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EXHIBIT-99.B8.1
AMENDMENT TO THE CUSTODIAN AGREEMENT
AMENDMENT entered into as of this 24th day of June, 1996 to the Custodian
Agreement among STRONG ASIA PACIFIC FUND, INC. (the "Fund") and XXXXX BROTHERS
XXXXXXXX & CO. (the "Custodian") dated as of December 20, 1993 (the
"Agreement") and 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 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 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 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
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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 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
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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 r
equire 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 3 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:
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.
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The Custodian shall promptly inform the Fund whenever it is unable to take
any actions requested by Proper Instructions."
7. Section 2 1. 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 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:
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"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, Liabilily;
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.
"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 retums, 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."
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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 0any 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 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.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
STRONG ASIA PACIFIC FUND, INC. XXXXX BROTHERS XXXXXXXX & CO.
/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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