DISTRIBUTION AGREEMENT
AGREEMENT made as of the 20th day of November, 2000, by and between State
Farm Mutual Fund Trust, a Delaware business trust (the "Trust"), and State Farm
VP Management Corp. ("Distributor"), a Delaware corporation, and amended as of
this __ day of March, 2003.
WITNESSETH
WHEREAS, Distributor is a broker-dealer that engages in the distribution of
variable insurance products and may engage in the distribution of other
investment products;
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940: and
WHEREAS, the Trust issues shares of beneficial interest registered under
the Securities Act of 1933 pursuant to a registration statement initially filed
with the Securities and Exchange Commission on July 21, 2000, as amended from
time to time; and
WHEREAS, the Trust has established multiple series of Shares, each
corresponding to a separate investment portfolio having its own investment
objective; and
WHEREAS, the Trust and Distributor acknowledge that Distributor may
distribute variable insurance products and other investment products for other
companies.
NOW, THEREFORE, in consideration of their mutual promises, the Trust and
Distributor hereby agree as follows:
1. Definitions
a. Registration Statement -- At any time that this Agreement is in
effect, each currently effective registration statement filed with the
SEC under the 1933 Act on a prescribed form, or currently effective
post-effective amendment thereto, as the case may be, relating to the
Trust, including financial statements included in, and all exhibits
to, such registration statement or post-effective amendment. For
purposes of Section 8 of this Agreement, the term "Registration
Statement" means any document which is or at any time was a
Registration Statement within the meaning of this Section 1.b.
b. Prospectus -- The prospectus included within a Registration Statement,
except that, if the most recently filed version of the prospectus
(including any supplements thereto) filed pursuant to Rule 497 under
the 1933 Act subsequent to the date on which a Registration Statement
became effective differs from the prospectus included within such
Registration Statement at the time it became effective, the term
"Prospectus" shall refer to the most recently filed prospectus filed
under Rule 497 under the 1933 Act, from and after the date on which it
shall have been filed. For purposes of Section 8 of this Agreement,
the term "any Prospectus" means any document which is or at any time
was a Prospectus within the meaning of this Section 1.c.
c. Fund -- Each separate investment portfolio of the Trust having its own
investment objective.
d. 1933 Act -- The Securities Act of 1933, as amended.
e. 1934 Act -- The Securities Exchange Act of 1934, as amended.
f. 1940 Act -- The Investment Company Act of 1940, as amended.
g. SEC -- The Securities and Exchange Commission.
h. NASD -- The National Association of Securities Dealers, Inc.
i. Representative -- An individual who is an associated person of
Distributor, as that term is defined in the 1934 Act.
j Application -- An application for the opening of a Fund account.
2. Authorization and Appointment
a. Scope of Authority. The Trust hereby authorizes Distributor on an
exclusive basis, and Distributor accepts such authority, subject to
the registration requirements of the 1933 Act and the 1940 Act and the
provisions of the 1934 Act and conditions herein, to be the
distributor and principal underwriter for the sale of the Funds to the
public in each state and other jurisdiction in which the Funds may
lawfully be sold during the term of this Agreement. The Funds shall be
offered for sale and distribution at the public offering price as
described in the Trust's Prospectus. Distributor shall use its best
efforts to market the Funds actively subject to compliance with
applicable law, including the rules of the NASD. However, Distributor
shall not be obligated to sell any specific number or amount of Funds.
Also, the parties acknowledge and agree that Distributor may
distribute funds, variable insurance products and other investment
products for other companies.
