AksiaCTR057204ContractAPP.pdf

SCOPE OF WORK

Contract No.: CTR057204 Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

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A. ALL SERVICES

1. Contractor shall provide consulting and advisory services for the ASRS Investment Program in accordance with the provisions and requirements as stated in the Scope of Work.

2. Services rendered under this Contract shall comply with the ASRS Strategic Plan, the ASRS Board Governance Policy Handbook, SIP006, Strategic Asset Allocation Policy (SAAP) and the ASRS Investment Policy Statement.

B. INVESTMENT PROJECT CONSULTING

Contractor will perform the following on an as-needed basis:

1. Designate a senior private credit investment consultant with a minimum of ten (10) years’ experience related to the investments in the Investment Program to work extensively on the ASRS account. The designated senior private credit investment consultant will be expected to become thoroughly knowledgeable and up-to-date with the ASRS Credit Program, and to attend specified meetings. Consultant must be able to commit a sufficient amount of their available time to provide quality work while meeting all objectives and timelines established by ASRS staff.

2. Illiquid Credit Strategies

2.1. Perform due diligence and/or operational reviews of prospective investment managers primarily in illiquid credit strategies (i.e. private lending, distressed debt investing, etc.). Prospective investment managers will be located primarily in the U.S. and Europe and potentially in Asia.

2.1.1. Consultants will provide ASRS with a comprehensive due diligence report detailing the due diligence performed by the consultant on the prospective investment manager as outlined in Appendix 1 of SIP006.

2.1.1.1. The report will include a discussion of all topics relevant to ASRS’ decision to potentially hire the prospective manager.

2.1.1.2. The report will include the consultant’s recommendation as to the merits of ASRS hiring the prospective manager for the investment strategy.

2.1.1.3. The report will be delivered to ASRS within 60-75 calendar days of the assignment (unless otherwise mutually agreed upon by ASRS and the consultant).

2.1.2. Consultants will participate (either in-person or telephonically) in internal committee meetings of ASRS to discuss the due diligence performed, present the findings of the report and discuss the merits of ASRS hiring the prospective investment manager.

2.1.2.1. Perform ad-hoc consulting, including, but not limited to, due diligence on projects that may arise from time-to-time (i.e. evaluation of an investment opportunity).

3. Public Markets

3.1. Perform due diligence and/or operational reviews of prospective investment managers investing in publicly-traded equity and fixed income investment strategies in both the U.S. and international markets which could include equities, fixed income (i.e. high yield debt, leveraged loans, asset-backed securities, structured credit etc.) and multi-asset class strategies including hedge funds. Prospective investment managers will be located primarily in the U.S. and Europe and potentially in Asia.

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

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3.1.1. Consultants will provide ASRS with a comprehensive due diligence report detailing the due diligence performed by the consultant on the prospective investment manager as outlined in Appendix 1 of SIP006.

3.1.1.1. The report will include a discussion of all topics relevant to ASRS’ decision to potentially hire the prospective manager.

3.1.1.2. The report will include the consultant’s recommendation as to the merits of ASRS hiring the prospective manager for the investment strategy.

3.1.1.3. The report will be delivered to ASRS within 60-75 calendar days of the assignment (unless otherwise mutually agreed to by ASRS and the consultant).

3.1.2. Consultants will participate (either in-person or telephonically) in internal committee meetings of ASRS to discuss the due diligence performed, present the findings of the report and discuss the merits of ASRS hiring the prospective investment manager.

3.2. Assist in searches for prospective managers in an asset class selected by ASRS (e.g., a search for a high yield bond manager).

3.2.1. Consultants will help ASRS identify, screen, interview and rank potential managers that ASRS may consider hiring.

3.3. Perform ad-hoc consulting, including, but not limited to, due diligence on projects that may arise from time-to-time.

4. Contractor shall provide any other illiquid credit or public markets investment consulting services as requested by

ASRS.

