1
CUSTODY AGREEMENT
AGREEMENT, dated as of June 27, 2000 between Summit Funds Management
Corporation, a corporation organized and existing under the laws of the State
of Maryland having its principal office and place of business at 0 Xxxxxxxxx
Xxxxxx, Xxxx Xxxxx, Xxx Xxxx, 00000 (the "Fund") and The Bank of New York, a
New York corporation authorized to do a banking business having its principal
office and place of business at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual premises hereinafter set forth the
Fund and Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
1. "AUTHORIZED PERSON" shall be any person, whether or not an
officer or employee of the Fund, duly authorized by the Fund's board to execute
any Certificate or to give any Oral Instruction with respect to one or more
Accounts, such persons to be designated in a Certificate annexed hereto as
Schedule I hereto or such other Certificate as may be received by Custodian
from time to time.
2. "BNY AFFILIATE" shall mean any office, branch or subsidiary
of The Bank of New York Company, Inc.
3. "BOOK-ENTRY SYSTEM" shall mean the Federal Reserve/Treasury
book-entry system for receiving and delivering securities, its successors and
nominees.
4. "BUSINESS DAY" shall mean any day on which Custodian and
relevant Depositories are open for business.
5. "CERTIFICATE" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
Custodian, which is actually received by Custodian by letter or facsimile
transmission and signed on behalf of the Fund by an Authorized Person or a
person reasonably believed by Custodian to be an Authorized Person.
6. "COMPOSITE CURRENCY UNIT" shall mean the Euro or any other
composite currency unit consisting of the aggregate of specified amounts of
specified currencies, as such unit may be constituted from time to time.
7. "COMPULSORY DEPOSITORY" shall mean any Foreign Depository the
use of which is mandatory by law or regulation, or because securities cannot be
withdrawn from such Foreign
2
Depository, or because maintaining securities outside such Foreign Depository
is not consistent with prevailing custodial practices in the relevant market.
8. "DEPOSITORY" shall include (a) the Book-Entry System, (b) the
Depository Trust Company, (c) any other clearing agency or securities
depository registered with the Securities and Exchange Commission identified to
the Fund from time to time, and (d) the respective successors and nominees of
the foregoing.
9. "FOREIGN DEPOSITORY" shall mean (a) Euroclear, (b)
Clearstream Banking, societe anonyme, (c) any Compulsory Depository, (d) any
other security depository or clearing agency located outside the United States
that acts as a system for the central handling of securities identified to the
Fund from time to time, and (e) the respective successors and nominees of the
foregoing.
10. "INSTRUCTIONS" shall mean communications transmitted by
electronic or telecommunications media, including S.W.I.F.T.,
computer-to-computer interface, or dedicated transmission lines.
11. "ORAL INSTRUCTIONS" shall mean verbal instructions received
by Custodian from an Authorized Person or from a person reasonably believed by
Custodian to be an Authorized Person.
12. "SERIES" shall mean the various portfolios, if any, of the
Fund listed on Schedule II hereto, and if none are listed references to Series
shall be references to the Fund.
13. "SECURITIES" shall include, without limitation, any common
stock and other equity securities, bonds, debentures and other debt securities,
notes, mortgages or other obligations, and any instruments representing rights
to receive, purchase, or subscribe for the same, or representing any other
rights or interests therein (whether represented by a certificate or held in a
Depository or by a Subcustodian).
14. "SUBCUSTODIAN" shall mean a bank (including any branch
thereof) or other financial institution (other than a Foreign Depository)
located outside the U.S. which is utilized by Custodian in connection with the
purchase, sale or custody of Securities hereunder and identified to the Fund
from time to time, and their respective successors and nominees.
ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
1. (a) The Fund hereby appoints Custodian as custodian of
all Securities and cash at any time delivered to Custodian during the term of
this Agreement, and authorizes Custodian to hold Securities in registered form
in its name or the name of its nominees. Custodian hereby accepts such
appointment and agrees to establish and maintain one or more securities
accounts and cash accounts for each Series in which Custodian will hold
Securities and cash as provided herein. Custodian shall maintain books and
records segregating the assets of
- 2 -
3
each Series from the assets of any other Series. Such accounts (each, an
"Account"; collectively, the "Accounts") shall be in the name of the Fund.
(b) Custodian may from time to time establish on its
books and records such sub-accounts within each Account as the Fund and
Custodian may agree upon (each a "Special Account"), and Custodian shall
reflect therein such assets as the Fund may specify in a Certificate or
Instructions.
(c) Custodian may from time to time establish pursuant
to a written agreement with and for the benefit of a broker, dealer, future
commission merchant or other third party identified in a Certificate or
Instructions such accounts on such terms and conditions as the Fund and
Custodian shall agree, and Custodian shall transfer to such account such
Securities and money as the Fund may specify in a Certificate or Instructions.
2. The Fund hereby represents and warrants, which
representations and warranties shall be continuing and shall be deemed to be
reaffirmed upon each delivery of a Certificate or each giving of Oral
Instructions or Instructions by the Fund, that:
(a) It is duly organized and existing under the laws of
the jurisdiction of its organization, with full power to carry on its business
as now conducted, to enter into this Agreement, and to perform its obligations
hereunder;
(b) This Agreement has been duly authorized, executed
and delivered by the Fund, approved by a resolution of its board, constitutes a
valid and legally binding obligation of the Fund, enforceable in accordance
with its terms, and there is no statute, regulation, rule, order or judgment
binding on it, and no provision of its charter or by-laws, nor of any mortgage,
indenture, credit agreement or other contract binding on it or affecting its
property, which would prohibit its execution or performance of this Agreement;
(c) It is conducting its business in substantial
compliance with all applicable laws and requirements, both state and federal,
and has obtained all regulatory licenses, approvals and consents necessary to
carry on its business as now conducted;
(d) It will not use the services provided by Custodian
hereunder in any manner that is, or will result in, a violation of any law,
rule or regulation applicable to the Fund;
(e) Its board or its foreign custody manager, as defined
in Rule 17f-5 under the Investment Company Act of 1940, as amended (the "'40
Act"), has determined that use of each Subcustodian (including any Replacement
Custodian), each Depository, and each Foreign Depository which Custodian or any
Subcustodian is authorized to utilize in accordance with Section 1(a) of
Article III hereof, satisfies the applicable requirements of the '40 Act and
Rules 17f-4 or 17f-5 thereunder, as the case may be;
(f) It is fully informed of the protections and risks
associated with various methods of transmitting Instructions and Oral
Instructions and delivering Certificates to Custodian, understands that there
may be more secure methods of transmitting or delivering the same than the
methods selected by the Fund, agrees that the security procedures (if any) to
be
- 3 -
4
utilized provide a commercially reasonable degree of protection in light of its
particular needs and circumstances, and acknowledges and agrees that
Instructions need not be reviewed by Custodian, may conclusively be presumed by
Custodian to have been given by person(s) duly authorized, and may be acted
upon as given;
(g) It shall manage its borrowings, including, without
limitation, any advance or overdraft (including any day-light overdraft) in the
Accounts, so that the aggregate of its total borrowings for each Series does
not exceed the amount such Series is permitted to borrow under the '40 Act;
(h) Its transmission or giving of, and Custodian acting
upon, Certificates, Instructions, or Oral Instructions pursuant to this
Agreement shall at all times comply with the '40 Act;
(i) It shall impose and maintain restrictions on the
destinations to which cash may be disbursed by Instructions to ensure that each
disbursement is for a proper purpose; and
(j) It has the right to make the pledge and grant the
security interest and security entitlement to Custodian contained in Section 1
of Article V hereof, free of any right of redemption or prior claim of any
other person or entity, such pledge and such grants shall have a first priority
subject to no setoffs, counterclaims, or other liens or grants prior to or on a
parity therewith, and it shall take such additional steps as Custodian may
require to assure such priority.
3. The Fund hereby covenants that it shall from time to time
complete and execute and deliver to Custodian upon Custodian's request a Form
FR U-1 (or successor form) whenever the Fund borrows from Custodian any money
to be used for the purchase or carrying of margin stock as defined in Federal
Reserve Regulation U.
ARTICLE III
CUSTODY AND RELATED SERVICES
1. (a) Subject to the terms hereof, the Fund hereby
authorizes Custodian to hold any Securities received by it from time to time
for the Fund's account. Custodian shall be entitled to utilize Depositories,
Foreign Depositories and Subcustodians to the extent possible in connection
with its performance hereunder. Securities and cash held in a Depository or
Foreign Depository will be held subject to the rules, terms and conditions of
such entity. Securities and cash held through Subcustodians shall be held
subject to the terms and conditions of Custodian's agreements with such
Subcustodians. Subcustodians may be authorized to hold Securities in Foreign
Depositories in which such Subcustodians participate. Unless otherwise required
by local law or practice or a particular subcustodian agreement, Securities
deposited with a Subcustodian or a Depository will be held in a commingled
account, in the name of Custodian, holding only Securities held by Custodian as
custodian for its customers. Custodian shall identify on its books and records
the Securities and cash belonging to the Fund, whether held directly or
indirectly through Depositories, Foreign Depositories, or Subcustodians.
Custodian shall, directly or indirectly through Subcustodians, Depositories, or
Foreign Depositories, endeavor, to the extent feasible, to hold Securities in
the country or other jurisdiction in which
- 4 -
5
the principal trading market for such Securities is located, where such
Securities are to be presented for cancellation and/or payment and/or
registration, or where such Securities are acquired. Custodian at any time may
cease utilizing any Subcustodian and/or may replace a Subcustodian with a
different Subcustodian (the "Replacement Subcustodian"). In the event Custodian
selects a Replacement Subcustodian, Custodian shall not utilize such
Replacement Subcustodian until after the Fund's board or foreign custody
manager has determined that utilization of such Replacement Subcustodian
satisfies the requirements of the '40 Act and Rule 17f-5 thereunder.
(b) Unless Custodian has received a Certificate or
Instructions to the contrary, Custodian shall hold Securities indirectly
through a Subcustodian only if (i) the Securities are not subject to any right,
charge, security interest, lien or claim of any kind in favor of such
Subcustodian or its creditors or operators, including a receiver or trustee in
bankruptcy or similar authority, except for a claim of payment for the safe
custody or administration of Securities on behalf of the Fund by such
Subcustodian, and (ii) beneficial ownership of the Securities is freely
transferable without the payment of money or value other than for safe custody
or administration.
2. Custodian shall furnish the Fund with an advice of daily
transactions (including a confirmation of each transfer of Securities) and a
monthly summary of all transfers to or from the Accounts.
3. With respect to all Securities held hereunder, Custodian
shall, unless otherwise instructed to the contrary:
(a) Receive all income and other payments and advise the
Fund as promptly as practicable of any such amounts due but not paid;
(b) Present for payment and receive the amount paid upon
all Securities which may mature and advise the Fund as promptly as practicable
of any such amounts due but not paid;
(c) Forward to the Fund copies of all information or
documents that it may actually receive from an issuer of Securities which, in
the opinion of Custodian, are intended for the beneficial owner of Securities;
(d) Execute, as custodian, any certificates of
ownership, affidavits, declarations or other certificates under any tax laws
now or hereafter in effect in connection with the collection of bond and note
coupons;
(e) Hold directly or through a Depository, a Foreign
Depository, or a Subcustodian all rights and similar Securities issued with
respect to any Securities credited to an Account hereunder; and
(f) Endorse for collection checks, drafts or other
negotiable instruments.
4. (a) Custodian shall notify the Fund of rights or
discretionary actions with respect to Securities held hereunder, and of the
date or dates by when such rights must be
- 5 -
6
exercised or such action must be taken, provided that Custodian has actually
received, from the issuer or the relevant Depository (with respect to
Securities issued in the United States) or from the relevant Subcustodian,
Foreign Depository, or a nationally or internationally recognized bond or
corporate action service to which Custodian subscribes, timely notice of such
rights or discretionary corporate action or of the date or dates such rights
must be exercised or such action must be taken. Absent actual receipt of such
notice, Custodian shall have no liability for failing to so notify the Fund.
(b) Whenever Securities (including, but not limited to,
warrants, options, tenders, options to tender or non-mandatory puts or calls)
confer discretionary rights on the Fund or provide for discretionary action or
alternative courses of action by the Fund, the Fund shall be responsible for
making any decisions relating thereto and for directing Custodian to act. In
order for Custodian to act, it must receive the Fund's Certificate or
Instructions at Custodian's offices, addressed as Custodian may from time to
time request, not later than noon (New York time) at least two (2) Business
Days prior to the last scheduled date to act with respect to such Securities
(or such earlier date or time as Custodian may specify to the Fund). Absent
Custodian's timely receipt of such Certificate or Instructions, Custodian shall
not be liable for failure to take any action relating to or to exercise any
rights conferred by such Securities.
5. All voting rights with respect to Securities, however
registered, shall be exercised by the Fund or its designee. For Securities
issued in the United States, Custodian's only duty shall be to mail to the Fund
any documents (including proxy statements, annual reports and signed proxies)
actually received by Custodian relating to the exercise of such voting rights.
With respect to Securities issued outside of the United States, Custodian's
only duty shall be to provide the Fund with access to a provider of global
proxy services at the Fund's request. The Fund shall be responsible for all
costs associated with its use of such services.
6. Custodian shall promptly advise the Fund upon Custodian's
actual receipt of notification of the partial redemption, partial payment or
other action affecting less than all Securities of the relevant class. If
Custodian, any Subcustodian, any Depository, or any Foreign Depository holds
any Securities in which the Fund has an interest as part of a fungible mass,
Custodian, such Subcustodian, Depository, or Foreign Depository may select the
Securities to participate in such partial redemption, partial payment or other
action in any non-discriminatory manner that it customarily uses to make such
selection.
7. Custodian shall not under any circumstances accept bearer
interest coupons which have been stripped from United States federal, state or
local government or agency securities unless explicitly agreed to by Custodian
in writing.
8. The Fund shall be liable for all taxes, assessments, duties
and other governmental charges, including any interest or penalty with respect
thereto ("Taxes"), with respect to any cash or Securities held on behalf of the
Fund or any transaction related thereto. The Fund shall indemnify Custodian and
each Subcustodian for the amount of any Tax that Custodian, any such
Subcustodian or any other withholding agent is required under applicable laws
(whether by assessment or otherwise) to pay on behalf of, or in respect of
income earned by or payments or distributions made to or for the account of the
Fund (including any payment of Tax required by
- 6 -
7
reason of an earlier failure to withhold). Custodian shall, or shall instruct
the applicable Subcustodian or other withholding agent to, withhold the amount
of any Tax which is required to be withheld under applicable law upon
collection of any dividend, interest or other distribution made with respect to
any Security and any proceeds or income from the sale, loan or other transfer
of any Security. In the event that Custodian or any Subcustodian is required
under applicable law to pay any Tax on behalf of the Fund, Custodian is hereby
authorized to withdraw cash from any cash account in the amount required to pay
such Tax and to use such cash, or to remit such cash to the appropriate
Subcustodian or other withholding agent, for the timely payment of such Tax in
the manner required by applicable law. If the aggregate amount of cash in all
cash accounts is not sufficient to pay such Tax, Custodian shall promptly
notify the Fund of the additional amount of cash (in the appropriate currency)
required, and the Fund shall directly deposit such additional amount in the
appropriate cash account promptly after receipt of such notice, for use by
Custodian as specified herein. In the event that Custodian reasonably believes
that Fund is eligible, pursuant to applicable law or to the provisions of any
tax treaty, for a reduced rate of, or exemption from, any Tax which is
otherwise required to be withheld or paid on behalf of the Fund under any
applicable law, Custodian shall, or shall instruct the applicable Subcustodian
or withholding agent to, either withhold or pay such Tax at such reduced rate
or refrain from withholding or paying such Tax, as appropriate; provided that
Custodian shall have received from the Fund all documentary evidence of
residence or other qualification for such reduced rate or exemption required to
be received under such applicable law or treaty. In the event that Custodian
reasonably believes that a reduced rate of, or exemption from, any Tax is
obtainable only by means of an application for refund, Custodian and the
applicable Subcustodian shall have no responsibility for the accuracy or
validity of any forms or documentation provided by the Fund to Custodian
hereunder. The Fund hereby agrees to indemnify and hold harmless Custodian and
each Subcustodian in respect of any liability arising from any underwithholding
or underpayment of any Tax which results from the inaccuracy or invalidity of
any such forms or other documentation, and such obligation to indemnify shall
be a continuing obligation of the Fund, its successors and assigns
notwithstanding the termination of this Agreement.
9. (a) For the purpose of settling Securities and foreign
exchange transactions, the Fund shall provide Custodian with sufficient
immediately available funds for all transactions by such time and date as
conditions in the relevant market dictate. As used herein, "sufficient
immediately available funds" shall mean either (i) sufficient cash denominated
in U.S. dollars to purchase the necessary foreign currency, or (ii) sufficient
applicable foreign currency, to settle the transaction. Custodian shall provide
the Fund with immediately available funds each day which result from the actual
settlement of all sale transactions, based upon advices received by Custodian
from Subcustodians, Depositories, and Foreign Depositories. Such funds shall be
in U.S. dollars or such other currency as the Fund may specify to Custodian.
(b) Any foreign exchange transaction effected by
Custodian in connection with this Agreement may be entered with Custodian or a
BNY Affiliate acting as principal or otherwise through customary banking
channels. The Fund may issue a standing Certificate or Instructions with
respect to foreign exchange transactions, but Custodian may establish rules or
limitations concerning any foreign exchange facility made available to the
Fund. The Fund shall bear all risks of investing in Securities or holding cash
denominated in a foreign currency.
- 7 -
8
(c) To the extent that Custodian has agreed to provide
pricing or other information services in connection with this Agreement,
Custodian is authorized to utilize any vendor (including brokers and dealers of
Securities) reasonably believed by Custodian to be reliable to provide such
information. The Fund understands that certain pricing information with respect
to complex financial instruments (e.g., derivatives) may be based on calculated
amounts rather than actual market transactions and may not reflect actual
market values, and that the variance between such calculated amounts and actual
market values may or may not be material. Where vendors do not provide
information for particular Securities or other property, an Authorized Person
may advise Custodian in a Certificate regarding the fair market value of, or
provide other information with respect to, such Securities or property as
determined by it in good faith. Custodian shall not be liable for any loss,
damage or expense incurred as a result of errors or omissions with respect to
any pricing or other information utilized by Custodian hereunder.
10. Custodian shall promptly send to the Fund (a) any reports it
receives from a Depository on such Depository's system of internal accounting
control, and (b) such reports on its own system of internal accounting control
as the Fund may reasonably request from time to time.
ARTICLE IV
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
1. Promptly after each purchase or sale of Securities by the
Fund, the Fund shall deliver to Custodian a Certificate or Instructions, or
with respect to a purchase or sale of a Security generally required to be
settled on the same day the purchase or sale is made, Oral Instructions
specifying all information Custodian may reasonably request to settle such
purchase or sale. Custodian shall account for all purchases and sales of
Securities on the actual settlement date unless otherwise agreed by Custodian.
2. The Fund understands that when Custodian is instructed to
deliver Securities against payment, delivery of such Securities and receipt of
payment therefor may not be completed simultaneously. Notwithstanding any
provision in this Agreement to the contrary, settlements, payments and
deliveries of Securities may be effected by Custodian or any Subcustodian in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction in which the
transaction occurs, including, without limitation, delivery to a purchaser or
dealer therefor (or agent) against receipt with the expectation of receiving
later payment for such Securities. The Fund assumes full responsibility for all
risks, including, without limitation, credit risks, involved in connection with
such deliveries of Securities.
3. Custodian may, as a matter of bookkeeping convenience or by
separate agreement with the Fund, credit the Account with the proceeds from the
sale, redemption or other disposition of Securities or interest, dividends or
other distributions payable on Securities prior to its actual receipt of final
payment therefor. All such credits shall be conditional until Custodian's
actual receipt of final payment and may be reversed by Custodian to the extent
that final payment is not received. Payment with respect to a transaction will
not be "final" until Custodian shall
- 8 -
9
have received immediately available funds which under applicable local law,
rule and/or practice are irreversible and not subject to any security interest,
levy or other encumbrance, and which are specifically applicable to such
transaction.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
1. If Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft (including, without
limitation, any day-light overdraft) because the money held by Custodian in an
Account for such Series shall be insufficient to pay the total amount payable
upon a purchase of Securities specifically allocated to such Series, as set
forth in a Certificate, Instructions or Oral Instructions, or if an overdraft
arises in the separate account of a Series for some other reason, including,
without limitation, because of a reversal of a conditional credit or the
purchase of any currency, or if the Fund is for any other reason indebted to
Custodian with respect to a Series, including any indebtedness to The Bank of
New York under the Fund's Cash Management and Related Services Agreement
(except a borrowing for investment or for temporary or emergency purposes using
Securities as collateral pursuant to a separate agreement and subject to the
provisions of Section 2 of this Article), such overdraft or indebtedness shall
be deemed to be a loan made by Custodian to the Fund for such Series payable on
demand and shall bear interest from the date incurred at a rate per annum
ordinarily charged by Custodian to its institutional customers, as such rate
may be adjusted from time to time. In addition, the Fund hereby agrees that
Custodian shall to the maximum extent permitted by law have a continuing lien,
security interest, and security entitlement in and to any property, including,
without limitation, any investment property or any financial asset, of such
Series at any time held by Custodian for the benefit of such Series or in which
such Series may have an interest which is then in Custodian's possession or
control or in possession or control of any third party acting in Custodian's
behalf. The Fund authorizes Custodian, in its sole discretion, at any time to
charge any such overdraft or indebtedness together with interest due thereon
against any balance of account standing to such Series' credit on Custodian's
books.
2. If the Fund borrows money from any bank (including Custodian
if the borrowing is pursuant to a separate agreement) for investment or for
temporary or emergency purposes using Securities held by Custodian hereunder as
collateral for such borrowings, the Fund shall deliver to Custodian a
Certificate specifying with respect to each such borrowing: (a) the Series to
which such borrowing relates; (b) the name of the bank, (c) the amount of the
borrowing, (d) the time and date, if known, on which the loan is to be entered
into, (e) the total amount payable to the Fund on the borrowing date, (f) the
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan
is in conformance with the '40 Act and the Fund's prospectus. Custodian shall
deliver on the borrowing date specified in a Certificate the specified
collateral against payment by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount payable as set
forth in the Certificate. Custodian may, at the option of the lending bank,
keep such collateral in its possession, but such collateral shall be subject to
all rights therein given the lending bank by virtue of any promissory note or
loan agreement. Custodian shall deliver such Securities as
- 9 -
10
additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this Section. The Fund shall cause all
Securities released from collateral status to be returned directly to
Custodian, and Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in a Certificate the Series, the name of the issuer, the title and
number of shares or the principal amount of any particular Securities to be
delivered as collateral by Custodian, Custodian shall not be under any
obligation to deliver any Securities.
ARTICLE VI
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any shares issued by the Fund
("Shares") it shall deliver to Custodian a Certificate or Instructions
specifying the amount of money and/or Securities to be received by Custodian
for the sale of such Shares and specifically allocated to an Account for such
Series.
2. Upon receipt of such money, Custodian shall credit such money
to an Account in the name of the Series for which such money was received.
3. Except as provided hereinafter, whenever the Fund desires
Custodian to make payment out of the money held by Custodian hereunder in
connection with a redemption of any Shares, it shall furnish to Custodian a
Certificate or Instructions specifying the total amount to be paid for such
Shares. Custodian shall make payment of such total amount to the transfer agent
specified in such Certificate or Instructions out of the money held in an
Account of the appropriate Series.
4. Notwithstanding the above provisions regarding the redemption
of any Shares, whenever any Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund,
Custodian, unless otherwise instructed by a Certificate or Instructions, shall,
upon presentment of such check, charge the amount thereof against the money
held in the Account of the Series of the Shares being redeemed, provided, that
if the Fund or its agent timely advises Custodian that such check is not to be
honored, Custodian shall return such check unpaid.
ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. Whenever the Fund shall determine to pay a dividend or
distribution on Shares it shall furnish to Custodian Instructions or a
Certificate setting forth with respect to the Series specified therein the date
of the declaration of such dividend or distribution, the total amount payable,
and the payment date.
2. Upon the payment date specified in such Instructions or
Certificate, Custodian shall pay out of the money held for the account of such
Series the total amount payable to the dividend agent of the Fund specified
therein.
- 10 -
11
ARTICLE VIII
CONCERNING CUSTODIAN
1. (a) Except as otherwise expressly provided herein,
Custodian shall not be liable for any costs, expenses, damages, liabilities or
claims, including attorneys' and accountants' fees (collectively, "Losses"),
incurred by or asserted against the Fund, except those Losses arising out of
Custodian's own negligence or willful misconduct. Custodian shall have no
liability whatsoever for the action or inaction of any Depositories or any
Foreign Depositories. With respect to any Losses incurred by the Fund as a
result of the acts or any failures to act by any Subcustodian (other than a BNY
Affiliate), Custodian shall take appropriate action to recover such Losses from
such Subcustodian; and Custodian's sole responsibility and liability to the
Fund shall be limited to amounts so received from such Subcustodian (exclusive
of costs and expenses incurred by Custodian). In no event shall Custodian be
liable to the Fund or any third party for special, indirect or consequential
damages, or lost profits or loss of business, arising in connection with this
Agreement, nor shall BNY or any Subcustodian be liable: (i) for acting in
accordance with any Certificate or Oral Instructions actually received by
Custodian and reasonably believed by Custodian to be given by an Authorized
Person; (ii) for acting in accordance with Instructions without reviewing the
same; (iii) for conclusively presuming that all Instructions are given only by
person(s) duly authorized; (iv) for conclusively presuming that all
disbursements of cash directed by the Fund, whether by a Certificate, an Oral
Instruction, or an Instruction, are in accordance with Section 2(i) of Article
II hereof; (v) for holding property in any particular country, including, but
not limited to, Losses resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or securities industry;
exchange or currency controls or restrictions, devaluations or fluctuations;
availability of cash or Securities or market conditions which prevent the
transfer of property or execution of Securities transactions or affect the
value of property; (vi) for any Losses due to forces beyond the control of
Custodian, including without limitation strikes, work stoppages, acts of war or
terrorism, insurrection, revolution, nuclear or natural catastrophes or acts of
God, or interruptions, loss or malfunctions of utilities, communications or
computer (software and hardware) services; (vii) for the insolvency of any
Subcustodian (other than a BNY Affiliate), any Depository, or any Foreign
Depository; or (viii) for any Losses arising from the applicability of any law
or regulation now or hereafter in effect, or from the occurrence of any event,
including, without limitation, any rules or procedures of a Foreign Depository,
which may affect, limit, prevent or impose costs or burdens on, the
transferability, convertibility, or availability of any currency or Composite
Currency Unit in any country or on the transfer of any Securities, and in no
event shall Custodian be obligated to substitute another currency for a
currency (including a currency that is a component of a Composite Currency
Unit) whose transferability, convertibility or availability has been affected,
limited, or prevented by such law, regulation or event, and to the extent that
any such law, regulation or event imposes a cost or charge upon Custodian in
relation to the transferability, convertibility, or availability of any cash
currency or Composite Currency Unit, such cost or charge shall be for the
account of the Fund, and Custodian may treat any account denominated in an
affected currency as a group of separate accounts denominated in the relevant
component currencies.
- 11 -
12
(b) Custodian may enter into subcontracts, agreements
and understandings with any BNY Affiliate, whenever and on such terms and
conditions as it deems necessary or appropriate to perform its services
hereunder. No such subcontract, agreement or understanding shall discharge
Custodian from its obligations hereunder.
(c) The Fund agrees to indemnify Custodian and hold
Custodian harmless from and against any and all Losses sustained or incurred by
or asserted against Custodian by reason of or as a result of any action or
inaction, or arising out of Custodian's performance hereunder, including
reasonable fees and expenses of counsel incurred by Custodian in a successful
defense of claims by the Fund; provided however, that the Fund shall not
indemnify Custodian for those Losses arising out of Custodian's own negligence
or willful misconduct. This indemnity shall be a continuing obligation of the
Fund, its successors and assigns, notwithstanding the termination of this
Agreement.
2. Without limiting the generality of the foregoing, Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) Any Losses incurred by the Fund or any other person
as a result of the receipt or acceptance of fraudulent, forged or invalid
Securities, or Securities which are otherwise not freely transferable or
deliverable without encumbrance in any relevant market;
(b) The validity of the issue of any Securities
purchased, sold, or written by or for the Fund, the legality of the purchase,
sale or writing thereof, or the propriety of the amount paid or received
therefor;
(c) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid therefor;
(d) The legality of the declaration or payment of any
dividend or distribution by the Fund;
(e) The legality of any borrowing by the Fund;
(f) The legality of any loan of portfolio Securities,
nor shall Custodian be under any duty or obligation to see to it that any cash
or collateral delivered to it by a broker, dealer or financial institution or
held by it at any time as a result of such loan of portfolio Securities is
adequate security for the Fund against any loss it might sustain as a result of
such loan, which duty or obligation shall be the sole responsibility of the
Fund. In addition, Custodian shall be under no duty or obligation to see that
any broker, dealer or financial institution to which portfolio Securities of
the Fund are lent makes payment to it of any dividends or interest which are
payable to or for the account of the Fund during the period of such loan or at
the termination of such loan, provided, however that Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due;
(g) The sufficiency or value of any amounts of money
and/or Securities held in any Special Account in connection with transactions
by the Fund; whether any broker, dealer, futures commission merchant or
clearing member makes payment to the Fund of any variation
- 12 -
13
margin payment or similar payment which the Fund may be entitled to receive
from such broker, dealer, futures commission merchant or clearing member, or
whether any payment received by Custodian from any broker, dealer, futures
commission merchant or clearing member is the amount the Fund is entitled to
receive, or to notify the Fund of Custodian's receipt or non-receipt of any
such payment; or
(h) Whether any Securities at any time delivered to, or
held by it or by any Subcustodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus and statement of
additional information, or to ascertain whether any transactions by the Fund,
whether or not involving Custodian, are such transactions as may properly be
engaged in by the Fund.
3. Custodian may, with respect to questions of law specifically
regarding an Account, obtain the advice of counsel and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
such advice.
4. Custodian shall be under no obligation to take action to
collect any amount payable on Securities in default, or if payment is refused
after due demand and presentment.
5. Custodian shall have no duty or responsibility to inquire
into, make recommendations, supervise, or determine the suitability of any
transactions affecting any Account.
6. The Fund shall pay to Custodian the fees and charges as may
be specifically agreed upon from time to time and such other fees and charges
at Custodian's standard rates for such services as may be applicable. The Fund
shall reimburse Custodian for all costs associated with the conversion of the
Fund's Securities hereunder and the transfer of Securities and records kept in
connection with this Agreement. The Fund shall also reimburse Custodian for
out-of-pocket expenses which are a normal incident of the services provided
hereunder.
7. Custodian has the right to debit any cash account for any
amount payable by the Fund in connection with any and all obligations of the
Fund to Custodian. In addition to the rights of Custodian under applicable law
and other agreements, at any time when the Fund shall not have honored any of
its obligations to Custodian, Custodian shall have the right without notice to
the Fund to retain or set-off, against such obligations of the Fund, any
Securities or cash Custodian or a BNY Affiliate may directly or indirectly hold
for the account of the Fund, and any obligations (whether matured or unmatured)
that Custodian or a BNY Affiliate may have to the Fund in any currency or
Composite Currency Unit. Any such asset of, or obligation to, the Fund may be
transferred to Custodian and any BNY Affiliate in order to effect the above
rights.
8. The Fund agrees to forward to Custodian a Certificate or
Instructions confirming Oral Instructions by the close of business of the same
day that such Oral Instructions are given to Custodian. The Fund agrees that
the fact that such confirming Certificate or Instructions are not received or
that a contrary Certificate or contrary Instructions are received by Custodian
shall in no way affect the validity or enforceability of transactions
authorized by such Oral Instructions
- 13 -
14
and effected by Custodian. If the Fund elects to transmit Instructions through
an on-line communications system offered by Custodian, the Fund's use thereof
shall be subject to the Terms and Conditions attached as Appendix I hereto, and
Custodian shall provide user and authorization codes, passwords and
authentication keys only to an Authorized Person or a person reasonably
believed by Custodian to be an Authorized Person.
9. The books and records pertaining to the Fund which are in
possession of Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the '40 Act and the
rules thereunder. The Fund, or its authorized representatives, shall have
access to such books and records during Custodian's normal business hours. Upon
the reasonable request of the Fund, copies of any such books and records shall
be provided by Custodian to the Fund or its authorized representative. Upon the
reasonable request of the Fund, Custodian shall provide in hard copy or on
computer disc any records included in any such delivery which are maintained by
Custodian on a computer disc, or are similarly maintained.
10. It is understood that Custodian is authorized to supply any
information regarding the Accounts which is required by any law, regulation or
rule now or hereafter in effect. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal accounting control
of a Depository, and with such reports on its own system of internal accounting
control as the Fund may reasonably request from time to time.
11. Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied against Custodian in
connection with this Agreement.
ARTICLE IX
TERMINATION
1. Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
giving of such notice. In the event such notice is given by the Fund, it shall
be accompanied by a copy of a resolution of the board of the Fund, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital,
surplus and undivided profits. In the event such notice is given by Custodian,
the Fund shall, on or before the termination date, deliver to Custodian a copy
of a resolution of the board of the Fund, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, Custodian may designate a successor
custodian which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. Upon the date set
forth in such notice this Agreement shall terminate, and Custodian shall upon
receipt of a notice of acceptance by the successor custodian on that date
deliver directly to the successor custodian all Securities and money then owned
by the Fund and held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be
entitled.
- 14 -
15
2. If a successor custodian is not designated by the Fund or
Custodian in accordance with the preceding Section, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by Custodian of all Securities (other than Securities which cannot be
delivered to the Fund) and money then owned by the Fund be deemed to be its own
custodian and Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect
to Securities which cannot be delivered to the Fund to hold such Securities
hereunder in accordance with this Agreement.
ARTICLE X
MISCELLANEOUS
1. The Fund agrees to furnish to Custodian a new Certificate of
Authorized Persons in the event of any change in the then present Authorized
Persons. Until such new Certificate is received, Custodian shall be fully
protected in acting upon Certificates or Oral Instructions of such present
Authorized Persons.
2. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to Custodian, shall be sufficiently
given if addressed to Custodian and received by it at its offices at 000 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as Custodian may from
time to time designate in writing.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund shall be sufficiently given
if addressed to the Fund and received by it at its offices at 0 Xxxxxxxxx
Xxxxxx, Xxxx Xxxxx, Xxx Xxxx, 00000, or at such other place as the Fund may
from time to time designate in writing.
4. Each and every right granted to either party hereunder or
under any other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be exercised from time
to time. No failure on the part of either party to exercise, and no delay in
exercising, any right will operate as a waiver thereof, nor will any single or
partial exercise by either party of any right preclude any other or future
exercise thereof or the exercise of any other right.
5. In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any exclusive jurisdiction, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected thereby. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties, except that
any amendment to the Schedule I hereto need be signed only by the Fund and any
amendment to Appendix I hereto need be signed only by Custodian. This Agreement
shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by either party without the written consent of the other.
6. This Agreement shall be construed in accordance with the
substantive laws of the State of New York, without regard to conflicts of laws
principles thereof. The Fund and
- 15 -
16
Custodian hereby consent to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder. The Fund hereby irrevocably waives, to the fullest extent permitted
by applicable law, any objection which it may now or hereafter have to the
laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an
inconvenient forum. The Fund and Custodian each hereby irrevocably waives any
and all rights to trial by jury in any legal proceeding arising out of or
relating to this Agreement.
7. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
8. A copy of the Articles of Incorporation of the Fund is on
file with the Secretary of The State of Maryland, and notice is hereby given
that this instrument is executed on behalf of the Board of Directors of the
Fund as Directors and not individually and that the obligations of this
instrument are not binding upon any of the Directors or shareholders
individually but are binding only upon the assets and property of the Fund.
- 16 -
17
IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement
to be executed by their respective officers, thereunto duly authorized, as of
the day and year first above written.
Summit Funds Management Corporation
By: /s/ Xxxxx Xxxxx
---------------------------------
Title: President
Tax Identification No: 00-0000000
THE BANK OF NEW YORK
By: /s/ Xxxxxx X. XxXxxx
---------------------------------
Title: Vice President
