Exhibit 3(g)
CUSTODIAL SERVICES AGREEMENT
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AGREEMENT dated as of January 13, 1997 between THE BANK OF NEW YORK ("Bank") and
COLLEGE RETIREMENT EQUITIES FUND ("CREF") on behalf of the CREF INFLATION-LINKED
BOND ACCOUNT.
WHEREAS, the parties desire to arrange for the custody of certain
assets of CREF, specifically those of the CREF Inflation-Linked Bond Account, by
the Bank;
NOW THEREFORE, in consideration of the mutual agreement made herein,
the Bank and CREF agree as follows:
1. Establishment of Accounts
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a. Bank agrees to open and maintain custodial
account(s) ("Custody Account(s)") on behalf of the
CREF Inflation-Linked Bond Account
("Inflation-Linked Bond Account"), or such other
CREF portfolios or accounts ("CREF Accounts") as the
parties may from time to time agree to include
within the scope of this Agreement, for any and all
bonds and any other securities or other property
received by Bank for the account of the
Inflation-Linked Bond Account.
b. Bank also hereby agrees to establish and maintain
one or more deposit accounts ("Deposit Accounts")
for all cash (including cash proceeds from the sale
of such securities and similar investments and cash
monies whether in United States or foreign
denominated currencies, hereinafter termed "Cash")
received by Bank for the Inflation-Linked Bond
Account. Such accounts will be in the name of the
Inflation-Linked Bond Account or in the name of Bank
or Bank's branches or a Foreign Custodian, on behalf
of the Inflation-Linked Bond Account.
It is hereby agreed that all securities, Cash, or other property now
or hereinafter held by Bank hereunder are held for the Inflation-Linked Bond
Account and are to be maintained and disposed of by Bank only for the
Inflation-Linked Bond Account in accordance with the terms and conditions set
forth in this Agreement.
2. Location of Assets
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a. Securities, Cash and other property are permitted to
be held by
(1) Bank at any of its offices wherever located;
(2) domestic securities depositories ("Securities
Depositories") selected by Bank with the
approval of CREF on behalf of the
Inflation-Linked Bond Account;
(3) Foreign securities depositories or clearing
agencies ("Foreign Depository") selected by
Bank with the approval of CREF on behalf of
the Inflation-Linked Bond Account as described
in Section 9 of this Agreement; and
(4) Foreign banking institutions ("Foreign Banks")
selected by Bank with the approval of CREF on
behalf of the Inflation-Linked Bond Account as
described in Section 9 of this Agreement.
b. Such entities described in (2), (3) and (4), above,
shall be deemed to be Sub-Custodians of Bank, and all
securities, Cash and other property held by such
entities shall, unless otherwise specifically agreed
to in writing by Bank and CREF, be considered for all
purposes of this agreement as being held directly by
Bank and subject to the terms of this Agreement.
c. For purposes of this Agreement, a Securities
Depository or Foreign Depository shall mean a system
for the handling of securities of any particular class
or series of any particular issuer deposited therein
which may be treated as a part of a fungible bulk and
may be transferred by bookkeeping entry without
physical delivery of such securities. With respect to
a Securities Depository, such entity shall be a
clearing agency registered with the Securities and
Exchange Commission ("Commission") under Section 17A
of the Securities Exchange Act of 1934 ("Exchange
Act"), which acts as a securities depository, or the
book-entry system authorized by the U.S. Department of
the Treasury and certain federal agencies in
accordance with applicable Federal Reserve Board and
Commission rules and regulations. With respect to a
Foreign Depository, such entity shall satisfy the
requirements of Rule 17f-5 under the Investment
Company Act of 1940 ("1940 Act").
d. For purposes of this Agreement a Foreign Bank is a
foreign banking institution satisfying Rule 17f-5
under the 1940 Act and appointed by Bank as provided
in Section 9 of this Agreement.
3. BANK'S DUTIES
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a. Bank will be responsible for the safekeeping,
handling, servicing and disposition of all securities,
Cash or other property of the Inflation-Linked Bond
Account held by it hereunder including, without
limitation, any and all of the Inflation-Linked Bond
Account's Cash held by or received by Bank in the name
of the Inflation-Linked Bond Account, Bank's name, or
that of Foreign Banks.
b. Bank agrees to be liable and to indemnify and hold
CREF harmless for any and all liability for loss or
damage to CREF with respect to any such securities,
Cash and other property, if such liability, loss or
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damage results from any negligence, misfeasance or
misconduct on the part of Bank, its officers or
employees, its branches or its affiliates. Bank shall
have no liability for any consequential damages
occasioned by delay in receipt of notice by Bank or by
a Foreign Sub-Custodian of any payment, redemption,
proceeding or other transaction regarding, or of any
rights exercisable by the Inflation-Linked Bond
Account in connection with any securities, Cash or
other property with respect to which Bank has agreed
to take action.
c. Notwithstanding the foregoing, Bank further agrees
that it will at all times give the securities or other
property held by it hereunder the same care as it
gives its own property.
d. It is understood and agreed that Bank is not under any
duty to supervise the investment of, or to advise or
make any recommendation to CREF with respect to, the
purchase or sale of any securities.
e. In connection with Bank's responsibilities hereunder,
it has advised CREF that it currently has in force,
for its own protection, Bankers Blanket Bond
Insurance, and it is Bank's intention to continue to
maintain such insurance in substantially the same form
and amount. CREF understands that such policies would
apply to losses under this agreement. Bank agrees to
give CREF written notice of any reduction in the
amount, or material change in the form of such
insurance, at least once a year upon request.
f. Bank shall have responsibility as a bailee for hire
under the law of the State of New York with respect to
any Foreign Securities System or Foreign Custodian
acting as a Sub-Custodian of Bank. Without limiting
the generality of the foregoing, Bank will hold CREF
harmless from and indemnify it against any loss that
occurs as a result of the negligence, misfeasance or
misconduct of Bank, its officers or employees, and any
Foreign Depository or Foreign Bank acting as Foreign
Sub-Custodian of Bank.
