MUTUAL FUND CUSTODY AGREEMENT
-----------------------------
THIS AGREEMENT is made as December 11, 1990 by and between The Baupost
Fund, a Massachusetts business trust (the "Fund"), and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York State chartered bank and trust company ("U.S.
Trust").
WITNESSETH
----------
WHEREAS, the Fund is registered as a open-end non-diversified,
management investment company under the Investment Company Act of 1940, as
amended ("xxx 0000 Xxx"); and
WHEREAS, the Fund desires to retain U.S. Trust to serve as the Fund's
custodian and U.S. Trust is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints U.S. Trust to act as custodian
of its portfolio securities, cash and other property on the terms set
forth in this Agreement. U.S. Trust accepts such appointment and agrees
to furnish the services herein set forth in return for the compensation
as provided in Paragraph 21 of this Agreement.
2. Delivery of Documents. The Fund has furnished or will
furnish U.S. Trust with copies properly certified or
authenticated of each of the following:
(a) Resolutions of the Fund's Board of Trustees authorizing
the appointment of U.S. Trust as Custodian of the portfolio
securities, cash and other property of the Fund and approving
this Agreement:
(b) Incumbency and signature certificates identifying and
containing the signatures of the Fund's officers and/or the
persons authorized to sign Written Instructions, as
hereinafter defined, on behalf of the Fund;
(c) The Fund's Agreement and Declaration of Trust filed with
the Secretary of the State of the Commonwealth of
Massachusetts and all amendments thereto (such Agreement and
Declaration of Trust, as currently in effect and from time to
time amended, is herein called the "Declaration of Trust");
(d) The Fund's By-Laws and all amendments thereto (such
By-Laws, as currently in effect and as they shall from time to
time be amended, are herein called the "By-Laws");
(e) Resolutions of the Fund's Board of Trustees appointing the
investment advisor of the Fund and resolutions of the Fund's
Board of Trustees and the Fund's shareholder approving the
proposed Investment Advisory Agreement between the Fund and
the advisor dated as of December 11, 1990 (the "Advisory
Agreement");
(f) The Advisory Agreement;
(g) The Fund's Notification of Registration filed pursuant to
Section 8(a) of the 1940 Act, as filed with the SEC;
(h) The Fund's Registration Statement on Form N-1A under the
1940 Act and the Securities Act of 1933, as amended ("xxx 0000
Xxx"), as filed with the SEC; and
(i) The Fund's most recent prospectus including all amendments
and supplements thereto (the "Prospectus").
The Fund will furnish U.S. Trust from time to time with copies of all
amendments of or supplements to the foregoing, if any. The Fund will also
furnish U.S. Trust with a copy of the opinion of counsel for the Fund with
respect to the validity of the Fund's shares of beneficial interest, no par
value ("the Shares"), and the status of such Shares under the 1933 Act, and any
other applicable federal law or regulation.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means the Fund's President, Treasurer and
any other person, whether or not any such person is an officer
or employee of the Fund, duly authorized by the Board of
Trustees of the Fund to give Written Instructions on behalf of
the Fund and listed on Attachment B which may be amended from
time to time.
(b) "Book-Entry System". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury
book-entry system for United States and Federal agency
securities, its successor or successors and its nominee or
nominees.
(c) "Property". The term "Property", as used in this
Agreement, means:
(i) any and all securities and other property of the
Fund which may from time to time deposit, or cause to
be deposited, with U.S. Trust or which U.S. Trust may
from time to time hold for the Fund;
(ii) all income in respect of any other such
securities or other property;
(iii) all proceeds of the sales of any of such
securities or other property; and
(iv) all proceeds of the sale of securities issued by
the Fund, which are received by U.S. Trust from time
to time from or on behalf of the Fund.
(d) "Securities Depository". As used in this Agreement, the
term "Securities Depository" shall mean The Depository Trust
Company, which is a clearing agency registered with the SEC,
or its successor or successors and its nominee or nominees;
and shall also mean any other registered clearing agency, its
successor or successors specifically identified in a certified
copy of a resolution of the Fund's Board of Trustees approving
deposits by U.S. Trust therein.
