SPECIAL FOREIGN CUSTODY MANAGER AGREEMENT
This agreement is made as of January 15, 1999 between State Farm
Balanced Fund, Inc. (the "Fund") and State Farm Investment Management Corp. (the
"Adviser").
WHEREAS, The Fund desires to appoint the Adviser as a Special Foreign
Custody Manager on the terms and conditions contained herein.
WHEREAS, The adviser believes it appropriate that it serve as Special
Foreign Custody Manager and perform the duties set forth herein on the terms and
condition contained herein.
NOW, THEREFORE, in consideration of the terms of this agreement, each
of the Fund and the Adviser agrees as follows:
SECTION 1 - DEFINED TERMS. Whenever used in this agreement, the following words
and phrases shall have the following meanings, unless the context otherwise
requires:
"Compulsory Securities Depository" means a foreign Securities
Depository or clearing agency that, either as a legal or practical matter, must
be used if the Fund determines to place Foreign Assets in a country outside the
United States (i) because required by law or regulation; (ii) because securities
cannot be withdrawn from such foreign Securities Depository or clearing agency;
or (iii) because maintaining or effecting trades in securities outside the
foreign Securities Depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
"Country Risk" means all factors reasonably related to the systemic
risk of holding Foreign Assets in a particular country including, but not
limited to, such country's political environment; economic and financial
infrastructure, prevailing or developing custody and settlement practices; and
laws and regulations applicable to the safekeeping and recovery of Foreign
Assets held in custody in that country.
"Eligible Foreign Custodian" has the meaning provided in the Rule.
"Foreign Assets" means any of the Fund's investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Fund's
transactions in such investments.
"Rule" means Rule 17f-5 under the Investment Company Act of 1940, as
amended.
"Securities Depository" means any securities depository or clearing
agency within the meaning of Sections (a)(1)(ii) or (a)(1)(iii) of the Rule.
"1940 Act" means the Investment Company Act of 1940, as amended.
SECTION 2 - DELEGATION TO THE ADVISER AS SPECIAL FOREIGN CUSTODY MANAGER. The
Fund, pursuant to resolution adopted by its Board of Directors (the "Board"),
hereby delegates to the Adviser, subject to Section (b) of Rule 17f-5, the
responsibility for selecting, contracting with, and monitoring Eligible Foreign
Custodians that are Compulsory Securities Depositories, and the Adviser hereby
accepts such delegation, as Special Foreign Custody Manager of the Fund.
SECTION 3 - COUNTRIES COVERED. The Special Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A to this agreement, which list of countries may be amended
from time to time by the Fund with the agreement of the Special Foreign Custody
Manager. The Special Foreign Custody Manager shall list on Schedule B the
Compulsory Securities Depositories selected by the Special Foreign Custody
Manger to maintain the assets of the Fund, which list of Compulsory Securities
Depositories may be amended from time to time in the sole discretion of the
Special Foreign Custody Manager. The Special Foreign Custody Manger will provide
amended versions of Schedules A and B in accordance with Section 7 hereunder.
Upon receipt by the Special Foreign Custody Manager of Authorization to
place or maintain Foreign Assets in a country listed on Schedule A, the Special
Foreign Custody Manager shall be deemed to have been delegated by the Board
responsibility as Special Foreign Custody Manager and to have accepted such
delegation. Upon closing the Fund's account with the Compulsory Securities
Depository, the Adviser shall immediately cease to be the Special Foreign
Custody Manager of the Fund with respect to the country.
The Special Foreign Custody Manager may withdraw its acceptance of
delegated responsibilities with respect to a designated country upon written
notice to the Fund. Thirty days (or such longer period as to which the parties
agree in writing) after receipt of any such notice by the Fund, the Adviser
shall have no further responsibility as Special Foreign Custody Manager to the
Fund with respect to the country as to which the adviser's acceptance of
delegation is withdrawn.
SECTION 4 - SCOPE OF DELEGATED RESPONSIBILITIES.
4.1 SELECTION OF COMPULSORY SECURITIES DEPOSITORIES
Subject to the provisions of this Section 4, the Special
Foreign Custody Manager may place and maintain the Foreign Assets in
the Care of the Compulsory Securities Depository selected by the
Special Foreign Custody Manager in each country listed on Schedule A,
as amended from time to time.
In performing its delegated responsibilities as Special Foreign Custody Manager
to place or maintain Foreign Assets with Compulsory Securities Depositories, the
Special Foreign Custody Manager shall determine that the Foreign Assets will be
subject to reasonable card, based on the standards applicable to custodians in
the country in which the Foreign Assets will be held by that Compulsory
Securities Depository, after considering all factors relevant to the safekeeping
of such assets, including, without limitation the factors specified in Section
(c)(1) of the Rule.
4.2 CONTRACTS WITH COMPULSORY SECURITIES DEPOSITORIES
The Special Foreign Custody Manager shall determine that the
contract with each Compulsory Securities Depository selected by the
Special Foreign Custody Manager (or if no contract exists, the rules
or established practices or procedures of the Compulsory Foreign
Securities Depository) will satisfy the requirements of Section (c)(2)
of the Rule.
4.3 MONITORING
In each case in which the Special Foreign Custody Manager
maintains Foreign Assets with a Compulsory Securities Depository
selected by the Special Foreign Custody Manager, the Special Foreign
Custody Manager shall establish a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Compulsory
Securities Depository and (ii) the contract governing the custody
arrangements established by the Special Foreign Custody Manger with
the Compulsory Securities Depository referred to in Section 4.2. In
the event the Special Foreign Custody Manager determines that the
custody arrangements with a Compulsory Securities Depository it has
selected are no longer appropriate, the Special Foreign Custody
Manager shall notify the Board in accordance with Section 7 hereunder.
SECTION 5 - GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of
this Section 5, the Board shall be deemed to have considered and determined to
accept such Country Risk as is incurred by placing and maintaining the Foreign
Assets in each country for which the Adviser is serving as Special Foreign
Custody Manger of the Fund, and the Board shall be deemed to be monitoring on a
continuing basis such Country Risk to the extent the Board considers necessary
or appropriate.
SECTION 6 - STANDARD OF CARE AS SPECIAL FOREIGN CUSTODY MANAGER OF THE Fund. In
performing the responsibilities delegated to it, the Special Foreign Custody
Manager agrees to exercise reasonable care, prudence and diligence such as a
person having responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would exercise.
SECTIONS 7 - REPORTING REQUIREMENTS. The Special Foreign Custody Manager shall
report the withdrawal of the Foreign Assets from a Compulsory Securities
Depository by providing the Board amended Schedules A or B at the end of the
calendar quarter in which an amendment to either Schedule has occurred. The
Special Foreign Custody Manager shall make written reports notifying the Board
of any other material change in the foreign custody arrangements of the Fund
with respect to Compulsory Securities Depositories described in this Agreement
after the occurrence of the material change.
SECTION 8 - REPRESENTATIONS WITH RESPECT TO THE Rule. The Fund represents to the
Adviser that the Board has determined that it is reasonable for the Board to
rely on the Adviser to perform the responsibilities delegated pursuant to this
Agreement to the Adviser as the Special Foreign Custody Manager of the Fund.
SECTION 9 - EFFECTIVE DATE AND TERMINATION OF THE ADVISER AS SPECIAL FOREIGN
CUSTODY MANAGER. The Board's delegation to the Adviser as Special Foreign
Custody Manager of the Fund shall be effective as of the date hereof and shall
remain in effect until terminated at any time, without penalty, by written
notice from the terminating party to the non-terminating party. Termination will
become effective thirty days after receipt by the non-terminating party of such
notice.
SECTION 10 - REPRESENTATIONS.
10.1 The Fund hereby represents that (a) this Agreement has been duly
authorized, executed and delivered by the Fund, constitutes a valid and legally
binding obligation of the Fund enforceable in accordance with its terms, and no
statute, regulation, rule, order, judgment or contract binding on the Fund
prohibits the Fund's execution or performance of this agreement; and (b) this
agreement has been duly approved and authorized by the Board.
10.2 The Adviser represents that this agreement has been duly
authorized, executed and delivered by the Adviser, constitutes a valid and
legally binding obligation of the Adviser enforceable in accordance with its
terms, and no statute, regulation, rule, order, judgment or contract binding on
the Adviser prohibits the Adviser's execution or performance of this agreement.
SECTION 11 - MISCELLANEOUS.
11.1 The Adviser shall not be liable under this agreement for any
costs, expenses, damages, liabilities or claims, including attorneys' and
accountants' fees, sustained or incurred by, or asserted against the Fund,
except to the extent the same arises out of the failure by the Adviser to
exercise the care, prudence and diligence required by Section 6 of this
Agreement. In no event shall the Adviser be liable to either the Fund, its
Board, or any third party for special, direct or consequential damages, or for
lost profits or loss of business, arising in connection with this Agreement.
11.2 This Agreement constitutes the entire agreement between the
Adviser and the Fund regarding the delegation of responsibilities under the
Rule.
11.3 Any notice or other instrument in writing, authorized or required
by this agreement to be given to the Adviser, shall be sufficiently given if
received by it at its offices at Xxx Xxxxx Xxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxx
00000 or at such other place as the Adviser may from time to time designate in
writing.
11.4 Any notice or other instrument in writing, authorized or required
by this agreement to be given to the Fund shall be sufficiently given if
received by it at its offices at Xxx Xxxxx Xxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxx
00000 or at such other place as the Fund may from time to time designate in
writing.
11.5 In case any provision in or obligation under this agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
thereby. This agreement may not be amended or modified in any manner except by a
written agreement executed by both parties. This agreement shall extend to and
shall be binding upon the parties hereto, and their respective successors and
assigns; provided, however, that this agreement shall not be assignable by
either party without the written consent of the other.
11.6 This agreement shall be construed in accordance with the
substantive laws of the State of Illinois, without regard to conflicts of laws
principles thereof. Each of the Adviser and the Fund consents to the
Jurisdiction of a state or federal court situated in Illinois in connection with
any dispute arising hereunder and irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. Each of the Adviser and the Rind irrevocably waives any and all rights to
trial by jury in any legal proceeding arising out of or relating to this
agreement.
11.7 The parties hereto agree that, in performing hereunder, the
Adviser is acting solely on behalf of the Fund and no contractual or service
relationship shall be deemed to be established hereby between the Adviser and
any other person.
11.8 This agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, each the Fund and the Adviser have caused this
agreement to be executed by their respective officers, thereunto duly
authorized, as of the date first above written.
State Farm Growth Fund, Inc.
By: Xxxxxx X. Xxxx, Xx.
Title: President
State Farm Investment Management Corp.
By: Xxxxx X. Xxxxxx
Title: Vice President - Treasurer
SCHEDULE A
Specified Countries
1. Netherlands
SCHEDULEB
Compulsory Securities Depositories
1 - Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. (NECIGEF)
