UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Tejon Ranch Co.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
879080109
(CUSIP Number)
Martin J. Whitman, 767 Third Avenue, New York, NY 10017, (212)888-6685
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 17, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 879080109 Page 2 of 22
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Third Avenue Value Fund
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON
WITH 10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,045,508
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24%
14 TYPE OF REPORTING PERSON*
IV
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 879010109 Page 3 of 22
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Third Avenue Small-Cap Value Fund
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON
WITH 10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
200,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.6%
14 TYPE OF REPORTING PERSON*
IV
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 879080109 Page 4 of 22
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
EQSF Advisers, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ X ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
3,245,508
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,245,508
PERSON
WITH 10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,245,508
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.6%
14 TYPE OF REPORTING PERSON*
IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 879080109 Page 5 of 22
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Martin J. Whitman
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON
WITH 10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Issuer
This statement relates to the Common Stock, par value $0.50,
of Tejon Ranch Co. (the "Issuer"). The address of the Issuer's principal
executive offices is P.O. Box 1000, Lebec, CA 93243.
Item 2. Identity and Background
The persons filing this statement are Third Avenue Value Fund,
a series of Third Avenue Trust, a Delaware business trust ("TAVF"), Third Avenue
Small-Cap Value Fund, a series of Third Avenue Trust, a Delaware business trust
("Small-Cap Value"), EQSF Advisers, Inc., a New York corporation ("EQSF"), and
Martin J. Whitman, all having their principal place of business at 767 Third
Avenue, New York, New York 10017 (TAVF, Small-Cap Value, EQSF and Mr. Whitman
are hereinafter collectively referred to as "Registrants").
TAVF and Small-Cap Value are investment companies registered
under the Investment Company Act of 1940. EQSF is an investment adviser
registered under the Investment Advisers Act of 1940 and provides investment
advisory services to TAVF and Small-Cap Value. Mr. Whitman, a United States
citizen, is the Chairman of the Board and President of TAVF, Small-Cap Value and
EQSF and controls (through ownership and an irrevocable proxy) a majority of the
outstanding shares of EQSF common stock. Mr. Whitman is also Chairman of the
Board and Chief Executive Officer of Danielson Holding Corporation, a Delaware
corporation and an insurance holding company ("DHC"), and M.J. Whitman, Inc., a
New York corporation and a registered broker-dealer ("MJW"), both of which have
their principal place of business at 767 Third Avenue, New York, NY 10017.
Mr. David M. Barse is the Executive Vice President of TAVF,
Small-Cap Value and EQSF, a director of EQSF and the President and Chief
Operating Officer and a director of DHC and MJW. Michael Carney is the Treasurer
and Chief Financial Officer of TAVF, Small-Cap Value, EQSF, DHC and MJW. Ian M.
Kirschner is the Secretary and General Counsel of TAVF, Small-Cap Value, EQSF,
DHC and MJW. Barbara Whitman is a registered representative at MJW and a
director of EQSF. The principal place of business of each of the foregoing is
767 Third Avenue, New York, New York 10017.
The name, position and business address of each trustee (other
than Mr. Whitman) of TAVF and Small-Cap Value is as follows:
<PAGE>
<TABLE>
<CAPTION>
Name Position Business Address
<S> <C> <C>
Phyllis W. Beck Assosciate Judge Superior Court of Pennsylvania
GSB Building, Suite 800
One Belmont Ave.
Bala Cynwyd, PA 19004-1611
Tibor Fabian Financial & Organizational 44 W. 62nd St., Apt. 19B
Consultant New York, NY 10023
Gerald Hellerman Financial & Corporate Hellerman Associates
Consultant 10965 Eight Bells Lane
Columbia, MD 21044
Marvin Moser, M.D. Clinical Professor of Medicine 13 Murray Hill Rd.
Scarsdale, NY 10583
Myron M. Sheinfeld Attorney Sheinfeld, Maley & Kay
1001 Fannin, Suite 3700
Houston, TX 77002
Martin Shubik Professor of Mathematical Yale University
and Institutional Economics Dept. of Economics
Box 2125, Yale Station
New Haven, CT 06520
Charles C. Walden Chief Investment Officer Knights of Columbus
1 Columbus Plaza
New Haven, CT 06510
</TABLE>
None of the Registrants nor any executive officer or director
of TAVF, Small-Cap Value or EQSF has, during the past five years, (a) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (b) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The aggregate purchase price of the 3,045,508 shares of the
Issuer purchased by TAVF was $41,114,358. The aggregate purchase price of the
200,000 shares of the Issuer purchased by Small-Cap Value was $2,700,000. All of
such shares were paid for with the respective working capital of TAVF and
Small-Cap Value.
<PAGE>
Item 4. Purpose of Transaction
The Registrants have acquired their shares for investment
purposes and not with a view to acquiring control of the Issuer. The Registrants
intend to discuss further with the Issuer questions of Board of Directors
representation.
Item 5. Interest in Securities of the Issuer
TAVF is the beneficial owner of 3,045,508 shares of the
Issuer, which constitutes approximately 24% of the outstanding shares of the
Issuer based on the number of such shares outstanding according to the Issuer's
quarterly report on Form 10-Q for the quarter ended March 31, 1997. Small-Cap
Value is the beneficial owner of 200,000 shares of the Issuer, which constitutes
approximately 1.6% of the outstanding shares of the Issuer. As the investment
adviser to TAVF and Small-Cap Value, EQSF has the sole power to vote and to
direct the disposition of the shares of the Issuer and thus can be deemed to
beneficially own 3,245,508 shares of the Issuer, which constitutes 25.6% of the
outstanding shares of the Issuer. Mr. Whitman may be deemed to have beneficial
ownership of the shares of the Issuer beneficially owned by EQSF by reason of
his control of EQSF. Mr. Whitman disclaims beneficial ownership of such shares
for all other purposes.
The shares of the Issuer reported on in this statement were
acquired on July 17, 1997 for a purchase price of $13.50 per share, pursuant to
privately negotiated Stock Purchase and Sale Agreements between Third Avenue
Trust and The Times Mirror Company (with respect to 2,195,508 shares) and The
Times Mirror Foundation (with respect to 1,050,000 shares).
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
EQSF has the right to vote the shares of the Issuer reported
on in this statement and to direct the disposition of such shares pursuant to
its Investment Advisory Agreement with each of TAVF and Small-Cap Value.
Item 7. Material to Be Filed as Exhibits
1. Joint Filing Agreement dated July 23, 1997.
2. Investment Advisory Agreements between EQSF and TAVF and
Small-Cap Value, respectively.
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
July 23, 1997
Date
Third Avenue Trust, on behalf of the
Third Avenue Value Fund series
By: /s/ MARTIN J. WHITMAN
Name: Martin J. Whitman
Title: Chairman, President and
Chief Executive Officer
Third Avenue Trust, on behalf of the
Third Avenue Small-Cap Value Fund series
By: /s/ MARTIN J. WHITMAN
Name: Martin J. Whitman
Title: Chairman, President and
Chief Executive Officer
EQSF Advisers, Inc.
By: /s/ MARTIN J. WHITMAN
Name: Martin J. Whitman
Title: Chairman, President and
Chief Executive Officer
/s/ MARTIN J. WHITMAN
Martin J. Whitman
JOINT FILING AGREEMENT
In accordance with Rule 13d-1 (f) under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing on behalf of each of them of a statement on Schedule 13D (including
amendments thereto) with respect to the Common Stock, $0.50 par value per share,
of Tejon Ranch Co., and that this Agreement be included as an Exhibit to such
joint filing. This Agreement may be executed in any number of counterparts all
of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereby execute this
Agreement this 23rd day of July, 1997.
EQSF ADVISERS, INC.
By:/s/ MARTIN J. WHITMAN
Martin J. Whitman
Chairman, President and Chief Executive Officer
THIRD AVENUE VALUE FUND
By:/s/ MARTIN J. WHITMAN
Martin J. Whitman
Chairman, President and Chief Executive Officer
THIRD AVENUE SMALL CAP VALUE FUND
By:/s/ MARTIN J. WHITMAN
Martin J. Whitman
Chairman, President and Chief Executive Officer
/s/ MARTIN J. WHITMAN
Martin J. Whitman
-1-
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") made this 28th day of
February 1997, by and between THIRD AVENUE TRUST, a Delaware trust (the "Trust),
on behalf of the Third Avenue 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.
<PAGE>
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
<PAGE>
(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.
<PAGE>
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 1940 Act) 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
<PAGE>
of 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
<PAGE>
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 Value Fund series
By:____________________________________
David M. Barse
Executive Vice President
The Adviser:
EQSF ADVISERS, INC.
By:____________________________________
Martin J. Whitman
President
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") made this 28th day of
February 1997, by and between THIRD AVENUE TRUST, a Delaware trust (the "Trust),
on behalf of the Third Avenue Small-Cap 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.
<PAGE>
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
<PAGE>
(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.
<PAGE>
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 1940 Act) 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
<PAGE>
of 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
<PAGE>
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 Small-Cap Value Fund series
By:____________________________________
David M. Barse
Executive Vice President
The Adviser:
EQSF ADVISERS, INC.
By:____________________________________
Martin J. Whitman
President
