<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
STRONG SCHAFER VALUE FUND, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 3
STRONG SCHAFER VALUE FUND, INC.
101 CARNEGIE CENTER
PRINCETON, NEW JERSEY 08540
(800) 368-9630
Dear Stockholder:
As you may be aware, since early 1996, Schafer Capital Management, Inc.
("Schafer Capital"), the investment adviser of Strong Schafer Value Fund, Inc.
(the "Fund"), has arranged with Strong Capital Management, Inc. ("Strong") to
distribute shares of the Fund as part of the Strong Family of Funds. In
furtherance of this arrangement, Schafer Capital and Strong have formed a new
investment advisory firm, Strong Schafer Capital Management, L.L.C. ("SSCM"),
which is proposed to become the investment adviser to the Fund. Schafer Capital
will initially have management control of SSCM with no current change in the
Fund's investment philosophy. We are asking stockholders of the Fund to consider
approval of a new investment advisory agreement between the Fund and SSCM. We
urge you to review the enclosed proxy statement which explains this proposed new
investment advisory agreement in detail.
The Fund's Board of Directors has voted unanimously in favor of this
proposal and recommends that you vote "FOR" it. You will find more information
on this proposal, as well as proposals relating to the election of directors and
ratification of selection of auditors, in the enclosed proxy statement.
WHAT DO THESE CHANGES MEAN TO YOU?
SCHAFER CAPITAL, AND THE UNDERSIGNED AS PORTFOLIO MANAGER, WILL CONTINUE TO
BE RESPONSIBLE FOR MAKING INVESTMENT DECISIONS FOR THE FUND. IN ADDITION, NO
CHANGE IN THE ADVISORY FEE RATE IS PROPOSED IN THE NEW INVESTMENT ADVISORY
AGREEMENT YOU ARE ASKED TO APPROVE. The existing and new advisory agreements are
identical, except for their effective dates, the replacement of Schafer Capital
with SSCM as investment adviser, and certain other relatively minor changes to
certain other provisions described in the enclosed proxy statement.
YOUR VOTE IS IMPORTANT!
We urge you to read the enclosed proxy statement and to vote now by
completing, signing and returning the enclosed proxy card in the prepaid
envelope. You may also vote by telephone or via the Internet in accordance with
the instructions set forth on the proxy card. EVERY VOTE COUNTS!
Sincerely,
DAVID K. SCHAFER
PRESIDENT
<PAGE> 4
STRONG SCHAFER VALUE FUND, INC.
101 CARNEGIE CENTER
PRINCETON, NEW JERSEY 08540
(800) 368-9630
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 15, 1998
------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Strong
Schafer Value Fund, Inc. (the "Fund") will be held at the Hyatt Regency
Princeton, 102 Carnegie Center, Princeton, New Jersey, on Thursday, October 15,
1998 at 9:00 a.m., local time, for the following purposes:
(1) To elect four Directors of the Fund.
(2) To consider and vote upon approval of a new investment advisory
agreement between Strong Schafer Capital Management, L.L.C. and the
Fund (with no change in advisory fee rate and otherwise on
substantially the same terms as the current investment advisory
agreement).
(3) To consider and vote upon ratification of the appointment of
PricewaterhouseCoopers LLP as auditors of the Fund for the fiscal year
ending September 30, 1998.
(4) To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.
The close of business on August 13, 1998, has been fixed as the record date
for the determination of the stockholders entitled to notice of and to vote at
the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
BRENDAN J. SPILLANE
SECRETARY
AUGUST 21, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE, SIGN AND
RETURN THE
ACCOMPANYING PROXY CARD WITHOUT DELAY. YOU MAY ALSO VOTE BY TELEPHONE OR VIA THE
INTERNET
IN ACCORDANCE WITH THE INSTRUCTIONS SET
FORTH ON THE PROXY CARD.
<PAGE> 5
STRONG SCHAFER VALUE FUND, INC.
101 CARNEGIE CENTER
PRINCETON, NEW JERSEY 08540
(800) 368-9630
PROXY STATEMENT
Your proxy is solicited on behalf of the Board of Directors of Strong
Schafer Value Fund, Inc. (the "Fund") for its special meeting of stockholders to
be held at the Hyatt Regency Princeton, 102 Carnegie Center, Princeton, New
Jersey, on Thursday, October 15, 1998 at 9:00 a.m., local time (the "Special
Meeting"), and for any postponement or adjournment thereof. The Fund expects to
mail the Notice of Special Meeting, this Proxy Statement and form of proxy card
to stockholders on or about August 21, 1998.
Stockholders of record at the close of business on August 13, 1998 will be
entitled to vote in person or by proxy at the Special Meeting. As of the close
of business on such date, there were 29,772,102 full shares of the Fund's Common
Stock outstanding. Stockholders are entitled to one vote for each full share
held and a fractional vote corresponding to each fractional share held. You may
vote by proxy in any one of the following ways: (i) by marking, signing, dating
and promptly returning the enclosed proxy card using the enclosed postage
prepaid envelope; (ii) by calling the toll-free telephone number set forth on
the proxy card; or (iii) by voting via the Internet in accordance with the
instructions set forth on the proxy card. All valid proxies received by the Fund
will be voted unless revoked. Proxies will be voted in accordance with the
specifications therein and, in the absence of specification, FOR the election of
the nominees listed below as directors of the Fund and FOR the approval of the
other proposals described herein. The Board of Directors recommends a vote FOR
each proposal.
A proxy may be revoked at any time before its exercise by the submission of
a subsequent proxy (by any of the means described above), by written notice of
revocation delivered to the Secretary of the Fund or by attending the Special
Meeting and voting in person. To be effective, such revocation must be received
by the Fund prior to the Special Meeting and must indicate the stockholder's
name and account number.
1
<PAGE> 6
The table below sets forth certain information as to all persons known to
the Fund who, as of June 30, 1998, owned of record or beneficially more than 5%
of the Fund's outstanding shares.
