DELEGATION AGREEMENT
AGREEMENT, dated as of this 1st day of December, 2000, by and between
INVESTORS BANK & TRUST COMPANY, a Massachusetts trust Company (the "Delegate"),
and STATE FARM MUTUAL FUND TRUST, a business trust organized under the laws of
the state of Delaware (the "Trust").
WHEREAS, pursuant to the provisions of Rule 17f-5(b) under the
Investment Company Act of 1940, and subject to the terms and conditions set
forth herein, the Board of Trustees of the Trust, on behalf of the series/funds
listed on Schedule A hereto, as such Schedule A may be amended from time to
time, (each a "Fund" and collectively, the "Funds"), desires to delegate to the
Delegate, and the Delegate hereby agrees to accept and assume, certain
responsibilities described herein concerning Assets held outside of the United
States.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS
Capitalized terms in this Agreement have the following meanings:
a. ASSETS
Assets means any of 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 Fund's transactions in
such investments.
b. AUTHORIZED REPRESENTATIVE
Authorized Representative means any one of the persons who are
empowered, on behalf of the parties to this Agreement, to receive notices from
the other party, to send notices to the other party, to add or delete
jurisdictions pursuant to Article 3, and to otherwise bind the respective
parties with respect to the subject matter of this Agreement.
c. BOARD
Board means the Board of Directors or the Board of Trustees of the
Fund or Trust, as the case may be.
d. COMPULSORY SECURITIES DEPOSITORY
Compulsory Securities Depository means a Securities Depository the use
of which is mandatory (i) by law or regulation; (ii) because securities cannot
be withdrawn from the depository; or (iii) because maintaining securities
outside the Securities Depository is not consistent with prevailing custodial
practices.
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e. COUNTRY RISK
Country Risk means all factors reasonably related to the systemic risk
of holding assets in a particular country including, but not limited to, such
country's financial infrastructure (including any Securities Depositories
operating in such country); prevailing custody and settlement practices; and
laws applicable to the safekeeping and recovery of Assets held in custody.
f. ELIGIBLE FOREIGN CUSTODIAN
Eligible Foreign Custodian has the meaning set forth in
Rule 17f-5(a)(1).
g. FOREIGN CUSTODY MANAGER
Foreign Custody Manager has the meaning set forth in Rule 17f-5(a)(2).
h. MONITOR
Monitor means to re-assess or re-evaluate, at reasonable intervals, a
decision or determination previously made.
i. SECURITIES DEPOSITORY
Securities Depository has the meaning set forth in Rule 17f-5(a)(6).
2. REPRESENTATIONS
a. DELEGATE'S REPRESENTATIONS
Delegate represents that it is a trust company chartered under the
laws of the Commonwealth of Massachusetts.
b. TRUST'S REPRESENTATIONS
Trust represents that the Board has determined that it is reasonable
to rely on Delegate to perform the responsibilities delegated by this Agreement.
3. JURISDICTIONS COVERED
a. INITIAL JURISDICTIONS
The authority delegated by this Agreement applies only with respect to
Assets held in the jurisdictions listed in APPENDIX A.
b. ADDED JURISDICTIONS
Jurisdictions may be added to APPENDIX A by written agreement in the
form of APPENDIX B. Delegate's responsibility and authority with respect to any
jurisdiction so added will commence at the later of (i) the time that Delegate's
Authorized Representative and Board's
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Authorized Representative have both executed a copy of APPENDIX B listing
such jurisdiction, or (ii) the time that Delegate's Authorized Representative
receives a copy of such fully executed APPENDIX B.
c. WITHDRAWN JURISDICTIONS
Board may withdraw its delegation with respect to any jurisdiction
upon written notice to Delegate. Delegate may withdraw its acceptance of
delegated authority with respect to any jurisdiction upon written notice to
Board. Ten days (or such longer period as to which the parties agree) after
receipt of any such notice by the Authorized Representative of the party other
than the party giving notice, Delegate shall have no further responsibility or
authority under this Agreement with respect to the jurisdiction or jurisdictions
as to which authority is withdrawn.
4. DELEGATION OF AUTHORITY TO ACT AS FOREIGN CUSTODY MANAGER
a. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS
Subject to the provisions of this Agreement and the requirements of
Rule 17f-5 (and any other applicable law), Delegate is authorized and directed
to place and maintain Assets in the care of any Eligible Foreign Custodian or
Custodians selected by Delegate in each jurisdiction to which this Agreement
applies.
b. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS
Subject to the provisions of this Agreement and the requirements of
Rule 17f-5 (and any other applicable law), Delegate is authorized to enter into,
on behalf of Fund, such written contracts governing Fund's foreign custody
arrangements with such Eligible Foreign Custodians as Delegate deems
appropriate.
