CUSTODY AGREEMENT
THIS AGREEMENT made the _____ day of ___________, 1995, by and
between CENTRAL FIDELITY NATIONAL BANK, located at 0000 X. Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx ("Custodian"), and the SNAP Fund, a series of shares of
MENTOR INSTITUTIONAL TRUST, 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 Central Fidelity National Bank as
custodian of the securities and monies of the SNAP Fund (the "Series"); and
WHEREAS, Central Fidelity National Bank 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 Series, which is to include:
A. Appointment as custodian of the securities and monies at any time
owned by the Series; and
B. Appointment as agent to perform certain accounting and record
keeping 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 and the Series to
file required financial reports; maintaining and preserving
required books, accounts and records as the basis for such
reports; and preforming certain daily functions in
connection with such accounts and records;
2. 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 Trustees of Fund appointing Custodian as
custodian hereunder and approving the form of this Agreement; and
B. Resolutions of the Trustees 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 (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.
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 harmless
Custodian 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
Series 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 Series. 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, Treasury/Federal Reserve Book Entry System,
Participant Trust Company or 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 registrable 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
record holder 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.
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 Series;
2. The name of the issuer and description of the security;
3. The number of shares or principal amount purchases, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission,
taxes and other expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase; and
8. 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 purchased by or for the account of Fund
except the 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.
G. Sales and Deliveries of Investment 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 Series;
2. The name of the issuer and description of the securities;
3. The name of the shares or principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or
other information identifying the securities sold and to be
delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commissions, taxes
or other expenses payable in connection with such sale;
8. The total amount to be received by Series upon such sale;
and
9. 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. The name of the Series;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
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; and
j. Name and address of the broker or dealer through whom
the sale or purchase was made.
3. 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; and
j. The name and address of the broker or dealer through
whom the sale or purchase was made, or other applicable
settlement instructions.
4. 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;
e. The need for a segregated margin amount (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.
5. Options on Index Futures Contracts
a. The underlying index futures 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.
I. Deposit of Fund Assets in Securities Systems
The Custodian may directly or through a subcustodian deposit
and/or maintain securities owned by the Series in a clearing
agency registered with the Securities and Exchange Commission
under Section 17A of the Securities and Exchange Act of 1934,
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:
1. The Custodian may keep securities of the Series 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 or
custodian or otherwise for customers;
2. The records of the Custodian with respect to securities of
the Series which are maintained in a Securities System shall
identify by book entry those securities belonging to the
Series;
3. The Custodian shall pay for securities purchased for the
account of the Series 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 Series. The
Custodian shall transfer securities sold for the account of
the Series upon (i) receipt of advice from the Securities
System that payment for such securities have all 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
Series. Copies of all advices from the Securities System of
transfers of securities for the account of a Series shall
identify the Series, be maintained for the Series by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of
the Series confirmation of each transfer to or from the
account of a Series in the form of a written advice or
notice and shall furnish to the Fund on behalf of the Series
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Series;
4. The Custodian shall provide to the Fund any report obtained
by the Custodian on the Securities System's accounting
system, internal account 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 Series for any loss or damage to the
Series resulting from use of a Securities 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 Series has not been
made whole for any such loss or damage.
J. 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 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 full
cash collateral as specified in such instructions, and the
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 borrower.
K. Routine Matters
Custodian will, in general, attended 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
Trustees of Fund.
L. 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 Series 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., Richmond 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 Series of the Fund based on the schedule
attached at 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 Series 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 Trustees 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.
M. 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. 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
(i) 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.
N. Payment of Dividends and other Distributions.
On the declaration of any dividend or other distribution on the
shares of beneficial interest of the Series ( Fund Shares ) by
the Trustees of Fund, Fund shall deliver to Custodian
instructions with respect thereto, including a copy of the
resolution of said Trustees 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
applicable 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 Series,
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.
O. 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 Series 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 canceled and removed from the shareholder records.
P. 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. 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.
Q. 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.
R. 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.
S. Statement of Accounts
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
instruction 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.
T. 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 by Section 5. of this Agreement.
Any such subcustodian selected by the Custodian must have
the qualifications required for custodian under the 1940
Act, as amended. 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.
U. 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
Series' 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.
Custodian shall incur no lability 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.
V. 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 period on 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.
W. 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, Agreement and
Declaration of Trust, 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.
X. Overdrafts
If Custodian shall in its sole discretion advance funds to the
account of the Series which results in an overdraft because the
monies held by Custodian on behalf of the Series 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 Series to
Custodian upon demand. Custodian shall have a lien on the assets
of the Series in the amount of any outstanding overdraft.
Custodian shall be entitled to charge against any monies held by
it for the account of the appropriate Series 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 Trustees 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 investments of Fund
upon the mere receipt of such authorizations 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 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 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 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 in 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 actions, shall
be and 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 repurchase of any dividend by Fund, or
the legality of the issue of any Fund Shares in payment of
any stock dividend.
The foregoing shall not, however, relieve Custodian of any
liability it may incur in its capacity as the transfer agent of
the Fund pursuant to that certain Agency Agreement of even date
herewith by and between Fund and Custodian.
G. Custodian shall not be liable for, or considered to be Custodian
of, any money represented by a check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for payment
of money received by it on behalf of 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, neglect, 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 reasonable control,
including, without limitation: any interruption, loss or
malfunction of any utility, transportation, computer (hardware or
software) or communication service; inability to obtain labor,
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; or any other cause, contingency,
circumstance or delay not subject to the reasonable control of
Custodian or such entity.
6. COMPENSATION.
Fund will pay to Custodian such compensation as agreed under a
separate agreement.
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 effect, provided that the Fund
may at any time by action of its Trustees 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 direction 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 cooperate 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 selected by 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) in 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
properties 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 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.
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 0000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx, Attention
Institutional 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. DECLARATION OF TRUST.
A copy of the Agreement and Declaration of Trust of the Fund is on
file with the Secretary 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 or arising out of this instrument are not binding upon
any of the Trustees or beneficiaries individually, but binding only
upon the assets and property of the Fund.
10. 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 Virginia.
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 by each party hereto.
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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
CENTRAL FIDELITY NATIONAL BANK
By:
Title:
MENTOR INSTITUTIONAL TRUST
By:
Title:
