<PAGE>
As filed with the Securities and
Exchange Commission on May 4, 1999
Registration No. 33-43177; 811-6423
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ___
Pre-Effective Amendment No. ___ ___
Post-Effective Amendment No. 11 x
--- ---
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 ___
Amendment No. 13 x
--- ---
(Check appropriate box or boxes)
HILLIARD LYONS GROWTH FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
Hilliard Lyons Center
Louisville, Kentucky 40202
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (502) 588-8400
_____________________
Joseph C. Curry, Jr.
Vice President
HILLIARD LYONS GROWTH FUND, INC.
Hilliard Lyons Center
Louisville, Kentucky 40202
---------------------------------
With a copy to:
William G. Strench
Brown, Todd & Heyburn PLLC
400 West Market Street
32/nd/ Floor
Louisville, Kentucky 40202
--------------------------
___________________________
It is proposed that this filing will become effective:
x immediately upon filing pursuant to paragraph (b) of Rule 485
---
___ on May 1, 1999 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on __________ pursuant to paragraph (a)(1) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on _____________ pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
___ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
HILLIARD LYONS GROWTH FUNDS, INC.
CONTENTS OF REGISTRATION STATEMENT
1. Cover Sheet
2. Contents of Registration Statement
3. Hilliard Lyons Growth Fund, Inc.
Part A--Prospectus*
Part B--Statement of Additional Information*
4. Part C--Other Information
5. Signature Page
6. Exhibits
* Previously filed in Registrant's Registration Statement, Amendment No. 10 on
Form N-1A, SEC File No. 33-43177, on March 12, 1999.
<PAGE>
PART C
OTHER INFORMATION
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ITEM 24. Financial Statements and Exhibits
---------------------------------
a) Financial Statements included in Part B:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
b) Exhibits:
(1) (a) Articles of Incorporation.
(b) Articles Supplementary
(2) Bylaws.
(3) Not applicable.
(4) Not applicable.
(5) (a) Investment Advisory Agreement between Registrant and
Hilliard Lyons Investment Advisors, a division of J.J.B.
Hilliard, W.L. Lyons, Inc.
(6) (a) Distribution Agreement between Registrant and
Provident Distributors, Inc.
(b) Distribution Fee Letter Agreement between J.J.B. Hilliard,
W.L. Lyons, Inc. and the Registrant.
(c) Form of Broker-Dealer Agreement between J.J.B. Hilliard,
W.L. Lyons, Inc. and Provident Distributors, Inc.
(d) Letter Agreement between J.J.B. Hilliard, W.L. Lyons, Inc.
and Provident Distributors, Inc.
(7) Not applicable.
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(8) Form of Custodian Agreement between Registrant and State Street
Bank and Trust Company.
(9) Form of Transfer Agency and Service Agreement between Registrant
and State Street Bank and Trust Company.
(10) Opinion and consent of Brown, Todd & Heyburn PLLC, counsel to
the Fund.
(11) Consent of Ernst & Young LLP, Independent Auditors.
(12) Not applicable.
(13) Form of Subscription Agreement with initial stockholder.
(14) Not applicable.
(15) Amended and Restated Distribution Plan pursuant to Rule 12b-1.
(16) Not applicable.
(17) Not applicable.
(18) Form of Rule 18f-3 Multiple Class Plan.
(27) Financial Data Schedule.
- --------------------
*Previously filed.
ITEM 25. Persons Controlled by or under Common Control with Registrant*
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ITEM 26. Number of Holders of Securities*
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ITEM 27. Indemnification*
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*Previously filed.
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ITEM 28. Business and Other Connections of Investment Adviser*
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- ------------------------
*Previously filed
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ITEM 29. Principal Underwriters*
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*Previously filed
<PAGE>
ITEM 30. Location of Accounts and Records*
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*Previously filed
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ITEM 31. Management Services*
ITEM 32. Undertakings*
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*Previously filed
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SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(a)(1) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 11 to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Louisville
and Commonwealth of Kentucky, on the 30th day of April, 1999.
HILLIARD LYONS GROWTH FUND, INC.
By: /s/ Donald F. Kohler
--------------------------------
Donald F. Kohler,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 11 to the Registration Statement has been signed below
by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ DONALD F. KOHLER Chairman of the Board of April 30, 1999
- ----------------------------- Directors (Principal
Donald F. Kohler Executive Officer)
*/s/ WILLIAM A. BLODGETT, JR. Director April 30, 1999
- -----------------------------
William A. Blodgett, Jr.
*/s/ JOHN C. OWENS Director April 30, 1999
- -----------------------------
John C. Owens
*/s/ STEWART E. CONNER Director April 30, 1999
- -----------------------------
Stewart E. Conner
*By: /s/ DONALD F. KOHLER
------------------------
Donald F. Kohler
Attorney-in-Fact pursuant to
Power of Attorney previously
filed with the Commission
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
Exhibits:
--------
(1) (a) Articles of Incorporation.
(b) Articles Supplementary
(2) Bylaws.
(3) Not applicable.
(4) Not applicable.
(5) (a) Investment Advisory Agreement between Registrant and Hilliard
Lyons Investment Advisors, a division of J.J.B. Hilliard, W.L.
Lyons, Inc.
(6) (a) Distribution Agreement between Registrant and Provident
Distributors, Inc.
(b) Distribution Fee Letter Agreement between J.J.B. Hilliard,
W.L. Lyons, Inc. and the Registrant.
(c) Form of Broker-Dealer Agreement between J.J.B. Hilliard,
W.L. Lyons, Inc. and Provident Distributors, Inc.
(d) Letter Agreement between J.J.B. Hilliard, W.L. Lyons, Inc.
and Provident Distributors, Inc.
(7) Not applicable.
(8) Form of Custodian Agreement between Registrant and State Street Bank
and Trust Company.
(9) Form of Transfer Agency and Service Agreement between Registrant and
State Street Bank and Trust Company.
(10) Opinion and consent of Brown, Todd & Heyburn PLLC, counsel to the
Fund.
(11) Consent of Ernst & Young LLP, Independent Auditors.
(12) Not applicable.
(13) Form of Subscription Agreement with initial stockholder.
(14) Not applicable.
(15) Amended and Restated Distribution Plan pursuant to Rule 12b-1.
(16) Not applicable.
(17) Not applicable.
(18) Form of Rule 18f-3 Multiple Class Plan.
(27) Financial Data Schedule.
____________________
<PAGE>
Exhibit 1(a)
ARTICLES OF INCORPORATION
OF
HILLIARD LYONS GROWTH FUND, INC.
ARTICLE I
THE UNDERSIGNED, William G. Strench, whose address is 2450 Meidinger Tower,
Louisville, Kentucky 40202, being at least 18 years of age, does hereby act as
an incorporator and forms a corporation, under and by virtue of the Maryland
General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is Hilliard Lyons Growth Fund, Inc.
ARTICLE III
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts and on
such terms and conditions and for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.
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(4) To redeem, purchase or acquire in any other manner (all without the
vote or consent of the stockholders of the Corporation) shares of its capital
stock, in any manner and to the extent now or hereafter permitted by law and by
these Articles of Incorporation.
(5) To enter into a written contract or contracts with any person or
persons providing for a delegation of the management of all or part of the
Corporation's securities portfolio and also for the delegation of the
performance of various administrative or corporate functions, subject to the
direction of the Board of Directors. Any such contract or contracts may be made
with (i) any person even though such person may be an officer, other employee,
director or stockholder of the Corporation of (ii) a corporation, partnership,
trust or association in which any such officer, other employee, director or
stockholder may be interested.
(6) To enter into a written contract or contracts appointing one or more
underwriters, distributors or agents for the sale of the shares of the
Corporation on such terms and conditions as the Board of Directors of the
Corporation may deem reasonable and proper, and to allow such person or
persons a commission on the sale of such shares. Any such contract or contracts
may be made with (i) any person even though such person may be an officer, other
employee, director or stockholder of the Corporation or (ii) a corporation,
partnership, trust or association in which any such
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officer, other employee, director or stockholder may be interested.
(7) To enter into a written contract or contracts employing such custodian
or custodians for the safekeeping of the property of the Corporation and of its
shares, such dividend disbursing agent or agents, such transfer agent or agents
and registrar or registrars for its shares, and such agent or agents for
accounting and other administrative services on such terms and conditions as the
Board of Directors of the Corporation may deem reasonable and proper for the
conduct of the affairs of the Corporation, and to pay the fees and disbursements
of such custodians, dividend disbursing agents, transfer agents, registrars and
accounting and administrative services agents out of the income and/or any other
property of the Corporation. Notwithstanding any other provision of the Articles
of Incorporation or the Bylaws of the Corporation, the Board of Directors may
cause any or all of the property of the Corporation to be transferred to, or to
be acquired and held in the name of, a custodian so appointed or any nominee or
nominees of the Corporation or nominee or nominees of such custodian
satisfactory to the Board of Directors.
(8) To employ the same person, partnership, association, trust or
corporation in any multiple capacity under Sections (5), (6) and (7) of this
Article III and/or to provide securities brokerage services with respect to
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transactions in the Corporation's portfolio securities, and to pay compensation
from the Corporation to such person, partnership, association, trust or
corporation in as many capacities as such person, partnership, association,
trust or corporation shall serve the Corporation.
(9) To do any and all additional acts and to exercise any and all
additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
Maryland General Corporation Law now or hereafter in force, and the enumeration
of the foregoing shall not be deemed to exclude any powers, rights or privileges
so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
-----------------------------------
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Company Incorporated, 32 South
Street, Baltimore, Maryland 21201. The name and address of the resident agent of
the Corporation in the State of Maryland is The Corporation Trust Company
Incorporated, a Maryland corporation, 32 South Street, Baltimore, Maryland
21202.
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ARTICLE V
CAPITAL STOCK
-------------
(1) The total number of shares of capital stock that the Corporation shall
have authority to issue is one hundred and fifty million (150,000,000) shares,
of the par value of one-tenth of one cant ($.001) per share and of the aggregate
par value of One Hundred Fifty Thousand Dollars ($150,000.00) all of which one
Hundred Fifty Million (150,000,000) shares are designated Common Stock. Unless
otherwise prohibited by law, so long as the Corporation is registered as an
open-end investment company under the Investment Company Act of 1940 (the "1940
Act"), the Board of Directors shall have the power and authority, without the
approval of the holders of any outstanding shares, to increase or decrease the
number of shares of capital stock that the Corporation has authority to issue.
(2) The Corporation may issue fractional shares. Any fractional share shall
carry proportionately the rights of a whole share including, without limitation,
the right to vote and the right to receive dividends. A fractional share shall
not, however, have the right to receive a certificate evidencing it.
(3) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of these Articles of Incorporation and the
Bylaws of the Corporation.
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(4) No holder of stock of the Corporation by virtue of being such a holder
shall have any right to purchase or subscribe for any shares of the
Corporation's capital stock or any other security that the Corporation may issue
or sell other than a right that the Board of Directors in its discretion may
determine to grant.
(5) The Board of Directors shall have authority by resolution to classify
and reclassify any authorized but unissued shares of capital stock from time to
time by setting or changing in any one or more respects the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of the capital
stock.
(6) Each stockholder of any class of Common Stock shall be entitled to one
vote for each share of Common Stock then standing in the stockholder's name on
the books of the Corporation. At all meetings of the stockholders, the holders
of one-third of the shares of capital stock of the Corporation entitled to vote
at the meeting, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as otherwise provided by statute or by the
Articles of Incorporation, and a majority of all votes cast at a meeting at
which a quorum is present shall constitute the action of such meeting.
(7) Notwithstanding any provision of law requiring any action to be taken
or authorized by the affirmative vote of
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a greater proportion of the votes of all classes or of any class of stock of the
Corporation, such action shall be effective and valid if taken or authorized by
the affirmative vote of a majority of the total number of votes entitled to be
cast thereon, except as otherwise provided in these Articles of Incorporation.
ARTICLE V1
REDEMPTION
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(1) Upon the qualification of the Corporation as an open-end investment
company or at such other time as the Board of Directors may determine is
appropriate, and to the extent the Corporation has funds or other property
legally available therefor, each holder of shares of Common Stock of the
Corporation shall be entitled to require the Corporation to redeem all or any
part of the shares of Common Stock of the Corporation standing in the name of
such holder on the books of the Corporation, and all shares of Common Stock
issued by the Corporation shall be subject to redemption by the Corporation, at
the redemption price of such shares as in effect from time to time as determined
by the Board of Directors in accordance with the provisions hereof, subject to
the right of the Board of Directors to suspend the right of redemption of shares
of Common Stock of the Corporation or postpone the date of payment of such
redemption price in accordance with provisions of applicable law, including:
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(i) for any period (A) during which the New York Stock Exchange is closed
other than customary weekend and holiday closings, or (B) during which trading
on the New York Stock Exchange is restricted;
(ii) for any period during which an emergency, as defined by the rules of
the Securities and Exchange Commission or any successor thereto, exists as a
result of which (A) disposal by the Corporation of securities owned by it is
not reasonably practicable, or (B) it is not reasonably practicable for the
Corporation to fairly determine the value of its net assets; or
(iii) for such periods as the Securities and Exchange Commission or any
successor thereto may by order permit for the protection of stockholders of
the Corporation.
(2) Without limiting the generality of the foregoing, the Corporation
shall, to the extent permitted by applicable law, have the right at any time to
redeem the shares of Common Stock owned by any stockholder (i) if such
redemption is, in the opinion of the Board of Directors of the Corporation,
desirable in order to prevent the Corporation from being deemed a "personal
holding company" within the meaning of the Internal Revenue Code of 1986, as
amended, or (ii) if the value of such shares of Common Stock in the account of
such stockholder maintained by the Corporation or its transfer agent for any
class of Common Stock is less than
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Five Hundred Dollars ($500.00) and such stockholder is allowed thirty (30) days
to make additional purchases of shares before such redemption is processed by
the Corporation, in each case subject to such further terms and conditions as
the Board of Directors may from time to time adopt. The redemption price of
shares of Common Stock shall, except as otherwise provided in this Article VI,
be the net asset value thereof as determined by the Board of Directors from time
to time in accordance with the provisions of applicable law, less such
redemption fee or other charge, if any, as may be fixed by resolution of the
Board of Directors. Payment of the redemption price shall be made in cash by the
Corporation in such manner as may be determined from time to time by the Board
of Directors unless, in the opinion of the Board of Directors, which shall be
conclusive, conditions exist which make payment wholly in cash unwise or
undesirable; in such event the Corporation may make payment wholly or partly by
securities or other property included in the assets belonging or allocable to
the class of shares the redemption of which is being sought, the value of which
shall be determined as provided herein.
(3) Except as otherwise permitted by the 1940 Act, payment of the
redemption price of shares of any class for which redemption is being sought
pursuant to this Article V1 shall be made by the Corporation within seven days
after
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receipt by the Corporation or its authorized agent of the redemption request in
proper form.
(4) In the absence of any specification as to the purposes for which shares
are redeemed or repurchased by the Corporation, all shares so redeemed or
repurchased shall be deemed to be acquired for retirement in the sense
contemplated by the laws of the State of Maryland. Shares of any class retired
by repurchase or redemption shall thereafter have the status of authorized but
unissued shares of that class.
ARTICLE VII
DIRECTORS
---------
(1) The number of directors of the Corporation shall be five, which number
may be increased or decreased pursuant to the Bylaws of the Corporation, but
shall never be less than the minimum permitted by the General Laws of the State
of Maryland now or hereafter in force. Unless otherwise provided by the Bylaws
of the Corporation, the directors of the Corporation need not be stockholders.
(2) The following individuals shall act as initial directors of the
Corporation until the first annual meeting of stockholders and until their
successors are elected and qualified: Gilbert L. Pamplin, Donald F. Kohler,
Dillman A. Rash, Frank P. Doheny, Jr. and John C. Owens.
(3) The Bylaws of the Corporation may prescribe the tenure of office of
directors of the Corporation and may
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divide the directors of the Corporation into classes and prescribe the tenure of
office of the several classes, except that the term of office of a director may
not be longer than five years or, except in the case of an initial or substitute
director, shorter than the period between annual meetings, and the term of
office of at least one class shall expire each year.
(4) Stockholders of the Corporation may remove a director by the
affirmative vote of a majority of the Corporation's outstanding shares.
ARTICLE VIII
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
--------------------------------------------
In furtherance, and not in limitation, of the powers conferred by the laws
of the State of Maryland, the Board of Directors is expressly authorized:
(1) To make, alter or repeal the Bylaws of the Corporation, except where
such power is reserved by the Bylaws to the stockholders, and except as
otherwise required by the 1940 Act.
(2) From time to time to determine whether and to what extent and at what
times and places and under what conditions and regulations the books and
accounts of the Corporation, or any of them other than the stock ledger, shall
be open to the inspection of the stockholders; provided that no stockholder
shall have any right to inspect any account or book or document of the
Corporation, except as conferred by law
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or authorized by resolution of the Board of Directors or of the stockholders.
(3) Without the assent or vote of the stockholders, to authorize the
issuance from time to time of shares of the stock of any class of the
Corporation, whether now or hereafter authorized, for such consideration as the
Board of Directors may deem advisable.
(4) Without the assent or vote of the stockholders, to authorize and issue
obligations of the Corporation, secured and unsecured, as the Board of Directors
may determine, and to authorize and cause to be executed mortgages and liens
upon the property of the Corporation, real and personal.
(5) Notwithstanding anything in these Articles of Incorporation to the
contrary, to establish in its absolute discretion the basis or method for
determining the value of the Corporation's assets, and the net asset value of
each share of capital stock of the Corporation for purposes of sales,
redemptions, repurchases of shares or otherwise.
(6) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or net
assets in excess of capital, and to determine what accounting periods shall be
used by the Corporation for any purpose, whether annual or any other period,
including daily; to set apart out of any funds of the Corporation such reserves
for such purposes as it shall determine and to abolish the same; to declare and
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pay any dividends and distributions in cash, securities or other property from
surplus or any funds legally available therefor at such intervals (which may be
as frequently as daily) or on such periodic basis, as it shall determine; to
declare such dividends or distributions, by means of a formula or other method
of determination, at meetings held less frequently than the frequency of the
effective dates of such declarations; to establish payment dates for dividends
or any other distributions on any basis, including dates occurring less
frequently than the effective dates of declarations thereof; and to provide for
the payment of declared dividends on a date earlier or later than the specified
payment date in the case of stockholders of the Corporation redeeming their
entire ownership of shares of any class of the Corporation.
(7) In addition to the powers and authorities granted herein and by statute
expressly conferred upon it, the Board of Directors is authorized to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of Maryland law, the
Articles of Incorporation and the Bylaws of the Corporation.
ARTICLE IX
INDEMNIFICATION
---------------
(1) The Corporation shall indemnify to the fullest extent permitted by the
Maryland General Corporation Law, as
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amended from time to time, each of its directors and officers (including persons
who serve at the Corporation's request as directors, officers or trustees of
another organization in which the Corporation has any interest as a stockholder,
creditor or otherwise) (hereinafter referred to as a "Covered Person") against
all liabilities and expenses, including, but not limited to, amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or otherwise or with which
such Covered Person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Covered Person.
(2) The right of indemnification hereby provided shall not be exclusive of
or affect any other rights to which such Covered Person may be entitled. As used
in this Article IX, the term "Covered Person" shall include such person's heirs,
executors and administrators. Nothing contained in this Article IX shall affect
any rights to indemnification to which personnel of the Corporation (other than
directors or officers) and other persons may be entitled by contract or
otherwise under law, nor the power of the Corporation to purchase and maintain
liability insurance on behalf of any
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such person; provided, however, that the corporation shall not purchase or
maintain any such liability insurance in contravention of applicable law,
including without limitation the 1940 Act.
(3) To the fullest extent permitted by the Maryland General Corporation
Law, as amended from time to time, no director or officer of the Corporation
shall be personally liable to the Corporation or its stockholders for money
damages, except to the extent such exemption from liability or limitation
thereof is not permitted by the 1940 Act, as such statute is now or hereafter in
force, except that such indemnity shall not protect any such person against any
liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office.
ARTICLE X
AMENDMENTS
----------
The Corporation reserves the right from time to time to make any amendment
to these Articles of Incorporation, now or hereafter authorized by law,
including any amendment that alters the contract rights of any outstanding
stock.
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ARTICLE XI
MISCELLANEOUS
So long as permitted by Maryland law, the books of the Corporation may be
kept outside of the State of Maryland at such place or places as may be
designated from time to time by the Board of Directors or in the Bylaws of the
Corporation.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
By: /s/ WILLIAM G. STRENCH
-----------------------
Incorporator
Dated: September 4, 1991
-----------------
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Exhibit 1(b)
ARTICLES SUPPLEMENTARY
HILLIARD LYONS GROWTH FUND, INC.
WRITTEN INSTRUMENT ESTABLISHING
AND DESIGNATING SEPARATE CLASSES OF SHARES
April 13, 1998
The undersigned is the Vice President of Hilliard Lyons Growth Fund, Inc.
(the "Corporation"), a Maryland corporation governed by Articles of
Incorporation dated September 5, 1991 (the "Articles"). The following sets forth
resolutions duly adopted by the Board of Directors of this Corporation, which
resolutions are authorized pursuant to Section 2-208 of the Maryland General
Corporation Law and Section 5 of Article V of the Articles in order to establish
and designate separate classes of shares of the Corporation.
The Board of Directors is authorized, in its discretion and without
shareholder approval, to divide the shares of the Corporation into separate
classes of shares;
The Board of Directors hereby deems it desirable and in the best interests
of the Corporation to divide and reclassify the shares of Common Stock of the
Corporation evenly into shares of Class A Common Stock ("Class A Shares") and
Class B Common Stock ("Class B Shares") and to provide investors with a
conversion feature from Class B Shares to the Class A Shares, which conversion
feature would thereby eliminate any distribution fee then in effect under any
plan adopted pursuant to Rule 12b-1 of the Investment Company Act of 1940 ("1940
Act") for such Class B Shares; and
The Board of Directors of this Corporation hereby establishes and
designates separate classes of shares in accordance with the following
provisions:
1. Subject to the conditions hereinafter set forth, the shares of the
Corporation shall be divided into two classes to be known respectively as the
"Class A Common Stock" and the "Class B Common Stock," which classes shall have
such preference and special or relative rights and privileges as may be
determined from time to time by this Board of Directors subject always to the
Articles and the 1940 Act and the rules and regulations thereunder.
2. Subject to the terms of the Articles, the Class A Shares and Class B
Shares will have the same rights and privileges except that:
(a) The Class A Shares
(1) shall be sold subject to an initial sales charge as
described in the prospectus for the Corporation as from time to time
in effect or shall be issued to shareholders in connection with the
conversion feature as hereinafter described;
<PAGE>
(2) shall have a management fee;
(3) shall be subject to the plan of distribution adopted under
Rule 12b-1 of the 1940 Act (the "Rule 12b-1 Plan") and any fees
payable from time to time under such plan shall be allocated and
charged to the Class A Shares in accordance with the plan; and
(4) shall have such dividend reinvestment, exchange and
redemption rights and privileges as may be described in the prospectus for
the Corporation as from time to time in effect; and
(B) the Class B Shares
(1) shall be sold without an initial sales charge but subject to
a contingent deferred sales charge imposed upon the redemption of the Class
B shares as described in the prospectus for the Corporation as from time to
time in effect;
(2) shall have a management fee;
(3) shall be subject to the Rule 12b-1 Plan and any fees payable
from time to time under such plan shall be allocated and charged to the
Class B Shares in accordance with the plan;
(4) shall convert to Class A Shares within a specified number of
years as hereinafter described; and
(5) shall have such purchase, dividend reinvestment, exchange and
redemption rights and privileges associated therewith as may be described
in the prospectus for the Corporation as from time to time in effect.
3. Any shares of the Corporation that are issued and outstanding at the
time when shares of the Corporation are effectively divided into separate
classes of shares as set forth above shall be classified as Class A Shares.
4. Class A Shares of the Corporation shall be issued to holders of Class
B Shares of the Corporation pursuant to the following described conversion
feature:
(A) Class B Shares will convert to Class A Shares at the end of the
month which precedes the seventh anniversary of the purchase date of such
Class B Shares;
(B) Class B Shares issued upon reinvestment of income and capital
gain dividends and other distributions will convert to Class A Shares on a
pro rata basis with other Class B Shares; and
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<PAGE>
(C) Conversion to Class A Shares shall be based upon the relative net
asset values of the Class A Shares and the Class B Shares at the time of
conversion.
IN WITNESS WHEREOF, the undersigned Dianna P. Wengler, Vice President of
the Company, has executed this instrument and Joseph C. Curry, Secretary of the
Company, has affixed its corporate seal hereto and attested said seal on this
13th day of April, 1998.
HILLIARD LYONS GROWTH FUND, INC.
ATTEST: By /s/ DIANNA P. WENGLER
-----------------------------
Dianna P. Wengler, Vice President
/s/ JOSEPH C. CURRY
- --------------------------
Joseph C. Curry, Secretary
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<PAGE>
CORPORATE ACKNOWLEDGEMENT
COMMONWEALTH OF KENTUCKY )
) SS:
COUNTY OF JEFFERSON )
On this 13th day of April, 1998, before me, Rebecca D. Gaddie, the
undersigned, personally appeared DIANNA P. WENGLER and JOSEPH C. CURRY, known
personally to me to be Vice President and Secretary, respectively, of HILLIARD
LYONS GROWTH FUND, INC., and that they, as such officers, being authorized to do
so, executed the foregoing instrument for the purposes therein contained, by
signing the name of the corporation by them as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Rebecca D. Gaddie
----------------------------
Notary Public
[NOTARY SEAL]
My Commission expires: 7-9-2000
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<PAGE>
HILLIARD LYONS GROWTH FUND, INC.
BYLAWS
ARTICLE I
STOCKHOLDERS
------------
Section 1.1. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Maryland or at
such other place within the United States as may from time to time be designated
by the Board of Directors and stated in the notice of such meeting.
Section 1.2. Annual Meetings. The Corporation is not required to hold an
annual meeting in any year in which the election of directors is not required by
the Investment Company Act of 1940, as amended (the "1940 Act"). If the
Corporation is required to hold a meeting of stockholders to elect directors,
such meeting shall be designated an annual meeting and shall be held on a date
no later than 120 days after the occurrence of the event requiring the meeting
and at an hour as may be designated by the Board of Directors and stated in the
notice of the meeting. Any business of the Corporation may be considered at an
annual meeting without being specified in the notice, except as otherwise
required by law.
Section 1.3. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or a majority of the Board of Directors. Special meetings of
stockholders for the purpose
<PAGE>
of considering the replacement of a director or directors shall be called by the
Secretary of the Corporation (the "Secretary") on the written request of
stockholders holding not less than 10% of the votes entitled to be cast thereat.
Special meetings of stockholders for other purposes shall be called by the
Secretary on the written request of stockholders holding not less than 25% of
the votes entitled to be cast thereat. Such requests shall state the purpose or
purposes of the proposed meeting and the matters proposed to be acted on at such
meeting. The Secretary shall inform such stockholders of the reasonably
estimated cost of preparing and mailing the notice of such meeting and upon
payment to the Corporation of such cost, the Secretary shall give notice as
required in this Article to all stockholders entitled to notice of the meeting.
No special meeting of stockholders need be called upon the request of
stockholders entitled to cast less than a majority of all votes entitled to be
cast at such meeting to consider any matter that is substantially the same as a
matter voted upon at any special meeting of stockholders held during the
preceding 12 months.
Section 1.4. Notice of Meetings of Stockholders. Written or printed notice
of the purpose or purposes and of the time and place of each meeting of the
stockholders shall be given by the Secretary to each stockholder of record
entitled to vote at the meeting, by placing the notice in the mail at least ten
(10) days, but not more than ninety (90) days, prior to the date designated for
the meeting addressed to each stockholder at the
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address appearing on the books of the Corporation or supplied by the stockholder
to the Corporation for the purpose of notice. The notice of any meeting of
stockholders may be accompanied by a form of proxy approved by the Board of
Directors in favor of the actions or persons as the Board of Directors may
select. Notice of any meeting of stockholders shall be deemed waived by any
stockholder who attends the meeting in person or by proxy, or who before or
after the meeting submits a signed waiver of notice that is filed with the
records of the meeting.
Section 1.5. Record Dates. The Board of Directors may fix, in advance, a
record date for the determination of stockholders entitled to notice of or to
vote at any stockholders meeting or to receive a dividend or be allotted rights
or for the purpose of any other proper determination with respect to
stockholders and only stockholders of record on such date shall be entitled to
notice of and to vote at such meeting or to receive such dividends or rights or
otherwise, as the case may be; provided, however, that such record date shall
not be more than 90 days preceding the date of any such meeting of stockholders,
dividend payment date, date for the allotment of rights or other such action
requiring the fixing of a record date; and further provided that such record
date shall not be prior to the close of business on the day the record date is
fixed, that the transfer books shall not be closed for a period longer than 20
days, and that in the case of a meeting of stockholders, the record date or
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the closing of the transfer books shall not be less than 10 days prior to the
date designated for such meeting.
Section 1.6. Quorum. Except as otherwise provided by law or by the Articles
of Incorporation, the presence in person or by proxy of stockholders entitled to
cast at least one-third of the votes eligible to be cast shall constitute a
quorum at each meeting of the stockholders and all questions except for the
election of directors shall be decided by majority vote of the shares so
represented in person or by proxy and entitled to vote at the meeting. A
plurality of all the votes cast at a meeting at which a quorum is present is
sufficient to elect a director. In the absence of a quorum, the stockholders
present in person or by proxy, by majority vote and without notice other than by
announcement at the meeting, may adjourn the meeting from time to time as
provided in Section 1.7 of this Article I until a quorum shall be present. The
stockholders present at any duly constituted meeting may continue to do business
until adjournment, notwithstanding the withdrawal of stockholders so that a
quorum is no longer present. If any applicable law or statute, the Articles of
Incorporation or these Bylaws require, for action upon a given matter, the
presence in person or by proxy of stockholders representing more than one-third
of the votes entitled to be cast and such additional votes are not so
represented, action may be taken at the meeting on any other matter or matters
that may properly come before the meeting, so long as there are present, in
person or by proxy, holders of the
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number of shares of stock of the Corporation required for action upon the other
matter or matters.
Section 1.7. Adjournment. Any meeting of stockholders may be adjourned from
time to time, without notice other than by announcement at the meeting at which
the adjournment is taken. At any adjourned meeting at which a quorum shall be
present any action may be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be adjourned to a date
more than one hundred twenty (120) days after the original record date.
Section 1.8. Voting and Inspectors. At all meetings, stockholders of
record entitled to vote thereat shall have one vote for each share and
fractional votes for each fractional share of stock standing in such
stockholders' names on the books of the Corporation on the record date. Votes
may be cast either in person or by proxy appointed by instrument in writing
subscribed by such stockholder or a duly authorized attorney.
All elections shall be had and all questions decided by a majority of the
votes cast at a duly constituted meeting, except as otherwise provided by
statute or by the Articles of Incorporation or by these Bylaws.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for such stockholder by a proxy
signed by the stockholder or an attorney-in-fact. No proxy shall be valid after
the expiration of eleven months from the date thereof, unless otherwise provided
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<PAGE>
in the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except for cases in which the proxy states that it is irrevocable
and an irrevocable proxy is permitted by law.
If a vote shall be taken on any question, unless required by statute or
these Bylaws or determined by the Chairman of the meeting to be advisable, such
vote need not be by ballot. On a vote by ballot, each ballot shall be signed by
the stockholder voting, or by the proxy of such stockholder, and shall state the
number of shares voted.
At any election of directors, the Chairman of the meeting may, and upon
the request of the holders of 10% of the stock entitled to vote at such
election shall, appoint two inspectors of election who shall first subscribe an
oath or affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of their ability,
and shall after the election provide a certificate of the result of the vote
taken. No director or candidate for the office of director shall act as
inspector of an election of directors. An inspector need not be a stockholder of
the Corporation.
Section 1.9. Conduct of Stockholders' Meetings. Meetings of stockholders
shall be presided over by the Chairman of the Board, or if not present, by the
President, or if not present, by a Vice-President, or if none of them is
present, by a Chairman to be elected at the meeting. The Secretary of the
Corporation, if present, shall act as a Secretary of such meetings, or if not
6
<PAGE>
present, an Assistant Secretary shall so act; if neither the Secretary nor an
Assistant Secretary is present, then the meeting shall elect its Secretary.
The order of business at all meetings of the stockholders shall be as
determined by the Chairman of the meeting.
Section 1.10. Validity of Proxies and Ballots. At each meeting of
stockholders, all proxies shall be received and taken in charge of and all
ballots shall be received and canvassed by the Secretary of the meeting, who
shall decide all questions regarding the qualification of voters, the validity
of the proxies and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed by the Chairman of the meeting, in which
event such inspectors of election shall decide all such questions.
Section 1.11. Action without Meeting. Any action to be taken by
stockholders may be taken without a meeting if (1) all stockholders entitled to
vote on the matter consent to the action in writing, (2) all stockholders
entitled to notice of the meeting, but not entitled to vote at it, sign a
written waiver of any right to dissent, and (3) said consents and waivers are
filed with the records of the meetings of stockholders. Such consent shall be
treated for all purposes as a vote at the meeting.
ARTICLE II
BOARD OF DIRECTORS
------------------
Section 2.1. General Powers. Except as otherwise provided in the
Corporation's Articles of Incorporation, the business and
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affairs of the Corporation shall be managed under the direction of the Board of
Directors. All powers of the Corporation may be exercised by or under authority
of the Board of Directors except as conferred on or reserved to the stockholders
by law, by the Corporation's Articles of Incorporation or by these Bylaws.
Section 2.2. Number of Directors. The number of directors may be increased
or decreased from time to time by resolution of the Board of Directors adopted
by a majority of the entire Board of Directors then in office. Any vacancy
created by an increase in directors may be filled in accordance with Section 2.6
of this Article II. No reduction in the number of directors shall have the
effect of removing any director from office prior to the expiration of a term
unless the director is specifically removed pursuant to Section 2.5 of this
Article II at the time of the decrease. A director need not be a stockholder of
the Corporation, a citizen of the United States or a resident of the State of
Maryland.
Section 2.3. Election and Term of Directors. The term of office of each
director shall be from the time of election and qualification until a successor
shall have been elected and shall have qualified, or until death, or until
resignation or removal as provided in these Bylaws, or as otherwise provided by
statute or the Corporation's Articles of Incorporation.
Section 2.4. Resignation. A director of the Corporation may resign at any
time by giving written notice of resignation to the Board of Directors or the
Chairman of the Board or to the
8
<PAGE>
President or the Secretary of the Corporation. Any resignation shall take effect
at the time specified in it or, should the time when it is to become effective
not be specified in it, immediately upon its receipt. Acceptance of a
resignation shall not be necessary to make it effective unless the resignation
states otherwise.
Section 2.5. Removal of Directors. Any director of the Corporation may be
removed by the stockholders with or without cause at any time by an affirmative
vote of a majority of the Corporation's outstanding shares entitled to vote for
the election of directors.
Section 2.6. Vacancies. Subject to the provisions of the 1940 Act, any
vacancies in the Board of Directors, whether arising from death, resignation,
removal or any other cause except an increase in the number of directors, shall
be filled by a vote of the majority of the Board of Directors then in office
even though that majority is less than a quorum, provided that no such vacancy
or vacancies shall be filled by action of the remaining directors if, after the
filling of the vacancy or vacancies, fewer than two-thirds of the directors then
holding office shall have been elected by the stockholders of the Corporation.
A majority of the entire Board may fill a vacancy which results from an increase
in the number of directors. In the event that at any time a vacancy exists in
any office of a director that may not be filled by the remaining directors, a
special meeting of the stockholders shall be held as promptly as
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<PAGE>
possible and in any event within sixty (60) days, for the purpose of filling the
vacancy or vacancies. Any director elected or appointed to fill a vacancy shall
hold office until a successor has been chosen and qualifies, or until
resignation or removal, if earlier.
Section 2.7. Place of Meetings. Meetings of the Board may be held at any
place that the Board of Directors may from time to time determine or that is
specified in the notice of the meeting.
Section 2.8. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at the time and place determined by the Board of
Directors.
Section 2.9. Special Meetings. Special meetings of the Board of Directors
may be called by two or more directors of the Corporation or by the Chairman of
the Board or the President.
Section 2.10. Notice of Special Meetings. Notice of each special meeting of
the Board of Directors shall be given by the Secretary as hereinafter provided.
Each notice shall state the time and place of the meeting and shall be delivered
to each director, either personally or by telephone, facsimile transmission or
other standard form of telecommunication, at least twenty-four (24) hours before
the time at which the meeting is to be held, or by first-class mail, postage
prepaid, addressed to the director at the director's residence or usual place of
business, and mailed at least three (3) days before the day on which the meeting
is to be held.
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Section 2.11. Waiver of Notice of Meetings. Notice of any special meeting
need not be given to any director who shall, either before or after the meeting,
sign a written waiver of notice that is filed with the records of the meeting,
or who shall attend the meeting.
Section 2.12. Quorum and Voting. One-third (but not fewer than two (2)) of
the members of the entire Board of Directors shall be present in person at any
meeting of the Board in order to constitute a quorum for the transaction of
business at the meeting (unless there is only one director, in which case that
one will constitute a quorum for the transaction of business), and except as
otherwise expressly required by the Corporation's Articles of Incorporation,
these Bylaws, the 1940 Act, or any other applicable statute, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board. In the absence of a quorum at any meeting of the
Board, a majority of the directors present may adjourn the meeting to another
time and place until a quorum shall be present. Notice of the time and place of
any adjourned meeting shall be given to all directors. At any adjourned meeting
at which a quorum is present, any business may be transacted that might have
been transacted at the meeting as originally called.
Section 2.13. Organization. The Board of Directors may designate a Chairman
of the Board, who shall preside at each meeting of the Board. In the absence or
inability of the Chairman of the Board to act, the President, or, if absent or
not
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<PAGE>
able to act, another director chosen by a majority of the directors present,
shall act as Chairman of the meeting and preside at the meeting. The Secretary,
or, if absent or not able to act, any person appointed by the Chairman, shall
act as Secretary of the meeting and keep the minutes thereof.
Section 2.14. Committees. The Board of Directors may designate one or more
committees of the Board of Directors, each consisting of two (2) or more
directors. To the extent provided in the resolution, and permitted by law, the
committee or committees shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers that may
require it. Any committee or committees shall have the name or names determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required. The members of a committee present at any
meeting, whether or not they constitute a quorum (at least one-half of its
members), may appoint a director to act in the place of an absent member.
Section 2.15. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the 1940 Act, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the Board may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are
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filed with the minutes of the proceedings of the Board or committee.
Section 2.16. Telephone Conference. Members of the Board of Directors or
any committee of the Board may participate in any Board or committee meeting by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at the
meeting.
Section 2.17. Compensation. No director shall receive any stated salary or
fee from the Corporation for services as a director if such director is, other
than by reason of being a director, an "interested person" (as such term is
defined by the 1940 Act) of the Corporation. Except as provided in the preceding
sentence, directors shall be entitled to receive such compensation from the
Corporation for their services as may from time to time be voted by the Board of
Directors.
Section 2.18. Investment Policies. It shall be the duty of the Board of
Directors to ensure that the purchase, sale, retention and disposal of portfolio
securities and the other investment practices of the Corporation are at all
times consistent with the investment policies and restrictions with respect to
securities investments and otherwise of the Corporation as recited in the
current Prospectus of the Corporation filed from time to time with the
Securities and Exchange Commission and as required by the 1940 Act. The Board,
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however, may delegate the duty of management of the assets and the
administration of the Corporation's day-to-day operations to an individual or
corporate management company or investment adviser pursuant to a written
contract or contracts which have obtained the requisite approvals, including the
requisite approvals of renewals thereof, of the Board or the stockholders of the
Corporation in accordance with the provisions of the 1940 Act.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
------------------------------
Section 3.1. Number and Qualifications. The officers of the Corporation
shall be a President, a Secretary and a Treasurer, each of whom shall be elected
by the Board of Directors. The Board of Directors may elect or appoint one or
more Vice Presidents and may also appoint any other officers, agents and
employees it deems necessary or proper. Any two or more offices may be held by
the same person, except the offices of President and Vice President, but no
officer shall execute, acknowledge or verify in more than one capacity any
instrument required by law to be executed, acknowledged or verified by more than
one officer. Officers shall be elected by the Board of Directors to hold office
until their successors shall have been duly elected and shall have qualified.
Officers shall serve at the pleasure of the Board of Directors. The Board of
Directors may from time to time elect, or delegate to the President the power to
appoint, such officers (including one or more Assistant
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Vice Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries) and such agents and employees as may be necessary or desirable for
the business of the Corporation. Such other officers, agents and employees shall
have such duties and hold office for such terms as may be prescribed by the
Board or by the appointing authority.
Section 3.2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary. Any resignation shall
take effect at the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt. Acceptance of
a resignation shall not be necessary to make it effective unless the resignation
states otherwise.
Section 3.3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate the power of removal as to
agents and employees not elected or appointed by the Board of Directors. Removal
shall be without prejudice to the person's contract rights, if any, but the
appointment of any person as an officer, agent or employee of the Corporation
shall not of itself create contract rights.
Section 3.4. Vacancies. A vacancy in any office whether arising from death,
resignation, removal or any other cause, may
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be filled in the manner prescribed in these Bylaws for the regular election or
appointment to the office.
Section 3.5. Compensation. The compensation of the officers of the
officers of the Corporation shall be fixed by the Board of Directors, but this
power may be delegated to any officer with respect to other subordinate
officers.
Section 3.6. Bonds or Other Security. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of such individual's duties, in an amount
and with any surety or sureties as the Board may require.
Section 3.7. Powers and Duties. The officers of the Corporation shall have
such powers and duties as shall be stated in a resolution of the Board of
Directors and, to the extent not so stated, as generally pertain to their
respective offices, subject to the control of the Board of Directors.
ARTICLE IV
CAPITAL STOCK
-------------
Section 4.1. Issuance of Shares. Shares shall be issued without
certificates. At the time of issuance or transfer of shares, the Corporation
shall send the stockholder a written statement identifying: (1) the Corporation
as the issuer of the stock; (2) the stockholder to whom the stock is issued and
such stockholder's address and taxpayer identification number; (3) the class of
stock and the number of shares of stock issued or transferred; and (4) the date
of such transaction.
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Section 4.2. Transfer of Shares. Transfer of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by such holder's attorney authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent, by
a duly executed stock transfer power and the payment of all taxes thereon.
Except as otherwise provided by law, the Corporation shall be entitled to
recognize the exclusive right of a person in whose name any share or shares
stand on the record of stockholders as the owner of such share or shares for all
purposes, including, without limitation, the rights to receive dividends or
other distributions, and to vote as such owner, and the Corporation shall not be
bound to recognize any equitable or legal claim to or interest in any such share
or shares on the part of any other person.
Section 4.3. Transfer Agents and Registrars. The Board of Directors may
from time to time appoint or remove transfer agents or registrars of stock of
the Corporation, and it may appoint the same person as both transfer agent and
registrar.
Section 4.4. Regulations. The Board may make such additional rules and
regulations, not inconsistent with these Bylaws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
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ARTICLE V
INDEMNIFICATION
---------------
Section 5.1. Indemnification of Directors and Officers. The Corporation
shall indemnify to the fullest extent permitted by the Maryland General
Corporation Law, as amended from time to time, each of its directors and
officers (including persons who serve at the Corporation's request as directors,
officers or trustees of another organization in which the Corporation has any
interest as a shareholder, creditor or otherwise) (hereinafter referred to as a
"Covered Person") against all liabilities and expenses, including, but not
limited to, amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person, unless it is established: (a) that the act or
omission of the Covered Person was material to the matter giving rise to the
proceeding; and (b)(i) the act or omission was committed in bad faith or was the
result of active or deliberate dishonesty; or (ii) the Covered Person actually
received an improper personal benefit in money, property, or services; or (iii)
in the case of any criminal
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proceeding, the Covered Person had reasonable cause to believe that the act or
omission was unlawful. Furthermore, a Covered Person who has been successful, on
the merits or otherwise, in the defense of any proceeding referred to above
shall be indemnified against reasonable expenses incurred by the Covered Person
in connection with the proceeding. Notwithstanding the foregoing, no Covered
Person shall be indemnified for any liability arising by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duties by such
Covered Person. Termination of any proceeding by conviction or a plea of nolo
contendere or its equivalent, or any entry of an order of probation prior to
judgment, creates a rebuttable presumption that such Covered Person did not meet
the necessary standard of conduct. No such presumption results from the
termination of any proceeding by judgment, order or settlement.
Section 5.2. Advances. Expenses, including counsel fees so incurred by
any such Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), shall be paid from time to
time by the Corporation in advance of the final disposition of any such action,
suit or proceeding; provided, however, that (i) such Covered Person shall in
good faith believe and have so affirmed that the standard of conduct necessary
for indemnification has been met and shall have provided a written undertaking
to repay the amount paid if it is ultimately determined that the standard of
conduct has not been met, and (ii) either (a) a majority of the non-party,
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disinterested directors acting on the matter (provided that at least two (2) of
such directors then in office act on the matter) or (b) independent legal
counsel in a written opinion shall have determined based upon a review of
readily available facts that there is reason to believe that such Covered Person
will be found entitled to indemnification under this Article.
Section 5.3. Disposition without Adjudication. As to any matter disposed
of (whether by a compromise payment, pursuant to a consent decree or otherwise)
without an adjudication by a court, or by any other body before which the
proceeding was brought, that such Covered Person either (a) (i) acted in bad
faith or with active and deliberate dishonesty toward the Corporation, (ii)
actually received an improper personal benefit, or (iii) in the case of any
criminal proceeding, had reasonable cause to believe that the act or omission
was unlawful, or (b) is liable to the Corporation or its stockholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, indemnification shall be
provided if (i) approved as in the best interest of the Corporation by at least
a majority of the non-party, disinterested directors acting on the matter
(provided that at least two (2) of such directors then in office act on the
matter) upon a determination, based upon a review of readily available facts at
a meeting called for the purpose of reviewing such indemnification, that such
Covered Person (a) did not act in bad faith or with active and deliberate
dishonesty,
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did not receive any improper personal benefit and had no reasonable cause to
believe the act or omission was unlawful and (b) is not liable to the
Corporation or its stockholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office, or (ii) there has been obtained an opinion in writing of
independent legal counsel, based upon a review of readily available facts, to
the effect that such Covered Person appears not to have acted in bad faith or
with active and deliberate dishonesty, not to have actually received any
improper personal benefit and not to have had reasonable cause to believe the
act or omission was unlawful, and that such indemnification would not protect
such Covered Person against any liability to the Corporation to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section 5.3 shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section 5.3 as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction to have acted in bad faith or
with active and deliberate dishonesty, to have actually received an improper
personal benefit or to have been liable to the Corporation or its stockholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
21
<PAGE>
Person's office, or in the case of any criminal proceeding, that a Covered
Person had reasonable cause to believe that an act or omission was unlawful.
Section 5.4. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
such Covered Person may be entitled. As used in this Article V, the term
"Covered Person" shall include such person's heirs, executors and
administrators, and a "non-party disinterested director" is a director who is
not an "interested person" of the Corporation as defined in Section 2(a)(19) of
the 1940 Act (or who has been exempted from being an "interested person" by any
rule, regulation or order of the Securities and Exchange Commission) and against
whom none of such actions, suits or other proceedings or another action, suit
or other proceeding on the same or similar grounds is then or has been pending.
Nothing contained in this Article V shall affect any rights to indemnification
to which personnel of the Corporation (other than directors or officers) and
other persons may be entitled by contract or otherwise under law, nor the power
of the Corporation to purchase and maintain liability insurance on behalf of any
such person; provided, however, that the Corporation shall not purchase or
maintain any such liability insurance in contravention of applicable law,
including without limitation the 1940 Act.
Section 5.5. Limitation of Damages. To the fullest extent permitted by
the Maryland General Corporation Law, as amended
22
<PAGE>
from time to time, no director or officer of the Corporation shall be personally
liable to the Corporation or its stockholders for money damages, except to the
extent such exemption from liability or limitation thereof is not permitted by
the 1940 Act.
Section 5.6. Indemnification of Employees and Agents. Employees and agents
who are not directors or officers of the Corporation may be indemnified, and
reasonable expenses may be advanced to such employees or agents, in accordance
with the procedures set forth in this Article V to the extent permissible under
the 1940 Act, the Securities Act of 1933 and the Maryland General Corporation
Law, as such statutes are now or hereafter in force, and to such further extent,
consistent with the foregoing, as may be provided by action of the Board of
Directors or by contract.
Section 5.7. Constituent, Resulting or Surviving Corporations. For the
purposes of this Article V, references to the "Corporation" shall include all
constituent corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation so that any person who is or was a director
or officer of a constituent corporation or is or was serving at the request of a
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise shall stand
in the same position under this Article V with respect to the resulting or
surviving corporation as would be the case if such person had
23
<PAGE>
served the resulting or surviving corporation in the same capacity.
Section 5.8. Insurance. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or who, while a director,
officer, employee or agent of the Corporation, is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, against any liability asserted against and incurred by
such person in any such capacity, or arising out of such status.
ARTICLE V1
CORPORATE SEAL; LOCATION OF
OFFICES; BOOKS; NET ASSET VALUE
-------------------------------
Section 6.1. Corporate Seal. The Board of Directors may provide for a
suitable corporate seal, in such form and bearing such inscriptions as it may
determine. Any officer or director shall have the authority to affix the
corporate seal. If the Corporation is required to place its corporate seal to a
document, it shall be sufficient to place the word "(seal)" adjacent to the
signature of the person authorized to sign the document on behalf of the
Corporation.
Section 6.2. Location of Offices. The Corporation's principal office shall
be in the State of Maryland. The Corporation may, in addition, establish and
maintain such other
24
<PAGE>
offices as the Board of Directors or any executive officer may from time to
time determine.
Section 6.3. Books and Records. The books and records of the Corporation
shall be kept at the places, within or outside the State of Maryland, as the
directors or any executive officer may determine; provided, however, that (i)
the original or a certified copy of the Bylaws, including any amendments to
them, shall be kept at the Corporation's principal office in the State of
Maryland, and (ii) the stock ledgers of the Corporation, containing the names
and addresses of the stockholders and the number of shares held by them
respectively, shall be kept at the principal office of the Corporation or, if
the Corporation employs a transfer agent, at the offices of such transfer agent
or sub-agent of the Corporation.
Section 6.4. Annual Statement of Affairs. The President or any other
executive officer of the Corporation shall prepare annually a full and correct
statement of the affairs of the Corporation, to include a balance sheet and a
financial statement of operations for the preceding fiscal year. The statement
of affairs shall be submitted at any annual meeting of stockholders of the
Corporation and shall be placed on file at the Corporation's principal office in
the State of Maryland within 20 days after such annual meeting. In the event the
Corporation is not required to hold an annual meeting of stockholders, the
statement of affairs shall be placed on file at the principal
25
<PAGE>
office of the Corporation 120 days after the end of the Corporation's fiscal
year to which the statement relates.
Section 6.5. Net Asset Value. Subject to any requirements of the
Corporation's Articles of Incorporation, the value of the Corporation's net
assets shall be determined at such times and by such method as shall be
established from time to time by the Board of Directors.
ARTICLE VII
FISCAL YEAR
-----------
The fiscal year of the Corporation, unless otherwise fixed by resolution of
the Board of Directors, shall begin on the first day of January and shall end on
the last day of December in each year.
ARTICLE VIII
AMENDMENT OF BYLAWS
-------------------
The Board of Directors shall have the power to amend, alter and repeal the
Bylaws of the Corporation.
26
<PAGE>
Exhibit (5)(a)
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS AGREEMENT dated as of December 1, 1998,/1/ between HILLIARD LYONS
GROWTH FUND, INC., a Maryland corporation ("Fund"), and HILLIARD LYONS
INVESTMENT ADVISORS ("Adviser"), a division of J.J.B. Hilliard, W.L. Lyons,
Inc., a Kentucky corporation.
WITNESSETH:
-----------
WHEREAS, the Fund desires to retain the Adviser to render certain specified
investment advisory services to the Fund and the Adviser is willing to render
such services.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the parties agree as follows:
1. Services of Adviser.
1.1 The adviser will regularly provide the Fund with investment
research, advice and supervision and will furnish continuously an investment
program for the Fund consistent with the investment objectives and policies of
the Fund. The Adviser will determine from time to time what securities shall be
purchased for the Fund and what securities shall be held or sold by the Fund,
subject to the provisions of the Fund's Articles of Incorporation and Bylaws and
of the Investment Company Act of 1940 (the "1940 Act"), and to the investment
objectives, policies and restrictions of the Fund, as each of the same shall be
from time to time in effect, and subject, further, to such policies and
instructions as the Board of Directors of the Fund may from time to time
establish and convey.
1.2 Subject to the general supervision of the Board of Directors of
the Fund, the Adviser will provide certain administrative services to the Fund.
In this regard, the Adviser will, to the extent not required to be provided by
others pursuant to the Fund's custodian agreement or transfer agent agreement,
(i) provide supervision of all aspects of the Fund's operations not incorporated
in section 1.1 above; (ii) provide the Fund with personnel to perform such
executive, administrative and clerical services as are reasonably necessary to
provide effective administration of the Fund; (iii) arrange for, at the Fund's
expense, (A) the preparation for the Fund of all required tax returns, (B) the
preparation and submission of reports to existing stockholders, and (C) the
periodic updating of the Fund's prospectus and statement of additional
information and the preparation of reports filed with the Securities and
Exchange Commission and other regulatory authorities; and (iv) provide the Fund
with adequate office space and all necessary office equipment and services
including telephone service, heat, utilities, stationery and office supplies.
