DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this _____ day of ____________, 1997 (the
"Agreement") by and between The Potomac Funds, a ______________business trust
(the "Company") and First Data Distributors, Inc. (the "Distributor"), a
Massachusetts corporation.
WHEREAS, the Company is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and is currently offering units of beneficial interest (such units
of all series are hereinafter called the "Shares"), representing interests in
investment portfolios of the Company identified on Schedule A hereto (the
"Funds") which are registered with the Securities and Exchange Commission (the
"SEC") pursuant to the Company's Registration Statement on Form N-1A (the
"Registration Statement"); and
WHEREAS, the Company desires to retain the Distributor as distributor for
the Funds to provide for the sale and distribution of the Shares of the Funds
identified on Schedule A and for such additional classes or series as the
Company may issue, and the Distributor is prepared to provide such services
commencing on the date first written above.
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby the parties hereto agree
as follows:
1. SERVICE AS DISTRIBUTOR
1.1. The Distributor will act on behalf of the Company for the distribution
of the Shares covered by the Registration Statement under the Securities
Act of 1933, as amended (the "1933 Act"). The Distributor will have no
liability for payment for the purchase of Shares sold pursuant to this
Agreement or with respect to redemptions or repurchases of Shares.
1.2. The Distributor agrees to use efforts deemed appropriate by the
Distributor to solicit orders for the sale of the Shares and will
undertake such advertising and promotion as it believes reasonable in
connection with such solicitation; provided, however, that each Fund
will bear the expenses incurred and other payments made in accordance
with the provisions of the Agreement and any plan now or hereafter
adopted with respect to any Fund pursuant to Rule 12b-1 under the 1940
Act (the "Plans"). To the extent that the Distributor receives
shareholder services fees under any shareholder services plan adopted by
the Company, the Distributor agrees to furnish, and/or enter into
arrangements with others for the furnishing of, personal and/or account
maintenance services with respect to the relevant shareholders of the
Company as may be required pursuant to such plan. It is contemplated
that the Distributor will enter into sales or servicing agreements with
securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate
planning firms.
1.3. The Company understands that the Distributor is now, and may in the
future be, the distributor of the shares of several investment companies
or series (collectively, the "Investment Entities"), including
Investment Entities having investment objectives similar to those of the
Company. The Company further understands that investors and potential
investors in the Company may invest in shares of such other Investment
Entities. The Company agrees that the Distributor's duties to such
Investment Entities shall not be deemed in conflict with its duties to
the Company under this Section 1.3.
1.4. The Distributor shall not utilize any materials in connection with the
sale or offering of Shares except the Company's prospectus and statement
of additional information and such other materials as the Company shall
provide or approve.
1.5. All activities by the Distributor and its employees, as distributor of
the Shares, shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations
made or adopted by the SEC or the National Association of Securities
Dealers.
1.6. The Distributor will transmit any orders received by it for purchase or
redemption of the shares to the transfer agent for the Company
1.7. Whenever in its judgment such action is warranted by unusual market,
economic or political conditions or abnormal circumstances of any kind,
the Company may decline to accept any orders for, or make any sales of,
the Shares until such time as the Company deems it advisable to accept
such orders and to make such sales, and the Company advises the
Distributor promptly of such determination.
1.8. The Distributor may enter into selling agreements with selected dealers
or other institutions with respect to the offering of Shares to the
public. Each such selling agreement will provide (a) that all payments
for purchases of Shares will be sent directly from the dealer or such
other institution to the Funds' transfer agent and (b) that, if payment
is not made with respect to purchases of Shares at the customary or
required time for settlement of the transaction, the Distributor will
have the right to cancel the sale of the Shares ordered by the dealer or
such other institution, in which case the dealer or such other
institution will be responsible for any loss suffered by any Fund or the
Distributor resulting from such cancellation. The Distributor may also
act as disclosed agent for a Fund and sell Shares of that Fund to
individual investors, such transactions to be specifically approved by
an officer of that Fund.
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1.9. The Company agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended, and
all expenses in connection with maintaining facilities for the issue and
transfer of Shares and for supplying information, prices and other data
to be furnished by the Fund hereunder, and all expenses in connection
with the preparation and printing of the Fund's prospectuses and
statements of additional information for regulatory purposes and for
distribution to shareholders.
1.10. The Company agrees at its own expense to execute any and all documents
and to furnish any and all information and otherwise to take all actions
that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as the Distributor may designate. The
Company shall notify the Distributor in writing of the states in which
the Shares may be sold and shall notify the Distributor in writing of
any changes to the information contained in the previous notification.
