CUSTODY AGREEMENT
THIS AGREEMENT is made and entered into as of this ________ day of
_________, 2000, by and among Xxxxxx X. Xxxxx & Co. Incorporated, a Wisconsin
corporation (the "Advisor"), the Baird Funds, Inc., a Wisconsin corporation (the
"Company"), and Firstar Bank, N.A., a national banking association (the
"Custodian").
W I T N E S S E T H:
WHEREAS, the Advisor is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, and serves as the investment
manager of open-end investment management companies registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company is an open-end management investment company
registered under the 1940 Act, comprised of the Fund(s) set forth on Exhibit C,
as amended from time to time (individually a "Fund" and collectively the
"Funds"), each of them a series of the Company;
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(1) of the 1940 Act; and
WHEREAS, the Advisor and the Company desire that the Funds' Securities
and cash be held and administered by the Custodian pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Advisor, the Company and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of each Fund and named in Exhibit A hereto or in such
resolutions of the Board of Directors, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF DIRECTORS" shall mean the Directors from time to time serving
under the Company's Articles of Incorporation and By-Laws, as from time to time
amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular Xx. 000, 00 XXX 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by The
New York Stock Exchange, Inc. and any other day for which the Company computes
the net asset value of Shares of the Fund.
1.5 "FUND CUSTODY ACCOUNT" shall mean any of the accounts in the name of
the Company, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean the National Association of Securities Dealers, Inc.
1.7 "OFFICER" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer,
or any Assistant Treasurer of the Company.
1.8 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably believed
by the Custodian to have been given by an Authorized Person; (ii) recorded and
kept among the records of the Custodian made in the ordinary course of business;
and (iii) orally confirmed by the Custodian. The Company shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end of the
next Business Day. If such Written Instructions confirming Oral Instructions are
not received by the Custodian prior to a transaction, it shall in no way affect
the validity of the transaction or the authorization thereof by the Company. If
Oral Instructions vary from the Written Instructions which purport to confirm
them, the Custodian shall notify the Company of such variance but such Oral
Instructions will govern unless the Custodian has not yet acted.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "SECURITIES DEPOSITORY" shall mean the Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of the Board
of Directors, certified by an Officer, specifically approving the use of such
clearing agency as a depository for the Fund) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934, as amended (the "1934 Act"), which acts as
a system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities or other
obligations, and any certificates, receipts, warrants or other instruments
or documents representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to clear and to
service.
1.12 "SHARES" shall mean, with respect to a Fund, the shares of common
stock issued by the Company on account of the Fund.
1.13 "SUB-CUSTODIAN" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Funds based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Funds will be adequately protected
against the risk of loss of assets held in accordance with such contract;
(ii) that the Funds' assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Sub-Custodian or its
creditors except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that
beneficial ownership for the Funds' assets will be freely transferable without
the payment of money or value other than for safe custody or administration;
(iv) that adequate records will be maintained identifying the assets as
belonging to the funds or as being held by a third party for the benefit of the
Funds; (v) that the Funds' independent public accountants will be given access
to those records or confirmation of the contents of those records; and (vi) that
the Funds will receive periodic reports with respect to the safekeeping of the
Funds' assets, including, but not limited to, notification of any transfer to or
from a Fund's account or a third party account containing assets held for the
benefit of the Fund. Such contract may contain, in lieu of any or all of the
provisions specified above, such other provisions that the Custodian determines
will provide, in their entirety, the same or a greater level of care and
protection for Fund assets as the specified provisions, in their entirety.
1.14 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board of Directors, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Company and the Advisor hereby constitute and appoint
the Custodian as custodian of all Securities and cash owned by or in the
possession of the Funds at any time during the period of this Agreement.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
2.3 DOCUMENTS TO BE FURNISHED. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the Company:
(a) A copy of the Articles of Incorporation certified by the Secretary;
(b) A copy of the Bylaws of the Company certified by the Secretary;
(c) A copy of the resolution of the Board of Directors appointing the
Custodian, certified by the Secretary;
(d) A copy of the then current Prospectus of the Fund; and
(e) A certification of the Chairman and Secretary of the Company setting
forth the names and signatures of the current Officers of the Company
and other Authorized Persons.
2.4 NOTICE OF APPOINTMENT OF DIVIDEND AND TRANSFER AGENT. The Company and
the Advisor agree to notify the Custodian in writing of the appointment,
termination or change in appointment of any Dividend and Transfer Agent of the
Fund.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 SEPARATE ACCOUNTS. All Securities and non-cash property held by the
Custodian for the account of a Fund (other than Securities maintained in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
3.2 FUND CUSTODY ACCOUNTS. As to each Fund, the Custodian shall open and
maintain a custody account in the name of the Company coupled with the name of
the Fund, subject only to draft or order of the Custodian, in which the
Custodian shall enter and carry all Securities, cash and other assets of such
Fund which are delivered to it.
3.3 APPOINTMENT OF AGENTS. In its discretion, the Custodian may:
(a) Appoint one or more Sub-Custodians to act as Securities Depositories or
as sub-custodians to hold Securities and cash of the Funds and to carry out
such other provisions of this Agreement as it may determine, provided,
however, that the appointment of any such agents and maintenance of any
Securities and cash of the Fund shall be at the Custodian's expense and
shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors in connection with this Agreement, the Custodian wishes to
appoint other Sub-Custodians to hold property of the Fund, it will so
notify the Company and provide it with information reasonably necessary to
determine any such new Sub-Custodian's eligibility under Rule 17f-5 under
the 1940 Act, including a copy of the proposed agreement with such
Sub-Custodian. The Company shall at the meeting of the Board of Directors
next following receipt of such notice and information give a written
approval or disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Directors of the placement of the
Securities and cash of the Funds with a particular Sub-Custodian and of
any material changes in the Funds' arrangements. The Custodian shall
promptly take such steps as may be required to withdraw assets of the Funds
from any Sub-Custodian that has ceased to meet the requirements of Rule
17f-5 under the 1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Company and the Advisor that it agrees to
exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of property of the Funds. The Custodian
further warrants that a Fund's assets will be subject to reasonable care,
based on the standards applicable to custodians in the relevant market, if
maintained with each Sub-Custodian, after considering all factors relevant
to the safekeeping of such assets, including, without limitation: (i) the
Sub-Custodian's practices, procedures, and internal controls, for
certificated securities (if applicable), the method of keeping custodial
records, and the security and data protection practices; (ii) whether the
Sub-Custodian has the requisite financial strength to provide reasonable
care for Fund assets; (iii) the Sub-Custodian's general reputation and
standing and, in the case of a Securities Depository, the Securities
Depository's operating history and number of participants; and (iv) whether
the Fund will have jurisdiction over and be able to enforce judgments
against the Sub-Custodian, such as by virtue of the existence of any
offices of the Sub-Custodian in the United States or the Sub-Custodian's
consent to service of process in the United States.
(f) The Custodian shall establish a system to monitor the appropriateness
of maintaining the Fund's assets with a particular Sub-Custodian and the
contract governing the Funds' arrangements with such Sub-Custodian.
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Company shall deliver, or cause to
be delivered, to the Custodian all of the Funds' Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Company shall deliver to the Custodian
a resolution of the Board of Directors, certified by an Officer,
authorizing and instructing the Custodian on an on-going basis to deposit
in such Securities Depository or Book-Entry System all Securities eligible
for deposit therein and to make use of such Securities Depository or
Book-Entry System to the extent possible and practical in connection with
its performance hereunder, including, without limitation, in connection
with settlements of purchases and sales of Securities, loans of Securities,
and deliveries and returns of collateral consisting of Securities.
(b) Securities of the Funds kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which includes
only assets held by the Custodian as a fiduciary, custodian or otherwise
for customers.
(c) The records of the Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall, by
book-entry, identify such Securities as belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry System
or Securities Depository, the Custodian shall pay for such Securities upon
(i) receipt of advice from the Book-Entry System or Securities Depository
that such Securities have been transferred to the Depository Account, and
(ii) the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of such Fund. If Securities sold by
a Fund are held in a Book-Entry System or Securities Depository, the
Custodian shall transfer such Securities upon (i) receipt of advice from
the Book-Entry System or Securities Depository that payment for such
Securities has been transferred to the Depository Account, and (ii) the
making of an entry on the records of the Custodian to reflect such transfer
and payment for the account of such Fund.
(e) The Custodian shall provide the Company with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Fund are kept) on the internal
accounting controls and procedures for safeguarding Securities deposited in
such Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Company for any loss or damage to the Fund
resulting (i) from the use of a Book-Entry System or Securities Depository
by reason of any negligence or willful misconduct on the part of Custodian
or any Sub-Custodian appointed pursuant to Section 3.3 above or any of
its or their employees, or (ii) from failure of Custodian or any such
Sub-Custodian to enforce effectively such rights as it may have against a
Book-Entry System or Securities Depository. At its election, the Company
shall be subrogated to the rights of the Custodian with respect to any
claim against a Book-Entry System or Securities Depository or any other
person from any loss or damage to the Fund arising from the use of such
Book-Entry System or Securities Depository, if and to the extent that the
Funds has not been made whole for any such loss or damage.
3.6 DISBURSEMENT OF MONEYS FROM FUND CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in accordance with
Section 4.1 of this Agreement and only: (i) in the case of Securities
(other than options on Securities, futures contracts and options on futures
contracts), against the delivery to the Custodian (or any Sub-Custodian
appointed pursuant to Section 3.3 above) of such Securities registered as
provided in Section 3.9 below or in proper form for transfer, or if the
purchase of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in
Section 3.5 above; (ii) in the case of options on Securities, against
delivery to the Custodian (or such Sub-Custodian) of such receipts as are
required by the customs prevailing among dealers in such options; (iii) in
the case of futures contracts and options on futures contracts, against
delivery to the Custodian (or such Sub-Custodian) of evidence of title
thereto in favor of the Fund or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse repurchase agreements
entered into between the Company and a bank which is a member of the
Federal Reserve System or between the Company and a primary dealer in U.S.
Government securities, against delivery of the purchased Securities either
in certificate form or through an entry crediting the Custodian's account
at a Book-Entry System or Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions declared
by the Fund;
(d) In payment of the redemption price of Shares as provided in Section 5.1
below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the
Fund: interest; taxes; administration, investment advisory, accounting,
auditing, transfer agent, custodian, Director and legal fees; and other
operating expenses of the Fund, including any payments under a Rule 12b-1
plan; in all cases, whether or not such expenses are to be in whole or in
part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Company, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with rules of The
Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions by the Fund;
(g) For transfer in accordance with the provision of any agreement among
the Company, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less; and
(i) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the amount and purpose of such payment,
declaring such purpose to be a proper corporate purpose, and naming the
person or persons to whom such payment is to be made.
3.7 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall transfer, exchange or deliver
Securities from the Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or cashiers check
or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.5
above;
(c) To an offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such case,
the cash or other consideration is to be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Fund, the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above, or of any nominee or nominees of any of the foregoing, or (ii)
for exchange for a different number of certificates or other evidence
representing the same aggregate face amount or number of units; provided
that, in any such case, the new Securities are to be delivered to the
Custodian;
(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
issuer of such Securities, or pursuant to provisions for conversion
contained in such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in connection with
the issuance or cancellation of depository receipts; provided that, in any
such case, the new Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities and
cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of the Fund,
but only against receipt of such collateral as the Company shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Company, but only against receipt by
the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Company;
(l) For delivery in accordance with the provisions of any agreement among
the Company, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Company, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(n) For the purpose of redeeming in-kind shares of common stock of the Fund
upon delivery thereof to the Custodian;
(o) When securities are called, redeemed, retired or otherwise become
payable;
(p) Upon exercise of subscription, purchase or other similar rights
represented by the securities; or
(q) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the Securities to be
delivered, setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such Securities shall be made.
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Company, the Custodian shall with respect to all Securities held for the
Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all income and
other payments to which the Fund is entitled either by law or pursuant to
custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature or be
called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as agent on behalf of the Company, any necessary declarations
or certificates of ownership under the federal income tax laws or the laws
or regulations of any other taxing authority now or hereafter in effect,
and prepare and submit reports to the Internal Revenue Service ("IRS") and
to the Company at such time, in such manner and containing such information
as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all stock
dividends, rights and similar securities issued with respect to Securities
of the Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with the sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a Fund
that are issued or issuable only in bearer form shall be held by the Custodian
in that form, provided that any such Securities shall be held in a Book-Entry
System if eligible therefor. All other Securities held for the Fund may be
registered in the name of a registered nominee of the Custodian, or any
Sub-Custodian appointed pursuant to Section 3.3 above, or in the name of a
Book-Entry System, Securities Depository or any nominee of either thereof. The
Custodian shall execute and deliver all such certificates in connection
therewith as may be required by such tax laws or regulations or under the laws
of any state. The Company shall furnish to the Custodian appropriate instruments
to enable the Custodian to hold or deliver in proper form for transfer, or to
register in the name of any of the nominees hereinabove referred to or in the
name of a Book-Entry System or Securities Depository, any Securities which it
may hold for the account of a Fund.
3.10 RECORDS.
(a) The Custodian shall maintain, by Fund, complete and accurate records
with respect to Securities, cash or other property held for the Fund,
including: (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of
Securities and all receipts and disbursements of cash; (ii) ledgers (or
other records) reflecting (A) Securities in transfer, (B) Securities in
physical possession, (C) monies and Securities borrowed and monies and
Securities loaned (together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest received, and
(E) dividends receivable and interest receivable; and (iii) canceled checks
and bank records related thereto. The Custodian shall keep such other books
and records of the Funds as the Company or the Advisor shall reasonably
request, or as may be required by the 1940 Act, including, but not limited
to, Section 31 of the 1940 Act and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Company and the Advisor and in
compliance with rules and regulations of the Securities and Exchange
Commission, (ii) be the property of the Company and at all times during the
regular business hours of the Custodian be made available upon request for
inspection by duly authorized officers, employees or agents of the Company
and the Advisor and employees or agents of the Securities and Exchange
Commission, (iii) if required to be maintained by Rule 31a-1 under the 1940
Act, be preserved for the periods prescribed in Rule 31a-2 under the 1940
Act; and (iv) be promptly surrendered to the Company on and in accordance
with its request.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Company
with a daily activity statement and a summary of all transfers to or from each
Fund Custody Account on the day following such transfers. At least monthly and
from time to time, the Custodian shall furnish the Company with a detailed
statement of the Securities and moneys held by the Custodian and the
Sub-Custodians for the Fund under this Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Company
with such reports, as the Company may reasonably request from time to time, on
the internal accounting controls and procedures for safeguarding Securities,
that are employed by the Custodian or any Sub-Custodian appointed pursuant to
Section 3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the Fund, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Company such proxies, all proxy soliciting materials and
all notices relating to such Securities.
3.14 INFORMATION ON CORPORATE ACTIONS. The Custodian shall promptly deliver
to the Company all information received by the Custodian and pertaining to
Securities being held by the Fund with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Exhibit B. If the Company desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Company shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Company
will provide or cause to be provided to the Custodian all relevant information
for any Security which has unique put/option provisions at least five Business
Days prior to the beginning date of the tender period.
3.15 FEDERAL FUNDS. The Custodian shall, upon receipt of Proper
Instructions, make federal funds available to the Company as of a specified time
agreed upon from time to time by the Company and the Custodian in the amount of
checks received in payment for shares of the Fund which are deposited in the
Fund's accounts.
3.16 OVERNIGHT CASH EQUIVALENTS. Upon receipt of Proper Instructions, the
Custodian will invest any and all available cash in overnight cash-equivalent
investments as specified by the Fund's investment manager.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 TRANSFER TAX AND OTHER DISTRIBUTIONS. (a) The Company shall pay or
reimburse the Custodian from time to time for any transfer taxes payable upon
transfer of Securities made hereunder, and for all other necessary and proper
disbursements and expenses made or incurred by the Custodian in the performance
of this Agreement. (b) The Custodian shall execute and deliver such certificates
in connection with Securities delivered to it or by it under this Agreement as
may be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exempt transfer and/or deliveries of any
such Securities.
4.2 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to the Custodian, specifying:
(a) the name of the issuer or writer of such Securities, and the title or
other description thereof;
(b) the number of shares, principal amount (and accrued interest, if any)
or other units purchased;
(c) the date of purchase and settlement;
(d) the purchase price per unit;
(e) the total amount payable upon such purchase; and
(f) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by such Fund pay
out of the moneys held for the account of a Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for the Fund, if in the Fund Custody Account there is insufficient
cash available to the Fund for which such purchase was made.
4.3 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In
any and every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt of the Securities purchased but in
the absence of specified Written Instructions to so pay in advance, the
Custodian shall be liable to the Fund for such Securities to the same extent as
if the Securities had been received by the Custodian.
4.4 SALE OF SECURITIES. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying:
(a) the name of the issuer or writer of such Securities, and the title or
other description thereof;
(b) the number of shares, principal amount (and accrued interest, if any),
or other units sold;
(c) the date of sale and settlement;
(d) the sale price per unit;
(e) the total amount payable upon such sale; and
(f) the person to whom such Securities are to be delivered.
Upon receipt of the total amount payable to the Fund as specified in such
Written Instructions, the Custodian shall deliver such Securities to the person
specified in such Written Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in Securities.
4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for the
foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from time
to time, the Custodian may credit the Fund Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Fund, and (iii) income from
cash, Securities or other assets of the Fund. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Fund to use funds so
credited to the Fund Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Fund Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Company to facilitate the
settlement of a Fund's transactions in the Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
4.7 TRANSFER TAX AND OTHER DISBURSEMENTS. (a) The Company shall pay or
reimburse the Custodian from time to time for any transfer taxes payable upon
transfer of Securities made hereunder, and for all other necessary and proper
disbursements and expenses made or incurred by the Custodian in the performance
of this Agreement. (b) The Custodian shall execute and deliver such certificates
in connection with Securities delivered to it or by it under this Agreement as
may be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
the any state, to exempt from taxation any exempt transfer and/or deliveries of
any such Securities.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of the Fund, the
Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Company may designate with respect to such amount in
such Proper Instructions.
5.2 NO DUTY REGARDING PAYING BANKS. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in Proper
Instructions given pursuant to Section 5.1 above of any amount paid by the
Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall 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 a Depository Account:
(a) in accordance with the provisions of any agreement among the Company,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of the NASD (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 the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Fund;
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the
Fund;
(c) which constitute collateral for loans of Securities made by the Fund;
(d) for purposes of compliance by the Fund with requirements under the 1940
Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions; and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Board of Directors, certified by an Officer, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Company, the Advisor, or any Fund for any loss,
damage, cost, expense (including reasonable attorneys' fees and disbursements),
liability or claim unless such loss, damage, cost, expense, liability or claim
arises from negligence, bad faith or willful misconduct on its part or on the
part of any Sub-Custodian appointed pursuant to Section 3.3 above. The Custodian
shall be entitled to rely on and may act upon advice of counsel on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. The Custodian shall promptly notify the Company and the
Advisor of any action taken or omitted by the Custodian pursuant to advice of
counsel. The Custodian shall not be under any obligation at any time to
ascertain whether the Company, the Advisor, or the Fund is in compliance with
the 1940 Act, the regulations thereunder, the provisions of the Company's
charter documents or by-laws, or its investment objectives and policies as then
in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to a Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. The Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Fund if such Securities are
in default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
7.7 CO-OPERATION. The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Company to keep the books
of account of the Funds and/or compute the value of the assets of the Funds. The
Custodian shall take all such reasonable actions as the Company may from time to
time request to enable the Company to obtain, from year to year, favorable
opinions from the Company's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of
the Company's reports on Form N-1A and Form N-SAR and any other reports required
by the Securities and Exchange Commission, and (b) the fulfillment by the
Company of any other requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY COMPANY. The Company and the Advisor shall each
indemnify and hold harmless the Custodian and any Sub-Custodian appointed
pursuant to Section 3.3 above, and any nominee of the Custodian or of such
Sub-Custodian, from and against any loss, damage, cost, expense (including
reasonable attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking laws) or claim
arising directly or indirectly:
(a) from the fact that Securities are registered in the name of any such
nominee; or
(b) from any action or inaction by the Custodian or such Sub-Custodian (i)
at the request or direction of or in reliance on the advice of the Company,
or (ii) upon Proper Instructions; or generally
(c) from the performance of its obligations under this Agreement or any
sub-custody agreement with a Sub-Custodian appointed pursuant to Section
3.3 above, provided that neither the Custodian nor any such Sub-Custodian
shall be indemnified and held harmless from and against any such loss,
damage, cost, expense, liability or claim arising from the Custodian's or
such Sub-Custodian's negligence, bad faith or willful misconduct.
8.2 INDEMNIFICATION BY CUSTODIAN. The Custodian shall indemnify and hold
harmless the Company and the Advisor from and against any loss, damage, cost,
expense (including reasonable attorneys' fees and disbursements), liability
(including without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising from the negligence, bad faith or willful
misconduct of the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above, or any nominee of the Custodian or of such Sub-Custodian.
8.3 INDEMNITY TO BE PROVIDED. If the Company or Advisor requests the
Custodian to take any action with respect to Securities, which may, in the
opinion of the Custodian, result in the Custodian or its nominee becoming liable
for the payment of money or incurring liability of some other form, the
Custodian shall not be required to take such action until the Company or Advisor
shall have provided indemnity therefor to the Custodian in an amount and form
satisfactory to the Custodian.