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (%)
------------------- -------------------- ----------
<S> <C> <C>
Charles Schwab & Co. Inc. 8,159,034 26.42(1)
Attention: Mutual Fund Dept
101 Montgomery Street
San Francisco, California
94104-4122
</TABLE>
- ---------------
(1) Charles Schwab & Co. Inc. is the nominee account for many individual
shareholder accounts; the Fund is not aware of the size or identity of any
of these individual accounts
One-third of the Fund's shares outstanding and entitled to vote,
represented in person or by proxy, constitutes a quorum at all meetings of
stockholders, except as otherwise provided by law. With respect to certain
proposals, the Investment Company Act of 1940, as amended (the "1940 Act"), may
require the holders of a greater proportion of shares of the Fund issued and
outstanding and entitled to vote to be represented in person or by proxy for
action to be validly taken. If a quorum is not present at the Special Meeting,
or if a quorum is present at the Special Meeting but sufficient votes to approve
any of the proposals described in this Proxy Statement are not received, the
persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of proxies. Any adjournment will require
the affirmative vote of the holders of a majority of shares represented in
person or by proxy and voted at the Special Meeting. A stockholder vote may be
taken for a proposal in this Proxy Statement prior to any adjournment if
sufficient votes have been received for approval. When voting on a proposed
adjournment, the persons named as proxies will vote all proxies that they are
entitled to vote FOR approval of any proposal in favor of adjournment and will
vote all proxies required to be voted AGAINST any such proposal against
adjournment.
Abstentions and broker non-votes will be counted as shares present at the
Special Meeting for purposes of determining whether a quorum is present but will
not be voted on any proposal as to which the abstention or broker non-vote
applies or for or against any adjournment with respect thereto. Accordingly,
abstentions and broker non-votes will have the effect of a vote against each
proposal for which the required vote is a percentage of the shares present or
outstanding. Broker non-votes are
2
<PAGE> 7
shares held in the name of a broker or nominee as to which instructions have not
been received from the beneficial owners or other persons entitled to vote and
the broker or nominee does not have discretionary voting authority.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL
REPORT AND SEMI-
ANNUAL REPORT SUCCEEDING SUCH ANNUAL REPORT, IF ANY, TO ANY STOCKHOLDER UPON
REQUEST. A STOCKHOLDER WHO WISHES TO RECEIVE A COPY OF THE FUND'S ANNUAL REPORT
OR SEMI-ANNUAL REPORT MAY WRITE THE FUND AT P.O. BOX 2936, MILWAUKEE, WISCONSIN
53201 OR CALL (800) 368-3863.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Proposal No. 1 relates to the election of directors of the Fund. The Board
of Directors proposes the election of the four nominees named in the table
below. Each nominee, including those who are not "interested persons" of the
Fund ("Non-Interested Directors") as that term is defined in the 1940 Act, has
indicated his or her willingness to serve if elected. If elected, each nominee
will hold office until the next meeting of stockholders held for the purpose of
electing directors and until the election and qualification of his or her
successor. Unless you give contrary instructions on the enclosed proxy card, the
persons named on such proxy card will nominate and vote the shares represented
by proxy in favor of the election of the four nominees. Should any of the
nominees withdraw or otherwise become unavailable for election, which the Fund
does not anticipate, shares represented by proxy may be voted in favor of such
other nominee or nominees as management may recommend.
Two nominees for director of the Fund -- Messrs. Schafer and
Young -- currently serve as directors of the Fund, and each current director of
the Fund except for Mr. Young has previously been elected by the Fund's
stockholders. The other two nominees for director of the Fund -- Mr. Collins and
Dr. English -- are not currently serving as directors of the Fund. James P.
Cullen, a current director of the Fund, will not stand for re-election.
Under the charter and By-laws of the Fund, the Board of Directors, by a
vote of a majority of the Board, may increase or decrease the number of
directors of the Fund (but not to less than three). The number of directors
which currently constitutes the entire Board of Directors is
3
<PAGE> 8
three, although the Board of Directors has authorized an increase in the number
of directors to four effective as of the election of directors at the Special
Meeting. If elected, the four nominees will constitute all of the directors of
the Fund.
The following table shows the nominees who are standing for election as
directors of the Fund, their principal occupations (which, unless specified
dates show otherwise, are of more than five years' duration, although the titles
may not have been the same throughout) and their share ownership in the Fund:
<TABLE>
<CAPTION>
POSITION YEAR SHARES
WITH BUSINESS EXPERIENCE; BECAME OWNED PERCENT OF
NAME; AGE THE FUND OTHER DIRECTORSHIPS DIRECTOR (1) CLASS(%)
--------- ------------- ---------------------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
David K. Schafer*; President and President and director, 1985 124,804(2) **%
58 Director Schafer Capital Management,
Inc.; Chairman of the Board,
Schafer Cullen Capital
Management, Inc.
Timothy C. Collins; Director Chief Executive Officer and -- -- --
41 Nominee Senior Managing Director,
Ripplewood Holdings, L.L.C.
(a private equity firm);
prior to 1995, Senior
Managing Director, Onex
Investment Corp.; Director,
Dayton Superior Corporation
and Danielson Holdings
Corporation.
Mary P. English, Director Associate Professor of -- -- --
Ph.D.; 38 Nominee Economics and Management,
and Director, McDermond
Center for Management,
DePauw University.
Philip P. Young; 54 Director Principal, Gladwyne Partners 1997 10,122 **
(a private equity firm);
prior to 1998, private
investor; prior to April 1,
1996, Managing Director,
Lazard Freres & Co. L.L.C.
(investment banking firm).
</TABLE>
- ---------------
* This nominee is an interested person of the Fund's investment adviser and of
the Fund, as defined in the 1940 Act.
** Less than 1%.
(1) Full shares of the Fund owned beneficially as of June 30, 1998, based on
information furnished by each director or nominee. On that date, the
directors and officers of the Fund, as a group, beneficially owned 138,668,
constituting .45%, of the Fund's outstanding shares.
(2) Includes 13,408 shares held by Mr. Schafer as trustee for the benefit of his
minor children.
As noted above, Mr. Cullen, an "interested" director of the Fund, has
decided not to stand for re-election, but will continue to serve as a director
until the Special Meeting. Information relating to Mr. Cullen is shown in the
table below. Mr. Cullen has been a director since 1985 and will continue to
serve as Executive Vice President of the Fund.
4
<PAGE> 9
Officers of the Fund are appointed by the directors and may be removed if
the Board in its judgment finds that the best interests of the Fund will be
served thereby. None of the Fund's officers currently receives any compensation
from the Fund. The following table sets forth certain information furnished by
each of the executive officers of the Fund in addition to Mr. Schafer (about
whom information is given above). Except as noted below, each such executive
officer has engaged in the principal occupation indicated (or other executive
positions with the Fund or its investment adviser) for more than five years. The
business address of Mr. Cullen is 645 Fifth Avenue, New York, New York 10022 and
the business address of Mr. Spillane is 101 Carnegie Center, Princeton, New
Jersey 08540.
<TABLE>
<CAPTION>
POSITION WITH THE FUND; BUSINESS
NAME; AGE EXPERIENCE
--------- --------------------------------
<S> <C> <C>
James P. Cullen; 59............. Executive Vice President; Vice
President and director, Schafer
Capital Management, Inc.;
President, Schafer Cullen
Capital Management, Inc.
