AQUILA THREE PEAKS HIGH INCOME FUND
DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 24th day of May, 2006 by and between AQUILA
THREE PEAKS HIGH INCOME FUND (hereinafter called the "Fund"), and AQUILA
DISTRIBUTORS, INC., (hereinafter called the "Distributor").
W I T N E S S E T H :
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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
Fund's shares and the identity of any broker or dealer with which such
agreements are entered into. 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 September 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.
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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: AQUILA THREE PEAKS HIGH INCOME FUND
By:/s/Xxxxxxx X. Childs, III
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Executive Vice President
ATTEST: AQUILA DISTRIBUTORS, INC.
By: /s/Xxxxxx X. Xxxxxxxx
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Chief Compliance Officer
