Exhibit 99(h)
AGREEMENT
AGREEMENT made this 1st day of May, 1993 by and between VALUE LINE
STRATEGIC ASSET MANAGEMENT TRUST, a Massachusetts Business Trust, having its
principal office and place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Fund"), and THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.,
a Delaware insurance company, having its principal office and place of
business at 000 Xxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("GIAC").
WHEREAS, the Fund is offered as an underlying investment option with
respect to certain variable contracts which are issued by GIAC; and
WHEREAS, GIAC performs certain administrative and shareholder services
and incurs certain expenses related thereto on behalf of the Fund; and
WHEREAS, GIAC and the Fund desire to establish an arrangement to
compensate GIAC for the performance of such administrative and shareholder
services and to reimburse GIAC for such expenses it incurs on behalf of the
Fund;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints GIAC, and GIAC accepts such appointment, to
perform certain services on behalf of GIAC variable contractowners who have
allocated premium amounts to the Fund and to incur expenses related thereto,
including but not limited to:
(a) performing administrative and internal accounting functions in
connection with the accounts established with respect to each GIAC variable
contractowner who has allocated premium amounts to the Fund and the ongoing
maintenance of such accounts, including but not limited to the allocation,
but not the declaration, of dividends and distributions to such accounts and
the processing of transfers made by contractowners into and out of the Fund;
(b) printing and distribution of annual and semi-annual shareholder
reports for the Fund and any other Fund reports and documents distributed
pursuant to the Investment Company Act of 1940 to all GIAC contractowners who
have allocated variable contract premiums to the Fund; and
(c) providing ongoing shareholder servicing functions to all GIAC
contractowners who have allocated variable contract
premiums to the Fund, including responsibility for responding to telephone
and written shareholder inquiries, transactions and complaints. Service costs
shall not include marketing expenses.
2. As compensation for the services provided hereunder, the Fund shall
pay GIAC an amount equal to the sum of (i) all direct administrative and
shareholder servicing costs (which do not include marketing costs) incurred
by GIAC attributable to the Fund such as printing and postage, plus (ii) a
pro rata portion of the aggregate costs incurred by GIAC in performing
identical administrative and shareholder servicing functions for all the
investment options which underlie the variable contracts which GIAC issues
(the "Total Costs"). The subsection (ii) amount shall be calculated by
multiplying the Total Costs by a fraction, the numerator of which shall be
the total number of contractowner accounts for the Fund at the end of the
applicable quarter and the denominator of which shall be the total number of
contractowner accounts for all the investment options which underlie the
variable contracts issued by GIAC which offer the Fund as an investment
option at the end of such quarter. The payments will be made quarterly based
on the average number of contractowners each quarter, calculated by adding
the total number of contractowners at the beginning of the quarter and at the
end of the quarter and dividing by 2.
3. Beginning with the quarter ending June 30, 1993, within 12 business
days after the end of each calendar quarter, GIAC shall submit to the Fund
an invoice for the amount to be paid to GIAC pursuant to Section 2 hereof for
such quarter. GIAC shall include with each such invoice (i) a report
detailing the direct costs incurred by GIAC on behalf of the Fund during such
quarter and setting forth the calculation of the amount to be paid to GIAC in
accordance with Section 2(ii) above for such quarter and (ii) a certification
from a financial officer of GIAC that the invoice has been prepared in
accordance with the methodologies set forth in the Exhibits to the letter
addressed to the Board of the Fund from Price Waterhouse, dated December 16,
1992. As reasonably necessary to verify the accurateness of the submitted
invoice, GIAC hereby authorizes the officers, employees and agents of the
Fund, including outside auditors, to interview the appropriate financial
personnel of GIAC and to review the work papers and back-up materials
utilized by GIAC personnel to prepare the invoice under review. Expenses of
such review (including professional service fees incurred by GIAC at the
request of the Fund) shall be paid by the Fund except that the costs of
compensation of GIAC personnel or other professional service fees incurred by
GIAC shall be GIAC's responsibility. Subject to the next sentence, the Fund
agrees to pay to GIAC the amount invoiced within thirty calendar days of
receipt. The Fund shall not be obligated to make payment of, and GIAC will
promptly refund any previously-made payments of, invoiced amounts which the
Fund can demonstrate in writing, either prior to the time of
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its obligation to pay or at the time of its request for a refund, to exceed
the correct amounts due pursuant to this Agreement as a result of
mathematical miscalculations or an incorrect application of the agreed-upon
methodologies. The fee for the quarter ending June 30, 1993 shall be
pro-rated from the date of this Agreement to June 30, 1993.
4. The maximum aggregate annual amount of compensation paid by the Fund
to GIAC pursuant to this Agreement shall not exceed the multiple of: the
average number of contractowner accounts for the Fund for such year times
(a) in the calendar years 1993 and 1994, $18.00; and
(b) in the calendar years 1995 and thereafter, $18.00 plus a cumulative
annual increase of 4% per year.
The average number of contractowner accounts for the Fund for each calendar
year shall be calculated by adding the average number of contractowner
accounts for the Fund for each of the four quarters in such year (as
determined pursuant to Section 2 above) and dividing by 4.
5. The Fund acknowledges that it has reviewed the methodologies used by
GIAC in determining its costs associated with performing administrative and
shareholder servicing functions for the Fund and the other investment options
underlying the variable contracts issued by GIAC and agrees that GIAC shall
be entitled to continue to use such methodologies in calculating the amounts
to be invoiced to the Fund pursuant to Section 2(ii) hereof. GIAC agrees that
it will not change such methodologies without the prior written approval and
consent of the Fund.
6. This Agreement shall not be amended without the express written
consent of both parties hereto.
7. If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or
unenforceable any other severable provision of this Agreement, and this
Agreement shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
8. This Agreement may be terminated by either party upon ninety days
written notice for the calendar years 1993 and 1994 and thereafter upon
thirty days written notice. All obligations incurred pursuant to this
Agreement prior to the date of termination shall survive the termination of
this Agreement.
9. This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of
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the State of New York.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
as of the date first written above.
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Executive Vice President
VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Chairman
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