may deal with itself or
with the Trustees of the Trust or the Fund's underwriter or distributor to the
extent such actions are permitted by the 1940 Act. The Board of Trustees of the
Trust, 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 Fund.
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
Trust will pay all of its own expenses including, without limitation,
organization costs of the Trust; compensation of Trustees who are not
"interested persons" of the Trust; governmental fees; interest charges; loan
commitment fees; taxes; membership dues in industry associations allocable to
the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
Trust; expenses relating to the issuance and redemption of shares of beneficial
interest of the Fund and servicing shareholder accounts; expenses of preparing,
typesetting, printing and mailing prospectuses, statements of additional
information, shareholder reports, notices, proxy statements and reports to
governmental officers and commissions and to shareholders of the Fund; expenses
connected with the execution, recording and settlement of security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
Fund, including safekeeping of funds and securities and maintaining required
books and accounts; expenses of calculating the net asset value of the Fund
(including but not limited to the fees of independent pricing services);
expenses of meetings of the Fund's shareholders; and such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust on behalf of the Fund may be a party and the
legal obligation which the Trust 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 out of the management fee it receives from the Trust
out of the assets of the Fund, and only to the extent thereof, a subadvisory
fee, accrued daily and paid monthly, at an annual rate equal to 0.20% of the
average daily net assets of the Fund allocated to the Submanager. If SSB serves
as Submanager for less than the whole of any
period specified in this Section 4, the compensation to SSB, as Submanager,
shall be accordingly adjusted and prorated.
5. COVENANTS OF THE SUBMANAGER.
The Submanager agrees that it will not deal with itself, or with the
Trustees of the Trust or the Trust'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
shares of beneficial interest of the Fund, 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 Trust applicable to
the Fund 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 Fund, 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 Trust 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 Fund are not to be deemed to be
exclusive, the Submanager being free to render investment advisory and/or other
services to others. It is understood that Trustees and officers of the Trust and
shareholders of the Fund 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 Trust or the Fund or the Manager and that the Submanager may
be or may become interested in the Trust or the Fund as a shareholder 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 January 14, 2002, on which date it will terminate
unless its continuance after January 14, 2002 is "specifically approved at least
annually" (a) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust 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 Trust or by "vote of a majority of the
outstanding voting securities" of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by (i) the Trustees of the Trust, (ii) the "vote of a majority of the
outstanding voting securities" of the Fund or (iii) DSI with the prior consent
of the Trustees of the Trust, 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
Trust. 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 Trust and the "vote of a majority of the outstanding voting
securities" of the Fund (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.
SOUTH SHORE BANK
By: ▇▇▇▇ ▇▇▇▇▇
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Title: ▇▇▇▇ ▇▇▇▇▇, SVP and CFO
DOMINI SOCIAL INVESTMENTS LLC
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Principal
Acknowledged:
Domini Social Investment Trust
On behalf of Domini Social Bond Fund
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Treasurer, Secretary