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Custody Agreement

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Title:

Custody Agreement

Entities:

Baird Funds Inc; U.S. Bank, NA

Date:

2006

Size:

77KB total

Price:

$46

ID:

#2467628

► Securities ► Custody Agreements
► Financial

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CUSTODY AGREEMENT

THIS AGREEMENT is made and entered into as of this 15^th day of August, 2005, by and between Robert W. Baird & Co. Incorporated, a Wisconsin corporation (the Advisor), Baird Funds, Inc., a Wisconsin corporation (the Company), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America with its principal place of business at Cincinnati, Ohio (the Custodian).

WHEREAS, the Company is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company, and is authorized to issue shares of common stock in separate series, with each such series representing interests in a separate portfolio of securities and other assets;

WHEREAS, the Custodian is a bank having the qualifications prescribed in Section 26(a)(1) of the 1940 Act;

WHEREAS, the Company desires to retain the Custodian to act as custodian of the cash and securities of each series of the Company listed on Exhibit C hereto (as amended from time to time) (each a Fund and collectively, the Funds); and

WHEREAS, the Board of Directors of the Company have delegated to the Custodian the responsibilities set forth in Rule 17f-5(c) under the 1940 Act and the Custodian is willing to undertake the responsibilities and serve as the foreign custody manager for the Company.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

Whenever used in this Agreement, the following words and phrases shall have the meanings set forth below unless the context otherwise requires:

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 the 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 of the Company from time to time serving under the Companys Articles of Incorporation and By-laws and applicable corporate law, as amended from time to time.

1.3

Book-Entry System shall mean a federal book-entry system as provided in Subpart O of Treasury Circular No. 300, 31 CFR 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

Eligible Securities Depository shall mean a system for the central handling of securities as defined in Rule 17f-4 under the Act that meets the requirements of Rule 17f-7 under the 1940 Act.

1.6

Fund Custody Account shall mean any of the accounts in the name of the Company, which is provided for in Section 3.2 below.

1.7

IRS shall mean the Internal Revenue Service.

1.8

NASD shall mean The National Association of Securities Dealers, Inc.

1.9

Officer shall mean the President, any Senior Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Company.

1.10

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 any two Authorized Persons, (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 that 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.

1.11

Proper Instructions shall mean Oral Instructions or Written Instructions.

1.12

SEC shall mean the Securities and Exchange Commission.

1.13

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 or its agents have the facilities to clear and service.

1.14

Securities Depository shall mean The Depository Trust Company and any other clearing agency registered with the SEC under Section 17A of the Securities 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.

1.15

Shares shall mean, with respect to a Fund, the shares of common stock issued by the Company on account of the Fund.

1.16

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, and (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 Fund based on the standards specified in Section 3.3 below. Such contract shall be in writing and shall include provisions that provide: (i) for indemnification or insurance arrangements (or any combination of the foregoing) such that the Fund 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 Fund or as being held by a third party for the benefit of the Fund; (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 Fund 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 in (i)-(vi) 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.

1.17

Written Instructions shall mean (i) written communications actually received by the Custodian and signed by any two Authorized Persons, (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 hereby appoints the Custodian as custodian of all Securities and cash owned by or in the possession of each Fund at any time during the period of this Agreement, on the terms and conditions set forth in this Agreement, and the Custodian hereby accepts such appointment and agrees to perform the services and duties set forth in this Agreement. The services and duties of the Custodian shall be confined to those matters expressly set forth herein, and no implied duties are assumed by or may be asserted against the Custodian hereunder.

2.2

Documents to be Furnished. The following documents, including any amendments thereto, have been provided to the Custodian by the Company:

(a)	A copy of the Companys Articles of Incorporation, certified by the Secretary;

(b)	A copy of the Companys bylaws, certified by the Secretary;

(c)	A copy of the resolution of the Board of Directors of the Company appointing the Custodian, certified by the Secretary;

(d)	A copy of the current prospectus of the Fund (the Prospectus);

(e)	A certification of the Chairman or the President and the Secretary of the Company setting forth the names and signatures of the current Officers of the Company and other Authorized Persons; and

(f)	An executed authorization required by the Shareholder Communications Act of 1985, attached hereto as Exhibit E.

2.3

Notice of Appointment of Transfer Agent. The Company agrees to notify the Custodian in writing of the appointment, termination or change in appointment of any transfer agent of the Fund.

ARTICLE III

CUSTODY OF CASH AND SECURITIES

3.1

Segregation. All Securities and non-cash property held by the Custodian for the account of the Fund (other than Securities maintained in a Securities Depository, Eligible 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 series of the Company) and shall be identified as subject to this Agreement.

3.2

Fund Custody Accounts. As to each Fund, the Custodian shall open and maintain in its trust department 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.

(a)

In its discretion, with regard to foreign Securities owned by a Fund, the Custodian may appoint one or more Sub-Custodians to establish and maintain arrangements with (i) Eligible Securities Depositories or (ii) members of the Sub-Custodians network to hold Securities and cash of the Fund 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. The Custodian shall be liable for the actions of any Sub-Custodians (regardless of whether assets are maintained in the custody of a Sub-Custodian, a member of its network or an Eligible Securities Depository) appointed by it as if such actions had been done by the Custodian.

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