Brendan J. Spillane; 34......... Secretary and Treasurer;
Secretary, Treasurer and
director, Schafer Capital
Management, Inc.
</TABLE>
During the Fund's last fiscal year ended September 30, 1997, the Board of
Directors met three times. Each of the directors of the Fund except Mr. Cullen
attended 75% or more of the meetings of the Board of Directors held during such
fiscal year. The Board does not have a standing nominating or compensation
committee. The Fund has an audit committee currently consisting of Mr. Young. It
is anticipated that Mr. Collins and Dr. English will be added to the audit
committee if elected to the Board of Directors. The audit committee meets
periodically with the Fund's independent accountants and executive officers.
This committee reviews the accounting principles being applied by the Fund in
financial reporting, the scope and adequacy of internal controls, the scope of
the audit and non-audit assignments of the independent accountants, and the
related fees. During the fiscal year ended September 30, 1997, the audit
committee met once. The sole director who then served on the audit committee
attended such meeting.
The Board of Directors is responsible for the overall management of the
Fund, including general oversight and review of its investment policies and
activities. The Board of Directors elects the officers of the Fund. The officers
are responsible for supervising and administering the Fund's day-to-day
operations.
5
<PAGE> 10
Prior to July 1, 1997, the Fund paid each Non-Interested Director an annual
retainer of $1,000 plus $500 for attendance at each Board of Directors meeting.
Since July 1, 1997, the Fund has paid Non-Interested Directors an annual
retainer of $10,000 plus $1,250 for attendance at each Board of Directors
meeting. Directors are reimbursed for any expenses incurred in attending
meetings. Directors of the Fund who are "interested persons" of the Fund as
defined in the 1940 Act receive no direct remuneration from the Fund.
Schafer Capital Management, Inc., 101 Carnegie Center, Princeton, New
Jersey 08540, ("Schafer Capital") currently serves as investment adviser to the
Fund. The Fund pays a fee to Schafer Capital as investment adviser to the Fund,
and Mr. Schafer is the President, a director and the sole shareholder of Schafer
Capital. It is proposed pursuant to Proposal No. 2 that Strong Schafer Capital
Management, L.L.C. be approved as the new investment adviser to the Fund. For a
description of Strong Schafer Capital Management, L.L.C. and Mr. Schafer's
interest therein, see "APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT ADVISORY
AGREEMENT BETWEEN THE FUND AND STRONG SCHAFER CAPITAL MANAGEMENT, L.L.C. --
Information About SSCM; Description of LLC Agreement."
The aggregate compensation paid by the Fund to its Non-Interested Directors
during its fiscal year ended September 30, 1997 is set forth below. (Mr. Potter
served as a Non-Interested Director from October 1, 1996 through June 10, 1997
and Mr. Young served as a Non-Interested Director from July 7, 1997 through
September 30, 1997 in such fiscal year.) The Fund does not maintain any deferred
compensation, pension or retirement plans, and no pension or retirement benefits
are accrued as part of Fund expenses.
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
NAME OF NON-INTERESTED COMPENSATION FROM FUND AND FUND
DIRECTOR OF THE FUND FROM THE FUND COMPLEX PAID TO DIRECTOR(1)
---------------------- ------------- -----------------------------
<S> <C> <C>
Eugene W. Potter............ $3,000 $3,000
Philip P. Young............. $3,750 $3,750
</TABLE>
- ---------------
(1) No director of the Fund serves as a director of any other funds in the
Strong Family of Funds.
Since the beginning of the Fund's fiscal year ended September 30, 1997,
there were no transactions involving purchases or sales of securities of Schafer
Capital by any director or nominee. For a description of the respective
interests in Strong Schafer Capital Management, L.L.C. acquired by Schafer
Capital and Strong Capital Management, Inc. in connection with the formation of
such entity, see "APPROVAL OR
6
<PAGE> 11
DISAPPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE FUND AND STRONG
SCHAFER CAPITAL MANAGEMENT, L.L.C. -- Information About SSCM; Description of LLC
Agreement."
Election of directors requires the affirmative vote of a majority of the
shares of the Fund present or represented and entitled to vote at the meeting in
person or by proxy, provided a quorum is present.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS
THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF
MESSRS. SCHAFER, COLLINS AND YOUNG AND
DR. ENGLISH AS DIRECTORS OF THE FUND
APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN THE FUND AND
STRONG SCHAFER CAPITAL MANAGEMENT, L.L.C.
(PROPOSAL NO. 2)
INTRODUCTION
It is proposed that the Fund enter into a new investment advisory agreement
(the "New Advisory Agreement") with Strong Schafer Capital Management, L.L.C.
("SSCM"). SSCM is an investment advisory firm formed by Schafer Capital and
Strong Capital Management, Inc. ("Strong"). Under the terms of the formation of
SSCM, Schafer Capital will initially have management control of SSCM, and no
current change in the Fund's investment philosophy is anticipated. In addition,
no change in the investment advisory fee rate and no other material change is
proposed under the New Advisory Agreement. The Board of Directors has approved,
and recommends that the stockholders of the Fund approve, the New Advisory
Agreement.
BACKGROUND
Schafer Capital, a Delaware corporation formed in 1984 and registered under
the Investment Advisers Act of 1940, currently serves as investment adviser to
the Fund under an Investment Advisory Agreement dated August 13, 1985 (the
"Current Advisory Agreement"). Schafer Capital also serves as investment adviser
to other equity accounts.
The Current Advisory Agreement was approved by the stockholders of the Fund
on January 21, 1987. The Current Advisory Agreement
7
<PAGE> 12
provides that it shall continue in effect from year to year only so long as such
continuance is specifically approved at least annually by (i) a majority of
those directors who are Non-Interested Directors, in person at a meeting called
for the purpose of voting on such approval, and (ii) the vote of the holders of
a majority of the outstanding voting securities of the Fund or a vote of the
Board of Directors. Continuance of the agreement was last approved by the Board
of Directors on August 12, 1998. The agreement may be terminated on 60 days'
written notice by either the Fund or Schafer Capital, and automatically
terminates in the event of its assignment.