C. PRIVATE EQUITY INVESTMENT CONSULTING

Contractor shall provide the following services relating to the Investment Program, including but not limited to:

1. Designate a senior private equity investment consultant with a minimum of ten (10) years’ experience related to the investments in the Investment Program to work extensively on the ASRS account. The designated senior private equity investment consultant will be expected to become thoroughly knowledgeable and up-to-date with the ASRS Investment Program, and to attend specified meetings. Consultant must be able to commit a sufficient amount of their available time to provide quality work while meeting all objectives and timelines established by ASRS staff.

2. Portfolio Strategic Advice

2.1. Provide continuing advice on strategic and tactical matters related to investments and portfolio construction.

2.2. Provide advice and assistance on identification and assessment of tactical and opportunistic themes for investment implementation.

2.3. Provide assistance in designing a framework for ongoing execution of the Investment Program, including but not limited to criteria for fund selection, methods of diligence, performance measurement, and monitoring systems.

2.4. Assist in future updates of formal strategic plans.

2.5. Perform other tasks related to portfolio strategy as may be requested from time to time by the ASRS.

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

3. Investment Advice and Due Diligence

3.1. All investment memoranda required in this Section shall be in a format acceptable to the ASRS.

3.2. Investment Selection - Commingled Investments

3.2.1. Identify prospective commingled fund investments.

3.2.2. Perform diligence on commingled fund investments in accordance with SIP006.

3.2.3. Present the results in an investment memorandum for decision by the Combined Asset Class Committee.

3.3. Investment Selection - Co-Investments

3.3.1. Recommend tactical strategies in private equity related assets that may not meet the constraints of the Strategic Plan, but which nevertheless offer attractive risk adjusted returns.

3.3.2. Perform diligence on such investments in accordance with SIP006.

3.3.3. Perform company level diligence for co-investments.

3.3.4. Present the results of the diligence in an investment memorandum for decision by the ASRS Combined Asset Class Committee.

3.4. Perform other investment related activities as may be requested from time to time by the ASRS.

4. Organizational Assessment of Culture

4.1. Perform diligence on existing and prospective private equity firms’ culture.

4.2. Provide continuing advice on the organizational assessment of a private equity firm’s culture.

4.3. Provide training to ASRS staff to assess firm culture.

4.4. Provide other organizational assessment and development services as may be requested from time to time by the ASRS.

5. Valuation, Monitoring, and Compliance Services

5.1. Valuation Policy Development and Analysis

5.1.1. Assist ASRS in developing valuation policies.

5.1.2. Review the valuation policies of external managers of ASRS assets.

5.2. Fee Analysis and Monitoring

5.2.1. Review manager calculations of fees, partnership expenses, and carried interest.

5.2.2. Monitor and confirm compliance of manager calculations of fees, partnership expenses, and carried interest with appropriate documentation.

5.3. Valuation and Fee Analysis Reporting

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

5.3.1. Provide valuation and fee analysis reports on any of the following types of assets:

5.3.1.1. Commingled fund;

5.3.1.2. Co-investment vehicle;

5.3.1.3. Direct investment; and

5.3.1.4. Other types of investments as requested by the ASRS.

5.3.2. Provide valuation and fee analysis reports on ASRS partnerships.

5.3.3. Provide annual report communicating findings of compliance with ASRS investment policies.

5.4. Validation and Monitoring of Capital Calls

5.4.1. Monitor, validate, and authenticate capital calls for compliance with appropriate documentation, including communication among ASRS, the sponsor, and relevant parties.

5.5. Provide other valuation, monitoring, reporting and compliance services as may be requested from time to time by the ASRS.

6. Contractor shall provide any other private equity investment consulting services as requested by ASRS.

All terms not defined herein shall have the meaning given to them in the Uniform Terms and Conditions.

BEST AND FINAL OFFER

ATTACHMENT C: Pricing Schedule ARIZONA STATE

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services Solicitation Code: BPM003473

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The ASRS, at its discretion, may award contracts for all or any portion of the services for which an Offeror has provided a response.

Offeror must complete the Items tab in APP by entering $1 in the Unit Price field.

State pricing below for the services described in the Scope of Work. Pricing may be provided as an hourly billable rate in Section 1 and/or by task/project/retainer in Section 2.

