EXHIBIT e.
DISTRIBUTION AGREEMENT
AGREEMENT dated as of March 5, 2003 between Wasatch Funds, Inc. (the
"Fund"), an open-end, management investment company organized as a corporation
under the laws of the State of Minnesota, having its principal place of business
at 000 Xxxxxx Xxxx Xxxxxx, 0xx Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 and ALPS
Distributors, Inc., a Colorado corporation and a registered broker-dealer under
the Securities Exchange Act of 1934, having its principal place of business at
0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 (the "Distributor").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, as amended, presently
consisting of the portfolios listed in Schedule A, attached hereto;
WHEREAS, the Fund wishes to employ the services of the Distributor in
connection with the promotion and distribution of the shares of each series of
the Fund (the "Shares"); and
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, the parties agree as follows:
1. Documents - The Fund has furnished or will furnish, upon request, the
Distributor with copies of the Fund's Articles of Incorporation, advisory
agreement, custodian agreement, transfer agency agreement, administration
agreement, current prospectus, and statement of additional information, and all
forms relating to any plan, program or service offered by the Fund. The Fund
shall furnish, within a reasonable time period, to the Distributor a copy of any
amendment or supplement to any of the above-mentioned documents. Upon request,
the Fund shall furnish promptly to the Distributor any additional documents
necessary or advisable to perform its functions hereunder. As used in this
Agreement the terms "registration statement", "prospectus" and "statement of
additional information" shall mean any registration statement, prospectus and
statement of additional information filed by the Fund with the Securities and
Exchange Commission ("SEC") and any amendments and supplements thereto that are
filed with the SEC.
2. Sale of Shares - The Fund grants to the Distributor the right to sell
the Shares as agent on behalf of the Fund, during the term of this Agreement,
subject to the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), the Investment Company Act of 1940, as amended (the
"1940 Act") and of the laws governing the sale of securities in the various
states ("Blue Sky Laws"), under the terms and conditions set forth in this
Agreement. The Distributor shall have the right to sell, as agent on behalf of
the Fund, the Shares covered by the registration statement, prospectus and
statement of additional information for the Fund then in effect under the 1933
Act and the 1940 Act.
3. Sale of Shares by the Fund - The rights granted to the Distributor
shall be nonexclusive in that the Fund reserves the right to sell Shares to
investors on applications received and accepted by the Fund.
4. Public Offering Price - Except as otherwise noted in the Fund's current
prospectus and/or statement of additional information, all Shares sold to
investors by the Distributor or the Fund
will be sold at the public offering price. The public offering price for all
accepted subscriptions will be the net asset value per Share, as determined in
the manner described in the Fund's current prospectus and/or statement of
additional information. The Fund shall in all cases receive the net asset value
per Share on all sales. If a fee in connection with shareholder redemptions is
in effect, such fee will be paid to the Fund.
5. Suspension of Sales - The Fund reserves the right to suspend sales and
the Distributor's authority to process orders for Shares on behalf of the Fund
if, in the judgment of the Fund, it is in the best interests of the Fund to do
so. Suspension will continue for such period as may be determined by the Fund.
6. Solicitation of Sales - In consideration of these rights granted to the
Distributor, the Distributor agrees to use its best efforts to solicit orders
for the sale of the Shares at the public offering price and will undertake such
advertising and promotion as it believes is reasonable in connection with such
solicitation. The Distributor shall review and file such materials with the SEC
and/or the National Association of Securities, Inc. (the "NASD") to the extent
required by the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the 1940 Act and the rules and regulations thereunder, and by the
rules of the NASD. This shall not prevent the Distributor from entering into
like arrangements (including arrangements involving the payment of underwriting
commissions) with other issuers. The Distributor will act only on its own behalf
as principal should it choose to enter into selling agreements with selected
dealers or others.
7. Authorized Representations - The Distributor is not authorized by the
Fund to give any information or to make any representations other than those
contained in the registration statement or prospectus and statement of
additional information, or contained in shareholder reports or other material
that may be prepared by or on behalf of the Fund for the Distributor's use.
