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EXHIBIT-99.B8.1
AMENDMENT TO THE CUSTODIAN AGREEMENT
AMENDMENT entered into as of this 26th day of August, 1996 to the
Custodian Agreement among STRONG INTERNATIONAL STOCK FUND, INC. (the "Fund")
and XXXXX BROTHERS XXXXXXXX & CO. (the "Custodian") dated as of February
24,1992 (the "Agreement") as amended October 20, 1995.
In consideration of the Custodian's offering subcustodial services to
the Funds in Russia, the Funds and the Custodian agree that the Agreement is
hereby amended as follows:
1. Section 2.A, Safekeeping, is amended by the addition of the
following phrase at the end of said Section:
"provided, however, that the Custodian's responsibility for
safekeeping equity securities of Russian issuers ("Russian Equities")
hereunder shall be limited to the safekeeping of relevant share
extracts from the share registration books maintained by the entities
providing share registration services to issuers of Russian Equities
(each a "Registrar") indicating an investor's ownership of such
securities (each a "Share Extract")."
2. Section 2.3, Registered Name; Nominee, is amended by the
addition of the following at the end of said Section:
"However, with respect to Russian Equities, the Custodian shall
instruct a Subcustodian to ensure that registration thereof shall be
reflected on the books of the issuer's Registrar, subject to the
following conditions, but shall in no event be liable for losses or
costs incurred as a result of delays or failures in the registration
process, including without limitation the inability to obtain or
enforce relevant Share Extracts, unless such delays or failures are
due to the Custodian's or Subcustodian's negligence, fraud, or willful
default. Such registration may be in the name of a nominee of a
Subcustodian. In the event registration is in the name of a Fund,
such Fund hereby acknowledges that only the Custodian or Subcustodian
may give instructions to the Registrar to transfer or engage in other
transactions involving the Russian Equities so registered.
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A Subcustodian may from time to time enter into
contracts with Registrars with respect to the registration of Russian
Equities ("Registrar Contracts"). The Custodian shall provide the
Funds with a list of the Russian Equities with respect to which the
Subcustodian has entered into a Registrar Contract, and will promptly
provide the Funds with updates to that list whenever the Subcustodian
enters into any new Registrar Contracts. Such Registrar Contracts
will include (i) regular share confirmations by the Subcustodian, (ii)
reregistrations within set timeframes, (iii) use of a Subcustodian's
nominee name, (iv) direct access by auditors of the Subcustodian or
its clients to share registers, and (v) specification of the
Registrar's responsibilities and liabilities. It is hereby
acknowledged and agreed that the Custodian does not represent or
warrant that such Registrar Contracts are enforceable.
If a Fund instructs the Custodian to settle a
purchase of a Russian Equity, the Custodian will instruct a
Subcustodian to use reasonable efforts to reregister the Russian
Equity and obtain a Share Extract in a timely manner.
After completion of reregistration of a Russian
Equity in respect of which a Subcustodian has entered into a Registrar
Contract, the Custodian shall instruct the Subcustodian to monitor
such registrar using reasonable efforts and to promptly notify the
Custodian upon the Subcustodian's obtaining knowledge of the
occurrence of any of the following events ("Registrar Events"): (i) a
Registrar has eliminated a shareholder from the register or has
altered registration records; (ii) a Registrar has refused to register
securities in the name of a particular purchaser and the purchaser or
seller has alleged that the registrar's refusal to so register was
unlawful; (iii) a Registrar holds for its own account shares of an
issuer for which it serves as registrar; (iv) if a Registrar Contract
is in effect with a Registrar, and the Registrar notifies the
Subcustodian that it will no longer be able materially to comply with
the terms of the Registrar Contract; or the Subcustodian has actual
knowledge that a registrar has engaged in conduct that indicates it
will not materially comply with the provisions. or (v) if the
Registrar has materially breached such Contract. The Custodian shall
promptly inform the Fund of the occurrence of a Registrar Event
provided the Subcustodian has actual notice of the Registrar Event.
It shall be the sole responsibility of each Fund to
promptly contact the Custodian prior to executing any transaction in a
Russian Equity to determine whether a Registrar Contract exists in
respect of an issuer not included on the list provided to the Fund.
If a Fund instructs the Custodian by Proper
Instruction to settle a purchase of a Russian Equity in respect of
which the Subcustodian has not entered into a Registrar Contract, then
the Custodian shall instruct the Subcustodian to endeavor to settle
such transaction in accordance with the Proper Instruction and with
the provisions of Section 2.D of this Agreement, notwithstanding the
absence of any such Registrar Contract and subject to the requirement
that the Custodian provide and promptly update the Registrar Contract
list with the respect to Russian Equities and without the Custodian
being required to notify the Fund that no such Registrar Contract is
then in effect, and it being understood that neither the Custodian nor
the Subcustodian shall be required to follow the procedure set forth
in the second preceding paragraph."
3. Section 2.D, Purchases, is amended by the addition of the
following at the end of said Section:
"Without limiting the generality of the foregoing,
the following provisions shall apply with respect to settlement of
purchases of securities in Russia. Unless otherwise
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instructed by Proper Instructions acceptable to the Custodian,
the Custodian shall only authorize a Subcustodian to make payment for
purchases of Russian Equities upon receipt of the relevant Share
Extract in respect of the Fund's purchases. With respect to
securities other than Russian Equities, settlement of purchases shall
be made in accordance with securities processing or settlement
practices which the Custodian in its discretion determines to be a
market practice. Subject to the exercise of reasonable care, the
Custodian shall only be responsible for securities purchased upon
actual receipt of such securities at the premises of its Subcustodian,
provided that the Custodian's responsibility for securities
represented by Share Extracts shall be limited to the safekeeping of
the relevant Share Extract upon actual receipt of such Share Extract
at the premises of the Subcustodian."
4. Section 2.E, Exchanges, is amended by inserting after the word
"exchange" in the second line thereof, the following phrase:
", in accordance with the registration procedures described in Section
2.C, of this Agreement,"
5. Section 2.F, Sales of Securities, is amended by the addition
of the following at the end of said Section:
"Without limiting the generality of the foregoing, the
following provisions shall apply with respect to settlement of sales
of securities in Russia. Unless otherwise expressly instructed by
Proper Instructions acceptable to the Custodian, settlement of sales
of securities shall be made in accordance with securities processing
or settlement practices which the Custodian in its discretion
determines to be a market practice. Each Fund hereby expressly
acknowledges that such market practice might require delivery of
securities prior to receipt of payment and that the Fund bears the
risk of payment in instances where delivery of securities is made
prior to receipt of payment therefor in accordance with Proper
Instructions received by the Custodian or pursuant to the Custodian's
determination in its discretion that such delivery is in accordance
with market practice. Subject to the exercise of reasonable care, the
Custodian shall not be responsible for any securities delivered from
the premises of the Subcustodian from the time they leave such
premises."
6. Section 2.H, Exercise of Rights; Tender Offers, is replaced in its
entirety with the following:
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Section 2.H, Exercise of Rights Tender Offers -- Upon timely
receipt of Proper Instructions, to use reasonable efforts to take any
action required by the terms of a rights offer, tender offer, put,
call, merger, consolidation, reorganization or other corporate action
affecting securities held on behalf of a Fund. The Custodian shall
use reasonable efforts to act on such Proper Instructions but will not
be held liable for any losses or costs incurred as a result of such
actions or as a result of the Custodian's inability for reasons beyond
its control to take the actions requested by such Proper Instructions,
provided however, that the Custodian or Subcustodian was not negligent
in performing its duties under this section. The Custodian shall
promptly inform the Fund whenever it is unable to take any actions
requested by Proper Instructions."
7. Section 2.I, Stock Dividends, Rights, Etc., is modified by the
addition of the following paragraph at the end of said Section:
"With respect to Russian Equities, to request a Subcustodian
to obtain a Share Extract with respect to all Russian Equities issued
by reason of a stock dividend, bonus issue or other distribution
resulting from a corporate action not requiring instructions from the
shareholder of the security, provided that the Custodian shall not be
responsible for its inability to obtain any such Share Extract or for
the failure of a Registrar or any agent thereof to record the Fund's
ownership on the issuer's records, unless such inability is due to the
negligence, fraud, or willful default of the Custodian or Subcustodian
or Agent selected by the Custodian or Subcustodian"
8. Section 3, Powers and Duties of the Custodian with Respect to
the Appointment of Subcustodians, is modified by the insertion of the following
at the end of the first paragraph of Section 3:
"With respect to Russia, each Fund hereby expressly
acknowledges that a Subcustodian for Russian securities may utilize
the services of Rosvneshtorgbank (also called Vneshtorgbank R-F)
("VTB") which, as of the date of this amendment, meets the
requirements of Rule 17f-5 under the Investment Company Act of 1940.
Each Fund acknowledges that the rights of the Subcustodian against the
VTB may consist only of a contractual claim Neither the Custodian nor
the Subcustodian shall be responsible or liable to a Fund or its
shareholders for the acts or omissions of the VTB unless any loss
results from the negligence, fraud or willful default of the Custodian
or Subcustodian.
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In the event of a loss of securities or cash held on behalf of a Fund
through the VTB, the Custodian shall not be responsible to a Fund or
its shareholders unless and to the extent it in fact recovers from the
Subcustodian."