1. PRICING BY HOURLY RATE

In addition to Offeror's key personnel assigned under a Contract, ASRS assumes a complement of Offeror staff may also be assigned to and work on a task or service requested by ASRS. Offeror should categorize staff by general titles/classifications and then provide the maximum (highest) hourly rate within that category that Offeror is proposing to invoice the ASRS. While Offeror may bill ASRS less than the max rate in any category of staff, it may not bill more than the rate listed on this Pricing Schedule.

All pricing must be inclusive of travel.

Example:

Indicate “N/A” below if not bidding on a particular Scope of Work Service.

Service Max Hourly

Rate Year 1 Rate

Max Hourly Rate

3 Year Rate Guarantee

Max Hourly Rate

5 Year Rate Guarantee

Illiquid Credit & Public Markets Investment Project Consulting Services

Rate 1 (title or classification): Partner $300 $300 $300

Rate 2 ( title or classification ): Associate $250 $250 $250

Service Hourly Rate Year 1 Rate

Hourly Rate 3 Year Rate Guarantee

Hourly Rate 5 Year Rate Guarantee

Illiquid Credit & Public Markets Investment Project Consulting Services

Rate 1 (title or classification): Partner $700/hour $742/hour $787/hour

Rate 2 ( title or classification ): Senior Professional (Managing Director, Director, Senior Vice President, Senior Portfolio Advisor)

$400/hour $424/hour $449/hour

Rate 3 ( title or classification ): Senior Associate, Associate, Portfolio Advisor, Analyst

$200/hour $212/hour $225/hour

Rate 4 ( title or classification ): Administrative Support $150/hour $159/hour $169/hour

Private Equity Investment Consulting Services

Rate 1 (title or classification): Partner $700/hour $742/hour $787/hour

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services Solicitation Code: BPM003473

Page

Additional Comments:

Aksia typically does not charge hourly pricing for the services requested in ASRS’s Scope of Services. Aksia’s preferred pricing, as described in the Pricing by Task/Project or Flat Fee section below, is comprised of 1) each project related to the Illiquid Credit & Public Markets Investment Project Consulting Services portion of this RFP will be charged a flat fee mutually agreed upon ahead of commencement of work as an effort to control ASRS’s costs for this engagement and 2) advisory services pricing for the Private Equity Investment Consulting Services portion of this RFP is based on a fixed annual fee.

2. PRICING BY TASK/PROJECT OR FLAT FEE

If the firm’s pricing structure is organized by task/project or any other fixed fee method it should be included in this section. If the task or project is billed based on hourly rates, provide those rates below a shown in Section 1 of this Pricing Schedule. If the hourly rates are the same as in Section 1, indicate as such in lieu of duplicating the rates below. ASRS reserves the right to award a contract based on any pricing structure submitted as part of the offer.

Please find below an overview of Aksia’s fees per ASRS’ scope of services. Each project will be charged a flat fee and will be mutually agreed upon ahead of commencement of work.

A. Illiquid Credit & Public Market Investment Project Consulting Services

PROJECT 1 – Due Diligence, Recommendation, and Internal Committee Meeting: $35k per private credit or hedge fund1

Includes:

• Investment and operational due diligence of prospective investment manager, delivered within 60-75 days of the assignment unless mutually agreed upon otherwise

• Recommendation memo as to the merits of ASRS investing in the fund

1 Project fee adjusted up or down annually by the percentage change in the CPI of the preceding annual period.

Rate 2 ( title or classification ): Senior Professional (Managing Director, Director, Senior Vice President, Senior Portfolio Advisor)

$400/hour $424/hour $449/hour

Rate 3 ( title or classification ): Senior Associate, Associate, Portfolio Advisor, Analyst

$200/hour $212/hour $225/hour

Rate 4 ( title or classification ): Administrative Support $150/hour $159/hour $169/hour

Real Estate Investment Consulting Services

Rate 1 (title or classification):______________ N/A N/A N/A

Rate 2 ( title or classification ):_____________ N/A N/A N/A

Rate 3 ( title or classification ):_____________ N/A N/A N/A

Rate 4 ( title or classification ):_____________ N/A N/A N/A

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services Solicitation Code: BPM003473

Page

• Participation (either in-person or telephonically as mutually agreed upon) in internal committee meetings of ASRS to discuss the due diligence performed, present the findings of the report, and discuss the merits of ASRS hiring the prospective investment manager

• No additional cost related to travel expenses to conduct due diligence on managers within our industry coverage, including travel to managers located in: the continental U.S., Canada, Western Europe (Finland, Sweden, Norway, Denmark, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and Switzerland), the U.K., Hong Kong, Singapore, China, and Japan.