Consistent with the foregoing, the Distributor may prepare and distribute sales
literature or other material as it may deem appropriate in consultation with the
Fund, provided such sales literature complies with applicable law and
regulation.
8. Registration of Shares - The Fund agrees that it will take all action
necessary to register the Shares under the 1933 Act and the 1940 Act (subject to
the necessary approval of its shareholders). The Fund shall make available to
the Distributor, at the Distributor's expense, such number of copies of its
prospectus and statement of additional information as the Distributor may
reasonably request. The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers, which the Distributor may
reasonably request for use in connection with the distribution of Shares of the
Fund.
9. Fund Expenses - Unless otherwise agreed to by the parties hereto in
writing, the Distributor shall not be responsible for fees and expenses in
connection with (a) filing of any registration statement, printing and the
distribution of any prospectus and statement of additional information under the
1933 Act and/or the 1940 Act and amendments prepared for use in connection with
the offering of Shares for sale to the public, preparing, setting in type,
printing and mailing the prospectus, statement of additional information and any
supplements thereto sent to existing shareholders, (b) preparing, setting in
type, printing and mailing any report (including annual and semi-annual reports)
or other communication to shareholders of the Fund, and (c) the Blue Sky
registration and qualification of Shares for sale in the various states in which
the officers of the Fund shall determine it advisable to qualify such Shares for
sale (including
registering the Fund as a broker or dealer or any officer of the Fund as agent
or salesman in any state).
11. Use of the Distributor's Name - The Fund shall not use the name of the
Distributor, or any of its affiliates, in any prospectus or statement of
additional information, sales literature, and other material relating to the
Fund in any manner without the prior written consent of the Distributor (which
shall not be unreasonably withheld); provided, however, that the Distributor
hereby approves all lawful uses of the names of the Distributor and its
affiliates in the prospectus and statement of additional information of the Fund
and in all other materials which merely refer in accurate terms to their
appointment hereunder or which are required by the SEC, NASD, OCC or any state
securities authority.
12. Use of the Fund's Name - Neither the Distributor nor any of its
affiliates shall use the name of the Fund in any publicly disseminated
materials, including sales literature in any manner without the prior consent of
the Fund (which shall not be unreasonably withheld); provided, however, that the
Fund hereby approves all lawful uses of its name in any required regulatory
filings of the Distributor which merely refer in accurate terms to the
appointment of the Distributor hereunder, or which are required by the SEC,
NASD, OCC or any state securities authority.
13. Insurance - The Distributor agrees to maintain fidelity bond and
liability insurance coverages which are, in scope and amount, consistent with
coverages customary for distribution activities relating to the Fund. The
Distributor shall notify the Fund upon receipt of any notice of material,
adverse change in the terms or provisions of its insurance coverage. Such
notification shall include the date of change and the reason or reasons
therefor. The Distributor shall notify the Fund of any material claims against
it, whether or not covered by insurance, and shall notify the Fund from time to
time as may be appropriate of the total outstanding claims made by it under its
insurance coverage.
14. Indemnification - The Fund agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any, who
controls the Distributor within the meaning of Section 15 of the 1933 Act,
against any loss, liability, claim, damages or expenses (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any Shares, based upon the
ground that the registration statement, prospectus, statement of additional
information, shareholder reports or other information filed or made public by
the Fund (as from time to time amended) included an untrue statement of material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements not misleading under the 1933 Act, the 1940 Act or
any other statute or the common law. However, the Fund does not agree to
indemnify the Distributor or hold it harmless to the extent that the statement
or omission was made in reliance upon, and in conformity with, information
furnished to the Fund by or on behalf of the Distributor. In no case (i) is the
indemnity of the Fund in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any liability to the
Fund or its security holders to which the Distributor or such person would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Fund to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the
Distributor or any person indemnified unless the Distributor or person, as the
case may be, shall have notified the Fund in writing of the claim promptly after
the summons or other first written notification giving information of the nature
of the claim shall have been served upon the Distributor or any such person (or
after the Distributor or such person shall have received notice of service on
any designated agent). However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability which it may have to the any person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Fund shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any claims, and if the Fund elects to assume the
defense, the defense shall be conducted by counsel chosen by the Fund. In the
event the Fund elects to assume the defense of any suit and retain counsel, the
Distributor, officers or directors or controlling person(s), defendant(s) in the
suit, shall bear the fees and expenses of any additional counsel retained by
them. If the Fund does not elect to assume the defense of any suit, it will
reimburse the Distributor, officers or directors or controlling person(s),
defendant(s) in the suit for the reasonable fees and expenses of any counsel
retained by them. The Fund agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
in connection with the issuance or sale of any of the Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its officers and person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any loss,
liability, damages, claims or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any Shares, based upon the 1933 Act, the 1940 Act
or any other statute or common law, alleging (a) any wrongful act of the
Distributor or any of its employees or (b) that any sales literature,
advertisements, information, statements or representations used or made by the
Distributor or any of its affiliates or employees or that the registration
statement, prospectus, statement of additional information, (as from time to
time amended) included an untrue statement of material fact or omitted to state
a material fact required to be stated or necessary in order to make the
statements not misleading, insofar as the statement or omission was made in
reliance upon, and in conformity with, information furnished to the Fund by or
on behalf of the Distributor. In no case (i) is the indemnity of the Distributor
in favor of the Fund or any person indemnified to be deemed to protect the Fund
or any person against any liability to which the Fund or such person would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Fund or any person indemnified unless the Fund or
person, as the case may be, shall have notified the Distributor in writing of
the claim promptly after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Fund or
any such person (or after the Fund or such person shall have received notice of
service on any designated agent). However, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability which it may have
to the Fund or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. In the case of
any notice to the Distributor, it shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce the claim, and if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by it and satisfactory
to the Fund, to its officers and to any controlling person(s), defendant(s) in
the
suit. In the event that the Distributor elects to assume the defense of any suit
and retain counsel, the Fund or controlling person(s), defendant(s) in the suit,
shall bear the fees and expenses of any additional counsel retained by them. If
the Distributor does not elect to assume the defense of any suit, it will
reimburse the Fund, officers or controlling person(s), defendant(s) in the suit,
for the reasonable fees and expenses of any counsel retained by them. The
Distributor agrees to notify the Fund promptly of the commencement of any
litigation or proceedings against it in connection with the Fund and sale of any
of the Shares.
15. Supplemental Information - The Distributor and the Fund shall regularly
consult with each other regarding the Distributor's performance of its
obligations under this Agreement. In connection therewith, the Fund shall submit
to the Distributor at a reasonable time in advance of filing with the SEC copies
of any amended or supplemented registration statement (including exhibits) under
the 1933 Act and the 1940 Act; provided, however, that nothing contained in this
Agreement shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to any prospectus or
statement of additional information, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and unconditional.
The Distributor acknowledges that the only information provided to it by the
Fund is that contained in the registration statement, the prospectus, the
statement of additional information and reports and financial information
referred to herein. Neither the Distributor nor any other person is authorized
by the Fund to give any information or to make any representations, other than
those contained in such documents and any sales literature or advertisements
specifically approved by appropriate representatives of the Fund.
16. Term - This Agreement shall become effective as of March 5, 2003 and
shall continue until two years from such date and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually (i) by the Fund's Board of Directors or
(ii) by a vote of a majority of the outstanding voting securities of the
relevant Series of the Fund (as defined in the 1940 Act), provided that in
either event the continuance is also approved by the majority of the Directors
of the Fund who are not interested persons (as defined in the 0000 Xxx) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without penalty
on sixty days' notice by the Fund's Board of Directors, by vote of the holders
of a majority of the outstanding voting securities of the relevant Series of the
Fund or by the Distributor. This Agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act).
Upon the termination of this Agreement, the Distributor, at the Fund's expense
and direction, shall transfer to such successor as the Fund shall specify all
relevant books, records and other data established or maintained by the
Distributor under this Agreement.
17. Anti-Money Laundering - The Distributor agrees to maintain an
anti-money laundering program in compliance with Title III of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 ("USA Patriot Act") and all applicable laws and
regulations promulgated thereunder. The Distributor confirms that, as soon as
possible, following the request from the Fund, the Distributor will supply the
Fund with copies of the Distributor's anti-money laundering policy and
procedures, and such other relevant
certifications and representations regarding such policy and procedures as the
Fund may reasonably request from time to time.
18. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by (i) telecopier (fax), or (ii)
registered or certified mail, postage prepaid, addressed by the party giving
notice to the other party of the last address furnished by the other party to
the party giving notice: if to the Fund at 150 Social Hall Avenue, 4th Floor,
Salt Lake City, Utah, 84111, Attn: Director of Compliance with a copy to Legal
Counsel: Xxxxxxx X. Xxxxxx, Xxxxxx &Whitney LLP, 00 Xxxxx Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxxxx, Xxxxxxxxx 00000; and if to the Distributor, at 0000 Xxxxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx, 00000, Attn: General Counsel, or such other
telecopier (fax) number or address as may be furnished by one party to the
other.
19. Confidential Information - The Distributor, its officers, directors,
employees and agents will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and to prior or
present shareholders or to those persons or entities who respond to the
Distributor's inquiries concerning investment in the Fund, and will not use such
records and information for any purposes other than performance of its
responsibilities and duties hereunder. If Distributor is requested or required
by, but not limited to, oral questions, interrogatories, request for information
or documents, subpoena, civil investigation, demand or other action, proceeding
or process or as otherwise required by law, statute, regulation, writ, decree or
the like to disclose such information, Distributor will provide Fund with prompt
written notice of any such request or requirement so that Fund may seek an
appropriate protective order or other appropriate remedy and/or waive compliance
with this provision. If such order or other remedy is not sought, or obtained,
or waiver not received within a reasonable period following such notice, then
the Distributor may without liability hereunder, disclose to the person, entity
or agency requesting or requiring the information, that portion of the
information that is legally required in the opinion of Distributor's counsel.
20. Limitation of Liability - The Distributor agrees that the obligations
assumed by the Fund under this contract shall be limited in all cases to the
Fund and its assets. The Distributor agrees that it shall not seek satisfaction
of any such obligation from the shareholders or any individual shareholder of
the Fund. Nor shall the Distributor seek satisfaction of any such obligation
from the Directors, officers or any individual Director or officer of the Fund.
The Distributor understands that the rights and obligations of each Series of
the Fund under the Fund's Articles of Incorporation are separate and distinct
from those of any and all other Series.
Any obligations of the Fund entered into in the name or on behalf thereof by any
of the Directors or officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Directors or officers, shareholders, or representatives of the Fund personally,
but bind only the Fund property, and all persons dealing with any Series of
Shares of the Fund must look solely to the Fund property belonging to such
Series for the enforcement of any claims against the Fund.
21. Miscellaneous - Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed, interpreted, and enforced in
accordance with and governed by the laws of the State of Colorado. The captions
in this Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may not be changed, waived, discharged or
amended except by written instrument which shall make specific reference to this
Agreement and which shall be signed by the party against which enforcement of
such change, waiver, discharge or amendment is sought. This Agreement may be
executed simultaneously in two or more counterparts, each of which taken
together shall constitute one and the same instrument.
All activities by the Distributor and its agents and employees as distributor of
the Shares shall comply with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted by the
SEC or any securities association registered under the Exchange Act.
The Distributor will promptly transmit any orders received by it for purchase,
redemption or exchange of the Shares to the Fund's transfer agent.
IN WITNESS WHEREOF, the Fund has executed this instrument in its name and
behalf, and the Distributor has executed this instrument in its name and behalf,
as of the day and year first above written.
WASATCH FUNDS, INC. ALPS DISTRIBUTORS, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. May
Name: Xxxx X. Xxxxxxx Name: Xxxxxx X. May
Title: Director, Mutual Funds Title: Senior Vice President
Schedule A
List of Portfolios
Wasatch Core Growth Fund
Wasatch Global Science & Technology Fund
Wasatch International Growth Fund
Wasatch Micro Cap Fund
Wasatch Small Cap Growth Fund
Wasatch Small Cap Value Fund
Wasatch Ultra Growth Fund
Wasatch-Xxxxxxxxxx U.S. Treasury Fund