8.4 SECURITY. If the Custodian advances cash or Securities to the Fund for
any purpose, either at the Company's request or as otherwise contemplated in
this Agreement, or in the event that the Custodian or its nominee incurs, in
connection with its performance under this Agreement, any loss, damage, cost,
expense (including reasonable attorneys' fees and disbursements), liability or
claim (except such as may arise from its or its nominee's negligence, bad faith
or willful misconduct), then, in any such event, any property at any time held
for the account of such Fund shall be security therefor, and should the Fund
fail promptly to repay or indemnify the Custodian, the Custodian shall be
entitled to utilize available cash of such Fund and to dispose of other assets
of such Fund to the extent necessary to obtain reimbursement or indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian, the Company nor the Advisor shall be liable for
any failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; strikes;
epidemics; riots; power failures; computer failure and any such circumstances
beyond its reasonable control as may cause interruption, loss or malfunction of
utility, transportation, computer (hardware or software) or telephone
communication service; accidents; labor disputes; acts of civil or military
authority; governmental actions; or inability to obtain labor, material,
equipment or transportation; provided, however, that the Custodian in the event
of a failure or delay (i) shall not discriminate against the Funds in favor of
any other customer of the Custodian in making computer time and personnel
available to input or process the transactions contemplated by this Agreement
and (ii) shall use its best efforts to ameliorate the effects of any such
failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
10.2 TERMINATION. Any party hereto may terminate this Agreement by giving
to the other parties a notice in writing specifying the date of such
termination, which shall be not less than sixty (90) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Directors, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Fund and held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an account of or for the
benefit of the Funds at the successor custodian, provided that the Company or
the Advisor, as the case may be, shall have paid to the Custodian all fees,
expenses and other amounts to the payment or reimbursement of which it shall
then be entitled. Upon such delivery and transfer, the Custodian shall be
relieved of all obligations under this Agreement. The Company or the Advisor
may at any time immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by regulatory
authorities or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Company on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which (a) is a "bank"
as defined in the 1940 Act and (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, all Securities, cash and other property held by Custodian under this
Agreement and to transfer to an account of or for the Funds at such bank or
trust company all Securities of the Funds held in a Book-Entry System or
Securities Depository. Upon such delivery and transfer, such bank or Company
shall be the successor custodian under this Agreement and the Custodian shall be
relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Company, the Advisor and the Custodian. The fees and other
charges in effect on the date hereof and applicable to the Fund are set forth in
Exhibit C attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Company hereunder
shall not be binding upon any of the Company's directors, shareholders,
nominees, officers, agents or employees of the Company personally, but shall
bind only the property of the Company as provided in the Company's Articles of
Incorporation, as from time to time amended. The execution and delivery of this
Agreement have been authorized by the Company and the Advisor, and this
Agreement has been signed and delivered by an authorized officer of the Company
and the Advisor, respectively, acting as such, and neither such authorization by
the Company or the Advisor nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the corporation
property of the Company or the Advisor as provided in the Company's or Advisor's
Articles of Incorporation.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
duly given upon receipt at the following addresses:
TO THE COMPANY:
Baird Funds, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxx
TO THE CUSTODIAN:
Firstar Bank, N.A.
000 Xxxxxx Xxxxxx, X.X. XX-XX-00XX
Xxxxxxxxxx, Xxxx 00000
Attention: Mutual Fund Custody Services
Facsimile: (000) 000-0000
TO ADVISOR:
Xxxxxx X. Xxxxx & Co. Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxx
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio. However, nothing herein shall be
construed in a manner inconsistent with the 1940 Act or any rule or regulation
promulgated by the Securities and Exchange Commission.
14.2 REFERENCES TO CUSTODIAN. The Company and the Advisor shall not
circulate any printed matter which contains any reference to Custodian without
the prior written approval of Custodian, excepting printed matter contained in
the prospectus or statement of additional information for the Fund and such
other printed matter as merely identifies Custodian as custodian for the Fund.
The Company shall submit printed matter requiring approval to Custodian in draft
form, allowing sufficient time for review by Custodian and its counsel prior
to any deadline for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein
are cumulative and not exclusive of any remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
BAIRD FUNDS, INC.
By:_____________________________
Title:____________________________
FIRSTAR BANK, N.A.
By:______________________________
Title:____________________________
XXXXXX X. XXXXX & CO. INCORPORATED
By:______________________________
Title:_____________________________