Exhibit (d)(2)
Sub-Investment Advisory Agreement
Exhibit (d)(2)
SUB-INVESTMENT ADVISORY AGREEMENT
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THIS AGREEMENT made this 24th day of September, 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 July 3, 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 24th day of September, 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 July
3, 2001, 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: Xxxx X. Xxxxxxx
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Its: President
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XXXXXX CAPITAL MANAGEMENT, LLC
By: Xxxxxx X. Xxxxxx
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Its: President
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CITIZENS FUNDS
By: Xxxx X. Xxxxxxx
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Its: President
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