9. Section 6 B. Liability of the Custodian with Respect to Use of
Securities Systems and Foreign Depositories, is amended by the insertion of
the following at the end of said Section:
"Notwithstanding anything in this Agreement to the contrary, neither
the Custodian nor the Subcustodian shall be responsible or liable to a
Fund or its shareholders for the acts or omissions of a Foreign
Depository in Russia, and in addition, neither the Custodian nor a
Subcustodian shall be responsible or liable to a Fund or its
shareholders for the failure of the Custodian or Subcustodian to
assert rights effectively against any such Foreign Depository unless
due to the negligence, fraud, or willful default of the Custodian or
Subcustodian. "
10. The first paragraph of Section 6 D., Standard of Care,
Liability; Indemnification, is replaced in its entirety with the following:
"The Custodian shall be held only to the exercise of
reasonable care in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any
action which is in contravention of any applicable law, rule or
regulation or any order or judgment of any court of competent
jurisdiction. With respect to securities issued by Russian issuers or
settlement in Russia of securities transactions, reasonable care shall
mean reasonable practices under the circumstances as measured by
prevailing custodial practices among international financial
institutions in Russia, and negligence as used herein shall mean the
failure to exercise reasonable care as defined in this sentence. The
Custodian shall in no event be liable for consequential or indirect
losses or from loss of goodwill.
"Notwithstanding the foregoing, the Custodian shall have no
liability in respect of any loss, damage or expense suffered by a Fund
or any shareholder of a Fund insofar as such loss, damage or expense
arises from investment risk inherent in investing in capital markets
or in holding assets in a particular country or jurisdiction,
including without limitation, (i) political, legal, economic,
settlement and custody infrastructure, and currency and exchange rate
risks; (ii) investment and repatriation restrictions; (iii) a Fund's
inability to protect and enforce any local legal rights including
rights of title and beneficial ownership; (iv) corruption and crime in
the local market; (v) unreliable information which emanates from the
local market; (vi) volatility of banking and financial systems and
infrastructure; (vii) bankruptcy and insolvency risks of any and all
local banking agents, counterparties to cash and securities
transactions or registrars or transfer agents; and (vii) risk of
issuer insolvency or default.
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"It is understood that no Registrar, whether or not any such
Registrar has entered into a contract or other arrangement with a
Subcustodian or Foreign Depository, is or shall be considered or
deemed to be a Foreign Depository or an agent of the Custodian or any
Subcustodian, and accordingly neither the Custodian nor the
Subcustodian shall be responsible for or liable to a Fund or to the
shareholders of a Fund for the acts or omissions of any such Registrar
unless such acts or omissions result from the negligence, fraud or
willful default of the Custodian or Subcustodian. It is also agreed
that each Fund shall be responsible for preparation and filing of tax
returns, reports and other documents on any activities it undertakes
in Russia which are to be filed with any relevant governmental or
other authority and for the payment of any taxes, levies, duties or
similar liability the Fund incurs in respect of property held or sold
in Russia or of payments or distributions received in respect thereof
in Russia. Accordingly, each Fund hereby agrees to indemnify and hold
harmless the Custodian from any loss, cost or expense resulting from
the imposition or assessment of any such tax, duty, levy or liability
or any expenses related thereto."
11. A new Section 14., Risk Disclosure Acknowledgment, is added at
the end of the present Section 13:
"Each Fund hereby acknowledges that it has received, has read
and has understood the Custodian's Risk Disclosure Statement, a copy
of which is attached hereto and is incorporated herein by reference.
Each Fund further acknowledges that the Risk Disclosure Statement is
not comprehensive, and warrants and represents to the Custodian that
it has undertaken its own review of the risks associated with
investment in Russia and has concluded that such investment is
appropriate for the Fund and in no way conflicts with the Fund's
constitutive documents, investment objective, duties to its
shareholders or with any regulatory requirements applicable to the
Fund."
12. A new Section 15., Registrar System Reports, is added at the
end of the new section 14:
"Credit Suisse (Moscow) Ltd. will prepare for distribution to
the Board of Directors a quarterly report identifying any concems
Credit Suisse (Moscow) Ltd. has regarding the Russian share
registration system that should be brought to the Board of Directors'
attention. This report will include detailed information regarding
the steps Credit Suisse (Moscow) Ltd. has taken during the reporting
period to ensure that the Fund's interests continue to be
appropriately recorded. This duty to report will commence upon Board
of Director approval of investment in Russia. The first quarterly
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report will be submitted to the Board of Directors after the first
full quarter of the fund's investment in Russia. Each report will
contain only new information from the date of the last quarterly
report."
Except as amended above, all the provisions of the Agreement as
heretofore in effect shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
STRONG INTERNATIONAL XXXXX BROTHERS XXXXXXXX & CO.
STOCK FUND, INC
/s/ Xxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Vice President Title: Partner
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