IV.5 Consolidated Endowment Fund Agreement

Transcription

1 Page 1 of 8 Last Updated: December 2006 As Amended and Restated Effective June 29, 2005 THIS CONSOLIDATED ENDOWMENT FUND AGREEMENT ( Agreement ), originally effective as of July 1, 1997 and amended effective April 2, 2003, between the UNIVERSITY OF ALASKA BOARD OF REGENTS (the Board of Regents ) and the UNIVERSITY OF ALASKA FOUNDATION (the Foundation ) is further amended and restated effective June 29, WHEREAS, the Governor signed into law SB 84 passed by the Twentieth Alaska Legislature, First session, transferring management of the University s Endowment Trust Fund to the Board of Regents; and WHEREAS, the Board of Regents is given complete authority for the management of the Endowment Trust Fund and the investment of its endowment assets by virtue of Alaska Statute and Alaska Statute ; and WHEREAS, the Foundation currently manages its own endowment assets through a pooled investment fund; and WHEREAS, the Foundation was established to accept, hold, and manage gifts and donations, including endowments, for the exclusive benefit of the University; and WHEREAS, the Board of Regents through its policies has authorized the Foundation to accept, hold, and manage all gifts to the University; and WHEREAS, the Board of Regents has exercised its fiduciary responsibility for the management of the Endowment Trust Fund and investment of its assets by delegating to the Foundation the fiduciary responsibilities provided in this Agreement and in determining that such fiduciary responsibilities be exercised as provided in this Agreement by means of the Investment Committee and the Treasurer; and WHEREAS, the Board of Regents and the Foundation wish to consolidate their respective endowment investments so as to more effectively utilize the investment expertise currently available within the Foundation and its Investment Committee, achieve lower management fees, greater diversification, and improved investment performance; and

2 Page 2 of 8 WHEREAS, the Foundation is willing to undertake performance of this Agreement under the terms provided herein; and WHEREAS, the Board of Regents has the authority to enter into this Agreement by virtue of Alaska Statute ; THE PARTIES HERETO AGREE AS FOLLOWS: Section 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: Board of Regents Trustee for the Endowment Trust Fund. Board of Trustees The Foundation s board charged with establishing the Foundation s investment policy, managing property donated to the Foundation, and overseeing distributions to its sole beneficiary, the University. Consolidated Endowment Fund or Fund The fund into which the Endowment Trust Fund and the Land Grant Inflation Proofing Fund are combined for investment purposes with the Foundation s Pooled Endowment Fund. Endowment Trust Fund The separate Endowment Trust Fund maintained by the Board of Regents pursuant to AS , which together with the Inflation Proofing Fund and grant lands constitute the Land Grant Trust established for the benefit of the University. Foundation The University of Alaska Foundation, a non-profit corporation. Investment Committee or Committee The Investment Committee as described in Section 5 of this Agreement. Land Grant Inflation Proofing Fund or Inflation Proofing Fund A fund established by the Board of Regents in order to help inflation proof investments in the Endowment Trust Fund. Pooled Endowment Fund The Foundation s pooled investment fund established by the Board of Trustees to facilitate management of its various endowment funds. Treasurer Treasurer of the Foundation, who, pursuant to the Foundation s bylaws, serves in that position by virtue of being the University s chief financial officer. University The University of Alaska.

3 Page 3 of 8 Section 2. Effective Date and Term. This Agreement shall be effective from July 1, 1997 until terminated in accordance with Section 8 of this Agreement. Section 3. Appointment and Delegation. 3.1 The Consolidated Endowment Fund shall be managed by the Foundation through its Investment Committee and Treasurer. The Foundation agrees to act as manager of the Fund in a prudent and responsible manner, and upon the terms and conditions herein set out. Subject to the terms and conditions of this Agreement, the investment policies established for the Fund, and as provided by applicable law, the Foundation shall have complete discretion with regard to the investment and reinvestment of the Fund, with full authority to buy and sell securities for the account of the Fund without obligation on its part to give prior notice to the University, except as may be provided by this agreement. The Foundation is hereby delegated the same power and duties with respect to the Fund as are vested in the Board of Regents under AS (b). These powers and duties are the same as provided to and required of the Alaska State Pension Investment Board under AS and AS , as amended from time to time, except that the standard of prudence that must be obeyed under AS [c] shall be in regard to the management of large trust investments rather than large investments. The text of the current AS and AS is attached hereto as Exhibit A. 3.2 The amounts invested in the Fund by the Endowment Trust Fund and Inflation Proofing Fund are invested at the discretion of the Board of Regents. The Board of Regents may withdraw all or any part of the Endowment Trust Fund or Inflation Proofing Fund, subject to availability of liquid resources of the Fund and considerations of adverse impacts on the asset allocation of the Fund, at any time upon 60 days written notice to the Foundation. The Fund shall be invested in accordance with the Consolidated Endowment Fund Investment Policy, as it may be amended from time to time, attached as Exhibit B. Section 4. Powers of the Foundation. Without limiting the generality of powers referred to in Section 3 of this Agreement or the Consolidated Endowment Fund Investment Policy, the Foundation shall exercise its powers under this Agreement through the Investment Committee and the Treasurer. The Investment Committee and the Treasurer (or designee) are authorized and empowered to: 4.1 make, execute, acknowledge, and deliver any and all documents and instruments that may be necessary or appropriate to carry out the powers herein granted; 4.2 in addition to the powers herein enumerated, the Investment Committee and the Treasurer shall have such other and further powers as may be necessary or proper to exercise any of the powers of an owner with respect to the property held in the Fund, carry out the purposes of this Agreement and discharge its duties and responsibilities hereunder.

