EXHIBIT 8(a)
CUSTODY AGREEMENT
THIS IS A CUSTODY AGREEMENT, dated as of _________________, 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 Variable Product Trust (herein called the "Trust") , a Business Trust
organized and doing business under the laws of the State of Delaware 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 Trust 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 Trust authorized to execute such
authorization pursuant to certain corporate resolutions of the Trust, 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.
"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.
"Trust" means State Farm Variable Product Trust, a Delaware Business Trust and
an investment company registered as such under the Investment Company Act of
1940.
"Custodian" means The Chase Manhattan Bank, a New York banking corporation and
member of the Federal Reserve System.
"Custody Account" means a securities account for each 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 Trust.
"DTC" means The Depository Trust Company, a New York limited purpose trust
company.
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"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 system accessed by password or other
security device and acceptable to the Trust and Custodian for the delivery of
instructions. Trust shall safeguard any testkeys, identification codes or other
security device made available by Custodian to Trust and Custodian may rely
upon any electronic instructions as being authorized by the Trust 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 Trust. 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 an investment portfolio of the Trust for which a separate series of
shares of beneficial interest are issued. Individual Funds are listed on
Schedule A.
"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 Trust 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 for each Fund of the Trust with the Custodian, at an
office in New York. The Custody Accounts shall be entitled as described on
Schedule A.
SECTION 2.2 APPOINTMENT. The Trust authorizes The Chase Manhattan Bank to
serve as custodian for the Funds of the Trust listed on schedule A, 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 Trust'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 Trust (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 each Fund. From time to time, pursuant
to a Letter, Notice, such Notice to be followed by the Trust'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 Accounts or to be received by the Custodian for deposit to the
Custody Accounts. 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
Trust 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 Trust (such Notice to be followed by written confirmation in the form
of an Authorization Letter), or Electronic Instruction, the Custodian shall
purchase for a 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 employee(s) of the Trust as the Trust shall
designate from time to time in writing to the Custodian as authorized to make
such confirmations. Unless and until otherwise instructed by the Trust pursuant
to the terms herein contained, the Custodian shall deposit any and all Financial
Assets purchased hereunder into the appropriate Funds' 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 Trust's transfer letter, substantially in the
form of Exhibit B 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 C).
From time to time, the Trust shall notify Custodian of deposits for its
accounts. Upon receipt of funds identifying the Trust or Funds by account
number as beneficiary, the Custodian shall credit such funds to the account
identified and notify the Trust.
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 a Fund as
therein described, and held in the Custody Account and cause the proceeds
generated by such sale(s), to be deposited into the Custody 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 person(s) as the Trust 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 Trust via telephone.
Unless the Custodian shall have received from the Trust 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 Trust 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 Trust 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 Trust from time to time identifies shall be
registered in the name of the Trust on behalf of the appropriate Fund. All
taxes or other expenses incidental to any transfer to or from the name of a
nominee shall be borne by the Trust.
SECTION 2.36 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 Trust 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 Trust 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 Trust, promptly upon receipt of the Trust's request, a
schedule of the Financial Assets held and maintained in a Custody
Account;
(d) promptly notify the Trust 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 Trust of any subscriptions, warrants or like
rights it may have of which the Custodian's corporate action unit
becomes aware;
(f) promptly notify the Trust 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 Trust all printed material received by the Custodian's
corporate actions unit and requiring some action by the Trust
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 appropriate
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 a 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 Trust,
shall sell such fractional share(s) and deposit the proceeds received from such
sale into the Custody Account. The Custodian shall notify the Trust 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 a 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 Trust certificates or other like documents. All cash shall be
held and maintained in a Custody Account subject to further instruction from the
Trust. In the event a 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 Trust 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 appropriate Fund of the Trust
as the entitlement holder of such Financial Assets and the location of the
Financial Assets.
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract. All such
records shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the
Trust and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Trust's request, supply the Trust with a tabulation of
securities owned by each Fund and held by the Custodian and shall, when
requested to do so by the Trust and for such compensation as shall be agreed
upon between the Trust and the
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Custodian, include certificate numbers in such tabulations.
The Custodian shall cooperate with and supply reasonable and customary
information to the entity or entities appointed by the Board of Trustees of the
Trust to keep the books of account of each Fund.
Unless Trust 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, Trust shall be deemed to have approved such statement.
SECTION 2.3.13 CERTIFICATE OF THE BANK. The Custodian shall:
(a) deliver to the Trust 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 Trust, within five (5) business
days after the receipt of the written request of the Trust 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 Trust, to any governmental agency
certified by the Trust 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 Trust by telephone and
promptly confirm such notice to the Trust in writing. Such written notice to
the Trust 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.
SECTION 2.4 LOTTERY. In the event Financial Assets held in the Custody
Account at a
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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 Trust, 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 reasonable method or agency available to it, including the
facilities of its own divisions or affiliates. The Trust agrees that it shall
bear all risk and reasonable expense of such conversion, including without
limitation, losses arising from fluctuations in the exchange rate.
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 Trust 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 Trust 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 Trust, (ii) to settle
the deliveries on a 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 Trust.
No prior action or course of dealing on the part of Custodian with respect
to the settlement of Financial Assets transactions on Trust's behalf shall be
used by or give rise to any claim or action by Trust 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 Trust'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 Trust shall have repaid the amount of such advance to Custodian, and
Custodian's security interest in such Financial Assets shall be released upon
Trust's repayment of such advance to Custodian.
SECTION 3 SAFEKEEPING OF FINANCIAL ASSETS.
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 each Fund all Financial Assets held by it, except those Financial
Assets which are book-entry securities maintained on the
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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 Trust 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 Trust 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 Trust 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 Trust 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 Trust'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 Trust and
Custodian has agreed in writing to do so;
(c) to evaluate, or report to Trust regarding, the financial
condition of any person, 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
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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 Trust 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 a
Fund's Financial Assets to a Securities Depository Account as provided
herein, identify in its records the Financial Assets as held for the
Trust on behalf of the appropriate 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 and the
Trust) 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 Trust, 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
Trust, deliver to the Trust 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
Trust; 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.
SECTION 3.4 CERTAIN CONDITIONS. Any Financial Assets held by the
Custodian for the
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benefit of the Trust 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 Trust, 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 Trust on behalf of each Fund establish and maintain a
segregated account or accounts for and on behalf of each such 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 Trust on
behalf of a 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 Trust 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 Trust of
such put option, where correct and timely notification is published in
the publications or services ("Notification Sources") the Custodian
routinely uses for this purpose, or as to which the Custodian receives
timely notice from the
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Trust;
(b) once notified, the Trust 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 Trust 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 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 Trust of put options exercisable
more frequently than semi-annually.
SECTION 5 BULK HOLDING. The Custodian may hold the Financial Assets of a
Fund of the Trust 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 Trust 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 Trust. 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 Trust 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 Trust's instructions.
In carrying out the purchase or sale of any Financial Assets hereunder, the
Custodian may, upon receipt of the Trust'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 Trust 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 Trust or the Custodian
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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 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 Trust.
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 us at:
State Farm Variable Product Trust
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 Trust'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 UCC.
SECTION 7.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Trust and the Custodian individually and each of their respective successors
and assigns, and shall inure to the benefit of the Trust and the Custodian and
the respective successors and assigns of the Trust and the Custodian; PROVIDED
that, the Custodian may not assign or transfer this Agreement
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or delegate any of its duties hereunder except as permitted herein, without the
prior written consent of the Trust.
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 Trust, or such mutually agreed date as the case
may be, of written notice from the Custodian or the Trust terminating this
Agreement.
SECTION 7.9 CERTAIN NOTICES BY THE TRUST AND THE CUSTODIAN. The Trust
agrees to promptly notify the Custodian of any material change in its
organization or any reorganization by it. The Custodian shall notify the Trust
of any changes in its organization which affect its ability to do business as a
banking corporation.
SECTION 7.10 CERTAIN REPRESENTATIONS BY THE TRUST. The Trust 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 Trustees 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.
SECTION 7.11 TAXPAYER IDENTIFICATION NUMBER. The Trust's taxpayer
identification number for each Fund is indicated in schedule A hereof. Unless
Trust has already done so, as a U.S. citizen or resident, it shall deliver
promptly to Custodian with respect to each Custody Account established under
this Agreement, two duly completed and executed copies of United States Internal
Revenue Service form W-9 for each Fund. Trust 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 Trust to Custodian. Each 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 Trust 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 Trust 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 Trust pursuant to the terms herein contained,
the Trust agrees to pay to the Custodian fees for such services as mutually
agreed upon by the parties hereto. Such agreed upon fees may from time to time
be modified by the Custodian pursuant to its notice to the Trust effective no
less than 90 days following the Trust's receipt of such notice. To the extent
that
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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 Trust and
Custodian have agreed in writing to another interest rate.
SECTION 7.14 HOLD HARMLESS. The Trust 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 exercised ordinary due care.
SECTION 7.15 FORCE MAJEURE. The Custodian shall not be responsible for
its failure to carry out its responsibilities hereunder where such failure is
caused by circumstances reasonably beyond the control of the Custodian,
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 Trust 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 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 Trust.
SECTION 7.18 EXHIBITS. The parties agree that any exhibits attached
hereto may be modified effective upon written notice from the Trust to the
Custodian. Any such modified exhibit shall be and is hereby deemed to be the
exhibit (indicated in such written notice) to this Agreement.
SECTION 7.19 NONDISCLOSURE, CONFIDENTIALITY. The Custodian expressly
agrees that it shall not use the name of, nor identify, the Trust or any of its
subsidiaries in any of the Custodian's
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media or other advertising distributed by the Custodian to its customers or
potential customers.
The Custodian shall maintain the confidentiality of the Trust'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 Trust.
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, Trust name, address and Securities position if
Trust Custody Account was opened after December 28, 1985, unless Trust states
its objection. Custodian hereby acknowledges Trust's objection.
SECTION 7.20 "FREE RIDING" PROHIBITION. Trust 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 Trust 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 TRUST RESPONSIBILITY. Trust 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 notwithstanding that Trust
may be acting on behalf of the Funds, and Trust warrants its authority to
deposit in the Custody Account any Financial Assets and funds which Custodian
receives therefor and to give instructions relative thereto. Trust 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 Trust and any such person.
SECTION 7.22 BINDING OBLIGATION AND LIMITATION OF LIABILITY. It is
expressly understood that the obligations of the Trust under this Agreement will
not be binding on any of the Trustees, shareholders, nominees, officers, agents
or employees of the Trust personally, but bind only the assets and property of
each Fund.
Custodian agrees that no Trustee, shareholder, nominee, officer, agent or
employee of the Trust may be held personally liable or responsible for any
obligations of the Trust arising out of this Agreement.
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 Trust's rights and remedies under this Agreement are in
addition to, and
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not in limitation of, any other rights and remedies available to Custodian and
Trust under applicable law.
SECTION 7.24 CUSTODIAN'S ANNUAL REPORT. Upon the Trust'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.
SECTION 7.25 ADDITIONAL INVESTMENT PORTFOLIOS. In the event that the Trust
establishes additional investment portfolios for which it desires the Custodian
to be the Custodian or desires to have the Custodian be the Custodian for
existing investment portfolios not covered by this Agreement, it shall so notify
the Custodian in writing, and if the Custodian agrees in writing to serve as
Custodian, such investment portfolios shall become Funds hereunder.
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 Variable Product Trust
By:
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Title:
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The Chase Manhattan Bank
By:
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Title:
--------------------
Address:
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