ADVISORY AND SERVICE CONTRACT
This Agreement, made as of January 27, 1998, by and
between Wasatch Funds, Inc., a Minnesota corporation (the
"Corporation"), on behalf of each Fund represented by a series
of shares of common stock of the Fund that adopts this
Agreement (each a "Fund" and, collectively, the "Funds") (the
Funds, together with the date each Fund adopts this Agreement,
are set forth in Exhibit A hereto, which shall be updated from
time to time to reflect additions, deletions or other changes
thereto), and Wasatch Advisors, Inc., a Utah Corporation (the
"Adviser").
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto
as follows:
1. The Corporation hereby employs the Adviser to act
as the investment adviser for and to manage the investment and
reinvestment of the assets of each Fund in accordance with each
Fund's investment objective and policies and limitations, and to
administer their affairs to the extent requested by and subject to
the supervision of the Board of Directors of the Corporation for
the period and upon the terms herein set forth. The investment
of funds shall be subject to all applicable restrictions of the
Articles of Incorporation and Bylaws of the Corporation as may
from time to time be in force.
The Adviser accepts such employment and agrees
during such period to render services, to furnish office facilities
and simple business equipment, to permit any of its officers to
serve without compensation as directors or officers of the
Corporation if elected to such positions and to assume the
obligations herein set forth for the compensation herein
provided. The Adviser shall for all purposes herein provided be
deemed to be an independent contractor, and, unless otherwise
expressly provided or authorized, shall have no authority to act
for or represent the Corporation in any way or otherwise be
deemed an agent of the Corporation. It is understood and
agreed that the Adviser, by separate agreement with the
Corporation, may also act as Distributor for a Fund.
2. For the services and facilities described in Section 1,
each Fund will pay to the Adviser at the end of each calendar
month, an investment management fee computed at the annual
rate of the percentage of the average daily net assets of each Fund
as set forth in Exhibit A.
If expenses borne by a Fund in any fiscal year (including
at the Adviser's fee, but excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities and, to the
extent permitted, extraordinary expenses), exceed those set forth
in any statutory or regulatory formula prescribed by any state in
which Fund shares are registered at such time, the Adviser will
reimburse the Fund for any excess.
The net asset value of each Fund shall be calculated as
of the close of the New York Stock Exchange on each day the
Exchange is open for trading or as of such other time or times as
the directors may determine in accordance with the provisions
of the Investment Corporation Act of 1940 (the "Act"). On
each day when the net asset value is not calculated, the net asset
value of a share of common stock of a Fund shall be deemed to
be the net asset value of such a share as of the close of business
on the last day on which such calculation was made for the
purpose of the foregoing computations.
For the month and year in which this Agreement
becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement
is in effect during the month and year, respectively. The
services of the Adviser to the Funds under this Agreement are
not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as its
services hereunder are not impaired thereby.
3. In addition to the fee of the Adviser, the Funds shall
assume and pay any expenses for services rendered by a
custodian for the safekeeping of the Funds' securities or other
property and for any other charges of the custodian. The
Adviser shall not be required to pay and each Fund shall assume
and pay the charges and expenses of its operations, including
compensation of the directors (other than those affiliated with
the Adviser), charges and expenses of independent auditors, of
legal counsel, of any transfer or dividend disbursing agent or
any registrar of the Fund, costs of acquiring and disposing of
portfolio securities, interest, if any, on obligations incurred by
the Fund, costs of share certificates and of reports, costs for
keeping its books of account, costs for calculating the net asset
value of the Funds as provided in Articles of Incorporation of
the Corporation, membership dues in the Investment Company
Institute or any similar organization, costs of reports and notices
to shareholders, other like miscellaneous expenses and all taxes
and fees payable to federal, state or other governmental
agencies on account of the registration of securities issued by
the Funds, filing of corporate documents or otherwise. No Fund
shall pay or incur any obligation for any management or
administrative expenses for which the Fund intends to seek
reimbursement from the Adviser as herein provided without
first obtaining the written approval of the Adviser. The Adviser
shall arrange, if desired by the Corporation, for officers of the
Adviser to serve, without compensation from the Funds, as
directors, officers or agents of the Corporation if duly elected or
appointed to such positions and subject to their individual
consent and to any limitations imposed by law.
