INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 1st day of June, 1998
by and between FUNDAMENTAL FUNDS, INC., a Maryland corporation,
on behalf of its series, the NEW YORK MUNI (the "Fund") and
TOCQUEVILLE ASSET MANAGEMENT L.P., a limited partnership (the
"Interim Investment Adviser");
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the
rules and regulations promulgated thereunder; and
WHEREAS, the Interim Investment Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended (the "Investment Advisers Act"), and engages in the
business of acting as an investment adviser; and
WHEREAS, the Fund and the Interim Investment Adviser desire to
enter into an agreement to provide for the management of the
assets of the Fund on an interim basis on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt
whereof is hereby acknowledged, the parties hereto agree as
follows:
1. Management. The Interim Investment Adviser shall act as
interim investment adviser for the Fund for a period of up to,
but not exceeding, 120 days from June 1, 1998, and shall, in
such capacity, supervise the investment and reinvestment of the
cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the
Fund's Board of Directors. The Interim Investment Adviser shall
give the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as investment adviser.
2. Duties of Interim Investment Adviser. In carrying out its
obligation under paragraph 1 hereof, the Interim Investment
Adviser shall, subject at all times to the policies and control
of the Fund's Board of Directors:
(a) supervise and manage all aspects of the Fund's operations;
(b) provide the Fund or obtain for it, and thereafter
supervise, such executive, administrative, clerical and
shareholder servicing services as are deemed advisable by the
Fund's Board of Directors;
(c) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax
returns, reports to the Fund's shareholders and reports to and
filings with the Securities and Exchange Commission and state
Blue Sky authorities;
(d) provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and
similar items for the Fund's principal office;
(e) provide the Board of Directors of the Fund on a regular
basis with financial reports and analyses on the Fund's
operations and the operations of comparable investment companies;
(f) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Fund, and whether concerning the
individual issuers whose securities are included in the Fund or
the activities in which they engage, or with respect to
securities which the Investment Adviser considers desirable for
inclusion in the Fund;
(g) determine what issuers and securities shall be
represented in the Fund's portfolio and regularly report them to
the Board of Directors of the Fund;
(h) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and
regularly report thereon to the Board of Directors of the Fund;
and
(i) take, on behalf of the Fund, all actions which appear to
the Fund necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including the
placing of orders for the purchase and sale of portfolio
securities.
3. Broker-Dealer Relationships. The Interim Investment
Adviser is responsible for decisions to buy and sell securities
for the Fund, broker-dealer selection, and negotiation of
brokerage commission rates. The Interim Investment Adviser's
primary consideration in effecting a security transaction will
be execution at a price that is reasonable and fair compared to
the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable
transactions, including similar securities being purchased or
sold on a securities exchange during a comparable period of time.
In selecting a broker-dealer to execute each particular
transaction, the Interim Investment Adviser will take the
following into consideration: the best net price available; the
reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the
order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a
continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies and procedures as the Board of
Directors may determine, the Interim Investment 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
its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Interim
Investment Adviser for the Fund's use an amount of commission
for effecting a portfolio investment transaction in excess of
the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Interim
Investment Adviser determines 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 Interim Investment Adviser's overall responsibilities with
respect to the Fund. The Interim Investment Adviser is further
authorized to allocate the orders placed by it on behalf of the
Fund to such brokers and dealers who also provide research or
statistical material, or other services to the Fund or the
Interim Investment Adviser for the Fund's use. Such allocation
shall be in such amounts and proportions as the Interim
Investment Adviser shall determine and the Interim Investment
Adviser will report on said allocations regularly to the Board
of Directors of the Fund indicating the brokers to whom such
allocations have been made and the basis therefor.
4. Control by Board of Directors. Any investment program
undertaken by the Interim Investment Adviser pursuant to this
Agreement, as well as any other activities undertaken by the
Interim Investment Adviser on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the
Board of Directors of the Fund.
5. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, the Interim Investment
Adviser shall at all times conform to:
(a) all applicable provisions of the Investment Company Act
and the Investment Advisers Act and any rules and regulations
adopted thereunder as amended; and
(b) the provisions of the Registration Statements of the Fund
under the Securities Act of 1933, as amended, and the Investment
Company Act; and
(c) the provisions of the Articles of Incorporation of the
Fund, as amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and the Interim Investment Adviser as
follows:
(a) The Interim Investment Adviser shall furnish, at its
expense and without cost to the Fund, the services of a
President, Chief Financial Officer, and to the extent necessary,
such additional officers as may be required by the Fund for the
proper conduct of its affairs.
(b) The Interim Investment Adviser shall further maintain, at
its expense and without cost to the Fund, a trading function in
order to carry out its obligations under subparagraph (i) of
paragraph 2 hereof to place orders for the purchase and sale of
portfolio securities for the Fund.
(c) All of the ordinary business expenses incurred in the
operations of the Fund and the offering of its shares shall be
borne by the Fund unless specifically provided otherwise in this
paragraph 6. These expenses include but are not limited to
brokerage commissions, legal, auditing, taxes or governmental
fees, the cost of preparing share certificates, custodian,
depository, transfer and shareholder service agent costs,
expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale,
insurance premiums on property or personnel (including officers
and directors if available) of the Fund which inure to its
benefit, expenses relating to trustee and shareholder meetings,
the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Fund
in connection with membership in investment company
organizations and the cost of printing copies of prospectuses
and statements of additional information distributed to
shareholders.
7. Compensation. The Fund shall pay the Interim Investment
Adviser a portfolio management fee with respect to the Fund,
which fee shall be computed on the basis of the average net
asset value of the Fund as ascertained at the close of each
business day and which fee shall be paid monthly within three
(3) business days following the end of the month in accordance
with the following schedule:
Net Asset Value Annual Fee Payable
Net asset value to $100,000,000 Net asset value of $100,000,000
or more but less than $200,000,000 Net asset value of
$200,000,000 or more but less than $300,000,000 Net asset value
of $300,000,000 or more but less than $400,000,000 Net asset
value of $400,000,000 or more but less than $500,000,000 Net
asset value of $500,000,000 or more .50% .48% .46% .44% .42%
.40%
8. Non-Exclusivity. The services of the Interim Investment
Adviser to the Fund are not to be deemed to be exclusive, and
the Interim Investment Adviser shall be free to render
investment advisory and corporate administrative or other
services to others (including other investment companies) and to
engage in other activities. It is understood and agreed that
officers or Partners of the Interim Investment Adviser may serve
as officers or directors of the Fund, and that officers or
directors of the Fund may serve as officers or partners of the
Interim Investment Adviser to the extent permitted by law; and
that the officers and partners of the Interim Investment Adviser
are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving
as partners, officers or partners of any other firm or
corporation, including other investment companies.
9. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in
force and effect for up to 120 days pending (i) consummation of
the Agreement and Plan of Reorganization providing for the
transfer of the Fund's assets to a separate newly-created series
of The Tocqueville Trust, (ii) approval of a permanent
investment adviser, or (iii) approval of another interim
investment adviser.
10. Termination. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Fund's
Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. This Agreement may be terminated
by the Interim Investment Adviser on twenty (20) days' written
notice to the Fund. The notice provided for herein may be
waived by the Fund. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment"
for the purpose having the meaning defined in Section 2(a)(4) of
the Investment Company Act.
11. Liability of Interim Investment Adviser and
Indemnification. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Interim Investment Adviser
or any of its officers, trustees or employees, it shall not be
subject to liability to the Fund or to any shareholder of the
Fund for any 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.
12. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the
other party at such address as such other party may designate
for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Fund and that
of the Interim Investment Adviser shall be 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000. If to the Fund, an additional copy of any
notice under this Agreement shall be provided to Kramer, Levin,
Naftalis & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
attention to Xxxx Xxxxxxxxxx, Esq. If to the Interim Investment
Adviser, an additional copy of any notice under this Agreement
shall be provided to Xxxxxx & Xxxxxxx, Xxx Xxxxxxx Xxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, attention to Xxxxxx Xxx Xxxxxx, Esq.
13. Questions of Interpretation. Any question of
interpretation of any term or provision of this Agreement having
a counterpart in or otherwise derived from a term or provision
of the Investment Company Act shall be resolved by reference to
such term or provision of the Act and to interpretations
thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission
issued pursuant to said Act. In addition, where the effect of a
requirement of the Investment Company Act reflected in any
provision of this Agreement is released by rules, regulation or
order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule,
regulation or order.
14. Miscellaneous. The Interim Investment Adviser will
notify the Fund of any changes in the general partner of its
limited partnership within a reasonable time after such change.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective
officers on the day and year first above written.
FUNDAMENTAL FUNDS, INC.
on behalf of the New York Muni Fund
Attest: By:
TOCQUEVILLE ASSET MANAGEMENT L.P.
Attest:
By:
