-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B8nTn1sFVpag3I1DbohudmG8r5VKyTeCQ1QowoYPS09rtInwK3V8bUrshhrODbSA 2Y4faXy7jMUdpdg06imqJA== 0000892712-99-000120.txt : 19990729 0000892712-99-000120.hdr.sgml : 19990729 ACCESSION NUMBER: 0000892712-99-000120 CONFORMED SUBMISSION TYPE: N-2/A PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LCM INTERNET GROWTH FUND INC CENTRAL INDEX KEY: 0001068897 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-2/A SEC ACT: SEC FILE NUMBER: 333-74407 FILM NUMBER: 99671676 FILING VALUES: FORM TYPE: N-2/A SEC ACT: SEC FILE NUMBER: 811-09261 FILM NUMBER: 99671677 BUSINESS ADDRESS: STREET 1: 810 WEST WASHINGTON BLVD CITY: CHICAGO STATE: IL ZIP: 60607 BUSINESS PHONE: 3127053028 MAIL ADDRESS: STREET 1: 810 WEST WASINGTON BLVD CITY: CHICAGO STATE: IL ZIP: 60607 N-2/A 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on July 28, 1999 Securities Act File No. 333-74407 Investment Company Act File No. 811-9261 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-2 [X] Registration Statement under the Securities Act of 1933 [X] Pre-Effective Amendment No. 2 [ ] Post-Effective Amendment No. ____ and/or [X] Registration Statement under the Investment Company Act of 1940 [X] Amendment No. 2 LCM INTERNET GROWTH FUND, INC. (Exact Name of Registrant as Specified in Charter) 810 West Washington Boulevard Chicago, Illinois 60607 (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (312) 705-3028 Barry J. Glasgow LCM Internet Growth Fund, Inc. 810 West Washington Boulevard Chicago, Illinois 60607 (Name and Address of Agent for Service) Copies to: Scott A. Moehrke, Esq. Godfrey & Kahn, S.C. 780 North Water Street Milwaukee, Wisconsin 53202-3590 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement. If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, as amended, other than securities offered in connection with a dividend reinvestment plan, check the following box. [ ] CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 Title of Amount Proposed Maximum Proposed Maximum Amount of Securities Being Offering Price Aggregate Offering Registration Being Registered Registered per Share(1) Price(1) Fee(3) Common Stock, 4,600,000 $10.00 $46,000,000 $12,788.00 $0.01 par shares(2) value (1) Estimated solely for the purpose of calculating the registration fee, pursuant to Rule 457(a) under the Securities Act of 1933, as amended. (2) Includes 600,000 shares to be issued in connection with the exercise of the Underwriters' over-allotment option. (3) $7,478.20 of the registration fee was paid in connection with initial filing of the Registration Statement on March 15, 1999. The remaining $5,309.80 is being paid herewith. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. The information in this Prspectus is not complete and may be changed. The Fund may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This Propspectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. PROSPECTUS dated ____________, 1999 Subject to Completion, Dated July 28, 1999 4,000,000 SHARES LCM INTERNET GROWTH FUND, INC. COMMON STOCK ($.01 PAR VALUE) The LCM Internet Growth Fund, Inc. (the "Fund"), which is a newly organized, non-diversified, closed-end management investment company, is offering an aggregate of 4,000,000 shares of common stock, $.01 par value per share (the "Common Stock"). The Fund's investment objective is to seek capital appreciation by investing in a portfolio consisting primarily of equity securities issued by companies that the Fund's investment adviser believes will benefit from growth of the Internet. Current dividend income is not an investment consideration. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of companies that engage in Internet and Internet-related activities. There can be no assurance that the Fund's investment objective will be achieved. LCM Capital Management, Inc. ("LCMCM") will serve as the investment adviser to the Fund. The address of the Fund is 810 West Washington Boulevard, Chicago, Illinois 60607, and the Fund's telephone number is (312) 705-3028. These securities involve a high degree of risk. Prior to this offering, there has been no public market for the Fund's shares. Equity securities of closed-end funds have frequently traded at discounts from their net asset values and initial offering prices. This risk may be greater for investors expecting to sell shares of a closed-end fund soon after completion of an initial public offering of such shares. For a discussion of other significant risks that should be considered by potential investors, see "Risk Factors and Special Considerations." Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Price to Public(1) Underwriting Discount(2) Proceeds to Fund(3) Per Share $10.00 $0.55 $9.45 Total(4) $40,000,000.00 $2,200,000.00 $37,800,000.00 (1) The Common Stock is being offered to investors at an initial public offering price of $10.00 per share. See "Underwriting." (2) The Fund and LCMCM have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended ("Securities Act"). See "Underwriting." (3) Before deducting a non-accountable expense allowance payable to LaSalle St. Securities, Inc., the representative of the Underwriters (the "Representative"), in an amount equal to 1% of the total Price to Public ($400,000). Organizational expenses of the Fund and offering expenses associated with this offering, estimated to be $260,000, will be paid by LCMCM from its own assets. See "Underwriting." (4) The Fund has granted to the Underwriters a 30-day over-allotment option to purchase up to 600,000 additional shares of Common Stock on the same terms and conditions set forth above. If all of such shares are purchased by the Underwriters, the total Price to Public, Underwriting Discount and Proceeds to Fund will be $46,000,000, $2,530,000 and $43,470,000. See "Underwriting." LaSalle St. Securities, Inc. Internet distribution by E InvestmentBank Wedbush Morgan Securities The Common Stock is being offered, subject to prior sale, when, as and if accepted by the Underwriters and subject to approval of certain legal matters by counsel for the Underwriters. It is expected that delivery of the shares of Common Stock will be made on or before the third business day following the effective date of this Prospectus at the offices of the Fund's transfer agent, Firstar Bank Milwaukee, N.A., Milwaukee, Wisconsin. Application will be made to list the Common Stock on the American Stock Exchange under the symbol "LCM." You are advised to read this Prospectus, which sets forth concisely the information about the Fund that you should know before investing. It should be retained for future reference. Additional information regarding the Fund is included in the Statement of Additional Information (the "SAI"), dated the date hereof, which has been filed with the Securities and Exchange Commission (the "SEC") and is incorporated herein by reference. The table of contents of the SAI is located on page 35 of this Prospectus. A copy of the SAI is available without charge by writing the Fund at 810 West Washington Boulevard, Chicago, Illinois 60607, or by calling (312) 705-3028. TABLE OF CONTENTS OF THE PROSPECTUS Page PROSPECTUS SUMMARY 4 FEES AND EXPENSES 7 USE OF PROCEEDS 7 THE FUND 8 INVESTMENT OBJECTIVE AND POLICIES 8 INVESTMENT RESTRICTIONS 10 INVESTMENT PRACTICES AND TECHNIQUES 11 RISK FACTORS AND SPECIAL CONSIDERATIONS 14 YEAR 2000 ISSUE 16 MANAGEMENT OF THE FUND 16 DESCRIPTION OF COMMON STOCK 17 DISTRIBUTIONS; DISTRIBUTION REINVESTMENT PLAN 18 ANTI-TAKEOVER PROVISIONS 19 SHARE PURCHASES AND TENDERS 20 FEDERAL TAXATION OF THE FUND AND ITS DISTRIBUTIONS 20 NET ASSET VALUE 21 UNDERWRITING 21 LEGAL MATTERS 22 EXPERTS 22 ADDITIONAL INFORMATION 22 REPORTS TO SHAREHOLDERS 23 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION 24 Until _______________, 1999, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a Prospectus. This is in addition to the dealers' obligation to deliver a Prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. You should rely only on the information contained in this Prospectus. The Fund has not authorized anyone to provide you with different information. The Fund is not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this Prospectus is accurate as of any date other than the date on the front of this Prospectus. PROSPECTUS SUMMARY The following summary is qualified in its entirety by reference to the more detailed information included elsewhere in this Prospectus. The Fund The Fund is a newly organized, non- diversified, closed-end management investment company, which is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act"). The investment objective of the Fund is to seek capital appreciation by investing in a portfolio consisting primarily of equity securities issued by companies that LCMCM believes will benefit from growth of the Internet. Current dividend income is not an investment consideration. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of companies that engage in Internet and Internet- related activities. See "The Fund." Investment Objective and The Fund's investment objective is Policies capital appreciation. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of companies that participate in the Internet. See "Investment Objective and Policies," "Investment Restrictions" and "Investment Practices and Techniques." The Offering The Fund is offering an aggregate of 4,000,000 shares of Common Stock to investors at an initial public offering price of $10.00 per share. The offering is being made on behalf of the Fund through a group of Underwriters, for which LaSalle St. Securities, Inc. is acting as lead Representative. The Underwriters have been granted an option, exercisable for 30 days from the date of this Prospectus, to purchase up to an additional 600,000 shares of Common Stock to cover over-allotments. The minimum permitted investment by an investor in this offering is 200 shares. See "Underwriting." Use of Proceeds The net proceeds of this offering (estimated to be $37,400,000 if the Underwriters' over-allotment option is not exercised), after deducting the underwriting discount and the non- accountable expense allowance, will be invested by LCMCM on behalf of the Fund in accordance with the Fund's investment objective and policies. Organizational and offering expenses of the Fund will be paid by LCMCM from its own assets. See "Use of Proceeds." Listing Prior to this offering, there has been no public market for the shares of Common Stock of the Fund. Application will be made to list the Common Stock on the American Stock Exchange (the "ASE") under the symbol "LCM." See "Underwriting." Stock Symbol "LCM." Investment Adviser LCM Capital Management, Inc. ("LCMCM"), a newly organized, registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and an affiliate of the Representative, is the Fund's investment adviser. LCMCM will manage the Fund's investment portfolio in accordance with the Fund's investment objective and policies. Prior to the organization of the Fund, LCMCM had not served as an investment adviser to any other investment company. Prior to joining LCMCM in June 1998, the portfolio manager of the Fund, Barry J. Glasgow, spent seven years with Gonski & Glasgow Investments, a registered investment manager, in the positions of managing partner and portfolio manager. Prior to the organization of the Fund, Mr. Glasgow had not served as a portfolio manager to any other investment company. See "Management of the Fund" and "Risk Factors and Special Considerations." Management Fees The Fund will pay LCMCM for its investment management services a monthly fee at an annual rate of 1.0% of the Fund's average daily net assets. See "Management of the Fund." Dividends and It is the Fund's present policy, which Distributions may be changed by the Board of Directors, to make regular annual cash distributions to its shareholders of substantially all of the Fund's net investment income, and to distribute, at least annually, any net realized capital gains. See "Distributions; Distribution Reinvestment Plan." Distribution Under the Fund's Distribution Reinvestment Plan Reinvestment Plan (the "Plan"), shareholders will have all dividends and distributions automatically reinvested in additional whole and fractional shares of Common Stock of the Fund, unless they notify the Fund of their desire to receive cash distributions instead. Shareholders whose shares are held in the name of a broker or nominee should contact such broker or nominee to confirm that they may participate in the Plan. See "Distributions; Distribution Reinvestment Plan." Taxation The Fund intends to qualify and elect to be treated as a regulated investment company for U.S. federal income tax purposes. As such, it will generally not be subject to U.S. federal income tax on income and gains that are distributed to shareholders. See "Federal Taxation of the Fund and its Distributions" below and in the SAI. Custodian, Transfer Firstar Bank Milwaukee, N.A. ("Firstar Agent, Dividend Paying Bank"), 615 East Michigan Street, Agent, Registrar, Milwaukee, Wisconsin, 63202, will act Administrator and Fund as custodian of the Fund's assets and Accountant as the Fund's transfer agent, dividend paying agent and registrar. Firstar Mutual Fund Services, L.L.C., which is an affiliate of Firstar Bank and which is located at the same address, will act as the Fund's administrator and fund accountant. See "Management of the Fund." Trading Discount As a newly organized entity, the Fund has no operating history. Shares of closed-end investment companies frequently trade in the market at a discount from net asset value. This characteristic is a risk separate and distinct from the risk that the Fund's net asset value will decrease as a result of the Fund's investment activities, and may be greater if you expect to sell your shares in a relatively short period of time following this offering. It should be noted, however, that shares of some closed-end funds have traded at premiums to net asset value. The Fund cannot predict whether its shares will trade at, above or below net asset value. The Fund is intended primarily for long-term investors, and should not be considered as a vehicle for short-term trading purposes. See "The Fund" and "Risk Factors and Special Considerations." Anti-Takeover Provisions The Fund's Articles of Incorporation contain certain anti-takeover provisions that may have the effect of inhibiting the Fund's possible conversion to open-end status and limiting the ability of other persons to acquire control of the Fund. In certain circumstances, these provisions might also inhibit the ability of shareholders to sell their shares at a premium over prevailing market prices. The Fund's Board of Directors has determined that these provisions are in the best interests of shareholders generally. See "Anti- Takeover Provisions." Risk Factors The shares of Common Stock offered hereby involve a high degree of risk, including the Fund's lack of prior operating history, LCMCM's lack of investment management experience, the non-diversified status of the Fund under the 1940 Act, the volatility and concentration of the Fund's investments, the illiquid nature of some of the Fund's portfolio securities and the risks relating to a limited public market for the Fund's Common Stock. You should carefully consider your ability to assume the foregoing risks before making an investment in the Fund. Given these investment risks, investment in the Fund should not be considered a complete investment program. See "Risk Factors and Special Considerations." FEES AND EXPENSES The purpose of the following Fee Table and Example is to assist you in understanding the fees and expenses that you will bear directly (shareholder transaction expenses) and indirectly (annual operating expenses) as a shareholder of the Fund. Fee Table: Shareholder Transaction Expenses Sales Load (as a percentage of offering price) 5.50% Non-Accountable Expense Allowance 1.00% ----- Total Shareholder Transaction Expenses 6.50% Annual Operating Expenses (as a percentage of net assets) Management Fees 1.00% Other Expenses (1) 1.50% ----- Total Annual Operating Expenses 2.50% Example: 1 year 3 years 5 years 10 years You would pay the following expenses on a $1,000 investment, assuming a 5% annual return: $89 $138 $189 $330 (1) Based upon estimated amounts of expenses for the Fund's first fiscal year, assuming Fund assets of $40,000,000. The Example set forth above assumes payment by an investor of the sales load, reinvestment of all dividends and distributions at net asset value and an expense ratio equal to the Total Annual Operating Expense as set forth above. The assumption in the example of a 5% annual rate of return is mandated by the SEC regulations, and is applicable to all investment companies. This Example should not be considered a representation of future expenses or annual rates of return. Actual expenses and annual rates of return may be more or less than those assumed for purposes of the above Example. In addition, while the above Example assumes reinvestment of all dividends and distributions at net asset value, participants in the Fund's Distribution Reinvestment Plan may receive shares purchased or issued at a price or value different from net asset value. See "Distributions; Distribution Reinvestment Plan." USE OF PROCEEDS The net proceeds of this offering (estimated to be $37,400,000 assuming the Underwriters' over-allotment option is not exercised), after deducting the underwriting discount and the non-accountable expense allowance, will be invested in accordance with the Fund's investment objective and policies set forth under "Investment Objective and Policies" within three months from the date of this Prospectus. Pending such investment, the proceeds will be invested in U.S. government securities and/or money market securities as described under "Investment Practices and Techniques" herein. LCMCM will begin to receive its 1% management fee as soon as the Fund has assets to invest. The organizational expenses of the Fund and the expenses associated with the offering, which are estimated to be $260,000, will be paid by LCMCM from its own assets. THE FUND The Fund was organized on August 24, 1998 as a corporation under the laws of the State of Maryland. The Fund is a non-diversified, closed-end management investment company registered under the 1940 Act. The Fund's address is 810 West Washington Boulevard, Chicago, Illinois 60607, and its telephone number is (312) 705-3028. The Fund's investment objective is to seek capital appreciation by investing in a portfolio consisting primarily of equity securities issued by companies that LCMCM believes will benefit from growth of the Internet. Current dividend income is not an investment consideration. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of companies that engage in Internet and Internet-related activities. There can be no assurance that the Fund's investment objective will be achieved. Due to the risks inherent in the securities in which the Fund plans to invest, the Fund should not be considered a complete investment program. See "Risk Factors and Special Considerations." INVESTMENT OBJECTIVE AND POLICIES The Fund's investment objective is capital appreciation, a goal it seeks to achieve by investing primarily in the equity securities of companies that participate in the Internet. Equity securities are defined to include common stocks, securities convertible into common stocks, such as convertible preferred stocks, bonds, notes and debentures, and American Depositary Receipts ("ADRs"). Current income is not an investment consideration. No assurance can be given that the Fund will realize its investment objective. The Fund's investment objective is a fundamental policy that may not be changed without the approval of a majority of the Fund's outstanding voting securities. A "majority of the Fund's outstanding voting securities" means the lesser of (i) 67% of the shares of Common Stock represented at a meeting at which more than 50% of the outstanding shares are represented or (ii) more than 50% of the outstanding shares of Common Stock. Under normal market conditions, at least 65% of the Fund's total assets will be invested in the equity securities of companies that engage in Internet and Internet-related activities. Under favorable market conditions, the Fund would expect to be substantially fully invested in such securities. The Fund may hold a small portion of its assets (generally not more than 10%) in U.S. government securities, money market securities and cash to meet ordinary daily cash needs. Under unusual circumstances, as a defensive technique, the Fund may retain a larger portion of cash and/or invest more assets in U.S. government securities and/or money market securities deemed by LCMCM to be consistent with a temporary defensive posture. To the extent the Fund engages in temporary investment strategies, the Fund may not achieve its investment objective. The Internet is a global collection of connected computers that allows commercial and professional organizations, educational institutions, government agencies and consumers to communicate electronically, access and share information and conduct business. LCMCM believes that because of the dramatic growth of Internet activity in recent years, favorable investment opportunities are offered by companies that provide products and/or services designed for Internet use. In evaluating investment opportunities for the Fund, LCMCM will focus primarily on companies with significant research and development efforts. In this regard, an important yardstick LCMCM employs in making portfolio selections, in addition to evaluating trends in corporate revenues, earnings and dividends, is the amount of capital currently being expended on research and development, and the purpose of the technology. LCMCM believes that dollars invested in research and development today frequently have significant bearing on future growth, or lack thereof. LCMCM will draw upon a myriad of information sources in evaluating the direction of the Internet and the opportunities afforded thereby. Through these sources, LCMCM has come to believe that the Internet as it exists today will eventually develop into three separate, yet connected, forms, each serving a different function. Specifically, in addition to the current version of the Internet which serves a variety of commercial, communication and entertainment functions (i.e., Internet 1), LCMCM foresees the development of two new "Internets": Internet-2 (for government and university use), and Internet-3 (for very secure commercial purposes, like bank transactions). Given its investment objective and policies, LCMCM believes that the Fund will be well positioned to take advantage of any such growth, should it occur. In order to assist in the assessment of Internet- related investment opportunities for the Fund, LCMCM has divided those companies which participate in the Internet into three major areas consisting of 13 sectors and 65 sub-sectors. These three major areas are as follows: infrastructure, content and e- commerce. Infrastructure is the basic connections, networks and computer and server hardware necessary to convey information from point A to point B. Content includes those sites, services, software and applications necessary to facilitate user access to information and/or services on the web. E-commerce is the structure necessary to conduct business-to- business, consumer-to- business and government-to- business transactions. Those companies providing infrastructure, content and e-commerce products and/or services designed for Internet use comprise the "information technology industry." Although LCMCM has identified 13 sectors and 65 sub- sectors for investment, because the Internet is so dynamic, LCMCM intends to closely monitor the Internet for emerging and obsolete sectors and sub-sectors. For each identified sub-sector, LCMCM intends to evaluate the companies, both public and private, that are vying for leadership. Generally, such leaders will be added to the Fund's holdings. However, like the sectors and sub-sectors themselves, these leaders will not remain static. The evaluation of changes among the leaders will be a continual process. LCMCM expects that approximately 85% of the Fund's Internet-related equity investments will be divided among the leaders of the identified sub-sectors. As the leaders of the identified sub-sectors change, the Fund's investments will be rebalanced so as to replicate as nearly as possible the current status of the indicated sub-sectors and the leaders thereof. Any such rebalancing will increase the Fund's transactional expenses and portfolio turnover. The weighting of the investment in each sub-sector will be determined by a proprietary quantitative program overlapping the portfolio. The remaining 15% will be in assets identified by LCMCM as special situations which will generally be in companies that do not have the historical basis necessary for the Fund's model or involve emerging technology. LCMCM will utilize a quantitative model to overlap the Fund's portfolio holdings because LCMCM expects the Internet to exhibit a life cycle effect which will generate benefits for a shifting set of companies. Certain sectors may become more visible, garner more public attention and may, in fact, be more vital to one phase of the Internet's development than other sectors until the Internet enters a new phase. Periods of over- visibility and sky-high valuations for one sub-sector may prove temporary as another gains visibility and momentum, only to be replaced by another sub-sector, and so on. The chart below illustrates the 13 sectors and 65 sub- sectors LCMCM has currently identified: Infrastructure Content E-Commerce Communications Information Providers Retail E-Commerce -Equipment -Family Oriented -Direct Sales -Digital Subscriber Line -Financial -Auctions -Cable -Health/Medical -Shopping Bots/Guides -Wireless -Multimedia -Transaction/ Entertainment Billing Management Network Security -General and Fulfillment Industrial News -Biometrics -Education Business-to-Business -Virtual Private Networks Internet Software E-Commerce ("VPNs") -Virus Detection -JAVA Enablers -Vertical Business- to-Business Networks -Security System -E-Commerce -Business-to- Management Enablers Business Search -Public Key Interchange -Database Procurement Bots -Intrusion Detection -Enterprise Interface -Encryption -Web Interface -Business-to- and Browsers Business Auctions -Firewalls -Site Building -EDI Fulfillment Networks -Business-to- Business Out- Sourcing Management Infrastructure Content E-Commerce Network Connections Portals and Hubs Government-to-Business -Servers -Mass-Market E-Commerce Portals -Routers -Industry -Government-to- Specific Portals Business -Data Storage -Search Engine -Vertical Government- Technologies to-Business Networks -Satellite -Communities -Backbones -Transaction -Government Document Management Distribution Internet Service Providers Advertising and Marketing ("ISPs") -Portal -Web Ad Management -Government-to- Business Contract -Private Networks -Market Research Search Bots/Guides -Web Developers -Industry Consultants -Government-to- Business -E-Commerce Providers Enabling Technologies Auctions -Turnkey -Streaming Media -Outsourcing Management Media Technologies -Traffic Cache Management -Video Conference -Fax/Telephony Sites/Tech -Streaming Video -Digital Video Discs -Set-Top TV Boxes -Multimedia Plug-ins INVESTMENT RESTRICTIONS The following restrictions, along with the Fund's investment objective, are the Fund's only fundamental policies - that is, policies that cannot be changed without the approval of a majority of the Fund's outstanding voting securities. See "Investment Objective and Policies," above. All other policies and investment restrictions referred to in this Prospectus are not fundamental policies of the Fund and may be changed by the Fund's Board of Directors without shareholder approval. Except as otherwise noted, the percentage restrictions set forth below, as well as those contained elsewhere in this Prospectus, apply at the time a transaction is effected, and a subsequent change in a percentage resulting from market fluctuations or any other cause other than action by the Fund will not require the Fund to dispose of portfolio securities or take other action to satisfy the percentage restriction. As a matter of fundamental policy: (1) The Fund may not borrow money or issue senior securities, except as permitted under the 1940 Act; (2) The Fund may not purchase or sell commodities, unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts or other derivative instruments, or from investing in securities or other instruments backed by commodities); (3) The Fund may not make loans, except to the extent the Fund may be deemed to be making loans by purchasing debt securities or entering into repurchase agreements, and the Fund may lend its portfolio securities in an amount not in excess of 33 1/3% of its total assets (taken at market value); (4) The Fund may not act as an underwriter of another issuer's securities, except to the extent that, in connection with the purchase and sale of portfolio securities, it may be deemed to be an underwriter within the meaning of the Securities Act; (5) The Fund may not purchase or sell real estate, unless acquired as a result of ownership of securities or other instruments (but this shall not prohibit the Fund from purchasing or selling securities or other instruments backed by real estate or of issuers engaged in real estate activities); and (6) The Fund may not purchase the securities of any issuer if, as a result, more than 25% of the Fund's total assets would be invested in the securities of issuers whose principal business activities are in the same industry, except that the Fund will invest, under normal market conditions, more than 25% of its total assets in the securities of issuers in the "information technology industry" (as defined by the Fund). INVESTMENT PRACTICES AND TECHNIQUES The following provides a more detailed discussion of certain of the securities that the Fund may purchase and certain of the investment practices and portfolio management techniques that the Fund may utilize. Any investment by the Fund in debt securities or repurchase agreements will be for cash management purposes only, and in the event the Fund determines to lend its portfolio securities, it will be for the purpose of generating additional income (not capital appreciation). a) U.S. Government Securities The U.S. government securities in which the Fund may invest are securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. Certain of these securities, including U.S. Treasury bills, notes and bonds, and Federal Housing Administration debentures, are supported by the full faith and credit of the United States. Other U.S. government securities issued or guaranteed by federal agencies or government-sponsored enterprises that are not supported by the full faith and credit of the United States include obligations supported by the right of the issuer to borrow from the U.S. Treasury, such as obligations of Federal Home Loan Banks, and obligations supported only by the credit of the agency or instrumentality, such as Student Loan Marketing Association securities. b) Money Market Securities The money market securities in which the Fund may invest include (i) commercial paper rated A-1 or higher by Standard & Poor's ("S&P") or Prime-I or higher by Moody's Investor Service ("Moody's"), or if such commercial paper is not rated, issued by companies which have an outstanding debt issue rated AA or higher by S&P or Aa or higher by Moody's, (ii) repurchase agreements entered into with respect to U.S. government securities which are secured by collateral at least equal to the repurchase price and (iii) certificates of deposit, bankers' acceptances and other short-term obligations issued by domestic branches of U.S. banks and savings and loan associations. c) Leverage through Borrowing The Fund has a fundamental investment restriction which states that the Fund may not borrow money except as permitted under the 1940 Act. The 1940 Act permits borrowings in an amount up to 33 1/3% of a fund's total assets. Accordingly, the Fund is authorized to borrow money in an amount up to 33 1/3% of its total assets (measured by adding the amount borrowed to the Fund's other assets). This percentage restriction must be satisfied at all times. The Fund's borrowings create an opportunity for greater return to the Fund and, ultimately, the Fund's shareholders, but at the same time increase exposure to losses. Borrowing money (or leveraging the Fund's assets, as it is sometimes referred to) will generally exaggerate the effect on the Fund's net asset value of any increase or decrease in the market value of the Fund's investment portfolio. In addition, interest payments and fees paid by the Fund on any borrowings may offset or exceed the return earned on borrowed funds. The Fund currently intends to borrow money only for temporary, extraordinary or emergency purposes. While the Fund has no current intention of doing so, the Fund may also borrow for the purpose of financing additional investments, or purchasing the Fund's own Common Stock in the open market in an attempt to increase the market price of such stock when it is trading at a discount to net asset value. In the event the Fund determines to engage in either of these activities, shareholders will be notified via a supplement to this Prospectus, press release and/or in some other similar manner. d) Derivative Transactions The Fund may purchase and sell "call" and "put" options on securities and securities indices which are listed on a national securities exchange or in the over-the- counter markets as a means of achieving additional return or hedging the value of the Fund's portfolio. The Fund will not write (i.e., sell) options in an amount exceeding 10% of its total assets, or invest (i.e., purchase) more than 10% of its total assets in options. A "call" option is a contract that gives the holder of the option the right to buy from the writer (i.e., the seller) of the option, in return for a premium paid, the security underlying the option at a specified exercise price at any time during the term of the option. The writer of the call option has the obligation upon exercise of the option to deliver the underlying security upon payment of the exercise price during the option period. A "put" option is a contract that gives the holder of the option the right to sell to the writer (i.e., the seller), in return for the premium, the underlying security at a specified price during the term of the option. The writer of the put option, who receives the premium, has the obligation to buy the underlying security upon exercise, at the exercise price during the option period. Options on securities indices work in much the same manner as options on securities discussed above, except that delivery of cash rather than the underlying securities is made. Cash settled index options do not relate to a particular number of shares. Rather, the "size" of a cash-settled index option contract is determined by the index "multiplier." A stock index fluctuates with changes in the market values of the stocks included in the index, although due to differences in trading times and days or other factors, a stock index option may not reflect actual market values of the underlying securities in the index at certain times. If the Fund has written an option, it may terminate its obligation by effecting a closing purchase transaction. This is accomplished by purchasing an option of the same series as the option previously written. There can be no assurance that a closing purchase transaction can be effected when the Fund so desires. An exchange- traded option may be closed out only on an exchange which provides a secondary market for an option of the same series. Although the Fund will generally purchase or write those options for which there appears to be a secondary market, there can be no assurance that a liquid secondary market will exist for any particular option. In addition to purchasing and selling options, the Fund may invest in futures and options on futures. Please see the SAI for more information. e) American Depositary Receipts The Fund's investment in equity securities may include investments in ADRs. ADRs, which are typically issued by a U.S. financial institution (a "depositary"), evidence ownership interests in a security or pool of securities issued by a foreign company which have been deposited with a depositary. ADRs are denominated in U.S. dollars and trade in the U.S. securities markets. Investments in ADRs may entail the special risks of international investment, including currency exchange fluctuations, government regulations and the potential for political and economic instability. f) Illiquid Securities The Fund may invest up to 15% of its net assets in illiquid securities, which are securities that are not readily marketable. When purchasing illiquid securities, the Fund will endeavor to obtain the right to registration at the expense of the issuer. Generally, there will be a lapse of time between the Fund's decision to sell any such security and the registration of the security permitting sale. Investing in such securities may have the effect of decreasing the level of liquidity in the Fund's investment portfolio during such period. g) Closed-End Investment Companies The Fund may also invest in shares of closed-end investment companies that are trading at a discount to net asset value, or at a premium to net asset value if LCMCM believes that such investments will further the Fund's investment objective. Closed-end funds in which the Fund may invest need not have a policy of investing in the Internet. There can be no assurance that the market discount on shares of any closed-end fund purchased by the Fund will ever decrease. In fact, it is possible that the market discount may increase and the Fund may suffer realized or unrealized capital losses due to further decline in the market price of the securities of such closed-end funds. Similarly, there can be no assurance that the market price of any shares of a closed-end fund purchased by the Fund at a premium will not decrease subsequent to a purchase of such shares by the Fund. Under the 1940 Act, the Fund may invest only up to 10% of its total assets in shares of other investment companies and only up to 5% of its total assets in any one investment company, provided the investment does not represent more than 3% of the voting stock of the acquired investment company at the time such shares are purchased. Any investment by the Fund in a closed-end fund will result in increased transaction costs, since the closed-end fund will have its own fees and expenses (including its own management fees) which will be passed along to its investors, including the Fund. As a result, Fund shareholders will be subject to duplicative fees. h) Lending Portfolio Securities The Fund may lend portfolio securities with a value not exceeding 33 1/3% of the Fund's total assets to brokers or dealers, banks or other institutional borrowers of securities as a means of earning income. Any such securities lending will be done through Firstar Bank as agent for the Fund. In the event the Fund engages in securities lending activities, the Fund will receive from the borrower collateral in the form of cash or securities issued or guaranteed by the U.S. government. Such collateral will be invested on the Fund's behalf by Firstar Bank and maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The purpose of such securities lending is to permit the borrower to use such securities for delivery to purchasers when the borrower has sold short. The Fund will continue to receive the equivalent of the interest or dividends paid by the issuer of the securities lent, and the Fund will also receive interest on the investment of the collateral, or a fee from the borrower as compensation for the loan. However, the Fund will pay reasonable custodial and administrative fees to Firstar Bank in connection with any such loan. The Fund will retain the right to call, upon notice, the lent securities. While there may be delays in recovery or even loss of right in collateral should the borrower fail financially, LCMCM will, together with Firstar Bank, review the creditworthiness of the entities to which such loans are made to evaluate those risks. There are no special protections afforded to the Fund in the event Firstar Bank fails financially. i) Repurchase Agreements The Fund may acquire U.S. government securities and simultaneously enter into so-called "repurchase agreements" with the settler, which may be a member bank of the Federal Reserve System or primary dealers in U.S. government securities, whereby the settler agrees to repurchase such securities at the Fund's cost plus interest within a specified time (usually within seven days). Repurchase agreements offer the Fund a means of generating income from excess cash that the Fund might otherwise hold. The Fund's repurchase agreements will provide that the collateral underlying the repurchase agreement will always be at least equal to the repurchase price. Repurchase agreements are deemed to be loans under the 1940 Act. In all cases, LCMCM must be satisfied with the creditworthiness of the other party to the agreement before entering into a repurchase agreement on behalf of the Fund. In the event of the bankruptcy (or other insolvency proceeding) of the other party to a repurchase agreement, the Fund might experience delays in securing its cash. To the extent that, in the meantime, the value of the securities the Fund purchases may have declined, the Fund could experience a loss. j) Reverse Repurchase Agreements From time to time, the Fund may enter into reverse repurchase agreements whereby the Fund sells a security and simultaneously obtains the commitment of the purchaser, which may be a commercial bank or a broker or dealer, to sell the security back to the Fund at an agreed upon price on an agreed upon date. The Fund generally retains the right to interest and principal payments on the security. Since the Fund receives cash upon entering into a reverse repurchase agreement, it may be considered a borrowing. When required by SEC guidelines, the Fund will set aside permissible liquid assets in a segregated account to secure its obligations to repurchase the security. k) When-Issued and Delayed-Delivery Securities The Fund may purchase securities on a "when-issued" or "delayed-delivery" basis whereby the Fund purchases a security with delivery of the security and payment deferred to a future date. Normally, the settlement date occurs within 45 days of the purchase. During the period between purchases and settlement, no payment is made by the Fund to the issuer, and no interest is accrued on debt securities nor is dividend income earned on equity securities. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in the value of the Fund's other assets. While when- issued or delayed-delivery securities may be sold prior to the settlement date, the Fund intends to purchase such securities with the intent of actually acquiring them. The Fund will maintain liquid securities equal in value to such securities, which will either mature or, if necessary, be sold on or before the settlement date to pay for the when-issued or delayed-delivery securities. There is no restriction on the percentage of the Fund's assets that may be invested in when-issued or delayed- delivery securities. l) Concentration Under normal market conditions, the Fund intends to invest more than 25% of its total assets in the securities of issuers in the information technology industry. This practice involves an increased risk of loss to the Fund should the market value of securities in this industry decline. RISK FACTORS AND SPECIAL CONSIDERATIONS The purchase of shares of Common Stock involves a number of significant risks. As a result, there can be no assurance that the Fund will achieve its investment objective. In addition to the other information contained in this Prospectus, you should consider the following risk factors in evaluating an investment in the Common Stock. a) No Prior History; Discount from Net Asset Value The Fund is a newly organized, closed-end management investment company with no operating history. Prior to this offering, there has been no public market for the Fund's shares. Shares of closed-end management investment companies frequently trade at a discount from their net asset value. This risk may be greater for investors expecting to sell their shares in a relatively short period after completion of the public offering. Accordingly, the Common Stock is designed primarily for long-term investors and should not be considered a vehicle for short-term trading purposes. The net asset value of the Fund's shares are expected to also fluctuate with price changes of its portfolio securities, but may not fluctuate proportionately with the changes in value of portfolio securities. b) No Prior Investment Record at LCMCM Although the portfolio manager of the Fund, Barry J. Glasgow, has more than seven years of prior investment management experience as a portfolio manager for private accounts, he has no prior investment record with LCMCM and he has no prior experience managing an investment company. Likewise, LCMCM is a newly organized investment adviser which, prior to the organization of the Fund, had not served as an investment adviser to any other investment company. c) Non-Diversified Status The Fund is classified as a "non-diversified" investment management company under the 1940 Act, which means that the Fund may invest a greater portion of its assets in a limited number of issuers than would be the case were the Fund classified as a "diversified" investment management company. Relative to a "diversified" investment management company, changes in the financial results and/or condition or market valuation of a single issuer may cause greater fluctuations in net asset value per share. d) Volatility of Investments The market prices of the securities in which the Fund intends to invest are likely to be highly volatile and could be subject to wide fluctuations which would result in similar fluctuations in the net asset value of the Fund's Common Stock. The reason for this volatility is that the stock markets, and in particular the Nasdaq National Market, have experienced extreme price and volume fluctuations that have particularly affected the market prices of equity securities of many technology companies and that have often been unrelated or disproportionate to the operating performance of such companies. As a result, the trading prices of many technology companies' stocks are at or near historical highs and reflect price-to-earnings ratios substantially above historical levels. There can be no assurance that these trading prices and price-to- earnings ratios will be sustained. In the event of a decrease in such prices or ratios, the net asset value of the Fund's Common Stock (and the value of your investment) is likely to fall and could fall greater than that of technology shares in general. e) Concentration in the Information Technology Industry Because the Fund's investments will be concentrated in the information technology industry, the net asset value of its shares of Common Stock will be especially influenced by factors specific to that industry and may fluctuate more widely than the value of shares in a portfolio investing in a broader range of industries. For example, many products and services are subject to risks of rapid obsolescence caused by technological advances. In addition, competitive pressures may have a significant effect on the financial condition of companies in this industry. If the information technology continues to advance at an accelerated rate, and the number of companies and product offerings continues to expand, these companies could become increasingly sensitive to short product cycles and aggressive pricing. Finally, many of the activities of companies in the information technology industry are highly capital- intensive, and it is possible that companies which invest substantial amounts of capital in new products and services will be unable to recover their investments or otherwise meet their obligations. f) Smaller Companies The Fund expects to invest a substantial portion of its assets in securities issued by smaller companies (both as to revenues and stock market capitalization). Such companies may offer greater opportunities for capital appreciation than larger companies, but also involve certain special risks. Such companies may have limited product lines, markets and/or financial resources, and may be dependent on a limited management group. While the markets in securities of such companies have grown rapidly in recent years, such securities may trade less frequently and in smaller volume than more widely-held securities. The market prices of such securities may fluctuate more sharply than those of other securities, and the Fund may experience some difficulty in establishing and/or closing out positions in these securities at prevailing market prices. There may be less publicly-available information about the issuers of these securities or less market interest in such securities than those of larger companies, and it may take a longer time for the market prices of such securities to reflect the full value of the issuer's underlying earnings potential. g) Investments in Equity Securities Under normal market conditions, the Fund will invest at least 65% of its total assets in equity securities. All equity securities are subject to price volatility, potential bankruptcy of the issuer, general movements in markets, overall economic conditions and perceptions of potential growth. The equity securities of small- capitalization companies are particularly susceptible to these characteristics. h) Illiquid Securities The Fund may invest in securities for which no readily available market exists, which are restricted as to resale or otherwise are highly illiquid. The ability of the Fund to dispose of such securities may be greatly limited, and the Fund may have to continue to hold such securities during periods when LCMCM would otherwise have sold the securities. This, in turn, could cause the Fund to sell other investments and/or engage in borrowing transactions if necessary to raise cash to meet its obligations. i) Anti-Takeover Provisions The Fund's Articles of Incorporation contain certain anti-takeover provisions that may have the effect of inhibiting the Fund's possible conversion to open-end status and limiting the ability of other persons to acquire control of the Fund. In certain circumstances, these provisions might also inhibit the ability of shareholders to sell their shares of Common Stock at a premium over prevailing market prices. The Fund's Board of Directors has determined that these provisions are in the best interests of shareholders generally. YEAR 2000 ISSUE Like other investment companies, financial and business organizations and individuals around the world, the Fund could be adversely affected if the computer systems used by the Fund's service providers do not properly process and calculate date-related information and data from and after January 1, 2000. This is commonly known as the "Year 2000 Problem." The Fund has made compliance with the Year 2000 Problem a high priority. Accordingly, the Fund is taking steps it believes are reasonably designed to address the Year 2000 Problem, focusing primarily on the computer software systems of its major service providers. In this regard, these service providers have represented to the Fund that they do not currently anticipate that the Year 2000 Problem will have a material impact on their ability to continue to fulfill their duties as service providers to the Fund. With respect to the companies in which the Fund invests, the Fund cannot make any assurances as to their Year 2000 compliance efforts. In the event one or more of these companies is not Year 2000 compliant, the Fund may be adversely affected. MANAGEMENT OF THE FUND Directors & Officers The business and affairs of the Fund are managed under the direction of the Fund's Board of Directors, and the day-to-day operations of the Fund are conducted through or under the direction of the Fund's officers. The SAI contains information as to the identity and background of the Fund's directors and officers. Investment Adviser The Board of Directors of the Fund has entered into an Investment Advisory Agreement with LCM Capital Management, Inc. ("LCMCM") under which LCMCM will manage the Fund's investments and business affairs, subject to the supervision of the Board of Directors. LCMCM was organized on June 4, 1998 as an Illinois Corporation, and is a registered investment adviser under the Advisers Act. LCMCM has no prior experience managing investment companies. The address of LCMCM is 810 West Washington Street, Chicago, Illinois 60607, and its telephone number is (312) 705-3028. The Fund's portfolio manager is Barry J. Glasgow, Chief Investment Officer and Secretary of LCMCM. From March 1991 to June 1998, Mr. Glasgow served as the managing partner and portfolio manager of Gonski & Glasgow Investments, a registered investment adviser, with responsibility for investment direction, portfolio management, operations, computer software and compliance (i.e., filings with state and federal authorities). Mr. Glasgow has no prior experience managing investment companies. Investment Advisory Agreement Pursuant to the Investment Advisory Agreement, dated as of _________, 1999, LCMCM will, under the supervision of the Fund's Board of Directors: (i) provide a continuous investment program for the Fund's portfolio, (ii) provide investment research, and from this research, make and execute recommendations for the purchase and sale of securities, (iii) provide all facilities and personnel, including officers, required for the Fund's administrative management and (iv) pay the salaries and expenses of all officers and employees of the Fund, and all directors of the Fund who are affiliated with LCMCM or its affiliates. As compensation for its services, and the related expenses borne by LCMCM, the Fund pays LCMCM a fee, computed daily and payable monthly, equal to, on an annual basis, 1.0% of the Fund's average daily net assets. In addition to the fees payable to LCMCM, the Fund pays all other expenses incurred in the operation of the Fund including, but not limited to, direct charges relating to the purchase and sale of portfolio securities; interest charges; fees and expenses of attorneys and auditors; taxes and governmental fees; costs of stock certificates and any other expenses (including clerical expenses) of issuance, sale or repurchase of the Fund's Common Stock; expenses in connection with the Fund's Distribution Reinvestment Plan; membership fees in trade associations; expenses of maintaining any stock exchange listings of the Fund's Common Stock; expenses of printing and distributing reports, prospectuses, notices and proxy materials; expenses of corporate data processing and related services; shareholder record keeping and shareholder account services (including salaries of shareholder relations personnel); expenses of printing and filing reports and other documents filed with governmental agencies; expenses of shareholders' meetings; fees and disbursements of the Fund's administrator, fund accountant, transfer agent and custodian; expenses of disbursing dividends and distributions; fees, expenses and out-of-pocket costs of directors of the Fund who are not interested persons of LCMCM; insurance premiums and litigation costs; and indemnification. The Fund is not, however, responsible for its organizational fees and expenses or the expenses of this offering (except for underwriting discounts and commissions and the Representative's non-accountable expense allowance); rather, these fees will be paid by LCMCM from its own assets. The Investment Advisory Agreement contains provisions relating to the selection of securities brokers to effect the portfolio transactions of the Fund. Under these provisions, LCMCM may (i) direct Fund portfolio brokerage to the Representative, although LCMCM has no current intention to do so, and (ii) pay commissions to brokers other than the Representative which are higher than might be charged by another qualified broker to obtain brokerage and/or research services considered by LCMCM to be useful or desirable for its investment management of the Fund. The SAI contains more information about the Investment Advisory Agreement, including a more complete description of the brokerage practices of the Fund. Custodian The Fund's custodian is Firstar Bank Milwaukee, N.A., 615 East Michigan Street, Milwaukee, Wisconsin 53202. Transfer Agent, Dividend Paying Agent, Registrar and Fund Accountant Firstar Bank also serves as the Fund's transfer agent, dividend paying agent and registrar. Firstar Mutual Fund Services, L.L.C. ("Firstar"), which is an affiliate of Firstar Bank and which is located at the same address, serves as fund accountant. Administrator Firstar also serves as the Fund's administrator pursuant to a Fund Administration Servicing Agreement dated __________,1999. In this capacity, Firstar performs certain compliance and tax reporting functions for the Fund. For these services, the Fund pays Firstar a monthly fee computed at an annual rate as follows: (i) for the first $200 million of net assets, 0.06% of the Fund's average daily net assets during the previous month, (ii) for the next $500 million of net assets, 0.05% of the Fund's average daily net assets during the previous month and (iii) for net assets in excess of $700 million, 0.03% of the Fund's average daily net assets during the previous month, subject to a minimum annual fee of $35,000. Firstar is also entitled to reimbursement for certain out-of-pocket expenses. DESCRIPTION OF COMMON STOCK The Fund, which was incorporated under the laws of the State of Maryland on August 24, 1998, is authorized to issue 500,000,000 shares of capital stock, par value $0.01 per share, all of which shares are initially classified as Common Stock. The Board of Directors is authorized, however, to classify or reclassify any unissued shares of capital stock by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption. The shares of Common Stock, when issued, will be fully paid and non-assessable. All shares of Common Stock are equal as to dividends, assets and voting privileges and have no conversion, preemptive, subscription or exchange rights. In the event of liquidation, each share of Common Stock is entitled to its proportion of the Fund's assets after payment of debts and expenses. Shareholders are entitled to one vote per share. All voting rights for directors are non-cumulative, which means that holders of more than 50% of the shares of Common Stock can elect 100% of the directors if they choose to do so, and in such an event, the holders of the remaining shares of Common Stock will not be able to elect any directors. The Fund has no present intention of offering additional shares beyond this offering, except that additional shares may be issued under the Distribution Reinvestment Plan. See "Distributions; Distribution Reinvestment Plan." Other offerings of Common Stock, if made, will require approval of the Fund's Board of Directors. Any additional offerings will be subject to the requirements of the 1940 Act that shares may not be sold at a price below the then current net asset value (exclusive of underwriting discounts and commissions) except in certain circumstances, including in connection with an offering to existing shareholders or with the consent of a majority of the Fund's outstanding voting securities. The Fund is not required to hold annual shareholders' meetings and does not intend to hold such meetings. However, under Maryland law and the By-Laws of the Fund, the Fund will call a special meeting of its shareholders upon the written request of shareholders entitled to cast at least 25% of all the votes at such meeting. Any request for such a special meeting must state the purpose of the meeting and the matters proposed to be acted on at it. The Secretary of the Fund will (i) inform the shareholders who made the request of the reasonably estimated cost of preparing and mailing a notice of the meeting, and (ii) on payment of these costs to the Fund, notify each shareholder entitled to notice of the meeting. Notwithstanding the above, under Maryland law, unless requested by shareholders entitled to cast a majority of all the votes entitled to be cast at a meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of the shareholders held during the preceding 12 months. Shareholders' meetings must be held in order to approve any change in a fundamental investment policy of the Fund. See "Investment Restrictions." DISTRIBUTIONS; DISTRIBUTION REINVESTMENT PLAN The Fund's policy is to distribute to shareholders, on an annual basis, substantially all of its net investment income, and to distribute, at least annually, any net realized capital gains. If, for any calendar year, the total distributions exceed net investment income and net realized capital gains, the excess, distributed from the Fund's assets, will generally be treated as a tax-free return of capital (up to the amount of the shareholder's tax basis in his or her shares). The amount treated as a tax-free return of capital will reduce a shareholder's adjusted basis in his or her shares of Common Stock, thereby increasing his or her potential gain or reducing his or her potential loss on the sale of such shares. Such excess, however, will be treated first as ordinary income up to the amount of the Fund's current and accumulated earnings and profits, and then as return of capital and capital gains as set forth above. In the event the Fund distributes amounts in excess of its net investment income and net realized capital gains, such distributions will decrease the Fund's total assets and, therefore, have the likely effect of increasing the Fund's expense ratio. In addition, in order to make such distributions, the Fund may have to sell a portion of its investment portfolio at a time when independent investment judgment might not dictate such action. Shareholders may elect to receive all distributions in cash paid by check. Pursuant to the Distribution Reinvestment Plan (the "Plan"), shareholders not making such election will have all such amounts automatically reinvested in whole or fractional shares of Common Stock of the Fund, as the case may be. If the directors of the Fund declare a distribution payable either in shares of Common Stock or in cash, as shareholders may have elected, then non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in shares determined as follows: whenever the market price per share of Common Stock on the valuation date is equal to or exceeds the net asset value per share on that date, the Fund will issue new shares to participants at net asset value; provided, however, if the net asset value is less than 95% of the market price on the valuation date, then such shares will be issued at 95% of the market price. The valuation date will be the distribution payment date, or, if that date is not an ASE trading day, the next preceding trading day. If the net asset value exceeds the market price on the valuation date, Firstar Bank will purchase shares of Common Stock in the open market, on the ASE or elsewhere, for the participants' accounts on, or shortly after, the payment date. If, before such open market purchases can be made, the market price exceeds the net asset value of the shares, open market purchases will cease and the Fund will issue the remaining shares at a price equal to the higher of net asset value or 95% of the then market price. Firstar Bank maintains all shareholder accounts in the Plan and furnishes written confirmations of all transactions in an account, including information needed by shareholders for personal and tax records. Shares in the account of each Plan participant will be held by Firstar Bank in non-certificated form in the name of the participant. There is no charge to participants for reinvesting distributions. Firstar Bank's fees for handling the reinvestment of distributions will be paid by the Fund. There will be no brokerage charges with respect to shares issued directly by the Fund as a result of distributions payable either in stock or in cash. However, each participant will pay a pro-rata share of brokerage commissions incurred with respect to Firstar Bank's open market purchases in connection with the reinvestment of distributions. Brokerage charges for purchasing small amounts of stock for individual accounts through the Plan are expected to be less than the usual brokerage charges for such transactions, as Firstar Bank will be purchasing shares for all participants in blocks and prorating the lower commission thus attainable. Firstar Bank may use its affiliates and/or affiliates of LCMCM, including the Representative, for all trading activity relative to the Plan. Such affiliates will receive a commission in connection with such trading transactions. If a shareholder desires to discontinue his or her participation in the Plan, the shareholder will receive a certificate for the appropriate number of full shares in the account, along with a check in payment for any fractional shares. The automatic reinvestment of distributions will not relieve participants of any income tax that may be payable on such distributions. See "Federal Taxation of the Fund and its Distributions." Experience under the Plan may indicate that changes in the Plan are desirable. Accordingly, the Fund reserves the right to amend the Plan, provided participants are given written notice at least 30 days prior to the effective date thereof. The Fund may also terminate the Plan as applied to any distribution paid subsequent to written notice of the termination sent to participants at least 30 days before the record date for such distribution. For more information about the Plan, please call Firstar Bank at (877) 526-7528. ANTI-TAKEOVER PROVISIONS The Fund currently has provisions in its Articles of Incorporation which could have the effect of limiting (i) the ability of other entities or persons to acquire control of the Fund, (ii) the Fund's freedom to engage in certain transactions or (iii) the ability of the Fund's directors or shareholders to amend the Articles of Incorporation or effectuate changes in the Fund's management. These provisions, which are described below, may be regarded as "anti-takeover" provisions. First, directors of the Fund may be removed from office, with or without cause, only by the affirmative vote of the holders of at least 66 2/3% of the shares of the Fund entitled to be voted for the election of directors. Second, the affirmative vote of the holders of 66 2/3% of the outstanding shares of the Fund is required to amend certain provisions of the Articles of Incorporation. Third, the affirmative vote of the holders of 66 2/3% of the outstanding shares of the Fund is required to authorize the conversion of the Fund from a closed-end to an open-end investment company, or generally to authorize any of the following transactions: (i) a merger or consolidation or statutory share exchange of the Fund with or into any other corporation; (ii) a sale of all or substantially all of the Fund's assets (other than in the regular course of the Fund's investment activities); or (iii) a liquidation or dissolution of the Fund, unless such action has been approved, adopted or authorized by the affirmative vote of at least two- thirds of the total number of directors fixed in accordance with the By-Laws, in which case the affirmative vote of a majority of the Fund's outstanding shares is required. The 66 2/3% voting requirements described above, which are greater than the minimum requirements under Maryland law or the 1940 Act, can only be changed by a similar 66 2/3% vote. Reference is made to the Articles of Incorporation of the Fund, on file with the SEC, for the full text of these provisions. The provisions of the Articles of Incorporation described above could have the effect of depriving Fund shareholders of opportunities to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund in a tender offer or similar transaction. SHARE PURCHASES AND TENDERS Although shares of closed-end investment companies sometimes trade at premiums over net asset value, they frequently trade at discounts. The Fund cannot predict whether the Common Stock will trade above, at or below net asset value. The Fund believes that if the Common Stock trades at a discount to net asset value, the share price will not adequately reflect the value of the Fund to shareholders and that shareholders' financial interests would be furthered if the market price of the Common Stock more closely reflected net asset value. For these reasons, the Board of Directors currently intends to consider from time to time repurchases of Common Stock on the open market when the shares are trading at a discount from net asset value, and the Fund may engage in borrowings to finance or refinance such repurchase transactions. In addition, the Board of Directors may consider, from time to time, but not more frequently than once every two years, making an offer to each shareholder of record to purchase at net asset value shares of Common Stock owned by the shareholder. The Fund does not have a fundamental policy with respect to the repurchase of Common Stock and these repurchases are discretionary. Before authorizing any repurchase of Common Stock or tender offer to the Common Stock shareholders, the Fund's Board of Directors would consider all relevant factors, including the market price of the Common Stock, its net asset value per share, the liquidity of the Fund's securities positions, the effect an offer to repurchase might have on the Fund or its shareholders and relevant market considerations. Any offer would be made in accordance with the requirements of the 1940 Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Although the matter will be subject to the review of the Board of Directors at the time, a tender offer is not expected to be made if the anticipated benefit to shareholders and the Fund would not be commensurate with the anticipated cost to the Fund, or if the number of shares expected to be tendered would not be material. When a tender offer is authorized to be made by the Fund's Board of Directors, it will be an offer to purchase at a price equal to the net asset value of all (but not less than all) of the shares of Common Stock owned by a shareholder (or attributed to the shareholder for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code")). A shareholder who tenders all Common Stock shares owned or considered owned by him or her, as required, will realize a taxable gain or loss depending upon such person's basis in such shares. The policy of the Fund's Board of Directors with respect to tender offers and repurchases, which may be changed by the Board of Directors, is that the Fund will not accept tenders or effect repurchases if (i) those transactions, if consummated, would (a) result in the exclusion of the Common Stock from the ASE, or (b) impair the Fund's status as a regulated investment company under the Code; (ii) the Fund would not be able to liquidate securities to repurchase Common Stock in an orderly manner that is consistent with the Fund's investment objective and policies; or (iii) there is, in the Board's judgment, any material (a) legal action or proceeding instituted or threatened challenging the transactions or otherwise materially affecting the Fund, (b) suspension of or limitation on prices for trading securities generally on the ASE or any exchange on which securities held by the Fund are traded, (c) declaration of a banking moratorium by federal or state authorities or any suspension of payment by banks in the United States, (d) limitation affecting the Fund or issuers of securities held by the Fund imposed by federal, state or local authorities on the extension of credit by lending institutions, (e) commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States or (f) other event or condition that would have a material adverse effect on the Fund or its shareholders if shares of Common Stock were repurchased. The Board of Directors may modify these conditions in light of experience. FEDERAL TAXATION OF THE FUND AND ITS DISTRIBUTIONS The Fund intends to qualify and be treated as a regulated investment company under the Code. The Fund currently intends to distribute substantially all of its net investment income annually, and to distribute, at least annually, any net realized capital gains, thereby avoiding the imposition on the Fund of federal income and excise taxes on such distributed income and gain. Such distributions from net investment income will be taxable as ordinary income to shareholders of the Fund who are subject to tax, and the Fund's capital gain distributions will be taxable as capital gain to such shareholders. Notwithstanding the above, the Fund may decide to retain all or part of any net capital gains for reinvestment. After the end of each taxable year, the Fund will notify shareholders of the federal income tax status of any distributions, or deemed distributions, made by the Fund during such year. For a more detailed discussion of these matters, see "Taxation of the Fund and its Distributions" in the SAI. NET ASSET VALUE The net asset value of the Fund's shares of Common Stock will be determined as of the close of regular trading on the American Stock Exchange ("ASE") (or such other exchange on which the Fund's shares are traded) on each day the ASE is open for trading by dividing the Fund's total assets, less the Fund's total liabilities, by the total number of shares outstanding. Net asset value will be published weekly in a financial newspaper of general circulation. Such data for closed-end funds is usually published in the Monday editions of The Wall Street Journal and Barron's. The Fund assumes no responsibility for the accuracy of such data and does not represent that The Wall Street Journal and/or Barron's will continue to publish such data. UNDERWRITING Upon the terms and subject to the conditions contained in the Underwriting Agreement dated as of ____________, 1999, each Underwriter named below, for whom LaSalle St. Securities, Inc. is acting as Representative, has severally agreed to purchase, and the Fund has agreed to sell to each such Underwriter, the number of shares of Common Stock set forth opposite the name of each such Underwriter: Number of Underwriter Shares LaSalle St. Securities, Inc. ________ Total 4,000,000 The Underwriting Agreement provides that the obligations of the Underwriters to pay for and accept delivery of the shares of Common Stock offered hereby are subject to the approval of certain legal matters by counsel and to certain other conditions. The Underwriters are obligated to take and pay for all shares of Common Stock offered hereby if any are taken. The Underwriters propose to offer part of the shares of Common Stock directly to the public at the public offering price set forth on the cover page of this Prospectus and part of the shares to certain dealers at a price which represents a concession not in excess of $0.35 per share. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $0.10 per share to certain other dealers. After the initial offering of the shares of Common Stock to the public, the public offering price and such concessions may be changed by the Underwriters. The underwriting discount of $0.55 per share is equal to 5.5% of the initial offering price. You must pay for shares of Common Stock purchased in this offering on or before the third business day following the effective date of the Registration Statement of which this Prospectus is a part. Each investor must purchase a minimum of 200 shares of Common Stock in this offering. The Fund has granted to the Underwriters an option, exercisable for 30 days from the effective date of the Registration Statement of which this Prospectus is a part, to purchase up to an additional 600,000 shares of Common Stock to cover over-allotments, if any, at the initial public offering price less the underwriting discount. The Representative will receive from the Fund a non- accountable expense allowance in an amount equal to 1% of the gross offering amount, or $400,000. LCMCM has agreed to pay the organizational and offering expenses of the Fund, which are estimated to be $260,000 and which include all filing fees, legal costs and other expenses in connection with qualifying the shares of Common Stock offered hereby for sale under the laws of such states as the Representative may designate. The Fund anticipates that the Underwriters or their affiliates may, from time to time and subject to the regulations set forth in the 1940 Act, act as brokers or dealers in connection with the execution of the Fund's securities transactions after the Underwriters cease to act as underwriters of the Fund's Common Stock. The Fund and LCMCM have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. However, such indemnification is subject to the provisions of Section 17(i) of the 1940 Act which provides, in part, that no agreement shall contain a provision which protects or purports to protect an underwriter of an investment company against any liability to such company or its shareholders to which it would otherwise be subject due to misfeasance, bad faith or gross negligence in the performance of its duties, or reckless disregard of its obligations and duties under such agreement. In connection with this offering, the Underwriters may purchase and sell the Common Stock in accordance with Regulation M under the Exchange Act. These transactions may include over-allotment and stabilizing transactions. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the market price of the Common Stock. The Underwriters may also impose a penalty bid, whereby selling commissions otherwise accruing to an Underwriter or selling group member in respect of securities sold in the offering for their account may be reclaimed if such securities are repurchased by the Underwriters in stabilizing transactions. These activities may stabilize, maintain or otherwise affect the market price of the Common Stock, which may be higher than the price that might otherwise prevail in the open market; and these activities, if commenced, may be discontinued at any time. These transactions may be effected on the ASE, in the over-the-counter market or otherwise. This Prospectus is being made available in electronic fromat on the following Internet websites: www.lcmfunds.com (which is a website maintained by the Fund) and www.einvestmentbank.com (which is a website maintained by Wedbush Morgan Securities, Inc., one of the proposed Underwriters in this offering). Except for this Prospectus, nothing on either of these websites shall be deemed to be part of this Prospectus. Prior to this offering, there has been no public market for the Common Stock. Application will be made to list the Common Stock on the ASE under the symbol "LCM." The Representative is an affiliate of LCMCM, the Fund's investment adviser. The Representative's principal business address is 810 West Washington Boulevard, Chicago, Illinois 60607. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed on for the Fund by Godfrey & Kahn, S.C., Milwaukee, Wisconsin. Godfrey & Kahn, S.C. serves as counsel to the Fund. In addition, certain legal matters will be passed upon for the Underwriters by Sachnoff & Weaver Ltd., Chicago, Illinois. EXPERTS The Statement of Assets and Liabilities of the Fund as of ____________, 1999 will be included in this Registration Statement in reliance on the report of PricewaterhouseCoopers, Milwaukee, Wisconsin, independent accountants, which will appear elsewhere herein and given on the authority of said firm as experts in auditing and accounting. ADDITIONAL INFORMATION The Fund has filed with the SEC a Registration Statement on Form N-2 under the Securities Act and the 1940 Act with respect to the shares of Common Stock offered by this Prospectus. This Prospectus, which is a part of the Registration Statement, does not contain all the information set forth in the Registration Statement or the exhibits thereto. For further information regarding the Fund and the Common Stock, reference is made to the Registration Statement, including the exhibits thereto, which may be obtained from the SEC as specified below. In addition, as of the effective date of the Registration Statement of which this Prospectus is a part, the Fund will be subject to the informational requirements of the Exchange Act and the 1940 Act, and, in accordance therewith, will file reports, proxy statements and other information with the SEC. The reports, proxy statements and other information filed by the Fund with the SEC can be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its Regional Offices located at 7 World Trade Center, Room 1300, New York, New York 10048 and Northwest Atrium Center, 500 West Madison Street, Room 1400, Chicago, Illinois 60661-2511. Copies of such material can also be obtained from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC maintains a web site at http://www.sec.gov containing reports, proxy statements and other information regarding registrants, including the Fund, that file electronically with the SEC. Application will be made to list the Fund's Common Stock on the ASE. Once listed, reports, proxy statements and other information concerning the Fund, and filed with the SEC by the Fund, can be inspected at the offices of the American Stock Exchange, 86 Trinity Place, New York, New York 10006-1881. REPORTS TO SHAREHOLDERS The Fund will furnish to its shareholders annual reports containing audited financial statements, periodic unaudited reports containing financial statements and such other periodic reports as it may determine to furnish or as may be required by law. THE FOLLOWING IS THE TABLE OF CONTENTS CONTAINED IN THE STATEMENT OF ADDITIONAL INFORMATION FILED AS PART OF THE FUND'S REGISTRATION STATEMENT TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION PAGE Investment Objective and Policies SAI-3 Investment Practices and Techniques SAI-4 Management SAI-12 Principal Shareholders SAI-14 Investment Advisory and Other Services SAI-14 Portfolio Transactions and Brokerage Allocation SAI-15 Taxation of the Fund and its Distributions SAI-16 Financial Statements SAI-18 The information in this Statement of Additional Information is not complete and may be changed. The Fund may not sell these securitied until the Registration Statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information is not a Prospectus. Moreover, this Statement of Additional Information does not constitute an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. STATEMENT OF ADDITIONAL INFORMATION Subject to Completion, Dated July 28, 1999 LCM INTERNET GROWTH FUND, INC. This Statement of Additional Information ("SAI") is not a prospectus, but should be read in conjunction with the Prospectus of the LCM Internet Growth Fund, Inc. (the "Fund"), dated the date hereof. Before purchasing shares of the Fund, you should obtain and read the Fund's Prospectus. The Prospectus, which may be revised from time to time, is available without charge by writing to the Fund at 810 West Washington Boulevard, Chicago, Illinois 60607, or by calling (312) 705-3028. This Statement of Additional information is dated__________________, 1999. TABLE OF CONTENTS Page INVESTMENT OBJECTIVE AND POLICIES 3 INVESTMENT PRACTICES AND TECHNIQUES 4 MANAGEMENT 12 PRINCIPAL SHAREHOLDERS 14 INVESTMENT ADVISORY AND OTHER SERVICES 14 PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION 15 TAXATION OF THE FUND AND ITS DISTRIBUTIONS 16 FINANCIAL STATEMENTS 18 You should rely only on the information contained in this SAI and in the Prospectus. The Fund has not authorized anyone to provide you with different information. The Fund is not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this SAI or in the Prospectus is accurate as of any date other than the date hereof. INVESTMENT OBJECTIVE AND POLICIES a) Investment Objective The Fund's investment objective is to seek capital appreciation by investing in a portfolio consisting primarily of equity securities issued by companies that the Fund's investment adviser, LCM Capital Management, Inc. ("LCMCM"), believes will benefit from growth of the Internet. Current dividend income is not an investment consideration. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of companies that engage in Internet and Internet-related activities. For more information, please see "Investment Objective and Policies" in the Prospectus. b) Fundamental Investment Policies The Fund's fundamental investment policies (or restrictions) are set forth in the Prospectus under the caption "Investment Restrictions." The Fund's fundamental investment policies (which include the Fund's investment objective) may not be changed without the approval of a majority of the Fund's outstanding voting securities. Please refer to the Prospectus for more information. c) Non-Fundamental Investment Policies The Fund's non-fundamental investment policies (or restrictions), which may be changed by the Fund's Board of Directors without shareholder approval, are set forth below. Many of these policies are discussed in the Prospectus under the caption "Investment Practices and Techniques." As a matter of non-fundamental policy: (1)The Fund may not sell securities short, unless the Fund owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, or unless it covers such short sale as required by the current rules and positions of the Securities and Exchange Commission (the "SEC") or its staff, and provided that transactions in options, futures contracts or other derivative instruments are not deemed to constitute selling securities short; (2)The Fund may not purchase securities on margin, except that the Fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin deposits in connection with futures contracts or other derivative instruments shall not constitute purchasing securities on margin; (3)The Fund may not invest in illiquid securities if, as a result of such investment, more than 15% of its net assets would be invested in illiquid securities; (4)The Fund may not purchase securities of other investment companies, except in compliance with the Investment Company Act of 1940, as amended (the "1940 Act"); (5)The Fund may not engage in futures or options on futures transactions which are impermissible pursuant to Rule 4.5 under the Commodity Exchange Act (the "CEA") and, in accordance with Rule 4.5, will use futures or options on futures transactions solely for bona fide hedging transactions (within the meaning of the CEA); provided, however, that the Fund may, in addition to bona fide hedging transactions, use futures and options on futures transactions if the aggregate initial margin and premiums required to establish such positions, less the amount by which any such options are "in the money" (within the meaning of the CEA), do not exceed 5% of the Fund's net assets; (6)The Fund may not invest in, purchase or sell options, except that the Fund may invest up to 10% of its total assets in options, and may sell options in an amount not to exceed 10% of its total assets; and (7)The Fund may not borrow money in an amount in excess of 33 1/3% of its total assets (measured by adding the amount borrowed to the Fund's other assets). With the exception of non-fundamental policy number 7 above, the percentage restrictions set forth above apply at the time a transaction is effected, and a subsequent change in a percentage resulting from market fluctuations or any other cause other than action by the Fund will not require the Fund to dispose of portfolio securities or take other action to satisfy the percentage restriction. INVESTMENT PRACTICES AND TECHNIQUES The following information supplements the discussion of the Fund's investment practices and portfolio management techniques described in the Prospectus under the caption "Investment Practices and Techniques." a) Short-Term Fixed Income Securities The Fund may hold a small portion of its assets (generally not more than 10%) in U.S. government securities, money market securities and cash to meet ordinary cash needs. Under unusual circumstances, as a defensive technique, the Fund may retain a larger portion of cash and/or invest more assets in U.S. government securities and/or money market securities deemed by LCMCM to be consistent with a temporary defensive posture. (1)U.S. Government Securities. The U.S. government securities in which the Fund may invest are securities issued or guaranteed by the U.S. government (i.e., the U.S. Treasury) or its agencies or instrumentalities. U.S. government agency/instrumentality securities include securities issued by (i) the Federal Housing Administration, Farmers Home Administration, Export- Import Bank of the United States, Small Business Administration and GinnieMae, whose securities are supported by the full faith and credit of the United States; (ii) the Federal Home Loan Banks, Federal Intermediate Credit Banks and the Tennessee Valley Authority, whose securities are supported by the right of the agency to borrow from the U.S. Treasury; (iii) the FannieMae, whose securities are supported by the discretionary authority of the U.S. government to purchase certain obligations of the agency or instrumentality; and (iv) the Student Loan Marketing Association, the Interamerican Development Bank and the International Bank for Reconstruction and Development, whose securities are supported only by the credit of such agencies. While the U.S. government provides financial support to such U.S. government-sponsored agencies or instrumentalities, no assurance can be given that it always will do so since it is not so obligated by law. The U.S. government, its agencies and instrumentalities do not guarantee the market value of their securities, and consequently, the value of such securities may fluctuate. (2)Money Market Securities. The money market securities in which the Fund may invest include (i) commercial paper rated A-1 or higher by Standard & Poor's ("S&P") or Prime-1 or higher by Moody's Investors Service ("Moody's"), or if such commercial paper is not rated, issued by companies which have an outstanding debt issue rated AA or higher by S&P or Aa or higher by Moody's; (ii) repurchase agreements entered into only with respect to U.S. government securities. In such a transaction, at the time the Fund purchases the security, it simultaneously agrees to resell and redeliver the security to the seller, who also simultaneously agrees to buy back the security at a fixed price and time. This assures a predetermined yield for the Fund during its holding period since the resale price is always greater than the purchase price and reflects an agreed-upon market rate. Such transactions afford an opportunity for the Fund to invest temporarily available cash. Repurchase agreements may be considered loans to the seller, collateralized by the underlying securities. The risk to the Fund is limited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that the Fund is entitled to sell the underlying collateral. If the value of the collateral declines after the agreement is entered into, however, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, the Fund could incur a loss of both principal and interest. LCMCM monitors the value of the collateral at the time the transaction is entered into and at all times during the term of the repurchase agreement. LCMCM does so in an effort to determine that the value of the collateral always equals or exceeds the agreed-upon repurchase price to be paid to the Fund. If the seller were to be subject to a federal bankruptcy proceeding, the ability of the Fund to liquidate the collateral could be delayed or impaired because of certain provisions of the bankruptcy laws; (iii) certificates of deposit issued against funds deposited in a domestic branch of a U.S. bank or savings and loan association that are insured by the Federal Deposit Insurance Corporation ("FDIC") and have assets in excess of $500 million. Such certificates are for a definite period of time, earn a specified rate of return and are normally negotiable. If such certificates of deposit are non-negotiable, they will be considered illiquid securities and be subject to the Fund's 15% restriction on investments in illiquid securities. Pursuant to a certificate of deposit, the issuer agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Under current FDIC regulations, the maximum insurance payable as to any one certificate of deposit is $100,000; therefore, certificates of deposit purchased by the Fund will not generally be fully insured; (iv) bankers' acceptances, which are short-term credit instruments used to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then "accepted" by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an asset or it may be sold in the secondary market at the going rate of interest for a specific maturity; and (v) bank time deposits, which are monies kept on deposit with U.S. banks or savings and loan associations for a stated period of time at a fixed rate of interest. There may be penalties for the early withdrawal of such time deposits, in which case the yields of these investments will be reduced. b) Illiquid Securities The Fund may invest up to 15% of its net assets in illiquid securities (i.e., securities that are not readily marketable). For purposes of this restriction, illiquid securities include, but are not limited to, restricted securities (securities the disposition of which is restricted under the federal securities laws), repurchase agreements with maturities in excess of seven days and other securities that are not readily marketable. The Board of Directors of the Fund, or its delegate, has the ultimate authority to determine, to the extent permissible under the federal securities laws, which securities are liquid or illiquid for purposes of this 15% limitation. Certain securities exempt from registration or issued in transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), such as securities that may be resold to institutional investors under Rule 144A under the Securities Act, may be considered liquid under guidelines adopted by the Board of Directors. However, investing in securities which may be resold pursuant to Rule 144A under the Securities Act could have the effect of increasing the level of the Fund's illiquidity to the extent that institutional investors become, for a time, uninterested in purchasing such securities. The Board of Directors has delegated to LCMCM the day- to-day determination of the liquidity of any security, although it has retained oversight and ultimate responsibility for such determinations. Although no definitive liquidity criteria are used, the Board of Directors has directed LCMCM to look to such factors as (i) the nature of the market for the security (including the institutional private resale market), (ii) the terms of certain securities or other instruments allowing for the disposition to a third party or the issuer thereof (e.g., certain repurchase obligations and demand instruments), (iii) the availability of market quotations (e.g., for securities quoted in the PORTAL system) and (iv) other permissible relevant factors. Restricted securities may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in effect under the Securities Act. Where registration is required, the Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than that which prevailed when it decided to sell. Restricted securities will be priced at fair value as determined in good faith by the Board of Directors. If, through the appreciation of restricted securities or the depreciation of unrestricted securities, the Fund should be in a position where more than 15% of the value of its net assets are invested in illiquid securities, including restricted securities which are not readily marketable (except for Rule 144A securities deemed to be liquid by LCMCM), the Fund will take such steps as is deemed advisable, if any, to protect liquidity. c) Non-Diversification While the Fund is "non-diversified," which means that it is permitted to invest its assets in a more limited number of companies than other mutual funds, the Fund intends to diversify its assets to qualify for tax treatment as a regulated investment company under the Internal Revenue Code of 1986, as amended ("Code"). To qualify (i) not more than 25% of the total value of the Fund's assets may be invested in securities of any one issuer or of any two or more issuers controlled by the Fund, which, pursuant to the regulations under the Code, may be deemed to be engaged in the same, similar or related trades or businesses, and (ii) with respect to 50% of the total value of the Fund's assets (a) not more than 5% of its total assets may be invested in the securities of any one issuer and (b) the Fund may not own more than 10% of the outstanding voting securities of any one issuer. These percentage limitations do not apply to investments in U.S. government securities or the securities of other regulated investment companies. Accordingly, as a "non-diversified" fund, the Fund may invest up to 50% of its assets in the securities of as few as two companies, up to 25% each, so long as the Fund does not control the two companies and the two companies are engaged in different businesses. The Fund may also invest up to 50% of its assets in the securities of as few as ten companies, up to 5% each, provided that the Fund does not own in excess of 10% of any company's outstanding voting stock. Non- diversification involves an increased risk of loss to the Fund when the market value of a security declines. d) Concentration The Fund has adopted a fundamental investment policy which prohibits the Fund from investing more than 25% of its total assets in securities of issuers whose principal business activities are in the same industry, except that the Fund will invest, under normal market conditions, more than 25% of its total assets in the securities of issuers in the information technology industry. For this purpose, "information technology industry" is comprised of those companies providing infrastructure, content and e-commerce products and/or services designed for Internet use. This industry, which is very dynamic and therefore frequently changing, currently consists of 13 sectors and 65 sub- sectors as identified by LCMCM. See "Investment Objective and Policies" in the Prospectus for more information. Because a relatively high percentage of the Fund's assets will be invested in the information technology industry, the Fund's portfolio securities will be especially influenced by factors specific to that industry and may be more susceptible to fluctuation in value than portfolio securities of a less concentrated investment company. e) Derivative Transactions In General. The Fund may invest in derivative instruments for any lawful purpose consistent with its investment objective such as hedging or managing risk, but not for speculation. Derivative instruments are commonly defined to include securities or contracts whose value depend on (or "derive" from) the value of one or more other assets, such as securities or commodities. These "other assets" are commonly referred to as "underlying assets." Options and forward contracts are considered to be the basic "building blocks" of derivatives. An option is a contract in which the "holder" (the buyer) pays a certain amount (the "premium") to the "writer" (the seller) to obtain the right, but not the obligation, to buy from the writer (in a "call") or sell to the writer (in a "put") a specific asset at an agreed upon price (the "strike price" or "exercise price") at or before a certain time (the "expiration date"). The holder pays the premium at inception and has no further financial obligation. The holder of an option-based derivative generally will benefit from favorable movements in the price of the underlying asset but is not exposed to corresponding losses due to adverse movements in the value of the underlying asset. The writer of an option- based derivative generally will receive fees or premiums but generally is exposed to losses due to changes in the value of the underlying asset. A forward is a sales contract between a buyer (holding the "long" position) and a seller (holding the "short" position) for an asset with delivery deferred until a future date. The buyer agrees to pay a fixed price at the agreed future date and the seller agrees to deliver the asset. The seller hopes that the market price on the delivery date is less than the agreed upon price, while the buyer hopes for the contrary. The change in value of a forward-based derivative generally is roughly proportional to the change in value of the underlying asset. While the Fund may invest in options, it will not invest in forward contracts. As described below, the Fund may, however, invest in futures contracts. Hedging. The Fund may use derivative instruments to protect against possible adverse changes in the market value of securities held in, or are anticipated to be held in, the Fund's portfolio. Derivatives may also be used by the Fund to "lock-in" its realized but unrecognized gains in the value of its portfolio securities. Hedging strategies, if successful, can reduce the risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce the opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments. Managing Risk. The Fund may also use derivative instruments to manage the risks of the Fund's portfolio. Risk management strategies include, but are not limited to, facilitating the sale of portfolio securities, establishing a position in the derivatives markets as a substitute for buying or selling certain securities or creating or altering exposure to certain asset classes. The use of derivative instruments may provide a less expensive, more expedient or more specifically focused way for the Fund to invest than "traditional" securities (i.e., stocks or bonds) would. Exchange or OTC Derivatives. Derivative instruments may be exchange-traded or traded in over-the-counter ("OTC") transactions between private parties. Exchange- traded derivatives are standardized options and futures contracts traded in an auction on the floor of a regulated exchange. Exchange contracts are generally liquid. The exchange clearinghouse is the counterparty of every contract. Thus, each holder of an exchange contract bears the credit risk of the clearinghouse (and has the benefit of its financial strength) rather than that of a particular counterparty. OTC transactions are subject to additional risks, such as the credit risk of the counterparty to the instrument, and are less liquid than exchange-traded derivatives since they often can only be closed out with the other party to the transaction. For purposes of the Fund's 15% limitation on investments in illiquid securities, OTC transactions (as well as any assets used to cover such transactions) will be considered illiquid. Risks and Special Considerations. The use of derivative instruments involves risks and special considerations as described below. Risks pertaining to particular derivative instruments are described in the sections that follow. (1)Market Risk. The primary risk of derivatives is the same as the risk of the underlying assets; namely, that the value of the underlying asset may go up or down. Adverse movements in the value of an underlying asset can expose the Fund to losses. Derivative instruments may include elements of leverage and, accordingly, the fluctuation of the value of the derivative instrument in relation to the underlying asset may be magnified. The successful use of derivative instruments depends upon a variety of factors, particularly LCMCM's ability to predict movements of the securities, currencies and commodities markets, which requires different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy adopted will succeed. A decision to engage in a derivative transaction will reflect LCMCM's judgment that the derivative transaction will provide value to the Fund and its shareholders and is consistent with the Fund's objectives, investment limitations and operating policies. In making such a judgment, LCMCM will analyze the benefits and risks of the derivative transaction and weigh them in the context of the Fund's entire portfolio and investment objective. (2)Credit Risk. The Fund will be subject to the risk that a loss may be sustained by the Fund as a result of the failure of a counterparty to comply with the terms of a derivative instrument. The counterparty risk for exchange-traded derivative instruments is generally less than for privately- negotiated or OTC derivative instruments, since generally a clearing agency, which is the issuer or counterparty to each exchange-traded instrument, provides a guarantee of performance. For privately- negotiated instruments, there is no similar clearing agency guarantee. In all transactions, the Fund will bear the risk that the counterparty will default, and this could result in a loss of the expected benefit of the derivative transaction and possibly other losses to the Fund. The Fund will enter into transactions in derivative instruments only with counterparties that LCMCM reasonably believes are capable of performing under the contract. (3)Correlation Risk. When a derivative transaction is used to completely hedge another position, changes in the market value of the combined position (the derivative instrument plus the position being hedged) result from an imperfect correlation between the price movements of the two instruments. With a perfect hedge, the value of the combined position remains unchanged for any change in the price of the underlying asset being hedged. With an imperfect hedge, the value of the derivative instrument and its hedge are not perfectly correlated. Correlation risk is the risk that there might be imperfect correlation, or even no correlation, between price movements of an instrument and price movements of investments being hedged. For example, if the value of a derivative instrument used in a short hedge (such as writing a call option, buying a put option or selling a futures contract) increased by less than the decline in value of the hedged investments, the hedge would not be perfectly correlated. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which these instruments are traded. The effectiveness of hedges using instruments on indices will depend, in part, on the degree of correlation between price movements in the index and price movements in the investments being hedged. (4)Liquidity Risk. Derivatives are also subject to liquidity risk. Liquidity risk is the risk that a derivative instrument cannot be sold, closed out or replaced quickly at or very close to its fundamental value. Generally, exchange contracts are very liquid because the exchange clearinghouse is the counterparty of every contract. OTC transactions are less liquid than exchange-traded derivatives since they often can only be closed out with the other party to the transaction. The Fund might be required by applicable regulatory requirements to maintain assets as "cover," maintain segregated accounts and/or make margin payments when it takes positions in derivative instruments involving obligations to third parties (i.e., instruments other than purchased options). If the Fund is unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expires, matures or is closed out. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time. The Fund's ability to sell or close out a position in an instrument prior to expiration or maturity depends on the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the counterparty to enter into a transaction closing out the position. Therefore, there is no assurance that any derivatives position can be sold or closed out at a time and price that is favorable to the Fund. (5)Legal Risk. Legal risk is the risk of loss caused by the legal unenforceability of a party's obligations under the derivative. While a party seeking price certainty agrees to surrender the potential upside in exchange for downside protection, the party taking the risk is looking for a positive payoff. Despite this voluntary assumption of risk, a counterparty that has lost money in a derivative transaction may try to avoid payment by exploiting various legal uncertainties about certain derivative products. (6)Systemic or "Interconnection" Risk. Interconnection risk is the risk that a disruption in the financial markets will cause difficulties for all market participants. In other words, a disruption in one market will spill over into other markets, perhaps creating a chain reaction. Much of the OTC derivatives market takes place among the OTC dealers themselves, thus creating a large interconnected web of financial obligations. This interconnectedness raises the possibility that a default by one large dealer could create losses for other dealers and destabilize the entire market for OTC derivative instruments. General Limitations. The use of derivative instruments is subject to applicable regulations of the SEC, the several options and futures exchanges upon which they may be traded and the Commodity Futures Trading Commission ("CFTC"). The Fund has filed a notice of eligibility for exclusion from the definition of the term "commodity pool operator" with the CFTC and the National Futures Association, which regulate trading in the futures markets. In accordance with Rule 4.5 of the regulations under the CEA, the notice of eligibility for the Fund includes representations that the Fund will use futures contracts and related options solely for bona fide hedging purposes within the meaning of CFTC regulations, provided that the Fund may hold other positions in futures contracts and related options that do not qualify as a bona fide hedging position if the aggregate initial margin deposits and premiums required to establish these positions, less the amount by which any such futures contracts and related options positions are "in the money," do not exceed 5% of the Fund's net assets. The SEC has identified certain trading practices involving derivative instruments that involve the potential for leveraging a fund's assets in a manner that raises issues under the 1940 Act. In order to limit the potential for the leveraging of a fund's assets, as defined under the 1940 Act, the SEC has stated that a fund may use coverage or the segregation of a fund's assets. The Fund will set aside cash or other permissible liquid assets in a segregated custodial account if required to do so by SEC and CFTC regulations and/or SEC and CFTC interpretations thereof. Assets used as cover or held in a segregated account cannot be sold while the derivative position is open, unless they are replaced with similar assets. As a result, the commitment of a large portion of the Fund's assets to segregated accounts could impede portfolio management or the Fund's ability to meet redemption requests or other current obligations. In some cases, the Fund may be required to allocate or limit a percentage of its assets to a particular asset class. In such cases, the Fund may use a derivative instrument to increase or decrease exposure to an asset class. When the Fund uses derivatives in this way, it is required by applicable SEC guidelines to set aside liquid assets in a segregated account to secure its obligations under the derivative instruments. Under these circumstances, LCMCM may, where reasonable, measure compliance with the applicable percentage by reference to the nature of the economic exposure created through the use of the derivative instrument and not by reference to the nature of the exposure arising from the assets set aside in the segregated account (unless another interpretation is specified by applicable regulatory requirements, in which case such other interpretation will be complied with). For example, if U.S. government securities are set aside to secure the Fund's obligations under an equity position involving a derivative instrument, the combined position (i.e., the derivative instrument and the U.S. government securities) will be treated as an equity position (if allowed under applicable regulatory requirements), not as a U.S. government securities position. Options. The Fund may use options for any lawful purpose consistent with its investment objective such as hedging or managing risk, but not for speculation. The Fund may purchase (buy) or write (sell) put and call options on securities and securities indices ("underlying assets") and enter into closing transactions with respect to such options to terminate an existing position. Options used by the Fund may include European, American and Bermuda style options. If an option is exercisable only at maturity, it is a "European" option; if it is also exercisable prior to maturity, it is an "American" option. If it is exercisable only at certain times, it is a "Bermuda" option. The Fund may purchase (buy) and write (sell) put and call options and enter into closing transactions with respect to such options to terminate an existing position. The purchase of call options serves as a long hedge, and the purchase of put options serves as a short hedge. Writing put or call options can enable the Fund to enhance income by reason of the premiums paid by the purchaser of such options. Writing call options serves as a limited short hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and the Fund will be obligated to sell the security at less than its market value or will be obligated to purchase the security at a price greater than that at which the security must be sold under the option. Writing put options serves as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and the Fund will be obligated to purchase the security at more than its market value. The value of an option position will reflect, among other things, the historical price volatility of the underlying investment, the current market value of the underlying investment, the time remaining until expiration, the relationship of the exercise price to the market price of the underlying investment and general market conditions. The Fund may effectively terminate its right or obligation under an option by entering into a closing transaction. For example, the Fund may terminate its obligation under a call or put option that it had written by purchasing an identical call or put option; this is known as a closing purchase transaction. Conversely, the Fund may terminate a position in a put or call option it had purchased by writing an identical put or call option; this is known as a closing sale transaction. Closing transactions permit the Fund to realize the profit or limit the loss on an option position prior to its exercise or expiration. The Fund may purchase or write both exchange-traded and OTC options. Exchange-traded options are issued by a clearing organization affiliated with the exchange on which the option is listed that, in effect, guarantees completion of every exchange-traded option transaction. In contrast, OTC options are contracts between the Fund and the other party to the transaction ("counterparty") (usually a securities dealer or a bank) with no clearing organization guarantee. Thus, when the Fund purchases or writes an OTC option, it relies on the counterparty to make or take delivery of the underlying investment upon exercise of the option. Failure by the counterparty to do so would result in the loss of any premium paid by the Fund as well as the loss of any expected benefit of the transaction. The Fund's ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market. The Fund intends to purchase or write only those exchange-traded options for which there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the counterparty, or by a transaction in the secondary market if any such market exists. Although the Fund will enter into OTC options only with counterparties that are expected to be capable of entering into closing transactions with the Funds, there is no assurance that the Fund will in fact be able to close out an OTC option at a favorable price prior to expiration. In the event of insolvency of the counterparty, the Fund might be unable to close out an OTC option position at any time prior to its expiration. If the Fund were unable to effect a closing transaction for an option it had purchased, it would have to exercise the option to realize any profit. The Fund may engage in options transactions on securities indices in much the same manner as the options on securities discussed above, except the index options may serve as a hedge against overall fluctuations in the securities market in general. The writing and purchasing of options is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Imperfect correlation between the options and securities markets may detract from the effectiveness of attempted hedging. The Fund will not invest more than 10% of its total assets in options, nor will it sell options in an amount exceeding 10% of its total assets. Futures Contracts. The Fund may use futures contracts for any lawful purpose consistent with its investment objective such as hedging and managing risk, but not for speculation. The Fund may enter into interest rate and index futures. The Fund may also purchase put and call options, and write covered put and call options, on futures in which it is allowed to invest. The purchase of futures or call options thereon can serve as a long hedge, and the sale of futures or the purchase of put options thereon can serve as a short hedge. Writing covered call options on futures contracts can serve as a limited short hedge, and writing covered put options on futures contracts can serve as a limited long hedge, using a strategy similar to that used for writing covered options in securities. The Fund's hedging may include purchases of futures as an offset against the effect of expected increases in securities prices and sales of futures as an offset against the effect of expected declines in securities prices. To the extent required by regulatory authorities, the Fund may enter into futures contracts that are traded on national futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading are regulated under the CEA by the CFTC. Although techniques other than sales and purchases of futures contracts could be used to reduce a Fund's exposure to market or interest rate fluctuations, the Fund may be able to hedge its exposure more effectively and perhaps at a lower cost through using futures contracts. An interest rate futures contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial instrument (e.g., debt security) for a specified price at a designated date, time and place. An index futures contract is an agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index futures contract was originally written. Transaction costs are incurred when a futures contract is bought or sold and margin deposits must be maintained. A futures contract may be satisfied by delivery or purchase, as the case may be, of the instrument or by payment of the change in the cash value of the index. More commonly, futures contracts are closed out prior to delivery by entering into an offsetting transaction in a matching futures contract. Although the value of an index might be a function of the value of certain specified securities, no physical delivery of those securities is made. If the offsetting purchase price is less than the original sale price, the Fund realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the offsetting sale price is more than the original purchase price, the Fund realizes a gain; if it is less, the Fund realizes a loss. The transaction costs must also be included in these calculations. There can be no assurance, however, that the Fund will be able to enter into an offsetting transaction with respect to a particular futures contract at a particular time. If the Fund is not able to enter into an offsetting transaction, the Fund will continue to be required to maintain the margin deposits on the futures contract. No price is paid by the Fund upon entering into a futures contract. Instead, at the inception of a futures contract, the Fund is required to deposit in a segregated account with its custodian, in the name of the futures broker through whom the transaction was effected, "initial margin," consisting of cash or other liquid assets, in an amount generally equal to 10% or less of the contract value. Margin must also be deposited when writing a call or put option on a futures contract, in accordance with applicable exchange rules. Unlike margin in securities transactions, initial margin on futures contracts does not represent a borrowing, but rather is in the nature of a performance bond or good-faith deposit that is returned to the Fund at the termination of the transaction if all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, the Fund may be required by an exchange to increase the level of its initial margin payment, and initial margin requirements might be increased generally in the future by regulatory action. Subsequent "variation margin" payments are made to and from the futures broker daily as the value of the futures position varies, a process known as "marking to market." Variation margin does not involve borrowing, but rather represents a daily settlement of the Fund's obligations to or from a futures broker. When the Fund purchases an option on a future, the premium paid plus transaction costs is all that is at risk. In contrast, when the Fund purchases or sells a futures contract or writes a call or put option thereon, it is subject to daily variation margin calls that could be substantial in the event of adverse price movements. If the Fund has insufficient cash to meet daily variation margin requirements, it might need to sell securities at a time when such sales are disadvantageous. Purchasers and sellers of futures positions and options on futures can enter into offsetting closing transactions by selling or purchasing, respectively, an instrument identical to the instrument held or written. Positions in futures and options on futures may be closed only on an exchange or board of trade that provides a secondary market. The Fund intends to enter into futures transactions only on exchanges or boards of trade where there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist for a particular contract at a particular time. Under certain circumstances, futures exchanges may establish daily limits on the amount that the price of a future or option on a futures contract can vary from the previous day's settlement price; once that limit is reached, no trades may be made that day at a price beyond the limit. Daily price limits do not limit potential losses because prices could move to the daily limit for several consecutive days with little or no trading, thereby preventing liquidation of unfavorable positions. If the Fund were unable to liquidate a futures or option on a futures contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the future or option or to maintain certain liquid securities in a segregated account. Certain characteristics of the futures market might increase the risk that movements in the prices of futures contracts or options on futures contracts might not correlate perfectly with movements in the prices of the investments being hedged. For example, all participants in the futures and options on futures contracts markets are subject to daily variation margin calls and might be compelled to liquidate futures or options on futures contracts positions whose prices are moving unfavorably to avoid being subject to further calls. These liquidations could increase the price volatility of the instruments and distort the normal price relationship between the futures or options and the investments being hedged. Also, because initial margin deposit requirements in the futures markets are less onerous than margin requirements in the securities markets, there might be increased participation by speculators in the future markets. This participation also might cause temporary price distortions. In addition, activities of large traders in both the futures and securities markets involving arbitrage, "program trading," and other investment strategies might result in temporary price distortions. The Fund will limit its futures transactions to those permitted under Rule 4.5 of the CEA. f) Foreign Securities The Fund may invest up to 5% of its net assets directly in foreign securities. Investments in securities of foreign issuers involve risks which are in addition to the usual risks inherent in domestic investments. In many countries, there is less publicly available information about issuers than is available in the reports and ratings published about companies in the U.S. Additionally, foreign companies are not subject to uniform accounting, auditing and financial reporting standards. Other risks inherent in foreign investment include expropriation; confiscatory taxation; withholding taxes on dividends and interest; less extensive regulation of foreign brokers, securities markets and issuers; costs incurred in conversions between currencies; the illiquidity and volatility of foreign securities markets; the possibility of delays in settlement in foreign securities markets; limitations on the use or transfer of assets (including suspension of the ability to transfer currency from a given country); the difficulty of enforcing obligations in other countries; diplomatic developments; and political or social instability. Foreign economies may differ favorably or unfavorably from the U.S. economy in various respects, and many foreign securities are less liquid and their prices are more volatile than comparable U.S. securities. From time to time, foreign securities may be difficult to liquidate rapidly without adverse price effects. Certain costs attributable to foreign investing, such as custody charges and brokerage costs, are higher than those attributable to domestic investing. MANAGEMENT The directors and officers of the Fund, together with information as to their principal business occupations during the last five years, and other information, are shown below. Each director who is deemed an "interested person" of the Fund, as defined in the 1940 Act, is indicated by an asterisk. The directors and officers listed below have served as such since inception of the Fund in August 1998, except as otherwise noted. *Michael R. Grady, Jr., President, Treasurer and Director of the Fund (DOB 8/19/62; Age 36). Mr. Grady co-founded the Fund's investment adviser, LCMCM, with Mr. Barry Glasgow in June 1998 and has served as its President and a Director since then. Since January 1997, Mr. Grady has also served as President of LaSalle St. Capital Markets, Inc., an investment banking, research and consulting firm which is an affiliate of LCMCM, and since December 1996, Mr. Grady has served as a registered representative of LaSalle St. Securities, Inc., a registered broker- dealer, an affiliate of LCMCM and the Fund's principal underwriter (the "Underwriter"). Prior to joining the LaSalle group of companies, both of which are located in Chicago, Illinois, Mr. Grady spent 18 months with Madison Securities, Inc., a registered broker-dealer in Chicago, Illinois (from June 1995 until December 1996), and 14 months with Lexington Securities, Inc., a registered broker-dealer in Chicago, Illinois (from April 1994 until June 1995). At both companies, Mr. Grady served as a registered representative and an Executive Vice President. From August 1990 until April 1994, Mr. Grady served as a registered representative of A.G. Edwards & Sons, Inc., a registered broker- dealer in Bartlett, Illinois. Since October 1994, Mr. Grady has served as the President of Madison Investment Partners L.P., a private investment partnership that Mr. Grady helped to form. Mr. Grady received his B.S. in Finance from Northern Illinois University in 1985. *Barry J. Glasgow, Vice President, Secretary and Director of the Fund (DOB 4/14/43; Age 56). Mr. Glasgow co-founded the Fund's investment adviser, LCMCM, with Mr. Grady in June 1998 and has served as its Chief Investment Officer, Secretary, Portfolio Manager and a Director since then. From May 1991 until June 1998, Mr. Glasgow served as the Managing Partner and Portfolio Manager of Gonski & Glasgow Investments, a registered investment adviser in Elgin, Illinois. From January 1991 until May 1996, Mr. Glasgow served as a registered representative of Rocky Mountain Securities, Inc., a registered broker-dealer, in its Elgin, Illinois branch office. From May 1996 until May 1998, Mr. Glasgow served as a registered representative of Berry-Shino Securities, Inc., a registered broker- dealer, in its Elgin, Illinois branch office. From May 1998 until the date hereof, Mr. Glasgow has served as a registered representative of the Underwriter, and from November 1998 until the date hereof, Mr. Glasgow has served as a Research Analyst of LaSalle St. Capital Markets, Inc. David A. Schwering, Ph.D., Director of the Fund (DOB 1/8/50; Age 49). Dr. Schwering has served as the President and a Director of American Communication & Computation, Inc., a corporation engaged in the communications infrastructure business, since January 1980, and as a Director of International Digital Maintenance, Ltd., a digital equipment repair firm, since May 1972. Both companies are located in Silver Springs, Maryland. Dr. Schwering holds several patents in the fields of electronic and security devices. As a pioneer in modern computing, Dr. Schwering developed several early computer technologies. In the 1970s, he developed the downlink and computation algorithms for NASA's ABS satellites, the domestic money transfer system for Bankers Trust in New York, the off-track betting system for the State of New York and an encrypted telecommunications system for the U.S. government. Dr. Schwering received his B.S. in Physics from the Massachusetts Institute of Technology (M.I.T.), his M.S.C.S. from the University of Maryland and a Doctorate in Economics from Harvard University. Dr. Schwering is listed in "Who's Who" in the computer industry. Michael Radnor, Ph.D., Director of the Fund (DOB 2/1/33; Age 66). Dr. Radnor has served as a Professor at the J.L. Kellogg Graduate School of Management at Northwestern University in Evanston, Illinois since 1964. In 1983, Dr. Radnor launched the International Business Development program through which his staff at Northwestern assisted numerous U.S. and foreign companies to strengthen their international operations, technology and trade strategies and programs. Privatized as IBD, Inc. in late 1994, the program works with firms in several countries worldwide. Dr. Radnor is the President of IBD, Inc. In 1989, Dr. Radnor, with support from the State of Illinois, established the Small Business Development Center/Incubator ("SBDC"). SBDC provides counseling, training, referral services and direct assistance to small businesses in the Midwest. George D. Kraft, Ph.D., Director of the Fund (DOB 9/10/37; Age 61). Dr. Kraft has served as a Professor at the I.I.T. Stuart School of Business in Chicago, Illinois since 1994. Previously, he was an Associate Professor of Electrical and Computer Engineering in the Armour College of Engineering at I.I.T. In 1993, Dr. Kraft helped form the Telecommuting Advisory Council of Illinois, and in 1991, he was a member of a statewide telecommunications committee that developed a strategic plan for wiring Illinois with a broadband multimedia network. He has consulted extensively for the U.S. government through work for the Defense Information Systems Agency, the Department of Housing and Urban Development and the General Services Administration. Each of these agencies has used him as a national expert on telecommunication capabilities and products. Dr. Kraft has also been involved with the National Institute of Standards and Technology, as manager of the Integrated Services Digital Network ("ISDN") Standardization Effort and the Alternate Chairman of the Executive Steering Committee of the North American ISDN User's Forum. Dr. Kraft has served as a Director of the Fund since March 1999. Lawrence E. Harb, Director of the Fund (DOB 7/28/53; Age 45). Mr. Harb has served as the Managing Director of Sales and Marketing for J.S. Wurzler Underwriting Managers, LLC ("Wurzler"), an underwriter of internet and e- commerce insurance for certain syndicates of Lloyds of London which is located in Okemos, Michigan, since January 1999. Prior to joining Wurzler, he was affiliated with Aon Corp. for approximately three years. Aon Corp., which is located in Chicago, Illinois, is a holding company that owns mutual fund, investment advisory and brokerage businesses. While at Aon Corp., Mr. Harb served as Chairman of Financial Solutions Insurance Services, an insurance brokerage firm; President of Aon Securities Corp., a registered broker-dealer; and Senior Vice President/Director of Marketing of Aon Advisors, a registered investment adviser. Before his involvement with Aon Corp., Mr. Harb was President and founder of LaSalle Consultants, Ltd., a financial consulting firm located in Melrose Park, Illinois, and President of LCL Investments, Inc., a registered broker-dealer located in Melrose Park, Illinois. Mr. Harb has over 23 years experience in the financial services industry, co-authored a book on banking and has taught at the I.I.T. Stuart School of Business in Chicago, Illinois. Mr. Harb received his B.S. in Management from Northern Illinois University in 1975 and his Masters of Management degree from Northwestern University's Kellogg School of Management in 1993. Mr. Harb has served as a Director of the Fund since March 1999. The address of Messrs. Grady and Glasgow is 810 West Washington Boulevard, Chicago, Illinois 60607; the address of Dr. Schwering is 223 University Boulevard East, Silver Spring, Maryland 20901; the address of Dr. Radnor is Northwestern University, 2001 Sheridan Road, Evanston, Illinois 60208; the address of Dr. Kraft is I.I.T. Stuart School of Business, Room 424, 565 West Adams Street, Chicago, Illinois 60631; and the address of Mr. Harb is 3520 Okemos Road, Suite 120, Okemos, Michigan 48864-5943. In exchange for an equity interest in the Fund, certain officers of LCMCM will provide the initial seed capital required to register the Fund with the SEC. Accordingly, before the public offering of Fund shares, these persons will own 100% of the Fund's outstanding shares of common stock. Directors and officers of the Fund who are also officers, directors or employees of LCMCM will not receive any remuneration from the Fund for serving as directors or officers. Accordingly, neither Mr. Grady nor Mr. Glasgow will receive any remuneration from the Fund for their services as directors and officers. However, the remaining directors will receive the following fees for their services as directors of the Fund:(1) Name Cash Other Total Compensation(2) Compensation David A. Schwering $8,000 $0 $8,000 Michael Radnor $8,000 $0 $8,000 George D. Kraft $8,000 $0 $8,000 Lawrence E. Harb $8,000 $0 $8,000 Total $32,000 $0 $32,000 __________ (1)The amounts indicated are estimates of amounts to be paid by the Fund during its first fiscal year. (2)Each director who is not deemed an "interested person" of the Fund, as defined in the 1940 Act, will receive $2,000 for each Board of Directors meeting attended by such person, plus reimbursement of reasonable expenses incurred in connection therewith. The Board anticipates holding four meetings during its first fiscal year. Thus, each disinterested director is entitled to up to $8,000 during such time period from the Fund, plus reasonable expenses. PRINCIPAL SHAREHOLDERS As of the date hereof, the following persons own of record or are known by the Fund to own beneficially 5% or more of the outstanding shares of common stock of the Fund: [insert data when available] Name and Address No. Shares Percentage [_________________] [________] [_____] __________ Based on the foregoing, as of the date hereof, _________________ owned a controlling interest in the Fund. Shareholders with a controlling interest could effect the outcome of proxy voting or the direction of management of the Fund. INVESTMENT ADVISORY AND OTHER SERVICES Investment Adviser LCM Capital Management, Inc. ("LCMCM") is the investment adviser to the Fund. Jack McDermott, the Chairman of the Board of LCMCM, owns a controlling interest in LCMCM. Messrs. Grady and Glasgow serve as officers and directors of LCMCM and the Fund. See "Management" for more information. The investment advisory agreement between the Fund and LCMCM dated as of ___________________ ____, 1999 (the "Advisory Agreement") has an initial term of two years and thereafter is required to be approved annually by the Board of Directors of the Fund or by vote of a majority of the Fund's outstanding voting securities (as defined in the 1940 Act). Each annual renewal must also be approved by the vote of a majority of the Fund's directors who are not parties to the Advisory Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. The Advisory Agreement was approved by the full Board of Directors of the Fund on __________________ ____, 1999 and by the initial shareholder of the Fund on ________________ ____, 1999. The Advisory Agreement is terminable without penalty on 60 days' written notice by the Board of Directors, by vote of a majority of the Fund's outstanding voting securities or by LCMCM, and will terminate automatically in the event of its assignment. Under the terms of the Advisory Agreement, LCMCM will manage the Fund's investments and business affairs, subject to the supervision of the Board of Directors. At its expense, LCMCM will provide office space and all necessary office facilities, equipment and personnel for managing the investments of the Fund. As compensation for its services, the Fund will pay LCMCM a fee, computed daily and payable monthly, equal to, on an annual basis, 1.0% of the Fund's average daily net assets. The organizational and offering expenses of the Fund will be paid by LCMCM from its own assets. Custodian, Transfer Agent, Dividend Paying Agent, Registrar, Fund Accountant and Administrator As custodian of the Fund's assets, Firstar Bank Milwaukee, N.A. ("Firstar Bank"), 615 East Michigan Street, Milwaukee, Wisconsin 53202, has custody of all securities and cash of the Fund, delivers and receives payment for portfolio securities sold, receives and pays for portfolio securities purchased, collects income from investments, if any, and performs other duties, all as directed by the officers of the Fund. Firstar Bank also acts as transfer agent, dividend paying agent and registrar for the Fund, and Firstar Mutual Fund Services, L.L.C., which is an affiliate of Firstar Bank and which is located at the same address, acts as fund accountant and administrator for the Fund. Independent Accountants PricewaterhouseCoopers, ________________, Milwaukee, Wisconsin, independent accountants for the Fund, audit and report on the Fund's financial statements. PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION Under the Advisory Agreement, LCMCM is responsible for decisions to buy and sell securities for the Fund and for the placement of the Fund's securities business, the negotiation of the commissions to be paid on such transactions and the allocation of portfolio brokerage and principal business. Purchases may be made from brokers, dealers and, on occasion, issuers. The purchase price of securities purchased from a broker or dealer may include commissions and dealer spreads. The Fund may also pay mark-ups on principal transactions. In executing transactions on behalf of the Fund, LCMCM has no obligation to deal with any particular broker or dealer. Rather, LCMCM seeks to obtain the best execution at the best security price available with respect to each transaction. The best price to the Fund means the best net price without regard to the mix between purchase or sale price and commission, if any. While LCMCM seeks reasonably competitive commission rates, the Fund does not necessarily pay the lowest available commission. As noted in the Prospectus under the captions "Management of the Fund - Investment Advisory Agreement" and "Underwriting," pursuant to guidelines adopted by the Fund's Board of Directors and in accordance with the rules of the SEC, the Underwriter, which is an affiliate of LCMCM, as well as certain broker-dealers involved in the Fund's initial public offering, may serve as brokers to the Fund; however, in order for the Underwriter or such broker- dealers to effect portfolio transactions for the Fund on an exchange, the commissions, fees or other remuneration received by such persons must be reasonable and fair compared to the commissions, fees or other remuneration paid to other brokers in connection with comparable transactions involving similar securities being purchased or sold on any exchange during a comparable period of time. This standard allows the Underwriter and such broker-dealers to receive no more than the remuneration which would be expected to be received by an unaffiliated broker in a commensurate arm's-length transaction. Section 28(e) of the Securities Exchange Act of 1934, as amended ("Section 28(e)"), permits an investment adviser, under certain circumstances, to cause an account to pay a broker or dealer who supplies brokerage and research services a commission for effecting a transaction in excess of the amount of commission another broker or dealer would have charged for effecting the transaction. Brokerage and research services include (i) furnishing advice as to the value of securities, the advisability of investing, purchasing or selling securities and the availability of securities or purchasers or sellers of securities; (ii) furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts; and (iii) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement and custody). In selecting brokers or dealers, LCMCM considers investment and market information and other research, such as economic, securities and performance measurement research provided by such brokers or dealers and the quality and reliability of brokerage services, including execution capability, performance and financial responsibility. Accordingly, the commissions charged by any such broker or dealer may be greater than the amount another firm might charge if LCMCM determines in good faith that the amount of such commissions is reasonable in relation to the value of the research information and brokerage services provided by such broker or dealer to the Fund. LCMCM believes that the research information received in this manner provides the Fund with benefits by supplementing the research otherwise available to the Fund. Such higher commissions will not, however, be paid by the Fund unless (i) LCMCM determines in good faith that the amount is reasonable in relation to the services in terms of the particular transaction or in terms of LCMCM's overall responsibilities with respect to the accounts, including the Fund, as to which it exercises investment discretion; (ii) such payment is made in compliance with the provisions of Section 28(e) and other applicable state and federal laws; and (iii) in the opinion of LCMCM, the total commissions paid by the Fund will be reasonable in relation to the benefits to the Fund over the long term. In addition, such higher commissions will not be paid by the Fund with respect to portfolio transactions in which the Underwriter is serving as broker to the Fund. The investment advisory fees paid by the Fund under the Advisory Agreement are not reduced as a result of LCMCM's receipt of research services. Although LCMCM is a newly organized investment adviser and does not currently have any advisory accounts in addition to the Fund, LCMCM may take on other advisory accounts in the future. In the event that LCMCM serves as investment adviser to clients, in addition to the Fund, in the future, LCMCM would also place portfolio transactions for such other advisory accounts. Under these circumstances, research services furnished by firms through which the Fund effects its securities transactions could be used by LCMCM in servicing all of its accounts; that is, not all of such services may be used by LCMCM in connection with the Fund. LCMCM believes it would not be possible to measure separately the benefits from research services to each of the accounts (including the Fund) managed by it. Because the volume and nature of the trading activities of the accounts would not likely be uniform, the amount of commissions in excess of those charged by another broker or dealer paid by each account for brokerage and research services would vary. However, LCMCM believes such costs to the Fund would not be disproportionate to the benefits received by the Fund on a continuing basis. LCMCM would seek to allocate portfolio transactions equitably whenever concurrent decisions were made to purchase or sell securities by the Fund and another advisory account. In some cases, this procedure could have an adverse effect on the price or the amount of securities available to the Fund. There can be no assurance that a particular purchase or sale opportunity would be allocated to the Fund. In making such allocations between the Fund and other advisory accounts, certain factors considered by LCMCM would be the respective investment objectives, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment and the size of investment commitments generally held. A change in the investments held by the Fund is known as "portfolio turnover." For instance, a portfolio turnover rate of 100% would result if all the securities in a portfolio (excluding securities whose maturities at acquisition were one year or less) at the beginning of an annual period had been replaced by the end of the period. Portfolio turnover generally involves some expense to the Fund, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestment in other securities. Such sales may result in realization of taxable capital gains. The portfolio turnover rate may vary from year to year, as well as within a year. Under normal market conditions, the portfolio turnover rate for the Fund is expected to be approximately 80% to 130% and generally will not exceed 175%. TAXATION OF THE FUND AND ITS DISTRIBUTIONS As indicated under "Federal Taxation of the Fund and its Distributions" in the Prospectus, the Fund intends to qualify annually and be treated as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and, if so qualified, will not be liable for federal income taxes to the extent earnings are distributed on a timely basis. This qualification does not require government supervision of the Fund's management practices or policies. However, in order to so qualify, the Fund must, among other things: (i) derive at least 90% of its gross income in each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock or other income derived with respect to its business of investing in such stock (including, but not limited to, gains from options, futures or forward contracts), and (ii) diversify its holdings such that, at the end of each quarter of each taxable year, (a) at least 50% of the market value of the Fund's assets is represented by cash, cash items, U.S. government securities, securities of other regulated investment companies and other securities which, with respect to any one issuer, do not represent more than 5% of the value of the Fund's assets nor more than 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the market value of the Fund's assets is invested in the securities of any one issuer (other than U.S. government securities or the securities of other regulated investment companies). If the Fund qualifies as a regulated investment company, the Fund will not be subject to federal income tax on the portion of its investment company taxable income (i.e., its investment company taxable income as defined in the Code without regard to the deduction for dividends paid) and its net capital gain (i.e., the excess of its net realized long-term capital gain over its net realized short-term capital loss) which it distributes to the Fund's shareholders in each taxable year, provided that it distributes to its shareholders at least 90% of its net investment income for such taxable year. If the Fund should fail to qualify as a regulated investment company in any year, the Fund would be subject to tax in such year on all of its taxable income, whether or not the Fund made any distributions. In addition, amounts not distributed by a regulated investment company on a timely basis in accordance with a calendar year distribution requirement are subject to a 4% excise tax. To avoid this tax, the Fund must distribute during each calendar year an amount equal to, at a minimum, the sum of (i) 98% of its net investment income for the calendar year, (ii) 98% of its capital gain income for the one year period ending on October 31 of such year (unless, as in the case of the Fund, an election is made by a fund with a November or December year-end to use the fund's fiscal year) and (iii) all ordinary income and capital gain net income for previous years that were not previously distributed. Dividends paid by the Fund from its net investment income are taxable as ordinary income to shareholders of the Fund who are subject to tax. Distributions made from net capital gains and properly designated by the Fund as such are taxable to shareholders as long-term capital gains, regardless of the length of time the shareholder has owned Fund shares. Any loss upon the sale or exchange of Fund shares held for six months or less, however, is treated as long-term capital loss to the extent of any capital gain dividends received by the shareholder. Distributions in excess of the Fund's earnings and profits are treated first as a non-taxable reduction in the adjusted tax basis of a shareholder's Fund shares (up to the amount of the shareholder's tax basis in his or her shares) and, thereafter, constitute capital gain to such shareholder (provided that Fund shares are held as a capital asset). Capital gain dividends may be taxed at a lower rate than dividends from ordinary income for certain non- corporate taxpayers. For securities held longer than one year, the maximum long-term capital gains rate is 20%. Dividends and distributions by the Fund are generally taxable to shareholders at the time the dividend or distribution is made (even if paid or reinvested in additional Fund shares). However, any dividend declared by the Fund in October, November or December of any calendar year, which is payable to Fund shareholders of record on a specified date in such a month and which is not paid on or before December 31 of such year will be treated as being paid by the Fund and received by Fund shareholders as of December 31 of such year, provided that the dividend is paid during January of the following year. After the end of each taxable year, the Fund will notify shareholders of the federal income tax status of any dividends and distributions, or deemed distributions, made by the Fund during such year. Gain or loss, if any, recognized on the sale or other disposition of Fund shares, including repurchases by the Fund, will be taxed as a capital gain or loss if the shares are capital assets in the shareholder's hands and will be taxed as long-term or short-term gain or loss, as the case may be. A loss realized on a sale or exchange of Fund shares will be disallowed if other Fund shares are acquired within a 61-day period beginning 30 days before and ending 30 days after the date that the shares are disposed of. The basis of the shares acquired will be adjusted to reflect the disallowed loss. This section is not intended to be a full discussion of federal income tax laws and the effect of such laws on Fund shareholders. There may be other federal, state or local tax considerations applicable to a particular shareholder. Shareholders are urged to consult their own tax advisers. FINANCIAL STATEMENTS The following audited financial statements of the Fund are contained herein: (a) Report of Independent Accountants.* (b) Statement of Assets and Liabilities.* (c) Notes to Statement of Assets and Liabilities.* *To be filed by amendment. PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (1) Financial Statements Included in Parts A and B. (2) Exhibits See "Exhibit Index." ITEM 25. MARKETING ARRANGEMENTS See Exhibits h.1 and h.2 to this Registration Statement. ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated expenses expected to be incurred in connection with the offering described in this Registration Statement, assuming the underwriters' over-allotment option is not exercised (all of which expenses, except the expense allowance of LaSalle St. Securities, Inc. (the "Representative"), will be paid by LCMCM): SEC registration fees $ 12,788.00 American Stock Exchange listing fee 25,000.00 Printing and engraving expenses; postage * Audit fees and expenses 1,000.00 Legal fees and expenses * NASD fees 5,250.00 Representative's expense allowance 400,000.00 Miscellaneous * Total $660,000.00 ____________________ * To be completed by amendment. ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT Prior to the initial public offering of the Registrant's Common Stock, certain officers of LCMCM will control the Registrant. ITEM 28. NUMBER OF HOLDERS OF SECURITIES Title of Class Number of Record Holders as of________, 1999 Common Stock $0.01 par value [ ] ITEM 29. INDEMNIFICATION Under the Registrant's Articles of Incorporation and By- Laws, the directors and officers of the Registrant will be indemnified to the fullest extent permitted by the Maryland General Corporate Law, subject to the applicable provisions of the Investment Company Act of 1940, as amended, including advancing of expenses incurred in connection therewith. In addition, the Registrant is required to indemnify other employees and agents of the Registrant to such extent as shall be authorized by the Board of Directors and permitted by law. Such indemnification shall be in addition to any other right or claim to which any director, officer, employee or agent may otherwise be entitled. The Registrant may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Registrant against any liability asserted against and incurred by such person in any such capacity or arising out of such person's position, whether or not the Registrant would have the power to indemnify against such liability. The Registrant and LCMCM, its investment adviser, have also agreed to indemnify the Representative and other underwriters involved with the Registrant's initial public offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). Insofar as indemnification for liabilities under the Securities Act may be permitted to the directors, officers, employees and agents of the Registrant, and the Representative and other underwriters, pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities under the Securities Act (other than the payment by the Registrant of expenses incurred by a director, officer, employee or agent of the Registrant, or by the Representative or any other underwriter, in connection with the successful defense of any action, suit or proceeding) is asserted by such directors, officers, employees, agents or Representative or any other underwriter in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER Besides serving as investment adviser to the Registrant, LCMCM is not currently and has not during the past two fiscal years engaged in any other business, profession, vocation or employment of a substantial nature. Set forth below is a list of each executive officer and director of LCMCM indicating each business, profession, vocation or employment of a substantial nature in which each such person has been engaged during the past two fiscal years for his or her own account or in the capacity of director, officer, employee, partner or trustee: Position with Other Substantial Business, Name LCMCM Profession, Vocation or Employment Michael R. Grady, Jr. President, Treasurer President, LaSalle St. Capital and Director Markets, Inc.; Registered Representative, LaSalle St. Securities, Inc. Barry J. Glasgow Chief Investment Research Analyst, LaSalle St. Officer, Secretary, Capital Markets, Inc.; Portfolio Manager Registered Representative, and Director LaSalle St. Securities, Inc.; From May 1991 until June 1998, Managing Partner and Portfolio Manager of Gonski & Glasgow Investments. Daniel Schlesser Director Senior Vice President and CFO, LaSalle St. Securities, Inc. Jack McDermott Chairman of the Board President, LaSalle St. Securities, Inc.; President, McDermott- LaSalle, Inc. Byron Crowe Director Executive Vice President, LaSalle St. Capital Markets, Inc.; Registered Representative, LaSalle St. Securities, Inc. ITEM 31. LOCATION OF ACCOUNTS AND RECORDS All accounts, books or other documents of the Registrant required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules promulgated thereunder, are in the possession of LCMCM, the Registrant's investment adviser, at the Registrant's corporate offices, except records held and maintained by (i) Firstar Bank Milwaukee, N.A., 615 East Michigan Street, Milwaukee, Wisconsin 53202, relating to its function as custodian and as transfer agent and (ii) Firstar Mutual Fund Services, L.L.C., 615 East Michigan Street, Milwaukee, Wisconsin 53202, relating to its function as administrator and fund accountant. ITEM 32. MANAGEMENT SERVICES Not applicable. ITEM 33. UNDERTAKINGS (1) Registrant undertakes to suspend the offering of shares of Common Stock covered hereby until the Prospectus contained herein is amended, if (i) subsequent to the effective date of this Registration Statement, its net asset value per share of Common Stock declines more than 10% from its net asset value per share of Common Stock as of the effective date of the Registration Statement or (ii) its net asset value per share of Common Stock increases to an amount greater than its net proceeds as stated in the Prospectus contained herein. (2) Not applicable. (3) Not applicable. (4) Not applicable. (5)(a) For the purpose of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance on Rule 430A and contained in a form of prospectus filed under Rule 497(h) under the Securities Act shall be deemed to be a part of this Registration Statement as of the time it was declared effective; and (b) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof. (6) Registrant undertakes to send by first class mail, within two business days of receipt of a written or oral request, a copy of the Statement of Additional Information. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant has duly caused this Pre-Effective Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, hereunto duly authorized, in the City of Chicago, State of Illinois on the 23rd day of July, 1999. LCM INTERNET GROWTH FUND, INC. (Registrant) By: /s/ Michael R. Grady, Jr. ----------------------------- Michael R. Grady, Jr. President and Treasurer Pursuant to the requirements of the Securities Act of 1933, as amended, this Pre-Effective Amendment No. 2 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Name Title Date /s/ Michael R. Grady, Jr. President, Treasurer and Director July 23, 1999 - ------------------------- Michael R. Grady, Jr. * Vice President, Secretary and Director July 23, 1999 - ------------------------ Barry J. Glasgow * Director July 23, 1999 - ------------------------ Michael Radnor * Director July 23, 1999 - ------------------------ David A. Schwering * Director July 23, 1999 - ----------------------- George D. Kraft * Director July 23, 1999 - ---------------------- Lawrence E. Harb *By: /s/ Michael R. Grady, Jr. ------------------------------- Michael R. Grady, Jr. (as attorney-in-fact pursuant to authority granted by power of attorney included on this signature page in initial filing of this Registration Statement) EXHIBIT INDEX Exhibit No. Exhibit (a) Articles of Incorporation(1) (b) By-Laws(1) (c) Not Applicable (d) Form of Specimen Stock Certificate* (e) Form of Distribution Reinvestment Plan (f) Not Applicable (g) Form of Investment Advisory Contract (h.1) Form of Underwriting Agreement (h.2) Form of Master Selected Dealer Agreement (i) Not Applicable (j) Form of Custodian Servicing Agreement (k.1) Form of Stock Transfer Agency Agreement (k.2) Form of Fund Administration Servicing Agreement (k.3) Form of Fund Accounting Servicing Agreement (k.4) Form of Fulfillment Servicing Agreement (l) Form of Opinion and Consent of Godfrey & Kahn, S.C. (m) Not Applicable (n) Consent of PricewaterhouseCoopers* (o) Not Applicable (p) Form of Subscription Agreement for Initial Capital (q) Not Applicable (r) Financial Data Schedule* _______________ * To be filed by amendment. (1) Incorporated by reference to Registrant's initial filing of the Registration Statement on Form N-2 filed with the SEC on March 15, 1999 (Registration Nos. 333-74407; 811-9261). EX-99.E 2 FORM OF TERMS AND CONDITIONS Exhibit (e) FORM OF TERMS AND CONDITIONS OF LCM INTERNET GROWTH FUND, INC. DISTRIBUTION REINVESTMENT PLAN Holders of shares of common stock of LCM Internet Growth Fund, Inc. (the "Fund) are advised as follows with respect to the Fund's Distribution Reinvestment Plan (the "Plan"): 1. Participation. Each holder of shares of common stock of the Fund will automatically be deemed to have elected to be a participant in the Plan, unless Firstar Bank Milwaukee, N.A. (the "Plan Agent") is otherwise instructed by such shareholder, in writing, to have all distributions, net of any applicable withholding tax, paid in cash. A shareholder who does not wish to participate in the Plan will receive all distributions, the record date for which follows the receipt by the Plan Agent of such shareholder's instructions, in cash and will be paid by check mailed directly to such shareholder by the Plan Agent, as dividend-disbursing agent. The Plan Agent will act as agent for participants in administering the Plan and will open an account for each participant under the Plan in the same name as his or her outstanding shares of common stock are registered. 2. Distributions. (a) General. Whenever the directors of the Fund declare an income dividend or capital gains distribution payable, at the option of the shareholder, in shares of common stock or cash, non-participants in the Plan will receive such distribution in cash and participants in the Plan will receive such distribution in shares of common stock to be issued by the Fund or purchased on the open market by the Plan Agent. Any such shares so distributed will be held by the Plan Agent for each participant's account. (b) Market Premium Issuances. If, on the distribution payment date or, if that date is not an American Stock Exchange trading day, the next preceding trading day (the "Valuation Date"), the market price per share of common stock equals or exceeds the net asset value per share on that date, the Fund will issue shares of common stock to participants valued at net asset value; provided, however, if the net asset value is less than 95% of the market price on the Valuation Date, then participants will be issued shares valued at 95% of the market price. (c) Market Discount Purchases. If, on the Valuation Date, the net asset value per share of common stock exceeds the market price per share on that date, the Plan Agent, as agent for the participants, will, for a period of 30 days, buy shares of the Fund's common stock in the open market, on the American Stock Exchange or elsewhere, for each participant's account. If, at the close of business on any day during the purchase period, the market price exceeds the net asset value per share, the Plan Agent will cease open market purchases and the Fund will issue the remaining shares at a price equal to the greater of net asset value or 95% of the then current market price. In a case where the Plan Agent has terminated open market purchases and the Fund has issued the remaining shares, the number of shares received by each participant in respect of the distribution will be based on the weighted average of prices paid for shares purchased in the open market and the price at which the Fund issues the remaining shares. 3. Valuation. For purposes of the Plan, the market price of shares of common stock of the Fund on a particular date shall be the last sales price on the American Stock Exchange at the close of the previous trading day or, if there is no sale on the American Stock Exchange on that date, then the mean between the closing bid and asked quotations for such stock on the American Stock Exchange on such date. The net asset value per share of common stock on a particular date shall be as determined by or on behalf of the Fund. 4. Liability of Plan Agent. The Plan Agent shall at all times act in good faith and agree to use its best efforts within reasonable limits to ensure the accuracy of all services performed under this Plan and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Agent's negligence, bad faith or willful misconduct or that of its employees. Each participant's uninvested funds held by the Plan Agent will not bear interest. The Plan Agent shall have no liability in connection with any inability to purchase Fund shares, within the time provided, or with the timing of any purchases effected. The Plan Agent shall have no responsibility as to the value of the shares of common stock acquired for any participant's account. For the purpose of cash investments, the Plan Agent may commingle participants' funds. 5. Recordkeeping. (a) Stock Certificates. The Plan Agent will hold shares of common stock acquired pursuant to the Plan in non-certificated form in the name of each participant for whom such shares are being held. Upon a participant's written request, the Plan Agent will deliver to the participant, without charge, a certificate or certificates representing all full shares of common stock held by the Plan Agent pursuant to the Plan for the benefit of such participant. Although a participant may from to time have an undivided fractional interest in a share of common stock of the Fund, no certificates for fractional shares will be issued. However, distributions on fractional shares will be credited to each participant's account. In the event of termination of a participant's account under the Plan, the Plan Agent will adjust for any such undivided fractional interest in cash at the market value of the shares of common stock at the time of termination. (b) Confirmations. The Plan Agent will confirm, in writing, each acquisition made for the account of a participant as soon as practicable, but in any event not later than 60 days after the date thereof. (c) Stock Dividends or Splits. Any stock dividends or split shares distributed by the Fund on shares of common stock held by the Plan Agent for a participant will be credited to the participant's account. 6. Proxy Materials. The Plan Agent will forward to each participant any proxy solicitation material received by it and will vote any shares so held for each participant first in accordance with the instructions set forth on the proxies returned by the participant to the Fund and then with respect to any proxies not returned by the participant to the Fund in the same proportion as the Plan Agent votes proxies returned by participants to the Fund. 7. Fees. The Plan Agent's service fee for handling the reinvestment of distributions will be paid by the Fund. Each participant, however, will be charged a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of distributions. Brokerage charges for purchasing small amounts of stock for individual accounts through the Plan are expected to be less than the usual brokerage charges for such transactions because the Plan Agent will be purchasing shares for all participants in blocks and prorating the lower commission thus attainable. The Plan Agent may use its affiliates and/or affiliates of the Fund's investment adviser for all trading activity relative to the Plan. 8. Termination. (a) By Participant. A participant may terminate his or her account under the Plan by notifying the Plan Agent, in writing, at Firstar Bank Milwaukee, N.A., c/o LCM Internet Growth Fund, Inc., P. O. Box 2077, Milwaukee, Wisconsin 53201-2077. Such termination will be effective immediately if notice is received by the Plan Agent prior to the distribution record date; otherwise, such termination will be effective, with respect to any subsequent distribution, on the first trading day after the distribution paid for such record date shall have been credited to such participant's account. (b) By Plan Agent or Fund. The Plan may be terminated by the Plan Agent or the Fund with respect to any distributions paid subsequent to written notice of the termination mailed to participants at least 30 days before the record date for the payment of any distribution. (c) Effect of Termination. Upon any termination, the Plan Agent will cause a certificate or certificates to be issued for the full shares held for each participant under the Plan and cash adjustment for any fractional shares to be delivered to him or her without charge. 9. Amendment. The terms and conditions of the Plan may be amended by the Plan Agent or the Fund at any time or times but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to each participant appropriate written notice at least 30 days prior to the effective date thereof. The amendment shall be deemed to be accepted by each participant unless, prior to the effective date thereof, the Plan Agent receives written notice of the termination of the participant's account under the Plan. Any such amendment may include an appointment by the Plan Agent, in its place and stead, of a successor Plan Agent under these terms and conditions, with full power and authority to perform all or any acts to be performed by the Plan Agent under these terms and conditions. 10. Applicable Law. These terms and conditions shall be governed by the laws of the State of Maryland. EX-99.G 3 FORM OF INVESTMENT ADVISORY AGREEMENT Exhibit (g) FORM OF LCM INTERNET GROWTH FUND, INC. INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT is entered into as of the _____ day of _________, 1999, between LCM Internet Growth Fund, Inc., a Maryland corporation (the "Corporation") and LCM Capital Management, Inc., an Illinois corporation (the "Adviser"). W I T N E S S E T H WHEREAS, the Corporation is a closed-end investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"). WHEREAS, the Adviser is a registered investment adviser, formed to render investment advisory services. WHEREAS, in managing the Corporation's assets, as well as in the conduct of certain of its affairs, the Corporation seeks the benefit of the Adviser's services and its assistance in performing certain managerial functions. The Adviser desires to furnish such services and to perform the functions assigned to it under this Agreement for the consideration provided for herein. NOW THEREFORE, the parties mutually agree as follows: 1. Appointment of the Adviser. The Corporation hereby appoints the Adviser as its investment adviser, and the Adviser accepts the appointment. Subject to the direction of the Board of Directors (the "Directors") of the Corporation, the Adviser shall manage the investment and reinvestment of the Corporation's assets in accordance with the Corporation's investment objective and policies and limitations, for the period and upon the terms herein set forth. The investment of funds shall also be subject to all applicable restrictions of the Articles of Incorporation and By-Laws of the Corporation as may from time to time be in force. 2. Expenses Paid by the Adviser. In addition to the expenses which the Adviser may incur in the performance of its responsibilities under this Agreement, and the expenses which it may expressly undertake to incur and pay, the Adviser shall incur and pay the following expenses: (a) All reasonable compensation, fees and related expenses of the Corporation's officers and its Directors, except for such Directors who are not interested persons (as that term is defined in Section 2(a)(19) of the 1940 Act) of the Adviser (except as provided in subsection (c), below); (b) All expenses related to the rental and maintenance of the principal offices of the Corporation; and (c) All organizational expenses of the Corporation (including all reasonable compensation, fees and related expenses of the Corporation's interested and disinterested Directors incurred in connection with the Corporation's organizational meeting) and all expenses incurred in connection with the Corporation's initial public offering of common stock. 3. Investment Advisory Functions. In its capacity as investment adviser, the Adviser shall have the following responsibilities: (a) To furnish continuous advice and recommendations to the Corporation, as to the acquisition, holding or disposition of any or all of the securities or other assets which the Corporation may own or contemplate acquiring from time to time; (b) To cause its officers to attend meetings and furnish oral or written reports, as the Corporation may reasonably require, in order to keep the Directors and appropriate officers of the Corporation fully informed as to the condition of the investments of the Corporation, the investment recommendations of the Adviser and the investment considerations which have given rise to those recommendations; and (c) To supervise the purchase and sale of securities or other assets as directed by the appropriate officers of the Corporation. The services of the Adviser are not to be deemed exclusive and the Adviser shall be free to render similar services to others as long as its services for others does not in any way hinder, preclude or prevent the Adviser from performing its duties and obligations under this Agreement. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Adviser, the Adviser shall not be subject to liability to the Corporation or to any shareholder for any act or omission in the course of, or in connection with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. 4. Obligations of the Corporation. The Corporation shall have the following obligations under this Agreement: (a) To keep the Adviser continuously and fully informed as to the composition of the Corporation's investments and the nature of all of its assets and liabilities; (b) To furnish the Adviser with a copy of any financial statement or report prepared for it by certified or independent public accountants, and with copies of any financial statements or reports made to the Corporation's shareholders or to any governmental body or securities exchange; (c) To furnish the Adviser with any further materials or information which the Adviser may reasonably request to enable it to perform its functions under this Agreement; and (d) To compensate the Adviser for its services in accordance with the provisions of paragraph 5 hereof. 5. Compensation. The Corporation will pay the Adviser a fee for its services (the "Advisory Fee") at the annual rate of 1.00% of the Corporation's average daily net assets. The Advisory Fee shall be accrued each calendar day during the term of this Agreement and the sum of the daily fee accruals shall be paid monthly as soon as practicable following the last day of each month. The daily fee accruals will be computed by multiplying 1/365 by the annual rate and multiplying the product by the net asset value of the Corporation as determined in accordance with the Corporation's registration statement as of the close of business on the previous day on which the American Stock Exchange (or such other exchange on which the Corporation's shares are principally traded) was open for business, or in such other manner as the parties agree. The Adviser may from time to time and for such periods as it deems appropriate reduce its compensation and/or assume expenses of the Corporation. 6. Expenses Paid by Corporation. (a) Except as provided in this paragraph, nothing in this Agreement shall be construed to impose upon the Adviser the obligation to incur, pay or reimburse the Corporation for any expenses not specifically assumed by the Adviser under paragraph 2 above. Except as noted in paragraph 2 above, the Corporation shall pay or cause to be paid all of its expenses, including, but not limited to, investment adviser fees; direct charges relating to the purchase and sale of portfolio securities; interest charges; fees and expenses of attorneys and auditors; taxes and governmental fees; costs of stock certificates and any other expenses (including clerical expenses) of issuance, sale or repurchase of the Corporation's shares of common stock; expenses in connection with the Corporation's Distribution Reinvestment Plan; membership fees in trade associations; expenses of maintaining any stock exchange listings of the Corporation's shares of common stock; expenses of printing and distributing reports, prospectuses, notices and proxy materials; expenses of corporate data processing and related services; shareholder record keeping and shareholder account services (including salaries of shareholder relations personnel); expenses of printing and filing reports and other documents filed with governmental agencies; expenses of shareholders' meetings; fees and disbursements of the Corporation's administrator, fund accountant, transfer agent and custodian; expenses of disbursing dividends and distributions; fees, expenses and out-of-pocket costs of Directors who are not interested persons (as that phrase is defined in Section 2(a)(19) of the 1940 Act) of the Adviser; insurance premiums and litigation costs; and indemnification. (b) If expenses borne by the Corporation in any fiscal year (including the Adviser's fee, but excluding taxes, interest, brokerage commissions and similar fees) exceed those set forth in any statutory or regulatory formula applicable to the Corporation, the Adviser will reimburse the Corporation for any excess. 7. Brokerage Commissions. For purposes of this Agreement, brokerage commissions paid by the Corporation upon the purchase or sale of securities shall be considered a cost of the securities of the Corporation and shall be paid by the Corporation. The Adviser is authorized and directed to place such transactions only with brokers and dealers who render satisfactory service in the execution of orders at the most favorable prices and at reasonable commission rates; provided, however, that the Adviser may pay a broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Adviser determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer viewed in terms of either that particular transaction or the overall responsibilities of the Adviser. In placing portfolio business with such broker or dealers, the Adviser shall seek the best execution of each transaction, and all such brokerage placement shall be made in compliance with Section 28(e) of the Securities Exchange Act of 1934, as amended, and other applicable state and federal laws. Notwithstanding the foregoing, the Corporation shall retain the right to direct the placement of all such transactions, and the Directors may establish policies or guidelines to be followed by the Adviser in placing such transactions pursuant to the foregoing provisions. 8. Proprietary Rights. The Adviser has proprietary rights in the Corporation's name. The Corporation acknowledges and agrees that the Adviser may withdraw the use of such name should it cease to act as the investment adviser to the Corporation. 9. Termination. This Agreement may be terminated at any time, without penalty, by the Directors or the shareholders of the Corporation acting by the vote of at least a majority of its outstanding voting securities (as that phrase is defined in Section 2(a)(42) of the 1940 Act), provided in either case that 60 days' written notice of termination be given to the Adviser at its principal place of business. This Agreement may also be terminated by the Adviser at any time by giving 60 days' written notice of termination to the Corporation, addressed to its principal place of business. 10. Assignment. This Agreement shall terminate automatically in the event of any assignment (within the meaning of Section 2(a)(4) of the 1940 Act) of this Agreement. 11. Term. This Agreement shall begin as of the date hereof and shall continue in effect for two years from the date hereof and thereafter for successive periods of one year, subject to the provisions for termination and all of the other terms and conditions hereof if such continuation shall be specifically approved at least annually (i) by the vote of a majority of the Directors of the Corporation, including a majority of the Directors who are not parties to this Agreement or "interested persons" of any such party (as defined in the 1940 Act), cast in person at a meeting called for that purpose or (ii) by the vote of a majority of the outstanding voting securities (as that phrase is defined in Section 2(a)(42) of the 1940 Act) of the Corporation. 12. Amendments. This Agreement may be amended by the mutual consent of the parties, provided that the terms of each such amendment shall be approved by the Directors or by the affirmative vote of a majority of the outstanding voting securities (as that phrase is defined in Section 2(a)(42) of the 1940 Act) of the Corporation. 13. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois, provided, however that nothing herein shall be construed in a manner that is inconsistent with the 1940 Act, the Investment Advisers Act of 1940, as amended, or the rules and regulations promulgated with respect to such respective Acts. The Adviser: LCM CAPITAL MANAGEMENT, INC. By: __________________________________________ Barry J. Glasgow, Chief Investment Officer The Corporation: LCM INTERNET GROWTH FUND, INC. By: __________________________________________ Michael R. Grady, Jr., President EX-99.H.1 4 UNDERWRITING AGREEMENT 1 Exhibit (h.1) LCM Internet Growth Fund, Inc. 4,000,000 Shares* of Common Stock UNDERWRITING AGREEMENT August __, 1999 LASALLE ST. SECURITIES, INC. As Representative of the several Underwriters 810 West Washington Boulevard Chicago, Illinois 60607 Dear Sirs: LCM Internet Growth Fund, Inc., a Maryland corporation (the "Company"), and LCM Capital Management, Inc., an Illinois corporation and the Company's investment manager (the "Manager"), hereby confirm their agreement with the several underwriters named in Schedule 1 hereto (the "Underwriters"), for whom you have been duly authorized to act as representative (in such capacity, the "Representative"), as set forth below. If you are the only Underwriter, all references herein to the Representative shall be deemed to be to the Underwriter. 1. Securities. Subject to the terms and conditions herein contained, the Company proposes to issue and sell to the several Underwriters an aggregate of 4,000,000 (the "Firm Securities") of shares of common stock in the Company, par value, $.01 per share (the "Shares"). The Company also proposes to issue and sell to the several Underwriters not more than 600,000 additional Shares if requested by the Representative as provided in Section 3 of this Agreement. Any and all Shares to be purchased by the Underwriters pursuant to such option are referred to herein as the "Option Securities", and the Firm Securities and any Option Securities are collectively referred to herein as the "Securities". 2. Representations and Warranties of the Company and the Manager. (a) The Company and the Manager jointly and severally represent and warrant to, and agree with, each of the several Underwriters that: (i) A registration statement on Form N-2 (File Nos. 333-74407 and 811-9261) with respect to the Securities, including a prospectus subject to completion, has been filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), and one or more amendments to such ________________________ * Plus an option to purchase from LCM Internet Growth Fund, Inc. up to 600,000 additional shares to cover over-allotments. registration statement may have been so filed. A notification of registration on Form N-8A (the "Notification of Registration") has also been filed with the Commission pursuant to Section 8(a) of the Investment Company Act of 1940, as amended (the "Investment Company Act"). After the execution of this Agreement, the Company will file with the Commission either (A) if such registration statement, as it may have been amended, has been declared by the Commission to be effective under the Act, a prospectus in the form most recently included in an amendment to such registration statement (or, if no such amendment shall have been filed, in such registration statement), with such changes or insertions as are required by Rule 430A under the Act or permitted by Rule 497(h) under the Act and as have been provided to and approved by the Representative prior to the execution of this Agreement, or (B) if such registration statement, as it may have been amended, has not been declared by the Commission to be effective under the Act, an amendment to such registration statement, including a form of prospectus, a copy of which amendment has been furnished to and approved by the Representative prior to the execution of this Agreement. As used in this Agreement, the term "Registration Statement" means such registration statement, as amended at the time when it was or is declared effective, including all financial schedules and exhibits thereto and including any information omitted therefrom pursuant to Rule 430A under the Act and included in the Prospectus (as hereinafter defined); the term "Preliminary Prospectus" means each prospectus subject to completion filed with such registration statement or any amendment thereto (including the prospectus subject to completion, if any, included in the Registration Statement or any amendment thereto at the time it was or is declared effective); and the term "Prospectus" means the prospectus first filed with the Commission pursuant to Rule 497(b) or (h), as the case may be, under the Act or, if applicable, as subsequently filed pursuant to Rule 497(d) under the Act. (ii) The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus. When any Preliminary Prospectus was filed with the Commission it (A) contained all statements required to be stated therein in accordance with, and complied in all material respects with the requirements of, the Act, the Investment Company Act and the respective rules and regulations of the Commission thereunder and (B) did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. When the Registration Statement or any amendment thereto was or is declared effective, it (A) contained or will contain all statements required to be stated therein in accordance with, and complied or will comply in all material respects with the requirements of, the Act, the Investment Company Act and the respective rules and regulations of the Commission thereunder and (B) did not or will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading. When the Prospectus or any amendment or supplement thereto is filed with the Commission pursuant to Rule 497(b) or (h) under the Act, as the case may be, and, if applicable, when subsequently filed with the Commission pursuant to Rule 497(d) under the Act (or, if the Prospectus or such amendment or supplement is not required to be so filed, when the Registration Statement or the amendment thereto containing such amendment or supplement to the Prospectus was or is declared effective), and on the Firm Closing Date and any Option Closing Date (both as hereinafter defined), the Prospectus, as amended or supplemented at any such time, (A) contained or will contain all statements required to be stated therein in accordance with, and complied or will comply in all material respects with the requirements of, the Act, the Investment Company Act and the respective rules and regulations of the Commission thereunder and (B) did not or will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing provisions of this paragraph (ii) do not apply to statements or omissions made in any Preliminary Prospectus, the Registration Statement or any amendment thereto or the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representative specifically for use therein. (iii) When the Notification of Registration was filed with the Commission, it (A) contained all statements required to be stated therein in accordance with, and complied in all material respects with the requirements of, the Investment Company Act and the rules and regulations of the Commission thereunder and (B) did not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. (iv) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland and is duly qualified to transact business and is in good standing under the laws of all other jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified does not amount to a material liability or disability to the Company; and the Company holds all licenses, certificates and permits from all governmental authorities necessary for the conduct of its business as described in the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus) (other than, if the Registration Statement is not effective under the Act, the order of the Commission declaring the Registration Statement effective under the Act and similar orders as may be required under state securities or blue sky laws). The Company has no subsidiaries. (v) The Company has full power (corporate and other) (A) to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus or, if the Prospectus is not in existence, the most recent Preliminary Prospectus; (B) to enter into this Agreement, the Investment Advisory Agreement, dated as of _____, 1999 (the "Advisory Agreement"), between the Company and the Manager, the Custodian Contract dated as of _____, 1999, (the "Custody Agreement"), between the Company and Firstar Bank Milwaukee, N.A., the Transfer Agency Agreement, dated as of _____, 1999 (the "Transfer Agency Agreement"), between the Company and Firstar Bank Milwaukee, N.A., the Fund Administration Servicing Agreement, dated as of _____, 1999, (the "Fund Administration Agreement"), between the Company and Firstar Mutual Fund Services, LLC ("FMFS"), the Fulfillment Servicing Agreement, dated as of _____, 1999 (the "Fulfillment Agreement"), between the Company and FMFS and the Fund Accounting Servicing Agreement, dated as of _____, 1999 (the "Fund Accounting Agreement"), between the Company and FMFS; (C) to adopt the distribution reinvestment plan (the "Distribution Reinvestment Plan") described in the Prospectus, or, if the prospectus is not in existence, the most recent Preliminary Prospectus; and (D) to carry out all the terms and provisions hereof and of any of the foregoing agreements and plans to be carried out by it. (vi) The Company is duly registered with the Commission pursuant to Section 8 of the Investment Company Act as a non-diversified, closed-end management investment company; and the Company's articles of incorporation and by-laws comply in all material respects with the Investment Company Act and the rules and regulations of the Commission thereunder. (vii) The Company has authorized, issued and outstanding capitalization as set forth in the Prospectus or, if the Prospectus is not in existence, the most recent Preliminary Prospectus. All of the issued Shares have been duly authorized and validly issued and are fully paid and nonassessable. The Firm Securities and the Option Securities have been duly authorized and at the Firm Closing Date or the related Option Closing Date (as the case may be), after payment therefor in accordance herewith, will be validly issued, fully paid and nonassessable. [The Securities have been duly authorized for listing, subject to official notice of issuance, on the American Stock Exchange, and the Company's Registration Statement on Form 8-A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), has become effective.] No holders of outstanding shares of beneficial interest of the Company are entitled as such to any preemptive or other rights to subscribe for any of the Securities, and no holder of securities of the Company has any right which has not been fully exercised or waived to require the Company to register the offer or sale of any securities owned by such holder under the Act in the public offering contemplated by this Agreement. (viii) The Shares conform to the description thereof contained in the Prospectus or, if the Prospectus is not in existence, the most recent Preliminary Prospectus. (ix) Except as disclosed in the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus), there are no outstanding (A) securities or obligations of the Company convertible into or exchangeable for any capital stock of the Company, (B) warrants, rights or options to subscribe for or purchase from the Company any such capital stock or any such convertible or exchangeable securities or obligations, or obligations of the Company to issue any shares of capital stock, any such convertible or exchangeable securities or obligations, or any such warrants, rights or options. (x) The Statement of Assets and Liabilities of the Company included in the Registration Statement and the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus) fairly presents the financial position of the Company as of the date therein specified. Such Statement of Assets and Liabilities has been prepared in accordance with generally accepted accounting principles. (xi) Pricewaterhouse Coopers, LLP, who have certified certain financial statements of the Company and delivered their report with respect to the Statement of Assets and Liabilities of the Company included in the Registration Statement and the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus), are independent public accountants as required by the Act, the Investment Company Act and the respective rules and regulations thereunder. (xii) The execution and delivery of this Agreement, the Advisory Agreement, the Custody Agreement, the Transfer and Dividend Disbursing Agreement, and the Fund Administration Agreement have been duly authorized by the Company; this Agreement, the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement have been duly executed and delivered by the Company; and assuming due authorization, execution and delivery by the other parties thereto, the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement are the legal, valid, binding and enforceable instruments of the Company and all such agreements and the Distribution Reinvestment Plan comply in all material respects with the requirements of the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the Investment Company Act and the respective rules and regulations of the Commission thereunder; and the Distribution Reinvestment Plan has been duly adopted by the Company. (xiii) No legal or governmental proceedings are pending to which the Company is a party or to which the property of the Company is subject that are required to be described in the Registration Statement or the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus), and are not described therein and, to the knowledge of the Company and the Manager, no such proceedings have been threatened against the Company or with respect to any of its properties; and no contract or other document is required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that is not described therein (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus) or filed as required by the Act, the Investment Company Act or the respective rules and regulations of the Commission thereunder. (xiv) The issuance, offering and sale of the Securities to the Underwriters by the Company pursuant to this Agreement, the compliance by the Company with the other provisions of this Agreement, the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement and the consummation of the other transactions herein contemplated do not (A) require the consent, approval, authorization, registration or qualification of or with any governmental authority, stock exchange or securities association except such as have been obtained, such as may be required under state securities or blue sky laws or the rules of the National Association of Securities Dealers, Inc. (the "NASD Rules") and, if the registration statement filed with respect to the Securities (as amended) is not effective under the Act as of the time of execution hereof, such as may be required (and shall be obtained as provided in this Agreement) under the Act or the Investment Company Act, or (B) conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under, any agreement or instrument to which the Company is a party or by which the Company or any of its properties are bound, or the articles of incorporation or by-laws of the Company or any statute or any judgment, decree, order, rule or regulation of any court or other governmental authority or any arbitrator applicable to the Company. (xv) Subsequent to the date of the audited Statement of Assets and Liabilities included in the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus), the Company has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions not in the ordinary course of business, and there has not been any material adverse change, or any development involving a prospective material adverse change (including without limitation a change in management or control of the Company), in the condition (financial or otherwise), business prospects, financial position or net worth of the Company, except in each case as described in or contemplated by the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus). (xvi) The Company has not distributed and, prior to the later of the expiration of the option period described in Section 3(b) hereof and the completion of the distribution of the Securities, will not distribute any offering material in connection with the offering and sale of the Securities other than the Registration Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, or other materials, if any, permitted by the Act. (xvii) Neither the Company nor the Manager has directly or indirectly, (A) taken any action designed to cause or to result in, or that constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or (B) since the filing of the Registration Statement (X) sold, bid for, purchased, or paid anyone any compensation for soliciting purchases of, the Securities or (Y) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company. (xviii) Each certificate signed by any officer of the Company in his or her capacity as such and delivered to the Representative or counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to each Underwriter as to the matters covered thereby. (xix) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorization and with the investment policies and restrictions of the Company and the applicable requirements of the Investment Company Act, the rules and regulations thereunder and the Internal Revenue Code of 1986, as amended; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles, to calculate net asset value, to maintain accountability for assets and to maintain material compliance with the books and records requirements under the Investment Company Act and the rules and regulations thereunder; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded account for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (xx) The conduct by the Company of its business (as described in the Prospectus or, if the Prospectus is not in existence, the most recent Preliminary Prospectus) does not require it to be the owner, possessor or licensee of any patents, patent licenses, trademarks, service marks or trade names which it does not own, possess or license. (b) The Manager represents and warrants to, and agrees with each of the Underwriters that: (i) The Manager has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Illinois and is duly qualified to transact business as a foreign corporation and is in good standing under the laws of all other jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified does not amount to a material liability or disability to the Manager. (ii) The Manager has full power (corporate and other) to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus or, if the Prospectus is not in existence, the most recent Preliminary Prospectus; and the Manager has full power (corporate and other) to enter into this Agreement and the Advisory Agreement and to carry out all the terms and provisions hereof and thereof to be carried out by it. (iii) The Manager is duly registered with the Commission as an investment adviser under the Advisers Act; and the Manager is not prohibited by any provision of the Advisers Act or the Investment Company Act, or the respective rules and regulations of the Commission thereunder, from performing its obligations under the Advisory Agreement. (iv) The execution and delivery of this Agreement and the Advisory Agreement have been duly authorized by the Manager; this Agreement and the Advisory Agreement have been duly executed and delivered by the Manager; and, assuming due authorization, execution and delivery by the Company, the Advisory Agreement is the legal, valid, binding and enforceable instrument of the Manager and complies in all material respects with the Advisers Act and the Investment Company Act and the respective rules and regulations of the Commission thereunder. (v) The compliance by the Manager with the provisions of this Agreement and the Advisory Agreement and the consummation of the other transactions herein contemplated do not (A) require the consent, approval, authorization, registration or qualification of or with any governmental authority, stock exchange or securities association except such as have been obtained, such as may be required under state securities or blue sky laws or the NASD Rules and, if the registration statement filed with respect to the Securities (as amended) is not effective under the Act as of the time of execution hereof, such as may be required (and shall be obtained as provided in this Agreement) under the Act or the Investment Company Act, (B) result in a material breach or violation of any of the terms and provisions of, or constitute a material default under, any agreement or instrument to which the Manager is a party or by which the Manager or any of its properties are bound, or (C) conflict with the charter documents or by-laws of the Manager or any statute or any judgment, decree, order, rule or regulation of any court or other governmental authority or any arbitrator, stock exchange or securities association applicable to the Manager. (vi) The description of the Manager and its business contained in the Prospectus (or, if the Prospectus is not yet in existence, the most recent Preliminary Prospectus) complies in all material respects with the requirements of the Act, the Investment Company Act and the respective rules and regulations of the Commission thereunder and does not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (vii) Subsequent to the date of the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus), there has not been any material adverse change, or any development involving a prospective material adverse change (including without limitation a change in management or control of the Manager), in the condition (financial or otherwise), business prospects, net worth or results of operations of the Manager or in the ability of the Manager to fulfill its respective obligations under this Agreement or the Advisory Agreement. (viii) No legal or governmental proceedings are pending to which the Manager is a party or to which the property of the Manager is subject that are required to be described in the Registration Statement or the Prospectus (or, if the Prospectus is not in existence, the most recent Preliminary Prospectus), and are not described therein and, to the knowledge of the Manager, no such proceedings have been threatened against the Manager or with respect to any of its properties. (ix) Neither the Company nor the Manager has, directly or indirectly, (A) taken any action designed to cause or to result in, or that constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or (B) since the filing of the Registration Statement (X) sold, bid for, purchased, or paid anyone any compensation for soliciting purchases of, the Securities or (Y) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company. (x) The Manager has the financial resources available to it necessary for the performance of its services and obligations as contemplated in the Registration Statement and the Prospectus. 3. Purchase, Sale and Delivery of the Securities. (a) On the basis of the representations, warranties, agreements and covenants herein contained and subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters, severally and not jointly, agrees to purchase from the Company, at a purchase price of $9.45 per share, the number of Firm Securities set forth opposite the name of such Underwriter in Schedule 1 hereto. One or more certificates in definitive form for the Firm Securities that the several Underwriters have agreed to purchase hereunder, and in such denomination or denominations and registered in such name or names as the Representative requests upon notice to the Company at least 48 hours prior to the Firm Closing Date, shall be delivered by or on behalf of the Company to the Representative for the respective accounts of the Underwriters, against payment by or on behalf of the Underwriters of the purchase price therefor by wire transfer of immediately available funds to an account designated by the Company at least 48 hours prior to the Firm Closing Date. Such delivery of and payment for the Firm Securities shall be made at the offices of Godfrey & Kahn, S.C., 780 North Water Street, Milwaukee, Wisconsin at 9:30 A.M., Milwaukee time, on _____, 1999, or at such other place, time or date as the Representative and the Company may agree upon or as the Representative may determine pursuant to Section 9 hereof, such time and date of delivery against payment being herein referred to as the "Firm Closing Date". The Company will make such certificate or certificates for the Firm Securities available for checking and packaging by the Representative at the offices in Milwaukee, Wisconsin of the Company's transfer agent or registrar or at the offices in Chicago, Illinois of LaSalle St. Securities, Inc. at least 24 hours prior to the Firm Closing Date. (b) For the purpose of covering any over-allotments in connection with the distribution and sale of the Firm Securities as contemplated by the Prospectus, the Company hereby grants to the several Underwriters an option to purchase, severally and not jointly, the Option Securities. The purchase price to be paid for any Option Securities shall be the same price per share as the price per share for the Firm Securities set forth above in paragraph (a) of this Section 3, plus, if the purchase and sale of any Option Securities takes place after the Firm Closing Date and after the Firm Securities are trading "ex- dividend", an amount equal to the dividends payable on such Option Securities. The option granted hereby may be exercised as to all or any part of the Option Securities within thirty days after the date of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or holiday, on the next business day thereafter when the American Stock Exchange is open for trading). The Underwriters shall not be under any obligation to purchase any of the Option Securities prior to the exercise of such option. The Representative may exercise the option granted hereby by giving notice in writing or by telephone (confirmed in writing) to the Company setting forth the aggregate number of Option Securities as to which the several Underwriters are then exercising the option and the date and time for delivery of and payment for such Option Securities. Any such date of delivery shall be determined by the Representative but shall not be earlier than two business days or later than seven business days after such exercise of the option and, in any event, shall not be earlier than the Firm Closing Date. The time and date set forth in such notice, or such other time on such other date as the Representative and the Company may agree upon or as the Representative may determine pursuant to Section 9 hereof, is herein called the "Option Closing Date" with respect to such Option Securities. Upon exercise of the option as provided herein, the Company shall become obligated to sell to each of the several Underwriters, and, subject to the terms and conditions herein set forth, each of the Underwriters (severally and not jointly) shall become obligated to purchase from the Company, the same percentage of the total number of the Option Securities as to which the several Underwriters are then exercising the option as such Underwriter is obligated to purchase of the aggregate number of Firm Securities, as adjusted by the Representative in such manner as it deems advisable to avoid fractional shares. If the option is exercised as to all or any portion of the Option Securities, one or more certificates in definitive form for such Option Securities, and payment therefor, shall be delivered on the Option Closing Date in the manner, and upon the terms and conditions, set forth in paragraph (a) of this Section 3, except that reference therein to the Firm Securities and the Firm Closing Date shall be deemed, for purposes of this paragraph (b), to refer to such Option Securities and Option Closing Date, respectively. (c) It is understood that any of you may (but shall not be obligated to) make payment on behalf of any Underwriter or Underwriters for any of the Securities to be purchased by such Underwriter or Underwriters. No such payment shall relieve such Underwriter or Underwriters from any of its or their obligations hereunder. 4. Offering by the Underwriters. Upon your authorization of the release of the Firm Securities, the several Underwriters propose to offer the Firm Securities for sale to the public upon the terms set forth in the Prospectus. 5. Covenants of the Company. The Company covenants and agrees with each of the Underwriters that: (a) The Company will use its best efforts to cause the Registration Statement, if not effective at the time of execution of this Agreement, and any amendments thereto to become effective as promptly as possible. If required, the Company will file the Prospectus and any amendment or supplement thereto with the Commission in the manner and within the time period required by Rule 497(b), (d) or (h), as the case may be, under the Act. During any time when a prospectus relating to the Securities is required to be delivered under the Act, the Company (A) will comply with all requirements imposed upon it by the Act, the Investment Company Act and the respective rules and regulations of the Commission thereunder to the extent necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and of the Prospectus, as then amended or supplemented, and (B) will not file with the Commission the prospectus or the amendment referred to in the third sentence of Section 2(a)(i) hereof, any amendment or supplement to such prospectus or any amendment to the Registration Statement of which the Representative shall not previously have been advised and furnished with a copy for a reasonable period of time prior to the proposed filing and as to which filing the Representative shall not have given its consent. The Company will prepare and file with the Commission, in accordance with the rules and regulations of the Commission, promptly upon request by the Representative or counsel for the Underwriters, any amendments to the Registration Statement or amendments or supplements to the Prospectus that may be necessary or advisable in connection with the distribution of the Securities by the several Underwriters, and will use its best efforts to cause any such amendment to the Registration Statement to be declared effective by the Commission as promptly as possible. The Company will advise the Representative, promptly after receiving notice thereof, of the time when the Registration Statement or any amendment thereto has been filed or declared effective or the Prospectus or any amendment or supplement thereto has been filed and will provide evidence satisfactory to the Representative of each such filing or effectiveness. (b) The Company will advise the Representative, promptly after receiving notice or obtaining knowledge thereof, of (A) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any amendment thereto or any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, (B) the suspension of the qualification of the Securities for offering or sale in any jurisdiction, (C) the institution, threatening or contemplation of any proceeding for any such purpose or (D) any request made by the Commission for amending the Registration Statement, for amending or supplementing the Prospectus or for additional information. The Company will use its best efforts to prevent the issuance of any such stop order and, if any such stop order is issued, to obtain the withdrawal thereof as promptly as possible. (c) The Company will arrange for the qualification of the Securities for offering and sale under the securities or blue sky laws of such jurisdictions as the Representative may designate and will continue such qualifications in effect for as long as may be necessary to complete the distribution of the Securities; provided, however, that in connection therewith the Company shall not be required to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction. (d) If, at any time prior to the later of (A) the final date when a prospectus relating to the Securities is required to be delivered under the Act or (B) the Option Closing Date, any event occurs as a result of which the Prospectus, as then amended or supplemented, would include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if for any other reason it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Investment Company Act or the respective rules or regulations of the Commission thereunder, the Company will promptly notify the Representative thereof and, subject to Section 5(a)(i) hereof, will prepare and file with the Commission, at the Company's expense, an amendment to the Registration Statement or an amendment or supplement to the Prospectus that corrects such statement or omission or effects such compliance. (e) The Company will, without charge, provide (A) to the Representative and to counsel for the Underwriters (X) a signed copy of the Notification of Registration and (Y) a signed copy of the registration statement originally filed with respect to the Securities and each amendment thereto (in each case including exhibits thereto), a conformed copy of the registration statement originally filed with respect to the Securities and each amendment thereto (in each case including exhibits thereto), certified by the Secretary or an Assistant Secretary of the Company to be true and complete copies thereof as filed with the Commission by electronic transmission, (B) to each other Underwriter, a conformed copy of such Notification of Registration and such registration statement and each amendment thereto (in each case without exhibits thereto) and (C) so long as a prospectus relating to the Securities is required to be delivered under the Act, as many copies of each Preliminary Prospectus or the Prospectus or any amendment or supplement thereto as the Representative may reasonably request. (f) The Company, as soon as practicable but in no event later than 60 days after the period covered thereby, will make generally available to its security holders and to the Representative a consolidated earnings statement of the Company that satisfies the provisions of Section 11(a) of the Act and Rule 158 thereunder. (g) The Company will apply the net proceeds from the sale of the Securities as set forth under "Use of Proceeds" in the Prospectus. (h) The Company will use its best efforts to list, subject to notice of issuance, the Securities to be sold by it on the American Stock Exchange simultaneously with the effectiveness of the Registration Statement. (i) During a period of five years from the effective date of the Registration Statement, the Company will furnish to the Representative copies of all reports and other communications (financial or other) furnished by the Company to its shareholders and, as soon as available, copies of any reports or financial statements furnished or filed by the Company to or with the Commission or any national securities exchange on which any class of securities of the Company may be listed. (j) The Company and the Manager will not, directly or indirectly, (A) take any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or (B) (X) sell, bid for, purchase, or pay anyone any compensation for soliciting purchases of, the Securities or (Y) pay or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company. (k) If at any time during the 25-day period after the Registration Statement becomes effective or the period prior to the Option Closing Date, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in your opinion the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates a supplement to or amendment of the Prospectus), the Company will, after written notice from you advising the Company to the effect set forth above, forthwith prepare, consult with you concerning the substance of, and disseminate a press release or other public statement, reasonably satisfactory to you, responding to or commenting on such rumor, publication or event. 6. Expenses. (a) The Manager agrees to pay all costs and expenses incident to the performance of the Company's obligations under this Agreement, whether or not the transactions contemplated herein are consummated or this Agreement is terminated pursuant to Section 11 hereof, including all costs and expenses incident to (i) the printing or other production of documents with respect to the transactions, including any costs of printing the registration statement originally filed with respect to the Securities and any amendment thereto, the Notification of Registration, any Preliminary Prospectus (including without limitation, the expenses of printing the mailing folder for the Preliminary Prospectus and the expenses of attaching the mailing folder to each Preliminary Prospectus and of packaging each Preliminary Prospectus for distribution) and the Prospectus and any amendment or supplement thereto, this Agreement, the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement and any blue sky memoranda, (ii) all arrangements relating to the delivery to the Underwriters of copies of the foregoing documents, (iii) the fees and disbursements of the counsel, the accountants and any other experts or advisors retained by the Company or the Manager, (iv) the preparation, issuance and delivery to the Underwriters of any certificates evidencing the Securities, including transfer agent's and registrar's fees, (v) the qualification of the Securities under state securities and blue sky laws, including filing fees and fees and disbursements of counsel for the Underwriters relating thereto, (vi) the filing fees of the Commission and the National Association of Securities Dealers, Inc. relating to the Securities, (vii) any listing fees of the Securities [on the American Stock Exchange,] (viii) any meetings with prospective investors in the Securities (other than as shall have been specifically approved by the Representative to be paid for by the Underwriters) and (ix) advertising relating to the offering of the Securities (other than as shall have been specifically approved by the Representative to be paid for by the Underwriters). If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 7 hereof is not satisfied, because this Agreement is terminated pursuant to Section 11 hereof or because of any failure, refusal or inability on the part of the Company or the Manager to perform all obligations and satisfy all conditions on its respective part to be performed or satisfied hereunder other than by reason of a default by any of the Underwriters, the Manager agrees to reimburse the Underwriters severally upon demand for all out-of- pocket expenses (including counsel fees and disbursements) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities. Neither the Company nor the Manager shall in any event be liable to any of the Underwriters for the loss of anticipated profits from the transactions covered by this Agreement. (b) If the Underwriters purchase the Firm Securities, the Company will pay a non-accountable expense allowance up to $400,000 ($460,000 if the Option Securities are also purchased) to the Representative for out-of-pocket expenses incurred in connection with the offering (including, but not limited to, advertising relating to the offering of the Securities and travel expenses and the fees and disbursements of counsel for the Underwriters). The Company will pay such amount by permitting the Underwriters to deduct such amount from the proceeds payable to the Company on the Firm Closing Date pursuant to Section 3(a) hereof. 7. Conditions of the Underwriters' Obligations. The obligations of the several Underwriters to purchase and pay for the Firm Securities shall be subject, in the Representative's sole discretion, to the accuracy of the representations and warranties of the Company and the Manager contained herein as of the date hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing Date, to the accuracy of the statements of the Company's and the Manager's officers made pursuant to the provisions hereof, to the performance by the Company and the Manager of its covenants and agreements hereunder and to the following additional conditions: (a) If the Registration Statement or any amendment thereto filed prior to the Firm Closing Date has not been declared effective as of the time of execution hereof, the Registration Statement or such amendment shall have been declared effective not later than 10 A.M., Milwaukee time, on the date on which the amendment to the registration statement originally filed with respect to the Securities or to the Registration Statement, as the case may be, containing information regarding the initial public offering price of the Securities has been filed with the Commission, or such later time and date as shall have been consented to by the Representative; the Prospectus and any amendment or supplement thereto shall have been filed with the Commission in the manner and within the time period required by Rule 497(b), (d) or (h), as the case may be, under the Act; no stop order suspending the effectiveness of the Registration Statement or any amendment thereto shall have been issued, and no proceedings for that purpose shall have been instituted or threatened or, to the knowledge of the Company or the Representative, shall be contemplated by the Commission; and the Company shall have complied with any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise). (b) The Representative shall have received an opinion, dated the Firm Closing Date, of Godfrey & Kahn, S.C., counsel for the Company, to the effect that: (i) the Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland; (ii) the Company has corporate power to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus, and the Company has corporate power to enter into this Agreement, the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement and to carry out all the terms and provisions hereof and thereof to be carried out by it; (iii) the Company is duly registered with the Commission pursuant to Section 8 of the Investment Company Act as a non-diversified, closed-end management investment company; and the Company's articles of incorporation and by-laws comply in all material respects with the Investment Company Act and the rules and regulations of the Commission thereunder; (iv) the Company has an authorized, issued and outstanding capitalization as set forth in the Prospectus; all of the issued Shares have been duly authorized and validly issued and are fully paid and nonassessable, have been issued in compliance with all applicable federal securities laws and were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities; the Firm Securities have been duly authorized by all necessary corporate action of the Company and, when issued and delivered to and paid for by the Underwriters pursuant to this Agreement, will be validly issued, fully paid and nonassessable; no holders of outstanding Shares are entitled as such to any preemptive or other rights to subscribe for any of the Securities; and no holders of securities of the Company are entitled to have such securities registered under the Registration Statement; (v) the execution and delivery of this Agreement have been duly authorized by all necessary corporate action of the Company, and this Agreement has been duly executed and delivered by the Company; (vi) the execution and delivery of each of the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement have been duly authorized by all necessary corporate action of the Company and the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement and the Distribution Reinvestment Plan comply in all material respects with all applicable provisions of the Investment Company Act and the Advisers Act, and, assuming due authorization, execution and delivery by the other parties thereto, the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement are the legal, valid, binding, and enforceable instruments of the Company and comply in all material respects with the requirements of the Advisers Act and the Investment Company Act and the respective rules and regulations of the Commission thereunder; (vii) To the knowledge of such counsel, (A) no legal or governmental proceedings are pending to which the Company is a party or to which the property of the Company is subject that are required to be described in the Registration Statement or the Prospectus and are not described therein, and, to the knowledge of such counsel, no such proceedings have been threatened against the Company or with respect to any of its properties and (B) no contract or other document is required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that is not described therein or filed as required; (viii) the issuance, offering and sale of the Securities to the Underwriters by the Company pursuant to this Agreement, the compliance by the Company with the other provisions of this Agreement, the Advisory Agreement, the Custody Agreement, the Transfer Agency Agreement, the Fund Administration Agreement, the Fulfillment Agreement and the Fund Accounting Agreement and the consummation of the other transactions herein contemplated do not (A) require the consent, approval, authorization, registration or qualification of or with any governmental authority, except such as have been obtained and such as may be required under state securities or blue sky laws, or (B) conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under, any agreement known to such counsel, to which the Company is a party or by which the Company or any of its properties are bound, or the articles of incorporation or by-laws of the Company, or any statute or any judgment, decree, order, rule or regulation of any court or other governmental authority or any arbitrator known to such counsel and applicable to the Company; (ix) the Registration Statement is effective under the Act; the filing of the Prospectus pursuant to Rule 497(b), (d) or (h), as the case may be, has been made in the manner and within the time period required by Rule 497(b), (d) or (h), as the case may be; and, to the knowledge of such counsel after reasonable inquiry, no stop order suspending the effectiveness of the Registration Statement or any amendment thereto has been issued, and no proceedings for that purpose have been instituted or threatened or, to the knowledge of such counsel, are contemplated by the Commission; (x) the Registration Statement originally filed with respect to the Securities and each amendment thereto and the Prospectus (in each case, other than the financial statements and other financial information contained therein, as to which such counsel need express no opinion) comply as to form in all material respects with the applicable requirements of the Act, the Investment Company Act and the respective rules and regulations of the Commission thereunder; (xi) To the knowledge of such counsel, the Company is not currently in breach of, or in default under, any written agreement or instrument to which the Company is a party or by which it or its property is bound or affected; and (xii) The Company's Registration Statement on Form 8-A under the Exchange Act is effective. In rendering any such opinion, such counsel may rely, as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company, the Manager and public officials. References to the Registration Statement and the Prospectus in this paragraph (b) shall include any amendment or supplement thereto at the date of such opinion. (c) The Representative shall have received an opinion, dated the Firm Closing Date, of _________________, counsel of the Manager, to the effect that: (i) the Manager is duly incorporated and validly existing as a corporation in good standing under the laws of the State of Illinois and is duly qualified to transact business as a foreign corporation and is in good standing under the laws of all other jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified does not amount to a material liability or disability to the Manager; (ii) the Manager has corporate power to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus, and the Manager has corporate power to enter into this Agreement and the Advisory Agreement and to carry out all the terms and provisions hereof and thereof to be carried out by it; (iii) the Manager is duly registered with the Commission as an investment adviser under the Advisers Act; and the Manager is not prohibited by any provision of the Advisers Act or the Investment Company Act, or the respective rules and regulations of the Commission thereunder, from performing its obligations under the Advisory Agreement; (iv) the execution and delivery of this Agreement and the Advisory Agreement have been duly authorized by all necessary corporate action of the Manager; this Agreement and the Advisory Agreement have been duly executed and delivered by the Manager; and, assuming due authorization, execution and delivery by the Company, the Advisory Agreement is the legal, valid, binding and enforceable instrument of the Manager and complies in all material respects with the Advisers Act and the Investment Company Act and the respective rules and regulations of the Commission thereunder; (v) the compliance by the Manager with the provisions of this Agreement and the Advisory Agreement and the consummation of the other transactions herein contemplated do not (i) require the consent, approval, authorization, registration or qualification of or with any governmental authority, except such as have been obtained, result in a material breach or violation of any of the terms and provisions of, or constitute a material default under, any indenture, mortgage, deed of trust, lease or other agreement or instrument to which the Manager is a party or by which the Manager or any of its properties are bound, or (iii) conflict with the charter documents or by-laws of the Manager or any statute or any judgment, decree, order, rule or regulation of any court or other governmental authority or any arbitrator, stock exchange or securities association known to such counsel and applicable to the Manager; (vi) the description of the Manager and its business contained in the Prospectus complies in all material respects with the requirements of the Act and the Investment Company Act and the respective rules and regulations of the Commission thereunder and, to the best knowledge of such counsel after due inquiry, does not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (vii) no legal or governmental proceedings are pending to which the Manager is a party or to which the property of the Manager is subject that are required to be described in the Registration Statement or the Prospectus and are not described therein and, to the best knowledge of such counsel, no such proceedings have been threatened against the Manager or with respect to any of its properties. In rendering any such opinion, such counsel may rely, as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Manager and public officials. References to the Registration Statement and the Prospectus in this paragraph (c) shall include any amendment or supplement thereto at the date of such opinion. (d) The Representative shall have received an opinion, dated the Firm Closing Date, of Sachnoff & Weaver, Ltd., counsel for the Underwriters, with respect to the issuance and sale of the Firm Securities, the Registration Statement and the Prospectus, and such other related matters as the Representative may reasonably require, and the Company shall have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. (e) The Representative shall have received from Pricewaterhouse Coopers LLP a letter or letters dated, respectively, the date hereof and the Firm Closing Date, in form and substance satisfactory to the Representative, to the effect that: (i) they are independent accountants with respect to the Company within the meaning of the Act, the Investment Company Act and the respective rules and regulations thereunder; (ii) in their opinion, the Statement of Assets and Liabilities examined by them and included in the Registration Statement and the Prospectus complies in form in all material respects with the applicable accounting requirements of the Act, the Investment Company Act and the respective rules and regulations of the Commission thereunder; (iii) on the basis of carrying out certain specified procedures (which do not constitute an examination made in accordance with generally accepted auditing standards) that would not necessarily reveal matters of significance with respect to the comments set forth in this paragraph (iii), a reading of the minute books of the shareholders, the board of directors and any committees thereof of the Company, and inquiries of certain officials of the Company who have responsibility for financial and accounting matters, nothing came to their attention that caused them to believe that at a specific date not more than five business days prior to the date of such letter, there were any changes in the shares of beneficial interest or long-term debt of the Company or any decreases in stockholders' equity of the Company, in each case compared with amounts shown on the Statement of Assets and Liabilities included in the Registration Statement and the Prospectus; and (iv) they have recalculated certain data of a statistical or financial nature identified by the Representative and appearing in the Prospectus, including without limitation, under the caption "Fees and Expenses" and agree with the Company's calculation of such data as set forth in the Prospectus. In the event that the letters referred to above set forth any such changes or decreases, it shall be a further condition to the obligations of the Underwriters that (A) such letters shall be accompanied by a written explanation of the Company as to the significance thereof, unless the Representative deems such explanation unnecessary, and (B) such changes or decreases do not, in the sole judgment of the Representative, make it impractical or inadvisable to proceed with the purchase and delivery of the Securities as contemplated by the Registration Statement, as amended as of the date hereof. References to the Registration Statement and the Prospectus in this paragraph (d) with respect to either letter referred to above shall include any amendment or supplement thereto at the date of such letter. (f) The Representative shall have received a certificate, dated the Firm Closing Date, of the principal executive officer and the principal financial or accounting officer of the Company to the effect that: (i) the representations and warranties of the Company in this Agreement are true and correct as if made on and as of the Firm Closing Date; the Registration Statement, as amended as of the Firm Closing Date, does not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading, and the Prospectus, as amended or supplemented as of the Firm Closing Date, does not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Company has performed all covenants and agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Firm Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement or any amendment thereto has been issued, and no proceedings for that purpose have been instituted or threatened or, to the best of the Company's knowledge, are contemplated by the Commission; and (iii) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not sustained any material loss or interference with its business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor dispute or any legal or governmental proceeding, and there has not been any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or otherwise), management, business prospects, net worth or results of operations of the Company, except in each case as described in or contemplated by the Prospectus (exclusive of any amendment or supplement thereto). (g) The Representative shall have received a certificate, dated the Firm Closing Date, of the principal executive officer and the principal financial or accounting officer of the Manager to the effect that: (i) the representations and warranties of the Manager in this Agreement are true and correct as if made on and as of the Firm Closing Date; the description of the Manager and its businesss contained in the Prospectus, as amended or supplemented as of the Firm Closing Date, does not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (ii) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Manager has not sustained any material loss or interference with its business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor dispute or any legal or governmental proceeding, and there has not been any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or otherwise), business prospects, net worth or results of operations of the Manager, except in each case as described in or contemplated by the Prospectus (exclusive of any amendment or supplement thereto). (h) On or before the Firm Closing Date, the Representatives and counsel for the Underwriters shall have received such further certificates, documents or other information as they may have reasonably requested from the Company. (i) Prior to the commencement of the offering of the Securities, the Securities shall have been approved for listing on the American Stock Exchange, subject to official notice of issuance. All opinions, certificates, letters and documents delivered pursuant to this Agreement will comply with the provisions hereof only if they are reasonably satisfactory in all material respects to the Representative and counsel for the Underwriters. The Company and the Manager shall furnish to the Representative such conformed copies of such opinions, certificates, letters and documents in such quantities as the Representative and counsel for the Underwriters shall reasonably request. The respective obligations of the several Underwriters to purchase and pay for any Option Securities shall be subject, in their discretion, to each of the foregoing conditions to purchase the Firm Securities, except that all references to the Firm Securities and the Firm Closing Date shall be deemed to refer to such Option Securities and the Option Closing Date, respectively. 8. Indemnification and Contribution. (a) The Company and the Manager jointly and severally (subject to clause (i) below and to Section 17(i) of the Investment Company Act) agree to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement made by the Company or the Manager in Section 2 of this Agreement; provided, however, that under this clause (i) the Company shall be liable solely for untrue statements or alleged untrue statements made by the Company in Section 2 of this Agreement, (ii) any untrue statement or alleged untrue statement of any material fact contained in (A) the Registration Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto or (B) any application or other document, including the Notification of Registration, or any amendment or supplement thereto, executed by the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify the Securities under the securities or blue sky laws thereof or filed with the Commission or any securities association or securities exchange (each an "Application"), (iii) the omission or alleged omission to state in the Registration Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, or any Application a material fact required to be stated therein or necessary to make the statements therein not misleading or any untrue statement or alleged untrue statement of any material fact contained in any audio or visual materials used in connection with the marketing of the Securities that have been approved in writing or provided, prepared or authorized by the Company ("Sales Material"), including without limitation, slides, videos, films, tape recordings, and will reimburse, as incurred, each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating, defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action; provided, however, that neither the Company nor the Manager will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or any amendment thereto, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, any Application or any Sales Materials in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representative specifically for use therein; and provided, further, that neither the Company nor the Manager will be liable to any Underwriter or any person controlling such Underwriter with respect to any such untrue statement or omission made in any Preliminary Prospectus that is corrected in the Prospectus (or any amendment or supplement thereto) if the person asserting any such loss, claim, damage or liability purchased Securities from such Underwriter but was not sent or given a copy of the Prospectus (as amended or supplemented) at or prior to the written confirmation of the sale of such Securities to such person in any case where such delivery of the Prospectus (as amended or supplemented) is required by the Act, unless such failure to deliver the Prospectus (as amended or supplemented) was a result of noncompliance by the Company with any provisions of this Agreement. This indemnity agreement will be in addition to any liability which the Company or the Manager may otherwise have. Neither the Company or the Manager will, without the prior written consent of the Underwriter or Underwriters purchasing, in the aggregate more than fifty percent (50%) of the Securities, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any such Underwriter or any person who controls any such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to such claim, action, suit or proceeding), unless such settlement, compromise or consent includes an unconditional release of all of the Underwriters and such controlling persons from all liability arising out of such claim, action, suit or proceeding. (b) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Company and the Manager, each of the Company's directors, each of the Company's officers who signed the Registration Statement and each person, if any, who controls the Company or the Manager within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities to which the Company or any such director, officer or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, any Application or any Sales Material or (ii) the omission or the alleged omission to state therein a material fact required to be stated in the Registration Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment or supplement thereto, any Application or any Sales Material or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representative specifically for use therein; and, subject to the limitation set forth immediately preceding this clause, will reimburse, as incurred, any legal or other expenses reasonably incurred by the Company or the Manager or any such director, officer or controlling person in connection with investigating or defending any such loss, claim, damage, liability or any action in respect thereof. This indemnity agreement will be in addition to any liability which such Underwriter may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be one or more legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnifying party shall not have the right to direct the defense of such action on behalf of such indemnified party or parties and such indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by such indemnified party of counsel appointed to defend such action, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that in connection with such action the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) in any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances, designated by the Representative in the case of paragraph (a) of this Section 8, representing the indemnified parties under such paragraph (a) who are parties to such action or actions) or (ii) the indemnifying party does not promptly retain counsel satisfactory to the indemnified party or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. After such notice from the indemnifying party to such indemnified party, the indemnifying party will not be liable for the costs and expenses of any settlement of such action effected by such indemnified party without the consent of the indemnifying party. (d) In circumstances in which the indemnity agreement provided for in the preceding paragraphs of this Section 8 is unavailable or insufficient, for any reason, to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof), each indemnifying party, in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect (i) the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the offering of the Securities or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative benefits received by the Company and the Manager on the one hand (it being understood that for such purpose, the Company and the Manager shall be treated as one entity) and the Underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Manager or the Underwriters, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances. The Company, the Manager and the Underwriters agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take into account the equitable considerations referred to above in this paragraph (d). Notwithstanding any other provision of this paragraph (d), no Underwriter shall be obligated to make contributions hereunder that in the aggregate exceed the total public offering price of the Securities purchased by such Underwriter under this Agreement, less the aggregate amount of any damages that such Underwriter has otherwise been required to pay in respect of the same or any substantially similar claim, and no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute hereunder are several in proportion to their respective underwriting obligations and not joint, and contributions among Underwriters shall be governed by the provisions of the LaSalle St. Securities, Inc. Master Agreement Among Underwriters. For purposes of this paragraph (d), each person, if any, who controls an Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement and each person, if any, who controls the Company or the Manager within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Company or the Manager, as the case may be. 9. Default of Underwriters. If one or more Underwriters default in their obligations to purchase Firm Securities or Option Securities hereunder and the aggregate number of such Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase is ten percent or less of the aggregate number of Firm Securities or Option Securities to be purchased by all of the Underwriters at such time hereunder, the other Underwriters may make arrangements satisfactory to the Representative for the purchase of such Securities by other persons (who may include one or more of the non-defaulting Underwriters, including the Representative), but if no such arrangements are made by the Firm Closing Date or the related Option Closing Date, as the case may be, the other Underwriters shall be obligated severally in proportion to their respective commitments hereunder to purchase the Firm Securities or Option Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase. If one or more Underwriters so default with respect to an aggregate number of Securities that is more than ten percent of the aggregate number of Firm Securities or Option Securities, as the case may be, to be purchased by all of the Underwriters at such time hereunder, and if arrangements satisfactory to the Representative are not made within 36 hours after such default for the purchase by other persons (who may include one or more of the non-defaulting Underwriters, including the Representative) of the Securities with respect to which such default occurs, this Agreement will terminate without liability on the part of any non-defaulting Underwriter, the Company or the Manager other than as provided in Section 10 hereof. In the event of any default by one or more Underwriters as described in this Section 9, the Representative shall have the right to postpone the Firm Closing Date or the Option Closing Date, as the case may be, established as provided in Section 3 hereof for not more than seven business days in order that any necessary changes may be made in the arrangements or documents for the purchase and delivery of the Firm Securities or Option Securities, as the case may be. In the event of any such default, the Company shall have the right to postpone the Firm Closing Date or the Option Closing Date, as the case may be, in order to enable the Company to call and hold an in-person meeting of the directors to approve of any substitute underwriters as required by Section 15 of the Investment Company Act. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section 9. Nothing herein shall relieve any defaulting Underwriter from liability for its default. 10. Survival. The respective representations, warranties, agreements, covenants, indemnities and other statements of the Company, the Manager, the officers of the Company and the Manager and the several Underwriters set forth in this Agreement or made by or on behalf of them pursuant to this Agreement shall remain in full force and effect, regardless of (i) any investigation made by or on behalf of the Company, the Manager, any of their officers or directors, any Underwriter or any controlling person referred to in Section 8 hereof and (ii) delivery of and payment for the Securities. The respective agreements, covenants, indemnities and other statements set forth in Sections 6 and 8 hereof shall remain in full force and effect, regardless of any termination or cancellation of this Agreement. 11. Termination. (a) This Agreement may be terminated with respect to the Firm Securities or any Option Securities in the sole discretion of the Representative by notice to the Company given prior to the Firm Closing Date or the Option Closing Date, respectively, in the event that the Company or the Manager shall have failed, refused or been unable to perform all obligations and satisfy all conditions on its part to be performed or satisfied hereunder at or prior thereto or, if at or prior to the Firm Closing Date or such Option Closing Date, respectively, (i) the Company or the Manager shall have, in the sole judgment of the Representative, sustained any material loss or interference with its business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor dispute or any legal or governmental proceeding or there shall have been any material adverse change, or any development involving a prospective material adverse change (including without limitation a change in management or control of the Company or the Manager, as the case may be), in the condition (financial or otherwise), business prospects, net worth or results of operations of the Company or the Manager, except in each case as described in or contemplated by the Prospectus (exclusive of any amendment or supplement thereto); (ii) trading in the Shares shall have been suspended by the Commission or the American Stock Exchange or trading in securities generally on the American Stock Exchange shall have been suspended or minimum or maximum prices shall have been established; (iii) a banking moratorium shall have been declared by New York or United States authorities; or (iv) there shall have been (A) an outbreak or escalation of hostilities between the United States and any foreign power, (B) an outbreak or escalation of any other insurrection or armed conflict involving the United States or (C) any other calamity or crisis or material adverse change in general economic, political of financial conditions having an effect on the U. S. financial markets that, in the sole judgment of the Representative, makes it impractical or inadvisable to proceed with the public offering or the delivery of the Securities as contemplated by the Registration Statement, as amended as of the date hereof. (b) Termination of this Agreement pursuant to this Section 11 shall be without liability of any party to any other party except as provided in Section 10 hereof. 12. Information Supplied by Underwriters. The statements set forth under the heading "Underwriting" in any Preliminary Prospectus or the Prospectus or in any other sections of any Preliminary Prospectus or the Prospectus (to the extent such statements relate to the Underwriters) constitute the only information furnished by any Underwriter through the Representative to the Company for the purposes of Sections 2(a)(ii) and 8 hereof. The Underwriters confirm that such statements (to such extent) are correct. 13. Notices. All communications hereunder shall be in writing and, if sent to any of the Underwriters, shall be delivered or sent by mail, telex or facsimile transmission and confirmed in writing to LaSalle St. Securities, Inc., 810 West Washington Blvd., Chicago, Illinois 60607, Attention: Equity Transactions Group; if sent to the Company, shall be delivered or sent by mail, telex or facsimile transmission and confirmed in writing to the Company at 810 West Washington Blvd., Chicago, Illinois 60607, Attention: Will Thimes; and if sent to the Manager, shall be mailed, delivered or telegraphed and confirmed in writing to the Manager at 810 West Washington Blvd., Chicago, Illinois 60607, Attention: Barry Glasgow. 14. Successors. This Agreement shall inure to the benefit of and shall be binding upon the several Underwriters, the Company and the Manager and their respective successors and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person except that (i) the indemnities of the Company and the Manager contained in Section 8 of this Agreement shall also be for the benefit of any person or persons who control any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters contained in Section 8 of this Agreement shall also be for the benefit of the directors of the Company, the officers of the Company who have signed the Registration Statement and any person or persons who control the Company or the Manager within the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of Securities from any Underwriter shall be deemed a successor because of such purchase. 15. Applicable Law. The validity and interpretation of this Agreement, and the terms and conditions set forth herein, shall be governed by and construed in accordance with the law of the State of Illinois, without giving effect to any provisions relating to conflicts of laws. 16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. If signed in counterparts, the Agreement shall not become effective unless at least one counterpart hereof shall have been executed and delivered on behalf of each party hereto. If the foregoing correctly sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this letter shall constitute an agreement binding the Company, the Manager and each of the several Underwriters. Very truly yours, LCM INTERNET GROWTH FUND, INC. By:_________________________________ Name: Title: LCM CAPITAL MANAGEMENT, INC. By:_________________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. LASALLE ST. SECURITIES, INC. By:________________________________ Name: Title: Managing Director As Representative of the several Underwriters. SCHEDULE 1 UNDERWRITERS Number of Firm Securities to be Purchased _______________ Underwriter LaSalle St. Securities, Inc. [Insert names of other Underwriters] ____________ Total: 4,000,000 EX-99.H.2 5 FORM OF MASTER SELECTED DEALER AGREEMENT Exhibit (h.2) Form of Master Selected Dealer Agreement _______, 1999 Dear Sirs: On or after the date hereof we may invite you to participate as a selected dealer in connection with one or more public offerings of securities in which we are serving as sole or lead representative of the underwriting syndicates or are otherwise responsible for the distribution of securities to the public by means of offerings of securities for sale to selected dealers. This Agreement will confirm our mutual agreement to the following general terms and conditions applicable to your participation in any such selected dealer group. 1. Applicability of this Agreement. From time to time on or after the date hereof we may be responsible (acting for our own account or for the account of an underwriting or similar group or syndicate) for managing or otherwise implementing the sale to selected dealers ("Selected Dealer") of securities offered publicly pursuant to a registration statement filed under the Securities Act of 1933, as amended (the "Securities Act"), or offered pursuant to an exemption from registration thereunder. The terms and conditions of this Agreement shall be applicable to any such offering in which we have invited you to participate as a Selected Dealer and have expressly informed you that the terms and conditions of this Agreement apply. This Agreement shall not apply to any offering of securities effected wholly outside the United States of America. Any offering to which the terms and conditions of this Agreement apply is herein referred to as an "Offering", and the securities offered in an Offering are herein referred to as the "Securities" with respect to such Offering. In the case of any Offering in which we are acting for the account of an underwriting or similar group or syndicate ("Underwriters"), the terms and conditions of this Agreement shall be for the benefit of, and binding upon, such Underwriters, including, in the case of any Offering in which we are acting with others as representatives of Underwriters, such other representatives. Some or all of the Underwriters in any Offering may be included among the Selected Dealers. The following provisions of this Agreement shall apply separately to each Offering. 2. Conditions of Offering; Acceptance and Purchase. Any Offering will be subject to delivery of the Securities and their acceptance by us and any other Underwriters, will be subject to prior sale, to the approval of all legal matters by counsel and the satisfaction of other conditions, and may be made on the basis of a reservation of Securities or an allotment against subscription. We reserve the right to reject any acceptance in whole or in part, to make allotments and to close the subscription books at any time without notice. You agree to act as principal in purchasing any Securities. We shall invite you to participate in an Offering and in connection therewith shall advise you of the particular method and supplementary terms and conditions of the Offering (including the amount of Securities to be allotted to you, the amount of Securities reserved for purchase by the Selected Dealers, the period of such reservation and the information as to prices and offering date referred to in Section 3(c) hereof). Such invitation and additional information, to the extent applicable and then determined, shall be conveyed to you in a telegram, telex, facsimile transmission or other written form (electronic or otherwise) of communication (any communication in any such form being herein referred to as a "written communication"). Such written communication will include instructions for advising us of your acceptance of such invitation. Any such additional information, to the extent applicable but not determined at the time such invitation is conveyed to you, will be conveyed to you in a subsequent written communication. To the extent such supplementary terms and conditions are inconsistent with any provision herein, such terms and conditions shall supersede any such provision, and you, by your acceptance, shall be bound thereby. If we have received your acceptance, a subsequent written communication from us shall state that you may reject your allotment of Securities by notifying us prior to the time and in the manner specified in such written communication. Unless otherwise indicated in any such written communication, acceptances and other communications by you with respect to an Offering should be sent to LaSalle St. Securities, Inc., 810 West Washington Boulevard, Chicago, Illinois 60607, Attention: __________. Unless you are notified otherwise by us, Securities purchased by you shall be paid for on such date as we shall determine, on one day's prior notice to you, by certified or official bank check or checks drawn on a New York Clearing House bank and payable in next day funds, in an amount equal to the Public Offering Price as (hereinafter defined) or, if we shall so advise you, at such Public Offering Price less the Concession (as hereinafter defined), and payable to or upon the order of LaSalle St. Securities, Inc., 810 West Washington Boulevard, Chicago, Illinois 60607, against delivery of the Securities. If Securities are purchased and paid for at such Public Offering Price, such Concession will be paid after the termination of the provisions of Section 3(c) hereof with respect to such Securities. Unless you are notified otherwise by us, payment for and delivery of Securities purchased by you shall be made through the facilities of The Depository Trust Company, if you are a member, unless you have otherwise notified us within two days after the date the Securities are first released for public offering or, if you are not a member, settlement may be made through a correspondent who is a member pursuant to instructions you may send to us on or before the third business day preceding the closing for the sale of the Securities. 3. Offering Documents. (a) Registered Offerings. In the case of an Offering of Securities registered under the Securities Act (a "Registered Offering"), we shall provide you with such number of copies of any prospectus subject to completion (a "preliminary prospectus"), the prospectus and any amendment or supplement to any of the foregoing as you may reasonably request for the purposes contemplated by the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the applicable rules and regulations of the Securities and Exchange Commission (the "Commission") thereunder. You shall familiarize yourself with the terms of the Securities and the other terms of the Offering reflected in any such preliminary prospectus, prospectus, amendment or supplement. You agree that in purchasing Securities in a Registered Offering you will rely upon no statements whatsoever, written or oral, other than the statements in the prospectus delivered to you by us. You understand that you will not be authorized by the issuer or any seller other than the issuer, any guarantor or any insurer of Securities to give any information or to make any representation not contained in a preliminary prospectus or the prospectus, as amended or supplemented, in connection with the Offering of such Securities. You represent and warrant that you are familiar with Securities Act Release No. 4968 and Rule 15c2-8 (or any successor release or provision) under the Exchange Act and any applicable foreign laws (and any applicable rules and regulations thereunder) and agree that you will deliver all preliminary prospectuses and prospectuses required for compliance therewith. You agree to make a record of your distribution of each preliminary prospectus and prospectus (including dates, numbers of copies and persons to whom sent) and you shall, if requested by us, furnish a copy of an amended or supplemented preliminary prospectus or prospectus to each person to whom you have furnished a previous preliminary prospectus or prospectus and, if also requested by us, indicate to each such person the changes reflected in such amended or supplemented preliminary prospectus or prospectus. (b) Non-Registered Offerings. In the case of an Offering other than a Registered Offering, we shall provide you with such number of copies of any preliminary offering circular or other document comparable to a preliminary prospectus in a Registered Offering (a "preliminary offering circular") relating to such Offering, a proof of an offering circular or other document comparable to a prospectus in a Registered Offering (an "offering circular") relating to such Offering or such offering circular, as you may reasonably request. You shall familiarize yourself with the terms of the Securities and the other terms of the Offering reflected in any such preliminary offering circular, proof of an offering circular, offering circular or any amendment or supplement to any of the foregoing. You agree that in purchasing Securities pursuant to an offering circular you will rely upon no statements whatsoever, written or oral, other than the statements in the offering circular delivered to you by us. You understand that you will not be authorized by the issuer or any seller other than the issuer, any guarantor or any insurer of the Securities offered pursuant to the offering circular to give any information or to make any representation not contained in a preliminary offering circular, a proof of an offering circular or the offering circular, as amended or supplemented, in connection with the sale of such Securities. You agree that you will comply with the applicable federal, state and foreign laws, and the applicable rules and regulations of any regulatory body promulgated under such laws, governing the use and distribution of offering circulars by brokers or dealers and, to the extent consistent with such laws, rules and regulations, you agree that you will deliver all preliminary offering circulars and offering circulars that would be required if the provisions of Rule 15c2-8 (or any successor provision) under the Exchange Act applied to such Offering. You agree to make a record of your distribution of each preliminary offering circular, proof of an offering circular and offering circular (including dates, numbers of copies and persons to whom sent) and you shall, if requested by us, furnish a copy of an amended or supplemented preliminary offering circular, proof of an offering circular or offering circular to each person to whom you have furnished a previous preliminary offering circular, proof of an offering circular or offering circular and, if also requested by us, indicate to each such person the changes reflected in such amended or supplemented preliminary offering circular, proof of an offering circular or offering circular. (c) Offer and Sale to the Public. With respect to any offering of Securities, we shall inform you by a written communication of the initial public offering price, if any, the selling concession to Selected Dealers, the reallowance (if any) to other dealers and the time when you may commence selling Securities to the public. After such public offering has commenced, we may change the public offering price, the selling concession and the reallowance. The offering price, selling concession and reallowance (if any) at any time in effect with respect to an Offering are hereinafter referred to, respectively, as the "Public Offering Price", the "Concession" and the "Reallowance". With respect to each Offering of Securities, until the provisions of this Section 3(c) shall be terminated pursuant to Section 4 hereof, you agree to offer Securities to the public only at the Public Offering Price, except that if a Reallowance is in effect, a reallowance from the Public Offering Price not in excess of such Reallowance may be allowed. If such Offering is subject to the By-Laws, rules and regulations of the National Association of Securities Dealers, Inc. (the "NASD"), such Reallowance may be allowed only as consideration for services rendered in distribution to dealers who are actually engaged in the investment banking or securities business, who execute the written agreement prescribed by Section 24(c) of Article III of the Rules of Fair Practice of the NASD and who are either members in good standing of the NASD or are foreign banks, dealers or institutions not eligible for membership in the NASD who represent to you that they will promptly reoffer such Securities at the Public Offering Price and will abide by the conditions with respect to foreign banks, dealers and institutions set forth in Section 3(e) hereof. Upon our request, you will advise us of the identity of any dealer to whom you allowed a Reallowance and any Underwriter or dealer from whom you received a Reallowance. In connection with any Offering involving the public distribution of the Securities through two or more underwriting syndicates, you agree to be bound by, and all offers to sell and sales by you of Securities shall be subject to, such limitations on offers to sell and sales of Securities as we may advise you in a written communication, and you agree that any sales made by you to other dealers shall be made only to such dealers as agree, in their offers to sell and sales, to be bound by the same limitations. (d) Over-allotment; Stabilization; Unsold Allotments. We may, with respect to any Offering, be authorized (i) to over-allot in arranging for sales of Securities to Selected Dealers and to institutions and other retail purchasers and, if necessary, to purchase Securities or other securities of the issuer at such prices as we may determine for the purpose of covering such over- allotments and (ii) for the purpose of stabilizing the market in the Securities, to make purchases and sales of Securities or of any other securities of the issuer or any guarantor or insurer of the Securities as we may advise you by written communication or otherwise, in the open market or otherwise, for long or short account, on a when-issued basis or otherwise, at such prices, in such amounts and in such manner as we may determine. You agree that upon our request at any time and from time to time prior to the termination of the provisions of Section 3(c) hereof with respect to any Offering, you will report to us the amount of Securities purchased by you pursuant to such Offering which then remain unsold by you and will, upon our request at any such time, sell to us for our account or the account of one or more Underwriters such amount of such unsold Securities as we may designate at the Public Offering Price less an amount to be determined by us not in excess of the Concession. If, prior to the later of (i) the termination of the provisions of Section 3(c) hereof with respect to any Offering or (ii) the covering by us of any short position created by us in connection with such Offering for our account or the account of one or more Underwriters, we purchase or contract to purchase for our account or the account of one or more Underwriters in the open market or otherwise any Securities purchased by you under this Agreement as part of such Offering, you agree to pay us on demand an amount equal to the Concession with respect to such Securities (unless you shall have purchased such Securities pursuant to Section 2 hereof at the Public Offering Price, in which case we shall not be obligated to pay such Concession to you pursuant to Section 2), plus, in each case, transfer taxes, broker's commissions or dealer's mark-ups, if any, and accrued interest, amortization of original issue discount or accumulated dividends, if any, paid in connection with such purchase or contract to purchase. (e) NASD. The provisions of this Section 3(e) shall apply to any Offering subject to the By-Laws, rules and regulations of the NASD. You represent and warrant that you are a dealer actually engaged in the investment banking or securities business and you are either a member in good standing of the NASD or, if you are not such a member, you are a foreign bank, dealer or institution not eligible for membership in the NASD which agrees to make no sales within the United States of America, its territories or possessions or to persons who are citizens thereof or residents therein (other than through us) and to comply with all applicable rules of the NASD, including the NASD's Interpretation with Respect to Free-Riding and Withholding, in making sales outside the United States of America. You agree that, in connection with any purchase or sale of any of the Securities wherein a selling concession, discount or other allowance is received or granted, (i) you will comply with the provisions of Section 24 of Article III of the NASD's Rules of Fair Practice and (ii) if you are a non-NASD member broker or dealer in a foreign country, you will also comply, (A) as though you were an NASD member, with the provisions of Sections 8 and 36 thereof and (B) with Section 25 thereof as that section applies to a non-NASD member broker or dealer in a foreign country. You represent that you are fully familiar with the above provisions of the Rules of Fair Practice of the NASD. You represent, by your participation in an Offering, that neither you nor any of your directors, officers, partners or "persons associated with" you (as defined in the By-Laws of the NASD, which definition includes counsel, financial consultants and advisors, finders, members of the selling or distribution group, and any other persons associated with or related to any of the foregoing) or any broker-dealer (i) within the last eighteen months has purchased in private transactions, or intends before, at or within six months after the commencement of the public offering of the Securities, to purchase in private transactions, any securities (including warrants or options) of the issuer, its parent (if any), any guarantor or insurer of the Securities or any subsidiary of any of the foregoing or (ii) within the last twelve months had any dealings with the issuer, any guarantor or insurer of the Securities, any seller other than the foregoing or any subsidiary or controlling person of any of the foregoing (other than in connection with the syndicate agreements relating to such Offering) as to which documents or information are required to be filed with the NASD pursuant to its interpretation with Respect to Review of Corporate Financing. If we inform you that the NASD views the Offering as subject to Schedule E to the By-Laws of the NASD, you agree that you shall, to the extent required, offer the Securities in compliance with such Schedule and the NASD's interpretation thereof. If we inform you that the NASD views the Securities as interests in a direct participation program, you agree that you shall, to the extent required, offer the Securities in compliance with the NASD's interpretation of Appendix F of its Rules of Fair Practice. (f) Relationship among Underwriters and Selected Dealers. We shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to an Offering. We may buy Securities from or sell Securities to any Underwriter or Selected Dealer and, with our consent, the Underwriters (if any) and the Selected Dealers may purchase Securities from and sell Securities to each other at the Public Offering Price less all or any part of the Concession. You are not authorized to act as agent for us or any Underwriter or the issuer, any seller other than the issuer, or any guarantor or insurer of any Securities in offering Securities to the public or otherwise. Neither we nor any Underwriter shall be under any obligation to you except for obligations assumed hereby or in any written communication for us to you in connection with any Offering. Furthermore, neither we nor any Underwriter shall be under any liability for or in respect of the validity, value or delivery of or title to, any Securities or any securities issuable upon exercise, conversion or exchange of any Securities; the form of, or the statements contained in, or the validity of, in the case of a Registered Offering, the registration statement, any preliminary prospectus, the prospectus, any amendment or supplement to any of the foregoing or any materials incorporated by reference in any of the foregoing or, in the case of an Offering other than a Registered Offering, any preliminary offering circular, any proof of an offering circular, any offering circular, any amendment or supplement to any of the foregoing or any materials incorporated by reference in any of the foregoing or, in either case, any letters or instruments executed by or on behalf of the issuer, any seller other than the issuer, any guarantor or insurer of the Securities or any other party; the form or validity of any contract or agreement under which any Securities may be issued or which governs the rights of holders of any securities; the form or validity of any agreement for the purchase of the Securities, any agreement among underwriters or any agreements between or among underwriting syndicates; the performance by the issuer, any seller other than the issuer, any guarantor or insurer of the Securities and any other parties of any agreement on its or their parts; the qualification for sale in any jurisdiction of any Securities or securities issuable upon exercise, conversion or exchange of any Securities or the legality for investment of the Securities or such securities under the laws of any jurisdiction; or any matter in connection will any of the foregoing; provided, however, that nothing in this paragraph shall be deemed to relieve us or any Underwriter from any liability imposed by the Securities Act. Nothing contained here or in any written communication from us shall constitute the Selected Dealers an association or partners with us or any Underwriter or with one another or, in the case of an Offering involving the public distribution of the Securities through two or more underwriting syndicates, with any underwriter or manager participating in any such syndicate. If the Selected Dealers, among themselves or with the Underwriters and/or such other underwriters or managers, should be deemed to constitute a partnership for federal income tax purposes, then you elect to be excluded from the application of Subchapter K, Chapter 1, Subtitle A of the Internal Revenue Code of 1986 and agree not to take any position inconsistent with that election. You authorize us, in our discretion, to execute and file on your behalf such evidence of that election as may be required by the Internal Revenue Service. In connection with any Offering you shall be liable for your proportionate amount of any tax, claim, demand or liability that may be asserted against you alone or against one or more Selected Dealers participating in such Offering, or against us or the Underwriters and/or such other underwriters or managers, if any, based upon the claim that the Selected Dealers, or any of them, constitute an association, an unincorporated business or other entity, including, in each case, your proportionate share of any expense incurred in defending against any such tax, claim, demand or liability. (g) Legal Qualifications. It is understood that neither we nor any Underwriter assumes any responsibility with respect to the right of any Selected Dealer to offer or to sell Securities in any jurisdiction, notwithstanding any "Blue Sky" memorandum or survey or any other information that we or any other Underwriter may furnish as to the jurisdictions under the securities laws of which it is believed the Securities may be sold. If you propose to offer Securities outside of the United States of America, its territories or its possessions, you will take, at your own expense and risk, such action, if any, as may be necessary to comply with the laws of each foreign jurisdiction in which you propose to offer Securities. (h) Compliance with Law. You agree that in selling Securities pursuant to any Offering (which agreement shall also be for the benefit of the issuer, any seller other than the issuer and any guarantor or insurer of such Securities) you will comply with the applicable provisions of the Securities Act and the Exchange Act, the applicable rules and regulations of the Commission thereunder, the applicable rules and regulations of the NASD, the applicable rules and regulations of any securities exchange or other self-regulatory organization having jurisdiction over the Offering and the applicable federal, state or foreign laws, rules and regulations specified in Section 3 hereof. 4. Termination. This Agreement may be terminated by either party hereto upon five business days' written notice to the other party; provided, however, that with respect to any Offering, if we receive any such notice from you after you have agreed to participate as a Selected Dealer in any Offering, this Agreement shall remain in full force and effect as to such Offering and shall terminate with respect to such Offering in accordance with the provisions of the following paragraph. Unless this Agreement or any provision hereof is earlier terminated by us, and except as we may advise you in a written communication, the terms and conditions of this Agreement will cease to be applicable to your participation in an Offering at the close of business of the forty-fifth day after the date the Securities are first released for public offering, but in our discretion may be extended by us by written communication for a further period or periods not exceeding an aggregate of forty- five days; provided, however, that the provisions of this Agreement that contemplate obligations surviving the termination of its effectiveness shall survive such termination with respect to any Offering. 5. Amendments. This Agreement may be amended or supplemented by us by written notice to you and without need for further action on your part and, except for amendments or supplements set forth in a written communication to you relating solely to a particular Offering, any such amendment or supplement to this Agreement shall be effective with respect to any Offering effected after this Agreement is so amended or supplemented. Each reference herein to "this Agreement" shall, as appropriate, be to this Master Selected Dealer Agreement as so amended or supplemented. 6. Successors and Assigns. This Agreement shall be binding on, and inure to the benefit of, the parties hereto and the other persons specified in Sections 1 and 3 hereof, and the respective successors and assigns of each of them. 7. APPLICABLE LAW. THIS AGREEMENT AND THE TERMS AND CONDITIONS SET FORTH HEREIN WITH RESPECT TO ANY OFFERING, TOGETHER WITH SUCH SUPPLEMENTARY TERMS AND CONDITIONS WITH RESPECT TO SUCH OFFERING AS MAY BE CONTAINED IN ANY WRITTEN COMMUNICATION TO YOU IN CONNECTION THEREWITH, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. 8. Notices. Any notice from us to you shall be deemed to have been duly given if conveyed to you by written communication or telephone at the address set forth at the end of this Agreement, or at such other address as you shall have advised us in writing. Any notice from you to us shall be deemed to have been duly given if conveyed to us by written communication or telephone at LaSalle St. Securities, Inc., 810 West Washington Boulevard, Chicago, Illinois 60607, Attention: __________. Please confirm, by signing and returning this Agreement to us, your acceptance of any agreement to the terms and conditions of this Agreement (as amended and supplemented from time to time pursuant to Section 5 hereof), together with and subject to any supplementary or alternative terms and conditions contained in any written communication from us in connection with any Offering, all of which shall constitute a binding agreement between you and us, individually or as representative of any Underwriters. Your subscription to, or your acceptance of any reservation of, any Securities pursuant to an Offering shall constitute (i) confirmation that your representations and warranties set forth in this Agreement are true and correct as of the times or for the periods specified herein, (ii) confirmation that your agreements set forth in this Agreement have been and will be performed by you to the extent and at the times required hereby and (iii) acknowledgment that you have requested and received from us sufficient copies of the prospectus or offering circular, as the case may be, with respect to such Offering in order to comply with your undertakings in Section 3(a) or 3(b) hereof. Very truly yours, LASALLE ST. SECURITIES, INC. By:____________________________ CONFIRMED as of the date first written above: __________________________________ (Name of Dealer) By:_______________________________ Title*:___________________________ Address:__________________________ __________________________ __________________ *If signer is not an officer or partner, please attach evidence of authorization. EX-99.J 6 FORM OF CUSTODIAN SERVICING AGREEMENT Exhibit (j) FORM OF CUSTODIAN SERVICING AGREEMENT THIS AGREEMENT is made and entered into as of this ___ day of ____, 1999, by and between LCM Internet Growth Fund, Inc., a Maryland corporation (hereinafter referred to as the "Company"), and Firstar Bank Milwaukee, N.A., a corporation organized under the laws of the State of Wisconsin (hereinafter referred to as the "Custodian"). WHEREAS, the Company is a closed-end management investment company which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Company desires that its securities and cash shall be hereafter held and administered by Custodian pursuant to the terms of this Agreement. NOW, THEREFORE, in consideration of the mutual agreements herein made, the Company and Custodian agree as follows: 1. Definitions The word "securities" as used herein includes stocks, shares, bonds, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase or subscribe for the same, or evidencing or representing any other rights or interests therein, or in any property or assets. The words "officers' certificate" shall mean a request or direction or certification in writing signed in the name of the Company by any two of the President, a Vice President, the Secretary and the Treasurer of the Company, or any other persons duly authorized to sign by the Board of Directors. The word "Board" shall mean Board of Directors of the LCM Internet Growth Fund, Inc. 2. Names, Titles, and Signatures of the Company's Officers An officer of the Company will certify to Custodian the names and signatures of those persons authorized to sign the officers' certificates described in Section 1 hereof, and the names of the members of the Board of Directors, together with any changes which may occur from time to time. 3. Receipt and Disbursement of Money A. Custodian shall open and maintain a separate account or accounts in the name of the Company, subject only to draft or order by Custodian acting pursuant to the terms of this Agreement. Custodian shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Company. Custodian shall make payments of cash to, or for the account of, the Company from such cash only: (a) for the purchase of securities for the portfolio of the Company upon the delivery of such securities to Custodian, registered in the name of the Company or of the nominee of Custodian referred to in Section 7 or in proper form for transfer; (b) for the purchase or redemption of shares of the common stock of the Company upon delivery thereof to Custodian, or upon proper instructions from the Company; (c) for the payment of interest, dividends, taxes, investment adviser's fees or operating expenses (including, without limitation thereto, fees for legal, accounting, auditing and custodian services and expenses for printing and postage); (d) for payments in connection with the conversion, exchange or surrender of securities owned or subscribed to by the Company held by or to be delivered to Custodian; or (e) for other proper corporate purposes certified by resolution of the Board of Directors of the Company. Before making any such payment, Custodian shall receive (and may rely upon) an officers' certificate requesting such payment and stating that it is for a purpose permitted under the terms of items (a), (b), (c), or (d) of this Section 3, Subsection A, and also, in respect of item (e), upon receipt of an officers' certificate 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 corporate purpose, and naming the person or persons to whom such payment is to be made, provided, however, that an officers' certificate need not precede the disbursement of cash for the purpose of purchasing a money market instrument, or any other security with same or next-day settlement, if the President, a Vice President, the Secretary or the Treasurer of the Company issues appropriate oral or facsimile instructions to Custodian and an appropriate officers' certificate is received by Custodian within two business days thereafter. B. Custodian is hereby authorized to endorse and collect all checks, drafts or other orders for the payment of money received by Custodian for the account of the Company. C. Custodian shall, upon receipt of proper instructions, make federal funds available to the Company as of specified times agreed upon from time to time by the Company and the Custodian in the amount of checks received in payment for shares of the Company which are deposited into the Company's account. D. If so directed by the Company, Custodian will invest any and all available cash in overnight cash-equivalent investments as specified by the investment adviser to the FundCompany. 4. Segregated Accounts Upon receipt of proper instructions, the Custodian shall establish and maintain a segregated account(s) for and on behalf of the Company, into which account(s) may be transferred cash and/or securities. 5. Transfer, Exchange, Redelivery, etc. of Securities Custodian shall have sole power to release or deliver any securities of the Company held by it pursuant to this Agreement. Custodian agrees to transfer, exchange or deliver securities held by it hereunder only: (a) for sales of such securities for the account of the Company upon receipt by Custodian of payment therefore; (b) when such securities are called, redeemed or retired or otherwise become payable; (c) for examination by any broker selling any such securities in accordance with "street delivery" custom; (d) in exchange for, or upon conversion into, other securities alone or other securities and cash whether pursuant to any plan of merger, consolidation, reorganization, recapitalization or readjustment, or otherwise; (e) upon conversion of such securities pursuant to their terms into other securities; (f) upon exercise of subscription, purchase or other similar rights represented by such securities; (g) for the purpose of exchanging interim receipts or temporary securities for definitive securities; or (h) for other proper corporate purposes. As to any deliveries made by Custodian pursuant to items (a), (b), (d), (e), (f), and (g), securities or cash receivable in exchange therefor shall be deliverable to Custodian. Before making any such transfer, exchange or delivery, Custodian shall receive (and may rely upon) an officers' certificate requesting such transfer, exchange or delivery, and stating that it is for a purpose permitted under the terms of items (a), (b), (c), (d), (e), (f),or (g), of this Section 5 and also, in respect of item (h), upon receipt of an officers' certificate 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, provided, however, that an officers' certificate need not precede any such transfer, exchange or delivery of a money market instrument, or any other security with same or next-day settlement, if the President, a Vice President, the Secretary or the Treasurer of the Company issues appropriate oral or facsimile instructions to Custodian and an appropriate officers' certificate is received by Custodian within two business days thereafter. 6. Custodian's Acts Without Instructions Unless and until Custodian receives an officers' certificate to the contrary, Custodian shall: (a) present for payment all coupons and other income items held by it for the account of the Company, which call for payment upon presentation and hold the cash received by it upon such payment for the account of the Company; (b) collect interest and cash dividends received, with notice to the Company, for the account of the Company; (c) hold for the account of the Company hereunder all stock dividends, rights and similar securities issued with respect to any securities held by it hereunder; and (d) execute, as agent on behalf of the Company, all necessary ownership certificates required by the Internal Revenue Code of 1986, as amended (the "Code") or the Income Tax Regulations (the "Regulations") of the United States Treasury Department (the "Treasury Department") or under the laws of any state now or hereafter in effect, inserting the Company's name on such certificates as the owner of the securities covered thereby, to the extent it may lawfully do so. 7. Registration of Securities Except as otherwise directed by an officers' certificate, Custodian shall register all securities, except such as are in bearer form, in the name of a registered nominee of Custodian as defined in the Code and any Regulations of the Treasury Department issued thereunder or in any provision of any subsequent federal tax law exempting such transaction from liability for stock transfer taxes, and shall execute and deliver all such certificates in connection therewith as may be required by such laws or regulations or under the laws of any state. All securities held by Custodian hereunder shall be at all times identifiable in its records held in an account or accounts of Custodian containing only the assets of the Company. The Company shall from time to time furnish to Custodian appropriate instruments to enable Custodian to hold or deliver in proper form for transfer, or to register in the name of its registered nominee, any securities which it may hold for the account of the Company and which may from time to time be registered in the name of the Company. 8. Voting and Other Action Neither Custodian nor any nominee of Custodian shall vote any of the securities held hereunder by or for the account of the Company, except in accordance with the instructions contained in an officers' certificate. Custodian shall deliver, or cause to be executed and delivered, to the Company all notices, proxies and proxy soliciting materials with respect to such securities, such proxies to be executed by the registered holder of such securities (if registered otherwise than in the name of the Company), but without indicating the manner in which such proxies are to be voted. 9. Transfer Tax and Other Disbursements The Company shall pay or reimburse Custodian from time to time for any transfer taxes payable upon transfers of securities made hereunder, and for all other necessary and proper disbursements and expenses made or incurred by Custodian in the performance of this Agreement. Custodian shall execute and deliver such certificates in connection with securities delivered to it or by it under this Agreement as may be required under the provisions of the Code and any Regulations of the Treasury Department issued thereunder, or under the laws of any state, to exempt from taxation any exempt transfers and/or deliveries of any such securities. 10. Concerning Custodian Custodian shall be paid as compensation for its services pursuant to this Agreement such compensation as may from time to time be agreed upon in writing between the two parties. Until modified in writing, such compensation shall be as set forth in Exhibit A attached hereto. Custodian shall not be liable for any action taken in good faith upon any certificate herein described or certified copy of any resolution of the Board, and may rely on the genuineness of any such document which it may in good faith believe to have been validly executed. The Company agrees to indemnify and hold harmless Custodian and its nominee from all taxes, charges, expenses, assessments, claims and liabilities (including reasonable counsel fees) incurred or assessed against it or by its nominee in connection with the performance of this Agreement, except such as may arise from its or its nominee's own bad faith, negligent action, negligent failure to act or willful misconduct. Custodian is authorized to charge any account of the Company for such items. In the event of any advance of cash for any purpose made by Custodian resulting from orders or instructions of the Company, or in the event that Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominee's own bad faith, negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the Company shall be security therefor. Custodian agrees to indemnify and hold harmless the Company from all charges, expenses, assessments, and claims/liabilities (including reasonable counsel fees) incurred or assessed against it in connection with the performance of this Agreement, except such as may arise from the Company's own bad faith, negligent action, negligent failure to act, or willful misconduct. 11. Subcustodians Custodian is hereby authorized to engage another bank or trust company as a subcustodian for all or any part of the Company's assets, so long as any such bank or trust company is itself qualified under the 1940 Act and the rules and regulations thereunder and provided further that, if the Custodian utilizes the services of a subcustodian, the Custodian shall remain fully liable and responsible for any losses caused to the Company by the subcustodian as fully as if the Custodian was directly responsible for any such losses under the terms of this Agreement. Notwithstanding anything contained herein, if the Company requires the Custodian to engage specific subcustodians for the safekeeping and/or clearing of assets, the Company agrees to indemnify and hold harmless Custodian from all claims, expenses and liabilities incurred or assessed against it in connection with the use of such subcustodian in regard to the Company's assets, except as may arise from Custodian's own bad faith, negligent action, negligent failure to act or willful misconduct. 12. Reports by Custodian Custodian shall furnish the Company periodically as agreed upon with a statement summarizing all transactions and entries for the account of the Company. Custodian shall furnish to the Company, at the end of every month, a list of the portfolio securities for the Company showing the aggregate cost of each issue. The books and records of Custodian pertaining to its actions under this Agreement shall be open to inspection and audit at reasonable times by officers of, and by auditors employed by, the Company. 13. Termination or Assignment This Agreement may be terminated by the Company, or by Custodian, on ninety (90) days notice, given in writing and sent by registered mail to: Mr. James C. Tyler Attn.: Mutual Fund Services Firstar Bank Milwaukee, N.A. 615 East Michigan Street Milwaukee, WI 53202 or to the Company at: Mr. Barry J. Glasgow LCM Internet Growth Fund, Inc. 810 W. Washington Blvd. Chicago, IL 60607 as the case may be. Upon any termination of this Agreement, pending appointment of a successor to Custodian or a vote of the shareholders of the Company (if required) to dissolve or to function without a custodian of its cash, securities and other property, Custodian shall not deliver cash, securities or other property of the Company to the Company, but may deliver them to a bank or trust company of its own selection that meets the requirements of the 1940 Act as a Custodian for the Company to be held under terms similar to those of this Agreement, provided, however, that Custodian shall not be required to make any such delivery or payment until full payment shall have been made by the Company of all liabilities constituting a charge on or against the properties then held by Custodian or on or against Custodian, and until full payment shall have been made to Custodian of all its fees, compensation, costs and expenses, subject to the provisions of Section 10 of this Agreement. This Agreement may not be assigned by Custodian without the consent of the Company, authorized or approved by a resolution of its Board of Directors. 14. Deposits of Securities in Securities Depositories No provision of this Agreement shall be deemed to prevent the use by Custodian of a central securities clearing agency or securities depository, provided, however, that Custodian and the central securities clearing agency or securities depository meet all applicable federal and state laws and regulations, and the Board of Directors of the Company approves by resolution the use of such central securities clearing agency or securities depository. 15. Records Custodian shall keep records relating to its services to be performed hereunder, in the form and manner, and for such period, as it may deem advisable and is agreeable to the Company but not inconsistent with the rules and regulations of appropriate government authorities, in particular Section 31 of the 1940 Act and the rules thereunder. Custodian agrees that all such records prepared or maintained by the Custodian relating to the services performed by Custodian hereunder are the property of the Company and will be preserved, maintained, and made available in accordance with such section and rules of the 1940 Act and will be promptly surrendered to the Company on and in accordance with its request. 16. Governing Law This Agreement shall be governed by Wisconsin law. However, nothing herein shall be construed in a manner inconsistent with the 1940 Act on any rule or regulation promulgated by the Securities and Exchange Commission thereunder. 17.Year 2000 Representation Custodian hereby represents and warrants that it does not anticipate that the "Year 2000 Problem" will have a material impact on its ability to perform its duties under this Agreement. The "Year 2000 Problem" refers to the inability of computer systems to properly process and calculate date-related information and data from and after January 1, 2000. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the day and year first written above. LCM INTERNET GROWTH FUND, INC. FIRSTAR BANK MILWAUKEE, N.A. By:______________________________ By:________________________________ Attest:__________________________ Attest:____________________________ Custody Services Annual Fee Schedule - Domestic Funds Exhibit A Annual fee based upon market value 2 basis points per year Minimum annual fee - $3,000 Investment transactions (purchase, sale, exchange, tender, redemption, maturity, receipt, delivery): $12.00 per book entry security (depository or Federal Reserve system) $25.00 per definitive security (physical) $25.00 per mutual fund trade $75.00 per Euroclear $ 8.00 per principal reduction on pass-through certificates $35.00 per option/futures contract $15.00 per variation margin $15.00 per Fed wire deposit or withdrawal Variable Amount Demand Notes: Used as a short-term investment, variable amount notes offer safety and prevailing high interest rates. Our charge, which is 1/4 of 1%, is deducted from the variable amount note income at the time it is credited to your account. Plus reasonable out-of-pocket expenses. Foreign securities custody services will be quoted separately. Fees and out-of-pocket expenses are billed to the Company monthly, based upon market value at the beginning of the month. EX-99.K.1 7 FORM OF STOCK TRANSFER AGENCY AGREEMENT Exhibit (k.1) FORM OF STOCK TRANSFER AGENCY AGREEMENT THIS AGREEMENT entered into as of this ___ day of _________, 1999 by and between LCM Internet Growth Fund, Inc., a Maryland corporation (the "Company") and Firstar Bank Milwaukee, N.A., a national banking corporation (the "Agent"). WHEREAS, the Company desires to appoint the Agent as its registrar, transfer agent, dividend disbursing agent and agent in connection with certain other activities; and WHEREAS, the Agent desires to act in said capacities. NOW, THEREFORE, in consideration of the mutual covenants of the parties made herein and the payments herein provided for, the parties hereby agree as follows: 1. Appointment. The Company hereby appoints the Agent to serve as registrar, transfer agent for the Company's authorized and issued shares of common stock, $0.01 par value (the "Shares"), dividend disbursing agent and agent in connection with the Company's distribution reinvestment plan (the "Plan") as described in the Company's prospectus (which is included in its Registration Statement on Form N-2 as filed with the Securities and Exchange Commission (the "SEC")). The Agent hereby accepts said appointment and agrees to perform its duties in accordance with the provisions of this Agreement. 2. Term; Amendment. The Agent's appointment shall take effect as of the date hereof and, unless sooner terminated as provided herein, shall continue automatically in effect for successive annual periods. This Agreement may be terminated by either party upon 90 days written notice to the other. This Agreement may be amended only by the mutual written consent of the parties. 3. Duties of the Agent. The Agent hereby agrees to perform the following services: (a) In accordance with procedures established from time to time by agreement between the Company and the Agent, the Agent shall: (i) receive for acceptance orders for the purchase of Shares and promptly deliver payment and appropriate documentation thereof to the Company's custodian; (ii) pursuant to purchase orders, issue and record the appropriate number of Shares and hold such Shares in the appropriate shareholder account; (iii) effect transfers of Shares by the registered owners thereof upon receipt of appropriate documentation; (iv) prepare and transmit payments for dividends and distributions declared by the Company; (v) act as agent pursuant to the Plan (a copy of which is attached hereto as Exhibit A); (vi) issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Agent of indemnification satisfactory to the Agent and protecting the Agent and the Company and, if requested by the Agent, a surety bond from the effected shareholder, and the Agent may, at its option, issue replacement certificates in place of mutilated certificates upon presentation thereof and without such indemnity; (vii) maintain records of account for and advise the Company and its shareholders as to the foregoing; and (viii) record the issuance of Shares of the Company and maintain, pursuant to Rule 17ad-10(e) under the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), a record of the total number of Shares of the Company which are authorized, based upon data provided to it by the Company, and issued and outstanding. (b) In addition to and not in lieu of the services set forth in the above paragraph (a), the Agent shall: (i) perform the customary services of registrar, transfer agent, dividend disbursing agent and agent for the Plan, including, but not limited to: maintaining all shareholder accounts, preparing shareholder meeting lists, 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 of Shares and other confirmable transactions in shareholder accounts, preparing and mailing activity statements for shareholders and providing shareholder account information; and (ii) provide reports which will enable the Company to monitor the states in which registered shareholders are located. (c) In effecting transfers of Shares by the registered owners thereof, the Agent may rely upon the Uniform Commercial Code, the provisions of Chapter 112 of the Wisconsin Statutes and any other statutes which, in the opinion of counsel, protect the Agent and the Company in not requiring complete documentation, in registering transfers without inquiry into adverse claims, in delaying registration for the purpose of such inquiry or in refusing registration where, in its judgment, an adverse claim necessitates such refusal. 4. Fees and Expenses. The Company agrees to pay the Agent for the performance of the duties set forth in this Agreement, the amounts set forth in Exhibit B attached hereto. Such fees and out-of-pocket expense identified in Exhibit B may be changed from time to time subject to mutual agreement between the parties. The Company agrees to pay all fees and reimburseable expenses within ten (10) business days following receipt of the billing notice. 5. Representations and Warranties of the Agent. The Agent represents and warrants to the Company that: (a) It is a national bank duly organized and in good standing under the laws of the State of Wisconsin; (b) It is duly qualified to carry on its business in the State of Wisconsin; (c) It is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement; (d) All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement; (e) It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement; (f) It is a registered transfer agent under the Exchange Act; (g) It will comply with all applicable requirements of the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act, the Investment Company Act of 1940, as amended (the "Investment Company Act"), and any laws, rules and regulations of governmental authorities having jurisdiction; and (h) It does not anticipate that the "Year 200 Problem" will have a material impact on its ability to perform its duties under this Agreement. The "Year 2000 Problem" refers to the inability of computer systems to properly process and calculate date-related information and data from and after January 1, 2000. 6. Representations and Warranties of the Company. The Company represents and warrants to the Agent that: (a) It is a corporation duly organized and in good standing under the laws of the State of Maryland; (b) It is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement; (c) All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement; (d) It is a closed-end non-diversified investment company registered under the Investment Company Act; (e) A registration statement under the Securities Act will be made effective and appropriate state securities law filings will be made with respect to all Shares of the Fund being offered for sale; and (f) It shall make all required filings under federal and state securities laws. 7. Covenants of the Company and the Agent. (a) The Company shall promptly furnish to the Agent the following: (i) a certified copy of the resolution of the Board of Directors of the Company authorizing the appointment of the Agent and the execution and delivery of this Agreement; (ii) a copy of the Company's Articles of Incorporation and By-Laws, and all amendments thereto; (iii) specimen signatures of all officers of the Company authorized to sign stock certificates; (iv) a certificate of the Company's Secretary as to the number of Shares authorized, issued and outstanding; and (v) specimens of all forms of certificates for Shares, certified by the Company's Secretary. (b) The Agent agrees to establish and maintain facilities and procedures reasonably acceptable to the Company for the safekeeping of stock certificates, check forms and facsimile imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. (c) The Agent 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, and the rules thereunder, the Agent agrees that all such records prepared or maintained by the Agent relating to the services to be performed by the Agent hereunder are the property of the Company and will be preserved, maintained and made available in accordance with such section and rules, and will be surrendered promptly to the Company on and in accordance with its request. (d) The Agent and the Company 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. (e) In case of any requests or demands for the inspection of the shareholder records of the Company, the Agent will endeavor to notify the Company and to secure instructions from an authorized officer of the Company as to such inspection. The Agent 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. 8. Performance of Services; Limitation of Liability. (a) The Agent shall exercise reasonable care in the performance of its duties under this Agreement. The Agent shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with matters to which this Agreement relates, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond the Agent's control, except a loss resulting from the Agent's refusal or failure to comply with the terms of this Agreement or from bad faith, negligence or willful misconduct on its part in the performance of its duties under this Agreement. Notwithstanding any other provision of this Agreement, the Company shall indemnify and hold harmless the Agent from and against any and all claims, demands, losses, expenses and liabilities (whether with or without basis in fact or law) of any and every nature (including reasonable attorneys' fees) which the Agent may sustain or incur or which may be asserted against the Agent by any person arising out of any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to the Agent by any duly authorized officer of the Company, such duly authorized officer to be included in a list of authorized officers furnished to the Agent and as amended from time to time in writing by resolution of the Board of Directors of the Company. (b) The Agent shall indemnify and hold the Company harmless from and against any and all claims, demands, losses, expenses and liabilities (whether with or without basis in fact or law) of any and every nature (including reasonable attorneys' fees) which the Company may sustain or incur or which may be asserted against the Company by any person arising out of any action taken or omitted to be taken by the Agent as a result of the Agent's refusal or failure to comply with the terms of this Agreement, its bad faith, negligence or willful misconduct. (c) In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, the Agent shall take all reasonable steps to minimize service interruptions for any period that such interruption continues beyond the Agent's control. The Agent will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of the Agent. The Agent agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Company shall be entitled to inspect the Agent's premises and operating capabilities at any time during regular business hours of the Agent, upon reasonable notice to the Agent. (d) Regardless of the above, the Agent reserves the right to reprocess and correct administrative errors at its own expense. (e) In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation which presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim which may be the subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section. The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor's prior written consent. 9. Notices. Notices of any kind to be given by either party to the other party shall be in writing and shall be duly given if mailed or otherwise delivered as follows: Notice to the Agent, to: Ms. Suzanne Barnes Firstar Bank Milwaukee, N.A. Corporate Trust Department 1555 North RiverCenter Drive, Suite 301 Milwaukee, Wisconsin 53212 Tele: 414-905-5001 Fax: 414-905-5049 Notice to the Company, to: Mr. Barry J. Glasgow LCM Internet Growth Fund, Inc. 810 West Washington Blvd. Chicago, Illinois 60607 Tele: 312-705-3028 Fax: 312-705-3000 10. Duties in the Event of Termination. In the event that, in connection with termination, a successor to any of the Agent's duties or responsibilities hereunder is designated by the Company by written notice to the Agent, the Agent will promptly, upon such termination and at the expense of the Company, transfer to such successor all relevant books, records, correspondence and other data established or maintained by the Agent under this Agreement in a form reasonably acceptable to the Company (if such form differs from the form in which the Agent has maintained, the Company shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from the Agent's personnel in the establishment of books, records and other data by such successor. 11. Governing Law. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Wisconsin. However, nothing herein shall be construed in a manner inconsistent with the Investment Company Act or any rule or regulation promulgated by the SEC thereunder. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the day and year first written above. LCM INTERNET GROWTH FUND, INC. FIRSTAR BANK MILWAUKEE, N.A. By:___________________________ By:__________________________ Its:__________________________ Its:_________________________ Attest Attest By:___________________________ By:__________________________ Exhibit A TERMS AND CONDITIONS OF LCM INTERNET GROWTH FUND, INC. DISTRIBUTION REINVESTMENT PLAN Holders of shares of common stock of LCM Internet Growth Fund, Inc. (the "Fund) are advised as follows with respect to the Fund's Distribution Reinvestment Plan (the "Plan"): 1. Participation. Each holder of shares of common stock of the Fund will automatically be deemed to have elected to be a participant in the Plan, unless Firstar Bank Milwaukee, N.A. (the "Plan Agent") is otherwise instructed by such shareholder, in writing, to have all distributions, net of any applicable withholding tax, paid in cash. A shareholder who does not wish to participate in the Plan will receive all distributions, the record date for which follows the receipt by the Plan Agent of such shareholder's instructions, in cash and will be paid by check mailed directly to such shareholder by the Plan Agent, as dividend-disbursing agent. The Plan Agent will act as agent for participants in administering the Plan and will open an account for each participant under the Plan in the same name as his or her outstanding shares of common stock are registered. 2. Distributions. (a) General. Whenever the directors of the Fund declare an income dividend or capital gains distribution payable, at the option of the shareholder, in shares of common stock or cash, non-participants in the Plan will receive such distribution in cash and participants in the Plan will receive such distribution in shares of common stock to be issued by the Fund or purchased on the open market by the Plan Agent. Any such shares so distributed will be held by the Plan Agent for each participant's account. (b) Market Premium Issuances. If, on the distribution payment date or, if that date is not an American Stock Exchange trading day, the next preceding trading day (the "Valuation Date"), the market price per share of common stock equals or exceeds the net asset value per share on that date, the Fund will issue shares of common stock to participants valued at net asset value; provided, however, if the net asset value is less than 95% of the market price on the Valuation Date, then participants will be issued shares valued at 95% of the market price. (c) Market Discount Purchases. If, on the Valuation Date, the net asset value per share of common stock exceeds the market price per share on that date, the Plan Agent, as agent for the participants, will, for a period of 30 days, buy shares of the Fund's common stock in the open market, on the American Stock Exchange or elsewhere, for each participant's account. If, at the close of business on any day during the purchase period, the market price exceeds the net asset value per share, the Plan Agent will cease open market purchases and the Fund will issue the remaining shares at a price equal to the greater of net asset value or 95% of the then current market price. In a case where the Plan Agent has terminated open market purchases and the Fund has issued the remaining shares, the number of shares received by each participant in respect of the distribution will be based on the weighted average of prices paid for shares purchased in the open market and the price at which the Fund issues the remaining shares. 3. Valuation. For purposes of the Plan, the market price of shares of common stock of the Fund on a particular date shall be the last sales price on the American Stock Exchange at the close of the previous trading day or, if there is no sale on the American Stock Exchange on that date, then the mean between the closing bid and asked quotations for such stock on the American Stock Exchange on such date. The net asset value per share of common stock on a particular date shall be as determined by or on behalf of the Fund. 4. Liability of Plan Agent. The Plan Agent shall at all times act in good faith and agree to use its best efforts within reasonable limits to ensure the accuracy of all services performed under this Plan and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Agent's negligence, bad faith or willful misconduct or that of its employees. Each participant's uninvested funds held by the Plan Agent will not bear interest. The Plan Agent shall have no liability in connection with any inability to purchase Fund shares, within the time provided, or with the timing of any purchases effected. The Plan Agent shall have no responsibility as to the value of the shares of common stock acquired for any participant's account. For the purpose of cash investments, the Plan Agent may commingle participants' funds. 5. Recordkeeping. (a) Stock Certificates. The Plan Agent will hold shares of common stock acquired pursuant to the Plan in non-certificated form in the name of each participant for whom such shares are being held. Upon a participant's written request, the Plan Agent will deliver to the participant, without charge, a certificate or certificates representing all full shares of common stock held by the Plan Agent pursuant to the Plan for the benefit of such participant. Although a participant may from to time have an undivided fractional interest in a share of common stock of the Fund, no certificates for fractional shares will be issued. However, distributions on fractional shares will be credited to each participant's account. In the event of termination of a participant's account under the Plan, the Plan Agent will adjust for any such undivided fractional interest in cash at the market value of the shares of common stock at the time of termination. (b) Confirmations. The Plan Agent will confirm, in writing, each acquisition made for the account of a participant as soon as practicable, but in any event not later than 60 days after the date thereof. (c) Stock Dividends or Splits. Any stock dividends or split shares distributed by the Fund on shares of common stock held by the Plan Agent for a participant will be credited to the participant's account. 6. Proxy Materials. The Plan Agent will forward to each participant any proxy solicitation material received by it and will vote any shares so held for each participant first in accordance with the instructions set forth on the proxies returned by the participant to the Fund and then with respect to any proxies not returned by the participant to the Fund in the same proportion as the Plan Agent votes proxies returned by participants to the Fund. 7. Fees. The Plan Agent's service fee for handling the reinvestment of distributions will be paid by the Fund. Each participant, however, will be charged a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of distributions. Brokerage charges for purchasing small amounts of stock for individual accounts through the Plan are expected to be less than the usual brokerage charges for such transactions because the Plan Agent will be purchasing shares for all participants in blocks and prorating the lower commission thus attainable. The Plan Agent may use its affiliates and/or affiliates of the Fund's investment adviser for all trading activity relative to the Plan. 8. Termination. (a) By Participant. A participant may terminate his or her account under the Plan by notifying the Plan Agent, in writing, at Firstar Bank Milwaukee, N.A., c/o LCM Internet Growth Fund, Inc., P. O. Box 2077, Milwaukee, Wisconsin 53201-2077. Such termination will be effective immediately if notice is received by the Plan Agent prior to the distribution record date; otherwise, such termination will be effective, with respect to any subsequent distribution, on the first trading day after the distribution paid for such record date shall have been credited to such participant's account. (b) By Plan Agent or Fund. The Plan may be terminated by the Plan Agent or the Fund with respect to any distributions paid subsequent to written notice of the termination mailed to participants at least 30 days before the record date for the payment of any distribution. (c) Effect of Termination. Upon any termination, the Plan Agent will cause a certificate or certificates to be issued for the full shares held for each participant under the Plan and cash adjustment for any fractional shares to be delivered to him or her without charge. 9. Amendment. The terms and conditions of the Plan may be amended by the Plan Agent or the Fund at any time or times but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to each participant appropriate written notice at least 30 days prior to the effective date thereof. The amendment shall be deemed to be accepted by each participant unless, prior to the effective date thereof, the Plan Agent receives written notice of the termination of the participant's account under the Plan. Any such amendment may include an appointment by the Plan Agent, in its place and stead, of a successor Plan Agent under these terms and conditions, with full power and authority to perform all or any acts to be performed by the Plan Agent under these terms and conditions. 10. Applicable Law. These terms and conditions shall be governed by the laws of the State of Maryland. Exhibit B Annual Fee $16.00 per shareholder account Minimum annual fees of $25,500 Plus reasonable Out-of-Pocket Expenses, including but not limited to: Telephone - toll-free lines Proxies Postage Retention of records (with prior approval) Insurance Microfilm/fiche of records Programming (with prior approval) Special reports Stationery/envelopes ACH fees Mailing ACH Shareholder Services $125.00 per month per fund group $ .50 per account setup and/or change $ .35 per item for EFT payments and purchases $3.50 per correction, reversal, return item Additional Shareholder Fees (Billed to Investors) Any outgoing wire transfer $12.00 / wire Return check fee $25.00 / item Stop payment $20.00 / stop (liquidation, dividend, draft check) Research fee $ 5.00 / item (for requested items of the second calendar year [or previous] to the request) (cap at $25.00) EX-99.K.2 8 FORM OF FUND ADMINISTRATION SERVICING AGREEMENT Exhibit (k.2) FORM OF FUND ADMINISTRATION SERVICING AGREEMENT THIS AGREEMENT is made and entered into as of this ___ day of ____, 1999, by and between LCM Internet Growth Fund, Inc., a Maryland corporation (hereinafter referred to as the "Company") and Firstar Mutual Fund Services, LLC, a corporation organized under the laws of the State of Wisconsin (hereinafter referred to as "FMFS"). WHEREAS, the Company is a closed-end management investment company which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, FMFS is a trust company and, among other things, is in the business of providing fund administration services for the benefit of its customers; and WHEREAS, the Company desires to retain FMFS to act as Administrator for the Company. NOW, THEREFORE, in consideration of the mutual agreements herein made, the Company and FMFS agree as follows: 1. Appointment of Administrator The Company hereby appoints FMFS as Administrator of the Company on the terms and conditions set forth in this Agreement, and FMFS hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement in consideration of the compensation provided for herein. 2. Duties and Responsibilities of FMFS A. General Management 1. Act as liaison among all Company service providers 2. Coordinate board communication by: a. Assisting Company counsel in establishing meeting agendas b. Preparing board reports based on financial and administrative data c. Evaluating independent auditor d. Securing and monitoring fidelity bond and director and officer liability coverage, and making the necessary SEC filings relating thereto e. Preparing minutes of meetings of the board and shareholders 3. Audits a. Prepare appropriate schedules and assist independent auditors b. Provide information to SEC and facilitate audit process c. Provide office facilities 4. Assist in overall operations of the Company 5. Pay Company expenses upon written authorization from the Company B. Compliance 1. Regulatory Compliance a. Monitor compliance with 1940 Act requirements, including: 1) Asset diversification tests 2) Total return and SEC yield calculations 3) Maintenance of books and records under Rule 31a-3 4) Code of Ethics for the disinterested directors of the Company b. Monitor Company's compliance with the policies and investment limitations of the Company as set forth in its Prospectus and Statement of Additional Information 2. SEC Registration and Reporting a. Assist Company counsel in updating Prospectus and Statement of Additional Information (if necessary) and in preparing proxy statements b. Prepare annual and semiannual reports c. Coordinate the printing of publicly disseminated Prospectuses and reports d. File fidelity bond under Rule 17g-1 e. File shareholder reports under Rule 30b2-1 f. Prepare and file reports and other documents required by U.S. stock exchanges on which the Company's shares are listed 3. IRS Compliance a. Monitor Company's status as a regulated investment company under Subchapter M through review of the following: 1) Asset diversification requirements 2) Qualifying income requirements 3) Distribution requirements b. Calculate required distributions (including excise tax distributions) C. Financial Reporting 1. Provide financial data required by Company's Prospectus and Statement of Additional Information 2. Prepare financial reports for shareholders, the board, the SEC, U.S. stock exchanges on which the Company's shares are listed and independent auditors 3. Supervise the Company's custodian and accountants in the maintenance of the Company's general ledger and in the preparation of the Company's financial statements, including oversight of expense accruals and payments, of the determination of net asset value of the Company's net assets and of the Company's shares, and of the declaration and payment of dividends and other distributions to shareholders D. Tax Reporting 1. Prepare and file on a timely basis appropriate federal and state tax returns including Forms 1120/8610 with any necessary schedules 2. Prepare state income breakdowns where relevant 3. File Form 1099 Miscellaneous for payments to directors and other service providers 4. Monitor wash losses 5. Calculate eligible dividend income for corporate shareholders 3. Compensation The Company, agrees to pay FMFS for the performance of the duties listed in this Agreement, the fees and reasonable out-of-pocket expenses as set forth in the attached Exhibit A. These fees may be changed from time to time, subject to mutual written Agreement between the Company and FMFS. The Company agrees to pay all fees and reimbursable expenses within ten (10) business days following the receipt of the billing notice. 4. Performance of Service; Limitation of Liability A. FMFS shall exercise reasonable care in the performance of its duties under this Agreement. FMFS shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with matters to which this Agreement relates, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond FMFS's control, except a loss resulting from FMFS's refusal or failure to comply with the terms of this Agreement or from bad faith, negligence, or willful misconduct on its part in the performance of its duties under this Agreement. Notwithstanding any other provision of this Agreement, the Company shall indemnify and hold harmless FMFS from and against any and all claims, demands, losses, expenses, and liabilities (whether with or without basis in fact or law) of any and every nature (including reasonable attorneys' fees) which FMFS may sustain or incur or which may be asserted against FMFS by any person arising out of any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to FMFS by any duly authorized officer of the Company, such duly authorized officer to be included in a list of authorized officers furnished to FMFS and as amended from time to time in writing by resolution of the Board of Directors of the Company. FMFS shall indemnify and hold the Company harmless from and against any and all claims, demands, losses, expenses, and liabilities (whether with or without basis in fact or law) of any and every nature (including reasonable attorneys' fees) which the Company may sustain or incur or which may be asserted against the Company by any person arising out of any action taken or omitted to be taken by FMFS as a result of FMFS's refusal or failure to comply with the terms of this Agreement, its bad faith, negligence, or willful misconduct. In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, FMFS shall take all reasonable steps to minimize service interruptions for any period that such interruption continues beyond FMFS's control. FMFS will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of FMFS. FMFS agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Company shall be entitled to inspect FMFS's premises and operating capabilities at any time during regular business hours of FMFS, upon reasonable notice to FMFS. Regardless of the above, FMFS reserves the right to reprocess and correct administrative errors at its own expense. B. In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation which presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim which may be the subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section. The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor's prior written consent. 5. Proprietary and Confidential Information FMFS agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Company all records and other information relative to the Company and prior, present, or potential shareholders of the Company (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company, which approval shall not be unreasonably withheld and may not be withheld where FMFS may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Company. 6. Data Necessary to Perform Services The Company or its agent, which may be FMFS, shall furnish to FMFS the data necessary to perform the services described herein at times and in such form as mutually agreed upon. 7. Term of Agreement This Agreement shall become effective as of the date hereof and, unless sooner terminated as provided herein, shall continue automatically in effect for successive annual periods. The Agreement may be terminated by either party upon giving ninety (90) days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. However, this Agreement may be amended by mutual written consent of the parties. 8. Notices Notices of any kind to be given by either party to the other party shall be in writing and shall be duly given if mailed or delivered as follows: Notice to FMFS shall be sent to: Mr. James C. Tyler Firstar Mutual Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202 and notice to the Company shall be sent to: Mr. Barry J. Glasgow LCM Internet Growth Fund, Inc. 810 W. Washington Blvd. Chicago, IL 60607 9. Duties in the Event of Termination In the event that, in connection with termination, a successor to any of FMFS's duties or responsibilities hereunder is designated by the Company by written notice to FMFS, FMFS will promptly, upon such termination and at the expense of the Company, transfer to such successor all relevant books, records, correspondence, and other data established or maintained by FMFS under this Agreement in a form reasonably acceptable to the Company (if such form differs from the form in which FMFS has maintained, the Company shall pay any expenses associated with transferring the data to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from FMFS's personnel in the establishment of books, records, and other data by such successor. 10. Governing Law This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Wisconsin. However, nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or regulation promulgated by the Securities and Exchange Commission thereunder. 11. Records FMFS shall keep records relating to the services to be performed hereunder, in the form and manner, and for such period as it may deem advisable and is agreeable to the Company but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act and the rules thereunder. FMFS agrees that all such records prepared or maintained by FMFS relating to the services to be performed by FMFS hereunder are the property of the Company and will be preserved, maintained, and made available in accordance with such section and rules of the 1940 Act and will be promptly surrendered to the Company on and in accordance with its request. 12. Year 2000 Representation FMFS hereby represents and warrants that it does not anticipate that the "Year 2000 Problem" will have a material impact on its ability to perform its duties under this Agreement. The "Year 2000 Problem" refers to the inability of computer systems to properly process and calculate date- related information and data from and after January 1, 2000. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the day and year first written above. LCM INTERNET GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC By:______________________________ By:________________________________ Attest:__________________________ Attest:____________________________ Fund Administration and Compliance Annual Fee Schedule - Domestic Funds Exhibit A Annual fee based upon average net fund assets 6 basis points on the first $200 million 5 basis points on the next $500 million 3 basis points on the balance Minimum annual fee: $35,000 Plus reasonable out-of-pocket expense reimbursements,including but not limited to: Postage Programming Stationery Proxies Retention of records Special reports Federal and state regulatory filing fees Certain insurance premiums Expenses from board of directors meetings Auditing and legal expenses Fees and reasonable out-of-pocket expense reimbursements are billed monthly EX-99.K.3 9 FORM OF FUND ACCOUNTING SERVICING AGREEMENT Exhibit (k.3) FORM OF FUND ACCOUNTING SERVICING AGREEMENT THIS AGREEMENT is made and entered into as of this ___ day of ____, 1999, by and between LCM Internet Growth Fund, Inc., a Maryland corporation (hereinafter referred to as the "Company") and Firstar Mutual Fund Services, LLC, a corporation organized under the laws of the State of Wisconsin (hereinafter referred to as "FMFS"). WHEREAS, the Company is a closed-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, FMFS is in the business of providing, among other things, mutual fund accounting services to investment companies; and WHEREAS, the Company desires to retain FMFS to provide accounting services to the Company. NOW, THEREFORE, in consideration of the mutual agreements herein made, the Company and FMFS agree as follows: 1. Appointment of Fund Accountant The Company hereby appoints FMFS as Fund Accountant of the Company on the terms and conditions set forth in this Agreement, and FMFS hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement in consideration of the compensation provided for herein. 2. Duties and Responsibilities of FMFS A. Portfolio Accounting Services: (1) Maintain portfolio records on a trade date+1 basis using security trade information communicated from the investment manager. (2) For each valuation date, obtain prices from a pricing source approved by the Board of Directors of the Company and apply those prices to the portfolio positions. For those securities where market quotations are not readily available, the Board of Directors of the Company shall approve, in good faith, the method for determining the fair value for such securities. (3) Identify interest and dividend accrual balances as of each valuation date and calculate gross earnings on investments for the accounting period. (4) Determine gain/loss on security sales and identify them as, short-term or long-term; account for periodic distributions of gains or losses to shareholders and maintain undistributed gain or loss balances as of each valuation date. B. Expense Accrual and Payment Services: (1) For each valuation date, calculate the expense accrual amounts as directed by the Company as to methodology, rate or dollar amount. (2) Record payments for Company expenses upon receipt of written authorization from the Company. (3) Account for Company expenditures and maintain expense accrual balances at the level of accounting detail, as agreed upon by FMFS and the Company. (4) Provide expense accrual and payment reporting. C. Valuation and Financial Reporting Services: (1) Account for Company share purchases, sales, exchanges, transfers, dividend reinvestments, and other Company share activity as reported by the transfer agent on a timely basis. (2) Apply equalization accounting as directed by the Company. (3) Determine net investment income (earnings) for the Company as of each valuation date. Account for periodic distributions of earnings to shareholders and maintain undistributed net investment income balances as of each valuation date. (4) Maintain a general ledger and other accounts, books, and financial records for the Company in the form as agreed upon. (5) Determine the net asset value of the Company according to the accounting policies and procedures set forth in the Company's current Prospectus. (6) Calculate per share net asset value, per share net earnings, and other per share amounts reflective of Company operations at such time as required by the nature and characteristics of the Company. (7) Communicate, at an agreed upon time, the per share price for each valuation date to parties as agreed upon from time to time. (8) Prepare monthly reports which document the adequacy of accounting detail to support month- end ledger balances. D. Tax Accounting Services: (1) Maintain accounting records for the investment portfolio of the Company to support the tax reporting required for IRS-defined regulated investment companies. (2) Maintain tax lot detail for the investment portfolio. (3) Calculate taxable gain/loss on security sales using the tax lot relief method designated by the Company. (4) Provide the necessary financial information to support the taxable components of income and capital gains distributions to the transfer agent to support tax reporting to the shareholders. E. Compliance Control Services: (1) Support reporting to regulatory bodies and support financial statement preparation by making the Company's accounting records available to the Company and its advisers, the Securities and Exchange Commission, and the outside auditors. (2) Maintain accounting records according to the 1940 Act and regulations provided thereunder. 3. Pricing of Securities For each valuation date, obtain prices from a pricing source selected by FMFS but approved by the Company's Board of Directors and apply those prices to the portfolio positions of the Company. For those securities where market quotations are not readily available, the Company's Board of Directors shall approve, in good faith, the method for determining the fair value for such securities. If the Company desires to provide a price which varies from the pricing source, the Company shall promptly notify and supply FMFS with the valuation of any such security on each valuation date. All pricing changes made by the Company will be in writing and must specifically identify the securities to be changed by CUSIP, name of security, new price or rate to be applied, and, if applicable, the time period for which the new price(s) is/are effective. 4. Changes in Accounting Procedures Any resolution passed by the Board of Directors of the Company that affects accounting practices and procedures under this Agreement shall be effective upon written receipt and acceptance by the FMFS. 5. Changes in Equipment, Systems, Service, Etc. FMFS reserves the right to make changes from time to time, as it deems advisable, relating to its services, systems, programs, rules, operating schedules and equipment, so long as such changes do not adversely affect the service provided to the Company under this Agreement. 6. Compensation FMFS shall be compensated for providing the services set forth in this Agreement in accordance with the Fee Schedule attached hereto as Exhibit A and as mutually agreed upon and amended from time to time. The Company agrees to pay all fees and reimbursable expenses within ten (10) business days following the receipt of the billing notice. 7. Performance of Service; Limitation of Liability A. FMFS shall exercise reasonable care in the performance of its duties under this Agreement. FMFS shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with matters to which this Agreement relates, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond FMFS's control, except a loss resulting from FMFS's refusal or failure to comply with the terms of this Agreement or from bad faith, negligence, or willful misconduct on its part in the performance of its duties under this Agreement. Notwithstanding any other provision of this Agreement, the Company shall indemnify and hold harmless FMFS from and against any and all claims, demands, losses, expenses, and liabilities (whether with or without basis in fact or law) of any and every nature (including reasonable attorneys' fees) which FMFS may sustain or incur or which may be asserted against FMFS by any person arising out of any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to FMFS by any duly authorized officer of the Company, such duly authorized officer to be included in a list of authorized officers furnished to FMFS and as amended from time to time in writing by resolution of the Board of Directors of the Company. FMFS shall indemnify and hold the Company harmless from and against any and all claims, demands, losses, expenses, and liabilities (whether with or without basis in fact or law) of any and every nature (including reasonable attorneys' fees) which the Company may sustain or incur or which may be asserted against the Company by any person arising out of any action taken or omitted to be taken by FMFS as a result of FMFS's refusal or failure to comply with the terms of this Agreement, its bad faith, negligence, or willful misconduct. In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, FMFS shall take all reasonable steps to minimize service interruptions for any period that such interruption continues beyond FMFS's control. FMFS will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown at the expense of FMFS. FMFS agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Company shall be entitled to inspect FMFS's premises and operating capabilities at any time during regular business hours of FMFS, upon reasonable notice to FMFS. Regardless of the above, FMFS reserves the right to reprocess and correct administrative errors at its own expense. B. In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation which presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim which may be the subject of this indemnification. In the event that the indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek indemnification under this section. Indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor's prior written consent. 8. No Agency Relationship Nothing herein contained shall be deemed to authorize or empower FMFS to act as agent for the other party to this Agreement, or to conduct business in the name of, or for the account of the other party to this Agreement. 9. Records FMFS shall keep records relating to the services to be performed hereunder, in the form and manner, and for such period as it may deem advisable and is agreeable to the Company but not inconsistent with the rules and regulations of appropriate government authorities, in particular, Section 31 of the 1940 Act, and the rules thereunder. FMFS agrees that all such records prepared or maintained by FMFS relating to the services to be performed by FMFS hereunder are the property of the Company and will be preserved, maintained, and made available in accordance with such section and rules of the 1940 Act and will be promptly surrendered to the Company on and in accordance with its request. 10. Data Necessary to Perform Services The Company or its agent, which may be FMFS, shall furnish to FMFS the data necessary to perform the services described herein at such times and in such form as mutually agreed upon. If FMFS is also acting in another capacity for the Company, nothing herein shall be deemed to relieve FMFS of any of its obligations in such capacity. 11. Notification of Error The Company will notify FMFS of any balancing or control error caused by FMFS within three (3) business days after receipt of any reports rendered by FMFS to the Company, or within three (3) business days after discovery of any error or omission not covered in the balancing or control procedure, or within three (3) business days of receiving notice from any shareholder. 12. Proprietary and Confidential Information FMFS agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Company all records and other information relative to the Company and prior, present, or potential shareholders of the Company (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company, which approval shall not be unreasonably withheld and may not be withheld where FMFS may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Company. 13. Term of Agreement This Agreement shall become effective as of the date hereof and, unless sooner terminated as provided herein, shall continue automatically in effect for successive annual periods. This Agreement may be terminated by either party upon giving ninety (90) days prior written notice to the other party or such shorter period as is mutually agreed upon by the parties. However, this Agreement may be replaced or modified by a subsequent agreement between the parties. 14. Notices Notices of any kind to be given by either party to the other party shall be in writing and shall be duly given if mailed or delivered as follows: Notice to FMFS shall be sent to: Mr. James C. Tyler Firstar Mutual Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202 and notice to the Company shall be sent to: Mr. Barry J. Glasgow LCM Internet Growth Fund, Inc. 810 W. Washington Blvd. Chicago, IL 60607 15. Duties in the Event of Termination In the event that in connection with termination, a successor to any of FMFS's duties or responsibilities hereunder is designated by the Company by written notice to FMFS, FMFS will promptly, upon such termination and at the expense of the Company transfer to such successor all relevant books, records, correspondence and other data established or maintained by FMFS under this Agreement in a form reasonably acceptable to the Company (if such form differs from the form in which FMFS has maintained the same, the Company shall pay any expenses associated with transferring the same to such form), and will cooperate in the transfer of such duties and responsibilities, including provision for assistance from FMFS's personnel in the establishment of books, records and other data by such successor. 16. Governing Law This Agreement shall be construed in accordance with the laws of the State of Wisconsin. However, nothing herein shall be construed in a manner inconsistent with the 1940 Act or any rule or regulation promulgated by the SEC thereunder. 17. Year 2000 Representation FMFS hereby represents and warrants that it does not anticipate that the "Year 2000 Problem" will have a material impact on its ability to perform its duties under this Agreement. The "Year 2000 Problem" refers to the inability of computer systems to properly process and calculate date-related information and data from and after January 1, 2000. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the day and year first written above. LCM INTERNET GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC By:______________________________ By:________________________________ Attest:__________________________ Attest:____________________________ Fund Accounting Services Annual Fee Schedule Exhibit A Domestic Equity Funds $22,000 for the first $40 million 1 basis point on the next $200 million .5 basis point on average net assets exceeding $240 million Plus reasonable out-of-pocket expenses, including pricing service: Domestic and Canadian Equities $.15 Options $.15 Corp/Gov/Agency Bonds $.50 CMO's $.80 International Equities and Bonds $.50 Municipal Bonds $.80 Money Market Instruments $.80 Fees and reasonable out-of-pocket expenses are billed to the Company monthly EX-99.K.4 10 FORM OF FULFILLMENT SERVICING AGREEMENT Exhibit (k.4) FORM OF FULFILLMENT SERVICING AGREEMENT THIS AGREEMENT is made and entered into as of this ___ day of _____, 1999, by and between LCM Internet Growth Fund, Inc., a corporation organized under the laws of the State of Maryland (hereinafter referred to as the "Company"), LCM Capital Management, Inc., a corporation organized under the laws of the State of Illinois (hereinafter referred to as the "Adviser"), LaSalle St. Securities, Inc., a corporation organized under the laws of the State of _______ (hereinafter referred to as "LaSalle") and Firstar Mutual Fund Services, LLC, a corporation organized under the laws of the State of Wisconsin (hereinafter referred to as "FMFS"). WHEREAS, the Company is a closed-end management investment company which is registered under the Investment Company Act of 1940, as amended; WHERAS, the Adviser is a registered investment adviser under the Investment Advisers Act of 1940, as amended; WHEREAS, the Adviser serves as investment adviser to the Company; WHEREAS, LaSalle is a registered broker-dealer under the Securities Exchange Act of 1934, as amended, and serves as principal underwriter of Company shares; WHEREAS, FMFS provides fulfillment services to mutual funds, and WHEREAS, the Company, the Adviser and LaSalle desire to retain FMFS to provide fulfillment services to the Company. NOW, THEREFORE, the parties agree as follows: 1. Duties and Responsibilities of FMFS 1. Answer all prospective shareholder calls concerning the Company. 2. Send all available Company material requested by the prospect within 24 hours from time of call. 3. Receive and update all Company fulfillment literature so that the most current information is sent and quoted. 4. Provide 24 hour answering service to record prospect calls made after hours (7 p.m. to 8 a.m. CT). 5. Maintain and store Company fulfillment inventory. 6. Send periodic fulfillment reports to the Company as agreed upon between the parties. 2. Duties and Responsibilities of the Company 1. Provide Company fulfillment literature updates to FMFS as necessary. 2. Coordinate with LaSalle the filing with the NASD, SEC and State Regulatory Agencies, as appropriate, all fulfillment literature that the Company requests FMFS send to prospective shareholders. 3. Supply FMFS with sufficient inventory of fulfillment materials as requested from time to time by FMFS. 4. Provide FMFS with any sundry information about the Company in order to answer prospect questions. 3. Indemnification The Company agrees to indemnify FMFS from any liability arising out of the distribution of fulfillment literature, which has not been approved by the appropriate Federal and State Regulatory Agencies. FMFS agrees to indemnify the Company from any liability arising from the improper use of fulfillment literature during the performance of duties and responsibilities identified in this agreement. FMFS will be liable for bad faith, negligence or willful misconduct on its part in its duties under this Agreement. 4. Compensation The Adviser agrees to compensate FMFS for the services performed under this Agreement in accordance with the attached Exhibit A. All invoices shall be paid within ten days of receipt. 5. Proprietary and Confidential Information FMFS agrees on behalf of itself and its directors, officers, and employees to treat confidentially and as proprietary information of the Company all records and other information relative to the Company and prior, present, or potential shareholders of the Company (and clients of said shareholders), and not to use such records and information for any purpose other than the performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company which approval shall not be unreasonably withheld and may not be withheld where FMFS may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Company. 6. Termination This Agreement may be terminated by either party upon 10 days written notice. 7. No Agency Relationship Nothing herein contained shall be deemed to authorize or empower FMFS to act as agent for the Company, or to conduct business in the name of, or for the account of the Company. 8. Data Necessary to Perform Services The Company or its agent, which may be FMFS, shall furnish to FMFS the data necessary to perform the services described herein at such times and in such form as mutually agreed upon. If FMFS is also acting in another capacity for the Company, nothing herein shall be deemed to relieve FMFS of any of its obligations in such capacity. 9. Notification of Error The Company will notify FMFS of any error caused by FMFS the later of: within three (3) business days after receipt of any reports rendered by FMFS to the Company; within three (3) business days after discovery of any error or omission not covered in the balancing or control procedure; or within three (3) business days of receiving notice from any shareholder. 10.Year 2000 Representation FMFS hereby represents and warrants that it does not anticipate that the "Year 2000 Problem" will have a material impact on its ability to perform its duties under this Agreement. The "Year 2000 Problem" refers to the inability of computer systems to properly process and calculate date-related information and data from and after January 1, 2000. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer on one or more counterparts as of the day and year first written above. LCM INTERNET GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC By:______________________________ By:________________________________ Attest:__________________________ Attest:____________________________ LCM CAPITAL MANAGEMENT, INC. LA SALLE ST. SECURITIES, INC. By:______________________________ By:________________________________ Attest:__________________________ Attest:____________________________ Literature Fulfillment Services Annual Fee Schedule Exhibit A Base Service $100 per month Customer Service State registration compliance edits Literature database Record prospect request and profile Prospect servicing 8:00 am to 7:00 pm CT Recording and transcription of requests received off-hours Periodic reporting of leads to client Service Fee: $.99 / minute Assembly and Distribution of Literature Requests Generate customized prospect letters Assembly and insertion of literature items Inventory tracking Inventory storage, reporting Periodic reporting of leads by state, items requested, market source Service Fee: $.45 / lead - insertion of up to 4 items/lead $.15 / additional inserts Fees and reasonable out-of-pocket expenses are billed to Company monthly EX-99.L 11 OPINION AND CONSENT OF G&K Exhibit l GODFREY & KAHN, S.C. Attorneys at Law 780 North Water Street Milwaukee, Wisconsin 53202 Telephone: 414-273-3500 Facsimile: 414-273-5198 ______ __, 1999 LCM Internet Growth Fund, Inc. 810 West Washington Boulevard Chicago, Illinois 60607 Ladies and Gentlemen: We have acted as your counsel in connection with the preparation of a Registration Statement on Form N-2 (Registration Nos. 333-74407; 811-9261) (the "Registration Statement") relating to the sale by you of up to _________ shares of LCM Internet Growth Fund, Inc. (the "Company") common stock, $0.01 par value (the "Shares"), in the manner set forth in the Registration Statement (and the Prospectuses included therein). We have examined: (a) the Registration Statement (and the Prospectuses included therein), (b) the Company's Articles of Incorporation and By-Laws, (c) certain resolutions of the Company's Board of Directors and (d) such other proceedings, documents and records as we have deemed necessary to enable us to render this opinion. Based upon the foregoing, we are of the opinion that the Shares, when sold as contemplated in the Registration Statement, will be duly authorized and validly issued, fully paid and nonassessable. We consent to the use of this opinion as an exhibit to the Registration Statement. In giving this consent, however, we do not admit that we are "experts" within the meaning of Section 11 of the Securities Act of 1933, as amended, or within the category of persons whose consent is required by Section 7 of said Act. Very truly yours, GODFREY & KAHN, S.C. EX-99.P 12 Exhibit p ______ ___, 1999 LCM Internet Growth Fund, Inc. 810 West Washington Blvd. Chicago, IL 60607 Ladies and Gentlemen: The undersigned (the "Purchaser") hereby subscribes to 10,583 shares of common stock, $0.01 par value per share (the "Shares"), of LCM Internet Growth Fund, Inc. (the "Company") at a price of $9.45 per share payable by delivery of $100,000 in cash to the Company. The Purchaser is acquiring the shares solely for its own account and not with a view to their distribution within the meaning of the Securities Act of 1933, as amended (the "Securities Act"). The Purchaser represents that its present and anticipated financial position permits it to purchase the Shares and to hold such Shares indefinitely for investment purposes. The Purchaser acknowledges that: (a) the Shares are not registered under the Securities Act or under any applicable state securities law and must be held indefinitely unless they are subsequently so registered or unless an exemption from such registration is available; and (b) each certificate representing the Shares will bear the following legend, or one similar thereto, drawing attention to the restrictions on its transferability: "The securities evidenced by this certificate have not been registered under the Securities Act of 1933 or under any applicable state securities law, and may not be transferred except upon delivery to the Company of an opinion of counsel satisfactory in form and substance to it that such transfer will not violate the Securities Act of 1933, as amended, or any applicable state securities law." PURCHASER:__________________________ By:_________________________________ Name: Title: Receipt Acknowledged: LCM INTERNET GROWTH FUND, INC. By:_______________________________ Name: Title: Date: ______ __, 1999 -----END PRIVACY-ENHANCED MESSAGE-----