1.11. The Company shall furnish from time to time, for use in connection with
the sale of the Shares, such information with respect to the Company and
the Shares as the Distributor may reasonably request; and the Company
warrants that the statements contained in any such information shall
fairly show or represent what they purport to show or represent. The
Company shall also furnish the Distributor upon request with: (a)
audited annual statements and unaudited semi-annual statements of a
Fund's books and accounts prepared by the Company, (b) quarterly
earnings statements prepared by the Company, (c) a monthly itemized list
of the securities in the Funds, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time to time such
additional information regarding the financial condition of the Company
as the Distributor may reasonably request.
1.12. The Company represents to the Distributor that all Registration
Statements and prospectuses filed by the Company with the SEC under the
1933 Act with respect to the Shares have been prepared in conformity
with the requirements of the 1933 Act and the rules and regulations of
the SEC thereunder. As used in this Agreement, the term "Registration
Statement" shall mean any Registration Statement and any prospectus and
any statement of additional information relating to the Company filed
with the SEC and any amendments or supplements thereto at any time filed
with the SEC. Except as to information included in the Registration
Statement in reliance upon information provided to the Company by the
Distributor or any affiliate of the Distributor expressly for use in the
Registration Statement, the Company represents and warrants to the
Distributor that any Registration Statement, when such Registration
Statement becomes effective, will contain statements required to be
stated therein in conformity with the 1933 Act and the rules and
regulations of the SEC; that all statements of fact contained in any
such Registration Statement will be true and correct when such
Registration Statement becomes effective; and that no Registration
Statement when such Registration Statement becomes effective will
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include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares. The
Company may but shall not be obligated to propose from time to time such
amendment or amendments to any Registration Statement and such
supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Company's counsel, be necessary
or advisable. The Company shall promptly notify the Distributor of any
advice given to it by its counsel regarding the necessity or
advisability of amending or supplementing such Registration Statement.
If the Company shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the
Company of a written request from the Distributor to do so, the
Distributor may, at its option, terminate this Agreement. The Company
shall not file any amendment to any Registration Statement or supplement
to any prospectus without giving the Distributor reasonable notice
thereof in advance; provided, however, that nothing contained in this
Agreement shall in any way limit the Company's right to file at any time
such amendments to any Registration Statements and/or supplements to any
prospectus, of whatever character, as the Company may deem advisable,
such right being in all respects absolute and unconditional.
1.13. The Company authorizes the Distributor to use any prospectus or
statement of additional information in the form furnished from time to
time in connection with the sale of the Shares. The Company agrees to
indemnify and hold harmless the Distributor, its officers, directors,
and employees, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless (a) from and
against any and all claims, costs, expenses (including reasonable
attorneys' fees) losses, damages, charges, payments and liabilities of
any sort or kind which the Distributor, its officers, directors,
employees or any such controlling person may incur under the 1933 Act,
under any other statute, at common law or otherwise, arising out of or
based upon: (i) any untrue statement, or alleged untrue statement, of a
material fact contained in the Company's Registration Statement,
prospectus, statement of additional information, or sales literature
(including amendments and supplements thereto), or (ii) any omission, or
alleged omission, to state a material fact required to be stated in the
Company's Registration Statement, prospectus, statement of additional
information or sales literature (including amendments or supplements
thereto), necessary to make the statements therein not misleading,
provided, however, that insofar as losses, claims, damages, liabilities
or expenses arise out of or are based upon any such untrue statement or
omission or alleged untrue statement or omission made in reliance on and
in conformity with information furnished to the Company by the
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Distributor or its affiliated persons for use in the Company's
Registration Statement, prospectus, or statement of additional
information or sales literature (including amendments or supplements
thereto), such indemnification is not applicable; and (b) from and
against any and all such claims, demands, liabilities and expenses
(including such costs and counsel fees) which you, your officers and
directors, or such controlling person, may incur in connection with this
Agreement or the Distributor's performance hereunder (but excluding such
claims, demands, liabilities and expenses (including such costs and
counsel fees) arising out of or based upon any untrue statement, or
alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon
any omission, or alleged omission, to state a material fact required to
be stated in either any registration statement or any prospectus or
necessary to make the statements in either thereof not misleading),
unless such claims, demands, liabilities and expenses (including such
costs and counsel fees) arise by reason of the Distributor's willful
misfeasance, bad faith or negligence in the performance of the
Distributor's duties hereunder. The Company acknowledges and agrees that
in the event that the Distributor, at the request of the Company, are
required to give indemnification comparable to that set forth in clause
(a) of this Section 1.13 to any entity selling Shares of the Company or
providing shareholder services to shareholders of the Company and such
entity shall make a claim for indemnification against the Distributor,
the Distributor shall make a similar claim for indemnification against
the Company.