4. Subject to applicable statutes and regulations, it is
understood that directors, officers, or agents of the Corporation
are or may be interested in the Adviser as officers, directors,
agents, shareholders or otherwise, and that the officers,
directors, shareholders and agents of the Adviser may be
interested in the Corporation otherwise than as a director,
officer or agent.
-2-
5. The Adviser shall not be liable for any error of
judgement or of law, or for any loss suffered by the Funds in
connection with the matters to which this Agreement relates,
except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance
of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. The Adviser has proprietary rights in the Funds'
names and the Corporation's name. The Adviser may withdraw
from the Fund or the Corporation the use of their names. In
addition the Adviser reserves the right to grant the use of a
similar name to another investment company or business
enterprise. However, in doing so, the Adviser agrees to submit
the question of continuing this investment advisory contract to a
vote of the Funds' shareholders at the time.
7. (a) The effective date of this Agreement with
respect to each Fund shall be the date set forth on Exhibit A
hereto.
(b) Unless sooner terminated as hereinafter
provided, this Agreement shall continue in effect with respect to
each Fund for a period more than two years from the date of its
execution but only as long as such continuance is specifically
approved at lease annually (i) by the Board of Directors of the
Corporation or by the vote of a majority of the outstanding
voting securities of the applicable Fund, and (ii) by the vote of a
majority of directors of the Corporation who are not parties to
this Agreement or "interested persons", as defined in the Act, of
the Adviser or of the Corporation cast in person at a meeting
called for the purpose of voting of such approval.
(c) This Agreement may be terminated with
respect to any Fund at any time, without the payment of any
penalty, by the Board of Directors of the Corporation or by the
vote of a majority of the outstanding voting securities of such
Fund, or by the Adviser, upon 60 days' written notice to the
other party.
(d) This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the
Act).
(e) No amendment to this Agreement shall be
effective with respect to any Fund until approved by the vote of:
(i) a majority of the directors of the Corporation who are not
parties to this Agreement or "interested persons" (as defined in
the Act) of the Adviser or of the Corporation cast in person at a
meeting called for the purpose of voting on such approval; and
(ii) a majority of the outstanding voting securities of the
applicable Fund.
(f) Wherever referred to in this Agreement, the
vote or approval of the holders of a majority of the outstanding
voting securities or shares of a Fund shall mean the lesser of (i)
the vote of 67% or more of the voting securities of such Fund
present at a regular or special meeting of shareholders duly
called, if more than 50% of the Fund's outstanding voting
securities are present or represented by proxy; or (ii) the vote of
more than 50% of the outstanding voting securities of such
Fund.
-3-
8. As to the Wasatch-Xxxxxxxxxx U.S. Treasury Fund,
the Adviser is hereby authorized, at its option and expense, to
retain a sub-adviser or sub-advisers to assist the Adviser in
furnishing investment advice to such Funds; provided that the
Adviser shall be responsible for monitoring compliance by such
sub-adviser(s) with the investment policies and restrictions of
the Corporation and such Fund and with such other limitations
or directions as the Board of Directors of the Corporation may
from time to time prescribe. Any such retention of a sub-
adviser shall be subject to approval by the Board of Directors of
the Corporation and to the extent required by law, the
shareholders of such Fund. Any appointment of a sub-adviser
pursuant hereto shall in no way limit or diminish the Adviser's
obligations and responsibility under this Agreement.
9. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
IN WITNESS WHEREOF, the Corporation and the
Adviser have caused this Agreement to be executed by their
duly authorized officers as of the day and year first above
written.
Wasatch Funds, Inc.
By /S/ Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X. Xxxxxxx, Xx., President
Wasatch Advisors, Inc.
By /S/ Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx X. Xxxxxxx, Xx., President
-4-
Exhibit A
To
Advisory and Service Contract
between
Wasatch Funds, Inc. and
Wasatch Advisors, Inc.
Fund Effective Date Annual Advisory Fee
Series A - Wasatch Aggressive
Equity Fund January 27, 1998 1.00%
Series B - Wasatch Growth
Fund January 27, 1998 1.00%
Series C - Wasatch-Xxxxxxxxxx
U.S. Treasury Fund January 27, 1998 0.50%
Series D - Wasatch Mid-Cap
Fund January 27, 1998 1.25%
Series E - Wasatch Micro-Cap
Fund January 27, 1998 2.00%
Series F - Wasatch World Wide
Fund January 27, 1998 1.50%
Series G - Wasatch Micro-Cap
Value Fund January 27, 1998 1.50%
