SUB-ADVISORY AGREEMENT
This Agreement is made between COVA INVESTMENT ADVISORY CORPORATION, an
Illinois corporation, having its principal place of business in Oakbrook
Terrace, Illinois (hereinafter referred to as the "Advisor"), MISSISSIPPI VALLEY
ADVISORS INC., a Missouri corporation, having its principal place of business in
St. Louis, Missouri (hereinafter referred to as the "Sub-Advisor") and COVA
SERIES TRUST, a Massachusetts business trust (hereinafter referred to as the
"Trust").
WHEREAS, the Trust, an open-end diversified management investment
company, as that term is defined in the Investment Company Act of 1940, as
amended (the "Act"), that is registered as such with the Securities and Exchange
Commission, has appointed Advisor as investment adviser for and to the Balanced
Portfolio, Small Cap Equity Portfolio, Equity Income Portfolio, and Growth &
Income Equity Portfolio, each being a sub-trust of the Trust (referred to
individually as a "Sub-Trust" and collectively as the "Sub-Trusts"), pursuant to
the terms of an investment advisory agreement dated as of _________, 19___
between the Trust and Advisor ("Investment Advisory Agreement");
WHEREAS, Sub-Advisor is engaged in the business of rendering investment
management services; and
WHEREAS, Advisor desires to retain Sub-Advisor to provide certain
investment management services for the Sub-Trusts as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Retention of Sub-Advisor. Advisor hereby retains Sub-Advisor to assist
Advisor in its capacity as investment adviser for the Sub-Trusts. Subject
to the oversight and review of Advisor and the Board of Trustees of the
Trust, Sub-Advisor shall manage the investment and reinvestment of the
assets of the Sub-Trusts. Sub-Advisor will determine in its discretion,
subject to the oversight and review of Advisor, the investments to be
purchased or sold, will provide Advisor with records concerning its
activities which Advisor or the Trust is required to maintain and will
render regular reports to Advisor and to officers and Trustees of the Trust
concerning its discharge of the foregoing responsibilities.
Sub-Advisor, in its supervision of the investments of the Sub-Trusts, will
be guided by the Sub-Trusts' investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and
By-Laws of the Trust and as set forth in the Registration Statement and
exhibits as may be on file with the Securities and Exchange Commission, all
as communicated by Advisor to Sub-Advisor. Advisor hereby undertakes to
provide Sub-Advisor with copies of such Declaration of Trust and ByLaws and
Registration Statement and exhibits as well as any amendments as the same
become available from time to time.
Sub-Advisor shall be deemed to be an independent contractor under this
Agreement and, unless otherwise expressly provided or authorized, shall
have no authority to act for or represent the Trust or any Sub-Trust in any
way or otherwise be deemed an agent of the Trust or any Sub-Trust.
The services furnished by Sub-Advisor hereunder are deemed not to be
exclusive, and nothing in this Agreement shall (i) prevent Sub-Advisor or
any affiliated person (as defined in the Act) of Sub-Advisor from acting as
investment adviser or manager for any other person or persons, including
other management investment companies with investment objectives and
policies the same as or similar to those of the Sub-Trusts, or (ii) limit
or restrict Sub-Advisor or any such affiliated person from buying, selling
or trading any securities or other investments (including any securities or
other investments which the Sub-Trusts are eligible to buy) for its or
their own accounts or for the accounts of others for whom it or they may be
acting; provided, however, that Sub-Advisor agrees that it will not
undertake any activities which, in its reasonable judgment, will adversely
affect the performance of its obligations to the Sub-Trusts under this
Agreement and provided that all such activities are in conformity with all
applicable provisions of the Trust's Registration Statement.
2. Fee. Advisor shall pay to Sub-Advisor, for all services rendered to the
Sub-Trusts by Sub-Advisor hereunder, the sub-advisory fees set forth in
Exhibit A attached hereto. During the term of this Agreement, Sub-Advisor
will bear all expenses incurred by it in the performance of its duties
hereunder, other than the cost of securities, commodities and other
investments (including brokerage, commissions and other charges, if any)
purchased for the Sub-Trusts.
3. Term. The term of this Agreement shall begin on the date of its execution
and shall remain in effect for two years from that date and from year to
year thereafter, subject to the provisions for termination and all of the
other terms and conditions hereof, if such continuation is specifically
approved at least annually in the manner required by the Act. This
Agreement shall be submitted to the shareholders of the Trust and each
Sub-Trust for approval and shall automatically terminate if not approved by
a majority of the shares of the Sub-Trust.
4. Termination. This Agreement may be terminated at any time without the
payment of any penalty, by a majority of the Board of Trustees of the
Trust, by a vote of the majority of the outstanding shares of beneficial
interest of any Sub-Trust or by the Sub-Advisor on sixty (60) days written
notice to the Advisor.
This Agreement will terminate automatically in the event of the termination
of the Investment Advisory Agreement.
Notwithstanding any provision of this Agreement, this Agreement may not be
cancelled by the Advisor without the approval of a majority of the Board of
Trustees of the Trust.