1.14. The Distributor agrees to indemnify and hold harmless the Company, its
several officers and Trustees and each person, if any, who controls a
Fund within the meaning of Section 15 of the 1933 Act against any and
all claims, costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or kind
which the Company, its officers, Trustees or any such controlling person
may incur under the 1933 Act, under any other statute, at common law or
otherwise, but only to the extent that such liability or expense
incurred by the Company, its officers or Trustees, or any controlling
person resulting from such claims or demands arose out of the
acquisition of any Shares by any person which may be based upon any
untrue statement, or alleged untrue statement, of a material fact
contained in the Company's Registration Statement, prospectus or
statement of additional information (including amendments and
supplements thereto), or any omission, or alleged omission, to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished or confirmed in writing to
the Company by the Distributor or its affiliated persons (as defined in
the 1940 Act).
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1.15. In any case in which one party hereto (the "Indemnifying Party") may be
asked to indemnify or hold the other party hereto (the "Indemnified
Party") harmless, the Indemnified Party will notify the Indemnifying
Party promptly after identifying any situation which it believes
presents or appears likely to present a claim for indemnification (an
"Indemnification Claim") against the Indemnifying Party, although the
failure to do so shall not prevent recovery by the Indemnified Party,
and shall keep the Indemnifying Party advised with respect to all
developments concerning such situation. The Indemnifying Party shall
have the option to defend the Indemnified Party against any
Indemnification Claim which may be the subject of this indemnification,
and, in the event that the Indemnifying Party so elects, such defense
shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying
Party shall take over complete defense of the Indemnification Claim and
the Indemnified Party shall sustain no further legal or other expenses
in respect of such Indemnification Claim. The Indemnified Party will not
confess any Indemnification Claim or make any compromise in any case in
which the Indemnifying Party will be asked to provide indemnification,
except with the Indemnifying Party's prior written consent. The
obligations of the parties hereto under this Section 1.15 and Section
3.1 shall survive the termination of this Agreement.
In the event that the Company is the Indemnifying Party and the
Indemnifying Party does not elect to assume the defense of any such
suit, or in case the Distributor reasonably does not approve of counsel
chosen by the Company, or in case there is a conflict of interest
between the Company or the Distributor, the Company will reimburse the
Distributor, its officers, directors and employees, or the controlling
person or persons named as defendant or defendants in such suit, for the
fees and expenses of any counsel retained by the Distributor or them.
The Company's indemnification agreement contained in this Section 1.15
and Section 3.1 and the Company's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Distributor, its
officers, directors and employees, or any controlling person, and shall
survive the delivery of any Shares. This agreement of indemnity will
inure exclusively to the Distributor's benefit, to the benefit of its
several officers, directors and employees, and their respective estates
and to the benefit of the controlling persons and their successors. The
Company agrees promptly to notify the Distributor of the commencement of
any litigation or proceedings against the Company or any of its officers
or directors in connection with the issue and sale of any Shares.
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1.16. No Shares shall be offered by either the Distributor or the Company
under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Company if
and so long as effectiveness of the Registration Statement then in
effect or any necessary amendments thereto shall be suspended under any
of the provisions of the 1933 Act, or if and so long as a current
prospectus as required by Section 5(b)(2) of the 1933 Act is not on file
with the SEC; provided, however, that nothing contained in this Section
1.16 shall in any way restrict or have any application to or bearing
upon the Company's obligation to redeem Shares tendered for redemption
by any shareholder in accordance with the provisions of the Company's
Registration Statement, Declaration of Company, or bylaws.
1.17. The Company agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the SEC for amendments to the Registration
Statement, prospectus or statement of additional information then in
effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement, prospectus
or statement of additional information then in effect or the initiation
by service of process on the Company of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the Registration Statement, prospectus or
statement of additional information then in effect or that requires the
making of a change in such Registration Statement, prospectus or
statement of additional information in order to make the statements
therein not misleading; and
(d) of all actions of the SEC with respect to any amendments to any
Registration Statement, prospectus or statement of additional
information which may from time to time be filed with the SEC.
For purposes of this section, informal requests by or acts of the Staff
of the SEC shall not be deemed actions of or requests by the SEC.
2. TERM
----
2.1. This Agreement shall become effective on the date first written above
and, unless sooner terminated as provided herein, shall continue for an
initial two-year term and thereafter shall be renewed for successive
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one-year terms, provided such continuance is specifically approved at
least annually by (i) the Company's Board of Trustees or (ii) by a vote
of a majority (as defined in the 1940 Act and Rule 18f-2 thereunder) of
the outstanding voting securities of the Company, provided that in
either event the continuance is also approved by a majority of the
Trustees who are not parties to this Agreement and who are not
interested persons (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable without penalty,
on at least sixty days' written notice, by the Company's Board of
Trustees, by vote of a majority (as defined in the 1940 Act and Rule
18f-2 thereunder) of the outstanding voting securities of the Company,
or by the Distributor. This Agreement will also terminate automatically
in the event of its assignment (as defined in the 1940 Act and the rules
thereunder).
2.2. In the event a termination notice is given by the Company, all expenses
associated with movement of records and materials and conversion thereof
will be borne by the Company.
3. LIMITATION OF LIABILITY
-----------------------
3.1. The Distributor shall not be liable to the Company for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with the performance of its obligations and duties under this
Agreement, except a loss resulting from the Distributor's willful
misfeasance, bad faith or negligence in the performance of such
obligations and duties, or by reason of its reckless disregard thereof.
The Company will indemnify the Distributor against and hold it harmless
from any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of
any sort or kind which may be asserted against the Distributor for which
the Distributor may be held to be liable in connection with this
Agreement or the Distributor's performance hereunder (a "Section 3.1
Claim"), unless such Section 3.1 Claim resulted from a negligent act or
omission to act or bad faith by the Distributor in the performance of
its duties hereunder. The provisions of paragraph 1 of Section 1.12
shall apply to any indemnification provided by the Company pursuant to
this Section 3.1. The obligations of the parties hereto under this
Section 3.1 shall survive termination of this Agreement.
3.2. Notwithstanding any provision in this Agreement to the contrary, the
Distributor's cumulative liability (to the Company) for all losses,
claims, suits, controversies, breaches, or damages ("Liability Claims")
for any cause whatsoever and regardless of the form of action or legal
theory, shall not exceed $500,000. The Company understands the
limitation on the Distributor's damages to be a reasonable allocation of
risk and the Company expressly consents with respect to such allocation
of risk.
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3.3. Neither party may assert any cause of action against the other party
under this Agreement that accrued more than two (2) years prior to the
filing of the suit (or commencement of arbitration proceedings) alleging
such cause of action.
3.4. Each party shall have the duty to mitigate damages for which the other
party may become responsible.
3.5. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL THE DISTRIBUTOR, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY
OF TORT, CONTACT, STRICT LIABILITY OF OTHER LEGAL OR EQUITABLE THEORY
FOR LOST PROFITS, EXEMPLARY, PUNITIVE, SPECIAL INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF
THE PARTIES REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR
WHETHER EITHER PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.
4. EXCLUSION OF WARRANTIES
-----------------------
THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, THE DISTRIBUTOR DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE COMPANY, A FUND OR ANY OTHER
PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY,
SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF
TRADE) OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES
PROVIDED UNDER THIS AGREEMENT. THE DISTRIBUTOR DISCLAIMS ANY WARRANTY OF
TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT.
5. MODIFICATION AND WAIVERS
------------------------
No change, termination, modification, or waiver of any term or condition
of the Agreement shall be valid unless in writing signed by each party.
No such writing shall be effective as against the Distributor unless
said writing is executed by a Senior Vice President, Executive Vice
President or President of the Distributor. A party's waiver of a breach
of any term or condition in the Agreement shall not be deemed a waiver
of any subsequent breach of the same or another term or condition.
6. NO PRESUMPTION AGAINST DRAFTER
------------------------------
The Distributor and the Company have jointly participated in the
negotiation and drafting of this Agreement. The Agreement shall be
construed as if drafted jointly by the Company and the Distributor, and
no presumptions arise favoring any party by virtue of the authorship of
any provision of this Agreement.
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7. PUBLICITY
---------
Neither the Distributor nor the Company shall release or publish news
releases, public announcements, advertising or other publicity relating
to this Agreement or to the transactions contemplated by it without
prior review and written approval of the other party; provided, however,
that either party may make such disclosures as are required by legal,
accounting or regulatory requirements after making reasonable efforts in
the circumstances to consult in advance with the other party.
8. SEVERABILITY
------------
The parties intend every provision of this Agreement to be severable. If
a court of competent jurisdiction determines that any term or provision
is illegal or invalid for any reason, the illegality or invalidity shall
not affect the validity of the remainder of this Agreement. In such
case, the parties shall in good faith modify or substitute such
provision consistent with the original intent of the parties. Without
limiting the generality of this paragraph, if a court determines that
any remedy stated in this Agreement has failed of its essential purpose,
then all other provisions of this Agreement, including the limitations
on liability and exclusion of damages, shall remain fully effective.
