AMENDED AND RESTATED INVESTMENT ADVISORY AND
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT was first made and entered into on the
12th day of December, 1997, by and between STATE FARM VARIABLE
PRODUCT TRUST, a Delaware business trust (the "Trust"), and STATE
FARM INVESTMENT MANAGEMENT CORP., a Delaware corporation
(the "Adviser"). This AGREEMENT is hereby amended and restated
effective July 1, 2007 by the Trust and the Adviser.
WHEREAS, the Trust is registered as an open-end
management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); WHEREAS, the Trust issues shares of
beneficial interest (the "Shares") registered under the Securities Act of
1933, as amended (the "1933 Act") pursuant to a registration statement
initially filed with the Securities and Exchange Commission on February 27,
1997, as amended from time to time (the "Registration Statement");
WHEREAS, the Trust has established multiple separate
series of Shares, each corresponding to a separate investment portfolio
having its own investment objective, and may establish additional series of
Shares in the future (such existing and future series are collectively
referred to herein as the "Funds");
WHEREAS, the Shares are sold exclusively to certain
segregated asset accounts (the "Accounts") of State Farm Life Insurance
Company ("State Farm") or its affiliated life insurance companies
(collectively, "State Farm") to fund certain variable annuity and/or life
insurance contracts issued by State Farm (the "Contracts");
WHEREAS, the Adviser is an investment adviser registered
under the Investment Advisers Act of 1940, as amended (the "Advisers Act")
and all applicable state securities laws, a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and a
member of the National Association of Securities Dealers, Inc. (the
"NASD");
WHEREAS, the Trust desires to retain the Adviser to render
management and investment advisory services to each Fund in the manner
and on the terms and conditions set forth below; and
WHEREAS, the Adviser is willing to provide management
and investment advisory services to each Fund in the manner and on the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of their mutual
promises, the Trust and the Adviser agree as follows:
ARTICLE 1
Employment of Adviser
1.1 The Trust hereby employs the Adviser to act as
investment adviser for and to manage, or arrange for the management of,
the investment and reinvestment of the assets of the Funds, and to
administer, or arrange for the administration of, its affairs to the extent
requested by, and subject to the supervision and control of, the Board of
Trustees of the Trust for the period and upon the terms herein set forth.
1.2 The Adviser accepts such employment and agrees
during such period at its own expense to render the services, or to arrange
for the services to be rendered, and to assume the obligations herein set
forth for the compensation herein provided. In connection therewith, the
Adviser may retain one or more sub-advisers to render such services and to
assume the obligations set forth herein, subject to the provisions of the 1940
Act and the Advisers Act.
1.3 The Adviser shall for all purposes be deemed to be an
independent contractor, and unless otherwise expressly provided or
authorized shall have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust. Notwithstanding the
foregoing, the Adviser shall, for the purposes of this agreement, have and
exercise full investment discretion and authority to act as agent for the
Trust in buying, selling or otherwise disposing of or managing the Trust's
investments, subject to supervision by the Board.
1.4 The services of the Adviser herein provided are not to
be deemed exclusive and the Adviser shall be free to render similar services
or other services to others so long as its services hereunder shall not be
impaired thereby.
ARTICLE 2
Duties of Adviser
2.1 General Management Services. The Adviser shall
perform (or arrange for the performance) the management and
administrative services necessary for the operation of the Trust, including
processing shareholder orders, administering shareholder accounts and
handling shareholder relations. The Adviser shall provide the Trust with
office space, equipment, facilities and such other services as the Adviser,
subject to review by the Board, shall from time to time determine to be
necessary or useful to perform its obligations under this agreement. The
Adviser shall also, on behalf of the Trust, conduct relations with custodians,
depositories, transfer agents, dividend disbursing agents, other shareholder
service agents, accountants, attorneys, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and such other persons in any such
other capacity deemed to be necessary or desirable. The Adviser shall make
reports to the Board of its performance of its obligations hereunder and
furnish advice and recommendations with respect to such other aspects of
the business and affairs of the Trust as it shall determine to be desirable.
2.2 Investment Management Services.
(a) The Adviser shall provide the Trust with such
investment research, advice and supervision as the latter may from time to
time consider necessary for the proper supervision of the assets of each
Fund. In this regard, the Adviser shall:
(i) perform research and obtain and
evaluate pertinent economic, statistical, and financial data relevant to the
investment policies of each Fund as set forth in the Registration Statement;
(ii) consult with the Board and furnish to
the Board recommendations with respect to an overall investment strategy
for each Fund for approval, modification, or rejection by the Board;
(iii) seek out and implement specific
investment opportunities, consistent with any investment strategies
approved by the Board;
(iv) take such steps as are necessary to
implement any overall investment strategies approved by the Board for each
Fund, including making and carrying out day-to-day decisions to acquire or
dispose of permissible investments, management of investments and any
other property of the Fund, and providing or obtaining such services as may
be necessary in managing, acquiring or disposing of investments;
(v) regularly report to the Board with
respect to the implementation of any approved overall investment strategy
and any other activities in connection with management of the assets of
each Fund including furnishing, within 30 days after the end of each
calendar quarter, a statement of all purchases and sales during the quarter
and a schedule of investments and other assets of each Fund as of the end of
the quarter;
(vi) maintain all required accounts, records,
memoranda, instructions or authorizations relating to the acquisition or
disposition of investments for each Fund and the Trust;
(vii) assist in determining each business
day the net asset value of the shares of each Fund in accordance with
applicable law; and
(viii) enter into any advisory or sub-
advisory contract with another affiliated or unaffiliated entity pursuant to
which such entity will carry out some or all of the Adviser's responsibilities
(as specified in such advisory or sub-advisory contract) listed above.
(b) The Adviser's services shall be subject always
to the control and supervision of the Board, the restrictions of the
Declaration of Trust and Bylaws of the Trust, as amended from time to time,
the provisions of the 1940 Act, the statements relating to each Fund's
investment objective or objectives, investment policies and investment
restrictions as set forth in the then-current Registration Statement,
appropriate state insurance laws, and any applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"). The Trust has
furnished or will furnish the Adviser with copies of the Registration
Statement, Declaration of Trust, and Bylaws as currently in effect and
agrees during the continuance of this agreement to furnish the Adviser with
copies of any amendments or supplements thereto before or at the time the
amendments or supplements become effective. The Adviser will be entitled
to rely on all documents furnished by the Trust.
(c) The Adviser represents that in performing
investment advisory services for each Fund, the Adviser shall make every
effort to ensure that: (1) each Fund shall comply with Section 817(h) of the
Code, and the regulations issued thereunder specifically Regulation Section
1.817-5, relating to the diversification requirements for variable annuity,
endowment, and life insurance contracts, and any amendments or other
modifications to such Section or regulations; (2) each Fund continuously
qualifies as a Regulated Investment Company under Subchapter M of the
Code or any successor provision; (3) each Fund shall comply with any and
all applicable state insurance law restrictions on investments, and any
changes thereto, that operate to limit or restrict the investments that such
Fund may otherwise make. Except as instructed by the Board, the Adviser
shall also make decisions for the Trust as to the manner in which voting
rights, rights to consent to corporate action and any other rights pertaining
to the Trust's portfolio securities shall be exercised. Should the Board at
any time make any determination as to investment policy and notify the Adviser
thereof, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination has been revoked.
(d) In connection with the acquisition or
disposition of securities described in Section 2.2(a)(iv), the Adviser may
place orders for the purchase or sale of portfolio investments for the account
of each Fund with brokers or dealers selected by it and, to that end, the
Adviser is authorized as the agent of the Trust to give instructions to the
custodian of the Trust as to deliveries of securities and payments of cash for
the account of each Fund. In connection with the selection of brokers or
dealers and the placing of purchase and sale orders with respect to assets of
the Funds, the Adviser is directed at all times to seek to obtain best
execution and price within the policy guidelines determined by the Board
and set forth in the current Registration Statement. Subject to this
requirement and the provisions of the Advisers Act, the 1940 Act, the 1934
Act, and other applicable provisions of law, the Adviser may select brokers
or dealers with which it or the Trust is affiliated.