In January 1996, Schafer Capital and Strong entered into a letter of intent
which provided for, among other things, Schafer Capital and Strong to negotiate
agreements (i) designating Strong to assume certain responsibilities relating to
the marketing of the Fund's shares and (ii) providing Strong the right to
acquire an interest in Schafer Capital in a form to be negotiated, subject to
the satisfaction of certain substantive conditions (and subject to satisfaction
of applicable regulatory requirements). At that time, the Fund engaged Strong as
its registrar, dividend-paying agent and transfer agent and its fund accounting
services agent, and Strong Funds Distributors, Inc. ("Distributors"), 100
Heritage Reserve, Menomonee Falls, Wisconsin 53051, a subsidiary of Strong, as
the Fund's distributor. Pending negotiation of definitive agreements as
described below, Strong has marketed the Fund as part of the Strong Family of
Funds.
In September 1997, Schafer Capital and Strong entered into a Limited
Liability Company Agreement (the "LLC Agreement") pursuant to which they have
formed SSCM, 101 Carnegie Center, Suite 107, Princeton, New Jersey 08540. SSCM,
a Delaware limited liability company, is proposed to become the investment
adviser to the Fund.
Strong is located at 100 Heritage Reserve, Menomonee Falls, Wisconsin and,
as of June 30, 1998, had approximately $31.8 billion of assets under management,
including the Strong Family of Funds, a family of more than 40 diversified and
non-diversified no-load mutual funds.
As required by the 1940 Act, the Current Advisory Agreement provides for
its automatic termination upon its "assignment." The Fund does not believe, and
Schafer Capital and Strong have each informed the Fund that they do not believe,
that assumption by SSCM of the provision of investment advisory services to the
Fund would be deemed to be an assignment (as defined in the 1940 Act) of the
Current Advisory Agreement or terminate the Current Advisory Agreement.
Nonetheless, at a meeting held on August 12, 1998, the Fund's Board of
Directors,
8
<PAGE> 13
including the sole Non-interested Director, approved the New Advisory Agreement
and directed that it be submitted to stockholders for their approval at the
Special Meeting. THE NEW ADVISORY AGREEMENT IS IDENTICAL TO THE CURRENT ADVISORY
AGREEMENT, EXCEPT FOR ITS EFFECTIVE DATE, THE REPLACEMENT OF SCHAFER CAPITAL BY
SSCM, AND CERTAIN OTHER RELATIVELY MINOR CHANGES TO CERTAIN OTHER PROVISIONS
DESCRIBED BELOW UNDER "-- CURRENT AND NEW ADVISORY AGREEMENTS." THE INVESTMENT
ADVISORY FEE RATE UNDER THE NEW ADVISORY AGREEMENT WILL REMAIN THE SAME.
In connection with the approval of the New Advisory Agreement, the Board of
Directors considered that the terms of the assumption by SSCM of the provision
of investment advisory services to the Fund do not require any current change in
the Fund's investment objective or policies, the investment management or
operation of the Fund, the investment personnel managing the Fund, or the
stockholder services or other business activities of the Fund. Schafer Capital
has informed the Fund's Board of Directors that the assumption by SSCM of the
provision of investment advisory services to the Fund will not at this time
result in any such change. However, no assurance can be given that such a change
will not occur in the future. If, after the assumption by SSCM of the provision
of investment advisory services to the Fund, changes in SSCM are proposed that
might materially affect its services to the Fund, the Board of Directors will
consider the effect of those changes and take such action as it deems advisable
under the circumstances. See also "Board Consideration" below.
CURRENT AND NEW ADVISORY AGREEMENTS
The Current Advisory Agreement and the New Advisory Agreement are identical
except for (i) their effective dates, (ii) the replacement of Schafer Capital by
SSCM as investment adviser, (iii) alteration of the wording of Section 2(a)(i)
to confirm that the investment adviser may utilize Strong or others to arrange
for the placement of orders for the purchase and sale of securities for the
account of the Fund with brokers or dealers selected by or under the supervision
of the investment adviser, (iv) alteration of the wording of Sections 2(a)(ii)
and 4 to confirm that the investment adviser's responsibility to provide
bookkeeping and administrative services for the Fund does not extend to such
services as are provided by a fund accounting services agent, and (v) alteration
of the wording of Section 9 to address the circumstances under which the Fund
may continue to use the name "Strong". In respect of the proposed change
referred to in clause (iii) of the preceding sentence, Schafer Capital and
Strong have entered into an arrangement whereby Strong's trading desk performs
certain administrative responsibilities with respect
9
<PAGE> 14
to the execution of portfolio trades at the direction of Schafer Capital,
including trades which Schafer Capital may effect on behalf of the Fund, and it
is expected that this arrangement will continue if the New Advisory Agreement is
approved. In respect of the proposed change referred to in clause (iv) of the
second preceding sentence, since its inception in 1985, the Fund has engaged a
fund accounting services agent at the Fund's expense which performs the daily
calculation of the Fund's net asset value and related services. In 1994, in
connection with a routine examination of the Fund's books and records, the Fund
agreed with the staff of the Securities and Exchange Commission that it would
propose this change for approval by the Fund's stockholders at the next
following meeting of such stockholders.
A copy of the New Advisory Agreement in the form being presented for
approval, and as approved by the Fund's Board, is set forth as Exhibit A to this
Proxy Statement. The discussion below is qualified by reference to the
provisions of the complete New Advisory Agreement.
Under the terms of the New Advisory Agreement, SSCM will replace Schafer
Capital with respect to making and implementing investment decisions for the
Fund and furnishing office space, office facilities, equipment, personnel (other
than the services of directors of the Fund who are not interested persons of
SSCM), and clerical and bookkeeping services for the Fund to the extent not
provided by the Fund's custodian, transfer agent and dividend paying agent. The
Fund itself will continue to pay all other expenses of its operation, including,
without limitation, interest, taxes and any governmental filing fees; brokerage
commissions and other costs incurred in connection with the purchase or sale of
securities; compensation and expenses of its directors, other than those who are
interested persons of SSCM; legal and audit expenses; the fees and expenses of
the Fund's custodian, transfer agent and dividend paying agent; expenses
relating to the redemption of shares; expenses of servicing shareholder
accounts; fees and expenses related to the registration and qualification of the
Fund and its shares under Federal and state securities laws; expenses of
printing and mailing reports, notices and proxy material to shareholders;
insurance premiums for fidelity and other insurance coverage; expenses of
preparing prospectuses and statements of additional information and of printing
and distributing them to existing shareholders; and any nonrecurring expenses,
including actions, suits or proceedings to which the Fund is a party and any
obligation which the Fund may incur to indemnify others; and all other expenses
not assumed by SSCM pursuant to the terms of the New Advisory Agreement (which
are expected to be the same as those not assumed by Schafer Capital pursuant to
the terms of the Current Advisory Agreement). The Fund also will continue to
bear
10
<PAGE> 15
(as it has since its inception in 1985) the expense of calculating the daily net
asset value, a service currently provided principally by Strong as fund
accounting services agent.
Under the Current Advisory Agreement, the Fund pays Schafer Capital a fee,
payable monthly, at an annual rate equal to 1% of the Fund's average daily net
assets. For the fiscal year ended September 30, 1997, the advisory fee paid by
the Fund to Schafer Capital amounted to $7,583,633. Under the New Advisory
Agreement, the Fund will pay SSCM a fee, payable monthly, at the identical
annual rate equal to 1% of the Fund's average daily net assets.
In order to comply with the securities laws of certain states which were in
effect at the time the Current Advisory Agreement was originally entered into,
the Current Advisory Agreement requires Schafer Capital to reimburse the Fund in
any amount necessary to prevent the annual expenses of the Fund from exceeding
in any year the most restrictive annual expense limitation imposed by any state
in which the Fund's securities are qualified for sale. The New Advisory
Agreement contains an identical undertaking by SSCM. The Fund believes that it
is not currently subject to any such percentage limitation.
The New Advisory Agreement will continue in effect, unless sooner
terminated as provided therein, until the second anniversary of its effective
date. Thereafter, the New Advisory Agreement will continue in effect
automatically for successive annual periods, provided such continuance is
approved at least annually by (i) a majority of the directors who are not
parties to the New Advisory Agreement or interested persons of the Fund or SSCM,
as defined in the 1940 Act, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) either by the Board of Directors of the
Fund or by a Majority Vote of the holders of the Fund's outstanding voting
securities (as defined under "-- Required Vote and Board Members'
Recommendation" below). The New Advisory Agreement may be terminated without
penalty, on 60 days' written notice, by the Board of Directors of the Fund or by
a Majority Vote of the holders of the Fund's outstanding voting securities, or,
upon 60 days' written notice, by SSCM. The New Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
The New Advisory Agreement provides that, in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its
obligations thereunder, SSCM shall not be liable to the Fund for any error of
judgment, act or omission or for any loss that may be sustained by the Fund.
11
<PAGE> 16
INFORMATION ABOUT SSCM; DESCRIPTION OF LLC AGREEMENT
SSCM is a Delaware limited liability company that is in the process of
registering as an investment adviser under the Investment Advisers Act of 1940.
SSCM expects to be so registered by October 15, 1998. Its business address is
101 Carnegie Center, Princeton, New Jersey 08540. SSCM is managed by its
managing member, Schafer Capital, which has sole control and management of
SSCM's business and affairs (provided that certain actions may not be taken
without the consent of Strong). The only other member of SSCM is Strong.
Strong's membership interest in SSCM is non-managing.
The LLC Agreement provides that each of SSCM, Schafer Capital and Strong
will use commercially reasonable efforts to obtain Fund stockholder approval of
the New Advisory Agreement and, if requested by Schafer Capital, to comply with
the provisions of Section 15(f) of the 1940 Act in connection therewith (which
provides, in pertinent part, that an investment adviser may receive any amount
or benefit in connection with a sale of securities of, or a sale of any other
interest in, such adviser which results in an assignment of an investment
advisory contract if (i) for a period of three years after the event, at least
75% of the members of the board of directors of the investment company which it
advises are not "interested persons" (as defined in the 1940 Act) of the new or
old investment adviser; and (ii) there is no "unfair burden" imposed on the
investment company as a result of the transaction).
The LLC Agreement provides that Schafer Capital, in its capacity as
managing member and on behalf of SSCM, shall pay for and perform all obligations
of SSCM under the New Advisory Agreement and pay all expenses of SSCM incurred
in connection with the performance of its obligations thereunder (other than
certain equipment, facilities and office space used by SSCM and owned or leased
by Strong and the expense of any research analysts of SSCM located at Strong's
office). The LLC Agreement further provides that Strong shall cause Distributors
to act as distributor of the Fund and to pay for and provide marketing
assistance to Distributors in connection with such duties, including designing,
placing and paying for advertising and sales literature for the Fund.
The LLC Agreement provides for special allocations between Schafer Capital
and Strong of certain of SSCM's advisory fee revenues and expenses. Schafer
Capital is to receive a preferential allocation of certain revenues to be
received by SSCM under the New Advisory Agreement. Additionally, Schafer Capital
is to be specially allocated certain expenses of SSCM relating to compensation
paid to certain broker/dealers, transfer agents, trust companies, plan
administrators and other third parties
12
<PAGE> 17
pursuant to administrative services and/or subtransfer agency agreements in
proportion to the preferential allocation of revenue discussed above. All
expenses relating to the respective services described in the preceding
paragraph to be provided by Schafer Capital and Strong are to be specially
allocated to such respective parties. Otherwise, profits, losses, distributions
and expenses of SSCM are to be generally shared equally between Schafer Capital
and Strong.
The LLC Agreement provides that, commencing January 10, 2001 and for
eighteen months thereafter, Strong shall have the option to purchase the
membership interest of Schafer Capital in SSCM at a formula price. This option
is subject to certain conditions, including procurement of regulatory approvals
or other conditions that may be imposed by applicable law (including any
necessary approval of the Fund's stockholders). In the event of Strong's
purchase of Schafer Capital's membership interest in SSCM pursuant to the
exercise of this option, David K. Schafer's ongoing role with respect to SSCM
and the Fund will be subject to discussion among the parties. If Strong's option
is not exercised by Strong or Strong otherwise fails to purchase Schafer
Capital's membership interest in SSCM for any reason other than failure to
obtain necessary regulatory approvals or a breach by Schafer Capital of certain
obligations relating to the effectuation of such purchase, Schafer Capital shall
have certain rights, including the right to purchase Strong's membership
interest in SSCM for an amount equal to its fair market value at that time. If
Strong's option is exercised but Strong does not purchase Schafer Capital's
membership interest in SSCM subject thereto because of failure to obtain
necessary regulatory approvals, Schafer Capital shall negotiate in good faith
with respect to an appropriate modification of the relationship and arrangements
between Strong and Schafer Capital.
The LLC Agreement provides that, in the event of the bankruptcy of Schafer
Capital, or the death or disability of David K. Schafer, Strong shall have the
option, subject to conditions comparable to those relating to Strong's option
described in the preceding paragraph, to purchase the membership interest of
Schafer Capital in SSCM at a price equal to the fair market value thereof, and
upon the bankruptcy of Strong, Schafer Capital shall have the option to purchase
the membership interest of Strong in SSCM at a price equal to the fair market
value thereof.
