EXHIBIT 99(h)(2)
SUB-ADMINISTRATION AGREEMENT
THIS SUB-ADMINISTRATION AGREEMENT, dated as of this 8th day of August,
2002, (the "Agreement"), between PFPC INC., a Massachusetts corporation
("PFPC"), and Third Avenue Management LLC (the "Administrator").
WHEREAS, the Administrator provides administration services to Third
Avenue Variable Series Trust (the "Fund"), an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Administrator desires to retain PFPC to render certain
sub-administrative services with respect to each investment portfolio listed in
Schedule A hereto, as the same may be amended from time to time by the parties
hereto (collectively, the "Portfolios"), and PFPC is willing to render such
services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
Article 1 DEFINITIONS.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
officer of the Administrator; or (ii) any person, whether or not such
person is an officer or employee of the Administrator, duly authorized
to give Oral Instructions or Written Instructions on behalf of the
Administrator as indicated in writing to PFPC from time to time.
(c) "Board Members" shall mean the Directors or Trustees of
the governing body of the Fund, as the case may be.
(d) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
(e) "Commission" shall mean the Securities and Exchange
Commission.
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(f) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custody Agreement.
(g) "1933 Act" shall mean the Securities Act of 1933 and the
rules and regulations promulgated thereunder, all as amended from time
to time.
(h) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(i) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by PFPC from a person
reasonably believed by PFPC to be an Authorized Person.
(j) "Portfolio" shall mean each separate series of shares
offered by the Fund representing interests in a separate portfolio of
securities and other assets.
(k) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the 1933
Act and the 1940 Act.
(l) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Fund as may be issued from time to
time.
(m) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.
(n) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by PFPC to be an Authorized
Person and actually received by PFPC. Written Instructions shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original
or other process.
Article 2 APPOINTMENT OF PFPC.
The Administrator hereby appoints PFPC to act as Sub-Administrator of
the Fund on the terms set forth in this Agreement. PFPC accepts such appointment
and agrees to render the services herein set forth for the compensation herein
provided.
Article 3 DUTIES OF PFPC.
3.1 PFPC shall be responsible for the following: performing the
customary services of a sub-administrator, including treasury and blue sky for
the Fund, as more fully described in
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the written schedule of Duties of PFPC annexed hereto as Schedule B and
incorporated herein, and subject to the supervision and direction of the
Administrator.
3.2 In performing its duties under this Agreement, PFPC: (a) will act
in accordance with the Articles of Incorporation, By-Laws, Prospectuses and with
the Oral Instructions and Written Instructions of the Administrator and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal or state laws and regulations; and (b) will consult with
legal counsel to the Fund, as necessary and appropriate. Furthermore, PFPC shall
not have or be required to have any authority to supervise the investment or
reinvestment of the securities or other properties which comprise the assets of
the Fund or any of its Portfolios and shall not provide any investment advisory
services to the Fund or any of its Portfolios.
3.3 In addition to the duties set forth herein, PFPC shall perform such
other duties and functions, and shall be paid such amounts therefor, as may from
time to time be agreed upon in writing between the Administrator and PFPC.
Article 4 RECORDKEEPING AND OTHER INFORMATION.
4.1 PFPC shall create and maintain all records required of it pursuant
to its duties hereunder and as set forth in Schedule B in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the 1940 Act. Where applicable, such records shall be maintained by
PFPC for the periods and in the places required by Rule 31a-2 under the 1940
Act.
4.2 To the extent required by Section 31 of the 1940 Act, PFPC agrees
that all such records prepared or maintained by PFPC relating to the services to
be performed by PFPC hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such section, and
will be surrendered promptly to the Fund on and in accordance with the
Administrator's request.
Article 5 ADMINISTRATOR INSTRUCTIONS.
5.1 PFPC will have no liability when properly acting upon Written or
Oral Instructions reasonably believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice of
any change of authority of any person until receipt of a Written Instruction
thereof from the Administrator.