1.3 The Adviser will maintain all books and records with respect to
the Fund's securities transactions required by sub-paragraphs (b)(5), (6), (9)
and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the Fund's
________________________
/1/The Agreement will be executed and become effective upon the later of
(a) the closing of the transactions contemplated by the Agreement and Plan of
Merger by and between Hilliard-Lyons, Inc. and PNC Bank Corp. or (b) approval by
the shareholders of the Fund.
<PAGE>
custodian or transfer agent) and preserve such records for the periods
prescribed therefor by Rule 31a-2 under the 1940 Act.
1.4 The Adviser will keep the Fund informed of developments
materially affecting the Fund's portfolio and, in addition to providing the Fund
with statistical or other information the Fund may reasonably request with
respect to its investments.
2. Fees and Expenses
2.1 The Fund will pay the Adviser an investment advisory fee of 0.80%
per annum of the Fund's average daily net assets. This fee shall be accrued
daily and paid on the first business day of each January, April, July and
October for services performed the preceding quarter. Upon any termination of
this Agreement before the end of a quarter, the fee for such part of that
quarter shall be calculated through the date of termination and shall be payable
upon the date of termination of this Agreement. For the purpose of determining
fees payable to the Adviser, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the Fund's prospectus
and statement of additional information.
2.2 The Adviser shall bear all expenses of its employees and overhead
incurred by it in connection with its duties under this Agreement. The Adviser
will also pay all salaries and fees of the Fund's directors and officers who are
interested persons (as such term is defined in the 1940 Act) of the Adviser.
2.3 The Fund assumes and shall pay all expenses of the Fund not set
forth in Section 2.2 including, without limitation: (i) the reimbursements
payable to the Distributor under the Distribution Plan for expenses incurred in
connection with the offering and sale of shares of the Fund, (ii) the salaries
and fees of the Fund's directors who are not interested persons and of officers
and employees who are not affiliated with the Adviser, (iii) the fees and
expenses of the Fund's custodian and transfer agent, (iv) the fees and expenses
of the Fund's legal counsel and independent auditors, (v) brokerage and
commission expenses, (vi) all federal, state, local and foreign taxes and
corporate fees payable by the Fund to governmental agencies, including any issue
or transfer taxes chargeable to the Fund in connection with its securities
transactions, (vii) the dues, fees and other charges of any trade association of
which the Fund is a member, (viii) the cost of fidelity and liability insurance,
(ix) reimbursement of the organization expenses of the Fund and the fees and
expenses involved in registering and maintaining registration of the Fund and of
its shares with the Securities and Exchange Commission and registering the Fund
as a broker or dealer and qualifying its shares under state securities laws,
including the preparation and printing of the Fund's registration statement and
prospectus for such purposes, (x) costs incurred in having the Fund's net asset
value computed at the times and in the manner specified in the Fund's prospectus
and statement of additional information, (xi) all expenses of stockholders' and
directors' meetings and preparing, printing and mailing prospectuses, statements
of additional information, reports and proxy materials to existing stockholders,
and (xii) such non-recurring or extraordinary expenses as may arise outside the
ordinary course of the Fund's business, including litigation affecting the Fund
and the legal obligation the Fund may have to indemnify its officers and
directors and, in certain situations, the Distributor, with respect thereto. The
Fund shall not be required to pay expenses of activities which are primarily
intended to result in sales of shares of the Fund other than as provided for in
any Rule 12b-1 Distribution Plan adopted by the Fund.
2
<PAGE>
2.4 If, in any fiscal year, the sum of the Fund's operating expenses
(including the investment advisory fee payable pursuant to section 2.1 hereof,
but excluding taxes, interest, brokerage commissions relating to the purchase
or sale of portfolio securities and extraordinary expenses such as for
litigation) exceeds the expense limitations, if any, applicable to the Fund
imposed by state securities administrators, as such limitations may be modified
from time to time, the Adviser shall reimburse the Fund in the amount of such
excess to the extent required by such expense limitations, provided that the
amount of such reimbursement shall not exceed the amount of the Adviser's
investment advisory fee during such fiscal year.
2.5 In addition to the foregoing, the Adviser may from time to time
agree not to impose all or a portion of its fee otherwise payable hereunder
and/or undertake to reimburse the Fund for a portion of its operating expenses
not otherwise required to be borne or reimbursed by the Adviser. Any such fee
reduction or undertaking may be discontinued or modified by the Adviser at any
time.
3. Liability.
3.1 Neither the Adviser nor any of its officers, directors or
employees shall be liable for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which this Agreement
relates, except (i) that the Adviser shall be under a fiduciary duty with
respect to receipt of compensation for services pursuant to Section 36 of the
1940 Act, and shall therefore be liable for a loss resulting from a breach of
such fiduciary duty (in which case any award of damages shall be limited to the
period and the amount set forth in Section 36(b)(3) of the 1940 Act), or (ii)
for a loss resulting from willful misfeasance, bad faith or gross negligence on
its or their part in the performance of, or from reckless disregard by it or
them of, its or their obligations and duties under this Agreement.
3.2 Any person, even though also employed by the Adviser, who may be
or become an employee of and paid by the Fund shall be deemed, when acting
within the scope of employment by the Fund, to be acting in such employment
solely for the Fund and not as an employee or agent of the Adviser.
4. Services Not Exclusive. It is understood that the services of the
Adviser are not deemed to be exclusive, and nothing in this Agreement shall
prevent the Adviser or any of its affiliates from providing similar services
to other investment companies and other clients (whether or not their investment
objectives and policies are similar to those of the Fund) or from engaging in
other activities. When other clients of the Adviser desire to purchase or sell a
security at the same time such security is purchased or sold for the Fund, such
purchases and sales will, to the extent feasible, be allocated among the Fund
and such clients in a manner believed by the Adviser to be equitable to such
clients and the Fund. However, it cannot be expected that all of the Adviser's
clients, including the Fund, will receive equal treatment at all times.
5. Brokerage. The Adviser shall employ securities brokers that, in its
judgment, will implement the policy of the Fund to seek the best execution of
its portfolio transactions at reasonable expenses. For purposes of this
Agreement, "best execution" shall mean prompt, efficient and reliable execution
at the most favorable price obtainable. In making this determination, the
Adviser shall take into consideration a number of factors including, but not
limited to, the overall net economic results to the Fund (involving both price
paid or received and any commissions and other costs paid), the efficiency with
which the specific transaction is
3
<PAGE>
effected, the ability to effect the transaction at all where a large block is
involved, the known practices of brokers and their availability to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Under such conditions as may be specified by the Fund's
Board of Directors in the interest of its stockholders and to ensure compliance
with applicable law and regulations, the Adviser may (a) subject to the
restrictions of the 1940 Act, place orders for the purchase and sale of
portfolio securities for the Fund's account with J.J.B. Hilliard, W.L. Lyons,
Inc.; and (b) pay commissions to brokers other than J.J.B. Hilliard, W.L. Lyons,
Inc. that are higher than might be charged by another qualified broker to obtain
brokerage and/or research services considered by the Adviser to be useful or
desirable in the performance of the Adviser's duties hereunder and for the
investment management of other advisory accounts over which the Adviser or the
Adviser's affiliates exercise investment discretion.
6. Name of Fund. The Fund may use any name including or derived from the
name of "J.J.B. Hilliard, W.L. Lyons, Inc." in connection with the Fund only for
so long as this Agreement or any extension, renewal or amendment hereof remains
in effect. The Fund agrees that any name including or derived from the name
"J.J.B. Hilliard, W.L. Lyons, Inc." may freely be used by the Adviser for any
purpose including other investment companies, entities, products or services.
Upon the termination of this Agreement, the Fund shall promptly take all
necessary and appropriate action to change its name to one that does not include
and is not derived from the name J.J.B. Hilliard, W.L. Lyons, Inc.; provided,
however, that the Fund may continue to use such name if the Adviser consents in
writing to such use.
7. Miscellaneous.
7.1 This Agreement shall become effective on the date hereof. It
shall continue in effect until two years from the date on which this Agreement
is executed, and thereafter from year to year only so long as such continuance
is specifically approved at least annually by (i) the Fund's directors or (ii) a
vote of a majority of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the directors who
are not interested persons of any party thereto, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable, without penalty, on 60 days written notice, by the Fund's directors
or by vote of holders of a majority of the Fund's outstanding voting securities,
or upon 60 days written notice by the Adviser. This Agreement will also
terminate automatically in the event of its assignment.
7.2 As used herein, the terms "interested person" and "majority of
the outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the Fund under the 1940 Act
by the Securities and Exchange Commission.
7.3 This Agreement shall be construed in accordance with the laws of
the Commonwealth of Kentucky.
7.4 The captions in this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
7.5 If any provisions of this Agreement shall be held or made
invalid, in whole or in part, the other provisions of this Agreement shall
remain in force. Invalid provisions shall, in accordance with the intent and
purpose of this Agreement, be replaced by mutual
4
<PAGE>
consent of the parties with such valid provisions which in their economic effect
come as close as legally possible to such invalid provisions.
7.6 The Adviser shall be entitled to rely on any notice or other
communication believed by it to be genuine and correct and to have been sent to
it by or on behalf of the Fund.
7.7 This Agreement may be amended by the parties only if such
amendment is specifically approved by (i) the Board of Directors of the Fund,
and (ii) the vote of a majority of those directors of the Fund who are not
interested persons of the Adviser cast in person at a meeting called for the
purpose of voting on such approval.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer as of the day and year first above
written.
HILLIARD LYONS GROWTH FUND, INC.
By: /s/ Joseph C. Curry, Jr.
------------------------
Title: Treasurer and Secretary
-----------------------
HILLIARD LYONS INVESTMENT ADVISORS
By: /s/ SAMUEL C. HARVEY
--------------------
Title: Executive Vice-President
------------------------
5
<PAGE>
Exhibit (6)(a)
DISTRIBUTION AGREEMENT
---------------------
THIS AGREEMENT made as of the 1st day of December, 1998 between HILLIARD
LYONS GROWTH FUND, INC., a Maryland corporation (the "Fund"), and PROVIDENT
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WITNESSETH:
-----------
WHEREAS, the Fund is registered under the Investment Company Act of 1940
(the "1940 Act"), as an open-end non-diversified management investment company
and an indefinite number of the Fund's shares have been registered under the
Securities Act of 1933 (the "Securities Act"), to be offered for sale to the
public in a continuous public offering in accordance with the terms and
conditions set forth in the prospectus and statement of additional information
(the "Prospectus" and "Statement of Additional Information", respectively)
included in the Fund's registration statement on Form N-1A as the same may be
amended and supplemented from time to time (the "Registration Statement"); and
WHEREAS, the Distributor is a securities firm engaged in the business of
selling securities either directly to purchasers or through other securities
dealers; and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the Fund's shares in order
to promote the growth of the Fund and facilitate the distribution of its shares.
NOW, THEREFORE, for and in consideration of the premises and the covenants
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
Section 1. Appointment of the Distributor. The Fund hereby appoints the
Distributor as the general distributor and agent of the Fund to sell shares of
Common Stock, par value $.001 per share, of the Fund (hereinafter referred to
as "Shares") to the public on a best efforts basis pursuant to the continuous
offering of the Fund's Shares.
Section 2. Exclusive Nature of Duties. The Distributor shall be the
exclusive representative of the Fund to act as general distributor and agent in
connection with the continuous offering of the Fund's Shares, except that:
(a) The exclusive rights granted to the Distributor to sell Shares of
the Fund shall not apply to Shares issued and sold (i) in connection with the
merger or consolidation of any other investment company or personal holding
company with the Fund or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company by
the Fund; (ii) in connection with offers of exchange exempted from Section 11(a)
of the 1940 Act; or (iii) pursuant to reinvestment of dividends or capital gain
distributions.
<PAGE>
(b) Such exclusive rights shall also not apply to Shares issued and
sold directly by the Fund to its stockholders and other persons, provided that,
except with respect to Shares issued and sold by the Fund in transactions of the
type described in Section 2(a) above, the Distributor shall be entitled to the
applicable sales load as set forth in the Prospectus with respect to such
Shares.
Section 3. Purchase of Shares from the Fund. (a) The Distributor agrees to
use its best efforts to solicit offers to purchase the Shares upon the terms and
conditions set forth in the Prospectus.
(b) The Shares are to be sold by the Distributor and, if deemed
advisable by the Distributor, by securities dealers and financial advisors who
are members in good standing of the National Association of Securities Dealers,
Inc. and who have entered into sales agreements with the Distributor
("Authorized Dealers") upon the terms and conditions set forth in Section 8
hereof, to investors at the public offering price, as set forth in Section
3(c)hereof.
(c) The public offering price of the Shares, i.e., the price per
Share at which the Distributor or Authorized Dealers may sell Shares to the
public, shall be the public offering price as set forth in the currently
effective Prospectus and Statement of Additional Information included in the
Fund's Registration Statement, but not to exceed the net asset value at which
the Distributor is to purchase the Shares, plus the applicable sales charge as
set forth in the Prospectus. If the public offering price does not equal an even
cent, the public offering price may be adjusted to the nearest cent. All
payments to the Fund hereunder shall be made in the manner set forth in Section
3(1).
(d) The net asset value of Shares shall be determined by the Fund or
its agent in accordance with the method set forth in the Prospectus and
Statement of Additional Information and guidelines established by the Board of
Directors of the Fund. Such net asset value shall be determined on each day the
New York Stock Exchange is open for business and such public offering price
based upon such net asset value shall become effective as set forth from time to
time in the current Prospectus. The Fund (or its agent) shall furnish the
Distributor, with all possible promptness, a statement of each computation of
net asset value, and of the details entering into such computation.
(e) The Fund shall have the right to suspend the sale of its Shares
at times when redemption is suspended pursuant to the conditions set forth in
Section 4(b) hereof. The Fund shall also have the right to suspend the sale of
its Shares if trading on the New York Stock Exchange shall have been suspended,
if a banking moratorium shall have been declared by federal authorities, or if
there shall have been some other event, which, in the judgment of the Fund,
makes it impracticable or inadvisable to sell the Shares.
(f) The Distributors shall accept or reject orders it receives for
the purchase of Shares in accordance with the Prospectus or Statement of
Additional Information, and shall
2
<PAGE>
promptly transmit such orders as are so accepted to the Fund, or any agent of
the Fund designated in writing by the Fund. Any order may be rejected by the
Fund or the Distributor; provided, however, that neither the Fund nor the
Distributor will arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Shares. The Fund (or its agent) will confirm
orders upon receipt by the Fund (or its agent) of such orders together with
payment therefor, will apply such payment to the purchase of Shares and the
payment of the applicable sales charge, will make appropriate book entries
therefor, and will deliver the notice prescribed by the Maryland General
Corporation Law and Article 8 of the Maryland Uniform Commercial Code pursuant
to the instructions of the Distributor. The Distributor agrees to cause such
orders, such payment and such instructions to be delivered promptly to the Fund
(or its agent). The Distributor agrees to indemnify and reimburse the Fund for
any loss arising from non-payment by any investor of any purchase order accepted
by the Distributor.
Section 4. Redemption of Shares by the Fund. (a) Any of the outstanding
Shares may be tendered for redemption at any time, and the Fund agrees to redeem
the Shares so tendered in accordance with its obligations as set forth in the
Prospectus and Statement of Additional Information. Requests for redemption from
holders of Shares shall be submitted to the Distributor, Authorized Dealers or
to the Fund (or its agent) in accordance with the applicable provisions set
forth in the Prospectus. The price to be paid to redeem the Shares shall be
equal to the net asset value calculated in accordance with the provisions of
Section 3(d) hereof less any contingent deferred sales charge that may be
applicable in accordance with the Prospectus. All payments by the Fund (or its
agent) hereunder shall be made in accordance with the instructions of the
Distributor or redeeming stockholder on or before the seventh day subsequent to
the receipt by the Distributor or the Fund (or its agent) of a request for
redemption in proper form unless the Shares were recently purchased, in which
case the redemption proceeds will not be sent until the check received for the
Shares purchased has cleared.
(b) The Fund may suspend the right of redemption or postpone the date
of payment for more than seven days during any period when (i) trading on the
New York Stock Exchange is restricted or the New York Stock Exchange is closed,
other than customary weekend and holiday closings, (ii) the Securities and
Exchange Commission has by order permitted such suspension, or (iii) an
emergency, as defined by rules of the Securities and Exchange Commission, exists
making disposal of portfolio investments or determination of the value of the
net assets of the Fund not reasonably practicable.
Section 5. Duties of the Fund. (a) The Fund, or any agent of the Fund
designated in writing by the Fund, shall furnish to the Distributor such
material regarding the Fund which the Distributor may reasonably request for use
in connection with the distribution of Shares, and this shall include copies of
its Prospectus and Statement of Additional Information and one certified copy of
all financial statements prepared for the Fund by independent public
accountants.
(b) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of its Shares for sale under the
securities laws of such states as the
3
<PAGE>
Distributor and the Fund may approve. Any such qualification may be withheld,
terminated or withdrawn by the Fund at any time in its discretion. As provided
in Section 9(c) hereof, the expense of qualification and maintenance of
qualification shall be borne by the Fund. The Distributor shall furnish such
information and other material relating to its affairs and activities as may be
required by the Fund in connection with such qualification.
(c) The Fund (or its agent) will furnish, in reasonable quantities
upon request by the Distributor, copies of annual and interim reports of the
Fund.
Section 6. Duties of the Distributor. (a) The Distributor shall use its
best efforts to solicit offers to purchase the Shares, but shall not be
obligated to sell any specific number of Shares. The services of the Distributor
to the Fund hereunder are not to be deemed exclusive and nothing herein
contained shall prevent the Distributor from entering into like arrangements
with other investment companies so long as the performances of its obligations
hereunder is not impaired thereby.
(b) In selling the Shares of the Fund, the Distributor shall use its
best efforts to comply with the requirements of all federal and state laws and
the requirements of the National Association of Securities Dealers, Inc.
("NASD") governing the sale of such securities. Neither the Distributor nor any
Authorized Dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement, related Prospectus and Statement of Additional
Information, or any sales literature specifically approved by the Fund.
(c) The Distributor will submit orders for Shares of the Fund only to
the extent of purchase orders actually received and not in excess of such
orders, and it will not avail itself of any opportunity of making a profit by
expediting or withholding orders.
(d) Immediately following the receipt of a redemption request, the
Distributor will transmit the redemption request to the Fund (or its agent).
(e) The Fund has adopted a Distribution Plan pursuant to the
provisions of Rule 12b-1 under the 1940 Act (the "Plan") which provides for the
payment of fees to the Distributor to reimburse it for expenses incurred in
connection with the offering and sale of the Shares and the Distributor agrees
to take no action inconsistent with, and to file all reports required by, the
Plan.
Section 7. Compliance with Laws. The Fund shall use its best efforts in all
respects to comply with the requirements of all federal and state laws and the
requirements of the NASD governing the issuance and sale of the Shares.
Section 8. Authorized Dealers and Service Agents. The Distributor may enter
into sales agreements with Authorized Dealers who wish to offer and sell Shares
and may enter into
4
<PAGE>
servicing agreements with financial institutions (including banks) and others
("Service Agents") for stockholder servicing and administrative services with
respect to Shares owned by stockholders for whom the Service Agent is the holder
of record or for whom the Service Agent performs administrative or servicing
functions, provided that the Fund shall approve the form of sales agreement or
servicing agreement used. The Distributor will supervise the Fund's relations
with Authorized Dealers and Service Agents. The Distributor will be responsible
for payment of all fees and other charges owed to Authorized Dealers or Service
Agents. The Fund (or its agent) will pay to Authorized Dealers, on behalf of the
Distributor and solely out of any sales charge received by the Fund with respect
to sales of Shares by Authorized Dealers, the applicable reallowance to dealers
in accordance with the Prospectus and Statement of Additional Information.
Section 9. Payment of Expenses. (a) The Fund shall bear all costs and
expenses of the Fund, including fees and disbursements of its counsel and
auditors and fees and expenses incurred in connection with (i) the preparation
and filing of its Registration Statement, including the Prospectus and Statement
of Additional Information, under the 1940 Act and the Securities Act, and all
amendments and supplements thereto, and (ii) the preparation and mailing of
annual and interim reports and proxy materials to stockholders (including but
not limited to the expense of setting in type and printing and distributing to
existing stockholders any such Registration Statement, Prospectus, Statement of
Additional Information, annual or interim report or proxy materials).
(b) (i) Subject to Section 9(b)(ii) hereof, after the Prospectus,
Statement of Additional Information and annual and interim reports have been
prepared and set in type, the Distributor shall bear the costs and expenses of
printing and distributing any copies thereof which are to be used in connection
with the offering of Shares to Authorized Dealers or investors pursuant to this
Agreement, and the Distributor shall bear the costs and expenses of preparing,
printing and distributing any other literature used by the Distributor or
furnished by it for use by Authorized Dealers in connection with the offering of
the Shares for sale to the public and any expenses of advertising incurred by
the Distributor in connection with such offering.
(ii) Notwithstanding anything in Section 9(b)(i) to the
contrary, to the extent authorized by the Fund's Board of Directors pursuant to
the Plan and for so long as the Plan shall remain in effect, the Fund may
reimburse the Distributor for the expenses of printing and distributing
Prospectuses and Statements of Additional Information (other than those
distributed to existing stockholders of the Fund) and any other promotional
sales literature used by the Distributor or furnished by the Distributor to
investors or Authorized Dealers in connection with the offering of the Fund's
Shares.
(c) The Fund shall bear the costs and expenses of qualification of
the Shares for sale pursuant to this Agreement, and, if necessary or advisable
in connection therewith, of qualifying the Fund as a broker or dealer in such
states or other jurisdictions as shall be selected
5
<PAGE>
by the Fund and the Distributor, and the cost and expenses payable to each such
state for continuing qualification therein until the Fund decides to discontinue
such qualification, pursuant to Section 5(c) hereof.
Section 10. Compensation. The Fund shall promptly pay or cause to be paid
the Distributor any sales charge received by the Fund (net of any reallowance
payable to Authorized Dealers pursuant to Section 8 hereof) with respect to the
sale of Shares in accordance with the Prospectus and Statement of Additional
Information.
Section 11. Indemnification. (a) The Fund shall indemnify and hold
harmless the Distributor and each person, if any, who controls the Distributor
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage or
expense reasonable counsel fees incurred in connection therewith), arising by
reason of any person acquiring any Shares, which may be based upon the
Securities Act, or on any other statute or at common law, on the ground that the
Registration Statement or related Prospectus and Statement of Additional
Information, as from time to time amended and supplemented, or an annual or
interim report to stockholders of the Fund, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statement therein not misleading, unless such
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund in connection therewith by or on behalf of the
Distributor, provided, however, that in no case (i) is the indemnity of the Fund
in favor of the Distributor and any such controlling persons to be deemed to
protect the Distributor or any such controlling person thereof against any
liability to the Fund or its security holders to which the Distributor or any
such controlling person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of the reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Fund to be liable under its indemnity obligation
contained in this paragraph with respect to any claim made against the
Distributor or such controlling persons, unless the Distributor or such
controlling persons, as the case may be, shall have notified the Fund in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any designated
agent), but failure to notify the Fund of any such claim shall not relieve it
from any liability which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
subsection (a). The Fund will 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 such liability, but if the Fund elects to assume the defense, such
defense shall be conducted by counsel chosen by it and reasonably satisfactory
to the Distributor or such controlling person or persons, defendant or
defendants in the suit. In the event the Fund elects to assume the defense of
any such suit and retain such counsel, the Distributor or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Fund does
not elect to assume the defense of any such suit, it will reimburse the
Distributor or
6
<PAGE>
such controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. The Fund shall
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issuance or sale of any of the Shares.
(b) The Distributor shall indemnify and hold harmless the Fund and
each of its directors and officers and each person, if any, who controls the
Fund against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Fund by or on behalf of the Distributor for
use in connection with the Registration Statement or related Prospectus and
Statement of Additional Information, as from time to time amended, or the annual
or interim reports to stockholders. In case any action shall be brought against
the Fund or any person so indemnified, in respect of which indemnity may be
sought against the Distributor, the Distributor shall have the rights and duties
given to the Fund, and the Fund and each person so indemnified shall have the
rights and duties given to the Distributor by the provisions of subsection (a)
of this Section 11.
Section 12. Duration and Termination of this Agreement. This Agreement
shall continue in effect for two years from the date of its execution and
thereafter for successive periods of one year each if such continuance is
specifically approved at least annually by (i) the Board of Directors of the
Fund, or by the vote of a majority of the outstanding voting securities of the
Fund, and (ii) the vote of a majority of those directors who are not interested
persons of the Distributor or of the Fund and have no direct or indirect
financial interest in the operation of the Plan or in this or any other
agreement related to the Plan, cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors of the Fund or any vote of a majority of the
outstanding voting securities of the Fund, or by the Distributor, on sixty days
written notice to the other party. This Agreement shall automatically terminate
in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the 1940 Act.
Section 13. Amendments of this Agreement. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the Board of
Directors of the Fund, or by the vote of a majority of outstanding voting
securities of the Fund, and (ii) by the vote of a majority of those directors of
the Fund who are not interested persons of the Distributor or of the Fund and
have no direct or indirect financial interest in the operation of the Plan or
in this or any other agreement related to the Plan cast in person at a meeting
called for the purpose of voting on such approval.
7
<PAGE>
Section 14. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of Maryland
as at the time in effect and the applicable provisions of the 1940 Act. To the
extent that the applicable law of the State of Maryland conflicts with any of
the provisions of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer as of the day and year first above
written.
HILLIARD LYONS GROWTH FUND, INC.
By: /s/ JOSEPH C. CURRY, JR.
------------------------
PROVIDENT DISTRIBUTORS, INC.
By: /s/ JANE HAEGELE
----------------
8
<PAGE>
Exhibit (6)(b)
December 1, 1998
James M. Rogers
J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center
Louisville, KY 40202
Re: Provident Distributors, Inc.-Distribution Fees
Dear Mr. Rogers:
This letter services as an agreement between J.J.B Hilliard, W.L. Lyons,
Inc. ("Hilliard Lyons") and the Hilliard-Lyons Government Fund, Inc. and
Hilliard Lyons Growth Fund, Inc. (together the "Funds") with respect to payment
of distribution fees to Provident Distributors, Inc. ("PDI") pursuant to that
letter dated December 1, 1998 by and between PDI and Hilliard Lyons.
In consideration for the approval by the Funds of the Investment Advisory
Agreements between each the Funds and Hilliard Lyons, Hilliard Lyons will pay
PDI a monthly fee of $2,000, as well as any additional fees or expenses charged
by PDI for its services on behalf of the Funds in the ordinary course of
business, until the earlier of either the termination of the Investment Advisory
Agreements or PDI is no longer acting as the distributor for the Funds.
J.J.B. HILLIARD, W.L. LYONS, INC.
/s/ JAMES M. ROGERS Date: 12/1/98
-------------------------------
James M. Rogers, Executive
Vice President and
Chief Operating Officer
HILLIARD LYONS GOVERNMENT FUND
/s/ JOSEPH C. CURRY, JR. Date: 12/1/98
-------------------------------
Joseph C. Curry, Jr., President
HILLIARD LYONS GROWTH FUND, INC.
/s/ JOSEPH C. CURRY, JR. Date: 12/1/98
-------------------------------
Joseph C. Curry, Jr., Secretary
and Treasurer
<PAGE>
Exhibit (6)(c)
BROKER-DEALER AGREEMENT
FOR HILLIARD LYONS FUNDS
(FULLY DISCLOSED BASIS)
Provident Distributors, Inc.,
Four Falls Corporate Center, 6th Floor
West Conshobocken, PA 79428 2961
Ladies and Gentlemen:
We desire to enter into an Agreement with you for the sale of shares of
common stock of Hilliard Lyons Government Fund, Inc; Hilliard-Lyons Growth Fund,
Inc., open-end registered investment companies (hereinafter referred to as the
"Companies") of which you are the principal underwriter as such term is defined
in the Investment Company Act of 1940, as amended, and for which you are the
exclusive agent for the continuous distribution of shares pursuant to the terms
of a Distribution Agreement between you and the Companies. Unless the context
otherwise requires, as used herein the term "Prospectus" shall mean the
prospectus and related statement of additional information (the "Statement of
Additional Information") incorporated therein by reference, as amended and
supplemented, of each investment portfolio of the Companies ("Fund") included in
the then currently effective registration statement (or post-effective amendment
thereto) of the Companies, as filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Registration
Statement").
In consideration for the mutual covenants contained herein, it is hereby
agreed that our respective rights and obligations shall be as follows:
1. In all sales of Fund shares to the public, we shall act as dealer for our
own account and in no transaction shall we have any authority to act as agent
for the Company, any Fund, for you or for any other dealer.
2. All orders for the purchase of any Fund shares shall be executed at the
then current public offering price per share (i.e., the net asset value per
share plus the applicable sales load, if any) and all orders for the redemption
of any Fund shares shall be executed at the net asset value per shares, in each
case as described in the Prospectus of such Fund. The minimum initial purchase
order and minimum subsequent purchase order shall be as set forth in the
Prospectus of such Fund. All orders are subject to acceptance or rejection by
you at your sole discretion. Unless otherwise mutually agreed in writing, each
transaction shall be confirmed promptly in writing directly to the customer on a
fully disclosed basis and a copy of each confirmation shall be sent
simultaneously to us. We acknowledge that the Company has reserved the right, at
its discretion and without notice, to suspend the sale of shares or withdraw
entirely the sale of shares of any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively on
the representations contained in the Prospectus of such Fund. We agree that we
shall not offer or sell shares of any Fund except in compliance with all
applicable federal and state securities laws and the rules and regulations of
applicable regulatory agencies or authorities. In connection with offers to sell
and sales of shares of each Fund, we agree to deliver or cause to be delivered
to each person to whom any such offer or sale is made, at or prior to time of
such offer or sale, a copy of the Prospectus and, upon request, the Statement of
Additional Information of such Fund. We further agree to obtain from each
customer to whom we sell Fund shares any taxpayer identification number
certification required under Section 3406 of the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations promulgated thereunder, and to
provide you or your designee with timely written notice of any failure to obtain
such taxpayer identification number certification in order to enable the
implementation of any required backup withholding in accordance with
Section 3406 of the Code and the regulations thereunder. Unless otherwise
mutually agreed in writing, you shall deliver or cause to be delivered to each
customer who purchases shares of any Funds from or through us copies of all
annual and interim reports, proxy solicitation materials, and any other
information and materials relating to such Funds and prepared by or on behalf of
you, the Fund or its investment adviser, custodian, transfer agent or dividend
disbursing agent for distribution to each such customer. You agree to supply us
with copies of the Prospectus, Statement of Additional Information, annual
reports, interim reports, proxy solicitation materials and any such other
information and materials relating to each Fund in reasonable quantities upon
request.
4. We shall not make any representations concerning any Fund shares other than
those contained in the Prospectus of such Fund or in any promotional materials
or sales literature furnished to us by you or the Fund. Except as otherwise
provided in Paragraph 3 of this Agreement, we shall not furnish or cause to be
furnished to any person or display or publish any information or materials
relating to any Fund (including, without limitation, promotional materials and
sale literature, advertisements, press releases, announcements, statements,
posters, signs or other similar material), except such information and materials
as may be furnished to us by you or the Fund, and such other information and
materials as may be approved in writing by you.
5. In determining the amount of any dealer reallowance payable to us
hereunder, you reserve the right to exclude any sales which you reasonably
determine are not made in accordance with the terms of the applicable Fund
Prospectuses and the provisions of this Agreement.
6. (a) In the case of any Fund shares sold with a sales load, customers may
be entitled to a reduction in sales load on purchases made from a Fund which
utilizes a letter of intent ("Letter of Intent") in accordance with such Fund's
Prospectus. In such case, our dealer reallowance will be paid based upon the
reduced sales load, but an adjustment to the dealer reallowance will be made in
accordance with the Prospectus of the applicable Fund to reflect the investor's
actual purchases if he or she should fail to fulfill the commitment in the
Letter of Intent. The sales load and/or dealer reallowance may be changed at any
time in your sole discretion upon written notice to us.
<PAGE>
(b) Subject to and in accordance with the terms of the Prospectus of each Fund
sold with a sales load, a reduced sales load may be applicable with respect to
customer accounts through a right of accumulation under which customers are per-
mitted to purchase shares of a Fund at the then current public offering price
per share applicable to the total of (i) the dollar amount of shares then being
purchased plus (ii) an amount equal to the then current net asset value or
public offering price originally paid per share, whichever is higher, of the
customer's combined holdings of the shares of such Fund and of any other open-
end registered investment companies which may be permitted by the applicable
Fund prospectus. In such case, we agree to furnish to you if orders are made by
wire, or to the transfer agent as such term is defined in the Prospectus of each
Fund (the"Transfer Agent") if orders are made by mail, sufficient information to
permit your confirmation of qualification for a reduced sales load; acceptance
of the purchase order is subject to such confirmation.
(c) With respect to Fund shares sold with a sales load, we agree to advise you
promptly at your request as to amounts of any and all sales by us qualifying for
a reduced sales load.
(d) Exchanges (i.e., the investment of the proceeds from the liquidation of
shares of one Fund in the shares of another Fund) shall, where available, be
made subject to and in accordance with the terms of each Fund Prospectus.
7. Subject to and in accordance with the terms of each Fund Prospectus and the
Service Plan, if any, adopted by the Board of Directors of the Company pursuant
to Rule 12h-1 under the Investment Company Act of 1940, as amended, we
understand that you may pay to certain financial institutions (which may include
banks), securities dealers and other industry professionals with which you have
entered into a Service Agreement in substantially the form annexed hereto as
Appendix A (or such other form as may be approved from time to time by the Board
of Directors of the Company) such fees as may be determined by you in accordance
with such Service Agreement for shareholder and administrative services as
described therein.
8. The procedures relating to all orders and the handling thereof will be
subject to the terms of the Prospectus of each Fund and your written
instructions to us from time to time. No conditional orders will be accepted. We
agree to place orders with you immediately for the same number of shares and at
the same price as any sales by us. We shall not withhold placing orders received
from customers so as to profit ourselves as a result of such withholding by a
change in the net asset value from that used in determining the offering price
to such customers, or otherwise; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions (including,
without limitation, my purchases and redemptions) in any Fund shares registered
in the name of, or beneficially owned by, any customer unless such customer has
granted us full right, power and authority to effect such transactions on his or
her behalf and (b) you, each Fund, each Transfer Agent and your and their
respective officers, directors or trustees, agents, employees and affiliates
shall not be liable for, and shall be fully indemnified and held harmless by us
from and against, any and all claims, demands, liabilities and expenses
(including without limitation, reasonable attorneys fees) which may be incurred
by you or any of the foregoing persons entitled to indemnification from us
hereunder arising out of or in connection with the execution of any transactions
in Fund shares registered in the name of, or beneficially owned by, any customer
in reliance upon any oral or written instructions believed to be genuine and to
have been given by or on behalf of us.
9. (a) We agree to pay for purchase orders of any Fund shares from us in
accordance with the terms of the Prospectus of the applicable fund. On or before
the settlement date of each purchase order for shares of any Fund, we shall
either (i) remit to an account designated by you with the Transfer Agent an
amount equal to the then current public offering price of the shares of such
Fund being purchased less our dealer reallowance, if any, with respect to such
purchase order as determined by you in accordance with the terms of the
applicable Fund Prospectus, or (ii) remit to an account designated by you with
the Transfer Agent an amount equal to the then current public offering price of
the shares of each Fund being purchased without deduction for our dealer
reallowance, if any, with respect to such purchase order as determined by you in
accordance with the terms of the applicable Fund Prospectus, in which case our
dealer reallowance, if any, shall be payable to us on at least a monthly basis.
If payment for any purchase order is not received in accordance with the terms
of the applicable Fund Prospectus, you reserve the right, without notice, to
cancel the sale and to hold us responsible for any loss sustained as a result
thereof.
(b) If any shares sold to us under the terms of this Agreement are sold with a
sales load and are redeemed for the account of the Fund or are tendered for
redemption within seven (7) days after confirmation of our purchase order for
such shares: (i) we shall forthwith refund to you the full dealer reallowance
received by us on the sale; and (ii) you shall forthwith pay to the Fund your
portion of the sales load on the sale which had been retained by you and shall
also pay to the Fund the amount refunded by us.
10. Certificates for shares sold to us hereunder shall only be issued in
accordance with the terms of each Fund Prospectus upon our customer's specific
request and, upon such request, shall be promptly delivered to us by the
Transfer Agent unless we make other arrangements. However, in making delivery of
such share certificates to us, the Transfer Agent shall have adequate time to
clear any checks drawn for the payment of Fund shares.
11. We hereby represent and warrant to you that:
(a) we are a corporation, partnership or other entity duly organized and
validly existing in good standing under the laws of the jurisdiction in which
we were organized;
(b) the execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all necessary
action and all other authorization and approvals (if any) required for our
lawful execution and delivery of this Agreement and our performance hereunder
have been obtained; and
(c) upon execution and delivery by us, and assuming due and valid execution and
delivery by you, this Agreement will constitute a valid and binding agreement,
enforceable against us in accordance with its terms.
12. We further represent and warrant to you that we are a member of the NASD
and, with respect to any sales in the United States, we agree to abide by all of
the rules and regulations of the NASD, including, without limitation, its
Business Conduct Rules. We agree to comply with all applicable federal and state
laws, rules and regulations. You agree to inform us, upon our
<PAGE>
request, as to the states in which you believe the shares of the Funds have
qualified for sale under, or are exempt from the requirements of the respective
securities laws of such states, but you shall have no obligation or
responsibility as to our right to sell shares in any jurisdiction. We agree to
notify you immediately in the event of (a) our expulsion or suspension from the
NASD, or (b) our violation of any applicable federal or state law, rule or
regulation arising out of or in connection with this Agreement or which may
otherwise affect in any material way our ability to act as a dealer in
accordance with the terms of this Agreement. Our expulsion from the NASD will
automatically terminate this Agreement immediately without notice. Our
suspension from the NASD for violation of any applicable federal or state law,
rule or regulation will terminate this Agreement effective immediately upon your
written notice to us of termination.
13. In the event that you breach any of the terms and conditions of this
Agreement, you will indemnify us, the funds, and our affiliates for any damages,
losses, costs and expenses (including reasonable attorneys' fees and expenses)
arising out of or relating to such breach. In the event that we breach any of
the terms and conditions of this Agreement, we will indemnify you and your
affiliates for any damages, losses, costs and expenses (including reasonable
attorneys' fees and expenses) arising out of or relating to such breach.
14. The names and addresses and other information concerning our customers are
and shall remain our sole property,and neither you nor your affiliates shall use
such names, addresses or other information for any purpose except in connection
with the performance of your duties and responsibilities hereunder and except
for servicing and informational mailings relating to the Funds. Notwithstanding
the foregoing, this Paragraph 14 shall not prohibit you or any of your
affiliates from utilizing for any purposes the names, addresses or other
information concerning any of our customers if such names, addresses or other
information is obtained in any manner other than from us pursuant to this
Agreement. The provisions of this Paragraph 14 shall survive the termination of
this Agreement.
15. We agree to serve as a service organization, in accordance with the terms
of the form of Service Agreement annexed hereto as Appendix A. By executing this
Agreement, each of the parties hereto agrees to be bound by all terms,
conditions, rights and obligations set forth in the form of Service Agreement
annexed hereto as Appendix A and further agrees that such form of Service
Agreement supersedes any and all prior service agreements between the parties
hereto.
16. By requesting expedited redemption, we agree that you, the Company, the
Transfer Agent, and your and their respective officers, directors or trustees,
agents, employees and affiliates shall not be liable for and shall be fully
indemnified and held harmless by us from and against any and all claims,
demands, liabilities and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or in connection with any expedited redemption
payments.
17. Neither this Agreement nor the performance of the services of the
respective paries hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture between
you and us. Neither party hereto shall be, act as, or represent itself as, the
agent or representative of the other, nor shall either party have the right or
authority to assume, create or incur any liability or any obligation of any
kind, express or implied, against or in the name of, or on behalf of, the other
party. This Agreement is not intended to, and shall not, create any rights
against either party hereto by any third party solely on account of this
Agreement. Neither party hereto shall use the name of the other party in any
manner without the other party's prior written consent, except as required by
any applicable federal or state law, rule or regulation, and except pursuant to
any promotional programs mutually agreed upon in writing by the parties hereto.
18. Except as otherwise specifically provided herein, all notices required or
permitted to be given pursuant to this Agreement shall be given in writing and
delivered by personal delivery or by postage prepaid, registered or certified
United States first class mail, return receipt requested, or by telex, telegram
or similar means of same day delivery (with a confirming copy by mail as
provided herein). Unless otherwise notified in writing, all notices to you shall
be given or sent to you at your offices, located at Four Falls Corporate Center,
6th Floor, West Conshohocken, PA 19121-2961 and all notices to us shall be given
or sent to us at the address shown below.
19. This Agreement shall become effective only when accepted and signed by you,
and may be terminated at any time by either party hereto upon fifteen (15) days
prior written notice to the other party. Not withstanding the termination of
this Agreement all unfulfilled obligations, duties and liabilities of either
party to the other as of the date of termination including, without limitation,
all obligations of indemnification of either to the other shall remain the
responsibility of the respective party. This Agreement may be amended only by a
written instrument signed by both the parties hereto and, may not be assigned by
either party without the prior written consent of the other party. This
agreement constitutes the entire agreement and understanding between the parties
hereto relating to the subject matter hereof and supersedes any and all prior
agreements between the parties hereto relating to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware, without given effect to principles of
conflicts of laws.
Very truly yours,
- --------------------------------------------------------------------------------
Name of Broker-Dealer (Please Print or Type)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address
Dated:
--------------------------------------------------------------------------
By: --------------------------------------------------------------------------
Authorized Dealer
Note:
Please sign and return both copies of this Agreement to Provident Distributors,
Inc. Upon acceptance a countersigned copy will be returned to you for your
files.
Accepted:
Provident Distributors, Inc.
Date:
--------------------------------------------------------------------------
By:
--------------------------------------------------------------------------
Authorized Signature
<PAGE>
Exhibit (6)(d)
PROVIDENT DISTRIBUTORS, INC.
FOUR FALLS CORPORATE CENTER 6th FLOOR
WEST CONSHOHOCKEN, PA 19428-2961
609-259-6533
610-260-6535 FAX
December 1, 1998
Mr. James M. Rogers
J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center
Louisville, Kentucky 40202
Dear Mr. Rogers:
This letter agreement sets out the duties, responsibilities and
compensation of Provident Distributors, Inc. (PDI) and J.J.B. Hilliard, W.L.
Lyons, Inc. (Hilliard Lyons) with respect to PDI's role as the distributor of
the Hilliard-Lyons Government Fund, Inc. and Hilliard-Lyons Growth Fund, Inc.
(the "Funds").
PDI has entered into a distribution contract with each Fund dated December
1, 1998. As the distributor, PDI will maintain the necessary licensing and
status with the National Association of Securities Dealers (NASD), all 50
states, and the Commonwealth of Puerto Rico in order for it to act as a sponsor-
distributor of a mutual fund. PDI will consult and advise as necessary with the
marketing group at Hilliard Lyons with respect to the regulatory aspect of the
Fund's advertising. PDI will file, and be responsible for this advertising with
the NASD. PDI will register the Funds under the PDI membership with NSCC
Fund/Serv. PDI will prepare and present a distributor's report and any other
necessary information to each Fund's Board of Directors. PDI will make available
to Hilliard Lyons all information, reports, people, etc. concerning its capacity
as the Funds' distributor in order for Hilliard Lyons to perform its role as the
Funds' investment advisor. Additionally, PDI will, at the request of Hilliard
Lyons, enter into dealer agreements with other broker-dealer firms authorizing
them to sell shares of the Funds. Hilliard Lyons will make available to PDI all
necessary information, reports, people, etc. to permit PDI to perform its role
as the Funds' distributor.
<PAGE>
2
PDI will be responsible for all normal expenses of the distributor. It is
understood, however, that Hilliard Lyons will bear the expense of preparing and
printing prospectuses, advertising and sales literature.
Hilliard Lyons will pay PDI a monthly fee of $2,000.00 for its general
consulting services, payable by the 5th business day of the following month. The
fee will be due the first month following PDI's executed distribution contract
with The Funds.
This letter agreement can be cancelled by either party with 60 days written
notice. This letter agreement will expire at the end of the month in which PDI
is no longer acting as the distributor for the Fund.
/s/ PHILLIP H. RINNANDER 12/1/98
-------------------------------- -------
For Provident Distributors, Inc. Date
/s/ JAMES M. ROGERS 12/1/98
------------------- -------
For Hilliard Lyons Date
<PAGE>
EXHIBIT 8
CUSTODIAN CONTRACT
Between
HILLIARD LYONS GROWTH FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
------
1. Employment of Custodian and Property to be
Held By It......................................................... 1
2. Duties of the Custodian with Respect to Property of
the Fund Held by the Custodian in the United States................ 2
2.1 Holding Securities.......................................... 2
2.2 Delivery of Securities...................................... 3
2.3 Registration of Securities.................................. 7
2.4 Bank Accounts............................................... 8
2.5 Availability of Federal Funds............................... 9
2.6 Collection of Income........................................ 9
2.7 Payment of Fund Monies...................................... 10
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased............................. 13
2.9 Appointment of Agents....................................... 13
2.10 Deposit of Securities in Securities System.................. 14
2.10A Fund Assets Held in the Custodian's Direct
Paper System................................................ 17
2.11 Segregated Account.......................................... 18
2.12 Ownership Certificates for Tax Purposes..................... 20
2.13 Proxies..................................................... 20
2.14 Communications Relating to Fund
Portfolio Securities........................................ 20
2.15 Reports to Fund by Independent Public
Accountants................................................. 21
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States........................ 22
3.1 Appointment of Foreign Sub-Custodians....................... 22
3.2 Assets to be Held........................................... 22
3.3 Foreign securities Depositories............................. 23
3.4 Segregation of Securities................................... 23
3.5 Agreements with Foreign Banking Institutions................ 23
3.6 Access of Independent Accountants of the Fund............... 24
3.7 Reports by Custodian........................................ 24
3.8 Transactions in Foreign Custody Account..................... 25
3.9 Liability of Foreign Sub-Custodians......................... 26
3.10 Liability of Custodian...................................... 26
3.11 Reimbursement for Advances.................................. 27
3.12 Monitoring Responsibilities................................. 28
3.13 Branches of U.S. Banks...................................... 29
3.14 Tax Law..................................................... 29
4. Payments for Repurchases or Redemptions and Sales
of Shares of the Fund............................................. 30
5. Proper Instructions............................................... 31
6. Actions Permitted Without Express Authority....................... 32
<PAGE>
7. Evidence of Authority.............................................. 32
8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income......................................................... 33
9. Records............................................................ 33
10. Opinion of Fund's Independent Accountant........................... 34
11. Compensation of Custodian.......................................... 34
12. Responsibility of Custodian........................................ 34
13. Effective Period, Termination and Amendment........................ 36
14. Successor Custodian................................................ 38
15. Interpretive and Additional Provisions............................. 39
16. Massachusetts Law to Apply......................................... 40
17. Prior Contracts.................................................... 40
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between Hilliard Lyons Growth Fund, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at Hilliard Lyons Center, Louisville, Kentucky, 40202, hereinafter
called the "Fund", and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund agrees to deliver to the Custodian all securities and
cash owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of capital stock, $.001 par value, ("Shares") of the Fund as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian.
<PAGE>
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable vote by the
Board of Directors of the Fund, and provided that the Custodian shall have no
more or less responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as sub-custodians for the Fund's
securities and other assets the foreign banking institutions and foreign
securities depositories designated in Schedule "A" hereto but only in
accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, to be held by it in the
United States, including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System" and (b) commercial paper of an
issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian pursuant to Section 2.10A.
-2-
<PAGE>
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper book-
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into
-3-
<PAGE>
the name of any nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed pursuant to Section
2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided that, in
any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer
-4-
<PAGE>
of such securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is
to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for
-5-
<PAGE>
the delivery of securities owned by the Fund prior to the receipt
of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations,
-6-
<PAGE>
regarding account deposits in connection with transactions by the
Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
as may be described from time to time in the Fund's currently
effective prospectus and statement of additional information
("prospectus"), in satisfaction of requests by holders of Shares
for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive
Committee signed by an officer of the Fund and certified by the
Secretary of an Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be
<PAGE>
registered in the name of the Fund or in the name of any nominee of the
Fund or of any nominee of the Custodian which nominee shall be assigned
exclusively to the Fund, unless the Fund has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies having the same investment adviser as the Fund, or in
the name or nominee name of any agent appointed pursuant to Section 2.9 or
in the name or nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on behalf of the Fund
under the terms of this Contract shall be in "street name" or other good
delivery form. If, however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its best efforts
only to timely collect income due the Fund on such securities and to notify
the Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account established
and
<PAGE>
used in accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Custodian for the Fund may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the funds
to be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Directors of the Fund. Such funds shall
be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to United States registered securities held hereunder to which
the Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall
<PAGE>
collect on a timely basis all income and other payments with respect to
United States bearer securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to the Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Income due the Fund on United States
securities loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to which
the Fund is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities, or evidence of title to
such
<PAGE>
options, futures contracts or options on futures contracts, to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under
the Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its agent
for this purpose) registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.10 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.10A; (d) in the case
of repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a member
of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Fund
of securities owned by the Custodian along with
<PAGE>
written evidence of the agreement by the Custodian to repurchase
such securities from the Fund or (e) for transfer to a time
deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: interest, taxes, management, accounting,
transfer agent and legal fees, and operating expenses of the Fund
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
<PAGE>
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors or of the Executive Committee of the
Fund signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of domestic securities for the account of the
Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund to
so pay in advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been received
by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself
<PAGE>
qualified under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article
2 as the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Securities in Securities Systems. The Custodian may deposit
and/or maintain domestic securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep domestic securities of the Fund in a
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the securities
system which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
<PAGE>
2) The records of the Custodian with respect to domestic securities
of the Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer domestic
securities sold for the account of the Fund upon (i) receipt of
advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers of domestic
securities for the account of the Fund shall identify the Fund,
be maintained for the Fund by the Custodian and be provided to
the Fund at its request. Upon request, the Custodian shall
furnish the
<PAGE>
Fund confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall furnish
to the Fund copies of daily transaction sheets reflecting each
day's transactions in the Securities system for the account of
the Fund.
4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
domestic securities deposited in the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 13 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of
<PAGE>
the Custodian with respect to any claim against the Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that
the Fund has not been made whole for any such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by the Fund in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which
shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
-17-
<PAGE>
4) The Custodian shall pay for securities purchased for the account
of the Fund upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to
the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt
of payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a
written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's transaction in
the Securities System for the account of the Fund;
6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may reasonably
request from time to time;
2.11 Segregated Account. The Custodian shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf
of the Fund, into
-18-
<PAGE>
which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading Commission
or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written
by the Fund or commodity futures contracts or options thereon purchased or
sold by the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the
-19-
<PAGE>
Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in connection
with transfers of such securities.
2.13 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.14 Communications Relating to Fund Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund all written information (including, without limitation, pendency of
calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased or sold
-20-
<PAGE>
by the Fund) received by the Custodian from issuers of the domestic
securities being held for the Fund. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the domestic
securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
2.15 Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including domestic securities deposited and/or maintained in a
Securities System, relating to the services provided by the Custodian under
this Contract; such reports shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
-21-
<PAGE>
3. Duties of the Custodian with Respect to Property of the
Fund Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians
The Fund hereby authorizes and instructs the Custodian to employ as sub-
custodians for the Fund's securities and other assets maintained outside
the United States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign sub-custodians").
Upon receipt of "Proper Instructions", as defined in Section 5 of this
Contract, together with a certified resolution of the Fund's Board of
Directors, the Custodian and the Fund may agree to amend Schedule A hereto
from time to time to designate additional foreign banking institutions and
foreign securities depositories to act as sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining custody
of the Fund's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions.
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<PAGE>
3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as sub-custodians
pursuant to the terms hereof. Where possible, such arrangements shall
include entry into agreements containing the provisions set forth in
Section 3.5 hereof.
3.4 Segregation of Securities
The Custodian shall identify on its books as belonging to the Fund, the
foreign securities of the Fund held by each foreign sub-custodian. Each
agreement pursuant to which the Custodian employs a foreign banking
institution shall require that such institution establish a custody account
for the Custodian on behalf of the Fund and physically segregate in that
account, securities and other assets of the Fund, and, in the event that
such institution deposits the Fund's securities in a foreign securities
depository, that it shall identify on its books as belonging to the
Custodian, as agent for the Fund, the securities so deposited.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall be substantially in the form set forth in
Exhibit 1 hereto and shall provide that: (a) the Fund's assets will not be
subject to any right, charge, security interest, lien
-23-
<PAGE>
or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership of the Fund's assets will be
freely transferable without the payment of money or value other than for
custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to the Fund; (d) officers of or
auditors employed by, or other representatives of the Custodian, including
to the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and records of
the foreign banking institution relating to its actions under its agreement
with the Custodian; and (e) assets of the Fund held by the foreign sub-
custodian will be subject only to the instructions of the Custodian or its
agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets
-24-
<PAGE>
of the Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's securities and
other assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking institution
for the Custodian on behalf of the Fund indicating, as to securities
acquired for the Fund, the identity of the entity having physical
possession of such securities.
3.8 Transactions in Foreign Custody Account
(a) Except as otherwise provided in paragraph (b) of this Section 3.8, the
provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis
mutandis to the foreign securities of the Fund held outside the United
States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the Fund
and delivery of securities maintained for the account of the Fund may be
effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor (or
an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer.
