Exhibit (d)(2)
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made this ___ day of _______, 2001, by and among CITIZENS
ADVISERS, INC. (the "Adviser"), a New Hampshire corporation, XXXXXX CAPITAL
MANAGEMENT, LLC (the "Sub-Adviser"), a California limited liability company,
and CITIZENS FUNDS (the "Fund"), an open-end investment company organized and
existing under the laws of the Commonwealth of Massachusetts.
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940 (the "1940 Act"); and the
Fund and the Adviser have entered into an Investment Management Agreement dated
_________, 2001 whereby the Adviser shall provide, inter alia, the Citizens
Value Fund (the "Value Fund"), a series of the Fund, with investment advice and
supervision on the terms and conditions provided therein; and
WHEREAS, the Sub-Adviser is willing to provide the Adviser and the Fund
with services on the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
and between the parties as set forth herein, the parties do hereby covenant and
agree as follows:
ARTICLE 1: Duties of the Sub-Adviser. The Sub-Adviser will furnish the
Adviser economic, statistical and research information and advice, relating to
the Value Fund. The Sub-Adviser will also make recommendations to the Adviser
as to the manner in which voting rights, rights of consent to corporate action
and any other rights pertaining to the Value Fund's portfolio shall be
exercised.
The Sub-Adviser will furnish continuously an investment program with
respect to the Value Fund and will determine from time to time what securities
shall be purchased, sold or exchanged with other Fund assets, and what portion,
if any, of the Value Fund assets shall be held uninvested; subject, always, to
compliance with provisions of the Fund's Declaration of Trust and By-Laws as
then in effect, the provisions of the 1940 Act and the provisions of the Fund's
then current Prospectus and Statement of Additional Information (copies of all
which, as amended from time to time, will be furnished to the Sub-Adviser by
the Adviser). For the purposes of compliance with the prospectus language on
"social criteria" the Adviser will furnish the Sub-Adviser with an approved
list of securities from which the Sub-Adviser will select. The Sub-Adviser may
suggest additions to this list but agrees not to purchase any suggested
securities until such security has been approved by the Adviser as meeting the
Fund's social criteria.
Should the Trustees of the Fund or the Adviser at any time make a definite
determination as to investment policy and notify the Sub-Adviser thereof, the
Sub-Adviser shall be bound by such determination for the period, if any,
specified in such notice or until notified that such determination has been
revoked. Further, the Adviser or the Trustees of the Fund may at any time, upon
notice to the Sub-Adviser, suspend or restrict the right of the Sub-Adviser to
determine what assets shall be purchased, sold or exchanged and what portion,
if any, of the assets shall be held uninvested.
The Sub-Adviser shall take, on behalf of the Fund, all actions which it
deems necessary to implement policies determined as provided above, and in
particular, consistent with the provisions of Article 3 of this Agreement, to
place all orders for the purchase, sale, or exchange of securities of the
Fund's account with brokers, dealers, or bankers selected by it, and to that
end the Sub-Adviser is authorized as the agent of the Fund to give instructions
to the Custodian and any Sub-Custodian of the Fund as to deliveries of
securities and gold, transfers of currencies and payments of cash for the
account of the Fund. The Sub-Adviser will advise the Adviser on the same day it
gives any such instructions. In connection with the selection of such brokers,
dealers or bankers and the placing of such orders, the Sub-Adviser is directed
to seek for the Fund execution at the most favorable price by responsible
brokerage firms at reasonably competitive commission rates. In fulfilling this
requirement the Sub-Adviser shall not be deemed to have acted unlawfully or to
have breached any duty, created by this Agreement or otherwise, solely by
reason of effecting a securities transaction in excess of the amount of
Commission another broker or dealer would have charged for effecting that
transaction, if the Sub-Adviser determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Sub-Adviser's overall responsibilities with
respect to the Fund and to other clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion. The Board of the Fund, in its
discretion, may instruct the Sub-Adviser to effect all or a portion of its
securities transactions with brokers/dealers selected by the Board if the Board
determines that use of such brokers/dealers are in the best interests of the
Fund.
ARTICLE 2: Compensation of the Sub-Adviser. For the services rendered by
the Sub-Adviser under this Agreement, the Adviser shall pay to the Sub-Adviser
compensation, computed and paid monthly in US dollars on average daily net
assets at the annual rate of: Value Fund - 30 basis points up to first $100
million in assets and 45 basis points thereafter. The Sub-Adviser will pay its
expenses incurred in performing its duties under this Agreement. The Fund and
Value Fund shall not be liable to the Sub-Adviser for the compensation of the
Sub-Adviser. If the Sub-Adviser serves for less than the whole period of this
Agreement, the Sub-Adviser's compensation shall be pro rated in accordance with
the time served under the Agreement.
