DISTRIBUTION AGREEMENT
AGREEMENT made as of the 20th day of March 2001, by and between State
Farm Associates' Funds Trust, a Delaware business trust (the "Trust"), and State
Farm VP Management Corp. ("Distributor"), a Delaware corporation.
WITNESSETH
WHEREAS, Distributor is a broker-dealer that engages in the
distribution of variable insurance products and mutual funds, and which 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 filed
with the Securities and Exchange Commission, and amended from time to time;
and
WHEREAS, the Trust has established four separate 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, mutual funds, 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. 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
market the Funds 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 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. SOLICITATION ACTIVITIES. All solicitation and sales
activities engaged in by Distributor 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:
(1) Distributor shall not offer or attempt to offer
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.
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(2) Distributor shall not 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.
(3) All Fund purchase payments 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.
C. 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.
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B. USE IN SOLICITATION ACTIVITIES. The Trust shall be
responsible for furnishing Distributor with such Applications,
Prospectuses and other materials for use by Distributor in
its distribution activities with respect to the Funds. The
Distributor shall not use any promotional, sales or
advertising materials unless such materials have been approved
by the Trust or the Distributor.
5. COMPENSATION AND EXPENSES
A. COMPENSATION FOR SERVICES. The Distributor shall receive no
fee or compensation for providing services under this
Distribution Agreement.
B. 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
(4) all registration fees for the Trust payable to the
SEC.
C. EXPENSES OF DISTRIBUTOR. The Distributor shall assume and pay
all expenses incurred by it in connection with providing
distribution services under this Agreement.
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.
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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.
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;
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(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:
(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.
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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.
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; (2) the
provisions contained in Section 8 regarding indemnification; and
(3) the provisions contained in Section 3(a)(3) 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.
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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.
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 Associates' Funds 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.
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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.
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.
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K. LIMITATION OF LIABILITY OF TRUST. The Distributor
acknowledges that it has received notice of and accepts the
limitations on the Trust's liability as set forth in the
Trust's Declaration of Trust, as amended from time to time.
In accordance therewith, the Distributor agrees that the
Trust's obligations hereunder shall be limited to the assets
of the Funds, and with respect to each Fund shall be limited
to the assets of such Fund, and no party shall seek
satisfaction of any such obligation from any shareholder of
the Trust, nor from any trustee, officer, employee or agent of
the Trust.
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 ASSOCIATES' FUNDS TRUST
By: /s/ Xxxxxx X. Xxxx, Xx.
----------------------
Name: Xxxxxx X. Xxxx, Xx.
Title: President
STATE FARM VP MANAGEMENT CORP.
By: /s/ Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and Treasurer
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