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b. Limits on Authority. Distributor shall act as an independent
contractor and nothing herein contained shall constitute Distributor
or its agents, officers or employees as agents, officers or employees
of the Trust solely by virtue of their activities in connection with
the sale of the Funds hereunder. Distributor and its Representatives
shall not have authority, on behalf of the Trust: to receive any
monies (except for the sole purpose of forwarding monies to the Trust
or its transfer agent). Distributor shall not possess or exercise any
authority on behalf of the Trust other than that expressly conferred
on Distributor by this Agreement.
c. Trademarks. An affiliate of the Distributor, State Farm Mutual
Automobile Insurance Company ("State Farm") owns all right, title and
interest in and to the name, "State Farm," and has authorized the
Trust to use and license other persons to use such name. State Farm
hereby grants to Distributor a non-exclusive license to use the name
"State Farm" in its corporate name and in connection with its
performance of the services contemplated under this Agreement, subject
to the termination provisions in Section 9, and subject further to
State Farm's right to terminate this license at any time for any
reason whatsoever. Upon any such termination, Distributor shall
promptly take steps to remove the name "State Farm" from its corporate
name and from all materials bearing its name.
Distributor: (i) acknowledges and stipulates that State Farm's name is
a valid and enforceable trademark and/or service xxxx; and that
Distributor does not own State Farm's name and claims no rights
therein other than as a Distributor under this Agreement; (ii) agrees
never to contend otherwise in legal proceedings or in other
circumstances; and (iii) acknowledges and agrees that the use of State
Farm's name pursuant to this grant of license shall inure to the
benefit of State Farm.
3. Solicitation Activities
a. Representatives. No Representative shall solicit the sale of a Fund
unless at the time of such solicitation such individual is duly
registered with the NASD and duly licensed with all applicable state
securities regulatory authorities.
b. Solicitation Activities. All solicitation and sales activities engaged
in by Distributor and its Representatives with respect to the Funds
shall be in compliance with all applicable federal and state
securities laws and regulations, as well as all compliance manuals
provided by the Distributor. In particular, without limiting the
generality of the foregoing:
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(1) Distributor shall train, supervise and be solely responsible for the
conduct of Representatives in their solicitation of Applications and
in their distribution of the Funds, and shall supervise their
compliance with, applicable rules and regulations of any securities
regulatory agencies that have jurisdiction over the Trust's or the
Distributor's securities activities.
(2) Neither Distributor nor any Representative shall offer, attempt to
offer, or solicit Applications for Funds in any state or other
jurisdiction unless the Trust has notified Distributor that such Funds
may lawfully be sold or offered for sale in such state, and has not
subsequently revised such notice.
(3) Neither Distributor nor any Representative shall give any information
or make any representation in regard to any Fund in connection with
the offer or sale of such Fund that is not in accordance with the
Prospectus for such Fund, or in the then-currently effective
prospectus or statement of additional information for a Fund, or in
current advertising materials for such Fund.
(4) All Fund purchase payments made by check or money order that are
collected by Distributor or any of its Representatives shall be
remitted promptly, and in any event within one business days after
receipt in full, together with any Applications, forms and any other
required documentation, to the transfer agent of the Trust. Checks or
money orders in payment of Fund purchases shall be drawn to the order
of "State Farm Mutual Funds." If any Fund purchase payment is held at
any time by Distributor, Distributor shall hold such payment as an
agent of the Trust and such payment shall be remitted promptly, and in
any event within one business days, to the transfer agent of the
Trust. Distributor acknowledges that all such Fund purchase payments,
whether by check, money order or wire, shall be the property of the
Trust. Distributor acknowledges that the Trust shall have the
unconditional right to reject, in whole or in part, any Application or
Fund purchase payment.
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c. Suitability. The Trust and Distributor wish to ensure that the Funds
sold by Distributor will be issued to purchasers for whom the Funds
are suitable. Distributor shall require that the Representatives have
reasonable grounds to believe that a recommendation to an applicant to
purchase a Fund is suitable for that applicant. Distributor shall
review all Applications for suitability in accordance with Rule 2310
of the NASD Conduct Rules and interpretations and guidance relating
thereto. Distributor will review all applications under the
suitability standards set forth in its compliance and operational
manuals. While not limited to the following, a determination of
suitability shall be based on information furnished to a
Representative after reasonable inquiry of the applicant concerning
his or her financial status, retirement needs, reasons for purchasing
a Fund, investment sophistication and experience, other securities
holdings, investment objectives (including risk tolerance), investment
time horizon and tax status.
d. Representations and Warranties of Distributor. Distributor represents
and warrants to the Trust that Distributor is and during the term of
this Agreement shall remain registered as a broker-dealer under the
1934 Act, admitted as a member with the NASD, and duly registered
under applicable state securities laws, and that Distributor is and
shall remain during the term of this Agreement in compliance with
Section 9(a) of the 1940 Act.
4. Marketing Materials
a. Preparation and Filing. The Trust and Distributor shall together
design and develop all promotional, sales and advertising material
relating to the Funds and any other marketing-related documents for
use in the sale of the Funds, subject to review and approval by
Distributor of such material and documents in accordance with Section
2210 of the NASD Conduct Rules. Distributor shall be responsible for
filing such material with the NASD. The Trust shall be responsible for
preparing the Prospectuses and Registration Statements and filing them
with the SEC and state regulatory authorities, to the extent required.
The parties shall notify each other expeditiously of any comments
provided by the SEC, NASD or any securities regulatory authority on
such material, and will cooperate expeditiously in resolving and
implementing any comments, as applicable.
b. Use in Solicitation Activities. The Trust shall be responsible for
furnishing Distributor with such Applications, Prospectuses and other
materials for use by Distributor and Representatives in their
solicitation activities with respect to the Funds. No Representative
of the Distributor shall use any promotional, sales or advertising
materials unless such materials have been approved by the Trust or the
Distributor.
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5. Compensation and Expenses
a. Compensation for Sales of the Funds. The Trust shall pay the following
compensation to the Distributor in exchange for the Distributor's
services provided to the Trust and to the Funds:
(1) Any initial sales charges as described in the Registration
Statement and paid by Fund shareholders, and
(2) Any contingent deferred sales charge or deferred sales charge as
described in the Registration Statement and imposed upon a Fund
shareholder.
b. Timing of Compensation Payments to Distributor. The compensation
described in 5(a)(1) above shall be paid to Distributor at the time
the shareholder pays the initial sales charge. With respect to the
compensation described in 5(a)(2), the Trust shall pay the Distributor
for providing these services for each of the Trust's fiscal quarters,
and the payments are due from the Trust to the Distributor within
three business days after the end of the Trust's fiscal quarter.
c. Payment of Compensation to Representatives: The Representatives are
due compensation from the Distributor for selling Fund shares and for
providing other shareholder services. The Distributor may arrange to
have State Farm pay the compensation to the Representatives as paying
agent on behalf of Distributor and may arrange to have State Farm
maintain the books and records reflecting such payments in accordance
with the requirements of the 1934 Act on behalf of Distributor.
d. Expenses Relating to the Trust . Subject to the provisions of this
Section 5 and the Investment Advisory and Management Services
Agreement between the Trust and State Farm Investment Management
Corp., the Trust shall pay any and all expenses in connection with the
Trust including, but not limited to:
(1) the preparation and filing of each Registration Statement
(including each pre-effective and post-effective amendment
thereto) and the preparation and filing of each Prospectus
(including any preliminary and each definitive Prospectus);
(2) the design, preparation and printing of all Prospectuses,
confirmations, reports and all other materials prepared for or
provided to Fund shareholders;
(3) any registration, qualification or approval or other filing of
the Trust required under the securities laws of the states in
which the Funds will be offered; and
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(4) all registration fees for the Trust payable to the SEC.
e. Expenses of Distributor. The Distributor shall assume and pay all
expenses incurred by it in connection with providing distribution
services under this Agreement.
f. No Rights to Compensation. Representatives shall have no interest in
this Agreement or right to any compensation to be paid to or on behalf
of Distributor hereunder. Distributor and Representatives shall have
no right to withhold or deduct any commission from any purchase
payments in respect of the Funds which either of them may collect.
6. Compliance
a. Maintaining Registration and Approvals. The Trust shall be responsible
for maintaining the registration of the Funds with the SEC and any
state securities regulatory authority with which such registration is
required.
7. Investigations and Proceedings
a. Cooperation. Distributor and the Trust shall cooperate fully in any
securities regulatory investigation or proceeding or judicial
proceeding arising in connection with the offering, sale or
distribution of the Funds distributed under this Agreement. Without
limiting the foregoing, the Trust and Distributor shall notify each
other promptly of any customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding received by either
party with respect to the Funds.
b. Customer Complaints. Distributor shall comply with the reporting
requirements imposed by Section 3070 of the NASD Rules of Conduct with
regard to the sales of the Funds. Without limiting the foregoing,
Distributor shall notify the NASD if Distributor or persons associated
with Distributor are the subject of any written customer complaint
involving allegations of theft, forgery or misappropriation of funds
or securities, or is the subject of any claim for damages by a
customer, broker, or dealer which is settled for an amount exceeding
$15,000.
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8. Indemnification
a. By the Trust. The Trust shall indemnify and hold harmless Distributor
and any officer, director or employee of Distributor against any and
all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which
Distributor and/or any such person may become subject, under any
statute or regulation, any NASD rule or interpretation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, in
light of the circumstances in which they were made, contained in
any Registration Statement or in any Prospectus; provided that
the Trust shall not be liable in any such case to the extent that
such loss, claim, damage or liability arises out of, or is based
upon, an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon information furnished
in writing to the Trust by Distributor specifically for use in
the preparation of any such Registration Statement or any
amendment thereof or supplement thereto;
(2) result from any breach by the Trust of any provision of this
Agreement.
This indemnification agreement shall be in addition to any liability
that the Trust may otherwise have; provided, however, that no person
shall be entitled to indemnification pursuant to this provision if
such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of duty
by the person seeking indemnification.
b. By Distributor. Distributor shall indemnify and hold harmless the
Trust and any officer, director or employee of the Trust against any
and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which the
Trust and/or any such person may become subject under any statute or
regulation, any NASD rule or interpretation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
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(1) arise out of, or are based upon, any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, in light of the
circumstances in which they were made, contained in any Registration
Statement or in any Prospectus; in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon information
furnished in writing by Distributor to the Trust specifically for use
in the preparation of any such Registration Statement or any amendment
thereof or supplement thereto;
(2) result from any breach by Distributor of any provision of this
Agreement;
(3) result from Distributor's own misconduct or negligence.
This indemnification shall be in addition to any liability that Distributor
may otherwise have; provided, however, that no person shall be entitled to
indemnification pursuant to this provision if such loss, claim, damage or
liability is due to the willful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the person seeking indemnification.
c. General. Promptly after receipt by a party entitled to indemnification
("indemnified person") under this Section 8 of notice of the commencement
of any action as to which a claim will be made against any person obligated
to provide indemnification under this Section 8 ("indemnifying party"),
such indemnified person shall notify the indemnifying party in writing of
the commencement thereof as soon as practicable thereafter, but failure to
so notify the indemnifying party shall not relieve the indemnifying party
from any liability which it may have to the indemnified person otherwise
than on account of this Section 8. The indemnifying party will be entitled
to participate in the defense of the indemnified person but such
participation will not relieve such indemnifying party of the obligation to
reimburse the indemnified person for reasonable legal and other expenses
incurred by such indemnified person in defending himself or itself.
The indemnification provisions contained in this Section 8 shall remain
operative in full force and effect, regardless of any termination of this
Agreement. A successor by law of Distributor or the Trust, as the case may
be, shall be entitled to the benefits of the indemnification provisions
contained in this Section 8.
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9. Termination. This Agreement shall terminate automatically if it is assigned
by Distributor without the prior written consent of the Trust. This
Agreement may be terminated at any time for any reason by either party upon
60 days' written notice to the other party, without payment of any penalty.
(The term "assigned" shall not include any transaction exempted from
Section 15(b)(2) of the 1940 Act.) This Agreement may be terminated at the
option of either party to this Agreement upon the other party's material
breach of any provision of this Agreement or of any representation or
warranty made in this Agreement, unless such breach has been cured within
10 days after receipt of notice of breach from the non-breaching party.
Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the following: (1) the obligation to settle
accounts hereunder, including the initial sales charge with respect to fund
purchase payments submitted by the Distributor or its Representatives prior
to termination; (2) the provisions contained in Section 8 regarding
indemnification; and (3) the provisions contained in Section 3(b)(4)
regarding the remittance of Fund purchase payments. In the event of any
termination for any reason, all Prospectuses or marketing materials held by
Distributor shall promptly be returned to the Trust free from any claim or
retention of rights by Distributor, and any books and records held or
maintained by the Trust on behalf of Distributor shall be returned to
Distributor free from any claim or retention of rights by the Trust.
Furthermore, if so requested by the Trust, upon termination of this
Agreement, Distributor shall eliminate all reference to the name "State
Farm," including removing the name from Distributor's corporate name, and
shall refrain from using the name "State Farm" in any form or combination
whatsoever, in connection with its business activities.
10. Miscellaneous
a. Binding Effect. This Agreement shall be binding on, and shall inure to
the benefit of, the respective successors and assigns of the parties
hereto provided that neither party shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of
the other party.
b. Schedules. The parties to this Agreement may amend this Agreement by
adding a schedule specifying new mutual funds to which this Agreement
applies. The provisions of this Agreement shall be equally applicable
to each new mutual fund that may be added to the schedule, unless the
context otherwise requires. Any other change in the terms or
provisions of this Agreement shall be by written agreement between the
Trust and Distributor.
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c. Rights, Remedies, etc, are Cumulative. The rights, remedies and
obligations contained in this Agreement are cumulative and are in
addition to any and all rights, remedies and obligations, at law or in
equity, which the parties hereto are entitled to under state and
federal laws. Failure of either party to insist upon strict compliance
with any of the conditions of this Agreement shall not be construed as
a waiver of any of the conditions, but the same shall remain in full
force and effect. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.
d. Notices. All notices hereunder are to be made in writing and shall be
given:
if to The Trust, to:
State Farm Mutual Fund Trust
Three Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0000
if to Distributor, to:
State Farm VP Management Corp.
Three Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0000
or such other address as such party may hereafter specify in writing.
Each such notice to a party shall be either hand delivered or
transmitted by registered or certified United States mail with return
receipt requested, or by overnight mail by a nationally recognized
courier, and shall be effective upon delivery.
e. Interpretation; Jurisdiction. This Agreement constitutes the whole
agreement between the parties hereto with respect to the subject
matter hereof, and supersedes all prior oral or written
understandings, agreements or negotiations between the parties with
respect to such subject matter. No prior writings by or between the
parties with respect to the subject matter hereof shall be used by
either party in connection with the interpretation of any provision of
this Agreement.
f. Severability. This is a severable Agreement. In the event that any
provision of this Agreement would require a party to take action
prohibited by applicable federal or state law or prohibit a party from
taking action required by applicable federal or state law, then it is
the intention of the parties hereto that such provision shall be
enforced to the extent permitted under the law, and, in any event,
that all other provisions of this Agreement shall remain valid and
duly enforceable as if the provision at issue had never been a part
hereof.
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g. Section and Other Headings. The headings in this Agreement are
included for convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect their
construction or effect.
h. Counterparts. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
i. Regulation. This Agreement shall be subject to the provisions of the
1933 Act, 1934 Act and 1940 Act and the regulations thereunder and the
rules and regulations of the NASD, from time to time in effect,
including the conditions of any exemptions therefrom as the SEC or
NASD may grant, and the terms hereof shall be interpreted and
construed in accordance therewith.
j. Privacy. Neither the Distributor nor the Trust shall disclose or use
nonpublic personal information (as defined in Rule 3(t) of Regulation
S-P) provided by the other party, except as necessary to carry out the
purposes for which such information is provided, including information
that is used in accordance with Rules 14 and 15 of Regulation S-P in
the ordinary course of business.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized officers designated below as of the date
specified above.
STATE FARM MUTUAL FUND TRUST
By:
Name: Xxxxxx X. Xxxx, Xx.
Title: President
STATE FARM VP MANAGEMENT CORP.
By:
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
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