CUSTODIAL SERVICES AGREEMENT
AGREEMENT dated as of November 1, 1994 between XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK ("Bank") and COLLEGE RETIREMENT EQUITIES FUND ("CREF")
on behalf of the CREF SOCIAL CHOICE ACCOUNT.
WHEREAS, the parties desire to arrange for the custody of
certain assets of CREF, specifically those of the CREF Social Choice 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
a. Bank agrees to open and maintain custodial account(s)
("Custody Account(s)") on behalf of the CREF Social Choice Account ("Social
Choice 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 Social Choice 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 Social Choice Account. Such accounts
will be in the name of the Social Choice Account or in the name of Bank or
Bank's branches or a Foreign Custodian, on behalf of the Social Choice Account.
It is hereby agreed that all securities, Cash, or other
property now or hereinafter held by Bank hereunder are held for the Social
Choice Account and are to be maintained and disposed of by Bank only for the
Social Choice Account in accordance with the terms and conditions set forth in
this Agreement.
2. LOCATION OF ASSETS
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
Social Choice Account;
(3) foreign securities depositories or clearing
agencies ("Foreign Depository") selected by Bank with the approval of CREF on
behalf of the Social Choice 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 Social Choice
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,
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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
a. Bank will be responsible for the safekeeping, handling,
servicing and disposition of all securities, cash or
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other property of the Social Choice Account held by it hereunder including,
without limitation, any and all of the Social Choice Account's Cash held by or
received by Bank in the name of the Social Choice 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 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 Social Choice
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
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Bank's intention to continue to maintain such insurance in substantially the
same form nd 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
a. Bank shall open and maintain a separate Deposit Account for
the Social Choice Account, in the name of the Social Choice 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 Social Choice Account. All Cash held by Bank hereunder
shall be subject to withdrawal and deposit by Bank from time to time on behalf
of the Social Choice Account for the purpose of consummating the purchases or
sales, as the case may be, of designated securities, solely upon Bank's receipt
of
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express directions in the form of Authorized Instructions in accordance with
the provisions of Section 20. Such directions shall include, but are not limited
to:
(1) the execution and delivery of foreign currency
contracts on behalf of the Social Choice Account;
(2) the debiting or crediting of currency accounts
(United States or foreign) of the Social Choice 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 Social Choice 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 the CREF on behalf of the Social Choice 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 Social Choice Account of securities owned by Bank
along with written evidence of the agreement by Bank to repurchase such
securities
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from the Social Choice 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 Social Choice 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 CRE
5. HOLDING SECURITIES
Banking shall hold in a separate Custody Account for the Social Choice 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 Social Choice
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
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assign, hypothecate, pledge or otherwise dispose of any such securities and
investments, except pursuant to the Authorized Instructions of CREF on behalf of
the Social Choice 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 Social Choice 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, not- withstanding 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 Social Choice Account only
against satisfactory delivery of securities. b. In accordance with this
Agreement, not- withstanding 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 Social Choice 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
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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;
(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 Social Choice Account;
(9) for delivery in connection with any loans of securities made by
the Social Choice 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
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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
Social Choice Account; and
(2) the delivery instructions are received by Bank in timely
fashion.
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
Social Choice 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 Social Choice 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 Social Choice 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 the Social Choice Account; provided, however, Bank is not
negligent in the selection of such broker or agent.
7. DEPOSIT OF SOCIAL CHOICE ACCOUNT ASSETS IN A SECURITIES DEPOSITORY
Bank may deposit and maintain securities owned by the Social Choice
Account in a Securities Depository subject to the
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following provisions:
a. Bank may keep the Social Choice 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
Social Choice Account held in a Securities Depository as being held in
book-entry form on behalf of the Social Choice Account;
c. Bank shall pay for securities purchased for the account of
the Social Choice 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 Social Choice Account. Bank shall transfer
securities sold for the account of the Social Choice 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 Social Choice
Account.
d. Anything to the contrary in this Agreement notwithstanding,
Bank shall be liable to CREF for the benefit of the Social Choice Account for
any loss or damage to the Social
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Choice 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 the election of the CREF on behalf of Social Choice 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 Social
Choice 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 behalf
of the Social Choice Account establish and maintain a segregated account or
accounts for and on behalf of the Social Choice 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
Social Choice 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
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or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Social Choice Account; (b) for purposes of segregating cash
or government securities in connection with options purchased, sold or written
by the Social Choice Account or commodity futures contracts or options thereon
purchased or sold by the Social Choice Account; (c) for the purposes of
compliance by the Social Choice 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 Social Choice Account.
9. DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE SOCIAL CHOICE ACCOUNT
HELD OUTSIDE OF THE UNITED STATES
a. CREF on behalf of the Social Choice Account hereby
authorizes and instructs Bank to employ as Sub-Custodians for the Social Choice
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 Social Choice Account may agree to designate
additional, Foreign Sub-Custodians. Upon receipt of Authorized Instructions,
CREF on behalf of the Social Choice Account may instruct Bank to cease to
utilize any one or more
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Foreign Sub-Custodians on behalf of the CREF Social Choice Account.
b. Except as may otherwise be agreed upon in writing by Bank
and CREF, assets of the Social Choice 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 Social Choice Account in accordance
with the terms hereof.
c. The Bank agrees that with respect to each Foreign
Sub-Custodian (i) the assets of the Social Choice 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
their safe custody or administration; (ii) beneficial ownership of the assets of
the Social Choice 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 Social Choice
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 Social Choice 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 Social Choice Account held by the Foreign
Bank will be subject only to the instructions of Bank; and (vi) assets of the
Social Choice Account held by a
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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
Social Choice 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 Social Choice Account. Bank shall transfer securities sold for
the account of the Social Choice 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 Social Choice 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 Social
Choice Account the securities, Cash or other property
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held by each Foreign Sub-Custodian.
g. Bank will supply to the Social Choice 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 Social Choice Account's
securities and other assets and advices or notifications of any transfers of
securities to or from each Custody Account maintained by a Foreign Bank for Bank
on behalf of the Social Choice Account indicating, as to securities acquired for
the Social Choice Account, the identity of the entity having physical possession
of such securities. Bank shall furnish annually to the Social Choice 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 Social Choice Account in
connection with the initial approval of this agreement.
h. In addition, Bank will promptly inform the Social Choice
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 Social Choice 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
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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 Social Choice Account for
any loss or damage to the Social Choice 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 the
CREF on behalf of Social Choice 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 Social Choice 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
Social Choice Account and delivery of securities maintained for the account of
the Social Choice 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
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expectation of receiving later payment for such securities from such purchaser
or dealer.
10. INCOME
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 Social
Choice 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:
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(1) present for payment all coupons and
other income items held by it for the account of the Social Choice 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 Social Choice Account;
(3) hold for the Social Choice 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 Social Choice 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 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
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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 Social Choice 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 Social
Choice Account. The foregoing shall not relieve Bank of its responsibilities or
liabilities hereunder.
12. PROVISIONS RELATING TO SECURITIES LENDING
a. From time to time CREF on behalf of the Social Choice 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.
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b. From time to time CREF on behalf of the Social Choice 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 Social
Choice Account, against receipt by Bank of collateral in respect of such Loaned
Securities (the "Collateral"), in the form and amount specified in such
instructions. Bank shall promptly place the specified Collateral in a Deposit or
Custody Account and promptly notify CREF on behalf of the Social Choice 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
Social Choice 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
Social Choice 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
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Social Choice 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, 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 Social Choice 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 CREFon behalf of the Social
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Choice Account of the completion of any such specified 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 Social Choice 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 Social Choice 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
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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 Social Choice 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 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
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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 Social Choice 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 of 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 Social Choice Account and Bank from time to time.
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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 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
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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 Social Choice Account and will be surrendered to the Social
Choice 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 Social Choice 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 Social Choice 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
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Department or agencies;
g. To furnish the Social Choice Account with any report obtained by Bank
on a Securities Depository's or Foreign Sub-Custodians system of internal
accounting control; and to furnish the Social Choice Account with such reports
on Bank's system of internal accounting control as CREF on behalf of the Social
Choice Account may reasonably require;
h. To furnish all such other reports and information as shall be
reasonably requested by CREF on behalf of the Social Choice Account relating to
all property held by Bank on the Social Choice Account's behalf pursuant to the
terms of this Agreement; and
i. That all such information, records, reports, and affidavits
maintained or held by Bank pursuant to this Section remain the property of
Social Choice Account and copies of all such information will be surrendered to
Social Choice Account within a reasonable time after request therefor.
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
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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
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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
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 Social Choice Account without the written consent signed by an
officer with the title of either Chairman or President and any officer with the
title of Executive Vice President or Treasurer and accepted in writing by Bank.
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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 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
Social Choice Account's assets.
b. Where expressly provided for in Section 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,
President, Executive Vice President, 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
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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 Social Choice 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 00 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 Social Choice Account's
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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 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 Social Choice 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
- 33 -
been made by CREF on behalf of the Social Choice 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.
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COLLEGE RETIREMENT EQUITIES FUND
ON BEHALF OF SOCIAL CHOICE MARKET
ACCOUNT
BY:__________________________________
Xxxxxx X. Xxxxx
President
BY:__________________________________
Xxxxxxx X. Xxxxxxx
Vice President and
Treasurer
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK
BY:__________________________________
BY:__________________________________
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