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EXHIBIT 8.1.1.1
AMENDMENT TO THE CUSTODIAN AGREEMENT
AMENDMENT entered into as of this 26th day of August, 1996 to the Custodian
Agreement among STRONG VARIABLE INSURANCE FUNDS, INC.-STRONG INTERNATIONAL
STOCK FUND II, (the "Fund") and XXXXX BROTHERS XXXXXXXX & CO. (the "Custodian")
dated as of July 10, 1995 (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 2A. 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 2C. Registered Name: Nominees 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
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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.
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 time frames, (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:
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"Without limiting the generality of the foregoing, the following
provisions shall apply with respect to settlement of purchases of
securities in Russia. Unless otherwise 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."
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6. Section 2 H., Exercise of Rights: Tender Offers, is replaced in
its entirety with the following:
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 RF) ("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
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results from the negligence, fraud or willful default of the Custodian
or Subcustodian. 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
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local banking agents, counterparties to cash and securities
transactions or registrars or transfer agents; and (vii) risk of
issuer insolvency or default.
"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 concerns 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
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commence upon Board of Director approval of investment in Russia. The
first quarterly 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 VARIABLE INSURANCE XXXXX BROTHERS XXXXXXXX & CO.
FUNDS, INC. on behalf of
STRONG INTERNATIONAL
STOCK FUND II
/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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