9. FORCE MAJEURE
-------------
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default
or delay is caused, directly or indirectly, by (i) fire, flood, elements
of nature or other acts of God; (ii) any outbreak or escalation of
hostilities, war, riots or civil disorders in any country; (iii) any act
or omission of the other party or any governmental authority; (iv) any
labor disputes (whether or not the employees' demands are reasonable or
within the party's power to satisfy); or (v) nonperformance by a third
party or any similar cause beyond the reasonable control of such party,
including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the
non-performing party shall be excused from any further performance and
observance of the obligations so affected only for so long as such
circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
10. MISCELLANEOUS
-------------
10.1. Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Company or the Distributor shall be
sufficiently given if addressed to the party and received by it at its
office set forth below or at such other place as it may from time to
time designate in writing.
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To the Company:
The Potomac Funds
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
To the Distributor:
First Data Distributors, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with a copy to the Distributor's Chief Legal Officer
10.2. The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, and the applicable provisions of the 1940 Act shall
govern the interpretation, validity, and enforcement of this Agreement.
To the extent the provisions of Massachusetts law or the provisions
hereof conflict with the 1940 Act, the 1940 Act shall control. All
actions arising from or related to this Agreement shall be brought in
the state and federal courts sitting in the City of Boston, and the
Distributor and the Company hereby submit themselves to the exclusive
jurisdiction of those courts.
10.3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
10.4. The captions of this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
10.5. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and is not intended
to confer upon any other person any rights or remedies hereunder.
11. CONFIDENTIALITY
---------------
11.1. The parties agree that the Proprietary Information (defined below) and
the contents of this Agreement (collectively "Confidential Information")
are confidential information of the parties and their respective
licensers. The Company and the Distributor shall exercise reasonable
care to safeguard the confidentiality of the Confidential Information of
the other. The Company and the Distributor may each use the Confidential
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Information only to exercise its rights or perform its duties under this
Agreement. The Company and the Distributor shall not duplicate, sell or
disclose to others the Confidential Information of the other, in whole
or in part, without the prior written permission of the other party. The
Company and the Distributor may, however, disclose Confidential
Information to its employees who have a need to know the Confidential
Information to perform work for the other, provided that each shall use
reasonable efforts to ensure that the Confidential Information is not
duplicated or disclosed by its employees in breach of this Agreement.
The Company and the Distributor may also disclose the Confidential
Information to independent contractors, auditors and professional
advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 11.
Notwithstanding the previous sentence, in no event shall either the
Company or the Distributor disclose the Confidential Information to any
competitor of the other without specific, prior written consent.
11.2. Proprietary Information means:
(a) any data or information that is completely sensitive material, and
not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance,
operations, customer relationships, customer profiles, sales estimates,
business plans, and internal performance results relating to the past,
present or future business activities of the Company or the Distributor,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or the
Distributor a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable or copyrightable.
11.3. Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either
party which now exist or come into the control or possession of the
other.
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11.4. The Company acknowledges that breach of the restrictions on use,
dissemination or disclosure of any Confidential Information would result
in immediate and irreparable harm, and money damages would be inadequate
to compensate the Distributor for that harm. The Distributor shall be
entitled to equitable relief, in addition to all other available
remedies, to redress any such breach.
12. The Company and the Distributor agree that the obligations of the
Company under the Agreement shall not be binding upon any of the
Trustees, shareholders, nominees, officers, employees or agents, whether
past, present or future, of the Company individually, but are binding
only upon the assets and property of the Company, as provided in the
Declaration of Trust. The execution and delivery of this Agreement have
been authorized by the Directors of the Company, and signed by an
authorized officer of the Company, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them or any
shareholder of the Company individually or to impose any liability on
any of them or any shareholder of the Company personally, but shall bind
only the assets and property of the Company as provided in the
Declaration of Trust.
13. ENTIRE AGREEMENT
----------------
This Agreement, including all Schedules hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous proposals, agreements,
contracts, representations, and understandings, whether written or oral,
between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
POTOMAC FUNDS
BY:________________________________
NAME:______________________________
TITLE:_____________________________
FIRST DATA DISTRIBUTORS, INC.
BY:________________________________
NAME:______________________________
TITLE:_____________________________
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SCHEDULE A
----------
to the Distribution Agreement
between The Potomac Funds and
First Data Distributors, Inc.
NAME OF FUNDS
-------------
Potomac Japan/Long Fund
Potomac Japan/Short Fund
Potomac U.S. Plus Fund
Potomac U.S./Short Fund
Potomac OTC Plus Fund
Potomac OTC/Short Fund
Potomac U.S. Government Money Market Fund
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