(e) In addition to seeking the best price and
execution, the Adviser may also take into consideration research and
statistical information and wire and other quotation services provided by
brokers and dealers to the Adviser. The Adviser is also authorized to effect
individual securities transactions at commission rates in excess of the
minimum commission rates available, if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or Adviser's overall
responsibilities with respect to each Fund. The policies with respect to
brokerage allocation, determined from time to time by the Board are those
disclosed in the Registration Statement. The execution of such transactions
shall not be deemed to represent an unlawful act or breach of any duty
created by this agreement or otherwise. The Adviser will periodically
evaluate the statistical data, research and other investment services provided
to it by brokers and dealers. Such services may be used by the Adviser in
connection with the performance of its obligations under this agreement or
in connection with other advisory or investment operations including using
such information in managing its own accounts.
(f) Nothing in this agreement shall preclude the
aggregation of orders for the sale or purchase of securities or other
investments by two or more Funds of the Trust or by the Trust and other
separate accounts or other accounts (collectively, "Advisory Clients")
managed by the Adviser, provided that: (i) the Adviser's actions with
respect to the aggregation of orders for multiple Advisory Clients, including
the Trust, are consistent with the then-current positions in this regard taken
by the Securities and Exchange Commission or its staff through releases,
"no-action" letters, or otherwise; and (ii) the Adviser's policies with
respect to the aggregation of orders for multiple Advisory Clients have been
previously submitted and approved by the Board.
ARTICLE 3
Allocation of Charges and Expenses
3.1 Charges and Expenses Allocated to the Adviser.
The Adviser shall provide all executive,
administrative, clerical and other personnel necessary to operate the Trust
and shall pay the salaries and other costs of employing all of these persons.
The Adviser shall also furnish the Trust with office space, facilities, and
equipment and shall pay the day-to-day expenses related to the operating
and maintenance of such office space, facilities and equipment. All
expenses incurred in the organization of the Trust or of any new Funds of
the Trust, including legal and accounting expenses and certain costs of
registering securities of the Trust under federal and state securities laws,
shall also be paid by the Adviser.
3.2 Charges and Expenses Allocated to the Trust.
(a) The Trust shall be responsible for payment of
all expenses it may incur in its operation and all of its general
administrative expenses except those expressly assumed by the Adviser as
described in Section 3.1 above. These include (by way of description and not
of limitation), any share redemption expenses, expenses of portfolio
transactions, shareholder servicing costs, pricing costs, interest on
borrowings by the Trust, charges of the custodians and transfer agent, if any,
cost of auditing services, non-interested Trustees' fees, all taxes and fees,
investment advisory fees (other than subadvisory fees), certain insurance
premiums, cost of maintenance of corporate existence, investor services
(including allocable personnel and telephone expenses), costs of printing
and mailing updated Trust prospectuses to shareholders and contractholders,
preparing, printing and mailing proxy statements and shareholder reports to
shareholders and contractholders, the cost of paying dividends and capital
gains distributions, costs of Trustee and shareholder meetings, dues to trade
organizations, and any extraordinary expenses, including litigation costs in
legal actions involving the Trust, or costs related to indemnification of
Trustees, officers and employees of the Trust.
(b) The Trust shall be free to retain at its expense
other persons to furnish it with any services whatsoever, including, without
limitation, statistical, factual or technical information or advice.
ARTICLE 4
Compensation of the Adviser
4.1 (a) For the services to be rendered, the facilities
to be furnished and the payments to be made by the Adviser, as provided
herein, the Trust shall pay to the Adviser within three business days after
the end of each month a fee based upon the average daily net assets of each
Fund, as determined pursuant to the Trust's Registration Statement and
Declaration of Trust, at the following annual rates:
Fund Rate
Large Cap Equity Index Fund .26%
Small Cap Equity Index Fund .40%
International Equity Index Fund .55%
Bond Fund .50%
Money Market Fund .40%
Stock and Bond Balanced Fund .00%
Large Cap Equity Fund .60%
Small Cap Equity Fund .80%
International Equity Fund .80%
(b) The Adviser acknowledges that it has agreed
not to be paid an investment advisory fee for performing its services for the
Stock and Bond Balanced Fund.
4.2 For the quarter and year in which this agreement
becomes effective or terminates there shall be an appropriate proration on
the basis of the number of days that the agreement is in effect during the
quarter and year respectively.
4.3 If, pursuant to the Trust's Registration Statement and
Declaration of Trust, the net asset value is not required to be determined on
any particular business day, then for the purpose of the foregoing
computations, the net asset value of a share as last determined shall be
deemed to be the net asset value of a share as of the close of business on
that day.
4.4 In connection with purchases or sales of portfolio
securities for the account of the Trust, neither the Adviser nor any officer,
director, shareholder or other affiliate of the Adviser nor any officer,
trustee, shareholder or other affiliate of the Trust shall: (i) act as agent
and accept any compensation other than its compensation provided for in this
agreement, except in the course of such person's business as an underwriter
or broker; or (ii) act as broker and accept any commission, fee, or other
remuneration in excess of the limits prescribed in the 1940 Act and the rules
promulgated thereunder.
4.5 The Adviser agrees that in all matters relating to the
management of the investment of the assets of the Trust and the
administration of its affairs, it will act in conformity with the Registration
Statement, Declaration of Trust, and Bylaws of the Trust then in effect. It is
understood and agreed that the Adviser, by virtue of a separate agreement
with the Trust, may also act as an underwriter for the Trust.
ARTICLE 5
Limitations of Liability
5.1 Limitation of Liability of Adviser. The Adviser shall
give the Trust the benefit of the Adviser's best judgment and efforts in
rendering services under this agreement; provided, that the Adviser shall not
be liable for any error of judgment or import of law, or for any loss suffered
by the Trust in connection with the matters to which this agreement relates,
except loss resulting from: (i) willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its obligations
and duties under this agreement; (ii) its reckless disregard of its
obligations and duties under this agreement; (iii) a breach of Section 2.2(c)
of this agreement.
5.2 Limitation of Liability of Trust. The Adviser
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 Adviser 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.
ARTICLE 6
Books and Records
6.1 The Adviser hereby undertakes and agrees to
maintain, in the form and for the period required, all records relating to the
Trust's investments that are required to be maintained by the Trust pursuant
to applicable law.
6.2 The Adviser agrees that all books and records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such books, records or information
upon the Trust's request. All such books and records shall be made available,
within five business days of a written request, to the Trust's accountants or
auditors during regular business hours at the Adviser's offices. The Trust or
its authorized representative shall have the right to copy any records in the
possession of the Adviser which pertain to the Trust. Such books, records,
information or reports shall be made available to properly authorized
government representatives consistent with state and federal law and/or
regulations. In the event of the termination of this agreement, all such
books, records or other information shall be returned to the Trust free from
any claim or assertion of rights by the Adviser.
6.3 The Adviser further agrees that it will not disclose or
use any records or information obtained pursuant to this agreement in any
manner whatsoever except as authorized in this agreement and that it will
keep confidential any information-obtained pursuant to this agreement and
disclose such information only if the Trust has authorized such disclosure,
or if such disclosure is required by federal or state regulatory authorities.
ARTICLE 7
Duration and Termination of this Agreement
7.1 Effective Date and Term. As to each Fund, this
agreement shall not become effective unless and until the later of the time at
which it is approved by the Trust's Board, including a majority of trustees
who are not parties to this agreement or interested persons of any such party
to this agreement, or the time at which it is approved by a majority of such
Fund's outstanding voting securities as required by the 1940 Act. This
agreement shall come into full force and effect on the later of such two
dates, provided that it shall not become effective as to any subsequently
created Fund until it has been approved by the Board specifically for such
Fund. As to each Fund, the agreement shall continue in effect for two years
and shall thereafter continue in effect from year to year so long as such
continuance is specifically approved for each Fund at least annually by: (i)
the Board, or by the vote of a majority of the Fund's outstanding voting
securities; and (ii) a majority of those trustees who are not parties to this
agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
7.2 Termination.
(a) As to each Fund, this agreement may be
terminated at any time, without penalty, by vote of the Board or by vote of
the holders of a majority of such Fund's outstanding voting securities, or by
the Adviser, on sixty (60) days' written notice to the other party.
(b) This agreement may be terminated at any time
without the payment of any penalty by vote of the Board in the event that it
shall have been established by a court of competent jurisdiction that the
Adviser or any officer or director of the Adviser has taken any action which
results in a breach of the covenants of the Adviser set forth herein.
(c) This agreement shall automatically terminate
in the event of its assignment.
(d) The Trust agrees that upon the termination of
this agreement at any time or for any reason it shall, when so requested by
State Farm or the Adviser, eliminate all reference to the name "State Farm"
from its corporate name and thereafter refrain from using the name "State
Farm" in connection with its business or activities in any form or
combination whatsoever.
ARTICLE 8
Amendments to this Agreement
8.1 This agreement may be amended as to each Fund by
the parties only if such amendment is specifically approved by: (i) the vote
of a majority of such Fund's outstanding voting securities; and (ii) a
majority of those trustees who are not parties to this agreement or interested
persons of any such party cast in person at a meeting called for the purpose
of voting on such approval.
ARTICLE 9
Notices
9.1 Any notice shall be sufficiently given when sent by
registered or certified mail to the other party at the address of such party
set forth below or at such other address as such party may from time to time
specify in writing to the other party.
If to the Trust:
State Farm Variable Product Trust
Xxx Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Secretary
If to the Adviser:
State Farm Investment Management Corp.
Xxx Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Secretary
ARTICLE 10
Miscellaneous Provisions
10.1 Other Relationships. It is understood that the officers,
directors, agents, shareholders and other affiliates of the Trust are or may
be interested in the Adviser as officers, directors, agents, shareholders,
affiliates or otherwise, and that the officers, directors; shareholders,
agents and other affiliates of the Adviser may be interested in the Trust
otherwise than as a shareholder.
10.2 Definitions of Certain Terms. The terms
"assignment", "affiliated person" and "interested person", when used in this
agreement, shall have the respective meanings specified in the 1940 Act.
The term "majority of the outstanding voting securities" means the lesser of:
(a) 67% or more of the votes attributable to Shares of a Fund or the Trust, as
appropriate, present at a meeting if the holders of more than 50% of such
votes are present or represented by proxy; or (b) more than 50% of the votes
attributable to Shares of a Fund or the Trust, as appropriate.
10.3 Applicable Law.
(a) This agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of
Delaware without regard to conflicts of law principles or precedents.
(b) This agreement shall be subject to the
provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations
and rulings thereunder, including such exemptions from those statutes, rules
and regulations as the SEC may grant and the terms hereof shall be
interpreted and construed in accordance therewith.
10.4 Severability. If any provision of this agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this agreement shall not be affected thereby.
10.5 Captions. The captions 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.
10.6 Counterparts. This agreement may be executed
simultaneously in multiple counterparts, each of which taken together shall
constitute one and the same instrument.
10.7 Cooperation with Authorities. Each party hereto shall
cooperate with the other party and all appropriate governmental authorities
(including without limitation the SEC, the NASD, and state insurance
regulators) and shall permit such authorities reasonable access to its books
and records in connection with any investigation or inquiry relating to this
agreement or the transactions contemplated hereby.
10.8 Cumulative Rights. The rights, remedies and
obligations contained in this agreement are cumulative and are in addition
to any and all rights, remedies and oat law or in equity, parties are entitled
to under which the parties hereto are entitled to under state and federal
obligations, at laws.
IN WITNESS WHEREOF, the parties hereto have caused
this agreement to be executed in their names and on their behalf by their
duly authorized officers all on the day and year first above written.
STATE FARM INVESTMENT MANAGEMENT CORP.
By: /s/ Xxxxxx X. Xxxx, Xx.
Name: Xxxxxx X. Xxxx, Xx.
Title: President
STATE FARM VARIABLE PRODUCT TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Sr. Vice President & Treasurer
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