Exhibit (8)(A)
CUSTODY AGREEMENT
THIS AGREEMENT made the day of 1998, by and between INVESTORS
FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of the state
of Missouri, having its trust office located at 000 Xxxx 00xx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000 ("Custodian"), and MENTOR VARIABLE INVESTMENT PORTFOLIOS, a
Massachusetts business trust having its principal office and place of business
at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
custodian of the securities and monies of each of the Fund's investment
portfolios, as may exist from time to time (each, a "Series"); and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints
Custodian as custodian of the assets of the Fund, which is to include:
A. Appointment as custodian of the securities and monies at any
time owned by the Fund; and
B. Appointment as agent to perform certain accounting and
recordkeeping functions required of a registered investment
company in compliance with applicable provisions of federal,
state and local laws, rules and regulations including, as may
be required:
1. Providing information necessary for Fund to file
required financial reports; maintaining and
preserving required books, accounts and
records as the basis for such reports; and performing
certain daily functions in connection with such
accounts and records;
2. Calculating weekly net asset value of Fund; and
3. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Resolutions of the Board of Directors of Fund appointing
Custodian as custodian hereunder and approving the form of
this Agreement; and
B. Resolutions of the Board of Directors of Fund designating
certain persons to give instructions on behalf of Fund to
Custodian and authorizing Custodian to rely upon written
instructions over their signatures.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Fund will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as
practicable, and from time to time thereafter, all portfolio
securities acquired by it and monies then owned by it or from
time to time coming into its possession during the time this
Agreement shall continue in effect, except in any case as
permitted by the Investment Company Act of 1940, as amended
(the "1940 Act"). Custodian shall have no responsibility or
liability whatsoever for or on account of securities or monies
not so delivered. All securities so delivered to Custodian
(other than bearer securities) shall be registered in the name
of Fund or its nominee, or of a nominee of Custodian in which
no assets in which the Custodian has any direct or indirect
beneficial interest are registered, or, if certificated
securities, shall be properly endorsed and in form for
transfer satisfactory to Custodian.
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B. Delivery of Accounts and Records
Fund shall, upon request of Custodian, turn over or cause to
be turned over to Custodian originals or copies of any of the
Fund's relevant accounts and records previously maintained
which are necessary to the proper performance of the
Custodian's duties hereunder. Custodian shall be entitled to
rely conclusively on the completeness and correctness of the
accounts and records turned over to it, and Fund shall
indemnify and hold Custodian harmless of and from any and all
expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other
deficiency of such accounts and records or in the failure of
Fund to provide, or to provide in a timely manner, any
accounts, records or information needed by the Custodian
knowledgeably to perform its function hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets
of Fund delivered to it from time to time and the assets of
the Fund segregated in a separate account. Custodian will not
deliver, assign, pledge or hypothecate any such assets to any
person except as permitted by the provisions of this Agreement
or any agreement executed by it according to the terms of
Section 3.S. of this Agreement. Upon delivery of any such
assets to a subcustodian pursuant to Section 3.S. of this
Agreement, Custodian will create and maintain records
identifying those assets which have been delivered to the
subcustodian as belonging to the Fund. The Custodian is
responsible for the safekeeping of the securities and monies
of Fund only until they have been transmitted to and received
by other persons as permitted under the terms of this
Agreement, except for securities and monies transmitted to
subcustodians appointed under Section 3.S. of this Agreement,
for which Custodian remains responsible to the extent provided
in Section 3.S. hereof. Custodian may participate directly or
indirectly through a subcustodian in the Depository Trust
Company, Treasure/Federal Reserve Book Entry System,
Participant Trust Company, or
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other depository approved by the Fund (as such entities are
defined at 17 CFR Section 270.17F-4(b)).
D. Registration of Securities
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or in the
name of any nominee of Custodian for whose fidelity and
liability Custodian will be fully responsible, or in street
certificate form, so-called, with or without any indication of
fiduciary capacity. Unless otherwise instructed, Custodian
will register all such portfolio securities in the name of its
authorized nominee. Notwithstanding the foregoing, the
Custodian shall not register in the name of such nominee any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers. All securities, and the
ownership thereof by Fund, which are held by Custodian
hereunder shall at all times be identifiable on the records of
the Custodian. The Fund agrees to hold Custodian and its
nominee harmless for any liability as a recordholder of
securities held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of Fund for other
securities or cash issued or paid in connection with any
reorganization, recapitalization, merger, consolidation,
split-up of shares, change of par value, conversion or
otherwise, and will deposit any such securities in accordance
with the terms of any reorganization or protective plan.
Without instructions, Custodian is authorized to exchange
securities held by it in temporary form for securities in
definitive form, to effect an exchange of shares when the par
value of the stock is changed, and, upon receiving payment
therefor, to surrender bonds or other securities held by it at
maturity or when advised of earlier call for redemption,
except that Custodian shall receive instructions prior to
surrendering any convertible security.
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F. Purchases of Investments of the Fund
Fund will, on each business day on which a purchase of
securities shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such
purchase:
1. The name of the issuer and description of the
security;
2. The number of shares or the principal amount
purchased, and accrued interest, if any;
3. The trade date;
4. The settlement date;
5. The purchase price per unit and the brokerage
commission, taxes and other expenses payable in
connection with the purchase;
6. The total amount payable upon such purchase; and
7. The name of the person from whom or the broker or
dealer through whom the purchase was made.
In accordance with such instructions, Custodian will pay for
out of monies held for the account of Fund, but only insofar
as monies are available therein for such purpose, and receive
the portfolio securities so purchase by or for the account of
Fund except that Custodian may in its sole discretion advance
funds to the Fund which may result in an overdraft because the
monies held by the Custodian on behalf of the Fund are
insufficient to pay the total amount payable upon such
purchase. Such payment will be made only upon receipt by
Custodian of the securities so purchased in form for transfer
satisfactory to Custodian.
G. Sales and Deliveries of Investments of the Fund - Other than
Options and Futures
Fund will, on each business day on which a sale of investment
securities of Fund has been made, deliver to Custodian
instructions specifying with respect to each such sale:
1. The name of the issuer and description of the
securities;
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2. The number of shares or principal amount sold, and
accrued interest, if any;
3. The date on which the securities sold were purchased
or other information identifying the securities sold
and to be delivered;
4. The trade date;
5. The settlement date;
6. The sale price per unit and the brokerage commission,
taxes or other expenses payable in connection with
such sale;
7. The total amount to be received by the Fund upon such
sale; and
8. The name and address of the broker or dealer through
whom or person to whom the sale was made.
In accordance with such instructions, Custodian will
deliver or cause to be delivered the securities thus
designated as sold for the account of Fund to the
broker or other person specified in the instructions
relating to such sale, such delivery to be made only
upon receipt of payment therefor in such form as is
satisfactory to Custodian, with the understanding
that Custodian may deliver or cause to be delivered
securities for payment in accordance with the customs
prevailing among dealers in securities.
H. Purchases or Sales of Security Options, Options on Indices and
Security Index Futures Contracts
Fund will, on each business day on which a purchase or sale of
the following options and/or futures shall be made by it,
deliver to Custodian instructions which shall specify with
respect to each such purchase or sale:
1. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
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e. The exercise price;
f. Whether the transaction is an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer
through whom the sale or purchase was made.
2. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening,
exercising, expiring or closing transaction;
h. Whether the transaction involves a put or
call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer
through whom the sale or purchase was made,
or other applicable settlement instructions.
3. Security Index Futures Contracts
a. The last trading date specified in the
contract and, when available, the closing
level, thereof;
b. The index level on the date the contract is
entered into;
c. The multiple;
d. Any margin requirements;
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e. The need for a segregated margin account (in
addition to instructions, and if not already
in the possession of Custodian, Fund shall
deliver a substantially complete and
executed custodial safekeeping account and
procedural agreement which shall be
incorporated by reference into this Custody
Agreement); and
f. The name and address of the futures
commission merchant through whom the sale or
purchase was made, or other applicable
settlement instructions.
4. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
and
i. The market on which the option is traded.