5.2 At any time, PFPC may request Written Instructions from the
Administrator and may seek advice from legal counsel for the Fund, or its own
legal counsel, with respect to any matter arising in connection with this
Agreement, and it shall not be liable for any action properly taken or not taken
or suffered by it in good faith in accordance with such Written Instructions or
in accordance with the opinion of counsel for the Fund or for PFPC. Written
Instructions requested by PFPC will be provided by the Administrator within a
reasonable period of time.
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5.3 PFPC, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing or
acting on behalf of the Administrator only if said representative is an
Authorized Person. The Administrator agrees that all Oral Instructions shall be
followed within one business day by confirming Written Instructions, and that
the Administrator's failure to so confirm shall not impair in any respect PFPC's
right to rely on Oral Instructions.
Article 6 COMPENSATION.
6.1 PFPC will from time to time employ or associate with itself such
person or persons as PFPC may believe to be particularly suited to assist it in
performing services under this Agreement. Such person or persons may be officers
and employees who are employed by both PFPC and the Administrator. The
compensation of such person or persons shall be paid by PFPC and no obligation
shall be incurred on behalf of the Administrator in such respect.
6.2 PFPC shall not be required to pay any of the following expenses
incurred by the Administrator or the Fund: membership dues in the Investment
Company Institute or any similar organization; investment advisory expenses;
costs of printing and mailing stock certificates, prospectuses, reports and
notices; interest on borrowed money; brokerage commissions; stock exchange
listing fees; taxes and fees payable to Federal, state and other governmental
agencies; fees of Board Members of the Fund who are not affiliated with PFPC;
outside auditing expenses; outside legal expenses; Blue Sky registration or
filing fees; or other expenses not specified in this Section 6.2 which are
properly payable by the Administrator or the Fund. PFPC shall not be required to
pay any Blue Sky registration or filing fees unless and until it has received
the amount of such fees from the Administrator.
6.3 The Administrator will compensate PFPC for the performance of its
obligations hereunder in accordance with the fees and other charges set forth in
the written Fee Schedule annexed hereto as Schedule C and incorporated herein.
6.4 In addition to those fees set forth in Section 6.3 above, the
Administrator agrees to pay, and will be billed separately for, out-of-pocket
expenses actually incurred by PFPC in the performance of its duties hereunder.
Out-of-pocket expenses shall include, but shall not be limited to, the items
specified in the written schedule of out-of-pocket charges annexed hereto as
Schedule D and incorporated herein. Schedule D may be modified by written
agreement between the parties. Unspecified out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by PFPC in the
performance of its obligations hereunder.
6.5 The Administrator agrees to pay all fees, charges and out-of-pocket
expenses to PFPC by Federal Funds Wire within fifteen (15) business days
following the receipt of the respective invoice. In addition, with respect to
all fees under this Agreement, PFPC may charge a service fee equal to the lesser
of (i) one and one half percent (1 1/2%) per month or (ii) the highest interest
rate legally permitted on any past due invoiced amounts, provided however, the
foregoing service fee shall not apply if the Administrator in good faith
legitimately disputes any invoice amount in which case the Administrator shall
do the following within thirty (30) days of
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the postmark date: (a) pay PFPC the undisputed amount of the invoice; and (b)
provide PFPC a detailed written description of the disputed amount and the basis
for the Administator's dispute with such amount. In addition, the Administrator
shall cooperate with PFPC in resolving disputed invoice amounts and then
promptly paying such amounts determined to be due.
6.6 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule C a revised Fee Schedule executed and dated by the
parties hereto.
Article 7 [RESERVED]
Article 8 FUND ACCOUNTING SYSTEM.
8.1 PFPC shall retain title to and ownership of any and all data bases,
computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by PFPC in connection with the services
provided by PFPC to the Administrator herein (the "PFPC System").
8.2 PFPC hereby grants to the Administrator a limited license to the
PFPC System for the sole and limited purpose of having PFPC provide the services
contemplated hereunder and nothing contained in this Agreement shall be
construed or interpreted otherwise and such license shall immediately terminate
with the termination of this Agreement.