Potential Additional Costs:

• Background checks, subject to pre-approval by ASRS

• Travel to managers outside of Aksia’s standard industry coverage

PROJECT 2 – Manager Search - $50k per private credit or hedge fund2

Includes:

• Search for a fund manager within a client-identified strategy and/or region

• Mapping of the investable universe within the client-identified strategy and/or region and compilation of short list of funds

• MAX access to already existing Insights Reports (Aksia’s version of a screening memo), basic fund information, and meeting notes on funds within project scope (strategy and/or region) for the duration of the project

• Initial manager meeting on short-listed managers in which Aksia has not already conducted an Insights report or published a meeting note

• Full investment and operational due diligence on selected manager o If the fund fails Aksia’s due diligence, Aksia will conduct due diligence on the second manager on the short list at no additional cost o If the fund passes Aksia’s due diligence but does not pass the client’s Investment Committee approval or the investment is not ultimately executed, the project will be deemed fulfilled and the client will be responsible for paying for full due diligence on another candidate, if desired ($35k)

• Recommendation memo as to the merits of ASRS investing in the fund

• Participation (either in-person or telephonically as mutually agreed upon) in internal committee meetings of ASRS to discuss the due diligence performed, present the findings of the report, and discuss the merits of ASRS hiring the prospective investment manager.

• No additional cost related to travel expenses to conduct due diligence on managers within our industry coverage, including travel to managers located in the continental U.S., Canada, Western Europe (Finland, Sweden, Norway, Denmark, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain, and Switzerland), the U.K., Hong Kong, Singapore, China, and Japan.

Potential Additional Costs:

• Background checks, subject to pre-approval by ASRS

• Travel to managers outside of Aksia’s standard industry coverage

• Additional manager due diligence within the same project scope – each additional report is $35k for private credit or hedge fund

2 Project fee adjusted up or down annually by the percentage change in the CPI of the preceding annual period.

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services Solicitation Code: BPM003473

Page

PROJECT 3 – Ad hoc consulting services – price TBD

Additional ad hoc consulting projects – scope and fees will be mutually agreed upon and negotiated when requested.

B. Private Equity Investment Consulting:

Aksia proposes an annual fee of $850,000 for the Private Equity Investment Consulting Services listed below, adjusted up or down annually by the percentage change in the CPI of the preceding annual period. Please see the table below for proposed services:

Private Equity Investment Consulting Services3 $850,000 per annum4 Investment Research

Existing or Commissioned Insight Reports Included

Existing Investment Reviews Commissioned Investment Reviews Up to 12 Reviews per Annum Included5 Meetings, Calls & Notes

Included Research Team Access

Operational Due Diligence

Existing Operational Reviews Included Commissioned Operational Reviews Up to 12 Reviews per Annum Included5

Risk Transparency High Level Risk Data Collection (e.g., basic company and performance information)

Included

Advisory Dedicated Senior Private Equity Investment Consultant

Included

Meeting Attendance Portfolio Construction, Oversight & Support:

Program Structure & Development Pacing Theme Identification & Pipeline Management Manager Sourcing & Peer Analysis Governance Docs (Rec Memos, IPS, etc.)

Portfolio Reviews & Reporting Training and Education

Ad Hoc Projects Fee Discounts

Ops & Accounting Operations & Accounting Support

Included Performance Reporting Onboarding of Legacy Investments6 Fee Analysis Reporting (tabulation) Corporate Actions

3 Access to a fund manager’s confidential information may be subject to Aksia’s receipt of such manager’s consent to disclose confidential information to ASRS.