H.II. Deposit of Fund Assets in Securities Systems
The Custodian may, directly or through a subcustodian, deposit
and/or maintain securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, as
amended, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies (each referred to herein
as a "Securities System"), in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following
provisions:
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1. The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Securities System Account") of the Custodian or its
subcustodian in the Securities System which shall not include
any assets of the Custodian or its subcustodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
2. The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
3. The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Securities System Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment
and transfer for the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for
such securities have been transferred to the Securities
Systems Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account
of the Fund shall identify the Fund, be maintained for the
Fund by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall
furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Securities System
for the account of the Fund;
4. The Custodian shall provide to the Fund any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control, and procedures for safeguarding
securities deposited in the Securities System;
5. Subject to the terms of Section 3.S hereof, the Custodian
shall be liable to the Fund for any loss or damage to the Fund
resulting from use of a Securities
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System to the extent resulting from any negligence,
misfeasance or misconduct of the Custodian or its subcustodian
or of any of its or their employees, or from failure of the
Custodian or its subcustodian to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, the Fund shall be entitled to be
subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which
the Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
H.III. Segregated Account
The Custodian shall upon receipt of instructions establish and
maintain a segregated account or accounts for and on behalf of
the Fund, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 3.H.II. hereof:
(i) in accordance with the provisions of any agreement among
the Fund, Custodian and broker-dealer registered under the
Securities Exchange Act of 1934, as amended and a member of
the National Association of Securities Dealers, Inc. (or any
futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange (or Commodity Futures Trading Commission
or any registered contract market), or any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund; (ii)
for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund
or commodity futures contracts or options thereon purchased or
sold by the Fund; (iii) for the purposes of complying with the
procedures required by Investment Company Act Release No.
10666, or any subsequent releases by the Securities and
Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies; and (iv) for
other proper corporate purposes as instructed by the Fund.
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I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of Fund:
1. Upon receipt of instructions, Custodian will release
or cause to be released securities held in custody to
the pledgee designated in such instructions by way of
pledge or hypothecation to secure any loan incurred
by the Fund; provided, however, that the securities
shall be released only upon payment to Custodian of
the monies borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made, further securities may be
released or caused to be released for that purpose
upon receipt of instructions. Upon receipt of
instructions, Custodian will pay, but only from funds
available for such purpose, any such loan upon
redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note
or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated
in such instructions; provided, however, that the
securities will be released only upon deposit with
Custodian of collateral in the form of cash or
eligible securities as specified in such
instructions, and that Fund will retain the right to
any dividends, interest or distribution on such
loaned securities. Upon receipt of instructions and
the loaned securities, Custodian will release the
cash collateral to the borrower.
J. Routine Matters
Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with
securities or other property of Fund except as may be
otherwise provided in this Agreement or directed from time to
time by the Board of Directors of Fund.
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K. Deposit Account
Custodian will open and maintain one or more special purpose
deposit accounts in the name of Custodian in its capacity as
custodian for the Fund ("Accounts"), subject only to draft or
order by Custodian upon receipt of instructions. All monies
received by Custodian from or for the account of the Fund
shall be deposited in the appropriate Account. Barring events
not in the control of the Custodian such as strikes, lockouts
or labor disputes, riots, war or equipment or transmission
failure or damage, fire, flood, earthquake or other natural
disaster, action or inaction of governmental authority or
other causes beyond its control, at 9:00 a.m., Kansas City
time, on the second business day after deposit of any check
into an Account, Custodian agrees to make Fed Funds available
to the Fund in the amount of the check. Deposits made by
Federal Reserve wire will be available to the Fund immediately
and ACH wires will be available to the Fund on the next
business day. Income earned on the portfolio securities will
be credited to the Fund based on the schedule attached as
Exhibit A. The Custodian will be entitled to reverse any
credited amounts where credits have been made and monies are
not finally collected. If monies are collected after such
reversal, the Custodian will credit the Fund in that amount.
Custodian may open and maintain Accounts in such other banks
or trust companies as may be designated by it or by properly
authorized resolution of the Board of Directors of Fund, such
Account, however, to be in the name of Custodian in its
capacity as such and subject only to its draft or order as
such.
L. Income and other Payments to Fund
Custodian will:
1. Collect, claim and receive and deposit for the
account of Fund all income and other payments which
become due and payable on or after the effective date
of this Agreement with respect to the securities
deposited under this Agreement, and credit the
account of Fund in accordance with Section 3.K. and
the schedule attached hereto as Exhibit
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A. If, for any reason, the Fund is credited with
income that is not subsequently collected, Custodian
may reverse that credited amount.
2. Execute ownership and other certificates and
affidavits for all federal, state and local tax
purposes in connection with the collection of bond
and note coupons; and
3. Take such other action as may be necessary or proper
in connection with:
a. the collection, receipt and deposit of such
income and other payments, including but not
limited to the presentation for payment of:
(1) all coupons and other income items
requiring presentation; and
(2) all other securities which may
mature or be called, redeemed,
retired or otherwise become payable
and regarding which the Custodian
has actual knowledge, or should
reasonably be expected to have
knowledge; and
b. the endorsement for collection, in the name
of Fund, of all checks, drafts or other
negotiable instruments.
Custodian, however, will not be required to institute suit or
take other extraordinary action to enforce collection except
upon receipt of instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or
other actions. Custodian will receive, claim and collect all
stock dividends, rights and other similar items and will deal
with the same pursuant to instructions. Unless prior
instructions have been received to the contrary, Custodian
will, without further instructions, sell any rights held for
the account of Fund on the last trade date prior to the date
of expiration of such rights.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on
the shares of capital stock of the Fund ("Fund Shares") by the
Board of Directors of Fund, Fund
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shall deliver to Custodian instructions with respect thereto,
including a copy of the resolution of said Board of Directors
certified by the Secretary or an Assistant Secretary of Fund
wherein there shall be set forth the record date as of which
shareholders entitled to receive such dividend or other
distribution shall be determined, the date of payment of such
dividend or distribution, and the amount payable per share on
such dividend or distribution.
Except if the ex-dividend date and the reinvestment date of
any dividend are the same, in which case funds shall remain in
the Custody Account, on the date specified in such resolution
for the payment of such dividend or other distribution,
Custodian will pay out of the monies held for the account of
the Fund, insofar as the same shall be available for such
purposes, and credit to the account of the Dividend Disbursing
Agent for Fund, such amount as may be necessary to pay the
amount per share payable in cash on Fund Shares issued and
outstanding on the record date established by such resolution.
N. Shares of Fund Purchased by Fund
Whenever any Fund Shares are repurchased or redeemed by Fund,
Fund or its agent shall advise Custodian of the aggregate
dollar amount to be paid for such shares and shall confirm
such advice in writing. Upon receipt of such advice, Custodian
shall charge such aggregate dollar amount to the account of
the Fund and either deposit the same in the account maintained
for the purpose of paying for the repurchase or redemption of
Fund Shares or deliver the same in accordance with such
advice.
Custodian shall not have any duty or responsibility to
determine that Fund Shares have been removed from the proper
shareholder account or accounts or that the proper number of
Fund Shares have been cancelled and removed from the
shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Fund Shares are purchased from Fund, Fund will
deposit or cause to be deposited with Custodian the amount
received for such shares.
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Custodian shall not have any duty or responsibility to
determine that Fund Shares purchased from Fund have been added
to the proper shareholder account or accounts or that the
proper number of such shares have been added to the
shareholder records.
P. Proxies and Notices
The Custodian shall, with respect to securities held
hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered
otherwise than in the name of the Fund or a nominee of the
Fund, all proxies, without indication of the manner in which
such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all
notices, requests, or announcements relating to such
securities. Except as provided in this Agreement or pursuant
to instructions hereafter received by Custodian, neither it
nor its nominee will exercise any power inherent in any such
securities, including any power to vote the same, or execute
any proxy, power of attorney, or other similar instrument
voting any of such securities, or give any consent, approval
or waiver with respect thereto, or take any other similar
action.
Q. Disbursements
Custodian will pay or cause to be paid insofar as funds are
available for the purpose, bills, statements and other
obligations of Fund (including but not limited to obligations
in connection with the conversion, exchange or surrender of
securities owned by Fund, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal
fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting
forth the name of the person to whom payment is to be made,
the amount of the payment, and the purpose of the payment.
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R. Daily Statement of Accounts
Custodian will render to Fund daily a detailed statement of
the amounts received or paid and of securities received or
delivered for the account of Fund during each business day.
Custodian will render to Fund monthly a detailed statement of
the securities and monies held for Fund under this Agreement,
and Custodian will maintain such books and records as are
necessary to enable it to do so and will permit such persons
as are authorized by Fund including Fund's independent public
accountants, access to such records or, in the case of such
records maintained on any computer, computer system or
computer network, confirmation of the contents of such
records. If demanded by federal and state regulatory agencies
or upon receipt of instructions from Fund, Custodian will
permit such agencies to examine the securities, books and
records. Upon the written instructions of Fund or as demanded
by federal or state regulatory agencies, Custodian will
instruct any subcustodian to permit such persons as are
authorized by Fund, including Fund's independent public
accountants, access to such records or, in the case of such
records maintained on any computer, computer system or
computer network, confirmation of the contents of such records
and to permit such agencies to examine the books, records and
securities held by such subcustodian which relate to Fund.
