THE CASCADES TRUST
DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 28th day of May, 1999 by and
between TAX-FREE TRUST OF OREGON (hereinafter called the
"Business Trust"), and AQUILA DISTRIBUTORS, INC.,
(hereinafter called the "Distributor").
W I T N E S S E T H:
WHEREAS, the Business Trust and the Distributor have
previously entered into the Distribution Agreement with
respect to a portfolio of the Business Trust entitled Tax-
Free Trust of Oregon (the "Trust") dated as of February 10,
1999;
WHEREAS, on May 1, 1999 the Board of Trustees of the
Business Trust 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:
b. For purposes of determining the renewal date
of this Agreement under paragraph 9 only, the effective date
of this Agreement shall be considered to be the same as the
effective date of the previously effective Distribution
Agreement.
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 Trust. The
price at which shares of the Trust 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 Trust 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
Trust 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 Trust's
prospectuses, statements of additional information and
reports to shareholders which are not sent to the Trust's
shareholders, as well as the costs of supplemental sales
literature, advertising and other promotional activities.
the above sentence only in cash funds
2. The Business Trust agrees to issue shares of the
Trust, subject to the provisions of its Declaration of Trust
and ByLaws, 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 Business Trust in any case in which the
purchase is made under terms not calling for such
certificates. Shares issued by the Business Trust 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 Trust and
shall enter into all of its engagements, agreements and
contracts as principal on its own account. The title to
shares of the Trust issued and sold through the Distributor
shall pass directly from the Business Trust 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 Business Trust.
4. The Business Trust 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, subadviser or administrator to the
Business Trust or other investment companies or persons.
The Business Trust 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 Business Trust covenants and agrees that it
will not during the term of this Agreement, without the
consent of the Distributor, offer any shares of the Trust
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 Trust, 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 Trust's shares for shares of another
investment company or securities holding company.
6. The Business Trust agrees to use its best efforts to
register from time to time under the Securities Act of 1933
adequate amounts of shares of the Trust 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 Business Trust agrees to advise the
Distributor of the net asset value of the Trust's shares as
often as computed. The Business Trust 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
Trust.
8. The Distributor is familiar with the Declaration of
Trust and By-Laws of the Business Trust, each as presently
in effect. Insofar as they are applicable to the
Distributor as principal underwriter of the Business Trust,
it will comply with the provisions of the Declaration of
Trust and By-Laws of the Business Trust 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 Business Trust 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 Business
Trust 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 Business Trust 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 Business Trust on account of its agreement
contained in this paragraph, notify the Business Trust in
writing of the commencement thereof. The omission of the
Distributor or such controlling person so to notify the
Business Trust of any such litigation shall relieve the
Business Trust 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 Business Trust 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 Business Trust, the Business Trust 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 Business Trust 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 Trust. The Business
Trust 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
Trust.
11. Anything herein to the contrary notwithstanding,
the agreement in paragraph 10, insofar as it constitutes a
basis for reimbursement by the Business Trust for
liabilities (other than payment by the Business Trust 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 Business Trust, 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 Business Trust the
matter has been adjudicated by controlling precedent, the
Business Trust, 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 Business Trust 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 Business Trust 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
Business Trust 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 Business Trust 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 Business Trust and its
Trustees and such officers, defendant or defendants, in any
such litigation shall, promptly after the complaint shall
have been served upon the Business Trust 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 Business Trust 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 Business Trust 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
Business Trust 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 Business Trust 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 Business Trust. 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 Business Trust and
shall survive any delivery of shares of the Trust. The
Distributor agrees to notify the Business Trust 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 Trust'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 Business Trust 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 Business Trust 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 Business Trust
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 Trust
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 Business Trust 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 Business Trust
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 Business Trust, 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 Business Trust, 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 Trust personally, but bind only the Business Trust's
property; the Distributor represents that it has notice of
the provisions of the Business Trust's Declaration of Trust
disclaiming shareholder liability for acts or obligations of
the Trust.
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:______________________________