(e) "Written Instructions". The term "Written Instructions" as
used in this Agreement, means instructions
(i) delivered by mail, tested telegram, cable, telex,
facsimile sending device, and received by U.S. Trust,
signed by two Authorized Persons or by persons
reasonably believed by U.S. Trust to be Authorized
Persons; or
(ii) transmitted electronically through the U.S.
Trust Asset Management System or any similar
electronic instruction system acceptable to U.S.
Trust.
4. Delivery and Registration of the Property. The Fund will deliver or
cause to be delivered to U.S. Trust all securities and all monies owned
by it, including cash received for the issuance of its Shares, at any
time during the period of this Agreement, except for securities and
monies to be delivered to any subcustodian appointed pursuant to
Paragraph 7 hereof. U.S. Trust will not be responsible for such
securities and such monies until actually received by it. All
securities delivered to U.S. Trust or to any such subcustodian (other
than in bearer form) shall be registered in the name of the Fund or in
the name of a nominee of the Fund or in the name of U.S. Trust or any
nominee of U.S. Trust (with or without indication of fiduciary status)
or in the name of any subcustodian or any nominee of such subcustodian
appointed pursuant to Paragraph 7 hereof or shall be properly endorsed
and in form for transfer satisfactory to U.S. Trust.
5. Voting Rights. With respect to all securities, however registered,
it is understood that the voting and other rights and powers shall be
exercised by the Fund. U.S. Trust's only duty shall be to mail to the
Fund any documents received, including proxy statements and offering
circulars, with any proxies for securities registered in a nominee name
executed by such nominee. Where warrants, options, tenders or other
securities have fixed expiration dates, the Fund understands that in
order for U.S. Trust to act, U.S. Trust must receive the Fund's
instructions at its offices in New York, addressed as U.S. Trust may
from time to time request, by no later than noon (NY City time) on the
last scheduled date to act with respect thereto. Absent U.S. Trust's
timely receipt of such instructions, such instruments will expire
without liability to U.S. Trust.
6. Receipt and Disbursement of Money.
(a) U.S. Trust shall open and maintain a custody account for
the Fund, subject only to draft or order by U.S. Trust acting
pursuant to the terms of this Agreement, and shall hold in
such account, subject to the provisions hereof, all cash
received by it from or for the Fund. U.S. Trust shall make
payments of cash to, or for the account of, the Fund from such
cash only (i) for the purchase of securities for the Fund as
provided in Paragraph 12 hereof; (ii) upon receipt of Written
Instructions, for the payment of dividends or other
distributions of shares, or for the payment of interest,
taxes, administration, distribution or advisory fees or
expenses which are to be borne by the Fund under the terms of
this Agreement, any advisory agreement to which the Fund is a
party, or any administration agreement; (iii) upon receipt of
Written Instructions for payments in connection with the
conversion, exchange or surrender of securities owned or
subscribed to by the Fund and held by or to be delivered to
U.S. Trust; (iv) to a subcustodian pursuant to Paragraph 7
hereof; or (v) upon receipt of Written Instructions for other
trust purposes.
(b) U.S. Trust is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money
received as custodian for the Fund.
7. Receipt of Securities.
(a) Except as provided by Paragraph 8 hereof, U.S. Trust shall
hold all securities and non-cash property received by it for
the Fund. All such securities and
non-cash property are to be held or disposed of by U.S. Trust
for the Fund pursuant to the terms of this Agreement. In the
absence of Written Instructions accompanied by a certified
resolution authorizing the specific transaction by the Fund's
Board, U.S. Trust shall have no power or authority to
withdraw, deliver, assign, hypothecate, pledge or otherwise
dispose of any such securities and investments, except in
accordance with the express terms provided for in this
Agreement. In no case may any trustee, officer, employee or
agent of the Fund withdraw any securities. In connection with
its duties under this Paragraph 7 and with the approval of the
Fund, U.S. Trust may, at its own expense, enter into
subcustodian agreements with other banks or trust companies
for the receipt of certain securities and cash to be held by
U.S. Trust for the account of the Fund pursuant to this
Agreement; provided that each such bank or trust company has
an aggregate capital, surplus and undivided profits, as shown
by its last published report, of not less than twenty million
dollars ($20,000,000) and that such bank or trust company
agrees with U.S. Trust to comply with all relevant provisions
of the 1940 Act and applicable rules and regulations
thereunder. U.S. Trust will be liable for acts or omissions of
any such subcustodian. (b) Promptly after the close of
business on each day U.S. Trust shall furnish the Fund with
confirmations and a summary of all transfers to or from the
account of the Fund during said day. Where securities are
transferred to the account of the Fund established at a
Securities Depository or the Book Entry System pursuant to
Paragraph 8 hereof, U.S. Trust shall also by book-entry or
otherwise identify as belonging to the Fund the quality of
securities in a fungible bulk of securities registered in the
name of U.S. Trust (or its nominee) or shown in U.S. Trust's
account on the books of a Securities Depository or the
Book-Entry System. At least monthly and from time to time,
U.S. Trust shall furnish the Fund with a detailed statement of
the Property held for the Fund under this Agreement.