8.3 In the event that the Administrator, including any affiliate or
agent of the Administrator or any third party acting on behalf of the
Administrator is provided with direct access to the PFPC System, such direct
access capability shall be limited to direct entry to the PFPC System by means
of on-line mainframe terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of information to the
PFPC System is strictly prohibited without the prior written consent of PFPC.
Article 9 REPRESENTATIONS AND WARRANTIES.
9.1 PFPC represents and warrants to the Administrator that:
(a) it is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement; and
(d) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
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9.2 The Administrator represents and warrants to PFPC that:
(a) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into this Agreement; and
(c) all corporate proceedings required have been taken to
authorize it to enter into this Agreement.
Article 10 INDEMNIFICATION.
10.1 The Administrator shall indemnify and hold PFPC harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against PFPC or for which PFPC may be held to be liable in
connection with this Agreement or PFPC's performance hereunder (a "Claim"),
unless such Claim resulted from a negligent act or omission to act or bad faith
by PFPC in the performance of its duties hereunder.
10.2 PFPC shall indemnify and hold the Administrator harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against the Administrator or for which the Administrator
may be held to be liable in connection with this Agreement (a "Claim"), provided
that such Claim resulted from a negligent act or omission to act, bad faith,
willful misfeasance or reckless disregard by PFPC in the performance of its
duties hereunder.
10.3 In any case in which one party (the "Indemnifying Party") may be
asked to indemnify or hold the other party (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnified Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party, and thereupon the Indemnifying
Party shall take over complete defense of the Claim and the Indemnified Party
shall sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
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10.4 Any claim for indemnification under this Agreement must be
made prior to the earlier of:
(a) one year after the Indemnified Party becomes aware of the
event for which indemnification is claimed; or
(b) one year after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.4 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
PFPC's sole and exclusive remedy for claims or other actions or proceedings to
which the Administrator's indemnification obligations pursuant to this Article
10 may apply.
Article 11 STANDARD OF CARE.
11.1 PFPC shall at all times act in good faith and agrees to use its
best efforts within commercially reasonable limits to ensure the accuracy of all
services performed under this Agreement, but assumes no responsibility for loss
or damage to the Administrator unless said errors are caused by PFPC's own
negligence, bad faith or willful misconduct or that of its employees.
11.2 Neither party may assert any cause of action against the other
party under this Agreement that accrued more than three (3) years prior to the
filing of the suit (or commencement of arbitration proceedings) alleging such
cause of action.
11.3 Each party shall have the duty to mitigate damages for which the
other party may become responsible.
11.5 Without in any way limiting the foregoing, in the event PFPC shall
provide Blue Sky services to the Administrator, PFPC shall have no liability for
failing to file on a timely basis any material to be provided by the
Administrator or its designee that it has not received on a timely basis from
the Administrator or its designee, nor shall PFPC have any responsibility to
review the accuracy or adequacy of materials it receives from the Administrator
or its designee for filing or bear any liability arising out of the timely
filing of such materials; nor shall PFPC have any liability for monetary damages
for the sale of securities in jurisdictions where Shares are not properly
registered, or in jurisdictions where Shares are sold in excess of the lawfully
registered amount unless such failure of proper registration or excess sales is
due to the willful misfeasance, bad faith or negligence of PFPC and provided
PFPC has requested such information from the Administrator in a timely fashion.
Article 12 CONSEQUENTIAL DAMAGES.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR
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DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES.
As used in the preceding paragraph "incidental, indirect or
consequential damages" means damages which do not flow directly from the act of
the party or which arise from the intervention of special circumstances not
ordinarily predictable, and does NOT include direct damages which arise
naturally or ordinarily from a breach of contract.
Article 13 TERM AND TERMINATION.
13.1 This Agreement shall be effective on the date first written above
and shall continue for a period of three (3) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year ("Renewal Terms") each,
unless the Administrator or PFPC provides written notice to the other of its
intent not to renew. Such notice must be received not less than ninety (90) days
and not more than one-hundred eighty (180) days prior to the expiration of the
Initial Term or the then current Renewal Term.
13.3 In the event a termination notice is given by the Administrator,
all expenses associated with movement of records and materials and conversion
thereof to a successor administrator will be borne by the Administrator.
13.4 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If the material failure is one for which the
Non-Defaulting Party has previously given the Defaulting Party notice as
provided in the previous sentence, the Agreement may be terminated by the
Non-Defaulting Party upon thirty (30) days written notice without giving the
Defaulting Party a second opportunity to cure such material failure. If PFPC is
the Non-Defaulting Party, its termination of this Agreement shall not constitute
a waiver of any other rights or remedies of PFPC with respect to services
performed prior to such termination of rights of PFPC to be reimbursed for
out-of-pocket expenses. In all cases, termination by the Non-Defaulting Party
shall not constitute a waiver by the Non-Defaulting Party of any other rights it
might have under this Agreement or otherwise against the Defaulting Party.
13.5 Notwithstanding anything contained in this Agreement to the
contrary and except as provided in Section 13.4, should the Fund or the
Administrator desire to move any of the services provided by PFPC hereunder to a
successor service provider prior to the expiration of the then current Initial
or Renewal Term, or should the Administrator or any of its affiliates take any
action which would result in PFPC ceasing to provide administration services to
the Administrator or the Fund prior to the expiration of the Initial or any
Renewal Term, PFPC shall make a good faith effort and use all commercially
reasonable efforts to facilitate the conversion
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on such prior date, however, there can be no guarantee that PFPC will be able to
facilitate a conversion of services on such prior date. In connection with the
foregoing, should services be converted to a successor service provider or
should the Administrator or any of its affiliates take any action which would
result in PFPC ceasing to provide administration services to the Administrator
or the Fund prior to the expiration of the Initial or any Renewal Term, the
payment of fees to PFPC as set forth herein shall be accelerated to a date prior
to the conversion or termination of services and calculated as if the services
had remained with PFPC until the expiration of the then current Initial or
Renewal Term and calculated at the asset and/or Shareholder account levels, as
the case may be, on the date notice of termination was given to PFPC.
Article 14 ADDITIONAL PORTFOLIOS
14.1 In the event that the Fund establishes one or more Portfolios in
addition to those identified in Schedule A, with respect to which the
Administrator desires to have PFPC render services as sub-administrator under
the terms hereof, the Administrator shall so notify PFPC in writing, and if PFPC
agrees in writing to provide such services, Schedule A shall be amended to
include such additional Portfolios. If after good faith negotiations, the
parties are unable to agree upon the conditions upon which PFPC will service the
new Portfolio, either party shall have the right to terminate this Agreement
upon sixty (60) days written notice to the other party.
Article 15 CONFIDENTIALITY.
15.1 The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The
Administrator and PFPC shall exercise at least the same degree of care, but not
less than reasonable care, to safeguard the confidentiality of the Confidential
Information of the other as it would exercise to protect its own confidential
information of a similar nature. The Administrator and PFPC shall not duplicate,
sell or disclose to others the Confidential Information of the other, in whole
or in part, without the prior written permission of the other party. The
Administrator and PFPC may, however, disclose Confidential Information to their
respective parent corporation, their respective affiliates, their subsidiaries
and affiliated companies and employees, provided that each shall use reasonable
efforts to ensure that the Confidential Information is not duplicated or
disclosed in breach of this Agreement. The Administrator and PFPC may also
disclose the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the
Administrator or PFPC disclose the Confidential Information to any competitor of
the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles,
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sales estimates, business plans, portfolio holdings and internal
performance results relating to the past, present or future business
activities of the Administrator or PFPC, their respective subsidiaries
and affiliated companies and the customers, clients and suppliers of
any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Administrator
or PFPC a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
15.4 The obligations of confidentiality and restriction on use herein
shall not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this
Agreement or subsequently came into the public domain through no fault of such
party; or
(b) Was lawfully received by the party from a third party free
of any obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to
receipt thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or
administrative proceeding after all reasonable legal remedies for maintaining
such information in confidence have been exhausted including, but not limited
to, giving the other party as much advance notice of the possibility of such
disclosure as practical so the other party may attempt to stop such disclosure
or obtain a protective order concerning such disclosure; or
(e) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the Confidential
Information disclosed under this Agreement.
Article 16 FORCE MAJEURE; EXCUSED NON-PERFORMANCE.
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No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature or
other acts of God; (ii) any outbreak or escalation of hostilities, war, riots or
civil disorders in any country, (iii) any act or omission of the other party or
any governmental authority; (iv) any labor disputes (provided that the
employees' demands are not reasonable and within the party's power to satisfy);
or (v) nonperformance by a third party or any similar cause beyond the
reasonable control of such party, including without limitation, failures or
fluctuations in telecommunications or other equipment. In addition, no party
shall be liable for any default or delay in the performance of its obligations
under this Agreement if and to the extent that such default or delay is caused,
directly or indirectly, by the actions or inactions of the other party. In any
such event, the non-performing party shall be excused from any further
performance and observance of the obligations so affected only for as long as
such circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
Article 17 ASSIGNMENT AND SUBCONTRACTING.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that PFPC
may, in its sole discretion, assign all its right, title and interest in this
Agreement to an affiliate, parent or subsidiary, or to the purchaser of
substantially all of its business. PFPC may, in its sole discretion, engage
subcontractors to perform any of the obligations contained in this Agreement to
be performed by PFPC but shall not be relieved of its obligations and
responsibilities hereunder by reason of such engagement.
Article 18 ARBITRATION.
18.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by the
American Arbitration Association in New York, New York in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
18.2 The parties hereby agree that judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction.
18.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Article 18.
Article 19 NOTICE.
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Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Administrator or PFPC, shall be sufficiently given
if addressed to that party and received by it at its office set forth below or
at such other place as it may from time to time designate in writing.
To the Administrator:
Third Avenue Management LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
To PFPC:
PFPC, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: President
with a copy to PFPC's General Counsel
Article 20 GOVERNING LAW/VENUE.
The laws of the State of New York, excluding the laws on conflicts of
laws, shall govern the interpretation, validity, and enforcement of this
agreement.
Article 21 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 22 CAPTIONS.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 PUBLICITY.
Neither PFPC nor the Administrator shall release or publish news
releases, public announcements, advertising or other publicity relating to this
Agreement or to the transactions contemplated by it without the prior review and
written approval of the other party; provided, however, that either party may
make such disclosures as are required by legal, accounting or
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regulatory requirements after making reasonable efforts in the circumstances to
consult in advance with the other party.
Article 24 RELATIONSHIP OF PARTIES/NON-SOLICITATION.
24.1 The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
24.2 During the term of this Agreement and for one (1) year afterward,
neither Party shall recruit, solicit, employ or engage, for itself or others,
the other Party's employees.
Article 25 ENTIRE AGREEMENT; SEVERABILITY.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. No such writing shall be
effective as against PFPC unless said writing is executed by a Senior Vice
President, Executive Vice President, or President of PFPC. A party's waiver of a
breach of any term or condition in the Agreement shall not be deemed a waiver of
any subsequent breach of the same or another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
25.3 The parties hereby acknowledge that August 1, 2002 shall serve as
the termination date of the Sub-Administration Agreement between PFPC (f/k/a
First Data Investor Services) and Third Avenue Management LLC (f/k/a EQSF
Advisers, Inc.) dated September 10, 1999.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
THIRD AVENUE MANAGEMENT LLC
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President
PFPC INC.
By:
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Name:
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Title:
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SCHEDULE A
LIST OF PORTFOLIOS
Third Avenue Value Portfolio
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SCHEDULE B
DUTIES OF PFPC
SERVICES RELATED TO SUB-ADMINISTRATION
PROCESSING AND PAYMENT OF BILLS
o Centralized contact to receive all invoices for Fund operating
expenses.
o Voucher invoices for authorization / money movement instructions
o Distribution of approved vouchers for payment / recording
o Monitoring bank statement for appropriate money movement and timing
o Ensure proper wire instructions for expenses paid by wire transfer
o Coordinate mailing of checks to various vendors
PREPARATION OF SEMI-ANNUAL REPORTS AND ANNUAL REPORTS
o Preparation of Schedule of Investments, Statements of Assets and
Liabilities, Operations and Changes, Financial Highlights and
Footnotes to Financial Statements.
o Contact for auditors regarding questions / comments relating to the
Financial Statements / process.
o Timely delivery of properly formatted tape of registered shareholders
to ADP for quarterly report mailing.
o Centralized contact for receipt of president's letter, audit opinion
letter and letter of internal controls.
o Centralized area to receive and implement comments and changes.
o Coordination and timing with printer.
o Review content of draft copies prior to printing.
o Average Net Assets / Ratio Analysis.
