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
such 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 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 Company 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.
5. The Adviser shall not be liable for any error of judgment 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 least 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 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 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.
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
Wasatch Advisors, Inc.
By
Exhibit A
to
Advisory and Service Contract
between
Wasatch Funds, Inc. and
Wasatch Advisors, Inc.
Annual
Fund Effective Date Advisory Fee
---- --------------- ------------
Series A - Wasatch Aggressive January 27, 1998 1.00%
Equity Fund
Series B - Wasatch Growth January 27, 1998 1.00%
Fund
Series C - Wasatch-Xxxxxxxxxx January 27, 1998 0.50%
U.S. Treasury Fund
Series D - Wasatch Mid-Cap January 27, 1998 1.25%
Fund
Series E - Wasatch Micro- January 27, 1998 2.00%
Cap Fund
Series F - Wasatch World January 27, 1998 1.50%
Wide Fund
Series G - Wasatch Micro- January 27, 1998 1.50%
Cap Value Fund