4 Consulting fee adjusted up or down annually by the percentage change in the CPI of the preceding annual period.

5 Up to 12 commissioned reports per year (IDD and ODD must be on the same fund). Additional commissioned due diligence would be at an additional cost of $35k per report. Up to two unused commissioned reports may roll over to be used in the subsequent year and would expire at the end of that year. Commissioned reviews are subject to a one-time background check expense. All commissioned due diligence shall be performed upon the mutual consent of the parties and upon mutually agreeable deliverable timeframes.

6 The onboarding process may be subject to an additional one-time fee dependent on the quality of the legacy data to be onboarded.

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services Solicitation Code: BPM003473

Page

MAX Data Platform

Fund Profiles

Included

Tracked Funds Returns & Screening Return Statistics & Peer Comparison Factor & Style Risk Analysis Portfolio Builder & Analysis Document Library

Additional Services (Not Included in Fixed Annual Fee)

Due Diligence in Excess of 12 Reports Per Annum $35,000 per report7 Granular Risk Transparency & Reporting (i.e., SMA-level detail on underlying fund investments)

Quarterly: $10k for every 5 investments Monthly: $40k for every 5 investments

Cash Flow Authorization8 $5,000 for every 5 investments Analysis of valuation reporting and manager fee calculation

Additional fee dependent upon the details of the scope.

Co-Investment Analysis and/or analysis of valuation reporting and manager fee calculation

See alternative pricing structure in the “Optional/Alternative Pricing” section below

3. OPTIONAL/ALTERNATIVE PRICING

The Offeror may propose alternative pricing structures, including multi-year pricing, or fees organized in a different way that has been requested above provided that pricing in Section 1 or 2 above has been provided.

The Offeror has full discretion in what it may propose, however, the ASRS is under no obligation to accept such proposals.

- Private Equity Co-investment Fund-of-One Custom Account –Aksia would propose to build a customized co-investment program of co-investments sourced from ASRS-invested GPs through a separate, dedicated vehicle. Aksia would be the appointed investment manager and ASRS would be able to choose their level of involvement and governance structure (e.g., retaining a veto) while benefiting from Aksia’s resources and execution support. These services are available as a standalone mandate or could be run alongside the non-discretionary private equity advisory engagement, outlined above.

Commitment Amount: $75-$125mm annually, as determined by ASRS

Structure: Discretionary single investor evergreen fund-of-one

Pricing Option 1: 65bps management fee on invested capital; 50bps after investment period9 Pricing Option 2: No management fee with 8% deal-by-deal carry over 8% preferred return9

7 Commissioned reviews are subject to a one-time background check expense. All commissioned due diligence shall be performed upon the mutual consent of the parties and upon mutually agreeable deliverable timeframes.

8 Aksia will cross reference cash flow notices with available materials in an effort to ensure capital calls and distributions are in compliance with the investment documents.

9 Depending on the client’s chosen investment structure there may be initial set up and ongoing maintenance service provider costs for vehicles which would be passed through to the client (e.g., administrator fees, annual audit, etc.). We are happy to provide an estimate of such fees upon request.

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services Solicitation Code: BPM003473

Page

- Hedge Fund and/or Private Credit Ongoing Advisory Services - For the Illiquid Credit & Private Market Investment Project Consulting Services, we understood the requested engagement to be on a project-only basis (i.e., non-retainer). If ASRS prefers to engage Aksia for an ongoing retainer-based advisory relationship, the minimum fee would be $450,000 per annum for hedge fund advisory services, and $350,000 per annum for private credit advisory services. These fees would include access to Aksia’s database of completed reports and sourcing pipeline as well as a dedicated advisory team to assist ASRS with pacing, portfolio construction, manager selection, and ongoing portfolio review.10

4. OTHER FEES

Provide pricing for any and all other fees that are not included in the rates above. The Offeror should also disclose any additional fees associated with subcontractor arrangements that involve the services provided to ASRS and are not included in attachments.

Please note, the additional fees not included in the hourly pricing will be mutually agreed upon ahead of commencement of work.

A. Illiquid Credit & Public Market Investment Project Consulting Services:

• Background checks, subject to pre-approval by ASRS.

