CUSTODY AGREEMENT
THIS IS A CUSTODY AGREEMENT, dated as of July 7, 1998, between The Chase
Manhattan Bank (herein called the "Custodian"), a New York banking corporation,
having its principal place of business in New York, New York and State Farm
Interim Fund, Inc. (herein called the "Fund"), a corporation organized and doing
business under the laws of the State of Maryland and an investment company
registered as such under the Investment Company Act of 1940, having its
principal place of business at Bloomington, Illinois.
In consideration of the mutual premises and agreements herein contained,
the parties hereto agree as follows:
SECTION 1 DEFINITIONS.
"Agreement" means this Custody Agreement.
"Authorization Letter" or "Letter" means a writing from the Fund substantially
in the form of Exhibit A(1) or A(2) hereto, in respect of Financial Assets,
signed by any of two (2) persons of the Fund authorized to execute such
authorization pursuant to certain corporate resolutions of the Fund, and
instructing the Custodian to take action in respect of the Custody Account and
the Cash Account and such other action incidental thereto and to the Agreement.
Custodian may rely upon a Letter received by facsimile transmission or Letter in
the form of an Electronic Instruction as hereinafter defined.
"Cash Account" means the cash ledger of the Custody Account to which debits and
credits are made in respect of security transactions and other deposits to said
account and against which no withdrawal may be made by check or draft.
"Custodian" means The Chase Manhattan Bank, a New York banking corporation and
member of the Federal Reserve System.
"Custody Account" means a securities account in the name of the Fund on
Custodian's records to which a Financial Asset is or may be credited pursuant to
this Agreement.
"Depository" means DTC, PTC, and FRBNY and any other depository acceptable to
the Fund.
"DTC" means The Depository Trust Company, a New York limited purpose trust
company.
"Electronic Instruction" means an electronic instruction received by the
Custodian (i) through DTC's Institutional Delivery System ("IDS") or (ii)
through such other electronic delivery
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system accessed by password or other security device and acceptable to the Fund
and Custodian for the delivery of instructions. Fund shall safeguard any
testkeys, identification codes or other security device made available by
Custodian to Fund and Custodian may rely upon any electronic instructions as
being authorized by the Fund which is received using the proper security device.
"Entitlement holder" means the person on the records of a securities
intermediary as the person having a security entitlement against the securities
intermediary.
"Financial Assets" means securities or other investments owned by the Fund. As
the context requires, a Financial Asset means either the interest itself or the
means by which a person's claim to it is evidenced, including a certificated or
uncertificated security, a security certificate, or a securities entitlement.
"FRBNY" means the Federal Reserve Bank of New York.
"Fund" means State Farm Interim Fund, Inc., a Maryland Corporation and an
investment company registered as such under the Investment Company Act of 1940.
"Instructions" includes, without limitation, any instructions to sell, assign,
transfer, deliver, purchase or receive for the Custody Account, Financial Assets
or to transfer funds from the Custody Account or a Cash Account.
"PTC" means Participants Trust Company, a New York limited purpose trust
company.
"Securities" means stocks, bonds, rights, warrants and other negotiable and
non-negotiable paper issued in certificated ("certificated securities") or book
entry form ("uncertificated securities") and commonly traded or dealt in on
securities exchanges or financial markets, and other obligations of an issuer,
or shares, participations and interests in an issuer recognized in an area in
which it is issued or dealt in as a medium for investment and any other property
as shall be acceptable to Custodian for the Custody Account.
"Security entitlement" means the rights and property interest of an entitlement
holder with respect to a financial asset as specified in Part 5 of Article 8 of
the Uniform Commercial Code.
"Securities intermediary" means, Custodian, DTC, PTC, the FRBNY, and any other
Depository or financial institution acceptable to the Fund which in the ordinary
course of business maintains securities accounts for others and acts in that
capacity.
"Uniform Commercial Code" means the Uniform Commercial Code of the State of New
York.
SECTION 2 TERMS OF THE CUSTODY.
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SECTION 2.1 CUSTODY ACCOUNT. The parties agree that there shall be a
Custody Account maintained in the name of the Fund with the Custodian, at an
office in New York. The Custody Account shall be entitled as described on
Exhibit B.
SECTION 2.2 APPOINTMENT. The Fund authorizes The Chase Manhattan Bank to
serve as custodian for the Fund, and to act on its behalf solely to the extent
expressly provided herein, or in any Authorization Letter and to take such other
action as may be reasonably incidental thereto. Custodian shall not use any
securities intermediaries other than DTC, PTC and the FRBNY without Fund's prior
written consent.
