EXHIBIT NO. (5)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this 16th day of
September 1998, by and between THIRD AVENUE TRUST, a Delaware trust (the
"Trust), on behalf of the Third Avenue Real Estate Value Fund series of the
Trust (the "Fund"), and EQSF ADVISERS, INC., a New York corporation (the
"Adviser").
RECITALS:
The Fund and the Adviser wish to enter into an Agreement setting forth
the terms and conditions under which the Adviser will perform certain investment
advisory and management services for the Fund, and be compensated for such
services by the Fund.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the Fund and the Adviser hereby agree as follows:
1. INVESTMENT ADVISORY SERVICES.
1.1 During the Term (as such term is defined in Section 5 hereof) of
this Agreement, the Adviser shall serve as the investment adviser (within the
meaning of the Investment Advisers Act of 1940, as amended) of the Fund. In such
capacity, the Adviser shall render the following services and perform the
following functions for and on behalf of the Fund:
(a) Furnish continuous advice and recommendations to the Fund
with respect to the acquisition, holding or disposition of any or all of the
securities or other assets which the Fund may own or contemplate acquiring from
time to time;
(b) Cause its officers to attend meetings and furnish oral or
written reports, as the Fund reasonably may request, in order to keep the
Trustees and appropriate officers of the Fund fully informed regarding the
investment portfolio of the Fund, the investment recommendations of the Adviser,
and the considerations which form the basis for such recommendations; and
(c) Supervise the purchase and sale of securities in
accordance with the direction of the appropriate officers of the Fund.
1.2 The services of the Adviser to the Fund are not exclusive, and
nothing contained herein shall be deemed or construed to prohibit, limit, or
otherwise restrict the Adviser from rendering investment or other advisory
services to any third person, whether similar to those to be provided to the
Fund hereunder or otherwise.
2. COMPENSATION OF ADVISER.
2.1 For its services hereunder, the Fund shall pay the Adviser a fee
(the "Fee"), payable monthly in arrears, in an amount which shall be calculated
as follows, subject to the provisions of Section 2.2 hereof:
(a) 1/12 of .90% of the average daily net assets of the Fund
for such month.
2.2 Notwithstanding the provisions of Section 2.1 hereof, the amount of
the Fee to be paid with respect to the first and last months of this Agreement
shall be pro rated based on the number of calendar days in such quarter.
3. EXPENSES PAID BY THE ADVISER.
3.1 Subject to the provisions of Section 3.2 hereof, the Adviser shall
pay the following expenses relating to the management and operation of the Fund:
(a) All reasonable fees, charges, costs and expenses
(collectively, "Costs") and all reasonable compensation of all officers and
trustees of the Fund relating to the performance of their duties to the Fund;
provided, however, that the Adviser shall not pay any such amounts to any
Outside Trustees (for purposes of this Agreement, an "Outside Trustee" is any
trustee of the Fund who is not an "Interested Person," within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act")); and provided, further, that in the event that any person serving as an
officer of the Fund has both executive duties attendant to such office and
administrative duties to the Fund apart from such office, the Adviser shall not
pay any amounts relating to the performance of such administrative duties;
(b) All Costs of office equipment and personnel necessary for
and allocable to the performance of the obligations of the Adviser hereunder.
3.2 Except as provided in this Section 3 hereof, nothing contained in
this Agreement shall be deemed or construed to impose upon the Adviser any
obligation to incur, pay, or reimburse the Fund for any other Costs of or
relating to the Fund.
4. EXPENSES PAID BY THE FUND.
4.1 Except as provided in Section 3 hereof, the Fund hereby assumes and
shall pay all fees, costs and expenses incurred by, or on behalf, or for the
benefit of the Fund, including without limitation:
(a) All Costs of any custodian or depository;
(b) All Costs for bookkeeping, accounting and auditors'
services;
(c) All Costs of leased office space of or allocable to the
Fund within the offices of the Adviser or in such other place as may be mutually
agreed upon between the parties from time to time; and
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(d) All Costs of any transfer agent and registrar of
shares of the Fund ("Shares");
(e) All Costs incurred by any Outside Trustee of the Fund in
connection with the performance of his duties relating to the affairs of the
Fund in such capacity as an Outside Trustee of the Fund, and Costs relating to
the performance by any officer of the Fund, performing administrative duties on
behalf of the Fund apart from such office, all in accordance with Section 3.1(a)
hereof;
(f) All brokers' commissions and other Costs incurred in
connection with the execution of Fund portfolio transactions;
(g) All taxes and other Costs payable by or on behalf of the
Fund to federal, state or other governmental agencies;
(h) All Costs of printing, recording and transferring
certificates representing Shares;
(i) All Costs in connection with the registration of the Fund
and the Shares with the Securities and Exchange Commission ("SEC"), and the
continuous maintenance of the effectiveness of such registrations, and the
registration and qualification of shares of the Fund under state or other
securities laws, including, without limitation, the preparation and printing of
registration statements, prospectuses and statements of additional information
for filing with the SEC and other authorities;
(j) All Costs of preparing, printing and mailing prospectuses,
statements of additional information and reports to holders of Shares;
(k) All Costs of shareholders' and Trustees' meetings and of
preparing, printing and mailing all information and documents, including without
limitation all notices, financial reports and proxy materials, to holders of
Shares;
(l) All Costs of legal counsel for the Fund and for Trustees
of the Fund in connection with the rendering of legal advice to or on behalf of
the Fund, including, without limitation, legal services rendered in connection
with the Fund's existence, corporate and financial structure and relations with
its shareholders, registrations and qualifications of securities under federal,
state and other laws, issues of securities, expenses which the Fund has herein
assumed whether customary or not, and extraordinary matters, including, without
limitation, any litigation involving the Fund, Trustees, or officers of the Fund
relating to the affairs of the Fund, employees or agents of the Fund; and
(m) All Costs of filing annual and other reports with the SEC
and other regulatory authorities.
In the event that the Adviser provides any of the foregoing services or pays any
of these expenses, the Fund promptly shall reimburse the Adviser therefor.
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5. TERM; TERMINATION.
5.1 This Agreement shall continue in effect, unless sooner terminated
in accordance with the provisions of Section 5.2 hereof, for a period of two
years beginning the date hereof, and shall continue in effect from year to year
thereafter (collectively, the "Term"); provided, however, that any such
continuation shall be expressly approved at least annually either by the Board
of Trustees of the Fund, including a majority of the directors who are not
parties hereto or Interested Persons of any such party, cast at a meeting called
for the purpose of voting on such renewal, or the affirmative vote of a majority
of the Outstanding Voting Securities (as such term is defined in Section
2(a)(42) of the 0000 Xxx) of the Fund.
(a) Any continuation of this Agreement pursuant to Section 5.1
hereof shall be deemed to be specifically approved if such approval occurs:
(i) with respect to the first continuation
hereof, during the 60 days prior to and
including the earlier of (A) the date specified herein for the termination of
this Agreement in the absence of such approval, or (B) the second anniversary of
the execution of this Agreement; and
(ii) with respect to any subsequent continuation
hereof, during the 60 days prior
to and including the first anniversary of the date upon which the most recent
previous annual continuance of this Agreement became effective; or
(iii) at such other date or time provided in or
permitted by Rule 15a-2 of the 1940 Act.
5.2 This Agreement may be terminated at any time, without penalty,
as follows:
(a) By a majority of the Trustees of the Fund who are not
parties hereto or Interested Persons of any such party, or by the affirmative
vote of a majority of the Outstanding Voting Securities of the Fund, upon at
least 60 days' prior written notice to the Adviser at its principal place of
business; and
(b) By the Adviser, upon at least 60 days' written notice
to the Fund at its principal place of business.
