Participation Agreement ETF Model Solutions Collective Investment Trust This Participation Agreement (the Agreement ), is made as of the day of, 2014, by Alta Trust Company, a trust company chartered under the laws of South Dakota (the Trustee ) and the Participating Trust described below: Plan or Trust Name Trustee Name Address Phone Email Custodian Recordkeeper Name Company City, State Zip Tax ID Custody Account Number Recordkeeper Contact Whereas, Trustee maintains one or more of the collective investment funds (the Funds ) listed in Exhibit A and established pursuant to the Declaration of Trust establishing the ETF Model Solutions Collective Investment Trust for Participating Pension and Profit Sharing Trusts (the Declaration of Trust ), dated May 1, 2014, for the collective investment of retirement plan assets. The Funds invest in registered investment companies and other investments according to the investment objectives, guidelines and restrictions set forth for each Fund in the Declaration of Trust; and plan. Whereas, the Participating Trust wishes to use one or more of the Funds as investment options within its employee benefit Now, therefore, the parties agree as follows: 1. Appointment of Trustee. The Participating Trust appoints the Trustee a trustee of the Participating Trust with respect to the assets of the Participating Trust placed under management of the Trustee under this Agreement, and all earnings and profits thereon. The Trustee accepts its appointment by the Participating Trust and agrees that during the term of this Participation Agreement it will manage the assets of the Participating Trust delivered hereunder in accordance with the Declaration of Trust, the investment objectives and policies of the Funds, and the Terms of this Participation Agreement. 2. Management of Assets. Assets of the Participating Trust shall be delivered to Trustee from time to time. Trustee shall hold the assets as part of the Fund. Trustee is authorized to invest the Participating Trust assets delivered to it in the Fund or Funds as directed by the Participating Trust. Trustee shall be responsible only for the investment and custody of the assets accepted by it and shall have no other duties except as specified herein and in the Declaration of Trust. Trustee shall have all necessary authority to discharge these responsibilities. 3. Adoption of Declaration of Trust. The Declaration of Trust, which, as it may be amended from time to time, establishes the Funds and governs their operation, is hereby incorporated as part of this Agreement. The Participating Trust acknowledges having received a copy of the Declaration of Trust, hereby adopts the Declaration of Trust as constituting part of its plan and trust agreement, and agrees to be bound by the terms and conditions of the Declaration of Trust, as amended from time to time.
Assets of the Participating Trust managed under this Agreement may be commingled with assets of other tax qualified employee benefit trusts in a Fund or Funds. 4. Role of Trustee. Pursuant to the authorization and limitations set forth in the Declaration of Trust, Trustee shall have sole authority to select the investments held by any Fund or designate an investment manager as defined in the Employee Retirement Income Security Act of 1974, as amended ( ERISA ) to select such investments. To the extent that the Participating Trust invests part or all of its assets in a Fund or Funds, Trustee shall be responsible for investing the Participating Trust's assets in such Fund according to the investment objectives and guidelines established for such Fund. Trustee acknowledges that it is a fiduciary as defined by ERISA with discretionary investment authority with respect to the assets of the Participating Trust invested in the Funds. Such fiduciary responsibility shall be limited only to the selection of the investments held within each Fund. 5. Representations and Warranties of the Participating Trust.. The Participating Trust represents and warrants to the Trustee the following: (a) (b) (c) (d) The person signing this Agreement on behalf of the Participating Trust is the responsible plan fiduciary of the Participating Trust with full power to execute this Agreement and to appoint the Trustee, and if applicable to the Participating Trust, authorize the Trustee to appoint an investment manager as defined in ERISA. This Agreement constitutes a valid and binding obligation of the Participating Trust enforceable against the Participating Trust in accordance with its terms. The Participating Trust is (i) an employee trust qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended ( IRC ) and exempt from taxation under the provisions of Section 501(a) of the IRC, or (ii) a governmental plan or unit that is described in 818(a)(6) of the IRC, and, whether qualified by reason of (i) or (ii), Participating Trust satisfies the applicable requirements of the Securities Act of 1933 and the Investment Company Act of 1940 regarding participation in bank-maintained collective investment funds. The Participating Trust is willing and able at the request of Trustee either to furnish a favorable determination letter from the Internal Revenue Service as to its tax exempt status or to furnish an opinion of counsel to that effect, or to provide other evidence acceptable to Trustee, in the reasonable exercise of Trustee's discretion, which demonstrates that the retirement trust qualifies for exemption from Federal income taxation pursuant to the IRC. The Participating Trust documents incorporate the Declaration of Trust by general or specific reference and authorize the commingling of plan assets within a collective trust. (e) The Participating Trust does not cover any self-employed individual, or the requirements of SEC Rule 180 on investment of retirement plan assets held for self-employed individuals have been satisfied. (f) (g) If the fiduciary of a Participating Trust wishes to be relieved of liability for the Funds selected for investment by plan participants, the fiduciary of the Participating Trust will distribute to plan participants disclosures that comply with ERISA section 404(c) and the regulations thereunder, as amended, and will provide an opportunity for plan participants to exercise control over their individual accounts in accordance with ERISA section 404(c) and the regulations thereunder, as amended. If the Participating Trust permits participants to direct the investment of their accounts, a fiduciary of the Participating Trust has, in accordance with ERISA and the regulations thereunder, as amended, selected a Fund as the qualified default investment alternative ( QDIA ) for the Participating Trust and will notify plan participants of the QDIA. The fiduciary of the Participating Trust shall inform the Trustee in writing of the QDIA selected.
6. Representations and Warranties of the Trustee. Trustee represents and warrants to the Participating Trust the following: (a) (b) (c) The Trustee has full power and authority to enter into and perform its obligations under this Participation Agreement. This Participation Agreement constitutes a valid and binding obligation of the Trustee enforceable against the Trustee in accordance with its terms. The Trustee has completed, obtained and performed all registrations, filings, approvals, authorizations, consents and examinations required by any government or governmental authority as may be required to perform its obligations under this Agreement and the acts contemplated by the Declaration of Trust. 7. Trustee's Fees. Trustee shall be compensated for its management and custody services provided under this Agreement in accordance with the attached Exhibit B, which may be modified by Trustee from time to time as described below. Such fees shall be charged against the assets under Trustee's management. If the Trustee employs an investment advisor to provide investment recommendations for the Funds or an investment manager as defined in ERISA to make investments for the Funds, the Trustee shall pay the advisor or manager, from its Trustee Fee, compensation based upon the schedule shown in Exhibit B. With respect to the service fee shown in Exhibit B, such fee shall be deducted from the assets of each Fund in accordance with the schedule shown in Exhibit B, and paid to third parties for recordkeeping or other services on behalf of the plan sponsor. 8. Term and Termination. This Agreement shall become effective on the date of its acceptance by the Trustee and shall continue in effect from year to year thereafter for so long as the Participating Trust maintains an interest in the Funds, subject to termination as provided herein. This Agreement may be terminated by Trustee or by the Participating Trust upon 30 days advance notice to the other party, or such shorter notice as agreed to by the parties. Upon termination by the Participating Trust, Trustee shall withdraw the assets of the Participating Trust from the Funds and shall remit the assets as directed by the fiduciary of the Participating Trust. During the interim between notice of termination and the date of payment upon withdrawal, Trustee shall continue to perform its duties in accordance with this Agreement with respect to assets of a Participating Trust remaining in the Funds, and shall continue to be paid the fees set forth in detail in Exhibit B of this Agreement. 