ANTI-MONEY LAUNDERING AMENDMENT
TO
DISTRIBUTION AGREEMENT
This ANTI-MONEY LAUNDERING AMENDMENT (this "Amendment") amends as of the
[____] day of [______________, 2006] (the "Effective Date"), the Distribution
Agreement, dated as of __________________, 2006 between AQUILA THREE PEAKS HIGH
INCOME FUND (the "Fund") and Aquila Distributors Inc. (the "Distributor") (the
"Agreement").
WHEREAS, the Distributor acts as principal underwriter and exclusive
distributor of the shares of the Fund ("Shares") pursuant to the Agreement:
WHEREAS, the Distributor receives orders for the purchase of Shares from
investors;
WHEREAS, the Distributor has implemented various anti-money laundering
("AML") procedures as described below, which Distributor has found to be
reasonable, and the Fund desires to delegate certain AML procedures to the
Distributor, as permitted by the USA PATRIOT Act and the regulations thereunder
(collectively, the "PATRIOT Act").
WHEREAS, the Fund and the Distributor desire to amend the Agreement to
reflect such services explicitly;
NOW THEREFORE, The Fund and the Distributor hereby agree that, as of the
Effective Date, the Agreement shall be amended by adding the following new
provision:
1. Anti-Money Laundering.
To the extent the other provisions of this Agreement require the
Distributor to establish, maintain and monitor accounts of investors
in the Fund consistent with securities laws, the Distributor shall
perform all reasonable actions necessary to help the Fund be in
compliance with United States federal AML laws applicable to investor
activity, including the Bank Secrecy Act and the PATRIOT Act, as
described hereinafter.
In this regard, the Distributor shall: (a) establish and implement
written internal policies, procedures and controls reasonably designed
to help prevent the Fund from being used to launder money or finance
terrorist activities; (b) provide for independent testing, by an
employee who is not responsible for the operation of the Distributor's
AML program or by an outside party, for compliance with the
Distributor's established policies and procedures; (c) designate a
person or persons responsible for implementing and monitoring the
operation and internal controls of the Distributor's AML program; and
(d) provide ongoing training of the Distributor's personnel relating
to the prevention of money-laundering activities. Upon the reasonable
request of the Fund, the Distributor shall provide to the Fund's
officer in charge of AML compliance (the "AML Compliance Officer"):
(x) a copy of the Distributor's written AML policies and procedures
(it being understood such information is to be considered confidential
and treated as such and afforded all protections provided to
confidential information under this Agreement): (y) a copy of a
written assessment or report prepared by the party performing the
independent testing for compliance, or a summary thereof, or a
certification that the findings of the independent party are
satisfactory; and (z) a summary of the AML training provided for
appropriate personnel.
Unless otherwise preformed by the Fund's transfer agent, the
Distributor shall also: (i) collect and maintain investor information,
verify the identity of investors and check investor identities against
all government lists of known or suspected terrorists and terrorist
organizations in compliance with the procedures set forth in the
Fund's AML program and the PATRIOT Act; (ii) provide notice of the
Fund's customer identification procedures to prospective investors in
the manner permitted by the PATRIOT Act before an account is opened;
(iii) maintain records of the information collected and methods used
to verify investor identity in compliance with the PATRIOT Act; (iv)
monitor investor accounts for suspicious activity to the extent
required by AML laws or the PATRIOT Act; and (v) make any required
regulatory filings on behalf of the Fund including, but not limited
to, Form 8300 and suspicious activity reports (to the extent required
by AML laws) and promptly provide a copy of all such reports filed to
the Fund's AML Compliance Officer.
To the extent that a Fund regulator wishes to examine the Distributor
regarding its services hereunder, the Distributor shall cooperate with
and permit examinations of its records and personnel by such
regulator, coordinating any such response with the Fund's AML
Compliance Officer. The Distributor also agrees to make available to
examiners from such regulatory agencies any information and records
relating to the Fund's AML program as such examiners shall reasonably
request.
2. General. This Amendment contains the entire understanding between the parties
with respect to the services contemplated hereby. Except as expressly set forth
herein, the Agreement shall remain unaffected hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
AQUILA THREE PEAKS HIGH INCOME FUND
By: _________________________________
Name:
Title:
AQUILA DISTRIBUTORS, INC.
By: __________________________________
Name:
Title:
