EXHIBIT 5.3
THE NAVELLIER PERFORMANCE FUNDS
INVESTMENT ADVISORY AGREEMENT
FOR
THE NAVELLIER SMALL CAP VALUE PORTFOLIO
AGREEMENT made as of the 12th day of September, 1997, by and between The
Navellier Small Cap Value Portfolio ("Portfolio") of THE NAVELLIER PERFORMANCE
FUNDS, a business trust organized under the laws of the State of Delaware (the
"Fund"), and NAVELLIER MANAGEMENT, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Small Cap
Value Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is being registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser with an emphasis on over the counter stocks; and
WHEREAS, the Portfolio desires to retain the Adviser as investment adviser
to furnish advisory and portfolio management services to the Portfolio;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Portfolio and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Portfolio hereby appoints the Adviser to act
as the investment adviser to the Portfolio and, subject to the supervision of
the Board of Trustees of the Portfolio, to provide investment advisory services
to the Portfolio as hereinafter set forth: (i) to obtain and evaluate such
information and advice relating to the economy, securities markets, and
securities as it deems necessary or useful to discharge its duties hereunder;
(ii) to continuously manage the assets of the Portfolio in a manner consistent
with applicable law and the investment objectives and policies set forth in the
most current prospectus and statement of additional information of the Fund
under the Securities Act of 1933 (the "Prospectus"); (iii) to determine which
issuers will be deemed "Qualified Issuers" (as defined in the Prospectus);
(iv) to determine the timing of purchases, sales, and dispositions of
securities; (v) to take such further action in its sole discretion (but always
in compliance with applicable law and the Prospectus) without obligation to give
prior notice to the Board of Trustees of the Portfolio, or the Custodian,
including the placing of purchase and sale orders on behalf of the Portfolio as
it shall deem necessary and appropriate; (vi) to furnish to or place at the
disposal of the Portfolio such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the
Portfolio may, from time to time, reasonably request; (vii) to take such actions
necessary or appropriate to carry out the decisions of the Portfolio's Board of
Trustees; (viii) to make decisions for the Portfolio as to the manner in which
voting rights, rights to consent to trust action, and any
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other rights pertaining to how the Portfolio's securities shall be exercised
("Portfolio Voting Rights"). The Portfolio has directed the Custodian, and
Custodian as agreed, to act in accordance with the instructions of the
Adviser. The Adviser shall at no time have custody of or physical control
over the investment account assets or securities, and the Adviser shall not
be liable for any act or omission of the Custodian. The Adviser shall
maintain records required under the Investment Advisers Act of 1940
("Advisers Act") and shall make them available to the Portfolio or its
designees for review or inspection upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost
of rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Portfolio,
furnish the services of such members of the Adviser's organization as may be
duly elected to be officers of the Portfolio, subject to their individual
consent to serve and to any limitations imposed by law.
The Portfolio will pay or cause to be paid all other expenses of the
Portfolio (except for the expenses to be paid by the Portfolio's Distributor),
including, without limitation, the following: (i) services rendered by the
Custodian and the Transfer Agent, (ii) fees, voluntary assessments, and other
expenses incurred in connection with membership in investment company
organizations, (iii) cost of stock certificates, reports, proxy materials and
notices to shareholders, and other like miscellaneous expenses, (iv) brokerage
commissions and other brokerage expenses, (v) taxes (including any income or
franchise taxes), and any fees payable to federal, state, and other governmental
agencies, (vi) fees and salaries payable to the Trustees, officers, and advisory
board members of the Portfolio, if any, (vii) auditing the Fund's books and
accounts, (viii) the cost of bookkeeping and accounting services, (ix) any and
all Portfolio legal expenses, (x) costs of mailing and tabulating proxies and
costs of shareholders' and Trustees' meetings, (xi) the cost of investment
company literature and other publications provided by the Portfolio to its
Trustees and officers, (xii) costs of any liability, uncollectible items of
deposit and other insurance or fidelity bonds, (xiii) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Portfolio,
(xiv) costs of printing and mailing monthly statements and confirmations,
(xv) expense of organizing the Portfolio, (xvi) filing fees and expenses
relating to the registration and qualification of the Portfolio's shares under
federal and/or state securities laws and maintaining such registrations and
qualifications and (vii) other expenses properly payable by the Portfolio.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Portfolio shall pay to the Adviser, on a monthly basis,
an annual fee of one and a quarter percent (1.25%) (the "Management Fee") of the
Portfolio's average daily net assets. Payment of the Adviser's compensation for
the preceding month shall be made as
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promptly as possible after the last day of each such month. The compensation
for the period from the effective date hereof to the next succeeding last day
of the month shall be prorated according to the proportion which such period
bears to the full month ending on such date, and provided further that, upon
any termination of this Agreement before the end of the month, such
compensation for the period from the end of the last month ending prior to
such termination shall be prorated according to the proportion which such
period bears to a full month, and shall be payable upon the date of
termination. If the annual operating expenses borne by the Fund relating to
any Portfolio, including amounts payable to the Adviser hereunder paid or
payable by such Portfolio for any fiscal year, exceed the applicable expense
limitations imposed by state securities laws or regulations thereunder (as
same may be adjusted from time to time), the Adviser will reduce its
Management Fee to the extent of such excess and if required, pursuant to any
such laws or regulations ((unless otherwise waived), will reimburse the
Portfolio for annual operating expenses in excess of any such expense
limitation up to the amount of the Management Fee payable to it during that
fiscal year with respect to the Portfolio. The Adviser has the right, but
not the obligation, to waive any portion or all of its Management Fee, from
time to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period,
and dividing the resulting total by the number of business days during such
period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or fact, or, for any loss suffered
by the Portfolio or its investors in connection with the matters to which this
Agreement relates, except (i) a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under this Agreement, or (ii) a loss for which the Adviser would not be
permitted to be indemnified under the federal Securities laws. The Portfolio
