Ex. 99.(d)
Form of Investment Advisory Agreement
THIRD AVENUE INTERNATIONAL VALUE FUND
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement dated as of ____, 2001, between
Third Avenue Trust (the "Trust"), a Delaware business trust, on behalf the
Third Avenue International Value Fund Series (the "Fund"), and EQSF
Advisers, Inc. (the "Adviser"), a New York corporation.
In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Fund with respect to the investment of the assets
of the Fund and to supervise and arrange the purchase and sale of assets
held in the investment portfolio of the Trust. The Adviser may delegate any
or all of its responsibilities to one or more sub-advisers or
administrators, subject to the approval of the Board of Trustees of the
Trust. Such delegation shall not relieve the Adviser of its duties and
responsibilities hereunder.
2. Duties and Obligations of the Adviser With Respect to
Investments of Assets of the Fund
(a) Subject to the succeeding provisions of this paragraph and
subject to the direction and control of the Trust's Board of Trustees, the
Adviser shall (i) act as investment adviser for and supervise and manage
the investment and reinvestment of the Fund's assets and in connection
therewith have complete discretion in purchasing and selling securities and
other assets for the Fund and in voting, exercising consents and exercising
all other rights appertaining to such securities and other assets on behalf
of the Fund; and (ii) arrange for the purchase and sale of securities and
other assets held in the investment portfolio of the Fund. Nothing
contained herein shall be construed to restrict the Fund's right to hire
its own employees or to contract separately with EQSF Advisers, Inc. or
others to provide administrative services to the Fund, including but not
limited to, the calculation of net asset value of the Fund's shares.
(b) In the performance of its duties under this Agreement, the
Adviser shall at all times use all reasonable efforts to conform to, and
act in accordance with, any requirements imposed by (i) the provisions of
the Investment Company Act of 1940, as amended (the "Act"), and of any
rules or regulations in force thereunder; (ii) any other applicable
provisions of law; (iii) the provisions of the Trust Instrument and By-Laws
of the Trust, as such documents are amended from time to time; (iv) the
investment objective, policies and restrictions applicable to the Fund as
set forth in the Fund's Prospectus (including its Statement of Additional
Information) and (v) any policies and determinations of the Board of
Trustees of the Trust.
(c) The Adviser will seek to provide qualified personnel to
fulfill its duties hereunder and will bear all costs and expenses
(including any overhead and personnel costs) incurred in connection with
its duties hereunder and shall bear the costs of any salaries or trustees
fees of any officers or trustees of the Trust who are affiliated persons
(as defined in the Act) of the Adviser. Subject to the foregoing, the Fund
shall be responsible for the payment of all the Fund's other expenses,
including (i) payment of the fees payable to the Adviser under paragraph 4
hereof; (ii) organizational expenses; (iii) brokerage fees and commissions;
(iv) taxes; (v) interest charges on borrowing; (vi) the cost of liability
insurance or fidelity bond coverage for the Fund's officers and employees,
and trustees' and officers' errors and omissions insurance coverage; (vii)
legal, auditing, and accounting fees and expenses; (viii) charges of the
Fund's administrator, custodian, transfer agent and other service
providers; (ix) the Fund's pro rata portion of dues, fees and charges of
any trade association of which the Fund is a member; (x) the expenses of
printing, preparing and mailing proxies, stock certificates and reports,
including the Fund's prospectus and statements of additional information,
and notices to shareholders; (xi) filing fees for the registration or
qualification of the Fund and its shares under federal or state securities
laws; (xii) the fees and expenses involved in registering and maintaining
registration of the Fund's shares with the Securities and Exchange
Commission; (xiii) the expenses of holding shareholder meetings; (xiv) the
compensation, including fees, of any of the Trust's trustees, officers or
employees who are not affiliated persons of the Adviser; (xv) all expenses
of computing the Fund's net asset value per share, including any equipment
or services obtained solely for the purpose of pricing shares or valuing
the Fund's investment portfolio; (xvi) expenses of personnel performing
shareholder servicing functions and all other distribution expenses payable
by the Fund; (xvii) expenses of redemption of shares and (xviii) litigation
and other extraordinary or non-recurring expenses and other expenses
properly payable by the Fund.