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<PAGE>
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign
-26-
<PAGE>
securities depository or a branch of a U.S. bank as contemplated by
paragraph 3.13 hereof, the Custodian shall not be liable for any loss,
damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism or any
loss where the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 3.10, in
delegating custody duties to State Street London Ltd., the Custodian shall
not be relieved of any responsibility to the Fund for any loss due to such
delegation, except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil strife or
armed hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk) due to
Acts of God, nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose including the purchase or sale of
foreign exchange or of contracts for foreign exchange, or in the event that
the Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this
-27-
<PAGE>
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of
the Fund assets to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign sub-
custodians employed by the Custodian. Such information shall be similar
in kind and scope to that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign sub-
custodian or any material loss of the assets of the Fund or in the case
of any foreign sub-custodian not the subject of an exemptive order from
the Securities and Exchange Commission is notified by such foreign sub-
custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
-28-
<PAGE>
3.13 Branches of U.S. Banks
(a) Except as otherwise set forth in this Contract, the provisions of
this Article 3 shall not apply where the custody of the Fund assets are
maintained in a foreign branch of a banking institution which is a "bank"
as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
paragraph 1 of this Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained in
an interest bearing account established for the Fund with the Custodian's
London branch, which account shall be subject to the direction of the
Custodian, State Street London Ltd. or both.
3.14 Tax Law
The Custodian shall have no responsibility or liability for any-
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the tax
law of jurisdictions other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental
-29-
<PAGE>
reporting. The sole responsibility of the Custodian with regard to such tax
law shall be to use reasonable efforts to assist the Fund with respect to
any claim for exemption or refund under the tax law of jurisdictions for
which the Fund has provided such information.
4. Payments for Repurchases or Redemptions and Sales of Shares of the Fund
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.
The Custodian shall receive from the distributor for the Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of the Fund issued or sold from time to time
by the Fund. The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the Fund.
-30-
<PAGE>
5. Proper Instructions
Proper Instructions as used herein means a writing signed or initialled by
one or more person or persons as the Board of Directors shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Board of Directors, Proper
Instructions may include communications effected directly between electro-
mechanical or electronic devices provided that the Board of Directors and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Fund's assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.11.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund:
-31-
<PAGE>
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
provided that all such payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise directed by the Board of
Directors of the Fund.
7. Evidence of Authority
---------------------
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
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<PAGE>
8. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income
-------------------------------------------------
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
9. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-l and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents
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of the Fund and employees and agents of the Securities and Exchange Commission.
The Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian and shall, when requested
to do so by the Fund and for such compensation as shall be agreed upon between
the Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party
-34-
<PAGE>
or parties, including any futures commission merchant acting pursuant to the
terms of a three-party futures or options agreement. The Custodian shall be held
to the exercise of reasonable care in carrying out the provisions of this
Contract, but shall be kept indemnified by and shall be without liability to the
Fund for any action taken or omitted by it in good faith without negligence or
misconduct; provided, however, that the Custodian uses reasonable care to
provide prompt notice to the Fund of the circumstances and all pertinent facts
of which the Custodian has knowledge giving rise to the claim for
indemnification. The Fund, using counsel of its choice, shall have the option to
defend the Custodian against any claim which may be the subject of this
indemnification and upon the exercise of such option the Custodian shall not be
entitled to indemnification for further legal expenses in connection therewith.
The Custodian shall in no case confess any claim or make any compromise or
settlement in any case in which the Fund shall be asked to indemnify the
Custodian, except with the prior written consent of the Fund. The Custodian
shall be entitled to rely on and may act upon advice of counsel (who may be
counsel for the Fund) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States and, regardless of whether assets are maintained in
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the custody of a foreign banking institution, a foreign securities depository or
a branch of a U.S. bank as contemplated by paragraph 3.11 hereof, the Custodian
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from, or caused by, the direction of or authorization by the Fund to
maintain custody or any securities or cash of the Fund in a foreign country
including, but not limited to, losses resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the'Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be
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security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section 2.10 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors of the Fund has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Directors has reviewed the use by the Fund of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not act under
Section 2.10A hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors has approved the
initial use of the Direct Paper System and the receipt of an annual certificate
of the Secretary or an Assistant Secretary that the Board of Directors has
reviewed the use by the Fund of
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<PAGE>
the Direct Paper System; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Articles of Incorporation, and
further provided, that the Fund may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
14. Successor Custodian
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the
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office of the Custodian and transfer such securities, funds and other properties
in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
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15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
16. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.
17. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
-40-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 3rd day of January, 1992.
ATTEST HILLIARD LYONS GROWTH FUND, INC.
/s/ Joseph C. Curry, Jr. By /s/ Donald F. Kohler
- ------------------------ ---------------------
Chairman
ATTEST STATE STREET BANK AND TRUST COMPANY
By /s/ Charles R. Whittemore, Jr.
- ------------------------ -------------------------------
Assistant Secretary Vice President
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<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Hilliard Lyons
Growth Fund, Inc. for use as sub-custodians for the Fund's securities and other
assets:
(Insert banks and securities depositories)
Certified:
__________________________________
Fund's Authorized Officer
Date: ____________________________
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EXHIBIT I
---------
CUSTODIAN AGREEMENT
-------------------
TO:
Gentlemen:
The undersigned ("State Street") hereby requests that you (the "Bank")
establish a custody account and a cash account for each State Street client
whose account is identified to this Agreement. Each such custody or cash account
as applicable will be referred to herein as the "Account" and will be subject to
the following terms and conditions:
1. The Bank shall hold as agent for State Street and shall physically
segregate in the Account such cash, bullion, coin, stocks, shares, bonds,
debentures, notes and other securities and other property which Is delivered to
the Bank for that State Street Account (the "Property").
2. (a) Without the prior approval of State Street it will not deposit
securities in any securities depository or utilize a clearing agency,
incorporated or organized under the laws of a country other than the United
States, unless such depository or clearing house operates the central system for
handling of securities or equivalent book-entries in that country or operates a
transnational system for the central handling of securities or equivalent book-
entries.
(b) When Securities hold for an Account are deposited in a securities
depository or clearing agency by the Bank, the Bank shall identify on its books
as belonging to State Street as agent for such Account, the Securities so
deposited.
The Bank represents that either:
3. (a) It currently has stockholders' equity in excess of $200 million (US
dollars or the equivalent of US dollars computed in accordance with generally
accepted US accounting principles) and will promptly inform State Street in the
event that there appears to be a substantial likelihood that its stockholders'
equity will decline below $200 million, or in any event, at such time as its
stockholders' equity in fact declines below $200 million; or
(b) It is the subject of an exemptive order issued by the United States
Securities and Exchange Commission, which such order permits State Street to
employ the Bank as a subcustodian, notwithstanding the fact that the Bank's
stockholders' equity is currently below $200 million or may in the future
decline below $200 million due to currency fluctuation.
4. Upon the written instructions of State Street as permitted by Section 8,
the Bank is authorized to pay out cash from the Account and to sell, assign,
transfer, deliver or exchange, or to purchase for the Account,
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any and a11 stocks, shares, bonds, debentures, notes and other securities
("Securities"), bullion, coin and other property, but only as provided in such
written instructions. The Bank shall not be held liable for any act or omission
to act on instructions given or purported to be given should there be any error
in such instructions.
5. Unless the Bank receives written instructions of State Street to the
contrary, the Bank is authorized:
a. To promptly receive and collect all income and principal with respect to
the Property and to credit cash receipts to the Account;
b. To promptly exchange Securities where the exchange is purely ministerial
(including, without limitation, the exchange of temporary Securities for
those in definitive form and the exchange of warrants, or other
documents of entitlement to Securities, for the Securities themselves);
c. To promptly surrender Securities at maturity or when called for
redemption upon receiving payment therefor;
d. Whenever notification of a rights entitlement or a fractional interest
resulting from a rights issue, stock dividend or stock split is
received for the Account and such rights entitlement or fractional
interest bears an expiration date, the Bank will endeavor to obtain
State Street's instructions, but should these not be received in time
for the Bank to take timely action, the Bank is authorized to sell such
rights entitlement or fractional interest and to credit the Account;
e. To hold registered in the name of the nominee of the Bank or its agents
such Securities as are ordinarily held in registered form;
f. To execute in State Street's name for the Account, whenever the Bank
deems it appropriate, such ownership and other certificates as may be
required to obtain the payment of income from the Property; and
g. To pay or cause to be paid from the Account any and all taxes and
levies in the nature of taxes imposed on such assets by any
governmental authority, and shall use reasonable efforts to promptly
reclaim any foreign withholding tax relating to the Account.
6. If the Bank shall receive any proxies, notices, reports, or other
communications relative to any of the Securities of the Account in connection
with tender offers; reorganizations, mergers, consolidations, or similar events
which may have an impact upon the issuer thereof, the Bank shall promptly
transmit any such communication to State Street by means as will permit State
Street to take timely action with respect thereto.
7. The Bank is authorized in its discretion to appoint brokers and agents
in connection with the Bank's handling of transactions relating to the Property
provided that any such appointment shall not relieve the Bank of any of its
responsibilities or liabilities hereunder.
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8. Written instructions shall include (i) instructions in writing signed by
such persons as are designated in writing by State Street (ii) telex or tested
telex instructions of State Street, (iii) other forms of instruction in computer
readable form as shall be customarily utilized for the transmission of like
information and (iv) such other forms of communication as from time to time
shall be agreed upon by State Street and the Bank.
9. The Bank shall supply periodic reports with respect to the safekeeping
of assets held by it under this Agreement. The content of such reports shall
include but not be limited to any transfer to or from any Account held by the
Bank hereunder and such other information as State Street may reasonably
request.
10. In addition to its obligations under Section 2 hereof, the Bank shall
maintain such other records as may be necessary to identify the assets hereunder
as belonging to each State Street client identified to this Agreement from time
to time.
11. The Bank agrees that its books and records relating to its actions
under this Agreement shall be opened to the physical, on-premises inspection and
audit at reasonable times by officers of, auditors employed by or other
representatives of State Street (including to the extent permitted under
law the independent public accountants for any entity whose Property is being
held hereunder) and shall be retained for such period as shall be agreed by
State Street and the Bank.
12. The Bank shall be entitled to reasonable compensation for its services
and expenses as custodian under this Agreement, as agreed upon from time to time
by the Bank and State Street.
13. The Bank shall exercise reasonable care in the performance of its
duties as are set forth or contemplated herein or contained in instructions
given to the Bank which are not contrary to this Agreement, and shall maintain
adequate insurance and agrees to indemnify and hold State Street and each
Account from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Bank's performance of its obligations
hereunder.
14. The Bank agrees that (i) the Property is not subject to any right,
charge, security interest, lien or claim of any kind in favor of the Bank or any
of its agents or its creditors except a claim of payment for their safe custody
and administration and (ii) the beneficial ownership of the Property shall be
freely transferable without the payment of money or other value other than for
safe custody or administration.
15. This Agreement may be terminated by the Bank or State Street by at
least 60 days' written notice to the other, sent by registered mail or express
courier. The Bank, upon the date this Agreement terminates pursuant to notice
which has been given In a timely fashion, shall deliver the Property in
accordance with written instructions of State Street specifying the name(s) of
the person(s) to whom the Property shall be delivered.
-45-
<PAGE>
16. The Bank and State Street shall each use its best efforts to maintain
the confidentiality of the Property in each Account, subject, however, to the
provisions of any laws requiring the disclosure of the Property.
17. The Bank agrees to follow such Operating Requirements as State Street
may require from time to time. A copy of the current State Street Operating
Requirements is attached as an exhibit to this Agreement.
18. Unless otherwise specified in this Agreement, all notices with respect
to matters contemplated by this Agreement shall be deemed duly given when
received in writing or by tested telex by the Bank or State Street at their
respective addresses set forth below, or at such other address as specified in
each case in a notice similarly given:
To State Street: Global Custody Services Division
STATE STREET BANK AND TRUST
COMPANY
P.O. BOX 470
Boston, Massachusetts 02102
To the Bank:
19. This Agreement shall be governed by and construed in accordance with
the laws of _____________.
Please acknowledge your agreement to the foregoing by executing a copy of
this letter.
Very truly yours,
STATE STREET BANK AND TRUST
COMPANY
By ________________________
Agreed to by:
By _______________________
Date _____________________
-46-
<PAGE>
EXHIBIT 9
TRANSFER AGENCY AND SERVICE AGREEMENT
between
HILLIARD LYONS GROWTH FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1 Terms of Appointment; Duties of the Bank.................... 1
Article 2 Fees and Expenses........................................... 5
Article 3 Representations and Warranties of the Bank.................. 6
Article 4 Representations and Warranties of the Fund.................. 6
Article 5 Indemnification............................................. 7
Article 6 Covenants of the Fund and the Bank..........................10
Article 7 Termination of Agreement....................................12
Article 8 Assignment..................................................12
Article 9 Amendment...................................................13
Article 10 Massachusetts Law to Apply..................................13
Article 11 Merger of Agreement.........................................13
Article 12 Counterparts................................................13
</TABLE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 3rd day of January, 1992, by and between HILLIARD
LYONS GROWTH FUND, INC., a Maryland corporation, having its principal office and
place of business at Hilliard Lyons Center, Louisville, Kentucky 40202 (the
"Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company
having its principal office and place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act as its transfer agent for the Fund's authorized and issued shares
of its common stock, $.001 par value, ("Shares"), dividend disbursing agent,
custodian of certain retirement plans and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of the
Fund ("Shareholders") and set out in the currently effective prospectus and
statement of additional information ("prospectus") of the Fund, including
without limitation any periodic investment plan or periodic withdrawal program.
<PAGE>
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time
by agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of the Fund authorized pursuant to
the Articles of Incorporation of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall in addition to executing transactions
directly with shareholders execute transactions directly
with J.J.B. Hilliard, W.L. Lyons, Inc. and other broker-
dealers authorized by the Fund who shall thereby be deemed
to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect
<PAGE>
to any redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(viii) If applicable, issue replacement certificates for those
certificates alleged to have been lost, stolen or destroyed
upon receipt by the Bank of indemnification satisfactory to
the Bank and protecting the Bank and the Fund, and the Bank
at its option, may issue replacement certificates in place
of mutilated stock certificates upon presentation thereof
and without such indemnity;
(ix) Report abandoned property to the various states as
authorized by the Fund per policies and principles agreed
upon by the Fund and the Bank;
(x) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(xi) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. The
Bank shall also provide the Fund on a regular basis
<PAGE>
with the total number of shares which are authorized and
issued and outstanding and shall have no obligation, when
recording the issuance of shares, to monitor the issuance of
such shares or to take cognizance of any laws relating to
the issue or sale of such shares, which functions shall be
the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of
the services set forth in the above paragraph (a), the Bank shall: (i) perform
the customary services of a transfer agent, dividend disbursing agent, custodian
of certain retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information
<PAGE>
and (ii) provide a system which will enable the Fund to monitor the total number
of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Bank for the Fund's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Fund
and the Bank per the attached service responsibility schedule. The Bank may at
times perform only a portion of these services and the Fund or its agent may
perform these services on the Fund's behalf.
Article 2 Fees and Expenses
2.01 For the performance by the Bank pursuant to this Agreement,
the Fund agrees to pay the Bank an annual maintenance fee for each Shareholder
account as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Bank.
<PAGE>
2.02 In addition to the fee paid under Section 2.01 above, the
Fund agrees to reimburse the Bank for out-of-pocket expenses or advances
incurred by the Bank for the items set out in the fee schedule attached hereto.
In addition, any other expenses incurred by the Bank at the request or with the
consent of the Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Fund at least seven
(7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in
good standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
<PAGE>
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in good
standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.04 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933,
as amended is currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.
Article 5 Indemnification
5.01 The Bank shall not be responsible for, and the Fund shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
<PAGE>
(b) The Fund's lack of good faith, negligence or willful
misconduct or breach of any representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records and documents or services which (i) are
received or relied upon by the Bank or its agents or subcontractors and/or
furnished to it or performed by or on behalf of the Fund, and (ii) have been
prepared, maintained and/or performed by the Fund or any other person or firm on
behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its
agents or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02 The Bank shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
5.03 At any time the Bank may apply to any officer of the Fund
for instructions, and may consult with legal counsel
<PAGE>
with respect to any matter arising in connection with the services to be
performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Fund for any
action taken or omitted by it in reliance upon such instructions or upon the
opinion of such counsel. The Bank, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document furnished by or
on behalf of the Fund, reasonably believed to be genuine and to have been signed
by the proper person or persons, or upon any instruction, information, data,
records or documents provided the Bank or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Fund, and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the Fund. The Bank, its
agents and subcontractors shall also be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar, or of a co-
transfer agent or co-registrar.
5.04 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.
<PAGE>
5.05 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in
this Article 5 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
----------------------------------
6.01 The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Directors
of the Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the
Fund and all amendments thereto.
6.02 The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile
<PAGE>
signature imprinting devices, if any; and for the preparation or use, and for
keeping account of, such certificates, forms and devices.
6.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
6.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
6.05 In case of any requests or demands for the inspection of
the Shareholder records of the Fund, the Bank will endeavor to notify the Fund
and to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
<PAGE>
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, the Bank reserves the right to charge for
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees.
Article 8 Assignment
8.01 Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
8.03 The Bank may, without further consent on the part of the
Fund, subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered
as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act
of 1934, as amended ("Section 17A(c)(l)"), (ii) a BFDS subsidiary duly
registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS
affiliate; provided, however, that the Bank shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor as it is for its own acts
and omissions.
<PAGE>
Article 9 Amendment
---------
9.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Directors of the Fund. Article 10 Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts. Article 11 Merger of Agreement
11.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written. Article 12 Counterparts
12.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
HILLIARD LYONS GROWTH FUND, INC.
BY: /s/ Donald F. Kohler
----------------------------
Donald F. Kohler
Title: Chairman
ATTEST:
/s/ Joseph C. Curry Jr.
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Charles R. Whittemore, Jr.
------------------------------
Charles R. Whittemore, Jr.