also agrees to indemnify Adviser to the extent provided for and agreed to by the
parties in that agreement entitled Indemnification Agreement executed by both
parties on this date and incorporated herein as Exhibit A and made a part
hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof and shall continue in effect unless
sooner terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Trustees of
the Portfolio; or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Portfolio, and, in addition, (c) by the
vote of a majority of the Trustees of the Portfolio who are not parties hereto
nor interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees of the Portfolio, or by a vote of a majority
(as defined in the Act) of the outstanding voting securities of the Portfolio,
in either case upon written notice to the Adviser, and it may be terminated by
the Adviser upon sixty (60) days' written notice to the Portfolio. This
Agreement shall automatically terminate in the event of its assignment,
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within the meaning of the Act, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct form, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by
agreement of the parties; provided, that such amendment shall be approved both
by the vote of a majority of Trustees of the Portfolio, including a majority of
Trustees who are not parties to this Agreement or interested persons of any such
party to this Agreement (other than as Trustees of the Portfolio) cast in person
at a meeting called for that purpose, and by the holders of a majority (as
defined in the Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Portfolio to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Portfolio nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to
the benefit of the Portfolio and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Portfolio acknowledge that the name
"Navellier" is and shall remain the sole property of the Adviser,
notwithstanding the use thereof by the Portfolio. The Portfolio may use the
name "The Navellier Performance Fund, The Navellier Small Cap Value Portfolio"
or any name derived from the name "Navellier" only for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Adviser and for only so long as Navellier Management, Inc.,
remains as Adviser to the Portfolio. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Portfolio will
(to the extent that it is lawfully able) cease to use such a name or any other
name connected with the Adviser or any organization which shall have succeeded
to the business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms
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"vote of a majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested person" shall have the respective
meanings specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of Delaware. Any dispute or controversy
arising out of this Agreement shall be either submitted to arbitration (if both
parties agree) in Reno, Nevada (near the Fund's principal place of business) in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc., or decided by a trier of fact in a federal or state
court in Reno, Nevada, and in no other jurisdiction or court venued outside of
Reno, Nevada.
13. ACKNOWLEDGEMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investments Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS.
This Agreement integrates all prior discussions, negotiations and agreements
between the parties relating to Adviser's and Portfolio's agreement relating to
the performance of investment advisory services for the Portfolio, and no
evidence or parol evidence may be introduced to vary or change the terms of this
written Agreement which is the full and final expression of the parties'
agreement. Any change in the terms of this Agreement must be in writing signed
by both parties.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
THE NAVELLIER SMALL CAP VALUE
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
By:
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▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
By:
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Attest: ▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
/s/ By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Trustee
NAVELLIER MANAGEMENT, INC.
By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
Attest:
/s/
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EXHIBIT A
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INDEMNIFICATION AGREEMENT
The Navellier Small Cap Value Portfolio of The Navellier Performance Funds
(the "Fund") and Navellier Management, Inc. (the "Advisor") agree as follows:
1. The Fund agrees with the Advisor, for the benefit of the Advisor and
each person, if any, who controls the Advisor within the meaning of Section 15
of the Securities Act and each and all and any of them, to indemnify and hold
harmless the Advisor and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several (including
reasonable legal fees and expenses) to which they or any of them may become
subject under the Securities Act or under any other statute, at common law or
otherwise, and to reimburse the Advisor and such controlling persons, if any,
for any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them in connection with any litigation,
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, filed with the SEC, or any amendment
thereof or supplement thereto, or which arise out of, or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without the
consent of the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
prospectus, or any amendment thereof of or supplement thereof, or arising out
of, or based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
such Registration Statement or Prospectus or any amendment thereof or supplement
thereto. The Advisor and each such controlling person shall, within thirty (30)
days after the complaint shall have been served upon the Advisor or such
controlling person in respect of which indemnity may be sought from the Fund on
account of its agreement contained in this paragraph, notify the Fund in writing
of the commencement thereof. The omission of the Advisor of such controlling
person so to notify the Fund of any such litigation shall relieve the Fund from
any liability which it may have to the Advisor or such controlling person on
account of the indemnity agreement contained in this paragraph if such failure
to timely notify the Fund has resulted in substantial prejudice to the Fund, but
shall not relieve the Fund from any liability which it may have to the Advisor
or controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Advisor or any such controlling person and notice of the
commencement thereof shall have been timely given to the Fund, the Fund shall be
entitled to participate in (and, to the extent that it shall wish, to direct)
the defense thereof at its own expense, but such defense shall be conducted by
counsel of good standing and reasonably satisfactory to the Advisor or such
controlling person(s) or defendant(s) in the litigation. The indemnity
agreement of the Fund contained in this paragraph shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Advisor or any such controlling person, and shall survive any delivery of
shares of the
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Fund. The Fund agrees to notify the Advisor promptly of the commencement of
any litigation or proceeding against it or any of it officers or directors of
which it may be advised in connection with the issue and sale of shares of
the Fund.