• Travel expenses related to travel outside of our standard industry coverage shall be reimbursed as agreed to in advance.

o Standard industry coverage includes travel to managers located in the continental U.S., Canada, Western Europe (Finland, Sweden, Norway, Denmark, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain, and Switzerland), the U.K., Hong Kong, Singapore, China, and Japan and shall be at no additional cost.

B. Private Equity Investment Consulting:

• Background checks, subject to pre-approval by ASRS.

• Travel expenses related to travel outside of our standard industry coverage shall be reimbursed as agreed to in advance.

o Standard industry coverage includes travel to managers located in the continental U.S., Canada, Western Europe (Finland, Sweden, Norway, Denmark, Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain, and Switzerland), the U.K., Hong Kong, Singapore, China, and Japan and shall be at no additional cost.

• As outlined in section 2B above, there may be costs in addition to the fixed annual fee for services not covered within the current scope, including:

o Co-investment services – pricing for a Private Equity Co-investment Fund-of-One Custom Account outlined in the optional/alternative pricing section.

o Private Equity consulting ad-on services: 1) Commissioned reports in excess of the 12 included annually, 2) granular risk transparency and reporting, 3) cash flow authorization11, and 4) analysis of valuation reporting and manager fee calculation.

10 Includes shadow accounting and performance reporting for the HF portfolio and up to 25 line items for the PC portfolio. Due diligence on funds outside of Aksia’s coverage universe (i.e., commissioned reviews), risk transparency reporting, and customized client operations and accounting support are not included and would be subject to an additional fee. Fees to be adjusted up or down annually by the percentage change in the CPI of the preceding annual period.

11 Aksia will cross reference cash flow notices with available materials in an effort to ensure capital calls and distributions are in compliance with the investment documents.

RETIREMENT SYSTEM

3300 N Central Ave

14th Floor Phoenix, AZ 85012

Investment Consulting Services: Illiquid Credit & Public Markets Projects, Private Equity, and Real Estate Investment Consulting Services Solicitation Code: BPM003473

Page

5. PAYMENT DISCOUNT OPTIONS

For the services specified herein, the following discounts apply:

Not applicable.

SPECIAL TERMS AND CONDITIONS

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

The Special Terms and Conditions modify the Uniform Terms and Conditions. It can modify them by replacing, deleting, appending to, or revising the text of an existing provision or by inserting a new paragraph into an existing article. No other document modifies or adds to the Uniform Terms and Conditions, except as may subsequently be otherwise and expressly agreed and incorporated by Contract Amendment.

1. DEFINITION OF TERMS

All other terms not defined herein shall have the meaning given to them in the Uniform Terms and Conditions.

1.1. “Acceptance of Offer” means the Attachment labeled “Offer and Acceptance” bearing the State contract number once the Procurement Officer has signed it to signify the (1) formal acceptance of the Offer and (2) the formation of the Contract. For clarity of intent, the foregoing is not to be confused with the term ‘acceptance’ used throughout the Contract in the context of delivery, inspection, etc., with respect to Materials or Services.

1.2. “Order” means the instrument by which ASRS authorizes Contractor to perform some or all of the Work. Whether the Contract will have one Order or many Orders depends on the scope of the Contract and how the ASRS will use it. Any of the following is to be construed as being an “Order”:

1.2.1. A purchase order;

1.2.2. A task order or service order;

1.2.3. Written correspondence or instruction.

1.3. “Subcontractor” has the meaning given in A.R.S. § 41-2503(38), which, for convenience of reference only, is “… a person who contracts to perform work or render service to … [C]ontractor or to another [S]ubcontractor as a part of a contract with a state governmental unit. . . .” The Contract is to be construed as “a contract with a state governmental unit” for purposes of the definition. For clarity of intent, a person carrying out any element of the Work is a Subcontractor from the moment they first carry out that element of the Work regardless of whether or not a Subcontract exists then or subsequently.

1.4. “Work” means the totality of the materials and the Services and all the acts of administration, creation, production, and performance necessary to fulfill and incidental to fulfilling all of Contractor's obligations and duties under the Contract in conformance with the Contract and applicable laws.