4. RECEIPT AND DISBURSEMENT OF CASH
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a. Bank shall open and maintain a separate Deposit
Account for the Inflation-Linked Bond Account, in the
name of the Inflation-Linked Bond Account, subject
only to actions by Bank acting pursuant to the terms
of this Agreement. Bank shall hold in such accounts,
subject to the provisions hereof, all Cash received by
it from or for the Inflation-Linked Bond Account. All
Cash held by Bank hereunder shall be subject to
withdrawal and deposit by Bank from time to time on
behalf of the Inflation-Linked Bond Account for the
purpose of consummating the purchases or sales, as the
case may be, of designated securities, solely upon
Bank's receipt of express directions in the form of
Authorized Instructions in accordance with the
provisions of Section 20. Such directions shall
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include, but are not limited to:
(1) the execution and delivery of foreign
currency contracts on behalf of the
Inflation-Linked Bond Account;
(2) the debiting or crediting of currency
accounts (United States or foreign) of
the Inflation-Linked Bond Account held by
Bank, pursuant to this Agreement as of
settlement date or such other date as
specified in such instructions;
(3) the purchase of securities, options on
securities, futures contracts, options on
futures contracts, or other property for
the Inflation-Linked Bond Account but
only (i) upon the delivery of such
securities or other property or evidence
of title for such options on securities,
futures contracts or options on futures
contracts to Bank, registered in the name
of CREF or of the nominee of Bank
referred to in Section 10 hereof or in
proper form for transfer; (ii) in the
case of repurchase agreements for
securities entered into between CREF on
behalf of the Inflation-Linked Bond
Account and the Bank, or another bank, or
a broker-dealer which is a member of the
National Association of Securities
Dealers ("NASD") against delivery of the
securities either in certificate form or
through an entry crediting Bank's account
at the Federal Reserve Bank with such
securities or against delivery of the
receipt evidencing purchase by the
Inflation-Linked Bond Account of
securities owned by Bank along with
written evidence of the agreement by Bank
to repurchase such securities from the
Inflation-Linked Bond Account; or (iii)
in the case of a purchase affected
through a Securities Depository in
accordance with the provisions of Section
7 hereof.
(4) the payment of interest, taxes (if any),
management or supervisory fees or
operating expenses (including, without
limitation thereto, fees for legal,
accounting and auditing services) (if
any);
(5) payments in connection with the
conversion, exchange or surrender of
securities owned or subscribed to by the
Inflation-Linked Bond Account held by or
to be delivered to Bank; or
(6) other corporate purposes.
b. Bank is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of
money received by it for the accounts of CREF.
5. HOLDING SECURITIES
------------------
Bank shall hold in a separate Custody Account for the
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Inflation-Linked Bond Account, and physically segregated at all times from those
of any other persons, firms or corporations, or any other of CREF's Accounts,
pursuant to the provisions hereof, all securities and other property to be held
by it for the Inflation-Linked Bond Account, except those held in a Securities
Depository as described in Section 7 of this Agreement or a Foreign
Sub-Custodian as described in Section 9 of this Agreement. All such securities
are to be held or disposed of by Bank for, and subject at all times to the
instructions of, CREF pursuant to the terms of this Agreement. Bank shall have
no power or authority to assign, hypothecate, pledge or otherwise dispose of any
such securities and investments, except pursuant to the Authorized Instructions
of CREF on behalf of the Inflation-Linked Bond Account and only as set forth in
Section 19 of this Agreement.
6. RECEIPT AND DELIVERY OF SECURITIES
----------------------------------
From time to time CREF on behalf of the Inflation-Linked Bond
Account will instruct Bank to receive or deliver securities through Authorized
Instructions as set forth in Section 20. Such instructions may be continuing if
agreed to by the parties.
a. In accordance with this Agreement, notwithstanding
such instructions that relate to settlement date
entries, Bank agrees to receive such securities
against payment or exchange as directed in any
Authorized Instructions and debit Cash held in a
Deposit Account on behalf of the Inflation-Linked Bond
Account only against satisfactory delivery of
securities.
b. In accordance with this Agreement, notwithstanding
instructions that relate to settlement date entries,
Bank agrees to transfer, exchange, or deliver
securities held by it hereunder including, but not
limited to, the following:
(1) for sales of such securities for the
Inflation-Linked Bond Account upon
receipt by Bank of payment therefor;
(2) when such securities are called, redeemed
or retired or otherwise become payable;
(3) for examination by any broker selling any
securities located in the U.S. in
accordance with "U.S. street delivery"
custom, provided that in any such case,
Bank shall have no responsibility or
liability for any loss arising from the
delivery of such securities prior to
receiving payment for such securities
except as may result from Bank's
negligence, misfeasance, or misconduct;
(4) in exchange for or upon conversion into
other securities alone or other
securities and Cash whether pursuant to
any plan or merger, consolidation,
reorganization, recapitalization or
readjustment, or otherwise;
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(5) upon conversion of such securities
pursuant to their terms into other
securities;
(6) upon exercise of subscription, purchase
or other similar rights represented by
such securities;
(7) for the purpose of exchanging interim
receipts or temporary securities for
definitive securities;
(8) upon receipt of payment in connection
with any repurchase agreement related to
such securities entered into by the
Inflation-Linked Bond Account;
(9) for delivery in connection with any loans
of securities made by the
Inflation-Linked Bond Account, in
accordance with the provisions of Section
12 herein;
(10) for other purely ministerial exchanges;
or
(11) for other corporate purposes.