SECTION 2.3 DUTIES OF THE CUSTODIAN. It is the expressed understanding of
the parties that:
SECTION 2.3.1 ACCEPT, DELIVER AND EXCHANGE SECURITIES. Upon receipt of and
pursuant to an Authorization Letter, oral notice (hereinafter "Notice,") from
the Fund (such Notice to be followed by written confirmation in the form of an
Authorization Letter), or Electronic Instructions, the Custodian shall accept
and deliver Financial Assets for the Fund. From time to time, pursuant to a
Letter, Notice, such Notice to be followed by the Fund's written confirmation
thereof, or Electronic Instructions, the Custodian shall exercise or dispose of
subscriptions, rights and warrants of any Financial Assets held in the Custody
Account or to be received by the Custodian for deposit to the Custody Account.
In respect of a Notice, in the event that the written confirmation has not been
received prior to the time requested action must take place, the Custodian may
rely upon the Notice provided that, the Custodian has been able to orally
confirm such instruction with such other persons as the Fund shall designate
from time to time in writing to the Custodian as authorized to make such
confirmations. Except as otherwise advised in a Letter, Notice, or by Electronic
Instructions, in delivering Financial Assets, the Custodian shall do so only
against payment, or upon the receipt of other Financial Assets .
SECTION 2.3.2 PURCHASE OF SECURITIES. Upon receipt of a Letter, Notice from
the Fund (such Notice to be followed by written confirmation in the form of an
Authorization Letter), or Electronic Instruction, the Custodian shall purchase
for the Fund such Financial Assets in the amounts and maturing on the dates
therein described and charge the payment for such purchases to the Cash Account.
In the event that the written confirmation has not been received prior to the
time requested action must take place, the Custodian may rely upon the Notice,
provided that the Custodian has been able to orally confirm such instruction
with such other persons as the Fund shall designate from time to time in writing
to the Custodian as authorized to make such confirmations. Unless and until
otherwise instructed by the Fund pursuant to the terms herein contained, the
Custodian shall deposit any and all Financial Assets purchased hereunder into
the Fund's Custody Account as soon as reasonably feasible following its receipt
thereof. Except as otherwise advised in a Letter, Notice, or by Electronic
Instructions, the Custodian shall make payment for Financial Assets purchased
only at the time of delivery of such Financial Assets to the Custodian.
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SECTION 2.3.3 PAYMENT OF MONIES. From time to time, the Custodian shall
upon its receipt of a Letter or Notice, such Notice to be followed by written
confirmation in the form of a Transfer Letter (as used herein the term "Transfer
Letter" shall mean the Fund's transfer letter, substantially in the form of
Exhibit C attached hereto) or Electronic Instruction, transfer monies from the
Custody Account; PROVIDED THAT: the Custodian complies with the requirements of
The Chase Manhattan Bank Funds Transfer Service Security Procedure Agreement
(Exhibit D).
From time to time, the Fund shall notify Custodian of deposits for its
accounts. Upon receipt of funds identifying the Fund by account number as
beneficiary, the Custodian shall credit such funds to the account identified and
notify the Fund.
SECTION 2.3.4 SALE OF SECURITIES. Upon the receipt of a Letter, Notice
(such Notice to be followed by written confirmation in the form of a Letter), or
Electronic Instruction, the Custodian shall use its reasonable best efforts,
subject to the terms and conditions herein contained, to present for sale in the
amount and on the dates therein stated such Financial Assets of the Fund as
therein described, and held in the Custody Account and cause the proceeds
generated by such sale(s), to be deposited into the Cash Account. In the event
that the written confirmation has not been received prior to the time the
requested action must take place, the Custodian may rely upon the Notice,
provided that the Custodian has been able to orally confirm such instruction
with such other persons as the Fund shall designate from time to time in writing
to the Custodian as authorized to make such confirmations.
In the event that it shall be impracticable for the Custodian, in
accordance with such Letter, Notice, or Electronic Instruction, to present for
sale Financial Assets on the dates specified, the Custodian shall as soon as it
learns of any such impracticability, notify the Fund via telephone .
Unless the Custodian shall have received from the Fund a Letter, Notice, or
Electronic Instruction to the contrary, the Custodian shall deliver the
Financial Assets to a broker, a dealer or other purchaser identified in the
instruction against payment. It is understood by the Fund that delivery against
payment in the securities markets means delivery against a receipt or other
evidence that a payment is due later but before the end of the same business
day. The Custodian shall have no liability with respect to the non-receipt of
payment arising from:
i) Any insolvency of any broker, dealer or other purchaser which occurs after
delivery of the Financial Assets by Custodian but before payment is
received by Custodian; or
ii) Insolvency of any issuer of the Financial Assets ; or
iii) Any act or omission of any broker, attorney, custodian, escrowee, or
similar agent designated by Fund to perform any act with respect to the
Financial Assets .
This Section shall not be interpreted to relieve or to lessen the standard of
care the Custodian is required to use by other terms of this Agreement.
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SECTION 2.3.5 REGISTERED SECURITIES. Except as otherwise set forth in this
Section 2.3.5, the Custodian shall register any registerable Financial Assets
held and maintained in a Custody Account in Custodian's nominee name or that of
an affiliate or Depository. Private placements and other types of Financial
Assets which the Fund from time to time identifies shall be registered in the
name of the Fund. All taxes or other expenses incidental to any transfer to or
from the name of a nominee shall be borne by the Fund.
SECTION 2.3.6 CALLS FOR PAYMENT. The Custodian shall use its reasonable
best efforts to determine from financial information services to which it
subscribes, or such other financial services as agreed to by the parties, when
Financial Assets held in the Custody Account are called for payment and
surrender for payment any Financial Assets or notes which have matured or with
respect to which it received or knows of a notice to call.
SECTION 2.3.7 NOTICES, ADVICE, ETC. The Custodian shall use its reasonable
best efforts to:
(a) promptly notify the Fund of any unpaid principal amounts, or any
unpaid amounts of interest accrued and owing, or payable on any
Financial Assets held or maintained in a Custody Account of which
Custodian is aware;
(b) forward to the Fund as of the close of business each business day
(electronically or by mail) advices of the Financial Assets and cash
transactions in a Custody Account;
(c) deliver to the Fund, promptly upon receipt of the Fund's request, a
schedule of the Financial Assets held and maintained in a Custody
Account;
(d) promptly notify the Fund of any legal action of which the Custodian's
corporate actions unit becomes aware with respect to any Financial
Assets held and maintained in a Custody Account;
(e) promptly notify the Fund of any subscriptions, warrants or like rights
it may have of which the Custodian's corporate action unit becomes
aware;
(f) promptly notify the Fund of any invitations to tender a Financial
Asset, held and maintained in a Custody Account of which the
Custodian's corporate action unit becomes aware; and
(g) deliver to the Fund all printed material received by the Custodian's
corporate actions unit and requiring some action by the Fund
pertaining to any Financial Assets held or maintained in a Custody
Account.
SECTION 2.3.8 STOCK DIVIDENDS, ETC. Financial Assets delivered to the
Custodian as
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stock dividends, stock splits or as a result of the exercise of rights, shall be
deposited into and held and maintained in the Custody Account of the Fund and
treated in like manner as all other Financial Assets therein held and
maintained.
SECTION 2.3.9 FRACTIONAL SHARES. In the event that an issuer of a Financial
Asset held by the Custodian in the Custody Account shall declare a dividend
payable in stock, and such dividend results in a fractional share of stock being
issued, the Custodian, without prior notice to or from the Fund, shall sell such
fractional share(s) and deposit the proceeds received from such sale into the
Custody Account. The Custodian shall notify the Fund of such sale thereafter.
SECTION 2.3.10 COLLECTION OF INCOME AND PRINCIPAL. The Custodian shall from
time to time take necessary action(s) to collect dividends, interest payments,
payments made on account of called and matured Financial Assets, and any other
payments with respect to such Financial Assets deposited into or held or
maintained in the Custody Account, when such payments shall become owing;
provided that so long as Custodian's actions are in compliance with the standard
of care set forth in Section 7.17, Custodian shall not be responsible for
failure to receive payment of (or late payment of) distributions with respect to
Financial Assets or other property held in the Custody Account. Upon receipt of
such funds collected hereunder, Custodian will use its best efforts to deposit
such collected funds into the Custody Account on the same business day upon
which such collected funds are received by the Custodian. Accordingly, in making
collections of income or principal hereunder, the Custodian may to the extent
necessary or required by any applicable law of any sovereign body, including the
United States, or a State, and solely to such extent, execute on behalf of the
Fund certificates or other like documents. All cash shall be held and maintained
in the Custody Account subject to further instruction from the Fund. In the
event the Custody Account is credited by the Custodian in anticipation of the
Custodian's collection of monies, and the Custodian is unable to collect such
monies, the Fund agrees that it shall promptly upon telephonic notice from the
Custodian, return an amount equal to the amount so credited and not collected to
the Custodian in immediately available funds.
SECTION 2.3.11 EXCHANGE CERTIFICATES. The Custodian shall exchange
temporary for definitive certificates or effect mandatory exchanges of
certificates.
SECTION 2.3.12 BOOKS AND RECORDS. Custodian shall at all times maintain
proper books and records that shall identify the Fund as the entitlement holder
of such Financial Assets and the location of the Financial Assets.
The Custodian shall with respect to the Fund create and maintain all
records relating to its activities and obligations under this Contract. All such
records shall upon reasonable notice and during the regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund, including the Fund's independent public accountant, and
employees and agents of the United States Securities and Exchange Commission.
The Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian and shall, when requested
to do so by the Fund and for such
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compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
The Custodian shall cooperate with and supply reasonable and customary
information regarding the Custody Account to the entity or entities appointed by
the Board of Directors of the Fund to keep the books of account of the Fund.
Unless Fund shall send to Custodian a written exception or objection to any
statement of account within 90 days of its receipt of such statement from
Custodian, Fund shall be deemed to have approved such statement.