2. CONTRACT INTERPRETATION

2.1. Usage. Where the Contract:

2.1.1. assigns obligations to Contractor, any reference to “Contractor” is to be construed to be a reference to Contractor and all Subcontractors, whether they are first-tier subcontractors, sub-subcontractors, suppliers, sub-suppliers, consultants, or sub-consultants, as well as all of Contractor’s and the Subcontractors’ respective agents, representatives, and employees in every instance unless the context plainly requires that it is be a reference only to Contractor as apart from Subcontractors;

2.1.2. uses the permissive “may” with respect to a party’s actions, determinations, etc., the term is to be interpreted as in A.A.C. R2-7-101(31) [Definitions]. For clarity of intent, any right given to ASRS using “ASRS may” or a like construction denotes discretion and freedom to act so far as any regulatory or operative constraints permit in the relevant circumstances, provided that: (a) where written “may, at its discretion,” the discretion extends to whatever is most advantageous to ASRS; and (b) where written only as “may,” the discretion is constrained by what is fair, reasonable, and as accommodating of the respective best interests of both parties as practicable under the circumstances;

2.1.3. uses the imperative “shall” with respect to a party’s actions, duties, etc., the term is to be interpreted as in A.A.C. R2-7-101(43) [Definitions]. Conversely, the phrase “shall not” is to be interpreted as an imperative prohibition.

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

2.1.4. uses the term “must” with respect to a requirement, criterion, etc., the term is to be interpreted as conveying compulsion or strict necessity, and is to be read as though written “must, if [the subject] is to be entitled to have [the object] considered or credited as being compliant with, conforming to, or satisfying [the requirement, criterion, constraint, etc.], otherwise, [the object] will be considered or debited as being non-compliant, non-conforming, or unsatisfactory for its Contract-related purposes” in every instance;

2.1.5. uses the term “might” with respect to an event, outcome, action, etc., the term is to be interpreted as conveying contingency or non-discretionary conditionality; and

2.1.6. uses the term “will” or the phrases “is to be” or “are to be” with respect to an event, outcome, action, etc., the term or phrase is to be interpreted as conveying such certainty or imperativeness that “shall” is either unnecessary or irrelevant in that instance.

2.2. Independent Contractor. Contractor is an independent contractor and shall act in an independent capacity in performance under the Contract. Neither party is or is to be construed as being to be the employee or agent of the other party, and no action, inaction, event, or circumstance will be grounds for deeming it to be so.

2.3. Complete Integration. The Contract, including any documents incorporated into the Contract by reference, is intended by the parties as a final and complete expression of their agreement. There are no prior, contemporaneous, or additional agreements, either oral or in writing, pertaining to the Contract.

3. CONTRACT ADMINISTRATION AND OPERATION

3.1. Authority to Contract. This Contract activity is issued under the authority of the State Procurement Administrator, through the Arizona State Retirement System (“ASRS”). No alteration of any portion of the Contract, any services awarded, or any other agreement that is based upon this Contract may be made without express written approval of the ASRS Chief Procurement Officer or other personnel delegated authority in the form of an official Contract Amendment. Any such action is subject to the legal and contractual remedies available to the State inclusive of, but not limited to, Contract termination, cancellation, suspension, and/or debarment of the Contractor.

3.2. Contract Applicability. Any Contract resulting from this Solicitation shall be for the exclusive use of the ASRS.

3.3. Term of Contract. The term of the Contract shall commence on the effective date indicated in the “Acceptance of Offer” and shall remain in effect for a period of twelve (12) months thereafter unless terminated, canceled or extended as otherwise provided herein.

3.4. Contract Usage. Contractor shall understand and agree that no quantity of service is guaranteed under the Contract and that ASRS does not guarantee that Contractor’s services will be utilized to any degree. ASRS reserves the right to contract for the services as a whole, or any of the various parts/scenarios listed separately.

3.5. Contract Extensions. The Contract shall not bind nor purport to bind the ASRS for any contractual commitment in excess of the original Contract term. The ASRS shall have the right, as its sole option, to extend the Contract for one or more months, provided that the maximum aggregate term of the Contract including extensions cannot exceed five (5) years. If the ASRS exercises such rights, all terms, conditions, and provisions of the original Contract shall remain the same and apply during an extension period.