6. RETENTION OF CONTROL BY FUND. The Fund acknowledges that the investment
advice and recommendations to be provided by the Adviser hereunder are advisory
in nature only. The Fund further acknowledges that, at all times during the Term
hereof, the Fund (and not the Adviser) shall retain full control over the
investment policies of the Fund. Nothing contained herein shall be deemed or
construed to limit, prohibit or restrict the right or ability of the trustees of
the Fund to delegate to the appropriate officers of the Fund, or to a committee
of directors of the Fund, the power to authorize purchases, sales or other
actions affecting the portfolio of the Fund between meetings of the Board of
Trustees of the Fund; provided, however, that all such purchases, sales or other
actions so taken during such time shall be consistent with the investment policy
of
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the Fund and shall be reported to the Board of Trustees of the Fund at its
next regularly scheduled meeting.
7. BROKERS AND BROKERAGE COMMISSIONS.
7.1 For purposes of this Agreement, brokerage commissions paid by the
Fund upon the purchase or sale of the Fund's portfolio securities shall be
considered a cost of securities of the Fund and shall be paid by the Fund in
accordance with Section 4.1(e) hereof.
7.2 The Adviser shall place Fund portfolio transactions with brokers
and dealers who render satisfactory service in the execution of orders at the
most favorable prices and at reasonable commission rates; provided, however,
that the Adviser may pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
broker or 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 the brokerage and research services provided by such
broker or dealer, in terms of either that particular transaction or the overall
responsibilities of the Adviser.
7.3 In placing portfolio business with broker-dealers for or on behalf
of the Fund, the Adviser shall seek the best execution of each such transaction,
and all such brokerage placements shall be consistent with the Rules of Conduct
of the National Association of Securities Dealers, Inc. Notwithstanding the
foregoing, the Fund shall retain the right to direct the placement of all
portfolio transactions for or on behalf of the Fund, and, in furtherance
thereof, the Fund may establish policies or guidelines to be followed by the
Adviser in its placement of Fund portfolio transactions pursuant to the
foregoing provisions. The Adviser shall report to the Board of Trustees of the
Fund at least on a quarterly basis regarding the placement of Fund portfolio
transactions.
7.4 The Adviser shall not deal with any affiliate in any transaction
hereunder in which such affiliate acts as a principal, nor shall the Adviser, in
rendering services to the Fund hereunder, execute any negotiated trade with any
affiliate if execution thereof involves such affiliate's acting as a principal
with respect to any part of an order for or on behalf of the Fund.
8. PURCHASES BY AFFILIATES. Neither the Adviser nor any officer or director
thereof shall take a short position in Shares of the Fund. Any direct purchase
of Shares of the Fund by any officer or director of the Fund (or by any deferred
benefit plan established for the benefit of such officer or director) shall be
made for investment purposes at the current price for such Shares available to
the public.
9. ASSIGNMENT. This Agreement may not be assigned by either party hereto. This
Agreement shall terminate automatically in the event of any assignment (as such
term is defined in Section 2(a)(4) of the 1940 Act). Any attempted assignment of
this Agreement shall be of no force and effect.
10. AMENDMENTS. This Agreement may be amended in writing signed by both parties
hereto; provided, however, that no such amendment shall be effective unless
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approved by a majority of the trustees of the Fund who are not parties hereto or
Interested Persons of any such party cast at a meeting called for the purpose of
voting on such amendment and by the affirmative vote of a majority of the
outstanding Voting Securities of the Fund.
11. GOVERNING LAW. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York, without
reference to the conflict of laws provisions thereof. In the event of any
inconsistency between this Agreement and the 1940 Act, the 1940 Act shall
govern, and the inconsistent provisions of this Agreement shall be construed so
as to eliminate such inconsistency.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
The Fund:
THIRD AVENUE TRUST, for the Third Avenue
Real Estate Value Fund series
By:
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Xxxxx X. Xxxxx
President
The Adviser:
EQSF ADVISERS, INC.
By:
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Xxxxxx X. Xxxxxxx
Chairman
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