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 28th 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 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 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: /s/ Xxxxxx X. Xxxx, Xx.
Name: Xxxxxx X. Xxxx, Xx.
Title: President
STATE FARM VP MANAGEMENT CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Treasurer
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