9. Amendment. This Agreement may be amended including without limitation the services to be provided by Trustee or the fees charged by Trustee, in the manner set forth herein and consistent with the procedure described in Department of Labor Advisory Opinion 97-16A or by written consent of both parties. Trustee may propose to increase or otherwise change the fees charged, to change the services provided or otherwise modify this Agreement by giving the Participating Trust reasonable advance notice of the proposed change. The notice shall be given in the manner described in this Agreement. The notices will (1) explain the proposed modification of the fees, services or other provision; (2) fully disclose any resulting changes in the fees to be charged as a result of any proposed change in the services or other changes to this Agreement; (3) identify the effective date of the change; (4) explain the Participating Trust s right to reject the change or terminate this Agreement; and (5) state that pursuant to the provisions of this Agreement, if the Participating Trust fails to object to the proposed change(s) before the date on which the change(s) become effective, the Participating Trust will be deemed to have consented to the proposed change(s). 10. Notices. Any notice under this Agreement shall be in writing and shall be effective when actually received and will be sent by hand-delivery, first class or certified mail return receipt requested, facsimile transmission or via electronic mail at the address of the party to whom the notice is directed. The address of the Participating Trust is indicated in the heading of this Agreement, and the address of the Trustee is set forth below. Any party may specify another address by written notice to the other party. Alta Trust Company 122 South Phillips Street, Suite 201 Sioux Falls, SD 57104 Phone: 303-996-3781 Fax: 303-996-3788 Email: aponder@trustalta.com
11. Arbitration. Except for any matter with respect to which South Dakota banking law forbids arbitration, all disputes arising out of or in connection with this Agreement or the Declaration of Trust will be settled by arbitration, to be conducted pursuant to the commercial arbitration rules of the American Arbitration Association. All arbitration proceedings will take place only in South Dakota or such other location agreed to by the parties. To the extent not preempted by federal law, South Dakota statutory law (including without limitation, the statutes governing the award of damages and arbitration) and South Dakota common law will control during arbitration. All parties waive any right any of them may have to institute or conduct litigation or arbitration in any other forum or location, or before any other body. Arbitration is final and binding on the parties. An award rendered by the arbitrator(s) may be entered in any court having jurisdiction over the pertinent party. The prevailing party in any arbitration will be entitled to reasonable attorney's fees and costs, including fees and costs on appeal. 12. Miscellaneous. This Agreement shall be binding upon the successors and assigns of any and all present and future parties. This Agreement and the obligations of the parties, including without limitation the applicability of state banking and securities laws, shall be governed by and interpreted under the laws of the state of South Dakota, to the extent not preempted by federal law. This Agreement and its Exhibits, together with the Declaration of Trust, as amended, and any written amendments agreed to as provided in Paragraph 9, is the entire agreement between the Participating Trust and Trustee regarding the subject matter of this Agreement. Acknowledgement of Participating Trust. Participating Trust specifically acknowledges and agrees that the Participating Trust has specifically reviewed the fees described in Exhibit B hereto that will be paid from the Funds, including any shareholder service fees, and Participating Trust acknowledges that the fees are reasonable, and that it has selected the Funds as investment options with full knowledge of such fees. 13. Reliance. The Participating Trust specifically authorizes the person or persons identified below (each an Authorized Person ) to communicate directions, instructions or other notices on its behalf to Trustee. The Participating Trust hereby agrees to indemnify and defend Trustee against any liability or expense (including reasonable attorneys fees and costs) arising from Trustee's reliance on any direction, instruction, or other notice given to Trustee by an Authorized Person on the Participating Trust's behalf unless Trustee has received express written notice from the Participating Trust that the authorization described above is no longer effective. Participating Trust will communicate or cause to be communicated all directions, instructions or other notices on its behalf to Trustee through an Authorized Person, named below, until and unless another relationship acceptable to Trustee is established.