S. Appointment of Subcustodian
1. Notwithstanding any other provisions of this
Agreement, all or any of the monies or securities of
Fund may be held in Custodian's own custody or in the
custody of one or more other banks or trust companies
acting as subcustodians as may be selected by
Custodian. Custodian shall be responsible for the
actions of any subcustodian appointed by Custodian
(except any subcustodian appointed at the instruction
of the Fund as provided below and as provided in
Section S.2. below) to the same extent Custodian is
responsible to the Fund under Section 5. of this
Agreement. Any such subcustodian selected by the
Custodian must have
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the qualifications required for custodian under the
1940 Act. Custodian is not responsible for DTC, the
Treasury/Federal Reserve Book Entry System, and PTC
except to the extent such entities are responsible to
Custodian; provided, however, that the foregoing
shall not relieve Custodian of its liability
hereunder to the extent attributable to its own
negligence or bad faith. Upon instruction of the
Fund, Custodian shall be willing to contract with
other subcustodians reasonably acceptable to the
Custodian for purposes of (i) effecting third-party
repurchase transactions with banks, brokers, dealers,
or other entities through the use of a common
custodian or subcustodian, or (ii) providing
depository and clearing agency services with respect
to certain variable rate demand note securities;
provided, however, that the Custodian will be
responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting
from the actions or omissions of any such
subcustodian only to the same extent such
subcustodian is responsible to the Custodian; and
provided, further, however, that the foregoing shall
not relieve Custodian of its liability hereunder to
the extent attributable to its own negligence or bad
faith. The Fund shall be entitled to review
Custodian's contracts with any such subcustodian
appointed at the instruction of Fund.
2. Notwithstanding any other provisions of this
Agreement, Fund's foreign securities (as defined in
Rule 17f-5(c)(1) under the 0000 Xxx) and Fund's cash
or cash equivalents, in amounts deemed by the Fund to
be reasonably necessary to effect Fund's foreign
securities transactions, may be held in the custody
of one or more banks or trust companies acting as
subcustodians, according to Section 3.S.1; and
thereafter, pursuant to a written contract or
contracts as approved by Fund's Board of Directors,
may be transferred to an account maintained by such
subcustodian with an eligible foreign custodian (as
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defined in Rule 17f-5(c)(2)) approved by the Fund's
Board of Directors. Custodian shall be responsible
for the monies and securities of the Fund held by
eligible foreign subcustodians or the domestic
subcustodian contracting with such eligible foreign
subcustodians only to the same extent such domestic
subcustodian is responsible to the Custodian.
T. Accounts and Records
Custodian with the direction and as interpreted by the Fund,
Fund's accountants and/or other tax advisors will prepare and
maintain, in complete, accurate and current form, all accounts
and records (i) required to be maintained by Fund with respect
to portfolio transactions under Rule 31a of the 1940 Act, (ii)
required to be maintained as a basis for calculation of the
Fund's net asset value, and (iii) as otherwise agreed upon
between the parties. Custodian will preserve said records in
the manner and for the periods prescribed in the 1940 Act or
for such longer period as is agreed upon by the parties.
Custodian relies upon Fund to furnish, in writing, accurate
and timely information to complete Fund's records and perform
weekly calculation of the Fund's net asset value, as provided
in Section 3.W. below. Custodian shall incur no liability and
Fund shall indemnify and hold harmless Custodian from and
against any liability arising from any failure of Fund to
furnish such information in a timely and accurate manner, even
if Fund subsequently provides accurate but untimely
information. It shall be the responsibility of Fund to furnish
Custodian with the declaration, record and payment dates and
amounts of any dividends or income and any other special
actions required concerning each of its securities when
Custodian may not reasonably be expected to have knowledge
thereof.
U. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to this Agreement are the
property of Fund, and will be made available to Fund for
inspection or reproduction within a reasonable
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period of time, upon demand. Custodian will assist Fund's
independent auditors, or upon approval of Fund, or upon
demand, any regulatory body, having jurisdiction over the Fund
or Custodian, in any requested review of Fund's accounts and
records but shall be reimbursed for all reasonable expenses
and employee time invested in any such review outside of
routine and normal periodic reviews. Upon receipt from Fund of
the necessary information, Custodian will supply necessary
data for Fund's completion of any necessary tax returns,
questionnaires, periodic reports to shareholders and such
other reports and information requests as Fund and Custodian
shall agree upon from time to time.
V. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as
they agree upon, and Custodian may conclusively assume that no
procedure approved by Fund, or directed by Fund, conflicts
with or violates any requirements of its prospectus, Articles
of Incorporation, Bylaws, or any rule or regulation of any
regulatory body or governmental agency applicable to Fund.