4 Page 4 of 8 Section 5. Investment Committee. The Investment Committee shall exercise its powers as provided in this section. 5.1 The Committee shall have the powers necessary to perform the responsibilities stated in the Investment Policy of the Fund including, but not limited to, establishing and revising asset allocation targets, developing investment performance guidelines, selecting investment managers, planning for alternative asset investments, and evaluating investment performance. 5.2 The Committee shall also serve as an advisory committee to the Board of Trustees and the Treasurer in matters related to the Fund. The Committee shall not be an advisory committee to the Board of Regents. 5.3 The Committee shall consist of eight regular members appointed by the Foundation president in consultation with the chair for the Board of Regents. In addition, the Foundation President shall serve as an ex-officio member of the Committee. (a) The regular members of the Committee shall be appointed by the Foundation s President for terms of four years, and they may be reappointed. The terms of the current members appointed above shall be shortened and staggered as fixed by the Foundation president so that no more than two members terms expire each year. (b) The members of the Committee shall serve at the pleasure of the Foundation president and may be removed from office by the Foundation president for any reason or no reason. The removal of a member from the Committee must be in writing. A member who is removed from office may not participate in Committee business as a member and may not be counted for purposes of establishing or maintaining a quorum after written notice of removal is issued. (c) A vacancy on the Committee caused by early departure of a member shall be promptly filled by appointment of a regular or temporary member by the Foundation president. An appointee to a vacancy shall hold office for the balance of the term for which the appointee s predecessor on the Committee was appointed or such shorter period as may be determined by the Foundation president. 5.4 Four members of the Committee constitute a quorum for the transaction of business and the exercise of the powers and duties of the Committee. Action may be taken only upon affirmative vote of a majority of the members in attendance.

5 Page 5 of 8 desirable. 5.5 The Committee may elect a chair and such other officers it deems 5.6 The Committee may adopt bylaws for the conduct of its business. The bylaws may not conflict with bylaws of the Foundation and may only be amended by an affirmative vote of a majority of its members. The Committee shall meet with the frequency it deems necessary to carry out its duties. 5.7 The Committee shall provide to all Committee members, the chair of the Board of Regents Finance and Audit Committee, and the president of the Foundation reasonable advance notice of all Committee meetings and provide opportunity for regents comments and attendance, in person or by teleconference as appropriate, at all Committee meetings. Not more than three regents, to be designated by the chair of the Board of Regents, may attend any meeting of the Committee unless appropriate public notice is provided. Section 6. Treasurer. The Foundation shall exercise its powers under this section by means of the Treasurer as provided in this section. The Treasurer shall: 6.1 Hold and invest the Fund as a commingled pool consisting of the Foundation s pooled endowment fund, the Endowment Trust Fund, and such other funds as determined by the University s vice president for finance and planning. 6.2 Hold investments of the Fund in the name of the Foundation, the University, the Fund, any fund or nominee as may be authorized by the Treasurer. 6.3 Invest and reinvest cash balances in the Fund. 6.4 Provide quarterly investment performance reports on the Fund to the Investment committee, the chair of the Board of Regents Finance and Audit Committee and to the president of the Foundation. 6.5 Provide to the Board of Regents and to the Board of Trustees an annual financial report on the Fund prepared in accordance with generally accepted accounting principles, and including an opinion thereon prepared by an independent certified public accountant. 6.6 Transfer to the University no less frequently than annually, on a schedule to be mutually agreed upon, amounts required for distribution under policies established by the Board of Regents. Such transfers must not exceed the accumulated total return of the Fund applicable to the specific participating endowments as of the preceding December 31.