The LLC Agreement provides that Schafer Capital (i) shall use its best
efforts to cause the Fund to continue the transfer agency and accounting
services agreements currently in effect between the Fund and Strong for so long
as Strong is a member of SSCM, and (ii) shall not take
13
<PAGE> 18
any actions materially adverse to Strong's membership interest in SSCM,
including, from and after the execution of the New Advisory Agreement by the
Fund and SSCM, proposing or making any material changes to the investment
objectives, policies, fees and charges, or operations of the Fund without the
prior written consent of Strong, for so long as Strong and Schafer Capital are
both members of SSCM.
The LLC Agreement provides that Strong will grant stock appreciation rights
of Strong to David K. Schafer in accordance with Strong's customary practices
with respect to the grant of stock appreciation rights to Strong's employees.
The LLC Agreement provides that if Strong ceases to be a member of SSCM,
Schafer Capital will use its best efforts to cause the Fund to cease to use
Strong's name within sixty (60) days and that if Strong purchases Schafer
Capital's membership interest in SSCM pursuant to Strong's option described
above, SSCM shall have the irrevocable right to use the name "Schafer" for SSCM
and the Fund.
The LLC Agreement provides that Schafer Capital will cause Richard S.
Strong, Chairman of Strong, to be elected a member of the Board of Directors of
Schafer Capital. In addition, the LLC Agreement places certain restrictions on
the right of Schafer Capital to provide investment advice to any publicly
offered investment vehicle other than the Fund and the right of each of Schafer
Capital and Strong to solicit investment advisory clients of the other for so
long as Schafer Capital and Strong are both members of SSCM and for three years
thereafter.
David K. Schafer and Strong have entered into a separate agreement dated
September 7, 1997 pursuant to which Mr. Schafer has agreed, among other things,
to several of the same covenants of Schafer Capital contained in the LLC
Agreement.
SHAREHOLDER SERVICING AND TRANSFER AGENT AGREEMENT; FUND ACCOUNTING SERVICING
AGREEMENT
Prior to 1996, Firstar Trust Company acted as the Fund's transfer and
dividend distribution agent, and Fund accounting servicing agent, at the expense
of the Fund. In January 1996, the Fund entered into a Shareholder Servicing and
Transfer Agent Agreement with Strong to provide shareholder servicing and
transfer agent services at a cost to the Fund of $21.75 per open account, $4.75
per closed account and out-of-pocket expenses. In February 1996, the Fund
entered into a Fund Accounting Servicing Agreement with Strong to provide Fund
accounting services at a cost to the Fund of $20,000 on the first $40 million in
Fund
14
<PAGE> 19
assets, .01% of Fund assets on the next $200 million in Fund assets and .005% on
Fund assets in excess of $240 million. For the fiscal year ended September 30,
1997, Strong received $1,209,581 and $66,064, as shareholder servicing and
transfer agent and fund accounting services agent, respectively.
BOARD CONSIDERATION
In considering whether to approve the New Advisory Agreement and to submit
it to the stockholders of the Fund for their approval, the Fund's Board of
Directors obtained and evaluated such information from Schafer Capital and SSCM
as the Board deemed relevant, including information on the nature and quality of
services to be provided by SSCM and comparative data as to advisory fees and
expenses. The Board considered, among other things, the following factors: (i)
the expectation that there would be no diminution in the scope and quality of
advisory and other services provided to the Fund by SSCM under the New Advisory
Agreement; (ii) the substantially identical nature of the terms and conditions
contained in the New Advisory Agreement as compared to the Current Advisory
Agreement; and (iii) the marketing and distribution expertise that will be
available to the Fund by virtue of Strong's being a member of SSCM.
Additionally, the Fund's Board of Directors considered the benefits that would
be obtained by the Fund in maintaining immediate continuity in the advisory
personnel providing services to it, and determined that this continuity was
advantageous to the Fund as it would provide for the continued utilization of
the demonstrated skills and capability of David K. Schafer and his staff and
their familiarity with the operation of the Fund, and avoid the possibility of
disruptive effects on the Fund that might otherwise result from a change in the
management and operation of the Fund.
REQUIRED VOTE AND BOARD MEMBERS' RECOMMENDATION
Approval of the New Advisory Agreement requires the affirmative vote of the
holders of a "majority of the outstanding voting securities" of the Fund, which
for this purpose means the affirmative vote of the lesser of (i) more than 50%
of the outstanding shares of the Fund or (ii) 67% or more of the shares of the
Fund present at the Special Meeting if more than 50% of the outstanding shares
of the Fund are represented at the Special Meeting in person or by proxy (a
"Majority Vote"). If the stockholders of the Fund do not approve the New
Advisory Agreement, the Fund will continue to operate under the Current Advisory
Agreement.
15
<PAGE> 20
THE BOARD OF THE FUND, INCLUDING THE SOLE
"NON-INTERESTED" BOARD MEMBER,
RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" PROPOSAL NO. 2
RATIFICATION OF SELECTION OF AUDITORS
(PROPOSAL NO. 3)
The Fund's financial statements for the fiscal year ended September 30,
1997 were audited by Coopers & Lybrand LLP, independent auditors, which has
since been succeeded by PricewaterhouseCoopers LLP ("PricewaterhouseCoopers").
In addition, PricewaterhouseCoopers reviews the Fund's federal and state annual
income tax returns.
On December 3, 1997, the Board of Directors of the Fund, by a vote of all
directors, including the sole Non-Interested Director, appointed
PricewaterhouseCoopers as auditors of the Fund for its fiscal year ending
September 30, 1998. PricewaterhouseCoopers has informed the Fund that it has no
material direct or indirect financial interest in the Fund. The ratification of
the appointment of PricewaterhouseCoopers as independent auditors for the Fund's
fiscal year ending September 30, 1998 is to be voted upon at the Special
Meeting, and it is intended that the persons named in the accompanying proxy
will vote for such ratification unless contrary instructions are given. Approval
of this proposal requires the affirmative vote of a majority of the shares of
the Fund present or represented in person or by proxy and entitled to vote at
the Special Meeting, provided a quorum is present.
Representatives of PricewaterhouseCoopers are expected to be present at the
Special Meeting and will be given the opportunity to make a statement if they so
desire.
THE BOARD OF DIRECTORS OF THE FUND
RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS AS INDEPENDENT
ACCOUNTANTS FOR THE FUND FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 1998
16
<PAGE> 21
GENERAL
OTHER BUSINESS
The Fund is not aware of any matters which may come before the Special
Meeting other than as set forth above. If other matters do properly come before
the meeting, the persons named in the accompanying form of proxy or their
substitutes will vote the proxies in accordance with their best judgment.
