CUSTODIAL SERVICES AGREEMENT
AGREEMENT dated as of March 1, 1990 between XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK ("Bank") and COLLEGE RETIREMENT EQUITIES FUND ("CREF")
on behalf of the CREF BOND MARKET ACCOUNT.
WHEREAS, the parties desire to arrange for the custody of
certain assets of CREF, specifically those of the CREF Bond Market 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 Bond Market Account ("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 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 Bond Account. Such accounts will be in
the name of the Bond Account or in the name of Bank or Bank's branches or a
Foreign Custodian, on behalf of the Bond Account.
It is hereby agreed that all securities, Cash, or other property now or
hereinafter held by Bank hereunder are held for the Bond Account and are to be
maintained and disposed of by Bank only for the Bond 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 Bond
Account;
(3) foreign securities depositories or clearing
agencies ("Foreign Depository") selected by Bank with the approval of CREF on
behalf of the 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 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
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XXXX, 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 other property of the Bond
Account held by it hereunder
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including, without limitation, any and all of the Bond Account's Cash held by or
received by Bank in the name of the 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 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 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
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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
a. Bank shall open and maintain a separate Deposit Account for
the Bond Account, in the name of the 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 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 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.
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Such directions shall include, but are not limited to:
(1) the execution and delivery of foreign currency
contracts on behalf of the Bond Account;
(2) the debiting or crediting of currency accounts
(United States or foreign) of the 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 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 the CREF on behalf of the 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
Bond Account of securities owned by Bank along with written evidence of the
agreement by Bank to repurchase such securities from the Bond Account; or (iii)
in the case of a purchase affected through a Securities Depository in accordance
with the provisions of
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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 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 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
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
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Instructions of CREF on behalf of the 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 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 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 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
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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 Bond
Account;
(9) for delivery in connection with any loans of
securities made by the 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
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instructions to such effect, provided that:
(1) the securities are on deposit in a Custody
Account for the Bond 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 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 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 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 the Bond Account; provided, however, Bank is not
negligent in the selection of such broker or agent.
7. DEPOSIT OF BOND ACCOUNT ASSETS IN A SECURITIES DEPOSITORY
Bank may deposit and maintain securities owned by the Bond
Account in a Securities Depository subject to the following provisions:
a. Bank may keep the Bond Account's securities in a
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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
Bond Account held in a Securities Depository as being held in book-entry form on
behalf of the Bond Account;
c. Bank shall pay for securities purchased for the account of
the 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 Bond Account. Bank shall transfer securities sold for the account
of the 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 Bond Account.
d. Anything to the contrary in this Agreement notwithstanding,
Bank shall be liable to CREF for the benefit of the Bond Account for any loss or
damage to the 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
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such rights as it may have against a Securities Depository; at the election of
the CREF on behalf of 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 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 behalf
of the Bond Account establish and maintain a segregated account or accounts for
and on behalf of the 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 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 Bond Account; (b) for purposes of segregating cash or
government securities in connection with options purchased, sold or written by
the Bond
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Account or commodity futures contracts or options thereon purchased or
sold by the Bond Account; (c) for the purposes of compliance by the 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 Bond Account.
9. DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE BOND ACCOUNT HELD
OUTSIDE OF THE UNITED STATES
a. CREF on behalf of the Bond Account hereby authorizes and instructs
Bank to employ as Sub-Custodians for the 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 Bond Account may agree to designate additional, Foreign
Sub-Custodians. Upon receipt of Authorized Instructions, CREF on behalf of the
Bond Account may instruct Bank to cease to utilize any one or more Foreign
Sub-Custodians on behalf of the CREF Bond Account.
b. Except as may otherwise be agreed upon in writing by Bank and CREF,
assets of the 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
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the 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 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 their
safe custody or administration; (ii) beneficial ownership of the assets of the
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 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 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 Bond Account held by the Foreign Bank will be subject only to the
instructions of Bank; and (vi) assets of the 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 Bond Account upon
(i) receipt of advice from the Foreign Depository that such securities have been
transferred to Bank's Account and (ii) the
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making of an entry on the records of Bank to reflect such payment and transfer
for the account of the Bond Account. Bank shall transfer securities sold for the
account of the 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 Bond Account.
e. Until Bank receives Authorized Instructions to the contrary, Bank
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 Bond Account
the securities, Cash or other property held by each Foreign Sub-Custodian.
g. Bank will supply to the 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 Bond 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 Bond Account
indicating, as to securities
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acquired for the Bond Account, the identity of the entity having physical
possession of such securities. Bank shall furnish annually to the 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 Bond Account in connection
with the initial approval of this agreement.
h. In addition, Bank will promptly inform the 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 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 Bond Account for any loss or
damage to the 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
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the election of the CREF on behalf of 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 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 Bond
Account and delivery of securities maintained for the account of the 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.
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
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distributed with respect to any securities, Cash or other property shall be made
at the risk of the 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 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 Bond Account;
(3) hold for the 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
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interest and to credit the Deposit Account with the proceeds thereof;
and
(4) with respect to any dividend reinvestment plan in which
the 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 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 Bond Account agrees to hold such nominee
harmless from any liability as a holder of record of such securities and will
have the same
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responsibility as if the securities were registered in the name of the Bond
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 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 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 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. Bank shall promptly place the specified Collateral in a Deposit or
Custody Account and promptly notify CREF on behalf of the Bond Account of such
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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
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 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 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, President,
Executive Vice President and Treasurer, or by any one of these officers together
with any
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XXXX 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 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 Bond 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 Bond Account and to act as bailee or
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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 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
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
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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 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 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)
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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 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 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
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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 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 Bond Account and will be surrendered to the 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;
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f. To furnish the 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 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 Bond 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 Bond Account with such reports on Bank's
system of internal accounting control as CREF on behalf of the 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 Bond Account relating to all
property held by Bank on the Bond 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 Bond
Account and copies of all such information will be surrendered to Bond Account
within a reasonable time after request therefor.
j. The specific records, reports and affidavits
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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
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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
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
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City of New York. CREF's Employer Identification No. is 000000000.
19. AMENDMENTS
No amendment or change to this Agreement shall be authorized by CREF on
behalf of the Bond 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.
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 Bond
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
-30-
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 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 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
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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 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 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
-32-
to a bank or trust company selected by CREF on behalf of the 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 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.
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COLLEGE RETIREMENT EQUITIES FUND
ON BEHALF OF BOND MARKET ACCOUNT
BY:_______________________________
Xxxx X. Xxxxx
President
BY:_______________________________
Xxxxxxx X. Xxxxxxx
Treasurer
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK
BY:_______________________________
BY:_______________________________
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EXHIBIT A
CUSTODIAN AFFIDAVIT
STATE OF )
)SS.:
COUNTY OF )
______________________________________________, being duly sworn, deposes
and says that he is ______________________________________of the (Custodian)
a banking corporation organized under and pursuant to the laws of
the _____________________________________________with principal place of
business at __________________________________, (hereinafter called the "Bank");
That his duties involve supervision of activities of the Bank as Custodian and
records relating thereto;
That the Bank is Custodian for certain securities of College Retirement Equities
Fund having a place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(hereinafter called the "Company") pursuant to the Custodial Services Agreement
dated as of _____________________________________, 1990 (hereinafter the
"Agreement") between the Bank and the Company;
That the schedule attached hereto is a true and complete statement of securities
which were in the custody of the Bank for the accounts of the Company as of the
close of business on __________________________________________________________;
that unless otherwise indicated on the schedule, the next maturing and all
subsequent coupons were then either attached to coupon bonds or in the process
of collection; and that, unless otherwise shown on the schedule, all such
securities were in bearer form or in registered form in the name of the Company
or its nominee, or a nominee of the Bank or its agent's nominee, or were in the
process of being registered in such form:
That the Bank as Custodian has the responsibility for the safekeeping of such
securities as that responsibility is specifically set forth in the Agreement
between the Bank as Custodian and the Company; and
That, to the best of his knowledge and belief, unless otherwise shown on the
schedule, said securities were the property of said Company and were free of all
liens, claims, or encumbrances whatsoever.
Subscribed and sworn to before me this_______________day of__________________
_______________________________________(L.S.)
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