2. Anything herein to the contrary notwithstanding, the agreement in
paragraph 1 of this Indemnification Agreement, insofar as it constitutes a basis
of reimbursement by the Fund for liabilities (other than payment by the Fund of
expenses incurred or paid in the successful defense of any action, suit or
proceeding) arising under the Securities Act, shall not extend to the extent of
any interest therein of any person who is an underwriter or a partner or
controlling person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a Trustee of the Fund,
except to the extent that an interest of such character shall have been
determined by a court of appropriate jurisdiction as not against public policy
as expressed in the Securities Act. Unless in the opinion of counsel for the
Fund the matter has been adjudicated by controlling precedent, the Fund, will,
if a claim for such reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is against the public
policy as expressed in the Securities Act.
3. The Advisor agrees to indemnify and hold harmless the Fund and
its Trustees and such officers as shall have signed any Registration Statement
filed with the Commission from and against any and all losses, claims, damages,
or liabilities, joint or several, to which the Fund or such Trustees or officers
may become subject under the Securities Act, under any other statute, at common
law or otherwise, and will reimburse the Fund or such Trustees or officers for
any legal or other expenses (including the cost of any investigation and
preparation) reasonably incurred by it or them or any of them in connection with
any litigation, whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities, or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made by the Fund in reliance upon
information furnished in writing to the Fund by the Advisor for inclusion in any
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto or otherwise for distribution or publication. The Advisor shall not be
liable for amounts paid in settlement of any such litigation if such settlement
was effected without its consent. The Fund and its Trustees and such officers
or defendant(s), in any such litigation, shall, within thirty (30) days after
the complaint shall have been served upon the Fund or any such Trustee or
officer in respect of which indemnity may be sought from the Advisor or account
of its agreement contained in this paragraph, notify the Advisor in writing of
the commencement thereof. The omission of the Fund or such Trustee or officer
so to notify the Advisor of any such litigation shall relieve the Advisor from
any liability which it may have to the Fund or such Trustee or officer of
liability which it may have to the Fund or such Trustee or officer on account of
the indemnity agreement contained in this paragraph, but shall not relieve the
Advisor from any liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement contained in this
paragraph. In case any such litigation shall be brought against the Fund or any
such Trustee or officer and timely notice of the commencement thereof shall have
been so given to the Advisor, the Advisor shall be entitled to participate in
(and, to the extent it shall wish, to direct) the defense thereof at its own
expense, but such defense shall be conducted by counsel of good standing and
satisfactory to the Fund. The indemnity agreement of the Advisor
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contained in this paragraph shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Fund and
shall survive any delivery of shares of the Fund. The Fund agrees to notify
the Advisor promptly of the commencement of any litigation or proceeding
against it or any of its officers or Trustees or against any such controlling
person of which it may be advised in connection with the issue and sale of
the Fund's shares.
4. Notwithstanding any provision contained in this Agreement, no
party hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence, in the performance of their duties, or by reason of their
reckless disregard of their obligations and duties under this Agreement.
5. Except as expressly provided in paragraphs 1 and 3 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Advisor, and the persons expressly provided for in paragraphs 1
and 3, their respective heirs, successor, personal representatives and assigns,
and except as so provided, nothing expressed or mentioned herein is intended or
shall be construed to give any person, firm or corporation, other than the Fund,
the Advisor, and the persons expressly provided for in paragraphs 1 and 3, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. Except as so
provided, the terms "heirs, successors, personal representatives and assigns"
shall not include any purchaser of shares merely because of such purchase.
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ATTEST: THE NAVELLIER SMALL CAP VALUE
PORTFOLIO OF THE NAVELLIER
PERFORMANCE FUNDS
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By:
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▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
By:
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▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Trustee
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
ATTEST: NAVELLIER MANAGEMENT, INC.
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By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
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