NARRAGANSETT INSURED TAX-FREE INCOME FUND
DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 28th day of May, 1999 by and
between NARRAGANSETT INSURED TAX-FREE INCOME FUND (hereinafter
called the "Fund"), and AQUILA DISTRIBUTORS, INC., (hereinafter
called the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund and the Distributor have previously
entered into the Distribution Agreement dated as of February 10,
1999;
WHEREAS, on March 6, 1999 the Board of Trustees of the Fund
approved a new Distribution Agreement, to go into effect upon
anticipated changes in ownership of the Distributor; and
WHEREAS, the transfer of shares of the Distributor effecting
such changes in ownership occurred as of the date hereof; and
WHEREAS, contemporaneously therewith pursuant to an
instrument executed and delivered between the parties, a new
Distribution Agreement went into effect, identical in its
provisions to the Distribution Agreement in effect immediately
prior thereto, except for the date of its effectiveness; and
WHEREAS, this Agreement is a document explicitly containing
all of the provisions of the new Distribution Agreement,
representing in explicit form the new Distribution Agreement
created thereby;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is agreed by a
between the parties hereto as follows:
W I T N E S S E T H :
In consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties
hereto as follows:
1. The Distributor agrees to act as principal underwriter
and exclusive distributor of the shares of the Fund. The price
at which shares of the Fund are issued to the public by the
Distributor shall be as computed and effective as set forth in
the Prospectus and Statement of Additional Information of the
Fund current as of the time of such sale (collectively, the
"Current Prospectus"). The Distributor is authorized to
determine from time to time (i) the sales charges forming part of
the public offering price and any dealer discount paid to dealers
and any agency commissions paid to brokers; (ii) the terms of any
privilege reducing or eliminating such sales charges; and (iii)
the terms of any sales agreement entered into by the Distributor
relating to the sale of the Trust/Fund's shares and the identity
of any broker or dealer with which such agreements are entered
into. The Trust/Fund agrees that it will promptly amend or
supplement the Current Prospectus in connection with any change
in any of the foregoing. The Fund agrees that it will promptly
amend or supplement the Current Prospectus in connection with any
change in any of the foregoing. The Distributor agrees to bear
the costs of printing and distributing all copies of the Fund's
prospectuses, statements of additional information and reports to
shareholders which are not sent to the Fund's shareholders, as
well as the costs of supplemental sales literature, advertising
and other promotional activities.
2. The Fund agrees to issue shares of the Fund, subject to
the provisions of its Declaration of Trust and By-Laws, to the
Distributor as ordered by the Distributor, but only to the extent
that the Distributor shall have received purchase orders therefor
at the times and subject to the conditions set forth in the
Current Prospectus. Certificates for shares need not be created
or delivered by the Fund in any case in which the purchase is
made under terms not calling for such certificates. Shares
issued by the Fund shall be registered in such name or names and
amounts as the Distributor may request from time to time and all
shares when so paid for and issued shall be fully paid and non-
assessable to the extent set forth in the Current Prospectus.
3. The Distributor shall act as principal in all matters
relating to promotion of the growth of the Fund and shall enter
into all of its engagements, agreements and contracts as
principal on its own account. The title to shares of the Fund
issued and sold through the Distributor shall pass directly from
the Fund to the dealer or investor, or shall, if the Distributor
so consents, first pass to the Distributor, as may from time to
time be determined by the Board of Trustees of the Fund.
4. The Fund hereby consents to any arrangements whereby
the Distributor may act as principal underwriter for other
investment companies or as principal underwriter, sponsor or
depositor for unit investment trusts and periodic payment plan
certificates issued thereby, or as investment adviser, sub-
adviser or administrator to the Fund or other investment
companies or persons. The Fund also consents to the Distributor
carrying on a business as a broker, dealer and underwriter in
securities and to carrying on any other lawful business.
5. The Fund covenants and agrees that it will not during
the term of this Agreement, without the consent of the
Distributor, offer any shares of the Fund for sale directly or
through any person or corporation other than the Distributor
excepting only (a) the reinvestment of dividends and/or
distributions, or their declaration in shares of the Fund, in
optional form or otherwise; (b) the issuance of additional shares
through stock splits or stock dividends; (c) sales of shares to
another investment or securities holding company in the process
of purchasing all or a portion of its assets; or (d) in
connection with an exchange of the Fund's shares for shares of
another investment company or securities holding company.
6. The Fund agrees to use its best efforts to register
from time to time under the Securities Act of 1933 adequate
amounts of shares of the Fund for sale by the Distributor to the
public and to register or qualify, or to permit the Distributor
to register or qualify, such shares for offering to the public in
such States or other jurisdictions as may be designated by the
Distributor.
7. The Fund agrees to advise the Distributor of the net
asset value of the Fund's shares as often as computed. The Fund
will also furnish to the Distributor, as soon as practicable,
such information as may reasonably be requested by the
Distributor in order that it may know all of the facts necessary
to sell shares of the Fund.
8. The Distributor is familiar with the Declaration of
Trust and By-Laws of the Fund, each as presently in effect.
Insofar as they are applicable to the Distributor as principal
underwriter of the Fund, it will comply with the provisions of
the Declaration of Trust and By-Laws of the Fund and with the
provisions of all acts administered by the Securities and
Exchange Commission (the "Commission") and rules thereunder.
9. This amended and restated Agreement shall go into
effect on the date first above written, and shall, unless
terminated as hereinafter provided, continue in effect until the
next June 30, and from year to year thereafter, but only so long
as such continuance is specifically approved at least annually as
provided in the Investment Company Act of 1940 (the "Act"). This
Agreement shall automatically terminate in the event of its
assignment (as defined in the Act) and may be terminated by
either party on sixty days written notice to the other party.
10. The Fund agrees with the Distributor, for the benefit
of the Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities
Act of 1933 (the "Securities Act") and each and all and any of
them, to indemnify and hold harmless the Distributor and any such
controlling person from and against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of
them may become subject under the Securities Act, under any other
statute, at common law or otherwise, and to reimburse the
Distributor and such controlling persons, if any, for any legal
or other expenses (including the cost of any investigation and
preparation) reasonably incurred by them or any of them in
connection with any litigation whether or not resulting in any
liability, insofar as such losses, claims, damages, liabilities
or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact
contained in any Registration Statement or any Prospectus, filed
with the Commission, or any amendment thereof or supplement
thereto, or which arise out of, or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this indemnity agreement
shall not apply to amounts paid in settlement of any such
litigation if such settlement is effected without the consent of
the Fund or to any such losses, claims, damages, liabilities or
litigation arising out of, or based upon, any untrue statement or
alleged untrue statement of a material fact contained in any such
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, or arising out of, or based upon, the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, which statement or omission was made in
reliance upon information furnished in writing to the Fund by the
Distributor for inclusion in any such Registration Statement or
Prospectus or any amendment thereof or supplement thereto. The
Distributor and each such controlling person shall, promptly
after the complaint shall have been served upon the Distributor
or such controlling person in respect of which indemnity may be
sought from the Fund on account of its agreement contained in
this paragraph, notify the Fund in writing of the commencement
thereof. The omission of the Distributor or such controlling
person so to notify the Fund of any such litigation shall relieve
the Fund from any liability which it may have to the Distributor
or such controlling person on account of the indemnity agreement
contained in this paragraph, but shall not relieve the Fund from
any liability which it may have to the Distributor or controlling
person otherwise than on account of the indemnity agreement
contained in the paragraph. In case any such litigation shall be
brought against the Distributor or any such controlling person
and notice of the commencement thereof shall have been given to
the Fund, the Fund shall be entitled to participate in (and, to
the extent that it shall wish, to direct) the defense thereof at
its own expense, but such defense shall be conducted by counsel
of good standing and satisfactory to the Distributor or such
controlling person or persons, defendant or defendants in the
litigation. The indemnity agreement of the Fund contained in
this paragraph shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
the Distributor or any such controlling person, and shall survive
any delivery of shares of the Fund. The Fund agrees to notify
the Distributor promptly of the commencement of any litigation or
proceeding against it or any of its officers or directors of
which it may be advised in connection with the issue and sale of
shares of the Fund.
11. Anything herein to the contrary notwithstanding, the
agreement in paragraph 10, insofar as it constitutes a basis for
reimbursement by the Fund for liabilities (other than payment by
the Fund of expenses incurred or paid in the successful defense
of any action, suit or proceeding) arising under the Securities
Act, shall not extend to the extent of any interest therein of
any person who is an underwriter or a partner or controlling
person of an underwriter within the meaning of Section 15 of the
Securities Act or who, at the date of this Agreement, is a
Trustee of the Fund, except to the extent that an interest of
such character shall have been determined by a court of
appropriate jurisdiction as not against public policy as
expressed in the Securities Act. Unless in the opinion of
counsel for the Fund the matter has been adjudicated by
controlling precedent, the Fund, will, if a claim for such
reimbursement is asserted, submit to a court of appropriate
jurisdiction the question of whether or not such interest is
against the public policy as expressed in the Securities Act.
12. The Distributor agrees to indemnify and hold harmless
the Fund and its Trustees and such officers as shall have signed
any Registration Statement filed with the Commission from and
against any and all losses, claims, damages or liabilities, joint
or several, to which the Fund or such Trustees or officers may
become subject under the Securities Act, under any other statute,
at common law or otherwise, and will reimburse the Fund or such
Trustees or officers for any legal or other expenses (including
the cost of any investigation and preparation) reasonably
incurred by it or them or any of them in connection with any
litigation, whether or not resulting in any liability, insofar as
such losses, claims, damages, liabilities or litigation arise out
of, or are based upon, any untrue statement or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which
statement or omission was made in reliance upon information
furnished in writing to the Fund by the Distributor for inclusion
in any Registration Statement or any Prospectus, or any amendment
thereof or supplement thereto. The Distributor shall not be
liable for amounts paid in settlement of any such litigation if
such settlement was effected without its consent. The Fund and
its Trustees and such officers, defendant or defendants, in any
such litigation shall, promptly after the complaint shall have
been served upon the Fund or any such Trustee or officer in
respect of which indemnity may be sought from the Distributor on
account of its agreement contained in this paragraph, notify the
Distributor in writing of the commencement thereof. The omission
of the Fund or such Trustee or officer so to notify the
Distributor of any such litigation shall relieve the Distributor
from any liability which it may have to the Fund or such Trustee
or officer on account of the indemnity agreement contained in
this paragraph, but shall not relieve the Distributor from any
liability which it may have to the Fund or such Trustee or
officer otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall
be brought against the Fund or any such Trustee or officer and
notice of the commencement thereof shall have been so given to
the Distributor, the Distributor shall be entitled to participate
in (and, to the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be conducted
by counsel of good standing and satisfactory to the Fund. The
indemnity agreement of the Distributor contained in this
paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Fund
and shall survive any delivery of shares of the Fund. The
Distributor agrees to notify the Fund promptly of the
commencement of any litigation or proceeding against it or any of
its officers or directors or against any such controlling person
of which it may be advised, in connection with the issue and sale
of the Fund's shares.
13. Notwithstanding any provision contained in this
Agreement, no party hereto and no person or persons in control of
any party hereto shall be protected against any liability to the
Fund or its security holders to which they would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of their duties, or by reason of
their reckless disregard of their obligations and duties under
this Agreement.
14. The Fund shall immediately advise the Distributor (a)
when any post-effective amendment to its Registration Statement
or any further amendment or supplement thereto or any further
Registration Statement or amendment or supplement thereto becomes
effective, (b) of any request by the Commission for amendments to
the Registration Statement or the then effective Prospectus or
for additional information, (c) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement, or the initiation of any proceedings for
that purpose, and (d) of the happening of any event which makes
untrue any material statement made in the Registration Statement
or the Current Prospectus or which in the opinion of counsel for
the Fund requires the making of a change in the Registration
Statement or the Current Prospectus in order to make the
statements therein not misleading. In case of the happening at
any time of any event which materially affects the Fund or its
securities and which should be set forth in a supplement to or an
amendment of the then effective Prospectus in order to make the
statements therein not misleading the Fund shall prepare and
furnish to the Distributor such amendment or amendments to the
then effective Prospectus as will correct the Prospectus so that
as corrected it will not contain, or such supplement or
supplements to the then effective Prospectus which when read in
conjunction with the then effective Prospectus will make the
combined information not contain, any untrue statement of a
material fact or any omission to state any material fact
necessary in order to make the statements in the then effective
Prospectus not misleading. The Fund shall, if at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, make every
reasonable effort to obtain the prompt lifting of such order.
15. Except as expressly provided in paragraphs 10 and 12
hereof, the agreements herein set forth have been made and are
made solely for the benefit of the Fund, the Distributor, and the
persons expressly provided for in paragraphs 10 and 12, their
respective heirs, successors, personal representatives and
assigns, and except as so provided, nothing expressed or
mentioned herein is intended or shall be construed to give any
person, firm or corporation, other than the Fund, the
Distributor, and the persons expressly provided for in paragraphs
10 and 12, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any representation, warranty or
agreement herein contained. Except as so provided, the term
"heirs, successors, personal representatives and assigns" shall
not include any purchaser of shares merely because of such
purchase.
16. The Distributor understands that the obligations of
this Agreement are not binding upon any shareholder of the Fund
personally, but bind only the Fund's property; the Distributor
represents that it has notice of the provisions of the Fund's
Declaration of Trust disclaiming shareholder liability for acts
or obligations of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers and their seals to be affixed as of the day and year
first above written.
ATTEST:
_______________________ By:______________________________
ATTEST: AQUILA DISTRIBUTORS, INC.
_______________________ By:______________________________
