DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 10th day of September,
1992, 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 :
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 December 31 which next precedes the second
anniversary of the effective date of this Agreement, 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 Trust 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.
NARRAGANSETT INSURED TAX-FREE
INCOME FUND
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By:________________________________
Vice President
ATTEST:
__________________________
AQUILA DISTRIBUTORS, INC.
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By:________________________________
Vice President
ATTEST:
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__________________________
Asst. Secy