[FORM OF OPINION]
_____________ __, 2003
Strong Equity Funds, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Strong Conservative Equity Funds, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Re: AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF SEPTEMBER 10, 2003 (THE
"AGREEMENT"), BY AND BETWEEN THE STRONG EQUITY FUNDS, INC., A WISCONSIN
CORPORATION ("TRANSFERRING CORPORATION"), ON BEHALF OF ITS SERIES, THE
STRONG LARGE CAP CORE FUND ("TRANSFERRING FUND") AND THE STRONG
CONSERVATIVE EQUITY FUNDS, INC., A WISCONSIN CORPORATION ("ACQUIRING
CORPORATION"), ON BEHALF OF ITS SERIES, THE STRONG GROWTH AND INCOME FUND
("ACQUIRING FUND")
Ladies and Gentlemen:
You have requested our opinions as to certain U.S. federal
income tax consequences of the reorganization of the Transferring Fund and the
Acquiring Fund that 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 of the liabilities of the
Transferring Fund (except those for which specific reserves, if any, have been
set aside), and (iii) the distribution of the Acquiring Fund Shares to the
shareholders of the Transferring Fund1 in complete liquidation of the
Transferring Fund, all upon the terms and condition set forth in the Agreement
(the "Reorganization").
In rendering our opinions, 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 held on October 31, 2003, (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
________ __, 2003 (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 with respect to this opinion. All terms used herein, unless
otherwise defined, are used as defined in the Agreement.
For purposes of our opinions, we have assumed that the
Transferring Fund and the Acquiring Fund as of 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 under the Code. 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 (except to the extent that such assets consist of
contracts described in Section 1256 of the Code) and the assumption by the
Acquiring Fund of all of the liabilities of the Transferring Fund (except those,
if any, for which specific reserves have been set aside) 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 (except those, if any, for which specific
reserves have been set aside) 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 as of 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 Treasury
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.
Our opinions are limited solely to the Reorganization. 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 opinions are 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.
Our opinions are 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,
the Transferring Corporation, their Boards of Directors, the Transferring Fund,
the Acquiring Fund, and the shareholders of the Transferring Fund and the
Acquiring Fund.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement on Form N-14. In giving this consent, we do not
concede that we are in the category of persons whose consent is required under
Section 7 of the 1933 Act.
Very truly yours,
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1 In the distribution, Transferring Fund shareholders who hold Transferring Fund
Investor Class shares will receive Acquiring Fund Investor Class shares.