SOLICITATION OF PROXIES
Solicitation will be primarily by mail, but officers of the Fund or regular
employees of the Fund's investment adviser may also solicit without compensation
by telephone, telecopy or personal contact. The Fund has also retained D.F. King
& Co. Inc. to assist in certain aspects of the process of solicitation of
proxies from stockholders. The fees of such firm are estimated to be up to
$5,000, plus reimbursement of out-of-pocket expenses. The cost of solicitation
will be paid by SSCM. In addition, SSCM may pay persons holding shares of the
Fund in their names or those of their nominees for their expenses in sending
soliciting materials to their principals.
FUTURE MEETINGS; STOCKHOLDER PROPOSALS
The Fund is generally not required to hold annual meetings of stockholders
and the Fund generally does not hold a meeting of stockholders in any year
unless certain specified stockholder actions such as election of directors or
approval of a new advisory agreement are required to be taken under the 1940
Act. By observing this policy, the Fund seeks to avoid the expenses customarily
incurred in the preparation of proxy material and the holding of stockholder
meetings, as well as the related expenditure of staff time.
A stockholder desiring to submit a proposal intended to be presented at any
meeting of stockholders of the Fund hereafter called should send the proposal to
the offices of the Fund, 101 Carnegie Center, Princeton, New Jersey 08540. The
mere submission of a proposal by a stockholder does not guarantee that such
proposal will be included in the proxy statement because certain rules under the
Federal securities laws must be complied with before inclusion of the proposal
is required.
By order of the
Board of Directors,
August 21, 1998
Brendan J. Spillane
Secretary
17
<PAGE> 22
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated , 1998 between Strong Schafer Value
Fund, Inc., a Maryland corporation (the "Fund"), and Strong Schafer Capital
Management, L.L.C. (the "Adviser").
RECITALS
A. The Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and authorized to issue its shares of capital stock, $.10 par value (the
"Shares");
B. The Fund desires to retain the Adviser to render the services described
herein for the Fund and the Adviser is willing to so render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. APPOINTMENT OF ADVISER. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund for the periods and on the terms herein set
forth. The Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES OF ADVISER.
(a) Subject to the general supervision of the Board of Directors of the
Fund, the Adviser shall manage the operations of the Fund and provide the
additional services and facilities hereinafter described. In this regard, the
Adviser shall
(i) provide supervision of the Fund's assets, furnish a continuous
investment program, determine from time to time what investments or
securities will be purchased, retained or sold by it and what portion of
its assets will be invested or held uninvested as cash, and, subject to
paragraph 3, place or arrange for the placement of orders for the purchase
and sale of securities for the account of the Fund with brokers or dealers
selected by or under the supervision of the Adviser; and
(ii) furnish office space, office facilities, equipment, personnel
(other than the services of directors of the Fund who are not interested
persons of the Adviser), and clerical, bookkeeping and administrative
services for managing the Fund, except such services as are provided by a
custodian or transfer, dividend disbursing or
A-1
<PAGE> 23
shareholder servicing agent or fund accounting services agent of the Fund.
(b) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties hereunder, the Adviser shall not
be liable to the Fund or to any of its shareholders or to any creditor of the
Fund for any error of judgment, act or omission or for any loss that may be
sustained by the Fund.
(c) The Adviser agrees that all records which it maintains for the Fund are
the property of the Fund and it will surrender promptly to the Fund any of such
records upon the Fund's request.
3. BROKERAGE. In placing orders for the purchase or sale of securities for
the account of the Fund the Adviser is authorized, to the fullest extent now and
hereafter permitted by law, to cause the Fund to pay a member of a securities
exchange, broker, or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another member of an exchange,
broker, or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services (within the meaning
of Section 28(e) of the Securities Exchange Act of 1934) provided by such
member, broker, or dealer, viewed in terms either of that particular transaction
or the overall responsibilities of the Adviser with respect to the accounts as
to which the Adviser exercises investment discretion (within the meaning of
Section 3(a)(35) of the Securities Exchange Act of 1934).
4. EXPENSES. The Adviser shall bear the expenses incurred by it in the
performance of its duties hereunder without reimbursement from the Fund. In
addition to the compensation payable to the Adviser hereunder, the Fund will pay
all other expenses of its operations including, without limitation, (i)
interest, taxes and any governmental filing fees; (ii) brokerage commissions and
other costs incurred in connection with the purchase or sale of securities;
(iii) compensation and expenses of its directors, other than those who are
interested persons of the Adviser; (iv) legal and audit expenses; (v) the fees
and expenses of the Fund's custodian and transfer, dividend disbursing and
shareholder servicing agent and fund accounting services agent; (vi) expenses
relating to the repurchase or redemption of Shares; (vii) expenses of servicing
shareholder accounts; (viii) fees and expenses related to the registration and
qualification of the Fund and its Shares under Federal and state securities
laws; (ix) expenses of printing and mailing reports, notices and proxy material
to shareholders and the expenses incidental to meetings of shareholders; (x)
insurance premiums for fidelity and other insurance
A-2
<PAGE> 24
coverage; (xi) the expenses of preparing prospectuses and statements of
additional information and of printing and distributing them to existing
shareholders; (xii) expenses incurred pursuant to any plan adopted by the Fund
pursuant to Rule 12b-1 under the 1940 Act and (xiii) any nonrecurring expenses,
including actions, suits or proceedings to which the Fund is a party and any
obligation which the Fund may incur to indemnify others. Notwithstanding the
foregoing provisions, the Adviser agrees to reimburse the Fund in any amount
necessary to prevent the annual expenses of the Fund from exceeding in any year
the most restrictive annual expense limitation imposed by any state in which the
Shares of the Fund are qualified for sale.
5. COMPENSATION. For the services to be rendered and the charges and
expenses to be assumed by the Adviser hereunder, the Fund shall pay to the
Adviser a fee, payable in monthly installments, equal to 1% per annum of the
average daily net asset value of the Fund. For purposes of computing the fees
payable hereunder, the net asset value of the Fund shall be determined in the
same manner as for the purchase and redemption of Fund shares as described in
the current Prospectus. Such fee shall be prorated for any monthly period in
which this Agreement is not in effect for the entire period.
6. STATUS OF ADVISER; SERVICES NOT EXCLUSIVE.
(a) The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund. However, one or more shareholders,
directors, officers or employees of the Adviser may serve as directors and/or
officers of the Fund, but without compensation or reimbursement of expenses for
such services from the Fund. Nothing herein contained shall be deemed to require
the Fund to take any action contrary to its Articles of Incorporation or any
applicable statute or regulation, or to relieve or deprive the Board of
Directors of the Fund of its responsibility for and control of the conduct of
the affairs of the Fund.
