SUB-INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made this 1st day of December, 1997, by and among CITIZENS
ADVISERS, INC., a California corporation (the "Adviser"), SENECA CAPITAL
MANAGEMENT, LLC, a California limited liability company (the "Sub-Adviser"), and
CITIZENS INVESTMENT TRUST, an open-end investment company organized and existing
under the laws of the Commonwealth of Massachusetts (the "Trust").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940; and the Trust and
the Adviser have entered into an Investment Advisory Agreement dated June 1,
1992 whereby the Adviser shall provide, inter alia, the Citizens Income
Portfolio (the "Income Portfolio") and the Citizen's Emerging Growth Portfolio
(the "Emerging Growth Portfolio"), two series of the Trust, collectively, the
"Portfolios" and each, a "Portfolio", 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
Trust 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 Income Portfolio and the Emerging Growth Portfolio, and to such other
portions of the Trust's assets as the Adviser shall from time to time designate
(collectively, the "Designated Assets"). 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 Trust's
portfolio securities included in the Designated Assets shall be exercised. From
time to time the Adviser will notify the Sub-Adviser of the aggregate US Dollar
amount of the Designated Assets.
The Sub-Adviser will furnish continuously an investment program with
respect to the Designated Assets and will determine from time to time what
securities shall be purchased, sold or exchanged with the Designated Assets, and
what portion, if any, of the Designated Assets shall be held uninvested;
subject, always, to compliance with provisions of the Trust's Declaration of
Trust and By-Laws as then in effect, the provisions of the Investment Company
Act of 1940 and the provisions of the Trust'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 Trust's social criteria. The Adviser
agrees that it will promptly and thoroughly research the suitability, under its
social criteria, of any suggested security.
Should the Trustees of the Trust 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 Trust 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 from the Designated Assets and what portion, if any, of the
Designated Assets shall be held uninvested.
The Sub-Adviser shall take, on behalf of the Trust, 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
Trust's account with brokers, dealers, or bankers selected by it, and to that
end the Sub-Adviser is authorized as the agent of the Trust to give instructions
to the Custodian and any Sub-Custodian of the Trust as to deliveries of
securities and gold, transfers of currencies and payments of cash for the
account of the Trust. 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 Trust 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
Trust. The Sub-Adviser further agrees that it shall at all times make a
reasonable and good faith determination that such brokerage or research services
provided by such broker or dealer are of benefit to the Trust.
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: Emerging Growth Portfolio - 35 basis
points; Income Portfolio - 17.5 basis points. The Sub-Adviser will pay its
expenses incurred in performing its duties under this Agreement. The Trust shall
not be liable to the Sub-Adviser for the compensation of the Sub-Adviser.
ARTICLE 3: Covenants of the Sub-Adviser. The Sub-Adviser agrees that it
will not deal with itself or any of its affiliates, or with the Trustees of the
Trust or the Trust'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 Trust except as permitted by the Investment Company Act of 1940
and all rules, regulations and orders thereunder, will comply with all other
provisions of the Trust's Declaration of Trust and By-Laws then in effect and
its current prospectus relative to the Sub-Adviser, its directors, officers,
employees and affiliates, and 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, direct officers and employees of the Sub-Adviser, as well as the
Sub-Adviser itself. The Trust 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 Trust.
ARTICLE 5: Activities of the Sub-Adviser. The services of the
Sub-Adviser to the Trust are not to be deemed to be exclusive, the Sub-Adviser
and its affiliates being free to render services to others. It is understood
that Trustees, officers, partners and shareholders of the Trust 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 Trust or the
Adviser as a shareholder, Trustee, 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 November 17, 1999 on which date it will terminate with respect to a
Portfolio, unless its continuance after that date is specifically approved at
least annually (i) by the vote of a majority of the Board of Trustees of the
Trust who are not interested persons of the Trust, 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 Trust or by vote of a
majority of the outstanding voting securities of the Portfolio. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the Investment
Company Act of 1940 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 Trust, by vote of a majority of the outstanding
voting securities of the Trust, by the Adviser or by the Sub-Adviser, on not
more than sixty (60) days nor less than thirty (30) days written notice to other
parties. This Agreement shall automatically terminate in the event of its
assignment.
This Agreement may be amended with respect to a Portfolio only if such
amendment is approved by vote of a majority of the outstanding voting securities
of that Portfolio, by the Adviser and by the Sub-Adviser.
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 Investment Company Act of
1940 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.
Each party acknowledges and agrees that all obligations of the Trust
under this agreement are binding only with respect to the Portfolios; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the appropriate Portfolio; and that no other series of the Trust shall be liable
with respect to this Agreement or in connection with the transactions
contemplated herein.
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 1st day of December, 1997.
The undersigned Trustee of the Trust has executed this Agreement not
individually, but as Trustee under the Trust's Declaration of Trust dated
November 19, 1982, as amended, and 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.
CITIZENS ADVISERS, INC.
By:___________________________
Its:___________________________
SENECA CAPITAL MANAGEMENT LLC
By:___________________________
Its:___________________________
CITIZENS INVESTMENT TRUST
By:___________________________
TRUSTEE
