[Form of Opinion]
_________, 2002
Board of Directors
Strong Heritage Reserve Series, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Board of Directors
Strong Money Market Fund, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Re: Agreement and Plan of Reorganization, dated as of __________, 2002 (the
"Agreement"), By and Between Strong Heritage Reserve Series, Inc., a
Wisconsin Corporation ("Transferring Corporation"), on behalf of its
series, the Strong Investors Money Fund ("Transferring Fund") and Strong
Money Market Fund, Inc., a Wisconsin Corporation ("Acquiring Corporation"),
on behalf of its series, the Strong Money Market Fund ("Acquiring Fund")
Ladies and Gentlemen:
You have requested our opinion as to certain U.S. federal
income tax consequences of the reorganization of the Transferring Fund which
will consist of (i) the transfer of all of the assets of the Transferring Fund
to the Acquiring Fund, in exchange solely for Investor Class Shares of the
Acquiring Fund (collectively, the "Acquiring Fund Shares"), (ii) the assumption
by the Acquiring Fund of all liabilities of the Transferring Fund, and (iii) the
distribution of the Acquiring Fund Shares to the shareholders of the
Transferring Fund1 in complete liquidation of the Transferring Fund as provided
herein, all upon the terms and conditions hereinafter set forth in the Agreement
(the "Reorganization").
In rendering our opinion, we have reviewed and relied upon (a)
the Agreement, (b) the proxy materials provided to shareholders of the
Transferring Fund in connection with the Special Meeting of Shareholders of the
Transferring Fund to be held on May 3, 2002, (c) certain representations
concerning the Reorganization made to us by the Acquiring Corporation and the
Transferring Corporation, on behalf of their respective funds, in a letter dated
_________ __, 2002 (the "Representation Letter"), (d) all other documents,
financial and other reports and corporate minutes which we deemed relevant or
appropriate, and (e) such statutes, regulations, rulings and decisions as we
deemed material to the rendition of this opinion. All terms used herein, unless
otherwise defined, are used as defined in the Agreement.
1 In the distribution, Transferring Fund shareholders who hold Transferring Fund
Investor Class Shares will receive Acquiring Fund Investor Class Shares.
For purposes of this opinion, we have assumed that the
Transferring Fund and the Acquiring Fund on the Effective Time of the
Reorganization each satisfy, and following the Reorganization, the Acquiring
Fund will continue to satisfy, the requirements of subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), for qualification as a regulated
investment company ("RIC").
Under regulations to be prescribed by the Secretary of
Treasury under Section 1276(d) of the Code, certain transfers of market discount
bonds will be excepted from the requirement that accrued market discount be
recognized on disposition of a market discount bond under Section 1276(a) of the
Code. Such regulations are to provide, in part, that accrued market discount
will not be included in income if no gain is recognized under Section 361(a) of
the Code where a bond is transferred in an exchange qualifying as a tax-free
reorganization. As of the date hereof, the Secretary has not issued any
regulations under Section 1276 of the Code.
Based on the foregoing and provided the Reorganization is
carried out in accordance with the laws of the State of Wisconsin, the
Agreement, and the Representation Letter, it is our opinion that:
1. The Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code, and the
Transferring Fund and the Acquiring Fund will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Transferring Fund solely in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of all of the
liabilities of the Transferring Fund pursuant to Section 1032(a) of the Code.
3. No gain or loss will be recognized by the Transferring Fund
upon the transfer of all of its assets to the Acquiring Fund solely in exchange
for Acquiring Fund Shares and the assumption by the Acquiring Fund of all of the
liabilities of the Transferring Fund or upon the distribution of Acquiring Fund
Shares to shareholders of the Transferring Fund pursuant to Sections 361(a) and
(c) and 357(a) of the Code. We express no opinion as to whether any accrued
market discount will be required to be recognized as ordinary income pursuant to
Section 1276 of the Code.
4. No gain or loss will be recognized by the shareholders of
the Transferring Fund upon the exchange of their shares of the Transferring Fund
for Acquiring Fund Shares (including fractional shares to which they may be
entitled) pursuant to Section 354(a) of the Code.
5. The aggregate tax basis of Acquiring Fund Shares received
by each shareholder of the Transferring Fund (including fractional shares to
which they may be entitled) will be the same as the aggregate tax basis of the
Transferring Fund shares exchanged therefor pursuant to Section 358(a)(1) of the
Code.
6. The holding period of the Acquiring Fund Shares received by
the shareholders of the Transferring Fund (including fractional shares to which
they may be entitled) will include the holding period of the Transferring Fund
shares surrendered in exchange therefor, provided that the Transferring Fund
shares were held as a capital asset on the Effective Time of the Reorganization
pursuant to Section 1223(1) of the Code.
7. The tax basis of the assets of the Transferring Fund
received by the Acquiring Fund will be the same as the tax basis of such assets
to the Transferring Fund immediately prior to the exchange pursuant to Section
362(b) of the Code.
8. The holding period of the assets of the Transferring Fund
received by the Acquiring Fund will include the period during which such assets
were held by the Transferring Fund pursuant to Section 1223(2) of the Code.
9. The Acquiring Fund will succeed to and take into account as
of the date of the transfer (as defined in Section 1.381(b)-1(b) of the Income
Tax Regulations) the items of the Transferring Fund described in Section 381(c)
of the Code, subject to the conditions and limitations specified in Sections
381(b) and (c), 382, 383 and 384 of the Code.
This opinion letter expresses our views only as to U.S.
federal income tax laws in effect as of the date hereof. It represents our best
legal judgment as to the matters addressed herein, but is not binding on the
Internal Revenue Service or the courts. Accordingly, no assurance can be given
that the opinions and analysis expressed herein, if contested, would be
sustained by a court. Our opinion is based upon the Code, the applicable
Treasury Regulations promulgated thereunder, the present position of the
Internal Revenue Service as set forth in published revenue rulings and revenue
procedures, present administrative positions of the Internal Revenue Service,
and existing judicial decisions, all of which are subject to change either
prospectively or retroactively. We do not undertake to make any continuing
analysis of the facts or relevant law following the date of this letter.
Our opinion is conditioned upon the performance by the
Acquiring Corporation, on behalf of the Acquiring Fund, and the Transferring
Corporation, on behalf of the Transferring Fund, of their respective
undertakings in the Agreement and the Representation Letter.
This opinion is being rendered to the Acquiring Corporation,
on behalf of the Acquiring Fund, and the Transferring Corporation, on behalf of
the Transferring Fund, and may be relied upon only by the Acquiring Corporation
and Transferring Corporation and their Boards of Directors and the shareholders
of the Acquiring Fund and Transferring Fund.
Very truly yours,