As to any deliveries made by you pursuant to Items (2), (4), (5),
(6), (7) and (10), securities or Cash receivable in exchange therefor shall be
deliverable to Bank.
c. Actual delivery of securities is to be made by Bank on
the contractual settlement date only upon express
instructions to such effect, provided that:
(1) the securities are on deposit in a
Custody Account for the Inflation-Linked
Bond Account; and
(2) the delivery instructions are received by
Bank in timely fashion.
d. Bank will withdraw and deliver securities "Free of
Payment" as directed in any such written instructions
as set forth in paragraph b of Section 20 herein.
e. Except as specifically otherwise stated in this
Agreement, in any and every case where payment for
purchase of securities for the account of the
Inflation-Linked Bond Account is made by the Bank in
advance of receipt of the securities purchased in the
absence of specific written instructions from CREF on
behalf of the Inflation-Linked Bond Account to so pay
in advance, Bank shall be liable for any loss to CREF
for such securities to the same extent as if the
securities had been received by Bank.
f. Bank shall promptly furnish the Inflation-Linked Bond
Account with advices or notices of any receipts or
deliveries of securities.
g. Bank will not be responsible for any act or omission,
or for the insolvency of any broker or agent selected
by Bank to effect a transaction for the account of
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the Inflation-Linked Bond Account; provided, however,
Bank is not negligent in the selection of such broker
or agent.
7. DEPOSIT OF INFLATION-LINKED BOND ACCOUNT ASSETS IN A
SECURITIES DEPOSITORY
---------------------
Bank may deposit and maintain securities owned by the
Inflation-Linked Bond Account in a Securities Depository subject to the
following provisions:
a. Bank may keep the Inflation-Linked Bond Account's
securities in a Securities Depository provided that
such securities are represented in an account of Bank
("Bank's Account") in Securities Depository which
shall not include any assets of Bank other than assets
held as a fiduciary, custodian or otherwise for
customers.
b. The records of Bank will identify those securities of
the Inflation-Linked Bond Account held in a Securities
Depository as being held in book-entry form on behalf
of the Inflation-Linked Bond Account.
c. Bank shall pay for securities purchased for the
account of the Inflation-Linked Bond Account upon (i)
receipt of advice from the Securities Depository that
such securities have been transferred to Bank's
Account, and (ii) the making of an entry on the
records of Bank to reflect such payment and transfer
for the account of the Inflation-Linked Bond Account.
Bank shall transfer securities sold for the account of
the Inflation-Linked Bond Account upon (i) receipt of
advice from the Securities Depository that payment for
such securities has been transferred to Bank's
Account, and (ii) the making of an entry on the
records of Bank to reflect such transfer and payment
for the account of the Inflation-Linked Bond Account.
d. Anything to the contrary in this Agreement
notwithstanding, Bank shall be liable to CREF for the
benefit of the Inflation-Linked Bond Account for any
loss or damage to the Inflation-Linked Bond Account
resulting from use of any Securities Depository by
reason of any negligence, misfeasance or misconduct of
Bank or any of its agents or of any of the employees
of such Depository or Bank or from failure of Bank or
any such agent to enforce effectively such rights as
it may have against a Securities Depository; at
election of the CREF on behalf of Inflation-Linked
Bond Account, it shall be entitled to be subrogated to
the rights of Bank with respect to any claim against a
Securities Depository or any other person which Bank
may have as a consequence of any such loss or damage
if and to the extent that the Inflation-Linked Bond
Account has not been made whole for any such loss or
damage.
8. SEGREGATED ACCOUNT
------------------
Bank shall upon receipt of Authorized Instructions from CREF on
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behalf of the Inflation-Linked Bond Account establish and maintain a segregated
account or accounts for and on behalf of the Inflation-Linked Bond Account, into
which account or accounts may be transferred Cash and/or securities, including
securities maintained by Bank in a Securities Depository pursuant to Section 7
hereof: (a) in accordance with the provisions of any agreement among CREF on
behalf of the Inflation-Linked Bond Account, Bank and a broker-dealer registered
under the Exchange 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
Inflation-Linked Bond Account; (b) for purposes of segregating Cash or
government securities in connection with options purchased, sold or written by
the Inflation-Linked Bond Account or commodity futures contracts or options
thereon purchased or sold by the Inflation-Linked Bond Account; (c) for the
purposes of compliance by the Inflation-Linked Bond Account with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Commission relating to the maintenance of segregated accounts
by registered investment companies; and (d) for other corporate purposes, but
only, in the case of clause (d), upon receipt of Authorized Instructions from
CREF on behalf of the Inflation-Linked Bond Account.
9. DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE
INFLATION-LINKED BOND ACCOUNT HELD OUTSIDE OF THE
UNITED STATES
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a. CREF on behalf of the Inflation-Linked
Bond Account hereby authorizes and
instructs Bank to employ as
Sub-Custodians for the Inflation-Linked
Bond Account's securities and other
assets maintained outside the United
States the Foreign Banks and Foreign
Depositories designated on a separate
document (together "Foreign
Sub-Custodians"). Upon receipt of
Authorized Instructions, Bank and CREF on
behalf of the Inflation-Linked Bond
Account may agree to designate
additional, Foreign Sub-Custodians. Upon
receipt of Authorized Instructions, CREF
on behalf of the Inflation-Linked Bond
Account may instruct Bank to cease to
utilize any one or more Foreign
Sub-Custodians on behalf of the CREF
Inflation-Linked Bond Account.
b. Except as may otherwise be agreed upon in
writing by Bank and CREF, assets of the
Inflation-Linked Bond Account shall be
maintained in Foreign Depositories only
through arrangements implemented by Bank
or by Foreign Banks serving as
Sub-Custodians on behalf of the
Inflation-Linked Bond Account in
accordance with the terms hereof.
c. The Bank agrees that with respect to each
Foreign Sub-Custodian (i) the assets of
the Inflation-Linked Bond Account will
not be subject to any right, charge,
security interest, lien or claim of any
kind in favor of the Foreign
Sub-Custodian or its creditors or agents,
except a claim of payment for
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their safe custody or administration;
(ii) beneficial ownership of the assets
of the Inflation-Linked Bond Account will
be freely transferable without the
payment of money or value other than for
custody or administration; (iii) adequate
records will be maintained identifying
the assets as belonging to the
Inflation-Linked Bond Account; (iv)
officers of or auditors employed by, or
other representatives of Bank, including
to the extent permitted under applicable
law the independent public accountants
for the Inflation-Linked Bond Account,
will be given access to the books and
records of the Foreign Sub-Custodian
relating to its actions under its
agreement with Bank; (v) assets of the
Inflation-Linked Bond Account held by the
Foreign Bank will be subject only to the
instructions of Bank; and (vi) assets of
the Inflation-Linked Bond Account held by
a Foreign Depository will be subject only
to the instructions of Bank or Foreign
Bank.
d. With respect to assets maintained in a
Foreign Depository, except as otherwise
required by such Foreign Depository or
other applicable regulations, Bank shall
pay for securities purchased for the
account of the Inflation-Linked Bond
Account upon (i) receipt of advice from
the Foreign Depository that such
securities have been transferred to
Bank's Account and (ii) the making of an
entry on the records of Bank to reflect
such payment and transfer for the account
of the Inflation-Linked Bond Account.
Bank shall transfer securities sold for
the account of the Inflation-Linked Bond
Account upon (i) receipt of advice from
the Foreign Depository that payment for
such securities had been transferred to
Bank's Account, and (ii) the making of
any entry on the records of Bank to
reflect such transfer and payment for the
account of the Inflation-Linked Bond
Account.
e. Until Bank receives Authorized
Instructions to the contrary, Bank will
and will instruct each Foreign
Sub-Custodian to take such steps as may
reasonably be necessary to secure or
otherwise prevent the loss of rights
relating to any securities, Cash or other
property; provided that it shall be
understood that the monitoring of
investment data provided by a recognized
international investment data service by
Bank will be deemed to fulfill Bank's
obligation under this Section 9.e.
f. Bank shall identify on its books as
belonging to the Inflation-Linked Bond
Account the securities, Cash or other
property held by each Foreign
Sub-Custodian.
g. Bank will supply to the Inflation-Linked
Bond Account from time to time, as
mutually agreed upon, statements in
respect of the securities and other
assets held by Foreign Sub-Custodians,
including but not limited to an
identification of entities having
possession of the Inflation-Linked Bond
Account's securities and other assets and
advices or notifications of any transfers
of securities to or
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from each Custody Account maintained by a
Foreign Bank for Bank on behalf of the
Inflation-Linked Bond Account indicating,
as to securities acquired for the
Inflation-Linked Bond Account, the
identity of the entity having physical
possession of such securities. Bank shall
furnish annually to the Inflation-Linked
Bond Account, during the month of [June],
all relevant information necessary to
enable CREF to evaluate the Foreign
Sub-Custodians employed by Bank. Such
information shall be similar in kind and
scope to that furnished to the
Inflation-Linked Bond Account in
connection with the initial approval of
this agreement.
h. In addition, Bank will promptly inform
the Inflation-Linked Bond Account in the
event that Bank learns of a material
adverse change in the financial condition
of a Foreign Sub-Custodian or any
material loss of the assets of the
Inflation-Linked Bond Account or is
notified by such Foreign Sub-Custodian
that there appears to be a substantial
likelihood that its shareholders' equity
will decline below $200 million (U.S.
dollars or the equivalent thereof) or
that its shareholders' equity has
declined below $200 million (in each case
computed in accordance with generally
accepted U.S. accounting principles).
i. Anything to the contrary in this
Agreement notwithstanding, Bank shall be
liable to CREF for the benefit of the
Inflation-Linked Bond Account for any
loss or damage to the Inflation-Linked
Bond Account resulting from use of any
Foreign Sub-Custodian by reason of any
negligence, misfeasance or misconduct of
Bank or any of its agents or of any of
the employees of such Sub-Custodian or
Bank or from failure of Bank or any such
agent to enforce effectively such rights
as it may have against a Foreign
Sub-Custodian; at the election of CREF on
behalf of Inflation-Linked Bond Account,
it shall be entitled to be subrogated to
the rights of Bank with respect to any
claim against a Foreign Sub-Custodian or
any other person which Bank may have as a
consequence of any such loss or damage if
and to the extent that the
Inflation-Linked Bond Account has not
been made whole for any such loss or
damage.
j. Notwithstanding any provision of this
Agreement to the contrary, settlement and
payment for securities received for the
account of the Inflation-Linked Bond
Account and delivery of securities
maintained for the account of the
Inflation-Linked Bond Account may be
effected in accordance with the customary
established securities trading or
securities processing practices and
procedures in the jurisdiction or market
in which the transaction occurs,
including, without limitation, delivering
securities to the purchaser thereof or to
a dealer therefor (or an agent for such
purchaser or dealer) against a receipt
with the expectation of receiving later
payment for such securities from such
purchaser or dealer.
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10. INCOME
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a. Income on securities and Cash held by
Bank hereunder will be credited
automatically to a Deposit Account or
Custody Account upon receipt and in
accordance with local market practices.
Principal received in connection with
securities which mature or are redeemed
shall be credited to a Deposit Account or
a Custody Account on the date such
principal is received. All collections of
income or principal paid or distributed
with respect to any securities, Cash or
other property shall be made at the risk
of the Inflation-Linked Bond Account,
provided however, that Bank takes
reasonable steps to collect such income
or principal and there is no negligence,
misfeasance or misconduct on the part of
Bank.
b. Unless instructed otherwise, collections of income in
foreign currency are to be converted into United
States dollars, and in effecting such conversion Bank
may use such methods or agencies as it may see fit
including its own facilities at prevailing rates. All
risk and expense incident to such collection of income
regardless of the particular currency or currencies
involved is for the account of the undersigned, and
Bank shall have no responsibility for fluctuations in
exchange rates affecting such conversion.
c. Unless and until Bank receives written instructions to
the contrary, it shall:
(1) present for payment all coupons and other
income items held by it for the account
of the Inflation-Linked Bond Account
which call for payment upon presentation
and hold the Cash received by it upon
such payment for the appropriate account;
(2) collect interest and cash dividends
received, with notice to CREF, for the
Inflation-Linked Bond Account;
(3) hold for the Inflation-Linked Bond
Account all stock dividends, rights and
similar securities issued with respect to
any securities held by Bank hereunder,
and with respect to stock dividends, it
is hereby authorized to sell any
fractional interest and to credit the
Deposit Account with the proceeds
thereof; and
(4) with respect to any dividend reinvestment
plan in which the Inflation-Linked Bond
Account participates, and as to which
Bank has been so notified, it agrees to
acquire and hold hereunder the
appropriate number of shares issuable
under such plan in lieu of the cash
dividend.
d. Any dividends or interest automatically credited to
the Deposit Accounts which are not subsequently
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collected by Bank from the corporation
making such payment will be reimbursed to
Bank and Bank may debit the Deposit
Accounts for this purpose.
11. REGISTRATION
------------
Securities which are eligible for deposit in Securities
Depositories or Foreign Depositories may be maintained in Bank's Account with
such Depositories. Subject to the aforesaid provision, Bank will register all
securities (except such as are in bearer form) in the name of its nominee or the
nominee of the Securities Depository or Foreign Depository, unless alternate
registration instructions are furnished by CREF. Bank will retain and have
available at all times for inspection by regulatory authorities evidence that
its nominee is registered as required by the laws and regulations of the United
States and the State of New York, as appropriate. All such agents shall be
appointed in conformance with Section 21. The Inflation-Linked Bond Account
agrees to hold such nominee harmless from any liability as a holder of record of
such securities and will have the same responsibility as if the securities were
registered in the name of the Inflation-Linked Bond Account. The foregoing shall
not relieve Bank of its responsibilities or liabilities hereunder.
12. PROVISIONS RELATING TO SECURITIES LENDING
-----------------------------------------
CREF on behalf of the Inflation-Linked Bond Account may either
appoint the Bank as its agent to lend securities the Inflation-Linked Bond
Account's pursuant to the terms and conditions set forth in a separate Agreement
executed by Bank and CREF or arrange for the lending of a CREF Account's
securities using CREF's proprietary facilities. If CREF proprietary facilities
are used, then the following provisions shall apply to the delivery, receipt and
recordkeeping of securities and Cash.
a. From time to time CREF on behalf of the
Inflation-Linked Bond Account shall designate in an
Authorized Instruction securities held by Bank in its
Custodial Account to be loaned to specified borrowers
("Borrowers"). Such securities shall be termed the
"Loaned Securities". This Section shall apply to and
shall be controlling solely with respect to such
Loaned Securities and lending services relating
thereto. Loaned Securities which are returned by the
Borrower to Bank shall upon receipt thereof constitute
securities and property held by Bank to which the
provisions of this Agreement shall be applicable
unless otherwise provided herein.
b. From time to time CREF on behalf of the
Inflation-Linked Bond Account will provide Bank with
Authorized Instructions regarding the delivery or
return of Loaned Securities. In this connection, Bank
is authorized and directed, all in accordance with
such instructions to promptly:
(1) Deliver the Loaned Securities to the
Borrower for the Inflation-Linked Bond
Account, against receipt by Bank of
collateral in respect of such Loaned
Securities (the "Collateral"), in the
form and amount specified in such
instructions.
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Bank shall promptly place the specified
Collateral in a Deposit or Custody
Account and promptly notify CREF on
behalf of the Inflation-Linked Bond
Account of such transaction.
(2) Receive Loaned Securities being returned
by Borrower in the form and amount
specified in the Authorized Instructions.
Upon satisfactory delivery of such Loaned
Securities, Bank shall debit the defined
Collateral from CREF's Deposit Account in
accordance with such instructions and pay
or redeliver the specified Collateral to
Borrower and promptly notify CREF on
behalf of the Inflation-Linked Bond
Account of such transaction.
(3) Release to Borrower any excess Collateral
or receive Collateral from Borrower as
specified in instructions issued by CREF
on behalf of the Inflation-Linked Bond
Account. Bank shall promptly transmit the
specified Collateral to be released, or
accept delivery and transmit Collateral
received to a Deposit Account, as the
case may be, and notify CREF on behalf of
the Inflation-Linked Bond Account of such
transmittal or receipt. Bank shall debit
or credit the defined Collateral from the
Deposit Account, as appropriate.
c. Where Bank has received Authorized Instructions from
CREF indicating that CREF has previously received
adequate Collateral covering contemplated loans, Bank
is authorized to deliver Loaned Securities "Free of
Payment" upon express direction from CREF with respect
to designated Loaned Securities. A list of authorized
Borrowers who are eligible to receive such Loaned
Securities will be signed by any two Authorized
Officers, with the title of Chairman, Vice Chairman,
President, Executive Vice President and Treasurer, or
by any one of these officers together with any CREF
officers with the title of Senior Vice President or
Vice President, in accordance with paragraph b. of
Section 20.
d. CREF on behalf of the Inflation-Linked Bond Account
shall also provide Bank with written instructions
regarding Loaned Securities for which CREF has
previously received adequate Collateral and their
delivery "Free of Payment" to designated Borrowers in
accordance with paragraph c. hereof or the return of
Loaned Securities. Bank shall be authorized, in
accordance with such written instructions, to:
(1) Deliver the Loaned Securities, "Free of
Payment" to the listed Borrower, and;
(2) Receive Loaned Securities specified in
our instructions.
Bank shall promptly advise CREF on behalf of the Inflation-Linked
Bond Account of the completion of any such specified
13
transaction.
e. Bank agrees to receive from the Borrower any income,
dividends, and/or distributions made by the issuer
with respect to the Loaned Securities, and to credit
the Deposit Account or Custody Account when such
amounts and properties are received from the Borrower
in accordance with the provisions of Section 10.
f. Bank shall be responsible for the Collateral and
Loaned Securities in its possession and for the
handling and servicing of such property in accordance
with written instructions. Bank is hereby designated
to acquire possession of Collateral on behalf of the
Inflation-Linked Bond Account and to act as bailee or
financial intermediary (as defined in the Uniform
Commercial Code of the State of New York, as amended
the "UCC"), as the case may be, to enable CREF on
behalf of the Inflation-Linked Bond Account to perfect
and maintain perfection of a security interest in such
Collateral, pursuant to the provisions of the UCC or
other applicable laws, as amended from time to time.
It is understood that Bank shall not be responsible
for obtaining or perfecting CREF's security interest
in the Collateral other than in accordance with the
preceding sentence and the instructions regarding
delivery and receipt, and shall not be responsible to
advise CREF of the steps necessary to obtain or
perfect such interest or for effecting any statutory
filing, unless mutually agreed upon at such time.
Under no circumstances and in no event shall Bank have
or be charged with any responsibility or liability for
(i) the credit worthiness or continued credit
worthiness of any Borrower, (ii) the adequacy or value
of any Collateral in connection with any loan of
securities, (iii) the failure of the Borrower to pay
any income, dividend and/or distribution made by the
issuer on the Loaned Securities, or (iv) any act taken
by it in accordance with the direction of the
Inflation-Linked Bond Account, or omitted by it in the
absence of such direction.
g. Bank shall report as assets of its Custody Account
property which is Loaned Securities that have
previously been delivered to Borrowers and hence are
not in Bank's possession. Bank shall have no
responsibility or liability whatsoever with respect to
such Loaned Securities and shall perform no services
with respect thereto, except as specifically set forth
herein.
h. Bank shall provide to CREF a Report of Assets Held
which shall include all Loaned Securities (whether or
not such securities are in the possession of
Borrowers) designated in such report to indicate that
the same is reported on a memorandum entry basis or on
such other basis as shall be mutually agreed upon.
Bank shall also provide to CREF all information and
data specified in paragraphs a., b., c. and f. of
Section 15, and such further information concerning
14
the Loaned Securities and Collateral, so that CREF may
properly account for and segregate such property. Bank
shall furnish CREF with all such other reports and
information as CREF shall reasonably request. Bank
shall furnish CREF with all reports and information
pursuant to this Amendment within a reasonable time
after request therefor.
13. VOTING AND OTHER ACTION
-----------------------
No person may vote (other than pursuant to Authorized Instructions)
any securities held by Bank hereunder. Bank will promptly transmit to CREF, or
direct to be transmitted to CREF, all notices, proxies and proxy soliciting
materials with respect to securities held by it hereunder, which proxies will be
executed by the registered holder thereof if registered otherwise than in the
name of CREF or the Inflation-Linked Bond Account, but without indicating the
manner in which such proxies are to be voted.
Bank will promptly transmit to CREF all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by it from the
issuers of securities or other property held by it hereunder. With respect to
tender or exchange offers, Bank will promptly transmit to CREF all written
information received by it from issuers of the securities or other property
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer.
14. FEES AND EXPENSES
-----------------
Bank will be compensated for the services rendered under this
Agreement and reimbursed for out-of-pocket expenses through arrangements
negotiated between CREF on behalf of the Inflation-Linked Bond Account and Bank
from time to time.
15. RECORDS, AFFIDAVITS AND REPORTS
-------------------------------
With respect to the securities and other property held by Bank
hereunder, Bank agrees:
a. To maintain records sufficient to verify
information CREF is required to report in
Schedule D of the Annual Statement Blank
of the Insurance Department of the State
of New York ("Insurance Department") as
amended from time to time, which records
will consist of a list of such securities
showing a complete description of each
issue, including the number of shares and
par value of securities so held at the
end of such month and such other
information as may be required by such
report or any other report required by
the Insurance Department;
b. To maintain records regarding
transactions and related activities
described in Sections 4, 5, 6, 7, 8, 9,
10, 11 and 12 sufficient to verify the
accuracy of regular monthly and other
reports and income received on such
securities and other property;
c. To maintain records sufficient to verify
information
15
relating to Cash held by Bank, including
but not limited to (i) the purchase of
foreign currency contracts, (ii) the
maintenance of foreign currency accounts
on behalf of CREF in the possession and
custody of Bank, its branches or other
entities located outside the United
States, and (iii) any reports submitted
to CREF relating to its Cash;
d. To create, maintain and preserve all
reports and records relating to Bank's
activities and obligations under this
Agreement as provided for in this Section
in such manner as will meet the
requirements of the 1940 Act, including
Section 31 thereof and Rules 31a-1 and
31a-2 thereunder and the Exchange Act,
including Section 17 thereof and Rules
17a-3 and 17a-4 thereunder, and to file a
written undertaking with the Commission
as will meet the requirements of Rule
17a-4(i) to the effect that such records
are the property of the Inflation-Linked
Bond Account and will be surrendered to
the Inflation-Linked Bond Account
promptly upon request;
e. To permit examination of such books and
records as provided for in this Section
at any time or from time to time during
business hours as provided for in Section
16 by representatives or designees of the
Commission, and to promptly furnish to
the Commission or its designees true,
correct, complete and current hard copy
of any or all or any part of such books
and records;
f. To furnish the Inflation-Linked Bond
Account with the appropriate affidavit(s)
in the form of Exhibit A, attached hereto
or in such other form as may be submitted
to Bank by CREF on behalf of the
Inflation-Linked Bond Account from time
to time which is acceptable to the
Insurance Department or any other state
or federal governmental agency having
jurisdiction over CREF, in order for the
securities and other property referred to
in such affidavit(s) to be recognized as
admitted assets of CREF and in order for
CREF to comply with any other
requirements of such Department or
agencies;
g. To furnish the Inflation-Linked Bond
Account with any report obtained by Bank
on a Securities Depository's or Foreign
Sub-Custodian's system of internal
accounting control; and to furnish the
Inflation-Linked Bond Account with such
reports on Bank's system of internal
accounting control as CREF on behalf of
the Inflation-Linked Bond Account may
reasonably require;
h. To furnish all such other reports and
information as shall be reasonably
requested by CREF on behalf of the
Inflation-Linked Bond Account relating to
all property held by Bank on the
Inflation-Linked Bond Account's behalf
pursuant to the terms of this Agreement;
i. That all such information, records,
reports, and
16
affidavits maintained or held by Bank
pursuant to this Section remain the
property of the Inflation-Linked Bond
Account and copies of all such
information will be surrendered to the
Inflation-Linked Bond Account within a
reasonable time after request therefor;
and
j. The specific records, reports and
affidavits required in a. through i.
above shall be set forth in a separate
document which may be modified from time
to time by agreement of the parties to
this Agreement.
16. RECONCILIATION OF STATEMENTS OR ADVICES
---------------------------------------
CREF agrees that it will reconcile statements and advices sent by
mail or electronic media and that all such statements and advices will be
considered final sixty days from the date of dispatch unless CREF has notified
Bank orally or in writing regarding any questions or problems.
17. ACCESS
------
a. During the course of Bank's regular
banking hours, any duly authorized
officer, employee or agent of CREF, any
independent accountants selected by CREF,
any member of the Insurance Department,
and any representative or designee of the
Commission or other governmental agencies
having jurisdiction over CREF, shall be
entitled to examine, on Bank's premises,
securities and records of all securities,
Cash and other property held by Bank, its
branches, or other entities hereunder and
its books and records pertaining to its
actions under this Agreement, but only
upon furnishing Bank with one day notice
of such examination signed by a duly
authorized officer of CREF. Bank's books
and records used in connection with
CREF's indirect participation in a
depository or other entities, to the
extent that they relate to depository,
custodial or other services rendered to
CREF by Bank, pursuant to this Agreement,
shall at all times during Bank's regular
business hours to be open to inspection
by duly authorized employees or agents of
CREF, or governmental agencies having
jurisdiction over CREF, but only upon
furnishing Bank with one day's notice to
that effect as specified in the preceding
sentence.
b. Upon receiving a request from CREF, Bank
agrees that it will take such steps as
are within its power to enable any of the
aforementioned officers, accountants,
employees, agents and members of CREF,
the Insurance Department, the Commission
or other governmental agencies having
jurisdiction over CREF, to inspect and
examine securities and other property of
CREF and books and records of such
property not located on Bank's premises,
which property and records are held on
CREF's behalf by its branches or other
entities pursuant to this Agreement.
18. EXEMPTION FROM INCOME TAX
-------------------------
17
a. CREF is exempt from the payment of United
States income tax. Upon receipt of
documentation evidencing CREF's tax
exempt status, Bank is hereby authorized
and empowered as CREF's agent to sign in
its name any certificate of ownership or
other certificate which is or may be
required by any regulations of the
Internal Revenue Service, the laws of any
state, or other authority of the United
States.
b. To enable Bank properly to execute the
certificate described in a. above, CREF
hereby certifies that CREF is a
corporation duly organized and existing
under the laws of the State of New York,
having its principal place of business in
the City of New York. CREF's Employer
Identification No. is 136022042.
19. AMENDMENTS
----------
No amendment or change to this Agreement shall be authorized by
CREF on behalf of the Inflation-Linked Bond Account without the written consent
signed by an officer with the title of either Chairman, Vice Chairman or
President and any officer with the title of Executive Vice President or
Treasurer and accepted in writing by any Vice President or Managing Director of
the Bank.