Title: Vice President
ATTEST:
/s/ ?????????
- ----------------------------
Assistant Secretary
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES/*/
Service Performed Responsibility
- ----------------- -------------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above directly
with broker-dealers.
5. Pay over monies to redeeming Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and accurate control
book for each issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current Shareholders.
15. Withhold taxes on U.S. resident and
non-resident alien accounts.
16. Prepare and file U.S. Treasury Department forms.
17. Prepare and mail account and confirmation
statements for Shareholders.
18. Provide Shareholder account information.
19. Blue sky reporting.
/*/ Such services are more fully described in Article 1.02 (a), (b) and (c) of
the Agreement.
<PAGE>
BY:
----------------------------
ATTEST:
- --------------------------
STATE STREET BANK AND TRUST COMPANY
BY:
------------------------------
Title: Vice President
ATTEST:
- --------------------------
Title: Assistant Secretary
<PAGE>
EXHIBIT 10
April 24, 1997
Hilliard Lyons Growth Fund, Inc.
501 South Fourth Street
Louisville, KY 40202
Ladies and Gentlemen:
We have acted as counsel to Hilliard Lyons Growth Fund, Inc. (the "Fund"),
the registrant named in a Registration Statement, as amended ("Registration
Statement") on Form N-1A under the Securities and Exchange Act of 1933, as
amended, and the Investment Company Act of 1940, as amended ("Investment Company
Act") relating to the sale of an indefinite number of shares of capital stock of
the Fund, par value $.001 per share, and registration of the Fund as a
registered investment company under the Investment Company Act.
We have acted as counsel to the Fund since its inception and have examined
the Fund's Articles of Incorporation, Bylaws, corporate records and such other
documents as we have deemed relevant in rendering this opinion.
Based upon the foregoing, it is our opinion that:
1. The Fund is a corporation duly organized and existing under the laws
of the State of Maryland;
2. The Fund is authorized to issue a total of 150,000,000 shares of
capital stock, par value $.001 per share; and
3. When shares of capital stock of the Fund are issued by the Fund and
the consideration described in the Registration Statement is received therefor
by the Fund, the shares will be validly issued, fully paid and non-assessable.
We consent to the use of this opinion in connection with Post-Effective
Amendment No. 7 to the Registration Statement and in the Prospectus and
Statement of Additional Information included therein. We further consent to the
reference to our firm in the Prospectus and Statement of Additional Information.
Very truly yours,
BROWN, TODD & HEYBURN PLLC
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Independent Auditors" in the Statement of
Additional Information and to the incorporation by reference, in Post-Effective
Amendment Number 11 to the Registration Statement (Form N-1A No. 33-43177) and
related Prospectus of Hilliard Lyons Growth Fund, Inc., of those references and
of our report dated January 20, 1999 on the Hilliard Lyons Growth Fund, Inc.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Louisville Kentucky
April 29, 1999
<PAGE>
Exhibit 13
SUBSCRIPTION AGREEMENT
Hilliard Lyons Growth Fund, Inc. (the "Fund"), an open-end management
investment company and J.J.B. Hilliard, W.L. Lyons, Inc., a Kentucky corporation
("Hilliard Lyons"), intending to be legally bound, hereby agree as follows:
1. In order to provide the Fund with its initial capital, the Fund hereby
sells to Hilliard Lyons and Hilliard Lyons hereby purchases 34,995.625
shares of the Fund's Common Stock ($.001 par value per share) at
$14.2875 per share (the "Shares"). The Fund hereby acknowledges
receipt from Hilliard Lyons of $500,000 in full payment for the
Shares.
2. Hilliard Lyons represents and warrants to the Fund that the Shares are
being acquired for investment and not with a view to distribution
thereof and that Hilliard Lyons has no present intention to redeem or
dispose of any of the Shares.
3. Hilliard Lyons hereby agrees that it will not redeem any of the Shares
prior to the time that the Fund has completed the amortization of its
organizational expenses. In the event that the Fund liquidates before
the deferred organizational expenses are fully amortized, then the
Shares shall bear their proportionate share of such unamortized
organizational expenses.
IN WITNESS WHEREOF, the parties have executed this agreement as of the ____
day of December, 1991.
HILLIARD LYONS GROWTH FUND, INC.
By:____________________________
Title:_________________________
J.J.B. HILLIARD, W.L. LYONS, INC.
By:____________________________
Title:_________________________
<PAGE>
Exhibit 15
AMENDED AND RESTATED DISTRIBUTION PLAN
--------------------------------------
THIS AMENDED AND RESTATED DISTRIBUTION PLAN (the "Plan") is adopted in
accordance with Rule 12b-1 under the Investment Company Act of 1940 (the "1940
Act"), by Hilliard Lyons Growth Fund, Inc., a corporation organized under the
laws of the State of Maryland (the "Fund"), subject to the following terms and
conditions:
Section 1. Reimbursement. The Fund shall reimburse J.J.B, Hilliard, W.L.
Lyons, Inc. (the "Distributor") at the annual rate of up to 0.25% of the average
daily net assets of the Fund for certain expenses actually incurred by the
Distributor in connection with the offering and sale of the Fund's shares. The
amount of the reimbursement shall be computed on an interim basis for each
quarter within 30 days of the end of such quarter and shall be paid promptly
after such computation. The aggregate amount of such quarterly reimbursements
for each year shall be subject to adjustment within 60 days after the end of
such year so that the Distributor is reimbursed for distribution expenses
incurred by it during such year up to a maximum of 0.25% of the average daily
net assets of the Fund. Any amount of excess distribution expenses incurred by
the Distributor in any quarter for which the Distributor is not reimbursed can
be carried forward from one quarter to the next but no expenses may be carried
over from year to year.
Section 2. Expenses Covered by the Plan. (a) The compensation provided for
under Section 1 of this Plan may be used to reimburse the Distributor for
expenses incurred in connection with any activity primarily intended to result
in the sale of the Fund's shares, including, but not limited to: (i) payments to
investment brokers of the Distributor and to securities dealers that have
entered into sales agreements with the Distributor ("Authorized Dealers") for
distributing shares of the Fund, promoting the maintenance of holdings by
established stockholders and servicing of stockholder accounts; (ii) payments to
financial institutions (including banks) and others ("Service Agents") for
stockholder servicing and administrative services with respect to shares of the
Fund owned by stockholders for whom the Service Agent is the holder of record
or for whom the Service Agent performs administrative or servicing functions;
(iii) payments to the Distributor for organizing and conducting sales seminars,
printing prospectuses, statements of additional information and interim and
annual reports for other than existing stockholders, and preparation and
distribution of advertising material and sales literature; (iv) an allocation
of distribution related overhead expenses of the Distributor; and (v) payments
of commissions to investment brokers of the Distributor and to Authorized
Dealers on $1 million and over sales of shares of Class A Common Stock of the
Fund with no initial sales charge.
(b) Hilliard Lyons Investment Advisors, as investment adviser to the
Fund (the "Adviser"), may use its investment advisory fee for purposes that may
be deemed to be directly or indirectly related to the distribution of Fund
shares. To the extent that such uses might be considered to constitute the
direct or indirect financing of activities primarily intended to result in the
sale of Fund shares, such uses are expressly authorized under the Plan.
Section 3. Distribution Fee. In addition to the reimbursement of expenses
pursuant to Section 1, the Fund shall pay the Distributor a distribution fee
under the Plan at the annual rate of
<PAGE>
0.75% of the average daily net assets of the Fund attributable to the shares of
Class B Common Stock of the Fund.
Section 4. Continuance of the Plan. The Plan will continue in effect so
long as its continuance is specifically approved at least annually of both (i)
the full Board of Directors of the Fund and (ii) those directors who are not
interested persons of the Fund (within the meaning of the 1940 Act) and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to it (the "Qualified Directors"), cast in person at a
meeting called for the purpose of voting on the Plan or the related agreements.
Section 5. Termination. The Plan may be terminated at any time by a
majority vote of the Qualified Directors or by vote of a majority of the
outstanding voting securities of the Fund. The Plan will terminate automatically
upon the termination of the Distribution Agreement between the Fund and the
Distributor.
Section 6. Amendments. The Plan may not be amended so as to increase
materially the maximum amount of the fee described in Section 1 above, unless
the amendment is approved by a vote of a majority of the outstanding voting
securities of the Fund. No material amendment to the Plan may be made unless
approved by the Fund's Board of Directors in the manner described in Section 3
above.
Section 7. Selection of Certain Directors. While the Plan is in effect, the
selection and nomination of the Fund's directors who are not interested persons
of the Fund will be committed to the discretion of the directors then in office
who are not interested persons of the Fund.
Section 8. Written Reports. In each year during which the Plan remains in
effect, an officer of the Fund authorized to direct the disposition of monies
paid or payable by the Fund pursuant to the Plan or any related agreement will
prepare and furnish to the Fund's Board of Directors, at least quarterly, and
the Board will review, at least quarterly, written reports complying with the
requirements of Rule 12b-1, which set out the amounts expended under the Plan
and the purposes for which those expenditures were made.
Section 9. Preservation of Materials. The Fund will preserve copies of the
Plan, any agreement relating to the Plan and any report made pursuant to Section
8 above, for a period of not less than six years (the first two years in an
easily accessible place) from the date of the Plan, agreement or report.
Section 10. Meanings of Certain Terms. As used in the Plan, the terms
"interested person" and "majority of the outstanding voting securities" will be
deemed to have the same meaning that those terms have under the 1940 Act and the
rules and regulations under the 1940 Act, subject to any exemption that may be
granted to the Fund under the 1940 Act by the Securities and Exchange
Commission.
2
<PAGE>
Section 11. Limitation of Liability. The execution of the Plan by the
undersigned officer of the Fund has been duly authorized by both the Fund's
Board of Directors, in accordance with its authority under the Fund's Articles
of Incorporation and Bylaws, and the sole shareholder of the shares of the Fund;
and, in undertaking those actions, the officer, the Board of Directors and the
sole shareholder have each acted on behalf of the Fund.
IN WITNESS WHEREOF, the Fund has executed the Plan as of April 14, 1998.
HILLIARD LYONS GROWTH FUND, INC.
By:/s/ DIANNA P. WENGLER
---------------------------------
Dianna P. Wengler, Vice President
3
<PAGE>
Exhibit 18
RULE 18f-3(d) MULTIPLE CLASS PLAN
HILLIARD LYONS GROWTH FUND, INC.
Introduction
This plan (the "Plan") is adopted pursuant to Rule 18f-3(d) of the
Investment Company Act of 1940, as amended (the "1940 Act"). Shares of the
Hilliard Lyons Growth Fund are distributed pursuant to a system (the "Multiple
Class System") in which each class of shares (a "Class") of the Fund represents
a pro rata interest in the same portfolio of investments of the Fund and differs
only to the extent outlined below.
I. Distribution Arrangements and Service Fees
One or more Classes of shares of the Fund are offered for purchase by
investors with the following sales load structure. In addition, pursuant to Rule
12b-1 under the 1940 Act (the "Rule"), the Fund has adopted a plan (the
"Distribution Plan") under which shares of the Classes are subject to the
services and distribution fees described below.
1. Class A Shares
Class A shares are offered with a front-end sales load and under the
Distribution Plan are subject to a service fee of up to 0.25% of average daily
net assets. In addition, the Fund is permitted to assess a contingent deferred
sales charge ("CDSC") on certain redemptions of Class A shares sold pursuant to
a complete waiver of front-end sales loads applicable to large purchases, if the
shares are redeemed with one year of the date of purchase. This waiver applies
to sale of Class A shares where the amount of purchase is equal to or exceeds
$1,000,000 although this amount may be changed in the future.
2. Class B Shares
Class B shares are offered without a front-end sales load, but are
subject to a five-year declining CDSC and under the Distribution Plan are
subject to a service fee at an annual rate of up to 0.25% of average daily net
assets and a distribution fee at an annual rate of up to 0.75% of average daily
net assets.
3. Additional Classes of Shares
The Board of Directors of the Fund has the authority to create
additional classes, or change existing Classes, from time to time, in accordance
with Rule 18f-3 of the 1940 Act.
<PAGE>
II. Expense Allocations
Under the Multiple Class System, all expenses incurred by the Fund are
allocated among the various Classes of shares based on the net assets of the
Fund attributable to each Class, except that each Class's net assets value and
expenses reflect the expenses associated with that Class under the Fund's
Distribution Plan, including any costs associated with obtaining shareholder
approval of the Distribution Plan (or an amendment thereto) and any expenses
specific to that Class. Such expenses are limited to the following:
(i) transfer agency fees as identified by the transfer agent as being
attributable to a specific Class;
(ii) printing and postage expenses related to preparing and distributing
materials such as shareholder reports, prospectuses and proxies to current
shareholders;
(iii) Blue Sky registration fees incurred by a Class of shares;
(iv) Securities and Exchange Commission registration fees incurred by a
Class of shares;
(v) the expense of administrative personnel and services as required to
support the shareholders of a specific Class;
(vi) litigation or other legal expenses relating solely to one Class of
shares; and
(vii) fees of members of the governing boards of the funds incurred as a
result of issues relating to one Class of shares.
Pursuant to the Multiple Class System, expenses of the Fund allocated to a
particular Class of shares of the Fund are borne on a pro rata basis by each
outstanding share of that Class.
III. Conversion Rights of Class B Shares
All Class B shares of the Fund will automatically convert to Class A shares
after a holding period of seven years. Upon the expiration of the holding
period, Class B shares (except those purchases through the reinvestment of
dividends and other distributions paid in respect of Class B shares) will
automatically convert to Class A shares of the Fund at the relative net asset
value of the Class, and will, as a result, thereafter be subject to the lower
fee under the Distribution Plan. For purposes of calculating the holding period
required for conversion, newly created Class B shares issued after the date of
implementation of the Multiple Class System are deemed to have been issued on
(i) the date on which the issuance of the Class B shares occurred or (ii) for
Class B shares obtained through an exchange, or a series of exchanges, the date
on which the issuance of the original Class B shares occurred.
Shares purchased through the reinvestment of dividends and other
distribution paid in respect of Class B shares are also Class B shares. However,
for purposes of conversion to Class A, all Class B shares in shareholder's Fund
account that were purchased through the reinvestment of dividends
-2-
<PAGE>
and other distributions paid in respect of Class B shares (and that have not
converted to Class A shares as provided in the following sentence) are
considered to be held in a separate sub-account. Each time any Class B shares in
the shareholder's Fund account (other than those in the sub-account referred to
in the preceding sentence) convert to Class A, a pro rata portion of the Class B
shares then in the sub-account also converts to Class A. The portion is
determined by the ratio that the shareholder's Class B shares converting to
Class A bears to the shareholder's total Class B shares not acquired through
dividends and distributions.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling of the Internal Revenue Service that payment
of different dividends on Class A and Class B shares does not result in the
Fund's dividends or distributions constituting "preferential dividends" under
the Internal Revenue Code of 1986, as amended (the "Code"). In the event that
conversion of Class B shares does not occur, Class B shares would continue to be
subject to the distribution fee and any incrementally higher transfer agency
costs attending the Class B shares for an indefinite period.
IN WITNESS WHEREOF, the Fund has executed the Plan as of February __,
1998.
HILLIARD LYONS GROWTH FUND, INC.
By:
-----------------------------
-3-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> HILLIARD LYONS GROWTH FUND, INC. CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 65,385,865
<INVESTMENTS-AT-VALUE> 97,586,731
<RECEIVABLES> 857,683
<ASSETS-OTHER> 4,540
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98,448,954
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 347,222
<TOTAL-LIABILITIES> 347,222
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<PAID-IN-CAPITAL-COMMON> 57,225,435
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<ACCUMULATED-NII-CURRENT> 494,512
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,909,451
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<ACCUM-APPREC-OR-DEPREC> 29,645,253
<NET-ASSETS> 88,497,465
<DIVIDEND-INCOME> 688,072
<INTEREST-INCOME> 774,864
<OTHER-INCOME> 0
<EXPENSES-NET> 968,424
<NET-INVESTMENT-INCOME> 494,512
<REALIZED-GAINS-CURRENT> 1,909,451
<APPREC-INCREASE-CURRENT> 7,241,195
<NET-CHANGE-FROM-OPS> 9,645,155
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,687,452
<NUMBER-OF-SHARES-REDEEMED> 13,188,919
<SHARES-REINVESTED> 2,196,708
<NET-CHANGE-IN-ASSETS> 22,695,241
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,473,146
<OVERDISTRIB-NII-PRIOR> 744
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<GROSS-ADVISORY-FEES> 623,966
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 968,424
<AVERAGE-NET-ASSETS> 87,715,927
<PER-SHARE-NAV-BEGIN> 30.29
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> 3.89
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> HILLIARD LYONS GROWTH FUND, INC. CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 67,385,865
<INVESTMENTS-AT-VALUE> 97,586,731
<RECEIVABLES> 857,683
<ASSETS-OTHER> 4,540
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98,448,954
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 347,222
<TOTAL-LIABILITIES> 347,222
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,143,832
<SHARES-COMMON-STOCK> 3
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<ACCUMULATED-NII-CURRENT> (9,804)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 144,781
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 555,613
<NET-ASSETS> 9,604,267
<DIVIDEND-INCOME> 41,672
<INTEREST-INCOME> 34,730
<OTHER-INCOME> 0
<EXPENSES-NET> 86,206
<NET-INVESTMENT-INCOME> (9,804)
<REALIZED-GAINS-CURRENT> 144,781
<APPREC-INCREASE-CURRENT> 555,613
<NET-CHANGE-FROM-OPS> 690,590
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,191,286
<NUMBER-OF-SHARES-REDEEMED> 278,586
<SHARES-REINVESTED> 226,183
<NET-CHANGE-IN-ASSETS> 9,138,883
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 86,206
<AVERAGE-NET-ASSETS> 6,019,122
<PER-SHARE-NAV-BEGIN> 32.63
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 1.57
<PER-SHARE-DIVIDEND> .14
<PER-SHARE-DISTRIBUTIONS> .85
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<PER-SHARE-NAV-END> 33.33
<EXPENSE-RATIO> .021
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
