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EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made this ___ day of ___________, 1996 between Bremer
Investment Funds, Inc., a Maryland corporation (the "Company"), and First
American Trust Company of Minnesota, a Minnesota corporation (the "Advisor").
WHEREAS, the Company shall become registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company; and
WHEREAS, the Company is initially authorized to issue shares of Class A
Common Stock (the Growth Stock Fund) and shares of Class B Common Stock (the
Bond Fund) (each, a Fund, and collectively, the "Funds"); and
WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940, as the
investment adviser for the Funds.
NOW, THEREFORE, the Company and the Adviser do mutually promise and
agree as follows:
1. Employment. The Company hereby employs the Adviser to manage the
investment and reinvestment of the assets of the Funds for the period and on
the terms set forth in this Agreement. The Adviser hereby accepts such
employment for the compensation herein provided and agrees during such period
to render the services and to assume the obligations herein set forth.
2. Authority of the Adviser. The Adviser shall supervise and manage
the investment portfolios of the Funds, and, subject to such policies as the
Board of Directors of the Company (the "Board") may determine, direct the
purchase and sale of investment securities in the day to day management of the
Funds. The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have
no authority to act for or represent the Company or the Funds in any way or
otherwise be deemed an agent of the Company or the Funds. However, one or more
shareholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Company, but without compensation or
reimbursement of expenses for such services from the Company. Nothing
contained herein shall be deemed to require the Company to take any action
contrary to its Articles of Incorporation, as amended, restated or supplemented
from time to time, or any applicable statute or regulation, or to relieve or
deprive the Board of its responsibility for and control of the affairs of the
Funds.
3. Expenses. The Adviser, at its own expense and without reimbursement
from the Company or the Funds, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for managing the
investments of the Funds. The Adviser shall not be required to pay any
expenses of a Fund except as provided herein if the total expenses borne by the
Fund, including the Adviser's fee and the fees paid to the Fund's
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Administrator but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, in any year (a) exceed that
percentage of the average net assets of the Fund for such year, as determined
by valuations made as of the close of each business day, which is the most
restrictive percentage provided by the state laws of the various states in
which the Fund's shares are qualified for sale or (b) if the states in which
the Fund's shares are qualified for sale impose no such restrictions, _______%.
The expenses of a Fund's operations borne by the Fund include by way of
illustration and not limitation, directors fees paid to those directors who are
not officers of the Company, the costs of preparing and printing registration
statements required under the Securities Act of 1933, as amended and the Act,
the expense of registering its shares with the Commission and in the various
states, the printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates (if any), director and officer
liability insurance, reports to shareholders, reports to government authorities
and proxy statements, interest charges, taxes, legal expenses, salaries of
administrative and clerical personnel, association membership dues, auditing
and accounting services, insurance premiums, brokerage and other expenses
connected with the execution of portfolio securities transactions, fees and
expenses of the custodian of the Fund's assets, expenses of calculating the net
asset value and repurchasing and redeeming shares, printing and mailing
expenses, charges and expenses of dividend disbursing agents, registrars and
stock transfer agents and the cost of keeping all necessary shareholder records
and accounts.
The Company shall monitor the expense ratios of the Funds on a monthly
basis. If the accrued amount of the expenses of a Fund exceeds the expense
limitation established herein, the Company shall create an account receivable
from the Adviser in the amount of such excess. In such a case, the monthly
payment of the Adviser's fee will be reduced by the amount of such excess,
subject to adjustment month by month during the balance of the Company's fiscal
year if accrued expenses thereafter fall below the expense limitation.
4. Compensation of the Adviser. For the services to be rendered by the
Adviser hereunder, the Company, through and on behalf of the Funds, shall pay
to the Adviser an advisory fee, paid monthly, based on the average net assets
of the Funds, as determined by valuations made as of the close of each business
day of the month. The monthly advisory fee shall be 1/12 of 0.7% (0.7% per
annum) on the average daily net assets of the Funds. For any month in which
this Agreement is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which it is
in effect and the fee computed upon the average net asset value of the business
days during which it is so in effect.
5. Ownership of Shares of the Fund. The Adviser shall not take an
ownership position in the Funds, and shall not permit any of its shareholders,
officers, directors or employees to take a long or short position in the shares
of the Funds, except for the purchase of shares of the Funds for investment
purposes at the same price as that available to the public at the time of
purchase or in connection with the initial capitalization of the Funds.
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6. Exclusivity. The services of the Adviser to the Funds hereunder are
not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others as long as the services hereunder are not impaired thereby.
During the period that this Agreement is in effect, the Adviser shall be the
Funds' sole investment adviser.
7. Liability. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be subject to liability to the Funds or
to any shareholder of the Funds for any act or omission in the course of, or
connected with, rendering services hereunder, or for any losses that may be
sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Adviser, subject to the control and
direction of the Board, shall have authority and discretion to select brokers
and dealers to execute portfolio transactions for the Funds and for the
selection of the markets on or in which the transactions will be executed. The
Adviser may cause the Funds to pay a broker-dealer which provides brokerage and
research services, as such services are defined in Section 28(e)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), a commission
for effecting a securities transaction in excess of the amount another
broker-dealer would have charged for effecting such transaction, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of brokerage and research services provided by the
executing broker-dealer, viewed in terms of either that particular transaction
or such broker-dealer's overall responsibilities with respect to the accounts
as to which such broker-dealer exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act). The Adviser shall provide such reports
as the Board may reasonably request with respect to the Funds' total brokerage
commissions and the manner in which that brokerage commission was allocated.
9. Code of Ethics. The Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and has provided
the Company with a copy of the code of ethics and evidence of its adoption.
Upon the written request of the Company, the Adviser shall permit the Company
to examine any reports required to be made by the Adviser pursuant to Rule
17j-1(c)(1) under the Act.
10. Amendments. This Agreement may be amended by the mutual consent of
the parties; provided, however, that in no event may it be amended without the
approval of the Board in the manner required by the Act, and by the vote of the
majority of the outstanding voting securities of the Funds, as defined in the
Act.
11. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by the Board or by a vote of the majority of the
outstanding voting securities of the Funds, as defined in the Act, upon giving
sixty (60) days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time upon the giving of sixty (60) days'
written notice to the Company. This Agreement shall terminate automatically in
the event of its assignment (as defined in Section 2(a)(4) of the Act). Subject
to prior termination as hereinbefore provided, this Agreement shall continue in
effect for an initial period beginning as of the date hereof and ending
__________ __, 1997
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and indefinitely thereafter, but only so long as the continuance after such
initial period is specifically approved annually by (i) the Board or by the
vote of the majority of the outstanding voting securities of the Funds, as
defined in the Act, and (ii) the Board in the manner required by the Act,
provided that any such approval may be made effective not more than sixty (60)
days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day first above written.
BREMER INVESTMENT FUNDS, INC.
By:_______________________________________
Xxxxxx X. Xxxxxxx
President
FIRST AMERICAN TRUST COMPANY OF MINNESOTA
By:_______________________________________
Xxxxxxx X. XxXxxxx
Vice President/Chief Financial Officer
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