As filed with the Securities and Exchange Commission on or about September 8,
1999
Securities Act Registration No. 33-37435
Investment Company Act Registration No. 811-6195
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 18 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 19 [ X ]
(Check appropriate box or boxes)
STRONG INCOME FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (414) 359-3400
Stephen J. Shenkenberg
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box).
[ X ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
This Post-Effective Amendment to the Registration Statement of Strong
Income Funds, Inc., which is currently comprised of two Funds, relates to, and
updates the exhibit index of, the Strong Short-Term High Yield Bond Fund and
Strong High-Yield Bond Fund.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 18 to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933, and has duly caused this Post-Effective Amendment No. 18 to the
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the Village of Menomonee Falls, and State of Wisconsin on
the 7th day of September, 1999.
STRONG INCOME FUNDS, INC.
(Registrant)
By: /S/ STEPHEN J. SHENKENBERG
Stephen J. Shenkenberg, Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 18 to the Registration Statement on Form N-1A has
been signed below by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
NAME TITLE DATE
- ----------------------------- ---------------------------------- -----------------
Chairman of the Board (Principal
/s/ Richard S. Strong Executive Officer) and a Director September 7, 1999
- -----------------------------
Richard S. Strong
Treasurer (Principal Financial and
/s/ John W. Widmer Accounting Officer) September 7, 1999
- -----------------------------
John W. Widmer
Director September 7, 1999
- -----------------------------
Marvin E. Nevins*
Director September 7, 1999
- -----------------------------
Willie D. Davis*
Director September 7, 1999
- -----------------------------
William F. Vogt*
Director September 7, 1999
- -----------------------------
Stanley Kritzik*
</TABLE>
* John S. Weitzer signs this document pursuant to powers of attorney filed
with Post-Effective Amendment No. 17 to the Registration Statement on Form
N-1A.
By: /S/ JOHN S. WEITZER
John S. Weitzer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
EDGAR
EXHIBIT NO. EXHIBIT EXHIBIT NO.
- ----------- -----------------------------------------------------------
(d) Amended and Restated Investment Advisory Agreement EX-99.d
(e) Distribution Agreement - Investor and Institutional Class EX-99.e
(h) Amended and Restated Transfer and Dividend Disbursing Agent EX-99.h
Agreement
(h.1) Administration Agreement - Investor Class EX-99.h1
(m) Rule 12b-1 Plan EX-99.m
(n) Rule 18f-3 Plan EX-99.n
</TABLE>
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AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on ___________, and as amended on
this ____ day of __________, between STRONG _________________________, a
Wisconsin corporation (the "Corporation"), and STRONG CAPITAL MANAGEMENT, INC.,
a Wisconsin corporation (the "Adviser");
WITNESSETH
WHEREAS, the Corporation is an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Corporation is authorized to create separate series, each
with its own separate investment portfolio; and,
WHEREAS, the Corporation desires to retain the Adviser, which is a
registered investment adviser under the Investment Advisers Act of 1940, to act
as investment adviser for each series of the Corporation listed in Schedule A
attached hereto, and to manage each of their assets;
NOW, THEREFORE, the Corporation and the Adviser do mutually agree and
promise as follows:
1. EMPLOYMENT. The Corporation hereby appoints Adviser as investment
adviser for each series of the Corporation listed on Schedule A attached hereto
(a "Portfolio" or collectively, the "Portfolios"), and Adviser accepts such
Corporation and the terms of this Agreement, the Adviser shall act as
investment adviser for and manage the investment and reinvestment of the assets
of any Portfolio. The Adviser is hereby authorized to delegate some or all of
its services subject to necessary approval, which includes without limitation,
the delegation of its investment adviser duties hereunder to a subadvisor
pursuant to a written agreement (a "Subadvisory Agreement") under which the
subadvisor shall furnish the services specified therein to the Adviser. The
Adviser will continue to have responsibility for all investment advisory
services furnished pursuant to a Subadvisory Agreement. The Adviser shall (i)
provide for use by the Corporation, at the Adviser's expense, office space and
all necessary office facilities, equipment and personnel for servicing the
investments of each Portfolio, (ii) pay the salaries and fees of all officers
and directors of the Corporation who are "interested persons" of the Adviser as
such term is defined under the 1940 Act, and (iii) pay for all clerical
services relating to research, statistical and investment work.
2. ALLOCATION OF PORTFOLIO BROKERAGE. The Adviser is authorized,
subject to the supervision of the Board of Directors of the Corporation, to
place orders for the purchase and sale of securities and to negotiate
commissions to be paid on such transactions. The Adviser may, on behalf of each
Portfolio, pay brokerage commissions to a broker which provides brokerage and
research services to the Adviser in excess of the amount another broker would
have charged for effecting the transaction, provided (i) the Adviser determines
in good faith that the amount is reasonable in relation to the value of the
brokerage and research services provided by the executing broker in terms of
the particular transaction or in terms of the Adviser's overall
responsibilities with respect to a Portfolio and the accounts as to which the
Adviser exercises investment discretion, (ii) such payment is made in
compliance with Section 28(e) of the Securities Exchange Act of 1934 and other
applicable state and federal laws, and (iii) in the opinion of the Adviser, the
total commissions paid by a Portfolio will be reasonable in relation to the
benefits to such Portfolio over the long term.
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3. EXPENSES. Each Portfolio will pay all its expenses and the
Portfolio's allocable share of the Corporation's expenses, other than those
expressly stated to be payable by the Adviser hereunder, which expenses payable
by a Portfolio shall include, without limitation, interest charges, taxes,
brokerage commissions and similar expenses, expenses of issue, sale, repurchase
or redemption of shares, expenses of registering or qualifying shares for sale,
expenses of printing and distributing prospectuses to existing shareholders,
charges of custodians (including sums as custodian and for keeping books and
similar services of the Portfolios), transfer agents (including the printing
and mailing of reports and notices to shareholders), registrars, auditing and
legal services, clerical services related to recordkeeping and shareholder
relations, printing of share certificates, fees for directors who are not
"interested persons" of the Adviser, and other expenses not expressly assumed
by the Adviser under Paragraph 1 above. If expenses payable by a Portfolio,
except interest charges, taxes, brokerage commissions and similar fees, and to
the extent permitted, extraordinary expenses, in any given fiscal year exceed
that percentage of the average net asset value of the Portfolio for such year,
as determined by valuations made as of the close of each business day of such
year, which is the most restrictive percentage expense limitation provided by
the laws of the various states in which the Portfolio's shares are qualified
for sale, or if the states in which the shares qualified for sale impose no
restrictions, then 2%, the Adviser shall reimburse the Portfolio for such
excess. Reimbursement of expenses by the Adviser shall be made on a monthly
basis and will be paid to a Portfolio by a reduction in the Adviser's fee,
subject to later adjustment month by month for the remainder of the Portfolio's
fiscal year.
4. AUTHORITY OF ADVISER. The Adviser shall for all purposes herein be
considered an independent contractor and shall not, unless expressly authorized
and empowered by the Corporation or any Portfolio, have authority to act for or
represent the Corporation or any Portfolio in any way, form or manner. Any
authority granted by the Corporation on behalf of itself or any Portfolio to
the Adviser shall be in the form of a resolution or resolutions adopted by the
Board of Directors of the Corporation.
5. COMPENSATION OF ADVISER. For the services to be furnished during
any month by the Adviser hereunder, each Portfolio listed in Schedule A shall
pay the Adviser, and the Adviser agrees to accept as full compensation for all
services rendered hereunder, an Advisory Fee as soon as practical after the
last day of such month. The Advisory Fee shall be an amount equal to 1/12th of
the annual fee as set forth in Schedule B of the average of the net asset value
of the Portfolio determined as of the close of business on each business day
throughout the month (the "Average Asset Value"). In case of termination of
this Agreement with respect to any Portfolio during any month, the fee for that
month shall be reduced proportionately on the basis of the number of calendar
days during which it is in effect and the fee computed upon the Average Asset
Value of the business days during which it is so in effect.