(d) The Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, but neither the
Adviser nor any of its officers, directors, employees, agents or
controlling persons shall be liable for any act or omission or for any loss
sustained by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties under this agreement,
provided, however, that the foregoing shall not constitute a waiver of any
rights which the Fund may have which may not be waived under applicable
law.
(e) Nothing in this Agreement shall prevent the Adviser or any
director, officer, employee or other affiliate thereof from acting as
investment adviser for any other person, firm or corporation, or from
engaging in any other lawful activity not prohibited by the Trust's and the
Adviser's Code of Ethics, and shall not in any way limit or restrict the
Adviser or any of its directors, employees or agents from buying, selling
or trading any securities for its or their own accounts or for the accounts
of others for whom it or they may be acting.
3. Portfolio Transactions
In the course of the Adviser's execution of portfolio transactions
for the Fund, it is agreed that the Adviser shall employ securities brokers
and dealers which, in its judgment, will be able to satisfy the policy of
the Fund to seek the best execution of its portfolio transactions at
reasonable expenses. For purposes of this Agreement, "best execution" shall
mean prompt, efficient and reliable execution at the most favorable price
obtainable. Under such conditions as may be specified by the Trust's Board
of Trustees in the interest of its shareholders and to ensure compliance
with applicable law and regulations, the Adviser may (a) place orders for
the purchase or sale of the Fund's portfolio securities with its
affiliates, X.X. Xxxxxxx, Inc. and X.X. Xxxxxxx Senior Debt Corp.; (b) pay
commissions to brokers other than its affiliates which are higher than
might be charged by another qualified broker or obtain brokerage and/or
research services considered by the Adviser to be useful or desirable in
the performance of its duties hereunder and for the investment management
of other advisory accounts over which it or its affiliates exercise
investment discretion; and (c) consider sales by brokers (other than its
affiliated distributor) of shares of the Fund and any other mutual fund for
which it or its affiliates act as investment adviser, as a factor in its
selection of brokers and dealers for the Fund's portfolio transactions.
4. Compensation of the Adviser
(a) The Fund agrees to pay to the Adviser out of the Fund's assets
and the Adviser agrees to accept as full compensation for all services
rendered by or through the Adviser a fee computed daily and payable monthly
in arrears an amount equal to 1/12 of 1.25% of the Fund's daily average net
assets for such month. For any period less than a month during which this
Agreement is in effect, the fee shall be prorated according to the
proportion which such period bears to a full month of 28, 29, 30 or 31
days, as the case may be.
(b) For purposes of this Agreement, the net assets of the
Fund shall be calculated pursuant to the procedures adopted by resolutions
of the Trustees of the Trust for calculating the net asset value of the
Fund's shares.
5. Indemnity
(a) The Fund hereby agrees to indemnify the Adviser and each of
the Adviser's directors, officers, employees, and agents (including any
individual who serves at the Adviser's request as director, officer,
partner, trustee or the like of another corporation) and controlling
persons (each such person being an "indemnitee") against any liabilities
and expenses, including amounts paid in satisfaction of judgements, in
compromise or as fines and penalties, and counsel fees (all as provided in
accordance with applicable corporate law) reasonably incurred by such
indemnitee in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body which he may be or may have been
involved as a party or otherwise or with which he may have been threatened,
while acting in any capacity set forth above in this paragraph or
thereafter by reason of his having acted in any such capacity, except with
respect to any matter as to which he shall have been adjudicated not to
have acted in good faith in the reasonable belief that his action was in
the best interest of the Fund and furthermore, in the case of any criminal
proceeding, so long as he had no reasonable cause to believe that the
conduct was unlawful, provided, however, that (1) no indemnitee shall be
indemnified hereunder against any liability to the Fund or its shareholders
or any expense of such indemnitee arising by reason of (i) willful
misfeasance, (ii) bad faith, (iii) gross negligence (iv) reckless disregard
of the duties involved in the conduct of his position (the conduct referred
to in such clauses (i) through (iv) being sometimes referred to herein as
"disabling conduct"), (2) as to any matter disposed of by settlement or a
compromise payment by such indemnitee, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless there has been a determination that such
settlement or compromise is in the best interests of the Fund and that such
indemnitee appears to have acted in good faith in the reasonable belief
that his action was in the best interest of the Fund and did not involve
disabling conduct by such indemnitee and (3) with respect to any action,
suit or other proceeding voluntarily prosecuted by any indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of
such action, suit or other proceeding by such indemnitee was authorized by
a majority of the full Board of the Trust. Notwithstanding the foregoing,
the Fund shall not be obligated to provide such indemnification (i) to the
extent such provision would waive any right which the Fund cannot lawfully
waive or (ii) with respect to any obligation, liability or expense of any
other series of shares of the Trust.
(b) The Fund shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification
might be sought hereunder if the Fund receives a written affirmation of the
indemnitee's good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to reimburse the
Fund unless it is subsequently determined that he is entitled to such
indemnification and if the trustees of the Trust determine that the facts
then known to them would not preclude indemnification. In addition, at
least one of the following conditions must be met: (A) the indemnitee shall
provide a security for his undertaking, (B) the Fund shall be insured
against losses arising by reason of any lawful advances, or (C) a majority
of a quorum of trustees of the Trust who are neither "interested persons"
of the Trust (as defined in Section 2(a)(19) of the Act) nor parties to the
proceeding ("Disinterested Non-Party Trustees") or an independent legal
counsel in a written opinion, shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the indemnitee ultimately will be found entitled to
indemnification.
(c) All determinations with respect to indemnification hereunder
shall be made (1) by a final decision on the merits by a court or other
body before whom the proceeding was brought that such indemnitee is not
liable by reason of disabling conduct or, (2) in the absence of such a
decision, by (i) a majority vote of a quorum of the Disinterested Non-Party
Trustees of the Trust, or (ii) if such a quorum is not obtainable or even,
if obtainable, if a majority vote of such quorum so directs, independent
legal counsel in a written opinion.
The rights accruing to any indemnitee under these provisions shall
not exclude any other right to which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective upon the date hereof and
shall continue in effect for a period of two years and thereafter from year
to year, but only so long as such continuation is specifically approved at
least annually in accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser at any time
without penalty upon giving the Fund sixty days written notice (which may
be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty days notice (which notice may
be waived by the Adviser), provided that such termination by the Fund shall
be directed or approved by the vote of a majority of the Trustees of the
Trust in office at the time or by the vote of the holders of a "majority of
the voting securities" (as defined in the Act) of the Fund at the time
outstanding and entitled to vote. This Agreement shall terminate
automatically in the event of its assignment (as "assignment" is defined in
the Act and the rules thereunder).
It is understood and hereby agreed that the name "Third Avenue"
and any associated logo and mask are the property of the Adviser for
copyright and other purposes. The Fund further agrees that the words "Third
Avenue" may freely be used by the Adviser for other investment companies,
entities or products. The Fund further agrees that, in the event that the
Adviser shall cease to act as investment adviser to the Fund, the Fund
shall promptly take all necessary and appropriate action to change its name
to names which do not include the words "Third Avenue"; provided, however,
that the Fund may continue to use the words "Third Avenue" if the Adviser
consents in writing to such use.
7. Notices
Any notice under this Agreement shall be in writing to the other
party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth day after the
postmark if such notice is mailed first class postage prepaid.
8. Governing Law
This Agreement shall be construed in accordance with the laws of
the State of New York for contracts to be performed entirely therein and in
accordance with the applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the
day and the year first above written.
Third Avenue Trust, for the
Third Avenue International Value Fund Series
By:
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman
EQSF ADVISERS, INC.
By:
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Name: Xxxxx Xxxxx
Title: President
