CODE OF ETHICS
(AS AMENDED ON JULY 26, 2000)
Nicholas Equity Income Fund, Inc., an investment company
registered under the Investment Company Act of 1940, as amended,
hereby adopts the following Code of Ethics governing the conduct
of personal trading by persons associated with it. The purpose
of this Code of Ethics is to foster compliance with applicable
federal regulatory requirements and to eliminate transactions
suspected of being in conflict with the best interests of the
Fund.
1. DEFINITIONS.
-----------
A. ACCESS PERSON.
-------------
As used in this Code, the term "Access Person" shall
mean any director or officer of the Fund, or any
employee of the investment adviser to the Fund who, in
connection with his or her regular functions or duties,
makes, participates in, or obtains information
regarding the purchase or sale of a security by the
Fund, or whose functions relate to the making of an
recommendation with respect to such purchases or sales.
B. FUND.
----
As used in this Code, the term "Fund" shall mean
Nicholas Equity Income Fund, Inc.
C. BENEFICIAL OWNERSHIP.
--------------------
As used in this Code, the term "beneficial ownership"
shall be interpreted in the same manner as it would be
in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), and the rules and
regulations thereunder. Pursuant to Rule 16a-1(a)(2)
under the Exchange Act, the term "beneficial owner"
shall mean any person who, directly or indirectly,
through any contract, arrangement, understanding,
relationship, or otherwise, has or shares: (1) a
direct or indirect pecuniary interest in a security;
(2) voting power, which includes the power to vote, or
to direct the voting of, such security; and/or (3)
investment power, which includes the power to dispose,
or to direct the disposition of, such security. For
example, close family or business relationships may
give rise to a degree of influence of one person over
the voting or investment decisions of another such as
to result in shared beneficial ownership. Typically,
ownership of securities by a spouse, minor child or a
trust of which an Access Person is grantor, beneficiary
or trustee, will be deemed beneficial ownership of
those securities by the related Access Person.
D. SECURITY.
--------
As used in this Code, except as otherwise provided
herein, the term "security" shall mean a "Covered
Security" as defined in Section 2(a)(36) of the
Investment Company Act, except that it shall not
include: (1) direct obligations of Government of the
United States; (2) bankers' acceptances, bank
certificates of deposit, commercial paper and high
quality short-term debt instruments, including
repurchase agreements; and (3) shares issued by open-
end investment companies registered under the
Investment Company Act.
2. PROHIBITED ACTIVITIES.
---------------------
A. UNLAWFUL ACTIONS:
----------------
No Access Person shall in connection with the purchase
or sale of a "Security Held or To Be Acquired" by the
Fund:
(1) Employ any device, scheme or artifice to
defraud the Fund;
(2) Make to the Fund any untrue statement of
a material fact or omit to state to the Fund any
material fact necessary in order to make the
statements made, in light of the circumstances
under which they are made, not misleading;
(3) Engage in any act, transaction,
practice, or course of business which operates or
would operate as a fraud or deceit upon the Fund;
or
(4) Engage in any manipulative practice with
respect to the Fund.
For purposes of this Section 2A, a "Security Held
or to Be Acquired" by the Fund shall mean any Covered
Security which, within the most recent 15 days: (a) is
or has been held by the Fund; or (b) is being or has
been considered by the Fund or its investment adviser
for purchase by the Fund. In addition, the securities
subject to the foregoing anti-fraud provisions include
any option to purchase or sell, and any security that
is exchangeable for or convertible into, any Covered
Security that is held or to be acquired by the Fund.
B. BLACKOUT PERIOD FOR SECURITY TRANSACTIONS.
-----------------------------------------
No Access Person shall purchase or sell, directly or
indirectly, for his/her own account, or acquire any
beneficial ownership in, any security which has been
purchased or sold within the preceding fifteen (15)
days by the Fund or which to his/her knowledge will be
purchased or sold within the succeeding fifteen (15)
days by the Fund unless such purchase or sale is
approved in writing by Albert O. Nicholas, David O.
Nicholas or Jeffrey T. May, or a person delegated by
either of the foregoing, prior to the effectuation of
such purchase or sale. A copy of such written approval
shall be retained for a period of at least five (5)
years.
C. No Access Person shall purchase any security from,
or sell any security to, the Fund, unless the sale or
purchase involves solely securities of which the issuer
is the Fund.
3. PRE-APPROVAL OF INVESTMENTS IN IPOS AND LIMITED OFFERINGS.
---------------------------------------------------------
All Fund Investment Personnel must obtain approval from
the Fund's investment adviser, Nicholas Company, Inc.
(either Albert O. Nicholas, David O. Nicholas or Jeffrey T.
May, or a person delegated by any of the foregoing) before
directly or indirectly acquiring beneficial ownership in any
securities in an Initial Public Offering or in a Limited
Offering. For purposes of this requirement, the following
definitions set forth in Rule 17j-1 shall apply:
INVESTMENT PERSONNEL shall mean (1) any employee of the Fund
(or any company in control of the Fund) who, in connection
with his or her regular functions or duties, makes or
participates in making recommendations regarding the
purchase or sale of securities by the Fund; and (2) any
natural person who controls the Fund and who obtains
information concerning recommendations made to the Fund
regarding the purchase or sale of securities by the Fund.
INITIAL PUBLIC OFFERING shall mean an offering of securities
under the Securities Act of 1933, as amended ("Securities
Act"), the issuer of which, immediately before the
registration, was not subject to the reporting requirements
of Sections 13 or 15(d) of the Exchange Act.
LIMITED OFFERING shall mean an offering that is exempt from
registration under the Securities Act pursuant to Section
4(2) or Section 4(6) or pursuant to Rule 504, Rule 505 and
Rule 506 under the Securities Act.
4. REPORTING.
---------
A. INITIAL HOLDINGS REPORTS.
------------------------
No later than ten (10) days after a person becomes an
Access Person of the Fund, he/she must provide an
Initial Holdings Report to the Fund which contains the
following information: (1) the title, number of shares
and principal amount of each Covered Security in which
the Access Person had any direct or indirect beneficial
ownership when the person became an Access Person; (2)
the name of any broker, dealer or bank with whom the
Access Person maintained an account in which any
securities (not limited solely to Covered Securities)
were held for the direct or indirect benefit of the
Access Person as of the date the person became an
Access Person; and (3) the date that the report is
submitted by the Access Person.
B. QUARTERLY TRANSACTION REPORTS.
-----------------------------
Within ten (10) days of the end of each calendar
quarter of the Fund, each Access Person shall submit a
Quarterly Transaction Report.
The Quarterly Transactions Report shall contain
the following information:
(1) with respect to any transaction during the quarter
in a Covered Security in which the Access Person had any
direct or indirect beneficial ownership:
(a) the date of the transaction,
the title, the interest rate and maturity
date (if applicable), the number of shares
and the principal amount of each Covered
Security involved;
(b) the nature of the transaction
(i.e., purchase, sale or any other type of
acquisition or disposition);
(c) the price of the Covered
Security at which the transaction was
effected;
(d) the name of the broker, dealer
or bank through which the transaction was
effected; and
(e) the date that the report is
submitted by an Access Person.
(2) with respect to any account established by the
Access Person in which any securities (not limited
solely to Covered Securities) were held during the
quarter for the direct or indirect benefit of the
Access Person:
(a) the name of the broker, dealer
or bank with whom the Access Person
established the account;
(b) the date the account was
established; and
(c) the date that the report is
submitted by the Access Person.
C. ANNUAL HOLDINGS REPORT.
----------------------
Annually, each Access Person shall submit an Annual
Holdings Report containing the following information:
(1) the title, number of shares and principal amount of
each Covered Security in which the Access Person had
any direct or indirect beneficial ownership; and (2)
the name of any broker, dealer or bank with whom the
Access Person maintains an account in which any
securities (not limited solely to Covered Securities)
are held for the direct or indirect benefit of the
Access Person; and (3) the date that the report is
submitted by the Access Person.
D. EXCEPTIONS FROM REPORTING REQUIREMENTS.
--------------------------------------
(1) A person who qualifies as an Access Person
solely because he is a director of the Fund is not
required to file the report required by subparagraphs
(A) and (C) hereof if such person is not an
"interested" director of the Fund, as "interested" is
defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended; and
(2) A director of the Fund who is not an
"interested person" of the Fund (as defined above) need
not make a Quarterly Transaction Report as required by
subparagraph (B) hereof if he/she does not know, or in
the ordinary course of fulfilling his/her official
duties as a director is not charged with knowing, that
during the 15-day period immediately preceding or
following a transaction in a Covered Security by such
director, the Fund purchased or sold, or the Fund or
its investment adviser considered purchasing or
selling, the same security. Thus, a disinterested
director only must file a Quarterly Transaction Report
if he/she had, or should have had, actual or imputed
knowledge at the time he/she entered into his/her
transaction that (i) the Fund had engaged in a
transaction in the same security within the last
fifteen (15) days, or is engaging in such transaction
or is going to engage in such transaction in the same
security in the next fifteen (15) days, or (ii) the
Fund or its investment adviser has within the last
fifteen (15) days considered a transaction in the same
security or is considering a transaction in the
security or within the next fifteen (15) days is going
to consider a transaction in the security; and
(3) An Access Person need not make any
reports pursuant to this Section 4 with respect to
transactions in Covered Securities over which the
person has no direct or indirect influence or control.
5. ADMINISTRATION OF CODE OF ETHICS.
--------------------------------
A. The Fund shall adopt procedures reasonably
necessary to ensure compliance with the provisions of
the Code, including procedures regarding Notification
of Reporting Obligations (as required by Rule 17j-
1(d)(4)), Review of Reports (as required by 17j-
1(d)(3)), and Record Keeping Requirements (as required
by Rule 17j-1(f)).
B. At least once a year, management of the Fund shall
provide the Board of Directors of the Fund with an
Annual Issues and Certification Report as required by
Rule 17j-1(c)(2)(ii) of the Investment Company Act.
6. SANCTIONS.
---------
Mr. Jeffrey T. May, or another person designated by the Board of
Directors, shall review all reports submitted, and shall
determine if any violations of the Code of Ethics have occurred.
If a violation of this Code of Ethics occurs, Albert O. Nicholas
or the Board of Directors of the Fund may impose such sanctions
as they deem appropriate in the circumstances, including
termination of employment of the violator.