(b) The services of the Adviser hereunder are not exclusive, and the
Adviser shall be free to render similar services to others (including other
investment companies) so long as its services under this Agreement are not
impaired thereby.
7. DURATION AND TERMINATION. This Agreement shall become effective on the
date hereof and shall continue in effect, unless sooner terminated as provided
herein, until the second anniversary of its effective date. Thereafter, this
Agreement shall continue in effect automatically for
A-3
<PAGE> 25
periods of one year so long as each such latter continuance is approved at least
annually (a) by the vote of a majority of the directors of the Fund who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Directors of the Fund or by vote of the holders of a majority of
the outstanding Shares of the Fund. Notwithstanding the foregoing provisions,
(i) the continuance of this Agreement for the two-year period referred to in the
first sentence of this paragraph 7 is, in addition to the requirements set forth
above, subject to the approval of this Agreement by the holders of a majority of
the outstanding Shares of the Fund on or before the effective date of this
Agreement, and (ii) this Agreement may be terminated at any time, without the
payment of any penalty, (x) by the Fund's Board of Directors or by vote of the
holders of a majority of the outstanding Shares of the Fund on 60 days' written
notice to the Adviser, or (y) by the Adviser on 60 days' written notice to the
Fund. This Agreement will terminate automatically in the event of its assignment
(as defined in the 1940 Act).
8. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Fund must be approved (a) by vote of a majority
of those directors of the Fund who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such amendment, and (b) by vote of the holders of a
majority of the outstanding Shares of the Fund.
9. NAME OF FUND. The parties agree that the Fund may use the respective
names "Strong" and "Schafer", and any related logos or service marks which the
Adviser may furnish, only so long as (i) this Agreement remains in effect and
(ii) the Adviser has the right to use such names (including under Section 1.2 of
the Adviser's Limited Liability Company Agreement dated as of September 7,
1997), and that any such use shall be royalty free. Upon termination of this
Agreement or the Adviser notifies the Fund that it ceases to have the right to
use either of such names, the Fund shall promptly discontinue the use of the
name or names that it ceases to have the right to use and any such related logos
or service marks at the request of the Adviser. The Fund acknowledges that (i)
it has no proprietary or exclusive rights in the respective names "Strong" or
"Schafer", or any related logo or service mark furnished by the Adviser, and
(ii) the Adviser reserves to itself the right to grant the nonexclusive right to
use any such name and any such logo or service mark to other persons (including
other investment companies), subject to the Adviser's rights with respect to
such names.
10. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
A-4
<PAGE> 26
provisions hereof or otherwise affect their construction or effect. The term
"interested person" is used herein as defined in the 1940 Act, and the term
"majority of the outstanding Shares" is used herein as defined in the 1940 Act
with respect to voting securities. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be construed in accordance with applicable federal law and the laws of the State
of New York and shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors (subject to the last sentence of
paragraph 7).
STRONG SCHAFER VALUE FUND, INC.
By:
----------------------------------------------------------------------
STRONG SCHAFER CAPITAL
MANAGEMENT, L.L.C.
By: SCHAFER CAPITAL MANAGEMENT, INC.,
its Managing Member
By:
----------------------------------------------------------------------
David K. Schafer
President
A-5
<PAGE> 27
Please detach at perforation before mailing
[Strong Logo]
VOTE BY TOUCH-TONE PHONE OR THE INTERNET
Call toll-free: 1-888-221-0697 or visit www.strong-funds.com
Proxy STRONG SCHAFER VALUE FUND, INC. Proxy
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
ON OCTOBER 15, 1998
The undersigned stockholder of Strong Schafer Value Fund, Inc., a Maryland
corporation (the "Company"), hereby appoints David K. Schafer and James P.
Cullen, or either of them, with full power of substitution, proxies for the
undersigned to attend the Special Meeting of Stockholders of the Company to be
held on October 15, 1998, at 9:00 a.m., and any postponement or adjournment
thereof, to cast on behalf of the undersigned all votes that the undersigned is
entitled to cast at such meeting and otherwise to represent the undersigned at
the Meeting, with all the powers which the undersigned would have if personally
present thereat. The undersigned hereby acknowledges receipt of the Notice of
Special Meeting and of the accompanying Proxy Statement and revokes any proxy
heretofore given with respect to such Meeting.
<TABLE>
<S> <C>
Dated ____________________________________, 1998
Signature(s) of stockholder(s) should correspond
exactly with the name(s) shown on this Proxy. If
the stockholder is a corporation, give full
corporate name and sign by a duly authorized officer.
Attorneys, trustees, executors, administrators,
guardians and others signing in a representative
capacity should designate their full titles.
----------------------------------------------------
(Signature of Stockholder)
For joint accounts, both signatures required
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE,
IF YOU ARE NOT VOTING BY PHONE OR INTERNET.
</TABLE>
<PAGE> 28
- ------------------------------------------------------------------------------
PLEASE, your vote is important and, as a stockholder, you are invited to
attend the Special Meeting of Stockholders ("Special Meeting") either in
person, or by proxy. If you are unable to attend the Special Meeting in person,
we urge you to vote by proxy. You can do this in any one of three ways: (1)
completing, signing, dating, and promptly returning this Proxy using the
enclosed postage prepaid envelope; (2) calling our toll-free telephone number
at 1-888-221-0697 or (3) voting at the Strong website at www.strong-funds.com.
Your prompt voting by proxy will help assure a quorum at the Special Meeting
and avoid additional expenses associated with further solicitation. You may
revoke your proxy at any time prior to its exercise by the submission of a
subsequent proxy (by any of the means described above), by written notice of
revocation delivered to the Secretary of Strong Schafer Value Fund, Inc. at any
time prior to the Special Meeting (indicating your name and account number), or
by attending the Special Meeting and voting in person.
- -------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IN PROPOSAL 1, FOR PROPOSALS 2 AND 3 AND IN THE
DISCRETION OF THE PROXIES UPON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE MEETING.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
1. Election of directors: FOR all nominees WITHHOLD FOR all except
[ ] [ ] [ ]
David K. Schafer (01), Timothy C. Collins (02), Mary P. English (03),
Philip P. Young (04)
(Instructions: To withhold authority to vote for any individual nominee(s),
mark the "FOR all except" box and write the name(s) of the nominee(s) on
the line below.)
2. Proposal to approve a new Investment Advisory Agreement between Strong
Schafer Capital Management, L.L.C. and the Fund, as more fully described
in the Proxy Statement:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Fund for the fiscal year ending September 30,
1998:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
and, in their discretion, upon any other matter which might properly come
before the meeting or any postponement or adjournment thereof.
(Continued and to be signed and dated on reverse side)