Fund will be responsible to notify Custodian of any changes in
statutes, regulations, rules or policies applicable to Fund
which might necessitate changes in Custodian's
responsibilities or procedures.
W. Calculation of Net Asset Value
Custodian will calculate the Fund's net asset value, in
accordance with Fund's prospectus, once weekly, as of such
time as Fund may specify. Custodian may for this purpose make
use of outside services normally used and contracted for this
purpose and designated by Fund; all other securities will be
evaluated in accordance with Fund's instructions. Custodian
will have no responsibility for the accuracy of the prices
quoted by these outside services of for the information
supplied by Fund or upon instructions; provided, however, that
the foregoing shall not relieve Custodian of its liability
hereunder to the extent attributable to its own negligence or
bad faith.
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X. Overdrafts
If Custodian shall in its sole discretion advance funds to the
account of the Fund which results in an overdraft because the
monies held by Custodian on behalf of the Fund are
insufficient to pay the total amount payable upon a purchase
of securities as specified in Fund's instructions or for some
other reason, the amount of the overdraft shall be payable by
the Fund to Custodian upon demand and shall bear the overdraft
charge rate set forth on the Fee Schedule attached hereto as
Exhibit B from the date advanced until the date of payment.
Custodian shall have a lien on the assets of the Fund in the
amount of any outstanding overdraft. Custodian shall be
entitled to charge against any monies held by it for the
account of the Fund the amount of any such overdraft and
accrued overdraft charges
4. INSTRUCTIONS.
A. The term "instructions," as used herein, means written or oral
instructions to Custodian from a designated representative of
Fund. Certified copies of resolutions of the Board of
Directors of Fund naming one or more designated
representatives to give instructions in the name and on behalf
of Fund, may be received and accepted from time to time by
Custodian as conclusive evidence of the authority of any
designated representative to act for Fund and may be
considered to be in full force and effect (and Custodian will
be fully protected in acting in reliance thereon) until
receipt by Custodian of notice to the contrary. Unless the
resolution delegating authority to any person to give
instructions specifically requires that the approval of anyone
else will first have been obtained, Custodian will be under no
obligation to inquire into the right of the person giving such
instructions to do so. Notwithstanding any of the foregoing
provisions of this Section 4. no authorizations or
instructions received by Custodian from Fund, will be deemed
to authorize or permit any trustee, officer, employee, or
agent of Fund to withdraw any of the securities or similar
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investments of Fund upon the mere receipt of such
authorization or instructions from such trustee, officer,
employee or agent.
B. No later than the next business day immediately following each
oral instruction, Fund will send Custodian written
confirmation of such oral instruction. At Custodian's sole
discretion, Custodian may record on tape, or otherwise, any
oral instruction whether given in person or via telephone,
each such recording identifying the parties, the date and the
time of the beginning and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall hold harmless and indemnify Fund from and
against any loss or liability arising out of Custodian's
failure to comply with the terms of this Agreement or arising
out of Custodian's negligence or bad faith; provided, however,
that Custodian shall not be liable for consequential, special
or punitive damages in any event. Custodian may request and
obtain the advice and opinion of counsel for Fund, or of its
own counsel with respect to questions or matters of law, and
it shall be without liability to Fund for any action
reasonably taken or omitted by it in good faith, in conformity
with such advice or opinion. If Custodian reasonably believes
that it could not prudently act according to the instructions
of the Fund or the Fund's counsel, it may in its discretion,
with prior notice to the Fund, not act according to such
instructions.
B. Custodian may rely upon the advice of Fund and upon statements
of Fund's public accountants and other persons believed by it
in good faith to be expert in matters upon which they are
consulted, and Custodian shall not be liable for any actions
taken, reasonably and in good faith, upon such statements.
C. If Fund requires Custodian in any capacity to take, with
respect to any securities, any action which involves the
payment of money by Custodian, or which in Custodian's opinion
might make it or its nominee liable for payment of monies or
in any other way, Custodian, upon notice to Fund given prior
to such
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actions, shall be kept indemnified by Fund in an amount and
form satisfactory to Custodian against any liability on
account of such action.
D. Custodian shall be entitled to receive, and Fund agrees to pay
to Custodian, on demand, reimbursement for such reasonable
cash disbursements, costs and expenses as may be agreed upon
from time to time by Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder
upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing
to it to be genuine and to have been properly executed and
shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter
required to be ascertained from Fund hereunder, a certificate
signed by the Fund's President, or other officer specifically
authorized for such purpose.
F. Without limiting the generality of the foregoing, Custodian
shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any securities purchased
by or for Fund, the legality of the purchase thereof
or the legality of the evidence of ownership required
by Fund to be received by Custodian, or the propriety
of the decision to purchase or amount paid therefor;
2. The legality of the sale of any securities by or for
Fund, or the propriety of the amount for which the
same are sold;
3. The legality of the issue or sale of any Fund Shares,
or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any
Fund Shares, or the propriety of the amount to be
paid therefor; or
5. The legality of the declaration of any dividend by
Fund, or the legality of the issue of any Fund Shares
in payment of any stock dividend.
G. Custodian shall not be liable for, or considered to be
Custodian of, any money represented by any check, draft, wire
transfer, clearinghouse funds, uncollected funds, or
instrument for the payment of money received by it on behalf
of
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Fund, until Custodian actually receives such money, provided
only that it shall advise Fund promptly if it fails to receive
any such money in the ordinary course of business, and use its
best efforts and cooperate with Fund toward the end that such
money shall be received.
H. Except as provided under Section 3.S., Custodian shall not be
responsible for loss occasioned by the acts, neglects,
defaults or insolvency of any broker, bank, trust company, or
any other person with whom Custodian may deal; provided,
however, that the foregoing shall not relieve Custodian of its
liability hereunder to the extent attributable to its own
negligence or bad faith.
I. Custodian shall not be responsible or liable for the failure
or delay in performance of its obligations under this
Agreement, or those of any entity for which it is responsible
hereunder, to the extent arising out of or caused, directly or
indirectly, by circumstances beyond the affected entity's
control, including, without limitation: any interruption,
loss or malfunction of any utility, transportation, computer
(hardware or software) or communication service; inability to
obtain material, equipment or transportation, or a delay in
mails; governmental or exchange action, statute, ordinance,
rulings, regulations or direction; war, strike, riot,
emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornados,
acts of God or public enemy, revolutions, or insurrection. For
purposes of this paragraph, no circumstances shall be deemed
to be within any entity's "control" if performance of the
affected obligation hereunder would require unreasonable
effort or expense.
6. COMPENSATION. Fund will pay to Custodian such compensation as is
stated in the Fee Schedule attached hereto as Exhibit B which may be
changed from time to time as agreed to in writing by Custodian and
Fund.
7. TERMINATION. Either party to this Agreement may terminate the same by
notice in writing, delivered or mailed, postage prepaid, to the other
party hereto and received not less than sixty (60) days prior to the
date upon which such termination will take
-23-
effect, provided, that the Fund may at any time by action of its Board
of Directors immediately terminate this Agreement in the event of the
bankruptcy or insolvency of or the appointment of a conservator or
receiver for the Custodian or upon the happening of a like event at the
director of an appropriate regulatory agency or court of competent
jurisdiction. Upon termination of this Agreement, Fund will pay to
Custodian such compensation for its reimbursable disbursements, costs
and expenses paid or incurred to such date and Fund will use its best
efforts to obtain a successor custodian. Custodian will, upon
termination of this Agreement and payment of all sums due to Custodian
hereunder, deliver to the successor custodian, at Custodian's office,
all securities then held by Custodian hereunder, duly endorsed and in
form for transfer, all funds and other properties of Fund deposited
with or held by Custodian hereunder, or will co-operate in effecting
changes in book-entries at the Depository Trust Company, Participants
Trust Company or in the Treasury/Federal Reserve Book-Entry System
pursuant to 31 CFR Sec. 306.118. In the event no written order
designating a successor custodian has been delivered to Custodian on or
before the date when such termination becomes effective, then Custodian
may deliver the securities, funds and properties of Fund to a bank or
trust company at the selection of Custodian and meeting the
qualifications for custodian, if any, set forth in the Bylaws of Fund
and having not less than Five Million Dollars ($5,000,000) aggregate
capital, surplus and undivided profits, as shown by its last published
report, or Custodian may make any other delivery of the securities,
funds and property of Fund which is permitted by the 1940 Act, Fund's
Articles of Incorporation and Bylaws then in effect or apply to a court
of competent jurisdiction for the appointment of a successor custodian.
Upon delivery to a successor custodian, Custodian will have no further
obligations or liabilities under this Agreement, other than such as may
have arisen prior to, or in respect of events occurring prior to, such
delivery. Thereafter such successor will be the successor custodian
under this Agreement and will be entitled to reasonable compensation
for its services. In the event that securities, funds and other
properties remain in the possession of the Custodian after the date of
termination hereof owing to
-24-
failure of the Fund to appoint a successor Custodian, the Custodian
shall be entitled to compensation in accordance with the then-current
fee schedule for its services during such period as the Custodian
retains possession of such securities, funds and other properties and
the provisions of this Agreement relating to the duties and obligations
of the Custodian shall remain in full force and effect. In addition to
the obligations of the Custodian under this Agreement, upon termination
of this Agreement, all records maintained by the Custodian in machine
readable form relating to the services to be performed by the Custodian
under this Agreement shall upon request be surrendered to the Fund or
its agent in machine readable form, and for reasonable compensation as
agreed to by the parties, the Custodian shall reasonably assist in the
conversion of such records to the recordkeeping system of the successor
to the Custodian and shall provide other information relating to its
services provided hereunder which is reasonably needed to effect such
conversion; provided, however, that the foregoing shall not require
disclosure of any proprietary information, trade secrets or other
confidential information of Custodian or any subcustodian, nor shall it
require Custodian or any subcustodian to reformat or alter any data or
to perform or develop any changes in programming or other alterations
in any recordkeeping system.
8. NOTICES. Notices, requests, instructions and other writings addressed
to Fund at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 or at such
other address as Fund may have designated to Custodian in writing, will
be deemed to have been properly given to Fund hereunder; and notices,
requests, instructions and other writings addressed to Custodian at its
offices at 000 Xxxx 00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000,
Attention: Custody Department or to such other address as it may have
designated to Fund in writing, will be deemed to have been properly
given to Custodian hereunder.
9. REPORTS. The Custodian shall provide the Fund annually reports by
independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding securities,
including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Agreement; such reports shall be of sufficient scope and in sufficient
detail to provide
-25-
reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, shall so
state. The Custodian shall take all reasonable action, as the Fund may
from time to time request, to obtain from year to year favorable
opinions from the Fund's independent accountants with respect to its
activities hereunder to the extent such activities involve the creation
and maintenance of records used by the Fund in connection with the
preparation of the Fund's registration statement and amendments
thereto, the Fund's Form N-2, and Form N-SAR or other annual reports to
the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
10. CONFIDENTIALITY. The Custodian, its employees and officers, shall not
disclose or use any records or information obtained pursuant to this
Agreement in any manner whatsoever except as expressly authorized in
this Agreement, will keep confidential any information obtained
pursuant to the arrangement under this Agreement and will disclose such
information only if the Fund has authorized such disclosure, or if such
disclosure is required by applicable law or federal or state regulatory
authorities.
11. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights
and liabilities of the parties hereto shall be governed by,
the laws of the State of Missouri.
B. All terms and provisions of this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted
assigns.
C. The representations and warranties, and the indemnifications
extended hereunder, if any, are intended to and shall continue
after and survive the expiration, termination or cancellation
of this Agreement.
D. No provisions of the Agreement may be amended or modified in
any manner except by a written agreement properly authorized
and executed each party hereto.
-26-
E. The captions in the 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.
F. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the
courts held to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
H. This Agreement may not be assigned by either party hereto
without prior written consent of the other party.
I. Neither the execution nor performance of this Agreement shall
be deemed to create a partnership or joint venture by and
between Custodian and Fund.
J. Except as specifically provided herein, this Agreement does
not in any way affect any other agreements entered into among
the parties hereto and any actions taken or omitted by either
party hereunder shall not affect any rights or obligations of
the other party hereunder.
K. If any provision of this Agreement, whether in its present
form or as amended from time to time, limits, qualifies or
conflicts with the 1940 Act or the rules and regulations
promulgated thereunder, the latter shall be deemed to control
and supersede such provision without nullifying or terminating
the remainder of this Agreement.
L. The Custodian will not release the identity of the Fund to an
issuer which requests such information pursuant to the
Shareholder Communications Act of 1985 for the specific
purpose of direct communications between such issuer and the
Fund unless the Fund directs the Custodian otherwise.
-27-
M. A copy of the Agreement and Declaration of Trust of the Fund
is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Fund as Trustees
and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or
officers of the Fund or shareholders of any series of the Fund
but are binding only upon the assets and property of the
relevant series of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By: _________________________________
Title: ______________________________
MENTOR VARIABLE INVESTMENT
PORTFOLIOS
By: _________________________________
Title: ______________________________
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