20. AUTHORIZATION
-------------
a. Except as otherwise provided for in this
Agreement, written instructions by CREF
hereunder shall be signed by any two of
its Authorized Officers specified in a
separate list for this purpose which will
be furnished to Bank from time to time
signed by the Treasurer, Associate
Treasurer or any Assistant Treasurer, and
by the Secretary or any Assistant
Secretary as certified under the
corporate seal of CREF. Such instructions
are referred to herein as "Authorized
Instructions". Upon receipt of written
instructions pursuant to paragraph b.,
below accompanied by a detailed
description of procedures approved by
such instructions, Authorized
Instructions may include communications
effected directly between
electro-mechanical or electronic devices
provided that CREF and Bank are satisfied
that such procedures afford adequate
safeguards for the Inflation-Linked Bond
Account's assets.
b. Where expressly provided for in Sections
6.d., 12.c. and 20.a. herein or in
connection with the delivery of
securities or other property "Free of
Payment," written instructions shall be
acted upon only if received in writing
manually signed by any two of such
Authorized Officers with the title
Chairman, Vice Chairman, President,
Executive Vice President,
18
or Treasurer, or by any one of those
officers together with any CREF officer
with the title Senior Vice President or
Vice President.
c. Bank shall not be liable for any action
taken in good faith upon Authorized
Instructions or upon written instructions
pursuant to b., above, and may rely on
such documents that it in good faith
believes to be validly executed.
21. APPOINTMENT OF AGENTS
---------------------
The Bank may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company which is itself
qualified under the 1940 Act, as amended, to act as a custodian, as its agent to
carry out such of the provisions of this Agreement as the Bank may from time to
time direct; provided, however, that the appointment of any agent shall not
relieve the Bank of its responsibilities or liabilities hereunder.
22. NOTICES
-------
a. Official receipts and advices of all
types relating to the securities, cash or
other property held by Bank hereunder
will be prepared by Bank, in duplicate,
and forwarded to the particular divisions
of CREF on behalf of the Inflation-Linked
Bond Account indicated in a separate
listing which the treasurer will furnish
to Bank from time to time.
b. Written notices hereunder shall be
hand-delivered or mailed first class,
addressed, if to Bank, at 0 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000, or if to CREF,
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Treasurer. Written
notice of (i) termination of this
Agreement, (ii) termination of Bank's
participation in DTC or any other
securities depository, (iii) changes in
Bank's designation of any of its branches
or Sub-Custodians having custody of any
of the Inflation-Linked Bond Account's
assets under this Agreement, or (iv)
changes in Bank's insurance coverage,
shall be sent by hand or by first-class
mail; provided, however, that any such
notice pursuant hereto shall not
constitute approval by CREF of any such
termination, change or designation nor
shall such notice relieve Bank of its
responsibilities hereunder.
c. Any notice so addressed, hand delivered
and mailed shall be deemed to be given on
whichever of the following dates shall
first occur: (i) the date of actual
receipt thereof, (ii) the fifth day next
following the date mailed, or (iii) if
the substance
19
thereof is communicated by hand delivery
or certified mail, the date so delivered
or mailed.
22. TERMINATION OR ASSIGNMENT
-------------------------
This Agreement may be terminated by either party on sixty days'
written notice sent by certified mail. Upon any termination of this Agreement,
pending appointment of a successor to Bank or a vote of the participants of CREF
to dissolve or to function without a custodian of its cash, securities or other
property, Bank shall deliver Cash, securities or other property to a bank or
trust company selected by CREF on behalf of the Inflation-Linked Bond Account
having an aggregate capital, surplus and undivided profits, as shown by its last
published report of not less than five hundred thousand dollars ($500,000) as a
custodian for CREF to be held under terms similar to those of this Agreement;
provided, however, that Bank shall not be required to make any such delivery or
payment until full payment shall have been made by CREF on behalf of the
Inflation-Linked Bond Account of all liabilities constituting a charge on or
against the properties then held by Bank or on or against it, and until full
payment shall have been made to Bank of all fees, compensation, costs and
expenses, subject to the provisions of Section 14 of this Agreement.
This Agreement may not be assigned by Bank without the consent of
CREF, authorized or approved by a resolution of CREF's trustees.
23. EFFECT OF HEADINGS
------------------
The Section headings herein are for convenience only and shall not
affect the construction thereof.
24. GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance
with the law of the State of New York.
20
IN WITNESS WHEREOF, the parties hereto have duly executed this Custodial
Services Agreement as of the date first written above.
COLLEGE RETIREMENT EQUITIES FUND
ON BEHALF OF THE INFLATION-LINKED
BOND ACCOUNT
BY:/s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
Vice Chairman, President and
Chief Operating Officer
BY:/s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
Vice President and Treasurer
THE BANK OF NEW YORK
BY:/s/ Xxxxxxxxxxx X. Xxxxxx
----------------------------
Xxxxxxxxxxx X. Xxxxxx
Vice President
BY:/s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx
Vice President
21
EXHIBIT A
CUSTODIAN AFFIDAVIT
STATE OF }
} SS:
COUNTY OF }
-----------------------------------, being duly sworn deposes and says that he
is ----------------------of ---------------------, a corporation organized under
and pursuant to the laws of the--------------------------------- with the
principal place of business at-------------------------------- .
That his duties involve the supervision of securities in custody of
said------------------------------------ and records relating thereto.
That said------------------------------ has in custody certain securities
for the account of -------------------------------, a corporation organized
under and pursuant to the laws of the State of New York with its principal place
of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
That the schedule hereto attached is a true and complete statement of all
securities which were held in custody by said --------------------- for the
account of said insurance company as of the close of business on
--------------------------------------------; that the schedule sets forth the
names of registered holders and, if no such name is shown, the security is in
bearer form; and that unless otherwise indicated, the next-maturing and all
subsequent coupons are either attached to coupon bonds or are in the process of
collection.
That each and every name other than that of the company in which such
securities are registered is that of a nominee of said ------------------.
That to the best of his knowledge and belief the said securities were held
for the said insurance company free of all liens, claims, or encumbrances
whatsoever, and were not held as security for any loan, except
-------------------------.
Subscribed and sworn to before me
this-------day of------------ 19--
----------------------------------- (L.S.)
A-1