8. Use of Securities Depository or the Book-Entry System. The Fund
shall deliver to U.S. Trust a certified resolution of the Board of
Trustees of the Fund approving, authorizing and instructing U.S. Trust
on a continuous and ongoing basis until instructed to the contrary by
Written Instructions actually received by U.S. Trust (i) to deposit in
a Securities Depository or the Book-Entry System all securities of the
Fund eligible for deposit therein and (ii) to utilize a Securities
Depository or the Book-Entry System to the extent possible in
connection with the performance of its duties hereunder, including
without limitation settlements of purchases and sales of securities by
the Fund, and deliveries and returns of securities collateral in
connection with borrowings. Without limiting the generality of such
use, it is agreed that the following provisions shall apply thereto:
(a) Securities and any cash of the Fund deposited in a
Securities Depository or the Book-Entry System will at all
times be segregated from any assets and cash controlled by
U.S. Trust in other than a fiduciary or custodian capacity but
may be commingles with other assets held in such capacities.
U.S. Trust will effect payment for securities and receive and
deliver securities in accordance with
accepted industry practices in the place where the transaction
is settled, unless the Fund has given U.S. Trust Written
Instructions to the contrary.
(b) All books and records maintained by U.S. Trust which
relate to the Fund's participation in a Securities Depository
or the Book-Entry System will at all times during U.S. Trust's
regular business hours be open to the inspection of the Fund's
duly authorized employees or agents, and the Fund will be
furnished with all information in respect of the services
rendered to it as it may require.
(c) U.S. Trust will send to the Fund all reports,
confirmations and records as required by Rule 17f-4 under the
1940 Act.
9. Instructions Consistent With the Declaration of Trust, etc. Unless
otherwise provided in this Agreement, U.S. Trust shall act only upon
Written Instructions. U.S. Trust may assume that any Written
Instructions received hereunder are not in any way inconsistent with
any provision of the Declaration of Trust or By-Laws or any vote or
resolution of the Fund's Board of Trustees, or any committee thereof.
U.S. Trust shall be entitled to rely upon any Written Instructions
actually received by U.S. Trust pursuant to this Agreement. The Fund
agrees that U.S. Trust shall incur no liability in acting upon Written
Instructions given to U.S. Trust. In accord with instructions from the
Fund, as required by accepted industry practice or as U.S. Trust may
elect in effecting the execution of Fund instructions, advances of cash
or other Property made by U.S. Trust, arising from the purchase, sale,
redemption, transfer or other disposition of Property of the Fund, or
in connection with the disbursement of funds to any party, or in
payment of fees, expenses, claims or liabilities owed to U.S. Trust by
the Fund, or to any other party which has secured judgment in a court
of law against the Fund which creates an overdraft in the account of
the Fund or overdelivery of Property shall be deemed a loan by U.S.
Trust to the Fund (but only to the extent permitted by the Fund's
Prospectus and Statement of Additional Information as time to time in
effect) payable on demand, bearing interest at such rate customarily
charged by U.S. Trust for similar loans.
The Fund agrees that test arrangements, authentication methods or to
other security devices to be used with respect to instructions which
the Fund may give by telephone, telex, TWX, facsimile transmission,
bank wire or other teleprocess, or through an electronic instruction
system, shall be processed in accordance with terms and conditions for
the use of such arrangements, methods or devices as U.S. Trust may put
into effect and modify from time to time. The Fund shall safeguard any
test keys, identification codes or other security devices which U.S.
Trust makes available to the Fund and agrees that the Fund shall be
responsible for any loss, liability or damage incurred by U.S. Trust or
by the Fund as a result of U.S. Trust's acting in accordance with
instructions from any unauthorized person using the proper security
device unless such loss, liability or damage was incurred solely as a
result of U.S. Trust's negligence or willful misconduct. U.S. Trust may
electronically record, but shall not be obligated to so record, any
instructions given by telephone and any other telephone discussions
with respect to the Fund's account. In the event that the Fund uses
U.S. Trust's Asset Management System or any successor electronic
communications or information system, the Fund agrees that U.S. Trust
is not responsible for the consequences of the failure of that system
to perform for
any reason, beyond the reasonable control of U.S. Trust, or the failure
of any communications carrier, utility, or communications network. In
the event that that system is inoperable, the Fund agrees that it will
accept the communication of transaction instructions by telephone,
facsimile transmission on equipment compatible to U.S. Trust's
facsimile receiving equipment or by letter, at no additional charge to
the Fund.
10. Transactions Not Requiring Instructions. U.S. Trust is authorized
to take the following action without Written Instructions:
(a) Collection of Income and Other Payments. U.S. Trust shall:
(i) collect and receive for the account of the Fund,
all income and other payments and distributions,
including (without limitation) stock dividends,
rights, warrants and similar items, included or to be
included in the Property of the Fund, and promptly
advise the Fund of such receipt and shall credit such
income, as collected, to the Fund. From time to time,
U.S. Trust may elect to credit, but shall not be so
obligated, the account with interest, dividends or
principal payments on payable or contractual
settlement date, in anticipation of receiving same
from a payor, central depository, broker or other
agent employed by the Fund or U.S. Trust. Any such
crediting and posting shall be at the Fund's sole
risk, and U.S. Trust shall be authorized to reverse
any such advance posting in the event it does not
receive good funds from any such payor, central
depository, broker or agent of the Customer.
(ii) with respect to securities of foreign issue,
effect collection of dividends, interest and other
income, and to notify the Fund of any call for
redemption, offer of exchange, right of subscription,
reorganization, or other proceedings affecting such
securities, or any default in payments due thereon.
It is understood, however, that U.S. Trust shall be
under no responsibility for any failure or delay in
effecting such collections or giving such notice with
respect to securities of foreign issue, regardless of
whether or not the relevant information is published
in any financial service available to it unless such
failure or delay is due to its negligence or willful
misconduct. Collections of income in foreign currency
are, to the extent possible, to be converted into
United States dollars unless U.S. Trust is otherwise
instructed in writing, and in effecting such
conversion U.S. Trust may use such methods or
agencies as it may see fit, including the facilities
of its own foreign division at customary and
competitive rates. All risk and expenses incident to
such collection and conversion are for the account of
the Fund and U.S. Trust shall have no responsibility
for fluctuations in exchange rates affecting any such
conversion.
(iii) endorse and deposit for collection in the name
of the Fund, checks, drafts, or other orders for the
payment of money on the same day as received;
(iv) receive and hold for the account of the Fund all
securities received by the Fund as a result of a
stock dividend, share split-up or reorganization,
recapitalization, readjustment of other rearrangement
or distribution of rights or similar securities
issued with respect to any portfolio securities of
the Fund held by U.S. Trust hereunder;
(v) present for payment and collect the amount
payable upon all securities which may mature or be
called, redeemed or retired, or otherwise become
payable on the date such securities become payable;
(vi) take any action which may be necessary and
proper in connection with the collection and receipt
of such income and other payments and the endorsement
for collection of checks, drafts and other negotiable
instruments;
(vii) with respect to domestic securities, to
exchange securities in temporary form for securities
in definitive form, to effect an exchange of the
shares where the par value of stock is changed, and
to surrender securities at maturity or when advised
of earlier call for redemption, against payment
therefor in accordance with accepted industry
practice. The Fund understands that U.S. Trust
subscribes to one or more nationally recognized
services that provide information with respect to
calls for redemption of bonds or other corporate
actions. U.S. Trust shall not be liable for failure
to redeem any called bond or take other action if
notice of such call or action was not provided by any
service to which it subscribes provided that U.S.
Trust shall have acted in good faith without
negligence and in accordance with "Street Practice".
U.S. Trust shall have no duty to notify the Fund of
any rights, duties, limitations, conditions or other
information set forth in any security (including
mandatory or optional put, call and similar
provisions), but U.S. Trust shall forward to the Fund
any notices or other documents subsequently received
in regard to any such security. When fractional
shares of stock of a declaring corporation are
received as a stock distribution, U.S. Trust is
authorized to sell the fraction received and credit
the Fund's account. Unless specifically instructed to
the contrary in writing, U.S. Trust is authorized to
exchange securities in bearer form for securities in
registered form. If any Property registered in the
name of a nominee of U.S. Trust is called for partial
redemption by the issuer of such Property, U.S. Trust
is authorized to allot the called portion to the
respective beneficial holders of the Property in such
manner deemed to be fair and equitable by U.S. Trust
in its sole discretion.
(b) Miscellaneous Transactions. U.S. Trust is authorized to
deliver or cause to be delivered Property against payment or
other consideration or written receipt therefore in the
following cases:
(i) for examination by a broker selling for the
account of the Fund in accordance with street
delivery custom;
(ii) for the exchange of interim receipts or
temporary securities for definitive securities;
(iii) for transfer of securities into the name of the
Fund or U.S. Trust or a nominee of either, or for
exchange of securities for a different number of
bonds, certificates, or other evidence, representing
the same aggregate face amount or number of units
bearing the same interest rate, maturity date and
call provisions, if any; provided that, in any such
case, the new securities are to be delivered to U.S.
Trust.
11. Transactions Requiring Instructions. Upon receipt of Written
Instructions and not otherwise, U.S. Trust, directly or through the use
of a Securities Depository or the Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated
in such Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the
authority of the Fund as owner of any securities may be
exercised;
(b) Deliver any securities held for the Fund against receipt
of other securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(c) Deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, against receipt of such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Fund
and take such other steps as shall be stated in said
instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(e) Release securities belonging to the Fund to any bank or
trust company for the purpose of pledge or hypothecation to
secure any loan incurred by the Fund; provided, however, that
securities shall be released only upon payment to U.S. Trust
of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
subject to proper prior authorization, further securities may
be released for that purpose; and pay such loan upon
redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing
the loan; and
(f) Deliver any securities held for the Fund upon the exercise
of a covered call option written by the Fund on such
securities.
12. Purchase of Securities. Promptly after each purchase of securities
by the investment advisor, the Fund shall deliver to U.S. Trust (as
Custodian) Written Instructions specifying with respect to each such
purchase: (a) the name of the issuer and the title of the securities,
(b) the number of shares or the principal amount purchased and accrued
interest, if any, (c) the dates of purchase and settlement, (d) the
purchase price per unit, (e) the total amount payable upon such
purchase, (f) the name of the person from whom or the broker through
whom the purchase was made and (g) the fund for which the purchase was
made. U.S. Trust shall upon receipt of securities purchased by or for
the Fund pay out of the monies held for the account of the Fund the
total amount payable to the person from whom or the broker through whom
the purchase was made, provided that the same conforms to the total
amount payable as set forth in such Written Instructions.
13. Sales of Securities. Promptly after each sale of securities by the
investment advisor, the Fund shall deliver to U.S. Trust (as Custodian)
Written Instructions, specifying with respect to each such sale: (a)
the name of the issuer and the title of the security, (b) the number of
shares or principal amount sold, and accrued interest, if any, (c) the
date of sale, (d) the sale price per unit, (e) the total amount payable
to the Fund upon such sale, (f) the name of the broker through whom or
the person to whom the sale was made and (g) the fund for which the
sale was made. U.S. Trust shall deliver the securities upon receipt of
the total amount payable to the Fund upon such sale, provided that the
same conforms to the total amount payable as set forth in such Written
Instructions. Subject to the foregoing, U.S. Trust 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.