SECTION 2.3.13 CERTIFICATE OF THE BANK. The Custodian shall:
(a) deliver to the Fund on or before January 31st of each calendar year, a
certified schedule, dated December 31, of the preceding calendar year,
executed by two duly elected and authorized officers of Custodian
setting forth a full description of the Financial Assets held and
maintained in each Custody Account, including, but not limited to,
among other things, the par value of each bond and the number of
shares for each stock or the equivalent, as the case may be, as of the
close of business on December 31st, of each calendar year;
(b) use its best efforts to deliver to the Fund, within five (5) business
days after the receipt of the written request of the Fund a certified
schedule, dated the date of its issue, executed by two duly elected
and authorized officers of Custodian, setting forth a full description
of the Financial Assets held and maintained in the Custody Accounts,
including among other things, the par value of each bond and the
number of shares for each stock or the equivalent, as the case may be;
and
(c) deliver, following a request by the Fund, to any governmental agency
certified by the Fund to the Custodian and, in a timely manner, a
certified schedule, which schedule, to the extent possible, shall be
substantially in the form of the certified schedule to be delivered
pursuant to the preceding clause (b) of this subsection.
In the event the Custodian is unable to deliver, pursuant to clause (c)
above, the certified schedule therein described, the Custodian shall,
immediately upon learning of such inability, notify the Fund by telephone and
promptly confirm such notice to the Fund in writing. Such written notice to the
Fund shall set forth (i) an explanation as to the Custodian's inability to
deliver such certified schedule and (ii) the date upon which such certified
schedule shall be delivered.
SECTION 2.3.14 OTHER SECURITIES. Upon receipt of an Authorization Letter or
Electronic Instruction, the Custodian is authorized to take any and all actions
necessary to settle transactions in futures and/or options contracts.
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SECTION 2.4 LOTTERY. In the event Financial Assets held in the Custody
Account at a Securities Depository are called for partial redemption by the
issuer, the Custodian will, in its reasonable discretion, allocate the called
portion to the respective holders in a manner which is fair, equitable, and in
accordance with its established procedures.
SECTION 2.5 CONVERSION. The Custodian shall, except where instructed
otherwise by the Fund, convert monies received by the Custodian with respect to
Financial Assets maintained in the Custody Account of foreign issue into United
States dollars at prevailing rates. In effecting such conversion, the Custodian
may use any commercially reasonable method or agency available to it, including
the facilities of its own divisions or affiliates. The Fund agrees that it shall
bear all risk and reasonable expense of such conversion, including without
limitation, losses arising from fluctuations in the exchange rate provided that
the Custodian has acted in good faith and in accordance with the commercial
standard of care for Money Center banks which offer custodial services.
SECTION 2.6 MAINTAIN DUPLICATE RECORDS. The Custodian shall store
"off-premises" tapes of daily transactions with respect to the Custody Account.
Such tapes shall be maintained in accordance with the Custodian's practice in
effect from time to time .
SECTION 2.7 SETTLEMENT. The Fund intends to have sufficient immediately
available funds each day in the Custody Account to pay for the settlement of all
Financial Assets delivered against payment to Custodian or its agents and
credited to the Custody Account. Should Fund fail to have sufficient immediately
available funds in a Custody Account to settle deliveries of Financial Assets
pursuant to Section 2.3.2 (a "Deficit"), Custodian may elect (i) to reject the
settlement of any or all of the Financial Assets delivered to it that day to a
Custody Account but only after notice to Fund, (ii) to settle the deliveries on
the Fund's behalf and debit the Custody Account of the Fund for the amount of
such Deficit , or (iii) to reverse the posting of the Financial Assets credited
to the Custody Account, but only after notice to the Fund.
No prior action or course of dealing on the part of Custodian with respect
to the settlement of Financial Assets transactions on Fund's behalf shall be
used by or give rise to any claim or action by Fund against Custodian for its
refusal to pay or settle for a securities transaction that has not been timely
funded as required herein.
SECTION 2.8 SECURITY INTEREST. To the extent Custodian has advanced funds
on Fund's behalf in connection with the settlement of purchases and sales of
Financial Assets for the Custody Account, Custodian shall have a security
interest in the Financial Assets which are the subject of such purchases and
sales until Fund shall have repaid the amount of such advance to Custodian, and
Custodian's security interest in such Financial Assets shall be released upon
Fund's repayment of such advance to Custodian.
SECTION 3 SAFEKEEPING OF FINANCIAL ASSETS.
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SECTION 3.1 SAFEKEEPING. The Custodian shall hold all Financial Assets held
in the Custody Account in its vault and physically segregate for the account of
the Fund all Financial Assets held by it, except those Financial Assets which
are book-entry securities maintained on the Federal Reserve Book-Entry Account
System or which are eligible for deposit with a Depository. Unless specified in
the Authorization Letter to the contrary, it is understood that, eligible
Financial Assets will be maintained with a Depository. The Custodian shall be
responsible for all Financial Assets deposited into and held and maintained in
the Custody Account whether the Financial Assets be in the physical custody of
the Custodian or held by the Custodian through a Depository; PROVIDED that the
Custodian shall not be responsible for loss or destruction of Securities held
and maintained in the Custody Account, where such loss or destruction is caused
by earthquake, volcanic eruptions or such like disturbances of nature, by reason
of war, whether declared or undeclared; or caused by the lawful act of any
executive, legislative, judicial, administrative or other governmental or
military body or officer. Custodian shall be obligated to indemnify Fund for any
loss of Financial Assets received for, and credited to the Custody Account
resulting from (i) the negligence or willful misconduct of Custodian or its
officers, employees or agents (excluding any Depository retained for such
Financial Assets) or (ii) the burglary, robbery, hold-up, theft or mysterious
disappearance, including loss by damage or destruction. In the event of a loss
of Financial Assets for which it is required to indemnify Fund pursuant to the
immediately preceding sentence, Custodian shall promptly replace such Financial
Assets (by among other means posting appropriate security or bond with the
issuer(s) of such Financial Assets and obtaining their reissue) or if agreed to
by Fund and Custodian, Custodian shall replace the value thereof (determined
based upon the market value of the Financial Assets which are the subject of
such loss as of the date of the discovery of such loss or as of the date of
replacement) and the value of any loss of rights or privileges resulting from
the loss of such Financial Assets. The foregoing indemnity shall be the
exclusive liability of Custodian to Fund for its loss of Financial Assets held
for the Custody Account.
Custodian shall be responsible for only those duties expressly stated in
this Agreement or expressly contained in instructions to perform the services
described herein given to Custodian pursuant to the provisions of this Agreement
and accepted by Custodian but, without limiting the foregoing, Custodian and its
agents shall have no duty or responsibility;
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, Financial Assets relating to
the Custody Account, or to maintain any insurance on Financial Assets in
the Custody Account for Fund's benefit;
(b) with regard to any Financial Assets in the Custody Account as to
which a default in the payment of principal or interest has occurred, to
take any action other than giving of notice with respect to such default;
except, in each instance, where Custodian has been requested by Fund and
Custodian has agreed in writing to do so;
(c) to evaluate, or report to Fund regarding, the financial condition
of any person,
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firm or corporation to which Custodian is instructed to deliver Financial
Assets or funds pursuant to this Agreement;
(d) for any loss occasioned by delay in the actual receipt of notice
by Custodian of any payment, redemption or other transaction in respect to
which Custodian is authorized to take some action pursuant to this
Agreement; or
(e) for any errors or omissions made by any securities pricing
services used by Custodian to value Financial Assets credited to the
Custody Account as part of any service subscribed to by Fund from
Custodian.
SECTION 3.2 USE OF A DEPOSITORY. The Custodian shall:
(a) upon the delivery or transfer, by book-entry or otherwise, of any of
the Fund's Financial Assets to a Securities Depository Account as
provided herein, identify in its records the Financial Assets as held
for the Fund in the Custody Agreement;
(b) at all times retain against the Depository any and all rights provided
the Custodian, whether such rights be provided by applicable law,
governmental rules or regulations, rules and regulations of the
Depository, or otherwise, including but not limited to, the right to
recover from the Depository (for the benefit of the Fund) for any loss
or losses on the part of the Depository;
(c) from time to time, as the need may arise, to enforce, for the benefit
of the Fund, any and all rights provided the Custodian, whether such
rights be provided by applicable law, governmental rules or
regulations or otherwise, against the Depository pertaining to any
Financial Assets which are the property of the Custody Account and are
deposited by the Custodian with the Depository;
(d) within ten (10) business days after its receipt of a request from the
Fund, deliver to the Fund the most current report issued by the
Depository pertaining to its system of internal accounting control;
and
(e) make payment for securities purchased and sold through the clearing
medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of securities, payment will be
made only upon delivery of the securities to or for the account of the
Fund; and upon any sale of securities, delivery of the securities will
be made only against payment therefor.
SECTION 3.3 THE DEPOSITORY ACCOUNT. The Depository account maintained by
the Custodian and receiving Financial Assets which have been recorded by the
Custodian as held for the Custody Account, shall hold only Financial Assets in
which the Custodian has interest only in a fiduciary or agency capacity for
clients and the Financial Assets in such account will not be commingled with the
Custodian's own Financial Assets.
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SECTION 3.4 CERTAIN CONDITIONS. Any Financial Assets held by the Custodian
for the benefit of the Fund pursuant hereto (including those Financial Assets
held in a Depository) shall be considered by the parties hereto, and shall be at
all times, the sole, absolute property of the Fund, and for purposes of this
Agreement, shall be considered part of the Financial Assets held and maintained
in the Custody Account.
SECTION 3.5 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Instructions from the Fund establish and maintain a segregated account or
accounts for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities (including securities maintained in an
account by the Custodian pursuant to Section 3.2. hereof):
(a) in accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund,
(b) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by
the Fund,
(c) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies, and
(d) for other proper corporate purposes.
SECTION 4 PUT OPTIONS. Notwithstanding any provision hereunder to the
contrary, with respect to Financial Assets which possess so-called put options
or similar characteristics which grant the Fund the option to redeem such
Financial Assets prior to their maturity date ("Put Options Securities")
including, but not limited to so-called put bonds, the following shall apply:
(a) with respect to put options which are exercisable semi-annually, or
less frequently than semi-annually, and where such Put Option
Financial Assets is actually delivered to the Custodian not less than
fifteen (15) business days prior to the put option exercise date, the
Custodian shall use its reasonable best efforts to notify the Fund of
such put option, where correct and timely notification is published in
the publications or services ("Notification Sources") the Custodian
routinely uses
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for this purpose, or as to which the Custodian receives timely notice
from the Fund;
(b) once notified, the Fund must direct the exercise or non-exercise of
such put option by Letter delivered to the Custodian not less than
five (5) business days prior to the put option exercise date, and if
the Fund fails to make such direction, the Custodian shall not
exercise such put option; and
(c) for purposes of this Section 3: a "business day" is a day on which the
Custodian is open for business under the laws of the State of New
York; the notification sources include, but are not limited to, X.X.
Xxxxxx, THE WALL STREET JOURNAL and/or DTC, and the Custodian reserves
the right to utilize commercially acceptable other notification
sources or discontinue any of the aforementioned notification sources
at any time and without notice; and
(d) the Custodian shall not notify the Fund of put options exercisable
more frequently than semi-annually.
SECTION 5 BULK HOLDING. The Custodian may hold the Financial Assets of the
Fund in its own vault, separate from its own Financial Assets in bulk with
Financial Assets of the same class and the same issue of other of its own
fiduciary and agency customers; PROVIDED THAT: the Financial Assets in such bulk
shall be adequately identified as belonging to the Fund on the records of the
Custodian.
SECTION 6 THE CUSTODIAN. The Fund and the Custodian agree that the
Custodian in carrying out the provisions of this Agreement, including but not
limited to the purchase of any Financial Assets for deposit into, or the selling
or delivering of any Financial Assets held and maintained in, the Custody
Account, is acting solely as the agent of the Fund. Unless the Custodian shall
otherwise agree in writing, the Custodian shall not have the duty to take any
action other than those actions expressly set forth herein or those actions
necessary and advisable to accomplish such expressly set forth actions. The
Custodian is hereby expressly authorized to execute in the name of the Fund such
certificates as may be necessary to obtain payment with respect to, or to effect
the sale, transfer or other disposition of any Financial Assets held in the
Custody Account in accordance with the Fund's instructions. In carrying out the
purchase or sale of any Financial Assets hereunder, the Custodian may, upon
receipt of the Fund's instructions, purchase from or sell to the Custodian's
bond department or an affiliate of the Custodian.
SECTION 7 GENERAL.
SECTION 7.1 WAIVER; AMENDMENTS. Except as otherwise provided in Section
2.3.12, no delay on the part of the Fund or the Custodian in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise by the Fund or the Custodian of any right, power or remedy
preclude other or further exercise thereof, or the exercise of any other right,
power or remedy. No amendment, modification or waiver of, or
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consent with respect to, any provision of this Agreement, shall in any event be
effective unless the same shall be in writing and signed and delivered by each
of the Custodian and the Fund.
SECTION 7 .2 NOTICE. Notices with respect to termination, any disputes
hereunder, specification of authorized officers and employees, and terms and
conditions for instructions required hereunder, shall be in writing, and shall
be deemed to have been duly given if delivered personally, by courier service or
by mail, postage prepaid, to the following addresses (or to such other address
as either party hereto may from time to time designate by notice duly given in
accordance with this paragraph):
To the Fund at:
State Farm Interim Fund, Inc.
Xxx Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
To Custodian, to the attention of the individual designated by Custodian as
the safekeeping account administrator for Fund's account, at:
The Chase Manhattan Bank
North American Insurance Securities Services
3 Chase XxxxxXxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
SECTION 7.3 COMPUTATIONS. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable, be made in accordance with generally accepted accounting
principles.
SECTION 7.4 HEADINGS. Section headings used in this Agreement are for
convenience only, and shall not effect the construction of this Agreement.
SECTION 7.5 GOVERNING LAW. This Agreement shall be a contract made under
and governed by the internal laws of the State of New York including the Uniform
Commercial Code.
SECTION 7.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Fund and the Custodian individually and each of their respective successors
and assigns, and shall inure to the benefit of the Fund and the Custodian and
the respective successors and assigns of the Fund and the Custodian; PROVIDED
that, the Custodian may not assign or transfer this Agreement or delegate any of
its duties hereunder except as permitted herein, without the prior written
consent of the Fund.
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SECTION 7.7 INTEGRATION; COURSE OF DEALING. This Agreement constitutes the
sole agreement of the parties with respect to the subject matter hereof and
supersedes all oral negotiations and prior writings with respect to the subject
matter hereof.
SECTION 7.8 TERMINATION. This Agreement shall terminate 90 days after the
receipt by the Custodian or the Fund, or such mutually agreed date as the case
may be, of written notice from the Custodian or the Fund terminating this
Agreement.
SECTION 7.9 CERTAIN NOTICES BY THE FUND AND THE CUSTODIAN. The Fund agrees
to promptly notify the Custodian of any material change in its organization or
any reorganization by it. The Custodian shall notify the Fund of any changes in
its organization which affect its ability to do business as a banking
corporation.
SECTION 7.10 CERTAIN REPRESENTATIONS BY THE FUND AND THE CUSTODIAN. (a) The
Fund herewith promises to the Custodian that (i) all instructions and
confirmations given hereunder shall be given and are given pursuant to
authorizations contained or to be contained in resolutions of its Board of
Directors and by persons authorized by such resolutions to give the same, and
(ii) it shall from time to time furnish the Custodian with certified copies of
such resolutions upon which it may rely for the authorizations contained therein
until otherwise notified in writing of a change thereto. (b) The Custodian
herewith promises to the Fund that (i) it has the full power and authority to
perform its obligations hereunder, (ii) this Agreement constitutes its legal,
valid and binding obligation enforceable in accordance with its terms and (iii)
it has taken all necessary action to authorize the execution and delivery
hereof.
SECTION 7.11 TAXPAYER IDENTIFICATION NUMBER. The Fund's taxpayer
identification number is 00-0000000. Unless Fund has already done so, as a U.S.
citizen or resident, it shall deliver promptly to Custodian with respect to the
Custody Account established under this Agreement, two duly completed and
executed copies of United States Internal Revenue Service form W-9 for the Fund.
Fund shall provide duly executed and completed updates of such form after the
occurrence of an event requiring a change in the form previously delivered by
Fund to Custodian. The Fund shall be responsible for the payment of all taxes
relating to the Financial Assets in the Custody Account.
SECTION 7.12 EXPENSES AND TAXES. The Fund agrees to pay, and to save the
Custodian harmless from all liability, for any taxes which may be payable in
connection with the Financial Assets and any proceeds generated by Financial
Assets and any other property of the Fund purchased or held and maintained
hereunder. All obligations provided for in this subsection 7.12, and in
subsection 7.13 hereof, shall survive any termination of this Agreement.
SECTION 7.13 FEES. For and in consideration of the Custodian acting as the
custodian and the agent of the Fund pursuant to the terms herein contained, the
Fund agrees to pay to the Custodian fees for such services as mutually agreed
upon by the parties hereto and as set forth in
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Exhibit E hereto. Such agreed upon fees may from time to time be modified by the
Custodian pursuant to its notice to the Fund effective no less than 90 days
following the Fund's receipt of such notice. To the extent that Custodian
advances funds to the Custody Account for disbursements or to effect the
settlement of purchase transactions, the Custodian shall be entitled to collect
from the Custody Account an amount equal to The Chase Manhattan Bank's Prime
Rate in effect as announced by it from time to time, unless the Fund and
Custodian have agreed in writing to another interest rate.
SECTION 7.14 HOLD HARMLESS. The Fund agrees to indemnify and hold the
Custodian harmless from and against all claims, losses, liabilities and
expenses, including without limitation, reasonable legal fees and expenses,
arising from any claim of any party arising or resulting from actions the
Custodian takes that are required by this Agreement; provided that the Custodian
shall have acted in good faith and in accordance with the commercial standard of
care for Money Center banks which offer custodial services.
SECTION 7.15 FORCE MAJEURE. Neither the Custodian nor the Fund shall be
responsible for its failure to carry out its responsibilities hereunder where
such failure is caused by circumstances reasonably beyond the control of the
parties so affected including but not limited to, acts of God, war, internal
strife and acts of government.
SECTION 7.16 DISCLAIMER OF LIABILITY. UNDER NO CIRCUMSTANCES WHATSOEVER
SHALL EITHER PARTY BE RESPONSIBLE TO THE OTHER PARTY FOR ANY INCIDENTAL,
SPECIAL, CONSEQUENTIAL, OR INDIRECT DAMAGES OF ANY KIND WHATSOEVER, PROVIDED THE
PARTY AGAINST WHOM THE DAMAGES ARE CLAIMED HAS NOT ACTED IN BAD FAITH OR ENGAGED
IN WILLFUL MISCONDUCT; AND, PROVIDED FURTHER, THAT ANY INDEMNITY CLAIM BY THE
CUSTODIAN UNDER SECTION 7.14 SHALL CONSTITUTE A DIRECT DAMAGES CLAIM AND SHALL
NOT BE SUBJECT TO THE LIMITATION SET FORTH HEREIN.
SECTION 7.17 STANDARD OF CARE. The Custodian expressly agrees that in
carrying out its responsibilities hereunder it shall be responsible for damages,
except as limited by Section 3.1, the Fund suffers as a result of Custodian's,
its employees' and agents' negligence, willful misconduct or failure to act in
good faith and in accordance with the commercial standard of care for Money
Center banks which offer custodial services. The Custodian shall not be
responsible for the title, validity or genuineness of any property or evidence
of title thereto received by it or delivered by it pursuant to this Agreement.
The Custodian shall be held harmless in acting upon any Letter, Notice, request,
direction, instruction, consent, certification or other instrument believed by
it, acting in good faith, to be genuine and delivered by an authorized officer
of Fund.
SECTION 7.18 EXHIBITS. The parties agree that any exhibits attached hereto
may be modified effective upon written notice from the Fund to the Custodian.
Any such modified exhibit shall be and is hereby deemed to be the exhibit
(indicated in such written notice) to this
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Agreement.
SECTION 7.19 NONDISCLOSURE, CONFIDENTIALITY. The Custodian expressly agrees
that it shall not use the name of, nor identify, the Fund or any of its
subsidiaries in any of the Custodian's media or other advertising distributed by
the Custodian to its customers or potential customers.
The Custodian shall maintain the confidentiality of the Fund's Custody
Account information and not disclose any such information except as permitted by
this Agreement or as required by laws, rules, regulations or orders having the
force of law, but only after notice to Fund.
The Shareholders Communications Act of 1985 and subsequent amendments to
the act authorize Custodian to release to issuers of Securities and to other
security holders of an issue, Fund name, address and Securities position if Fund
Custody Account was opened after December 28, 1985, unless Fund states its
objection. Custodian hereby acknowledges Fund's objection.
SECTION 7.20 "FREE RIDING" PROHIBITION. Fund hereby acknowledges that the
act of placing a buy order and sale order for the same securities which are to
settle on the same date in instances where Fund does not have in the Custody
Account sufficient funds independent of the sale of such securities to satisfy
fifty percent (50%) or more of the purchase price (or such other percentage as
may be required by applicable law and regulation) constitutes the practice
commonly known as "free riding" and is prohibited under both Regulation T and
Regulation U of the Board of Governors of the Federal Reserve System
(12 C.F.R. Parts 220 and 221).
SECTION 7.21 FUND RESPONSIBILITY. Fund agrees that it shall be responsible
to Custodian as a principal for all of its obligations to Custodian arising
under or in connection with this Agreement, and Fund warrants its authority to
deposit in the Custody Account any Financial Assets and funds which Custodian
receives therefor and to give instructions relative thereto. Fund further agrees
that Custodian shall not be subject to, nor shall its right and obligations with
respect to this Agreement and the Custody Account be affected by, any agreement
between Fund and any such person.
SECTION 7.22 BINDING OBLIGATION AND LIMITATION OF LIABILITY. It is
expressly understood that the obligations of the Fund under this Agreement will
not be binding on any of the Directors, shareholders, nominees, officers, agents
or employees of the Fund personally, but bind only the assets and property of
the Fund.
Custodian agrees that no Director, shareholder, nominee, officer, agent or
employee of the Fund may be held personally liable or responsible for any
obligations of the Fund arising out of this Agreement.
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SECTION 7.23 RESERVATION OF RIGHT. Custodian shall have the right not to
accept for deposit to the Custody Account any Financial Assets which are in a
form or condition which Custodian, in its sole discretion, determines not to be
suitable for the services Custodian provides under this Agreement.
Custodian's and Fund's rights and remedies under this Agreement are in
addition to, and not in limitation of, any other rights and remedies available
to Custodian and Fund under applicable law.
SECTION 7.24 CUSTODIAN'S ANNUAL REPORT. Upon the Fund's request, Custodian
will send the annual report (SAS 70 Report) prepared by its external auditors on
its systems of internal accounting control of custodied Financial Assets. In
addition, the Custodian shall allow the Fund's independent public accountant
reasonable access to the records of the Custodian relating to the Financial
Assets as is required in connection with their examination of books and records
pertaining to the Fund's affairs.
SECTION 7.25 YEAR 2000. The Custodian confirms that it is aware of the
problem that may be presented for certain computer systems by use of the date
fields and the like on and after January 1, 2000, and the Custodian has
developed and is implementing a plan to help assure that Custodian's systems as
the same relate to services provided hereunder will be unaffected by such
problems.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers effective as of the day
and year first written above.
State Farm Interim Fund, Inc.
By: Xxxxx X. Xxxxxx
Title: Assistant Vice President and Secretary
The Chase Manhattan Bank
By: Xxxxx X. Xxxxxx
Title: Vice President
Address:
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