INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on December 15, 2000, between
STRONG MUNICIPAL FUNDS, INC., 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, as amended (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, as
amended, 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
appointment. Subject to the supervision of the Board of Directors of the
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, as amended, 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.
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, distribution and shareholder
servicing 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.
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.
(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 this Agreement is first executed 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 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 0000 Xxx) 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.
Attest: Strong Capital Management, Inc.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------- ------------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxxxx X. Xxxxxxx, Vice President
and Assistant Secretary
Attest: Strong Municipal Funds, Inc.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------- ------------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxxxx X. Xxxxxxx, Vice President
and Assistant Secretary
SCHEDULE A
The Portfolio(s) of the Corporation currently subject to this Agreement
are as follows:
Date of Addition
Portfolio(s) to this Agreement
------------ -----------------
Strong Tax-Free Money Fund December 15, 2000
Attest: Strong Capital Management, Inc.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------- -----------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxxxx X. Xxxxxxx, Vice President
and Assistant Secretary
Attest: Strong Municipal Funds, Inc.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------- -----------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxxxx X. Xxxxxxx, Vice President
and Assistant Secretary
SCHEDULE B
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Portfolio(s) Annual Fee
------------ ----------
Strong Tax-Free Money Fund 0.50%
Attest: Strong Capital Management, Inc.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------- -----------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxxxx X. Xxxxxxx, Vice President
and Assistant Secretary
Attest: Strong Municipal Funds, Inc.
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------ -----------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxxxx X. Xxxxxxx, Vice President
and Assistant Secretary