14. Authorized Shares. The Fund has an unlimited number of Shares of
each class of its securities.
15. Records. The books and records pertaining to the Fund which are in
the possession of U.S. Trust shall be the property of the Fund. Such
books and records shall be prepared and maintained as required by the
1940 Act, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall
have access to such books and records at all times during U.S. Trust's
normal business hours, and such books and records shall be surrendered
to the Fund promptly upon request. Upon reasonable request of the Fund,
copies of any such books and records shall be provided by U.S. Trust to
the Fund or the Fund's authorized representative at the Fund's expense.
16. Cooperation with Accountants. U.S. Trust shall cooperate with the
Fund's independent certified public accountants and shall take all
reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to
such accountants for the expression of their unqualified opinion,
including but not limited to the opinion included in the Fund's
semi-annual report on Form N-SAR.
17. Confidentiality. U.S. Trust agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of
the Fund all records and other information relative to the Fund and its
prior, present or potential Shareholders and relative to the Fund's
investment advisor and its prior, present or potential customers, and
not to use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld
where U.S. Trust may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted legal authorities, or when so requested
by the Fund. Nothing contained herein, however, shall prohibit U.S.
Trust from advertising or soliciting the public generally with respect
to other products or services, regardless of whether such advertisement
or solicitation may include prior, present or potential Shareholders of
the Fund.
18. Equipment Failures. In the event of equipment failures beyond U.S.
Trust's control, U.S. Trust shall, at no additional expense to the
Fund, take reasonable steps to minimize service interruptions but shall
not have liability with respect thereto. U.S. Trust shall enter into
and shall maintain in effect with appropriate parties one or more
agreements making reasonable provision for back up emergency use of
electronic data processing equipment to the extent appropriate
equipment is available.
19. Right to Receive Advice.
(a) Advice of Fund. If U.S. Trust shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall
receive, from the Fund clarification or advice.
(b) Advice of Counsel. If U.S. Trust shall be in doubt as to
any question of law involved in any action to be taken or
omitted by U.S. Trust, it may request advice at its own cost
from counsel of its own choosing (who may be counsel for the
Fund or U.S. Trust, at the option of U.S. Trust).
(c) Conflicting Advice. In case of conflict between directions
or advice received by U.S. Trust pursuant to subparagraph (a)
of this paragraph and advice received by U.S. Trust pursuant
to subparagraph (b) of this paragraph, U.S. Trust shall be
entitled to rely on and follow the advice received pursuant to
the latter provision alone.
(d) Protection of U.S. Trust. U.S. Trust shall be protected in
any action or inaction which it takes or omits to take in
reliance on any directions or advice received pursuant to
subparagraphs (a) or (b) of this section which U.S. Trust,
after receipt of any such directions or advice, in good faith
believes to be consistent with such directions or advice.
However, nothing in this paragraph shall be construed as
imposing upon U.S. Trust any obligation (i) to seek such
directions or advice, or (ii) to act in accordance with such
directions or advice when received, unless, under the terms of
this Agreement, the same is a condition to U.S. Trust's
properly taking or omitting to take such action. Nothing in
this subparagraph shall excuse U.S. Trust when an action or
omission on the part of U.S. Trust constitutes willful
misfeasance, bad faith, negligence or reckless disregard by
U.S. Trust of its duties under this Agreement.
20. Compliance with Governmental Rules and Regulations. The Fund
assumes full responsibility for insuring that the contents of each
Prospectus of the Fund complies with all applicable requirements of the
1933 Act, the 1940 Act, and any laws, rules and regulations of
governmental authorities having jurisdiction over the Fund.
21. Compensation. As compensation for the services rendered by U.S.
Trust during the term of this Agreement, the Fund will pay to U.S.
Trust, in addition to reimbursement of its out-of-pocket expenses,
monthly fees as outlined in Exhibit A.
22. Indemnification. The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless U.S. Trust and its nominees from all taxes,
charges, expenses, assessments,
claims, and liabilities (including, without limitation, liabilities
arising under the 1933 Act, the Securities Exchange Act of 1934, the
1940 Act, and any state and foreign securities and blue sky laws, all
as amended from time to time) and expenses, including (without
limitation) attorney's fees and disbursements, arising directly or
indirectly (a) from the fact that securities included in the Property
are registered in the name of any such nominee or (b) without limiting
the generality of the foregoing clause (a) from any action or thing
which U.S. Trust takes or does or omits to take or do (i) at the
request or on the direction of or in reliance on the advice of the
Fund, or (ii) upon Written Instructions, provided, that neither U.S.
Trust nor any of its nominees or subcustodians shall be indemnified
against any liability to the Fund or to its Shareholders (or any
expenses incident to such liability) arising out of (x) U.S. Trust's or
such nominee's or subcustodian's own willful misfeasance, bad faith,
negligence or reckless disregard of its duties under this Agreement or
any agreement between U.S. Trust and any nominee or subcustodian or (y)
U.S. Trust's own negligent failure to perform its duties under this
Agreement. In the event of any advance of cash for any purpose made by
U.S. Trust resulting from orders or Written Instructions of the Fund,
or in the event that U.S. Trust or its nominee or subcustodian shall
incur or be assessed any taxes, charges, expenses, assessments, claims
or liabilities in connection with the performance of this Agreement,
except such as may arise from its or its nominee's or subcustodian's
own negligent action, negligent failure to act, willful misconduct, or
reckless disregard, the Fund shall promptly reimburse U.S. Trust, its
nominees or subcustodians for such advance of cash or such taxes,
charges, expenses, assessments, claims or liabilities.
23. Responsibility of U.S. Trust. U.S. Trust shall be under no duty to
take any action on behalf of the Fund except as specifically set forth
herein or as may be specifically agreed to by U.S. Trust in writing. In
the performance of its duties hereunder, U.S. Trust shall be obligated
to exercise care and diligence and to act in good faith and to use its
best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement. U.S. Trust shall be
responsible for its own negligent failure or that of any subcustodian
it shall appoint to perform its duties under this Agreement but to the
extent that duties, obligations and responsibilities are not expressly
set forth in this Agreement, U.S. Trust shall not be liable for any act
or omission which does not constitute willful misfeasance, bad faith,
or gross negligence on the part of U.S. Trust or reckless disregard of
such duties, obligations and responsibilities. Without limiting the
generality of the foregoing or of any other provision of this
Agreement, U.S. Trust in connection with its duties under this
Agreement shall not be under any duty or obligation to inquire into and
shall not be liable for or in respect of (a) the validity or invalidity
or authority or lack thereof of any advice, direction, notice or other
instrument which conforms to the applicable requirements of this
Agreement, if any, and which U.S. Trust believes to be genuine, (b) the
validity of the issue of any securities purchased or sold by the Fund,
the legality of the purchase or sale thereof or the propriety of the
amount paid or received therefor, (c) the legality of the issue or sale
of any Shares, or the sufficiency of the amount to be received
therefor, (d) the legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor, (e) the legality of the
declaration or payment of any dividend or distribution Shares, or (f)
delays or errors or loss of data occurring by reason
of circumstances beyond U.S. Trust's control, including acts of civil
or military authorities, national emergencies, labor difficulties,
fire, mechanical breakdown (except as provided in Paragraph 18), flood
or catastrophe, acts of God, insurrection, war, riots, or failure of
the mail, transportation, communication or power supply.
24. Collection. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by U.S. Trust) shall be at the sole risk of the
Fund. In any case in which U.S. Trust does not receive any payment due
the Fund within a reasonable time after U.S. Trust has made proper
demands for the same, it shall so notify the Fund in writing, including
copies of all demand letters, any written responses thereto, and
memoranda of all oral responses thereto, and to telephonic demands, and
await instructions from the Fund. U.S. Trust shall not be obliged to
take legal action for collection unless and until reasonably
indemnified to its satisfaction. U.S. Trust shall also notify the Fund
as soon as reasonably practicable whenever income due on securities is
not collected in due course.
25. Duration and Termination. This Agreement shall be effective as of
December 31, 1990, and shall continue in effect for two years from that
date and shall continue in force from year to year thereafter, but only
so long as such continuance is approved by U.S. Trust and the Fund.
This Agreement shall continue in effect until termination by the Fund
or by U.S. Trust on 90 days written notice. Upon any termination of
this Agreement, pending appointment of a successor to U.S. Trust or a
vote of the Shareholders of the Fund to dissolve or to function without
a custodian of its cash, securities or other property, U.S. Trust shall
not deliver cash, securities or other property of the Fund to the Fund,
but may deliver them to a bank or trust company of its own selection,
having aggregate capital, surplus and undivided profits, as shown by
its last published report of not less than twenty million dollars
($20,000,000) as a custodian for the Fund to be held under terms
similar to those of this Agreement; provided, however, that U.S. Trust
shall not be required to make any such delivery or payment until full
payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by U.S.
Trust or on or against U.S. Trust and until full payment shall have
been made to U.S. Trust of all of its fees, compensation, costs and
expenses, subject to the provisions of Paragraph 21 of this Agreement.
26. Notices. All notices and other communications (collectively
referred to as "Notice" or "Notices" in this paragraph) hereunder shall
be in writing or by confirm in telegram, cable, telex, or facsimile
sending device. Notices shall be addressed (a) if to U.S. Trust, at
U.S. Trust's address, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000;
(b) if to the Fund, at the address of the Fund, 00 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000; or (c) if to neither of the foregoing,
at such other address as shall have been notified to the sender of any
such Notice or other communication. If the location of the sender of a
Notice and the address of the addressee thereof are, at the time of
sending, more than 100 miles apart, the Notice may be sent by
first-class mail, in which case it shall be deemed to have been given
three days after it is sent, or if sent by confirming telegram, cable,
telex or facsimile sending device, it shall be deemed to have been
given immediately, and, if the
location of the sender of a Notice and the address of the addressee
thereof are, at the time of sending, not more than 100 miles apart, the
Notice may be sent by first-class mail, in which case it shall be
deemed to have been given two days after it is sent, or if sent by
messenger, it shall be deemed to have been given on the day it is
delivered, if sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. All
postage, cable, telegram, telex and facsimile sending device charges
arising from the sending of a Notice hereunder shall be paid by the
sender.
27. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
28. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
29. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof.
The captions in this 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 effect. This Agreement
shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parities hereto
and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE BAUPOST FUND
/s/ Jo-An X. Xxxxxxxx /s/ Xxxx X. Xxxxxxx
--------------------------- ---------------------------
Its President
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ Xxxxxx First
--------------------------- ---------------------------
Its Senior Vice President
Exhibit A
UNITED STATES TRUST COMPANY OF NEW YORK
BAUPOST GROUP
Baupost Fund
Domestic Custody Fee Proposal
February 26, 1997
Domestic Custody:
-----------------
Administration and Maintenance (annually)
-----------------------------------------
.02% on first $50 Million
.01% on Excess
Transaction Fees for On-Line Customer*
--------------------------------------
$10.00 per book entry transaction
$25.00 per physical transaction
$35.00 per future or option wire
$ 8.00 per wire transfer
* Assumes fund inputs trades directly to U.S. Trust system. If U.S. Trust inputs
trades, add a $5.00 per transaction charge.
Out of pocket expenses will be billed at cost.
Subject to review after one year.
This document supercedes any previous fee schedules.
/s/Xxxxxxx Xxxxxx
----------------------
Xxxxxxx Xxxxxx
Second Vice President
UNITED STATES TRUST COMPANY OF NEW YORK
STANDARD INTERNATIONAL CUSTODY FEE PROPOSAL
BAUPOST GROUP
DECEMBER 12, 1990
International Custody:
----------------------
Safekeeping fees:
0.12% on First $250 Million
0.10% on Excess
Transaction Fees by Country
GROUP I GROUP II
------- --------
Austria Australia
Belgium Canada
Denmark France
Finland Hong Kong
Germany Italy
Japan Netherlands
Norway Singapore/Malaysia
Sweden Spain
Switzerland United Kingdom
CEDEL/Euroclear Eligible Other Fixed Income
Fixed Income
$35.00 per transaction $75.00 per transaction
Out of pocket expenses will be billed at cost.