This Agreement shall automatically terminate in the event of its
assignment. The Sub-Advisor may employ or contract with any other person,
persons, corporation, or corporations at its own cost and expense as it
shall determine in order to assist it in carrying out its obligations and
duties under this Agreement.
5. Sub-Advisor's Representations. Sub-Advisor represents and warrants that
each the Sub-Trust will at all times be invested in such a manner as to
ensure compliance with Section 817(h) of the Internal Revenue Code of 1986,
as amended, and Treasury Regulations, Section 1.817.5, relating to the
diversification requirements for variable annuity endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulation. Sub-Advisor will be relieved of this obligation and
shall be held harmless when direction from the Advisor or Trustees causes
non-compliance with Section 817(h) and/or Regulation Section 1.817-5.
Sub-Advisor agrees to provide quarterly reports to Advisor, executed by a
duly authorized officer of Sub-Advisor, within seven (7) days of the close
of each calendar quarter certifying as to compliance with said Section or
Regulations. In addition to the quarterly reports, Advisor may request and
Sub-Advisor agrees to provide Section 817 diversification compliance
reports at more frequent intervals, as reasonably requested by Advisor.
6. Liability. The Sub-Advisor shall not be liable for any error in judgment or
of law, or for any loss suffered by the Trust or any Sub-Trust in
connection with the matters to which this Agreement relates, except (1) a
loss resulting from willful misfeasance, bad faith or gross negligence on
the part of the Sub-Advisor in the performance of its obligations and
duties or (2) by reason of its reckless disregard of its obligations and
duties under this Agreement. Notwithstanding the foregoing, it is agreed
that the relative investment performance of the Sub- Trusts shall not
constitute a breach by Sub-Advisor of its obligations under this Agreement.
7. Portfolio Transactions Brokerage. Investment decisions for the Sub-Trusts
shall be made by Sub-Advisor independently from those for any other
investment companies and accounts advised or managed by Sub-Advisor. The
Sub-Trusts and such investment companies and accounts may, however, invest
in the same securities. When a purchase or sale of the same security is
made at substantially the same time on behalf of a Sub-Trust and/or another
investment company or account, the transaction will be averaged as to
price, and available investments allocated as to amount, in a manner which
Sub-Advisor believes to be equitable to the Sub-Trust and such other
investment company or account. In some instances, this investment procedure
may adversely affect the price paid or received by the Sub-Trust or the
size of the position obtained or sold by the Sub-Trust. To the extent
permitted by law, Sub-Advisor may aggregate the securities to be sold or
purchased for the Sub-Trusts with those to be sold or purchased for other
investment companies or accounts in order to obtain best execution.
Sub-Advisor shall place all orders for the purchase and sale of portfolio
securities for the accounts of the Sub-Trusts with broker-dealers selected
by the Sub-Advisor. In executing portfolio transactions and selecting
broker-dealers, the Sub-Advisor will use its best efforts to seek best
execution on behalf of the Sub-Trusts. In assessing the best execution
available for any transaction, the Sub-Advisor shall consider all factors
it deems relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability of
the broker-dealer, and the reasonableness of the commission, if any (all
for the specific transaction and on a continuing basis). In evaluating the
best execution available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Advisor may also consider the brokerage and
research services (as those terms are used in Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided to the Sub-Trusts
and/or other accounts over which the Sub-Advisor or an affiliate of the
Sub-Advisor (to the extent permitted by law) exercises investment
discretion. The Sub-Advisor is authorized to cause the Sub-Trusts to pay a
broker-dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Sub-Trusts which
is in excess of the amount of commission another broker-dealer would have
charged for effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker-dealer viewed in terms of that particular transaction or in terms of
all of the accounts over which investment discretion is so exercised.
8. Amendment. This Agreement may be amended at any time by agreement of the
parties, provided that the amendment shall be approved in the manner
required by the Act.
9. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Illinois.
10. Registration as an Investment Advisor. Advisor and Sub-Advisor each hereby
acknowledges that it is registered as an investment adviser under the
Investment Advisers Act of 1940, that it will use its reasonable best
efforts to maintain such registration, and that it will promptly notify the
other if it ceases to be so registered, if its registration is suspended
for any reason, or if it is notified by any regulatory organization or
court of competent jurisdiction that it should show cause why its
registration should not be suspended or terminated.
Witness the due execution hereof this _____ day of ________________, 1997.
Attest: COVA INVESTMENT ADVISORY
CORPORATION
__________________________ By:______________________________________
Attest: MISSISSIPPI VALLEY ADVISORS INC.
__________________________ By:______________________________________
Attest COVA SERIES TRUST
__________________________ By:______________________________________
EXHIBIT A
COVA SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Advisor hereunder, Advisor shall pay
to Sub-Advisor and Sub-Advisor agrees to accept as full compensation for all
services rendered hereunder, fees accrued daily and paid at the end of each
calendar month equal to a percentage of the average daily net assets of the
Sub-Trusts as follows:
Portfolio % Per Annum
_______________________________ _______________
Balanced Portfolio .75 of 1%
Small Cap Equity Portfolio .75 of 1%
Equity Income Portfolio .75 of 1%
Growth & Income Equity Portfolio .75 of 1%