6. RIGHTS AND POWERS OF ADVISER. The Adviser's rights and powers with
respect to acting for and on behalf of the Corporation or any Portfolio,
including the rights and powers of the Adviser's officers and directors, shall
be as follows:
(a) Directors, officers, agents and shareholders of the Corporation
are or may at any time or times be interested in the Adviser as officers,
directors, agents, shareholders or otherwise. Correspondingly, directors,
officers, agents and shareholders of the Adviser are or may at any time or
times be interested in the Corporation as directors, officers, agents and as
shareholders or otherwise, but nothing herein shall be deemed to require the
Corporation to take any action contrary to its Articles of Incorporation or any
applicable statute or regulation. The Adviser shall, if it so elects, also have
the right to be a shareholder in any Portfolio.
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(b) Except for initial investments in a Portfolio, not in excess of
$100,000 in the aggregate for the Corporation, the Adviser shall not take any
long or short positions in the shares of the Portfolios and that insofar as it
can control the situation it shall prevent any and all of its officers,
directors, agents or shareholders from taking any long or short position in the
shares of the Portfolios. This prohibition shall not in any way be considered
to prevent the Adviser or an officer, director, agent or shareholder of the
Adviser from purchasing and owning shares of any of the Portfolios for
investment purposes. The Adviser shall notify the Corporation of any sales of
shares of any Portfolio made by the Adviser within two months after purchase by
the Adviser of shares of any Portfolio.
(c) The services of the Adviser to each Portfolio and the Corporation
are not to be deemed exclusive and 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 of the Portfolios or to any shareholder
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security.
7. DURATION AND TERMINATION. The following shall apply with respect to
the duration and termination of this Agreement:
(a) This Agreement shall begin for each Portfolio as of the date of
this Agreement and shall continue in effect for two years. With respect to each
Portfolio added by execution of an Addendum to Schedule A, the term of this
Agreement shall begin on the date of such execution and, unless sooner
terminated as hereinafter provided, this Agreement shall remain in effect to
the date two years after such execution. Thereafter, in each case, this
Agreement shall remain in effect, for successive periods of one year, subject
to the provisions for termination and all of the other terms and conditions
hereof if: (a) such continuation shall be specifically approved at least
annually by either (i) the affirmative vote of a majority of the Board of
Directors of the Corporation, including a majority of the Directors who are not
parties to this Agreement or interested persons of any such party (other than
as Directors of the Corporation), cast in person at a meeting called for that
purpose or (ii) by the affirmative vote of a majority of a Portfolio's
outstanding voting securities; and (b) Adviser shall not have notified a
Portfolio in writing at least sixty (60) days prior to the anniversary date of
this Agreement in any year thereafter that it does not desire such continuation
with respect to that Portfolio. Prior to voting on the renewal of this
Agreement, the Board of Directors of the Corporation may request and evaluate,
and the Adviser shall furnish, such information as may reasonably be necessary
to enable the Corporation's Board of Directors to evaluate the terms of this
Agreement.
(b) Notwithstanding whatever may be provided herein to the contrary,
this Agreement may be terminated at any time with respect to any Portfolio,
without payment of any penalty, by affirmative vote of a majority of the Board
of Directors of the Corporation, or by vote of a majority of the outstanding
voting securities of that Portfolio, as defined in Section 2(a)(42) of the 1940
Act, or by the Adviser, in each case, upon sixty (60) days' written notice to
the other party and shall terminate automatically in the event of its
assignment.
8. AMENDMENT. This Agreement may be amended by mutual consent of the
parties, provided that the terms of each such amendment shall be approved by
the vote of a majority of the Board of Directors of the
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<PAGE>
Corporation, including a majority of the Directors who are not parties to this
Agreement or interested persons of any such party to this Agreement (other than
as Directors of the Corporation) cast in person at a meeting called for that
purpose, and, where required by Section 15(a)(2) of the 1940 Act, on behalf of
a Portfolio by a majority of the outstanding voting securities (as defined in
Section 2(a)(42) of the 1940 Act) of such Portfolio. If such amendment is
proposed in order to comply with the recommendations or requirements of the
Securities and Exchange Commission or state regulatory bodies or other
governmental authority, or to obtain any advantage under state or federal laws,
the Corporation shall notify the Adviser of the form of amendment which it
deems necessary or advisable and the reasons therefor, and if the Adviser
declines to assent to such amendment, the Corporation may terminate this
Agreement forthwith.
9. NOTICE. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
10. ASSIGNMENT. This Agreement shall neither be assignable nor subject
to pledge or hypothecation and in the event of assignment, pledge or
hypothecation shall automatically terminate. For purposes of determining
whether an "assignment" has occurred, the definition of "assignment" in Section
2(a)(4) of the 1940 Act shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first stated above.
<TABLE>
<CAPTION>
<S> <C> <C>
Attest: Strong Capital Management, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong ________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
4
<PAGE>
SCHEDULE A
The Portfolio(s) of the Strong ___________________ currently subject to this
Agreement are as follows:
Date of Addition
PORTFOLIO(S) TO THIS AGREEMENT
Strong ________________ Fund ______________
<TABLE>
<CAPTION>
<S> <C> <C>
Attest: Strong Capital Management, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong ________________,Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
5
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SCHEDULE B
Compensation pursuant to Paragraph 5 of this Agreement shall be calculated in
accordance with the following schedules:
PORTFOLIO(S) ANNUAL FEE
Strong _____________ Fund ___%
<TABLE>
<CAPTION>
<S> <C> <C>
Attest: Strong Capital Management, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong __________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
6
<PAGE>
INVESTOR AND INSTITUTIONAL CLASS SHARES
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into on this ____ day of ____________,
between STRONG _____________________, INC., a Wisconsin corporation (the
"Corporation"), and STRONG INVESTMENTS, INC., a Wisconsin corporation (the
"Distributor"):
WITNESSETH:
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940 (the "Investment Company
Act");
WHEREAS, the Corporation is authorized to create separate series, each
with its own separate investment portfolio, and the beneficial interest in each
such series will be represented by a separate series of shares;
WHEREAS, the Corporation is authorized to create separate classes of beneficial
interest within each series, each with its own expenses;
WHEREAS, the Corporation is authorized to issue shares of its $.0001 par
value common stock (the "Shares") in separate series;
WHEREAS, the Distributor is a registered broker-dealer under state and
federal laws and regulations and is a member of the National Association of
Securities Dealers (the "NASD"); and
WHEREAS, the Corporation desires to retain Distributor as the distributor
of the Shares of each series on whose behalf this Agreement has been executed.
NOW, THEREFORE, the Corporation and Distributor mutually agree and promise
as follows:
1. APPOINTMENT OF DISTRIBUTOR
The Corporation hereby appoints the Distributor as its agent for the
distribution of the Shares of each series of the Corporation listed on Schedule
A attached hereto (each series is hereinafter referred to as a "Fund"), as such
Schedule may be amended from time to time, in jurisdictions wherein the Shares
may legally be offered for sale; provided, however, that the Corporation may
(a) issue or sell Shares directly to holders of such Shares upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the
payment or reinvestment of dividends or distributions, or otherwise; or (b)
issue or sell Shares at net asset value to the shareholders of any other
investment Company, as defined in the Investment Company Act, for which the
Distributor shall act as exclusive distributor, who wish to exchange all or a
portion of their investment in shares of such other investment company for
Shares of the Corporation.
2. ACCEPTANCE; SERVICES OF DISTRIBUTOR
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The Distributor hereby accepts appointment as agent for the distribution
of the Shares and agrees that it will use its best efforts with reasonable
promptness to sell such part of the authorized Shares remaining unissued as
from time to time shall be effectively registered under the Securities Act of
1933 (the "Securities Act"), at prices determined as hereinafter provided and
on terms hereinafter set forth, all subject to applicable federal and state
laws and regulations and the Articles of Incorporation and By-Laws of the
Corporation.
3. MANNER OF SALE; COMPLIANCE WITH SECURITIES LAWS AND REGULATIONS
a. The Distributor shall sell Shares to or through qualified dealers
or others in such manner, not inconsistent with the provisions hereof and the
Corporation's then effective Registration Statement under the Securities Act,
as the Distributor may determine from time to time, provided that no dealer or
other person shall be appointed or authorized to act as agent of the
Corporation without the prior consent of the Corporation. The Distributor
shall cause subscriptions for Shares to be transmitted in accordance with any
subscription agreement then in force for the purchase of Shares. Distributor
and Corporation shall cooperate in implementing procedures to ensure that the
sales commission, if any, payable on the purchase of Shares is paid to the
Distributor in a timely manner.
b. The Distributor, as agent of and for the account of the
Corporation, may repurchase Shares at such prices and upon such terms and
conditions as shall be specified in the Corporation's current prospectus
relating to each Fund.
c. The Corporation will furnish to the Distributor from time to time
such information with respect to the Corporation, each Fund, and the Shares as
the Distributor may reasonably request for use in connection with the sale of
the Shares. The Distributor agrees that it will not use or distribute or
authorize the use, distribution or dissemination by its dealers or others, in
connection with the sale of such Shares, of any statements, other than those
contained in the Corporation's current prospectus relating to each Fund, except
such supplemental literature or advertising as shall be lawful under federal
and state securities laws and regulations, and that it will furnish the
Corporation with copies of all such material.
d. In selling or reacquiring Shares for the account of the
Corporation, the Distributor will in all respects conform to the requirements
of all state and federal laws and the Conduct Rules of the NASD, relating to
such sale or reacquisition, as the case may be, and will indemnify and save
harmless the Corporation, each Fund, each person who has been, is or may
hereafter be a director or officer of the Corporation or any Fund from any
damage or expense on account of any wrongful act by the Distributor or any
employee, representative or agent of the Distributor. The Distributor will
observe and be bound by all the provisions of the Articles of Incorporation of
the Corporation (and of any fundamental policies adopted by the Corporation
and/or each Fund pursuant to the Investment Company Act, notice of which shall
have been given to the Distributor) which at the time in any way require,
limit, restrict or prohibit or otherwise regulate any action on the part of the
Distributor.
e. The Distributor will require each dealer to conform to the
provisions hereof and the Registration Statement (and related prospectus or
prospectuses) at the time in effect under the Securities Act with respect to
the public offering price of the Shares.
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4. PRICE OF SHARES
a. Shares offered for sale or sold by the Distributor for the account
of the Corporation shall be so offered or sold at a price per Share determined
in accordance with the then current prospectus relating to the sale of such
Shares except as departure from such prices shall be permitted by the rules and
regulations of the Securities and Exchange Commission (the "SEC").
b. The price the Corporation shall receive for all Shares purchased
from the Corporation shall be the net asset value used in determining the
public offering price applicable to the sale of each Fund's Shares. The
excess, if any, of the sales price over the net asset value of the Shares sold
by the Distributor as agent for the account of the Corporation shall be
retained by the Distributor as a commission for its services hereunder.
5. REGISTRATION OF SHARES AND DISTRIBUTOR
a. The Corporation agrees that it will use its best efforts to keep
effectively registered under the Securities Act for sale as herein contemplated
such Shares as the Distributor shall reasonably request and as the SEC shall
permit to be so registered.
b. The Corporation on behalf of each Fund will execute any and all
documents and furnish any and all information which may be reasonably necessary
in connection with the qualification of its Shares for sale (including the
qualification of the Corporation or a Fund as a dealer where necessary or
advisable) in such states as the Distributor may reasonably request (it being
understood that the Corporation shall not be required without its consent to
comply with any requirement which in its opinion is unduly burdensome). The
Distributor, at its own expense, will effect all required qualifications of the
Distributor as a dealer or broker or otherwise under all applicable state or
federal laws in order that the Shares may be sold in as broad a territory as is
reasonably practicable.
c. Notwithstanding any other provision hereof, the Corporation on
behalf of a Fund may terminate, suspend or withdraw the offering of its Shares
whenever, in its sole discretion, the Corporation deems such action to be
desirable.
6. EXPENSES
a. The Corporation or respective Fund will pay or cause to be paid the
expenses (including the fees and disbursements of its own counsel) of any
registration of the Shares under the Securities Act, expenses of qualifying or
continuing the qualification of the Shares for sale, and in connection
therewith, of qualifying or continuing the qualification of the Corporation or
respective Fund as a dealer or broker under the laws of such states as may be
designated by the Distributor under the conditions herein specified, and
expenses incident to the issuance of Shares, such as the cost of share
certificates, issue taxes and fees of the transfer agent.
b. The Distributor will pay all other expenses (other than expenses
which one or more dealers may bear pursuant to any agreement with the
Distributor) incident to the sale and distribution of the Shares issued or sold
hereunder, including, without limiting the generality of the foregoing, all (a)
expenses of printing and distributing or disseminating any other literature,
advertising and selling aids in
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connection with such offering of the Shares for sale (except that such expenses
shall not include expenses incurred by the Corporation or any Fund in
connection with the preparation, printing and distribution of any report or
other communication to holders of Shares in their capacity as such); and (b)
expenses of advertising in connection with such offering.
c. No transfer taxes, if any, which may be payable in connection with
the issue or delivery of Shares sold as herein contemplated or of the
certificates for such Shares shall be borne by the Corporation or any Fund, and
the Distributor will indemnify and hold harmless the Corporation and each Fund
against liability for all such transfer taxes.
7. DURATION AND TERMINATION
a. This Agreement shall become effective as of the date hereof and
shall continue in effect until August 30, 2001, and from year to year
thereafter, but only so long as such continuance is specifically approved each
year by either (i) the Board of Directors of the Corporation, or (ii) the
affirmative vote of a majority of the relevant Fund's respective outstanding
voting securities. In addition to the foregoing, each renewal of this
Agreement must be approved by the vote of a majority of the Corporation's
directors 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. Prior to voting on the renewal of this Agreement, the Board of
Directors of the Corporation shall request and evaluate, and the Distributor
shall furnish, such information as may reasonably be necessary to enable the
Corporation's Board of Directors to evaluate the terms of this Agreement.
b. Notwithstanding whatever may be provided herein to the contrary,
this Agreement may be terminated at any time, without payment of any penalty,
by vote of a majority of the Board of Directors of the Corporation, or by vote
of a majority of the outstanding voting securities of the relevant Fund, or by
the Distributor, in each case, on not more than sixty (60) days' written notice
to the other party and shall terminate automatically in the event of its
assignment as set forth in paragraph 9 of this Agreement.
8. NOTICE
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may from time to time designate for the receipt of such
notice.
9. ASSIGNMENT
This Agreement shall neither be assignable nor subject to pledge or
hypothecation and in the event of assignment, pledge or hypothecation shall
automatically terminate. For purposes of determining whether an "assignment"
has occurred, the definition of "assignment" in Section 2(a)(4) of the
Investment Company Act shall control.
10. MISCELLANEOUS
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a. This Agreement shall be construed in accordance with the laws of
the State of Wisconsin, provided that nothing herein shall be construed in a
manner inconsistent with the Investment Company Act, the Securities Act, the
Securities Exchange Act of 1934 or any rule or order of the SEC under such Acts
or any rule of the NASD.
b. The captions of this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
c. 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 and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first stated above.
<TABLE>
<CAPTION>
<S> <C><C>
Attest: Strong Investments, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong _________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
5
<PAGE>
SCHEDULE A
The Fund(s) of the Corporation currently subject to this Agreement are as
follows:
Date of Addition
FUND(S) TO THIS AGREEMENT
Strong ______________ Fund _______________
<TABLE>
<CAPTION>
<S> <C><C>
Attest: Strong Investments, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong _____________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
6
<PAGE>
AMENDED AND RESTATED
TRANSFER AND DIVIDEND DISBURSING AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this ____ day of ____________,
between STRONG ____________________, INC., a Wisconsin corporation (the
"Corporation"), on behalf of the Funds (as defined below) of the Corporation,
and STRONG CAPITAL MANAGEMENT, INC., a Wisconsin corporation ("Strong").
WITNESSETH
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940;
WHEREAS, the Corporation is authorized to create separate series, each
with its own separate investment portfolio, and the beneficial interest in each
such series will be represented by a separate series of shares (each series is
hereinafter individually referred to as a "Fund" and collectively, the
"Funds");
WHEREAS, the Corporation is authorized to issue shares of its $.0001 par
value common stock (the "Shares") of each Fund; and,
WHEREAS, the Corporation desires to retain Strong as the transfer and
dividend disbursing agent of the Shares of each Fund on whose behalf this
Agreement has been executed.
NOW, THEREFORE, the Corporation and Strong do mutually agree and promise
as follows:
1. APPOINTMENT. The Corporation hereby appoints Strong to act as
transfer and dividend disbursing agent of the Shares of each Fund listed on
Schedule A hereto, as such Schedule may be amended from time to time. Strong
shall, at its own expense, render the services and assume the obligations
herein set forth subject to being compensated therefor as herein provided.
2. AUTHORITY OF STRONG. Strong is hereby authorized by the
Corporation to receive all cash which may from time to time be delivered to it
by or for the account of the Funds; to issue confirmations and/or certificates
for Shares of the Funds upon receipt of payment; to redeem or repurchase on
behalf of the Funds Shares upon receipt of certificates properly endorsed or
properly executed written requests as described in the current prospectus of
each Fund and to act as dividend disbursing agent for the Funds.
3. DUTIES OF STRONG. Strong hereby agrees to:
A. Process new accounts.
B. Process purchases, both initial and subsequent, of Fund Shares in
accordance with conditions set forth in the prospectus of each Fund as mutually
agreed by the Corporation and Strong.
C. Transfer Fund Shares to an existing account or to a new account upon
receipt of required documentation in good order.
1
<PAGE>
D. Redeem uncertificated and/or certificated shares upon receipt of
required documentation in good order.
E. Issue and/or cancel certificates as instructed; replace lost, stolen or
destroyed certificates upon receipt of satisfactory indemnification or bond.
F. Distribute dividends and/or capital gain distributions. This includes
disbursement as cash or reinvestment and to change the disbursement option at
the request of shareholders.
G. Process exchanges between Funds (process and direct purchase/redemption
and initiate new account or process to existing account).
H. Make miscellaneous changes to records.
I. Prepare and mail a confirmation to shareholders as each transaction is
recorded in a shareholder account. Duplicate confirmations to be available on
request within current year.
J. Handle phone calls and correspondence in reply to shareholder requests
except those items set forth in Referrals to Corporation, below.
K. Prepare Reports for the Funds:
i. Monthly analysis of transactions and accounts by types.
ii. Quarterly state sales analysis; sales by size; analysis of systematic
withdrawals; Keogh, IRA and 403(b)(7) plans; print-out of shareholder balances.
L. Perform daily control and reconciliation of Fund Shares with Strong's
records and the Corporation's office records.
M. Prepare address labels or confirmations for four reports to shareholders
per year.
N. Mail and tabulate proxies for one Annual Meeting of Shareholders,
including preparation of certified shareholder list and daily report to
Corporation management, if required.
O. Prepare and mail required Federal income taxation information to
shareholders to whom dividends or distributions are paid, with a copy for the
IRS and a copy for the Corporation if required.
P. Provide readily obtainable data which may from time to time be requested
for audit purposes.
2
<PAGE>
Q. Replace lost or destroyed checks.
R. Continuously maintain all records for active and closed accounts.
S. Furnish shareholder data information for a current calendar year in
connection with IRA and Keogh Plans in a format suitable for mailing to
shareholders.
T. Prepare and/or deliver any written communication to a potential
purchaser of Fund shares, provided that the content of such communications is
approved by an authorized person of the Corporation.
U. Respond to inquiries of a potential purchaser of Fund shares in a
communication initiated by the potential purchaser, provided that the content
of such response is limited to information contained in the Corporation's
current registration statement filed under the Securities Act of 1933 and
Investment Company Act of 1940.
V. Perform ministerial and clerical work involved in effecting any Fund
transaction.
4. REFERRALS TO CORPORATION. Strong hereby agrees to refer to the
Corporation for reply the following:
A. Requests for investment information, including performance and outlook.
B. Requests for information about specific plans (i.e., IRA, Keogh,
Systematic Withdrawal).
C. Requests for information about exchanges between Funds.
D. Requests for historical Fund prices.
E. Requests for information about the value and timing of dividend
payments.
F. Questions regarding correspondence from the Corporation and newspaper
articles.
G. Any requests for information from non-shareholders.
H. Any other types of shareholder requests as the Corporation may request
from Strong in writing.
5. COMPENSATION TO STRONG. Strong shall be compensated for its
services hereunder in accordance with the Transfer and Dividend Disbursing Fee
Schedule (the "Fee Schedule") attached hereto as Schedule B and as such Fee
Schedule may from time to time be amended in writing between the two parties.
The Corporation will reimburse Strong for all out-of-pocket expenses,
including, but not
3
<PAGE>
necessarily limited to, postage, confirmation forms, etc. Special projects,
not included in the Fee Schedule and requested by proper instructions from the
Corporation with respect to the relevant Funds, shall be completed by Strong
and invoiced to the Corporation and the relevant Funds as mutually agreed upon.
6. RIGHTS AND POWERS OF STRONG. Strong's rights and powers with
respect to acting for and on behalf of the Corporation, including rights and
powers of Strong's officers and directors, shall be as follows:
A. No order, direction, approval, contract or obligation on behalf of the
Corporation with or in any way affecting Strong shall be deemed binding unless
made in writing and signed on behalf of the Corporation by an officer or
officers of the Corporation who have been duly authorized to so act on behalf
of the Corporation by its Board of Directors.
B. Directors, officers, agents and shareholders of the Corporation are or
may at any time or times be interested in Strong as officers, directors,
agents, shareholders, or otherwise. Correspondingly, directors, officers,
agents and shareholders of Strong are or may at any time or times be interested
in the Corporation as directors, officers, agents, shareholders or otherwise.
Strong shall, if it so elects, also have the right to be a shareholder of the
Corporation.
C. The services of Strong to the Corporation are not to be deemed exclusive
and Strong shall be free to render similar services to others as long as its
services for others do not in any manner or way hinder, preclude or prevent
Strong from performing its duties and obligations under this Agreement.
D. The Corporation will indemnify Strong and hold it harmless from and
against all costs, losses, and expenses which may be incurred by it and all
claims or liabilities which may be asserted or assessed against it as a result
of any action taken by it without negligence and in good faith, and for any
act, omission, delay or refusal made by Strong in connection with this agency
in reliance upon or in accordance with any instruction or advice of any duly
authorized officer of the Corporation.
7. EFFECTIVE DATE. This Agreement shall become effective as of the
date hereof.
8. TERMINATION OF AGREEMENT. This Agreement shall continue in force
and effect until terminated or amended to such an extent that a new Agreement
is deemed advisable by either party. Notwithstanding anything herein to the
contrary, this Agreement may be terminated at any time, without payment of any
penalty, by the Corporation or Strong upon ninety (90) days' written notice to
the other party.
9. AMENDMENT. This Agreement may be amended by the mutual written
consent of the parties. If, at any time during the existence of this
Agreement, the Corporation deems it necessary or advisable in the best
interests of Corporation that any amendment of this Agreement be made in order
to comply with the recommendations or requirements of the Securities and
Exchange Commission or state regulatory agencies or other governmental
authority, or to obtain any advantage under state or federal laws, the
Corporation shall notify Strong of the form of amendment which it deems
necessary or
4
<PAGE>
advisable and the reasons therefor, and if Strong declines to assent to such
amendment, the Corporation may terminate this Agreement forthwith.
10. NOTICE. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first stated above.
<TABLE>
<CAPTION>
<S> <C><C>
Attest: Strong Capital Management, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong __________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
6
<PAGE>
SCHEDULE A
The Fund(s) of the Corporation currently subject to this Agreement are as
follows:
Date of Addition
FUND(S) TO THIS AGREEMENT
Strong ______________ Fund _______________
<TABLE>
<CAPTION>
<S> <C><C>
Strong Capital Management, Inc.
Attest:
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong _________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
7
<PAGE>
TRANSFER AND DIVIDEND DISBURSING FEE SCHEDULE
Until such time that this schedule is replaced or modified, Strong
_______________, Inc. (the "Corporation"), on behalf of each Fund set forth on
Schedule A to this Agreement, agrees to compensate Strong Capital Management,
Inc. ("Strong") for performing as transfer and dividend disbursing agent as
specified below, plus out-of-pocket expenses attributable to the Corporation
and the Fund(s).
<TABLE>
<CAPTION>
<S> <C>
FUND/SHARE CLASS FEE(S)
- ---------------------------- -----------------------------------------------------------
Strong _____________ Fund
-----------------------------------------------------------
* Investor Class shares $31.50 annual open account fee, $4.20 annual closed account
fee.
- ---------------------------- -----------------------------------------------------------
* Institutional Class shares 0.015% of the average daily net asset value
- ---------------------------- -----------------------------------------------------------
* Advisor Class Shares 0.20% of the average daily net asset value
- ---------------------------- -----------------------------------------------------------
</TABLE>
Out-of-pocket expenses include, but are not limited to, the following:
1. All materials, paper and other costs associated with necessary and
ordinary shareholder correspondence.
2. Postage and printing of confirmations, statements, tax forms and any
other necessary shareholder correspondence. Printing is to include the cost of
printing account statements and confirmations by third-party vendors as well as
the cost of printing the actual forms.
3. The cost of mailing (sorting, inserting, etc.) by third-party vendors.
4. All banking charges of Corporation, including deposit slips and stamps,
checks and share drafts, wire fees not paid by shareholders, and any other
deposit account or checking account fees.
5. The cost of storage media for Corporation records, including phone
recorder tapes, microfilm and microfiche, forms and paper.
6. Offsite storage costs for older Corporation records.
7. Charges incurred in the delivery of Corporation materials and mail.
8. Any costs for outside contractors used in providing necessary and
ordinary services to the Corporation, a Fund or shareholders, not contemplated
to be performed by Strong.
9. Any costs associated with enhancing, correcting or developing the record
keeping system currently used by the Corporation, including the development of
new statement or tax form formats.
8
<PAGE>
INVESTOR CLASS SHARES
For purposes of calculating Strong's compensation pursuant to this
Agreement, all subaccounts which hold Investor Class shares of a Fund through
401(k) plans, 401(k) alliances, and financial institutions, such as insurance
companies, broker/dealers, and investment advisors shall be treated as direct
open accounts of the Fund. Out-of-pocket expenses will be charged to the
applicable Fund, except for those out-of-pocket expenses attributable to the
Corporation in general, which shall be charged pro rata to each Fund.
All fees will be billed to the Corporation monthly based upon the number
of open and closed accounts existing on the last day of the month plus any
out-of-pocket expenses paid by Strong during the month. These fees are in
addition to any fees the Corporation may pay Strong for providing investment
management services, administrative services, or for underwriting the sale of
Corporation shares.
ADVISOR AND INSTITUTIONAL CLASS SHARES
For the services to be furnished during any month by Strong under this
Agreement, each Fund listed above shall pay Strong a monthly fee equal to
1/12th of the annual fee as set forth above of the average daily net asset
value of the Fund determined as of the close of business on each business day
throughout the month, plus any out-of-pocket expenses paid by Strong during the
month. These fees are in addition to any fees the Corporation may pay Strong
for providing investment management services, administrative services, or for
underwriting the sale of Corporation shares. Out-of-pocket expenses will be
charged to the applicable Fund, except for those out-of-pocket expenses
attributable to the Corporation in general, which shall be charged pro rata to
each Fund.
<TABLE>
<CAPTION>
<S> <C><C>
Attest: Strong Capital Management, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong ______________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
9
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is entered into on this ___ day of ___________ between Strong
______________, Inc., a Wisconsin corporation (the "Corporation"), and Strong
Capital Management, Inc., a Wisconsin corporation ("SCM"), with respect to the
shares of each of the Funds. All capitalized terms not defined herein shall
have the same meaning as in the Fund's current prospectus.
WITNESSETH
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Corporation is authorized to create separate series, each with its
own separate investment portfolio, and the beneficial interest in each such
series will be represented by a separate series of shares (each series is
hereinafter individually referred to as a "Fund" and collectively, the
"Funds");
WHEREAS, it is in the interest of the Corporation to make administrative
services available to shareholders of the Funds;
WHEREAS, SCM wishes to act as the administrator for the Funds to perform
certain administrative functions in connection with purchases and redemptions
of shares of the Funds ("Shares") and to provide related services to
shareholders in connection with their investments in the Funds; and
NOW, THEREFORE, the Corporation and SCM do mutually agree and promise as
follows:
1. APPOINTMENT. SCM hereby agrees to perform certain administrative
services for the Corporation with respect to the Funds listed on Schedule A
hereto, as such Schedule A may be amended from time to time, as hereinafter set
forth.
2. SERVICES TO BE PERFORMED.
2.1 SHAREHOLDER SERVICES. SCM shall be responsible for performing
administrative and servicing functions, which shall include without limitation:
(i) authorizing expenditures and approving bills for payment on behalf of the
Funds; (ii) supervising preparation of the periodic updating of the Funds'
registration statements, including prospectuses and statements of additional
information, for the purpose of filings with the Securities and Exchange
Commission ("SEC") and state securities administrators and monitoring and
maintaining the effectiveness of such filings, as appropriate; (iii)
supervising preparation of shareholder reports, notices of dividends, capital
gains distributions and tax credits for the Funds' shareholders, and attending
to routine correspondence and other communications with individual
shareholders; (iv) supervising the daily pricing of the Funds' investment
portfolios and the publication of the respective net asset values of the shares
of each Fund, earnings reports and other financial data to the extent required
by the Fund's Advisory Agreement prior to the adoption of this Administration
Agreement; (v) monitoring relationships with organizations providing services
to the Funds, including the Custodian, DST and printers; (vi) supervising
compliance by the Funds with recordkeeping requirements under the 1940 Act and
regulations thereunder, maintaining books and records for the Funds (other than
those maintained by the Custodian and the Funds' transfer agent) and preparing
and filing of tax reports other than the Funds' income tax returns; (vii)
answering shareholder inquiries regarding account status and history, the
manner in which purchases and redemptions of the shares may be effected, and
certain other matters pertaining to the Funds; (viii) assisting shareholders in
designating and changing dividend options, account designations and addresses;
(ix) providing necessary personnel and facilities to coordinate the
establishment and maintenance of shareholder accounts and records with the
Funds' transfer agent; (x) transmitting shareholders' purchase and redemption
orders to the Funds' transfer agent; (xi) arranging for the wiring or other
transfer of funds to and from shareholder accounts in connection with
shareholder orders to purchase or redeem shares; (xii) verifying purchase and
redemption orders, transfers
1
<PAGE>
among and changes in shareholder-designated accounts; (xiii) informing the
distributor of the gross amount of purchase and redemption orders for shares;
and (xiv) providing such other related services as the Funds or a shareholder
may reasonably request, to the extent permitted by applicable law. SCM shall
provide all personnel and facilities necessary in order for it to perform the
functions contemplated by this paragraph with respect to shareholders.
2.2 STANDARD OF SERVICES. All services to be rendered by SCM hereunder
shall be performed in a professional, competent and timely manner subject to
the supervision of the Board of Directors of the Corporation on behalf of the
Funds. The details of the operating standards and procedures to be followed by
SCM in the performance of the services described above shall be determined from
time to time by agreement between SCM and the Corporation.
3. FEES. As full compensation for the services described in Section 2
hereof and expenses incurred by SCM, the Funds shall pay SCM a monthly fee at
an annual rate of 0.25% of each Fund's average daily net asset value. This fee
will be computed daily and will be payable as agreed by the Corporation and
SCM, but no more frequently than monthly.
4. INFORMATION PERTAINING TO THE SHARES. SCM and its officers, employees
and agents are not authorized to make any representations concerning the Funds
or the Shares except to communicate accurately to shareholders factual
information contained in the Funds' Prospectus and Statement of Additional
Information and objective historical performance information. SCM shall act as
agent for shareholders only in furnishing information regarding the Funds and
shall have no other authority to act as agent for the Funds.
During the term of this Agreement, the Funds agree to furnish SCM all
prospectuses, statements of additional information, proxy statements, reports
to shareholders, sales literature, or other material the Funds will distribute
to shareholders of the Funds or the public, which refer in any way to SCM as
the administrator of the Funds, and SCM agrees to furnish the Funds all
material prepared for shareholders, in each case prior to use thereof. The
Funds shall furnish or otherwise make available to SCM such other information
relating to the business affairs of the Funds as SCM may, from time to time,
reasonably request in order to discharge its obligations hereunder.
Nothing in this Section 4 shall be construed to make the Funds liable for the
use of any information about the Funds which is disseminated by SCM.
5. USE OF SCM'S NAME. The Funds shall not use the name of SCM in any
prospectus, sales literature or other material relating to the Funds in a
manner not approved by SCM prior thereto; PROVIDED, HOWEVER, that the approval
of SCM shall not be required for any use of its name which merely refers in
accurate and factual terms to its appointment hereunder or which is required by
the SEC or any state securities authority or any other appropriate regulatory,
governmental or judicial authority; PROVIDED, FURTHER, that in no event shall
such approval be unreasonably withheld or delayed.
6. USE OF THE FUNDS' NAME. SCM shall not use the name of the Funds on any
checks, bank drafts, bank statements or forms for other than internal use in a
manner not approved by the Funds prior thereto; PROVIDED, HOWEVER, that the
approval of the Funds shall not be required for the use of the Funds' names in
connection with communications permitted by Sections 2 and 4 hereof or for any
use of the Funds' names which merely refer in accurate and factual terms to
SCM's role hereunder or which is required by the SEC or any state securities
authority or any other appropriate regulatory, governmental or judicial
authority; PROVIDED, FURTHER, that in no event shall such approval be
unreasonably withheld or delayed.
7. SECURITY. SCM represents and warrants that the various procedures and
systems which it has implemented with regard to safeguarding from loss or
damage attributable to fire, theft or any other cause any Fund's records and
other data and SCM's records, data, equipment, facilities and other property
used in the performance of its obligations hereunder are adequate and that it
will make such changes therein from time to time as in its judgment are
required for the secure performance of its obligations hereunder. The parties
shall review such systems and procedures on a periodic basis, and the Funds
shall from time to time specify the types of records and other data of the
Funds to be safeguarded in accordance with this Section 7.
2
<PAGE>
8. COMPLIANCE WITH LAWS. SCM assumes no responsibilities under this
Agreement other than to render the services called for hereunder, on the terms
and conditions provided herein. SCM shall comply with all applicable federal
and state laws and regulations. SCM represents and warrants to the Funds that
the performance of all its obligations hereunder will comply with all
applicable laws and regulations, the provisions of its articles of
incorporation and by-laws and all material contractual obligations binding upon
SCM. SCM furthermore undertakes that it will promptly inform the Funds of any
change in applicable laws or regulations (or interpretations thereof) which
would prevent or impair full performance of any of its obligations hereunder.
9. FORCE MAJEURE. SCM shall not be liable or responsible for delays or
errors by reason of circumstances beyond its control, including, but not
limited to, acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, acts of God,
insurrection, war, riots or failure of communication or power supply.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION OF SCM. SCM, its directors, officers, employees and
agents shall not be liable for any error of judgment or mistake of law or any
loss suffered by the Funds in connection with the performance of its
obligations and duties under this Agreement, except a loss resulting from
willful misfeasance, bad faith, or gross negligence in the performance of such
obligations or duties or by reason of the reckless disregard thereof by SCM,
its directors, officers, employees and agents. The Funds will indemnify and
hold SCM, its directors, officers, employees and agents harmless, from all
losses, claims, damages, liabilities or expenses (including reasonable fees and
disbursements of counsel) from any losses, liabilities, damages, or expenses
(collectively, "Losses") resulting from any and all claims, demands, actions or
suits (collectively, "Claims") arising out of or in connection with actions or
omissions in the Funds including, but not limited to, any misstatements or
omissions in a prospectus, actions or inactions by the Funds or any of its
agents or contractors or the performance of SCM's obligations hereunder or
otherwise not resulting from the willful misfeasance, bad faith, or gross
negligence of SCM, its directors, officers, employees or agents, in the
performance of SCM's duties or from reckless disregard by SCM, its directors,
officers, employees or agents of SCM's obligations and duties under this
Agreement.
Notwithstanding anything herein to the contrary, the Funds will indemnify and
hold SCM harmless from any and all Losses (including reasonable counsel fees
and expenses) resulting from any Claims as a result of SCM's acting in
accordance with any received instructions from the Funds.
10.2 INDEMNIFICATION OF THE FUNDS. Without limiting the rights of the
Funds under applicable law, SCM will indemnify and hold the Funds harmless from
any and all Losses (including reasonable fees and disbursements of counsel)
from any Claims resulting from the willful misfeasance, bad faith, or gross
negligence of SCM, its directors, officers, employees or agents, in the
performance of SCM's duties or from reckless disregard by SCM, its directors,
officers, employees or agents of SCM's obligations and duties under this
Agreement.
10.3 SURVIVAL OF INDEMNITIES. The indemnities granted by the parties in
this Section 10 shall survive the termination of this Agreement.
11. INSURANCE. SCM shall maintain such reasonable insurance coverage as is
appropriate against any and all liabilities which may arise in connection with
the performance of its duties hereunder.
12. FURTHER ASSURANCES. Each party agrees to perform such further acts and
execute further documents as are necessary to effectuate the purposes hereof.
13. TERMINATION. This Agreement shall continue in force and effect until
terminated or amended to such an extent that a new Agreement is deemed
advisable by either party. Notwithstanding anything herein to the contrary,
this Agreement may be terminated at any time, without payment of any penalty,
by either party upon ninety (90) days written notice to the other party.
14. NON-EXCLUSIVITY. Nothing in this Agreement shall limit or restrict the
right of SCM to engage in any other business or to render services of any kind
to any other corporation, firm, individual or association.
3
<PAGE>
15. AMENDMENTS. This Agreement may be amended only by mutual written
consent.
16. NOTICE. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed post paid to the other party at the principal place of
business of such party.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
as of the day and year first stated above.
<TABLE>
<CAPTION>
<S> <C> <C>
Attest: Strong Capital Management, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong _______________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
4
<PAGE>
SCHEDULE A
The Funds of the Corporation currently subject to this Agreement are as
follows:
Date of Addition
PORTFOLIO(S) TO THIS AGREEMENT
Strong ______________ Fund _________________
<TABLE>
<CAPTION>
<S> <C> <C>
Attest: Strong Capital Management, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
Attest: Strong _________________, Inc.
--------------------------------------
John S. Weitzer Stephen J. Shenkenberg, Vice President
</TABLE>
5
<PAGE>
RULE 12B-1
DISTRIBUTION PLAN
WHEREAS, the corporations listed on Schedule A, as such Schedule A may be
amended from time to time, each a Wisconsin corporation (the "Corporation"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Corporation is authorized to create separate series, each with its
own separate investment portfolio, and the beneficial interest in each such
series will be represented by a separate series of shares (each series is
hereinafter individually referred to as a "Fund" and collectively, the
"Funds");
WHEREAS, the Corporation, on behalf of each Fund listed on Schedule A, as such
Schedule A may be amended from time to time, desires to adopt a Plan of
Distribution pursuant to Rule 12b-1 under the 1940 Act with respect to Advisor
Class shares of each Fund ("Distribution Plan");
WHEREAS, the Corporation employs Strong Investments, Inc. ("Distributor") as
distributor of the Advisor Class Shares of each Fund;
WHEREAS, the Funds, with respect to their Advisor Class shares, intend to enter
into Selected Dealer Agreements and other distribution or servicing agreements
("Agreements") pursuant to the Distribution Plan with various service
organizations ("Service Organizations") either directly or through the Funds'
Distributor, pursuant to which the Service Organization will make available or
service Advisor Class shares or will offer Advisor Class shares of the Funds
for sale to the public; and
WHEREAS, the Board of Directors of the Corporation, including the Independent
Directors, as defined herein, have determined in the exercise of their
reasonable business judgement and in light of their fiduciary duties that there
is a reasonable likelihood that adoption of this Distribution Plan will benefit
each of the Funds and each Fund's Advisor Class shareholders;
NOW, THEREFORE, the Corporation, on behalf of the Funds, hereby adopts this
Distribution Plan on the following terms and conditions:
1. COMPENSATION. The Funds are authorized to pay to the Distributor,
as the distributor of the Advisor Class shares of each Fund, or pay directly to
a Service Organization as compensation for the distribution of the Advisor
Class shares of each Fund and/or the servicing of shareholders of Advisor Class
shares of each Fund at an annual rate not to exceed 1.00% of each Fund's
average daily net assets attributable to Advisor Class shares. Notwithstanding
the foregoing, in no event shall any such expenditure paid by the Fund as an
"asset-based sales charge," as defined in NASD Conduct Rule 2830, exceed an
amount calculated at the rate of 6.25% of the average daily net assets of a
Fund attributable to its Advisor Class shares. The amount of such compensation
shall be calculated and accrued daily and paid monthly or at such
1
<PAGE>
other intervals as the Corporation shall determine, subject to any applicable
restriction imposed by rules of the National Association of Securities Dealers,
Inc.
2. DISTRIBUTION AND SERVICING ACTIVITIES. The amount of the
distribution or shareholder servicing fees set forth in Paragraph 1 of this
Distribution Plan may be spent by the Distributor or paid directly to a Service
Organization for any activities or expenses primarily intended to result in the
sale or servicing of Advisor Class shares, including, but not limited to:
compensation to and expenses, including overhead and telephone expenses, of
employees of the Distributor who engage in or support the distribution of
Advisor Class shares; printing and distribution of prospectuses, statements of
additional information and any supplements thereto, and shareholder reports to
persons other than existing shareholders; preparation, printing and
distribution of sales literature and advertising materials; holding seminars
and sales meetings with wholesale and retail sales personnel, which are
designed to promote the distribution of Advisor Class shares; and compensation
to Service Organizations. The Fund or the Distributor may determine the
services to be provided by the Service Organizations to shareholders in
connection with the sale or servicing of Advisor Class shares. All or any
portion of the compensation paid to the Distributor may be paid by the
Distributor to broker-dealers or Service Organizations who sell or service
Advisor Class shares.
3. DISTRIBUTION AND SERVICING ACTIVITIES OF SERVICE ORGANIZATIONS.
Services that a Servicing Organization may provide under an Agreement for which
they receive compensation in accordance with the Distribution Plan include, but
are not limited to, the following functions: providing answers to questions
from prospective Advisor Class investors about the Funds; receiving and
answering correspondence, including requests for Advisor Class prospectuses and
statements of additional information; preparing, printing and delivering
Advisor Class prospectuses and shareholder reports to prospective Advisor Class
shareholders; complying with federal and state securities laws pertaining to
the sale of Advisor Class shares; and assisting Advisor Class investors in
completing application forms and selecting dividend and other account options.
In addition, Service Organizations can provide their endorsement of the Advisor
Class shares of a Fund to their clients, members or customers as an inducement
to invest in the Funds.
4. SHAREHOLDER APPROVAL. This Distribution Plan shall not take effect
with respect to the Advisor Class shares of a Fund until it has been approved
by a vote of at least a majority of the outstanding Advisor Class shares (as
defined in the 1940 Act) of such Fund, if such Distribution Plan is adopted by
any Fund's Advisor Class shares after a public offering of such shares.
5. DIRECTOR APPROVAL. This Distribution Plan shall not take effect
with respect to a Fund until it, together with any related agreements, has been
approved by votes of a majority of both (a) the Board of Directors of the
Corporation and (b) those Directors of the Corporation who are not "interested
persons" of the Corporation (as defined in the 1940 Act) and who have no direct
or indirect financial interest in the operation of this Distribution Plan or
any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on this Distribution
Plan and such related agreements.
2
<PAGE>
6. TERM. This Distribution Plan shall continue in effect for a term
of one year. Thereafter, this Distribution Plan shall continue in force and
effect as to the Funds for so long as such continuance is specifically
approved, at least annually, in the manner provided for approval of this
Distribution Plan in Paragraph 5.
7. QUARTERLY REPORTS. The Distributor or any other person authorized
to direct the disposition of monies pursuant to the Distribution Plan or any
related agreement shall provide to the Board of Directors of the Corporation
and the Board of Directors shall review, at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
8. TERMINATION. This Distribution Plan and any agreement related to
the Distribution Plan shall be in writing and shall provide that (a) such
agreement or the Distribution Plan may be terminated as to any Fund at any
time, without payment of any penalty, by vote of a majority of the Rule 12b-1
Directors, or by a vote of a majority of the outstanding voting Advisor Class
shares of such Fund on not more than 60 days' written notice to any other party
to the Distribution Plan; and (b) that such agreement shall terminate
automatically in the event of its assignment.
9. SEVERABILITY. The provisions of this Distribution Plan are
severable for each Fund and if provisions of the Distribution Plan applicable
to a particular Fund are terminated, the remainder of the Distribution Plan
provisions' application to the other remaining Funds shall not be invalidated
thereby and shall be given full force and effect.
10. AMENDMENTS. This Distribution Plan may not be amended to increase
materially the amount of compensation provided for in Paragraph 1 unless such
amendment is approved in the manner provided for initial approval in Paragraph
4, and no material amendment to the Distribution Plan of any kind, including an
amendment which would increase materially the amount of such compensation,
shall be made unless approved in the manner provided for approval and annual
renewal in Paragraph 5.
11. SELECTION AND NOMINATION OF DIRECTORS. While this Distribution
Plan is in effect, the selection and nomination of Directors who are not
interested persons (as defined in the 1940 Act) of the Corporation shall be
committed to the discretion of the then current Directors who are not
interested persons (as defined in the 1940 Act) of the Corporation.
12. RECORDKEEPING. The Funds shall preserve copies of this
Distribution Plan and any related agreements and all reports made pursuant to
Paragraph 7 for a period of not less than six (6) years from the date of this
Distribution Plan, such agreements or such reports, as the case may be, the
first two (2) years in an easily accessible place.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has adopted this Distribution Plan
effective as of the 23rd day of July, 1999.
Each Corporation Listed on Schedule A.
By:
John S. Weitzer, Vice President
4
<PAGE>
SCHEDULE A
The Funds of the Corporation currently subject to this Distribution Plan are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Date of Addition
CORPORATION/FUND TO THIS DISTRIBUTION PLAN
- -----------------------------------------
Strong Advantage Fund, Inc. August 30, 1999
-Strong Advantage Fund
Strong Corporate Bond Fund, Inc. August 30, 1999
-Strong Corporate Bond Fund
Strong Government Securities Fund, Inc. August 30, 1999
-Strong Government Securities Fund
Strong Income Funds II, Inc. August 30, 1999
-Strong Bond Fund
Strong Short-Term Bond Fund, Inc. August 30, 1999
-Strong Short-Term Bond Fund
</TABLE>
1
<PAGE>
RULE 18F-3
MULTIPLE CLASS PLAN
WHEREAS, the corporations listed on Schedule A, as such Schedule A may be
amended from time to time, each a Wisconsin corporation (the "Corporation")
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Corporation is authorized to create separate series, each with its
own separate investment portfolio, and the beneficial interest in each such
series will be represented by a separate series of shares (each series is
hereinafter individually referred to as a "Fund" and collectively, the
"Funds");
WHEREAS, the Corporation, on behalf of the Funds listed on Schedule A, as such
Schedule A may be amended from time to time, desires to adopt a Multiple Class
Plan pursuant to Rule 18f-3 under the 1940 Act ("Plan");
WHEREAS, the Corporation, on behalf of the Funds, employs Strong Capital
Management, Inc. ("SCM") as its investment adviser, administrator, and transfer
agent and Strong Investments, Inc. (the "Distributor") as distributor of the
securities of the Funds; and
WHEREAS, the Board of Directors of the Corporation, including a majority of the
Directors of the Corporation who are not "interested persons", as defined in
the 1940 Act, of the Corporation, SCM, or the Distributors ("Independent
Directors") have found the Plan, as proposed, to be in the best interests of
each class of shares individually, each Fund, and the Corporation as a whole;
NOW, THEREFORE, the Corporation, on behalf of the Funds, hereby adopts the
Plan, in accordance with Rule 18f-3 under the 1940 Act on the following terms
and conditions:
1. FEATURES OF THE CLASSES. Each of the Funds shall offer, at the
discretion of the Board and as indicated on Schedule A, up to three classes of
shares: "Investor Class Shares," "Institutional Class Shares," and "Advisor
Class Shares." Shares of each class of a Fund shall represent an equal pro
rata interest in such Fund and, generally, shall have identical voting,
dividend, distribution, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications, and terms and conditions, except
that: (a) each class shall have a different designation; (b) each class of
shares shall bear any Class Expenses, as defined in Section 3 below; (c) each
class shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its distribution arrangements; and (d) each
class shall have separate voting rights on any matter submitted to shareholders
in which the interests of one class differ from the interests of any other
class. In addition, Investor Class, Institutional Class, and Advisor Class
shares of a Fund shall have the features described in Sections 2, 3, and 4
below.
1
<PAGE>
2. DISTRIBUTION FEE STRUCTURE.
(a) INVESTOR CLASS SHARES. Investor Class Shares of a Fund shall be
offered at their then current net asset value ("NAV") without the imposition of
an initial sales charge, contingent deferred sales charge, asset-based sales
charge or service fee under a Distribution Plan (as defined below).
(b) INSTITUTIONAL CLASS SHARES. Institutional Class Shares of a Fund shall
be offered at their then current NAV without the imposition of an initial sales
charge, contingent deferred sales charge, asset-based sales or service fee
under a Distribution Plan (as defined below).
(c) ADVISOR CLASS SHARES. Advisor Class Shares of a Fund shall be offered
at their then current NAV without the imposition of an initial sales charge or
contingent deferred sales charge. The Corporation has adopted, on behalf of
the Funds, a distribution plan with respect to the Advisor Class shares of each
Fund, if any, pursuant to Rule 12b-1 under the 1940 Act ("Distribution Plan").
The Distribution Plan authorizes a Fund to make payments for distribution
services and shareholder services at an annual rate of up to 1.00% of a Fund's
average daily net assets attributable to Advisor Class shares.
3. ALLOCATION OF INCOME AND EXPENSES.
(a) The net asset value of all outstanding shares representing interests in
a Fund shall be computed on the same days and at the same time. For purposes
of computing net asset value, the gross investment income of each Fund shall be
allocated to each class on the basis of the relative net assets of each class
at the beginning of the day adjusted for capital share activity for each class
as of the prior day as reported by the Fund's transfer agent. Realized and
unrealized gains and losses for each class will be allocated based on relative
net assets at the beginning of the day, adjusted for capital share activity for
each class of the prior day, as reported by the Fund's transfer agent. To the
extent practicable, certain expenses, (other than Class Expenses as defined
below, which shall be allocated more specifically), shall be allocated to each
class based on the relative net assets of each class at the beginning of the
day, adjusted for capital share activity for each class as of the prior day, as
reported by the Fund's transfer agent. Allocated expenses to each class shall
be subtracted from allocated gross income. These expenses include:
(1) Expenses incurred by the Corporation (for example, fees of Directors,
auditors, insurance costs, and legal counsel) that are not attributable to a
particular Fund or class of shares of such Fund ("Corporation Level Expenses");
and
(2) Expenses incurred by each Fund that are not attributable to any
particular class of the Fund's shares (for example, advisory fees, custodial
fees, banking charges, organizational costs, or other expenses relating to the
management of the Fund's assets) ("Fund Expenses").
(b) CLASS EXPENSES. Expenses attributable to a particular class ("Class
Expenses") shall be limited to: (i) payments made pursuant to a Distribution
Plan; (ii) transfer agent fees attributable to a specific class; (iii) printing
and postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current
2
<PAGE>
shareholders of a specific class; (iv) the expense of administrative personnel
and services to support the shareholders of a specific class, including, but
not limited to, fees and expenses under an administrative service agreement;
(v) litigation or other legal expenses relating solely to one class; and (vi)
directors' fees incurred as a result of issues relating to one class. Expenses
in category (i) above must be allocated to the class for which such expenses
are incurred. All other "Class Expenses" listed in categories (ii)-(vi) above
may be allocated to a class but only if an officer of the Corporation has
determined, subject to Board approval or ratification, which of such categories
of expenses will be treated as Class Expenses consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986 ("Code").
(c) Therefore, expenses of the Fund shall be apportioned to each class of
shares depending on the nature of the expense item. Corporation Level Expenses
and Fund Expenses shall be allocated among the classes of shares based on their
relative net asset values. Approved Class Expenses shall be allocated to the
particular class to which they are attributable. In addition, certain expenses
may be allocated differently if their method of imposition changes. Thus, if a
Class Expense can no longer be attributed to a class, it shall be charged to
the Fund for allocation among the classes, as determined by the Board of
Directors. Any additional Class Expenses not specifically identified above that
are subsequently identified and determined to be properly allocated to one
class of shares shall not be so allocated until approved by the Board of
Directors of the Corporation in light of the requirements of the 1940 Act and
the Code.
4. EXCHANGE PRIVILEGES. The Investor Class, Institutional Class, and
Advisor Class shares of a Fund may be exchanged at their relative NAVs for:
(i) Investor Class, Institutional Class, or Advisor Class shares of the same
Fund; (ii) Investor Class, Institutional Class, or Advisor Class shares of
another Strong Fund; or (iii) if the Strong Fund does not have multiple classes
of shares, the existing shares of another Strong fund. Purchases of Fund shares
by exchange are subject to the same minimum investment requirements and other
criteria imposed for purchases made in any other manner.
5. CONVERSION FEATURES. There shall be no conversion features associated
with the Investor Class, Institutional Class, or Advisor Class shares of a
Fund.
6. QUARTERLY AND ANNUAL REPORT. The Directors shall receive quarterly and
annual written reports concerning all allocated Class Expenses and expenditures
under the Distribution Plan complying with paragraph (b)(3)(ii) of Rule 12b-1.
The reports, including the allocations upon which they are based, shall be
subject to the review and approval of the Independent Directors in the exercise
of their fiduciary duties.
7. WAIVER OR REIMBURSEMENT OF EXPENSE. Expenses may be waived or
reimbursed by SCM or any other provider of services to the Funds without the
prior approval of the Corporation's Board of Directors.
8. EFFECTIVENESS OF PLAN. The Plan shall not take effect until it has been
approved by votes of a majority of both (a) the Directors of the Corporation
and (b) those Directors of the Corporation who are not "interested persons" of
the Corporation, SCM, or the Distributor (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this Plan,
cast in person at a meeting (or meetings) called for the purpose of voting on
this Plan.
3
<PAGE>
9. MATERIAL MODIFICATIONS. This Plan may not be amended to materially
modify its terms unless such amendment is approved in the manner provided for
initial approval in Paragraph 8 hereof.
10. LIMITATION OF LIABILITY. The Directors and the shareholders of the
Funds shall not be liable for any obligations of the Funds under this Plan, and
any person in asserting any rights or claims under this Plan shall look only to
the assets and property of the Funds in settlement of such right or claim and
not to such Directors or shareholders.
IN WITNESS WHEREOF, the Corporation, on behalf of the Funds, has adopted this
Multiple Class Plan effective as of the 23rd day of July, 1999.
Each Corporation Listed on Schedule A.
By:
John S. Weitzer, Vice President
4
<PAGE>
SCHEDULE A
The Funds of the Corporation currently subject to this Multiple Class Plan are
as follows:
<TABLE>
<CAPTION>
<S> <C>
Date of Addition
CORPORATION/FUND/CLASS TO THIS MULTIPLE CLASS PLAN
- ---------------------------------------------------
Strong Advantage Fund, Inc. August 30, 1999
-Strong Advantage Fund
* Investor Class
* Advisor Class
* Institutional Class
Strong Corporate Bond Fund, Inc. August 30, 1999
-Strong Corporate Bond Fund
* Investor Class
* Advisor Class
* Institutional Class
Strong Government Securities Fund, Inc. August 30, 1999
-Strong Government Securities Fund
* Investor Class
* Advisor Class
* Institutional Class
Strong Heritage Reserve Series, Inc. August 30, 1999
-Strong Heritage Money Fund
-Strong Investors Money Fund
Strong Income Funds, Inc. August 30, 1999
-Strong High-Yield Bond Fund
-Strong Short-Term High Yield Bond Fund
Strong Income Funds II, Inc. August 30, 1999
-Strong Bond Fund
* Investor Class
* Advisor Class
* Institutional Class
Strong Money Market Fund, Inc. August 30, 1999
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Strong Municipal Funds, Inc. August 30, 1999
-Strong Municipal Advantage Fund
-Strong Municipal Money Market Fund
Strong Short-Term Bond Fund, Inc. August 30, 1999
-Strong Short-Term Bond Fund
* Investor Class
* Advisor Class
* Institutional Class
</TABLE>
2
<PAGE>