In witness whereof, the parties have caused this Agreement to be signed by persons authorized as of the date first above written. The Participating Trust hereby approves the fees shown in Exhibit B. The Participating Trust hereby elects to participate in the selected Fund(s). Endowment Multi-Asset ETF Allocation Participating Trust By: Printed Name: Title: Date executed: Alta Trust By: Printed Name: Title: Date executed:
Exhibit A Description of Collective Investment Funds ETF Model Solutions Collective Investment Trust 1. Endowment Multi-Asset ETF Allocation CIF Investment Objective The objective of the Endowment Multi-Asset ETF Allocation is capital appreciation and growth. CIF Investment Strategy Most investment strategies are two dimensional portfolios comprised of stocks and bonds. The Endowment Multi-Asset ETF Allocation expands its portfolio to include a third dimension by using alternative investments. The primary benefit of using alternative investments in a portfolio is to augment the risk-adjusted returns provided by a two dimensional stock-bond portfolio. This three dimensional approach is similar to the portfolios of large charitable institutions, public and private pension plans and major Universities. The Investment Manager s Three Dimensional Approach combines five unique building blocks from three major asset classes: Growth, Income, Risk-Managed, with the target for each asset class falling within the following estimated ranges: Growth (30-50%), Income (8-30%), and Risk Managed (40-62%). Growth: This segment of the portfolio includes allocations to mostly liquid global equities, including domestic, international developed and emerging markets, typically through broad-based exchange traded funds (ETFs). Fixed Income: This segment includes allocations to fixed income securities that can provide a steady source of income and are intended to assist in the reduction of overall portfolio volatility. The manager will primarily utilize ETFs to fulfill the fixed income allocation. Risk Managed: This segment includes both tactical and strategic allocations to alternative investments like hedge funds, private equity and real assets, whose objective is to achieve equity type returns with bond type volatility. This portion of the portfolio is intended to help mitigate overall portfolio volatility (reduce drawdowns), assist in hedging inflation, and providing additional sources of return for the portfolio. The risk-managed portion of the portfolio will include both ETFs and mutual funds.
Exhibit B Schedule of Fees As indicated in section 7 of the Participation Agreement, Trustee shall be compensated for its management and custody services at the per annum percentage rates shown below. Such fees shall be charged against Fund assets under Trustee's management. Other fees, as specified below, will also be deducted from Fund assets. The fees associated with this Participation Agreement are: 1. Total Fund Fee The Total Fund Fee, which is the total of the Trustee Fee and the Service Fee, shown in the Total Fund Fee column below, will be paid to the Trustee based on the fair value of the assets held in each Fund listed below as of each Valuation Date (as defined in Section 5.01 of the Declaration of Trust). The fees accrue on a daily basis and are payable monthly in arrears. The Total Fund Fee is charged directly to the particular Fund. 2. Trustee Fee The Trustee Fee, which is shown in the Trustee Fee column below, will be paid to the Trustee as compensation for its management and administration of the Fund. From the Trustee Fee the Trustee shall pay a fee to the Registered Investment Advisor, ETF Model Solutions, LLC that it engages to provide advice to the Trustee with respect to the investment of the Fund. The Registered Investment Advisor will provide such advice as a fiduciary and as an investment adviser registered under either the Investment Advisers Act of 1940 or any State law. The fee paid to the Registered Investment Adviser is between 35-45 basis points. The Trustee will also pay between 5 and 10 basis points of the Trustee Fee to Mid Atlantic Trust Company for custody, trading and fund accounting services. 3. Service Fee A portion of the Total Fund Fee, called the service fee, will be deducted from each Fund and paid to the above named retirement plan custodian engaged by the plan sponsor. The plan sponsor shall be responsible for disclosure of such service fees to participants and beneficiaries of the Participating Trust. The service fee for each Fund is shown in the Service Fee column below. The service fee will be paid to the custodian or recordkeeper named above. The named custodian will be the default if no option is selected. Custodian Recordkeeper Cusip Fund Name Trustee Fee Service Fee Total Fund Fee 26923F105 Endowment Multi-Asset ETF Allocation.55%.05%.60% The reasonable expenses incurred by the Trustee in the administration and operation of the Fund(s) may be charged pro rata to the Fund(s), in the discretion of the Trustee, in an amount not to exceed 12 basis points with respect to the Fund(s). Such expenses may include, but are not limited to, the expenses incurred by the Trustee for transfer agency, auditing services, legal services, and annual report preparation and distribution. All of the above fees and expenses are deducted from the assets of the Fund(s) prior to determination of the net asset value of each unit in the Fund(s). The above fees and expenses are in addition to fees and expenses charged by underlying investments of the Fund(s), as disclosed in the prospectus of mutual funds, ETFs and other investments which may be assets of the Fund(s). The mutual fund and ETF expenses are estimated to be approximately 67 bps.