5. MONITORING OF ELIGIBLE FOREIGN CUSTODIANS AND CONTRACTS
In each case in which Delegate has exercised the authority delegated
under this Agreement to place Assets with an Eligible Foreign Custodian,
Delegate is authorized to, and shall, on behalf of Fund, establish a system to
Monitor the appropriateness of maintaining Assets with such Eligible Foreign
Custodian. In each case in which Delegate has exercised the authority delegated
under this Agreement to enter into a written contract governing Fund's foreign
custody arrangements, Delegate is authorized to, and shall, on behalf of Fund,
establish a system to Monitor the appropriateness of such contract.
6. GUIDELINES AND PROCEDURES FOR THE EXERCISE OF DELEGATED AUTHORITY
a. BOARD'S CONCLUSIVE DETERMINATION REGARDING COUNTRY RISK
In exercising its delegated authority under this Agreement, Delegate
may assume, for all purposes, that Board (or Fund's investment advisor, pursuant
to authority delegated by Board) has considered, and pursuant to its fiduciary
duties to Fund and Fund's shareholders, determined to accept, such Country Risk
as is incurred by placing and maintaining Assets in the jurisdictions to which
this Agreement applies. In exercising its delegated authority under this
Agreement, Delegate may also assume that Board (or Fund's investment advisor,
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pursuant to authority delegated by Board) has, and will continue to, Monitor
such Country Risk to the extent Board deems necessary or appropriate.
Nothing in this Agreement shall require Delegate to make any selection
or to engage in any Monitoring on behalf of Fund that would entail consideration
of Country Risk.
b. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS
In exercising the authority delegated under this Agreement to place
Assets with an Eligible Foreign Custodian, Delegate shall determine that Assets
will be subject to reasonable care, based on the standards applicable to
custodians in the market in which the Assets will be held, after considering all
factors relevant to the safekeeping of such assets, including, without
limitation;
i. The Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the
physical protections available for certificated securities
(if applicable), the method of keeping custodial records,
and the security and data protection practices;
ii. Whether the Eligible Foreign Custodian has the financial
strength to provide reasonable care for Assets;
iii. The Eligible Foreign Custodian's general reputation and
standing and, in the case of a Securities Depository, the
Securities Depository's operating history and number of
participants;
iv. Whether Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian,
such as by virtue of the existence of any offices of the
Eligible Foreign Custodian in the United States or the
Eligible Foreign Custodian's consent to service of process
in the United States;
v. In the case of an Eligible Foreign Custodian that is a
banking institution or trust company, any additional factors
and criteria set forth in APPENDIX C to this Agreement; and
c. EVALUATION OF WRITTEN CONTRACTS
In exercising the authority delegated under this Agreement to enter
into written contracts governing Fund's foreign custody arrangements with an
Eligible Foreign Custodian, Delegate shall determine that such contracts provide
reasonable care for Assets based on the standards applicable to Eligible Foreign
Custodians in the relevant market. In making this determination, Delegate shall
ensure that the terms of such contracts comply with the provisions of Rule
17f-5(c)(2).
d. MONITORING
In exercising the authority delegated under this Agreement to
establish a system to Monitor the appropriateness of maintaining Assets with an
Eligible Foreign Custodian or the
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appropriateness of a written contract governing Fund's foreign custody
arrangements, Delegate shall consider any factors and criteria set forth in
APPENDIX D to this Agreement. If, as a result of its Monitoring of Eligible
Foreign Custodian relationships hereunder or otherwise, the Delegate
determines in its sole discretion that it is in the best interest of the
safekeeping of the Assets to move such Assets to a different Eligible Foreign
Custodian, the Fund shall bear any expense related to such relocation of
Assets.
7. STANDARD OF CARE
In exercising the authority delegated under this Agreement, Delegate
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of an investment company
registered under the Investment Company Act of 1940 would exercise.
8. REPORTING REQUIREMENTS
Delegate agrees to provide written reports notifying Board of the
placement of Assets with a particular Eligible Foreign Custodian and of any
material change in Fund's foreign custody arrangements. Such reports shall be
provided to Board quarterly for consideration at the next regularly scheduled
meeting of the Board or earlier if deemed necessary or advisable by the Delegate
in its sole discretion.
9. PROVISION OF INFORMATION REGARDING COUNTRY RISK
With respect to the jurisdictions listed in APPENDIX A, or added
thereto pursuant to Article 3, Delegate agrees to provide annually to Board,
such information relating to Country Risk, if available, as is specified in
APPENDIX E to this Agreement. Such information relating to Country Risk shall be
updated from time to time as the Custodian deems necessary.
10. LIMITATION OF LIABILITY.
a. Notwithstanding anything in this Agreement to the contrary, in no
event shall the Delegate or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold the Delegate and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including legal fees, (a "Claim") arising as
a result of any act or omission of the Delegate or any Indemnified Party under
this Agreement, except for any Claim resulting from the negligence, willful
misfeasance or bad faith of the Delegate or any Indemnified Party. Without
limiting the foregoing, neither the Delegate nor the Indemnified Parties shall
be liable for, and the Delegate and the Indemnified Parties shall be indemnified
against, any Claim arising as a result of:
i. Any act or omission by the Delegate or any Indemnified Party
in reasonable good faith reliance upon the terms of this
Agreement, any resolution of the Board, telegram, telecopy,
notice, request, certificate or other instrument reasonably
believed by the Delegate to genuine;
ii. Any information which the Delegate provides or does not
provide under Section 9 hereof;
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iii. Any acts of God, earthquakes, fires, floods, storms or other
disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts
of war, civil war or terrorism, insurrection, nuclear
fusion, fission or radiation, the interruption, loss or
malfunction of utilities, the unavailability of energy
sources and other similar happenings or events.
iv. The Delegate shall have in place reasonable business
continuity and disaster recovery procedures and systems.
Neither the Delegate nor the Indemnified Parties shall be
liable for, and the Delegate and the Indemnified Parties
shall be indemnified against, any Claim arising as a result
of the nonperformance of computers (hardware and software)
and computer facilities, provided that such business
continuity and disaster recovery procedures and systems
operate as intended.
b. Notwithstanding anything to the contrary in this Agreement, in no
event shall any party hereto be liable to the other party or any third party for
lost profits or lost revenues or any special, consequential, punitive or
incidental damages of any kind whatsoever in connection with this Agreement or
any activities hereunder, unless such damages arise out of the willful
misconduct or bad faith of such party hereto.
11. ARBITRATION OF DISPUTES
To the extent permitted by law, all disputes or claims arising under
this Agreement shall be resolved through arbitration. Arbitration under this
Article shall be conducted according to the Commercial Arbitration Rules of the
American Arbitration Association and shall take place in the City of Boston,
Massachusetts. This Article shall be enforced and interpreted exclusively in
accordance with applicable federal law, including the Federal Arbitration Act.
12. EFFECTIVENESS AND TERMINATION OF AGREEMENT
This Agreement shall be effective as of the later of the date of
execution on behalf of Board or Delegate and shall remain in effect until
terminated as provided herein. This Agreement may be terminated at any time,
without penalty, by written notice from the terminating party to the
non-terminating party. Termination will become effective 90 days after receipt
by the non-terminating party of such notice.
13. AUTHORIZED REPRESENTATIVES AND NOTICES
The respective Authorized Representatives of Fund and Board, and the
addresses to which notices and other documents under this Agreement are to be
sent to each, are as set forth in APPENDIX F. Any Authorized Representative of a
party may add or delete persons from that party's list of Authorized
Representatives by written notice to an Authorized Representative of the other
party.
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14. GOVERNING LAW
This Agreement shall be constructed in accordance with the laws of the
Commonwealth of Massachusetts without regard to principles of choice of law.
IN WITNESS WHEREOF, Authorized Representatives of Board and of
Delegate have affixed their signatures as of the date first written above.
INVESTORS BANK & TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Director
STATE FARM MUTUAL FUND TRUST
By: /s/ Xxxxxx X. Xxxx, Xx.
-----------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: President
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LIST OF APPENDICES
A -- Jurisdictions Covered
B -- Additional Jurisdictions Covered
C -- Additional Factors and Criteria To Be Applied in the Selection of
Eligible Foreign Custodians That Are Banking Institutions or Trust Companies
D -- Factors and Criteria To Be Applied in Establishing Systems For
the Monitoring of Foreign Custody Arrangements and Contracts
E -- Information Regarding Country Risk
F -- Authorized Representatives
LIST OF SCHEDULES
A -- Portfolios
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APPENDIX A
JURISDICTIONS COVERED
Argentina Lithuania
Austria Luxembourg
Australia Malaysia
Bangladesh Mauritius
Belgium Mexico
Bahrain Morocco
Botswana Namibia
Brazil Netherlands
Canada New Zealand
Chile Norway
China Oman
Colombia Pakistan
Croatia Papau New Guinea
Cyprus Peru
Czech Republic Philippines
Denmark Poland
Ecuador Portugal
Egypt Romania
Estonia Russia
Euroclear Singapore
Finland Slovak Republic
France Slovenia
Germany South Africa
Ghana Spain
Greece Sri Lanka
Hong Kong Swaziland
Hungary Sweden
Iceland Switzerland
India Taiwan
Indonesia Thailand
Ireland Turkey
Israel United Kingdom
Italy Uruguay
Japan Venezuela
Jordan Zambia
Kenya Zimbabwe
Korea
Latvia
Lebanon
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APPENDIX B
ADDITIONAL JURISDICTIONS COVERED
Pursuant to Article 3 of this Agreement, Delegate and Board agree that
the following jurisdictions shall be added to Appendix A:
INVESTORS BANK & TRUST COMPANY
By:
-----------------------------------
Name:
Title:
STATE FARM MUTUAL FUND TRUST
By:
-----------------------------------
Name:
Title:
DATE:
------------------------------
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APPENDIX C
ADDITIONAL FACTORS AND CRITERIA TO BE APPLIED
IN THE SELECTION OF ELIGIBLE FOREIGN CUSTODIANS
THAT ARE BANKING INSTITUTIONS OR TRUST COMPANIES
In addition to the factors set forth in Rule 17f-5(c)(1), in selecting
Eligible Foreign Custodians that are banking institutions or trust companies,
Delegate shall consider the following factors, if such information is available
(check all that apply):
X None
---------
Other (list below):
---------
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APPENDIX D
FACTORS AND CRITERIA TO BE APPLIED
IN THE ESTABLISHING SYSTEMS FOR THE MONITORING OF
FOREIGN CUSTODY ARRANGEMENTS AND CONTRACTS
In establishing systems for the Monitoring of foreign custody
arrangements and contracts with Eligible Foreign Custodians, Delegate shall
consider the following factors, if such information is available:
1. Operating performance
2. Established practices and procedures
3. Relationship with market regulators
4. Contingency planning
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APPENDIX E
INFORMATION REGARDING COUNTRY RISK
To aid the Board in its determinations regarding Country Risk,
Delegate will furnish Board annually with respect to the jurisdictions specified
in Article 3 of this Agreement, the following information:
1. Copy of Addenda or Side Letters to Subcustodian Agreements
2. Legal Opinion, if available, with regard to:
a) Access to books and records by the Fund's accountants
b) Ability to recover assets in the event of bankruptcy of a
custodian
c) Ability to recover assets in the event of a loss
d) Likelihood of expropriation or nationalization, if available
e) Ability to repatriate or convert cash or cash equivalents
3. Audit Report
4. Copy of Balance Sheet from Annual Report
5. Summary of Central Depository Information
6. Country Profile Matrix containing market practice for:
a) Delivery versus payment
b) Settlement method
c) Currency restrictions
d) Buy-in practice
e) Foreign ownership limits
f) Unique market arrangements
7. Information Regarding Securities Depositories
a) Whether use is voluntary or compulsory
b) Ownership
c) Operating History
d) Established rules, practices and procedures
e) Membership
f) Financial Strength
g) Governing regulatory body
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APPENDIX F
AUTHORIZED REPRESENTATIVES
1. AUTHORIZED SIGNATORIES. The following parties are authorized to 0
execute all instructions and instruments pertaining to or considered by
this Agreement.
A. TRUST:
Xxxxxx X. Xxxx, Xx. Xxxxx Xxxxxx
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxx
Xxxxx X. Xxxxxxx Xxxx Xxxxx
B. R. Xxxxxxxxxx Xxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxxx
Xxxx Xxxxxx Xxxxxx X. Xxxxxx
Xxxxx Xxxxxx Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxx
Xxxxx Xxxxxxx Xxxxxx X. Xxxxxx
Xxxxx Xxxxx Xxxxxx X. Xxxxxx
Xxx Xxxxxx Xxxx Xxxxx
Xxxxx Xxxxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxx Xxxxx Xxxxxx
Xxxxxx Xxxx Xxxxxx Xxxxxxx
Xxxx Xxxxxxxxxxx Xxxxx Xxxxxx
B. DELEGATE
a. (name)
----------------------------------------
(title)
----------------------------------------
(specimen signature)
----------------------------------------
b. (name)
----------------------------------------
(title)
----------------------------------------
(specimen signature)
----------------------------------------
c. (name)
----------------------------------------
(specimen signature)
----------------------------------------
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2. ADDRESS FOR NOTICE. Notices under this Agreement shall be deemed
effective when received by the parties at the addresses listed below:
A. TRUST
State Farm Mutual Fund Trust
Three Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
With a copy to:
Barclays Global Fund Advisors
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
B. DELEGATE
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Director, Client Management
Fax: (000) 000-0000
With a copy to:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, General Counsel
Fax: (000) 000-0000
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SCHEDULE A
LIST OF PORTFOLIOS
STATE FARM INTERNATIONAL EQUITY FUND
STATE FARM S&P 500 INDEX FUND
STATE FARM INTERNATIONAL INDEX FUND
STATE FARM SMALL CAP INDEX FUND
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