6 Page 6 of Account for the assets and activity of the Fund in accordance with standards established by the Treasurer including, but not limited to, the following: (a) Assets of the Fund will be valued at estimated fair value, when determinable. (b) Each participant fund shall be credited with unit shares and fractions of unit shares based directly upon the dollar amount per share of funds contributed to the Fund. (c) Each participant fund shall be charged with unit shares and fractions of unit shares based directly upon the dollar amount per share of funds withdrawn from the Fund. (d) Each unit share has a beneficial interest in the Fund equal to the proportion which it bears to the total units outstanding. (e) Income (current yield) shall be distributed monthly as an addition to the Fund on the basis of the total unit shares outstanding. Contributions to the fund will receive a full month s earnings allocation for the month of addition, unless otherwise directed by the Treasurer. Withdrawals will receive no earnings allocation for the month of withdrawal. (f) The last calendar day of each month shall be designated the Valuation Date. (g) Unit shares shall be calculated as soon as practicable after the Valuation Date. (h) Contributions and withdrawals shall be effective as of a Valuation Date of the month received or disbursed by the Fund. (i) Net asset value (including realized return and unrealized gains/losses) shall be computed as of the Valuation Date. Section 7. Fiduciary Standards. In exercising investment, custodial, or depository powers or duties, the fiduciary shall apply the prudent investor rule as it applies in regard to the management of large trust investments and exercise the fiduciary duty in the sole financial best interest of the Fund. Among beneficiaries of the Fund, the fiduciary shall treat beneficiaries with impartiality. For purposes of this Agreement, the Investment Committee and the Treasurer shall be considered fiduciaries. Section 8. Amendment and Termination. 8.1 Amendment. This Agreement may be amended at any time only by written instrument signed by both parties.

7 Page 7 of Termination. Either party may terminate this Agreement without cause upon 120 days written notice to the other party at the address listed below. Furthermore, the Board of Regents may terminate this Agreement upon 60 days written notice to the Foundation in the event that the Board of Regents disagrees with a decision of the Foundation or the Committee with regard to the Fund and such disagreement cannot be resolved within 30 days of such notice. Upon termination of this Agreement, the Foundation shall pay all obligations of the Fund, and shall convey or transfer to the Board of Regents all assets applicable to its interest in the Fund. At the discretion of the Treasurer, such transfers may be made in cash or in-kind over a reasonable period of time; provided however, undivided interests in non-marketable investments may be held by the Foundation on behalf of the Board of Regents until maturity or other disposition. In the event of notice of termination, the Board of Regents may, upon written notice, place a freeze on or otherwise limit the reinvestment, encumbrance, or disbursement of assets pending the return of its portion of such assets. Section 9. Notice. Notice shall be deemed delivered upon personal delivery or three days following mailing, postage prepaid, to the following officers or the successors to those positions: Board of Regents: Foundation: Mr. Brian Rogers, Chair University of Alaska Board of Regents 202 Butrovich Building 910 Yukon Drive P. O. Box Fairbanks, AK Ms. Ann Parrish, President University of Alaska Foundation 206 Butrovich Building 910 Yukon Drive P. O. Box Fairbanks, AK Section 10. Miscellaneous Indemnification. In order to facilitate the recruitment of competent fiduciaries, except as otherwise provided by law, the University and the Foundation will

8 Page 8 of 8 indemnify the members of the Board of Regents, the Board of Trustees, the Committee, the Treasurer, and employees of the University and the Foundation for all acts taken in carrying out their responsibilities under this investment policy to the extent provided by law. This indemnification is intentionally broad but shall not provide indemnification for embezzlement or diversion of funds for personal benefit. The indemnification described herein includes all expenses of defending an action, any monetary recovery in any court or arbitration proceeding, and, if the claim is settled out of court with the concurrence of the University and the Foundation, shall include any monetary liability under such settlement Governing Law and Venue. This Agreement has been adopted and shall be governed and construed in accordance with the laws of the state of Alaska. Any disagreements or lawsuits arising out of this Agreement shall be brought in the Superior Court for the state of Alaska, Third Judicial District, in Anchorage, Alaska, unless federal jurisdiction applies in which case venue shall lie in the U.S. District Court for Alaska in Anchorage, Alaska. For purposes of the relationship established by this Agreement, the Board of Regents, University, and the Endowment Trust Fund are instrumentalities of the state of Alaska and may be sued only as provided for actions against the state of Alaska in Alaska Statute and other applicable statutes and rules of court Severability. If any part, term, or provision of this Agreement is determined by a court or agency of competent jurisdiction to be unlawful or in conflict with the laws of the United States or the state of Alaska, the validity of the remaining portion or provisions of the Agreement shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular part, terms, or provision held to be invalid No Assignment. This agreement is entered into based in large part upon the nature and responsibilities of the parties hereto and their unique relationship to each other. Neither party shall assign all or any part of its interest in this Agreement and any attempt at such assignment shall be void and shall, at the sole discretion of the other party, terminate this Agreement. Notwithstanding the above, the Foundation may delegate to one or more investment managers a portion of its powers, duties, and responsibilities with respect to investments of the Fund, as appropriate, according to the provisions of this Agreement and AS University of Alaska Board of Regents University of Alaska Foundation By: Chair Date: By: President Date: