SPECIAL FOREIGN CUSTODY MANAGER AGREEMENT
This agreement is made as of March ___, 2001, between the separate
investment portfolios of State Farm Associates' Funds Trust listed in
Schedule A ("Fund") and State Farm Investment Management Corp. (the
"Adviser").
WHEREAS, The Fund desires to appoint the Adviser as a Special
Foreign Custody Manager on the terms and conditions contained herein.
WHEREAS, The adviser believes it appropriate that it serve as
Special Foreign Custody Manager and perform the duties set forth herein on
the terms and condition contained herein.
NOW, THEREFORE, in consideration of the terms of this agreement,
each of the Fund and the Adviser agrees as follows:
SECTION 1 - DEFINED TERMS. Whenever used in this agreement, the following
words and phrases shall have the following meanings, unless the context
otherwise requires:
"Compulsory Securities Depository" means a foreign Securities
Depository or clearing agency that, either as a legal or practical matter,
must be used if the Fund determines to place Foreign Assets in a country
outside the United States (i) because required by law or regulation; (ii)
because securities cannot be withdrawn from such foreign Securities
Depository or clearing agency; or (iii) because maintaining or effecting
trades in securities outside the foreign Securities Depository or clearing
agency is not consistent with prevailing or developing custodial or market
practices.
"Country Risk" means all factors reasonably related to the systemic
risk of holding Foreign Assets in a particular country including, but not
limited to, such country's political environment; economic and financial
infrastructure, prevailing or developing custody and settlement practices;
and laws and regulations applicable to the safekeeping and recovery of
Foreign Assets held in custody in that country.
"Eligible Foreign Custodian" has the meaning provided in the Rule.
"Foreign Assets" means any of the Fund's investments (including
foreign currencies) for which the primary market is outside the United States
and such cash and cash equivalents as are reasonably necessary to effect the
Fund's transactions in such investments.
"Rule" means Rule 17f-5 under the Investment Company Act of 1940, as
amended.
"Securities Depository" means any securities depository or clearing
agency within the meaning of Sections (a)(1)(ii) or (a)(1)(iii) of the Rule.
" 1940 Act" means the Investment Company Act of 1940, as amended.
SECTION 2 - DELEGATION TO THE ADVISER AS SPECIAL FOREIGN CUSTODY MANAGER. The
Fund, pursuant to resolution adopted by its Board of Directors (the "Board"),
hereby delegates to the Adviser, subject to Section (b) of Rule 17f-5, the
responsibility for selecting, contracting with, and monitoring Eligible
Foreign Custodians that are
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Compulsory Securities Depositories, and the Adviser hereby accepts such
delegation, as Special Foreign Custody Manager of the Fund.
SECTION 3 - COUNTRIES COVERED. The Special Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule B to this agreement, which list of countries may be
amended from time to time by the Fund with the agreement of the Special
Foreign Custody Manager. The Special Foreign Custody Manager shall list on
Schedule C the Compulsory Securities Depositories selected by the Special
Foreign Custody Manger to maintain the assets of the Fund, which list of
Compulsory Securities Depositories may be amended from time to time in the
sole discretion of the Special Foreign Custody Manager. The Special Foreign
Custody Manger will provide amended versions of Schedules B and C in
accordance with Section 7 hereunder.
Upon receipt by the Special Foreign Custody Manager of Authorization
to place or maintain Foreign Assets in a country listed on Schedule B, the
Special Foreign Custody Manager shall be deemed to have been delegated by the
Board responsibility as Special Foreign Custody Manager and to have accepted
such delegation. Upon closing the Fund's account with the Compulsory
Securities Depository, the Adviser shall immediately cease to be the Special
Foreign Custody Manager of the Fund with respect to the country.
The Special Foreign Custody Manager may withdraw its acceptance of
delegated responsibilities with respect to a designated country upon written
notice to the Fund. Thirty days (or such longer period as to which the
parties agree in writing) after receipt of any such notice by the Fund, the
Adviser shall have no further responsibility as Special Foreign Custody
Manager to the Fund with respect to the country as to which the adviser's
acceptance of delegation is withdrawn.
SECTION 4 - SCOPE OF DELEGATED RESPONSIBILITIES.
4.1 SELECTION OF COMPULSORY SECURITIES DEPOSITORIES
Subject to the provisions of this Section 4, the Special
Foreign Custody Manager may place and maintain the Foreign Assets in
the Care of the Compulsory Securities Depository selected by the
Special Foreign Custody Manager in each country listed on Schedule A,
as amended from time to time.
In performing its delegated responsibilities as Special Foreign Custody
Manager to place or maintain Foreign Assets with Compulsory Securities
Depositories, the Special Foreign Custody Manager shall determine that the
Foreign Assets will be subject to reasonable card, based on the standards
applicable to custodians in the country in which the Foreign Assets will be
held by that Compulsory Securities Depository, after considering all factors
relevant to the safekeeping of such assets, including, without limitation the
factors specified in Section (c)(1) of the Rule.
4.2 CONTRACTS WITH COMPULSORY SECURITIES DEPOSITORIES
The Special Foreign Custody Manager shall determine that the
contract with each Compulsory Securities Depository selected by the
Special Foreign Custody Manager (or if no contract exists, the rules
or established practices or procedures of the Compulsory Foreign
Securities Depository) will satisfy the requirements of Section
(c)(2) of the Rule.
4.3 MONITORING
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In each case in which the Special Foreign Custody Manager
maintains Foreign Assets with a Compulsory Securities Depository
selected by the Special Foreign Custody Manager, the Special Foreign
Custody Manager shall establish a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such
Compulsory Securities Depository and (ii) the contract governing the
custody arrangements established by the Special Foreign Custody
Manager with the Compulsory Securities Depository referred to in
Section 4.2. In the event the Special Foreign Custody Manager
determines that the custody arrangements with a Compulsory
Securities Depository it has selected are no longer appropriate,
the Special Foreign Custody Manager shall notify the Board in
accordance with Section 7 hereunder.
SECTION 5 - GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes
of this Section 5, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and
maintaining the Foreign Assets in each country for which the Adviser is
serving as Special Foreign Custody Manger of the Fund, and the Board shall be
deemed to be monitoring on a continuing basis such Country Risk to the extent
the Board considers necessary or appropriate.
SECTION 6 - STANDARD OF CARE AS SPECIAL FOREIGN CUSTODY MANAGER OF THE Fund.
In performing the responsibilities delegated to it, the Special Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence
such as a person having responsibility for the safekeeping of assets of
management investment companies registered under the 1940 Act would exercise.
SECTIONS 7 - REPORTING REQUIREMENTS. The Special Foreign Custody Manager
shall report the withdrawal of the Foreign Assets from a Compulsory
Securities Depository by providing the Board amended Schedules A or B at the
end of the calendar quarter in which an amendment to either Schedule has
occurred. The Special Foreign Custody Manager shall make written reports
notifying the Board of any other material change in the foreign custody
arrangements of the Fund with respect to Compulsory Securities Depositories
described in this Agreement after the occurrence of the material change.
SECTION 8 - REPRESENTATIONS WITH RESPECT TO THE Rule. The Fund represents to
the Adviser that the Board has determined that it is reasonable for the Board
to rely on the Adviser to perform the responsibilities delegated pursuant to
this Agreement to the Adviser as the Special Foreign Custody Manager of the
Fund.
SECTION 9 - EFFECTIVE DATE AND TERMINATION OF THE ADVISER AS SPECIAL FOREIGN
CUSTODY MANAGER. The Board's delegation to the Adviser as Special Foreign
Custody Manager of the Fund shall be effective as of the date hereof and
shall remain in effect until terminated at any time, without penalty, by
written notice from the terminating party to the non-terminating party.
Termination will become effective thirty days after receipt by the
non-terminating party of such notice.
SECTION 10 - REPRESENTATIONS.
10.1 The Fund hereby represents that (a) this Agreement has been
duly authorized, executed and delivered by the Fund, constitutes a valid and
legally binding obligation of the Fund enforceable in accordance with its
terms, and no statute, regulation, rule, order, judgment or contract binding
on the Fund prohibits the Fund's execution or performance of this agreement;
and (b) this agreement has been duly approved and authorized by the Board.
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10.2 The Adviser represents that this agreement has been duly
authorized, executed and delivered by the Adviser, constitutes a valid and
legally binding obligation of the Adviser enforceable in accordance with its
terms, and no statute, regulation, rule, order, judgment or contract binding
on the Adviser prohibits the Adviser's execution or performance of this
agreement.
SECTION 11 - MISCELLANEOUS.
11.1 The Adviser shall not be liable under this agreement for any
costs, expenses, damages, liabilities or claims, including attorneys' and
accountants' fees, sustained or incurred by, or asserted against the Fund,
except to the extent the same arises out of the failure by the Adviser to
exercise the care, prudence and diligence required by Section 6 of this
Agreement. In no event shall the Adviser be liable to either the Fund, its
Board, or any third party for special, direct or consequential damages, or
for lost profits or loss of business, arising in connection with this
Agreement.
11.2 This Agreement constitutes the entire agreement between the
Adviser and the Fund regarding the delegation of responsibilities under the
Rule.
11.3 Any notice or other instrument in writing, authorized or
required by this agreement to be given to the Adviser, shall be sufficiently
given if received by it at its offices at Xxx Xxxxx Xxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxx 617 10 or at such other place as the Adviser may from time to time
designate in writing.
11.4 Any notice or other instrument in writing, authorized or
required by this agreement to be given to the Fund shall be sufficiently
given if received by it at its offices at Xxx Xxxxx Xxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxx 00000 or at such other place as the Fund may from time to time
designate in writing.
11.5 In case any provision in or obligation under this agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected thereby. This agreement may not be amended or modified in any
manner except by a written agreement executed by both parties. This agreement
shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns; provided, however, that this agreement
shall not be assignable by either party without the written consent of the
other.
11.6 This agreement shall be construed in accordance with the
substantive laws of the State of Illinois, without regard to conflicts of
laws principles thereof. Each of the Adviser and the Fund consents to the
Jurisdiction of a state or federal court situated in Illinois in connection
with any dispute arising hereunder and irrevocably waives, to the fullest
extent permitted by applicable law, any objection which it may now or
hereafter have to the laying of venue of any such proceeding brought in such
a court and any claim that such proceeding brought in such a court has been
brought in an inconvenient forum. Each of the Adviser and the Rind
irrevocably waives any and all rights to trial by jury in any legal
proceeding arising out of or relating to this agreement.
11.7 The parties hereto agree that, in performing hereunder, the
Adviser is acting solely on behalf of the Fund and no contractual or service
relationship shall be deemed to be established hereby between the Adviser and
any other person.
11.8 The Adviser acknowledges that it has received notice of and
accepts the limitations on the each Fund's liability as set forth in the
Trust's Declaration of Trust, as amended from time to time. In accordance
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therewith, the Adviser agrees that the Trust's obligations hereunder shall be
limited to the assets of the Funds, and with respect to each Fund shall be
limited to the assets of such Fund, and no party shall seek satisfaction of
any such obligation from any shareholder of the Trust, nor from any trustee,
officer, employee or agent of the Trust.
11.9 This agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, each the Fund and the Adviser have caused this
agreement to be executed by their respective officers, thereunto duly
authorized, as of the date first above written.
State Farm Associates' Funds Trust.
By: ____________________
Name: Xxxxxx X. Xxxx, Xx.
Title: President
State Farm Investment Management Corp.
By: ____________________
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and Treasurer
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SCHEDULE A
Separate Investment Portfolios to which this Agreement Applies
State Farm Growth Fund
State Farm Balanced Fund
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SCHEDULE B
Specified Countries
1. Netherlands.
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Schedule C
Compulsory Securities Depositories
1 - Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. (NECIGEF)
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