ARTICLE 3: Covenants of the Sub-Adviser. The Sub-Adviser agrees that it
(i) will not deal with itself or any of its affiliates, or with the Trustees of
the Fund or the Fund's principal underwriter, if any, as principal, broker or
dealer in making purchases or sales of securities or other property for the
account of the Fund except as permitted by the 1940 Act and all rules,
regulations and orders thereunder, (ii) will comply with all other provisions
of the Fund's Declaration of Trust and By-Laws then in effect and the Value
Fund's current prospectus relative to the Sub-Adviser, its directors, officers,
employees and affiliates, and (iii) will comply with all other laws, rules,
regulations and orders applicable to the activities contemplated herein.
ARTICLE 4: Liability of the Sub-Adviser. The Sub-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 in carrying out its duties under
this Agreement, except for violation of law, willful malfeasance, bad faith,
gross negligence, or by reason of reckless disregard of its obligations and
duties hereunder. As used in this Article 4 the term "Sub-Adviser" shall
include shareholders, directors, officers and employees of the Sub-Adviser, as
well as the Sub-Adviser itself. The Fund may enforce any obligations of the
Sub-Adviser under this Agreement, and may recover directly from the Sub-Adviser
for any liability it may have to the Fund.
ARTICLE 5: Activities of the Sub-Adviser. The services of the Sub-Adviser
to the Fund are not to be deemed to be exclusive. It is understood that
Trustees, directors, officers, partners and shareholders of the Fund or the
Adviser are or may become interested in the Sub-Adviser as directors, officers,
shareholders or otherwise and that shareholders, directors, officers and
employees of the Sub-Adviser may become similarly interested in the Fund or the
Adviser as a shareholder, Trustee, director, officer, partner, or otherwise.
ARTICLE 6: Duration, Termination and Amendment of this Agreement. This
Agreement shall become effective on the date of its execution and shall govern
the relations between the parties hereto thereafter, and shall remain in force
until two years after initial approval by the Board of Trustees of the Fund.
This Agreement shall continue in effect with respect to the Value Fund for
successive annual periods after its effectiveness so long as such continuance
is specifically approved at least annually (i) by the vote of a majority of the
Board of Trustees of the Fund who are not interested persons of the Fund, or of
the Adviser, or of the Sub-Adviser at a meeting specifically called for the
purpose of voting on such approval, and (ii) by the Board of Trustees of the
Fund or by vote of a majority of the outstanding voting securities of the Value
Fund. The aforesaid requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the 1940 Act and all rules, regulations and orders thereunder.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees of the Fund, by vote of a majority of the outstanding
voting securities of the Value Fund, or by the Adviser, on not more than sixty
(60) days nor less than thirty (30) days written notice to the Sub-Advisor.
This Agreement may be terminated by the Sub-Adviser on not less than ninety
(90) days notice to the Trustees of the Fund and the Adviser. This Agreement
shall automatically terminate in the event of its assignment.
This Agreement may be amended by the Adviser and the Sub-Adviser only if
such amendment is approved by the vote of a majority of the outstanding voting
securities of the Value Fund (except for any such amendment as may be effected
in the absence of such approval without violating 1940 Act).
The terms "assignment," "affiliated person," "interested person," and
"majority of the outstanding voting securities" when used in this Agreement
shall have the respective meanings specified in the 1940 Act and the rules,
regulations and orders thereunder, subject, however, to such exemptions as may
be granted by the Securities and Exchange Commission under said Act.
ARTICLE 7: Miscellaneous. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Massachusetts, contains the entire
understanding between the parties and may be executed in several counterparts,
each of which shall be deemed to be an original and one and the same
instrument.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
duly authorized, as of this ___ day of _______, 2001.
The undersigned officer of the Fund has executed this Agreement not
individually, but as an officer under the Fund's Declaration of Trust dated
______________, as amended. The parties acknowledge that the Fund is entitled
to enforce the provisions of this Agreement but does not undertake, on behalf
of the Value Fund or otherwise, any obligation to the Sub-Adviser.
CITIZENS ADVISERS, INC.
By:___________________________
Its:__________________________
XXXXXX CAPITAL INVESTMENT, LLC
By:___________________________
Its:__________________________
CITIZENS FUNDS
By:___________________________
Its:__________________________