MANAGEMENT REPORTING
o Daily, Schedule of Investment Report delivered electronically
COMPLETION AND FILING OF N-SARS
o Preparation of N-SARs semi-annually.
o Preparation of Financial Data Sheet to facilitate XXXXX filing.
o Filing of N-SARs.
STATE AND LOCAL TAX INFORMATION
o Preparation of 1099-DIV insert cards.
o Coordination with printer, mailroom for 1099-DIV insert cards.
o Review of 1099-DIV insert prior to printing.
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IRS COMPLIANCE TESTING
o Monitor monthly compliance of the Funds with Subchapter M of the
Internal Revenue Code to determine its status as a regulated
investment company.
o Monitor monthly compliance of the Third Avenue Variable Series
Trust with Section 817(h) of the Internal Revenue Code.
o Assistance in developing corrective measures, should such
measures be required, before the expiration of any 30 day cure
period.
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SCHEDULE C
FEE SCHEDULE
For the services to be rendered, the facilities to be furnished and the
payments to be made by PFPC, as provided for in this Agreement, the
Administrator will pay PFPC on the first business day of each month a fee for
the previous month at the rates listed below.
FUND ADMINISTRATION
$12,000 per year
MISCELLANEOUS CHARGES
The Company shall be charged for the following products and services as
applicable:
o Ad hoc reports
o Ad hoc SQL time
o Materials for Rule 15c-3 Presentations
o COLD Storage
o Digital Recording
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Pre-Printed Stock, including business forms, certificates,
envelopes, checks and stationary
FEE ADJUSTMENTS
After the one year anniversary of the effective date of this Agreement, PFPC may
adjust the fees described in the above sections once per calendar year, upon
thirty (30) days prior written notice in an amount not to exceed the cumulative
percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U)
U.S. City Average, All items (unadjusted) - (1982-84=100), published by the U.S.
Department of Labor since the last such adjustment in the Company's monthly fees
(or the Effective Date absent a prior such adjustment).
PROGRAMMING COSTS (TO THE EXTENT REQUESTED BY THE ADMINISTRATOR)
The following programming rates are subject to an annual 5% increase after the
one year anniversary of the effective date of this Agreement.
(a) Dedicated Team: Programmer: $100,000 per annum
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BSA: $ 85,000 per annum
Tester: $ 65,000 per annum
(b) System Enhancements (Non Dedicated Team): $150.00 per/hr per
programmer
IRS COMPLIANCE TESTING
The Administrator shall pay to PFPC an annualized fee of $1,000 per
Fund for the IRS compliance testing services.
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SCHEDULE D
OUT-OF-POCKET EXPENSES
The Company shall reimburse PFPC monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Postage - direct pass through to the Company
o Telephone and telecommunication costs, requested by the
Administrator, including all lease, maintenance and line costs
o Shipping, Certified and Overnight mail and insurance
o Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
requested by the Administrator
o Duplicating services
o Courier services
o Overtime, as approved by the Company
o Temporary staff, as approved by the Company
o Travel and entertainment, as approved by the Company
o Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
o Third party audit reviews
o Vendor set-up charges for services
o XXXXX filing fees
o Vendor pricing comparison
o Such other expenses as are agreed to by PFPC and the Company
The Company agrees that postage and mailing expenses will be paid on
the day of or prior to mailing as agreed with PFPC. In addition, the Company
will promptly reimburse PFPC for any other unscheduled expenses incurred by PFPC
whenever the Company and PFPC mutually agree that such expenses are not
otherwise properly borne by PFPC as part of its duties and obligations under the
Agreement.
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