3.5.1. The Contractor shall provide the ASRS with notice of any requests for program/operation changes or modifications of any type, including those on price, at least ninety (90) days prior to the effective date for each extension period. Any such request shall be accompanied by supporting documentation.

3.6. Notices. All notices, requests, demands, consents, approvals, and other communications which may or are required to be served or given hereunder (collectively, “Notices”):

3.6.1. If intended for the ASRS, shall be hand-delivered, emailed to ASRSProcurement@azasrs.gov or sent by registered or certified United States mail, return receipt requested, postage prepaid, and addressed to the mailto:ASRSProcurement@azasrs.gov

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

ASRS as indicated on the Offer and Acceptance document of this Contract or to such other address as may from time be furnished in writing to the Contractor.

3.6.2. If intended for the Contractor, such Notice shall be given to the person named in the Offer and Acceptance document of this Contract or to such other person as the Contractor may from time to time furnish in writing to the ASRS.

3.6.3. Any Notice so given shall be deemed to have been given as of the date such Notice is received as shown on the return receipt or on the date such Notice is personally delivered to the other party.

3.7. Key Personnel. It is essential that the Contractor provide an adequate staff of experienced personnel capable of and devoted to the successful accomplishment of work to be performed under this Contract. The Contractor must assign specific individuals. Once key personnel are assigned to work under the Contract, the ASRS shall have the opportunity to review the qualifications and approve the assignment of additional or replacement key personnel.

3.8. Intellectual Property

3.8.1. Ownership of lntellectual Property. Any and all intellectual property, including but not limited to copyright, invention, trademark, trade name, service mark, or trade secrets created or conceived solely pursuant to or as a result of this Contract and any related subcontract (collectively, the "Intellectual Property"), shall be work made for hire and the ASRS shall be the owner of such Intellectual Property. The ASRS shall own (for and on behalf of the State) the entire right, title and interest to the Intellectual Property throughout the world.

Software and other Materials developed or otherwise obtained by or for Contractor or its affiliates independently of this Contract ("Independent Materials") do not constitute Intellectual Property. If Contractor creates derivative works of Independent Materials, then the elements of such derivative works created pursuant to this Contract shall constitute Intellectual Property owned by the ASRS. Contractor shall notify the ASRS, within thirty (30) days, of the creation of any Intellectual Property by it or its subcontractor(s).

Contractor, on behalf of itself and any subcontractor(s), agrees to execute any and all document(s) necessary to assure ownership of the Intellectual Property vests in the ASRS and shall take no affirmat ive actions that might have the effect of vesting all or part of the Intellectual Property in any entity other than the ASRS. The Intellectual Property shall not be disclosed by Contractor or its subcontractor(s) to any entity not the ASRS without the express written authorization of the ASRS.

Notwithstanding the foregoing, if the ASRS elects, in its sole and absolute discretion, to relinquish its ownership interest in any or all of the Intellectual Property, the ASRS shall have the rights to use, modify, reproduce, release, perform, display, sublicense or disclose such Intellectual Property within State government and operations without restriction for any activity in which the ASRS is a party (collectively, "Government Purpose Rights").

3.8.2. Pre-Existing Material. All pre-existing software and other materials developed or otherwise obtained by or for Contractor or its affiliates independently of the Contract or applicable Purchase Orders are not part of the work product to which rights are granted State under subparagraph 3.9.1 above, and will remain the exclusive property of Contractor, provided that:

3.8.2.1. any derivative works of such pre-existing material or elements thereof that are created pursuant to the Contract are part of that work product;

3.8.2.2. any elements of derivative work of such pre-existing material that was not created pursuant to the Contract are not part of that work product; and

3.8.2.3. except as expressly stated otherwise, nothing in the Contract is to be construed to interfere or diminish Contractor’s or its affiliates’ ownership of such pre-existing materials.

3.9. Warranty

Unless otherwise modified elsewhere in the terms and conditions, the Contractor warrants that, for one year after acceptance by the ASRS, the Materials shall be fully compatible with the ASRS's computer hardware and software environment. Contractor represents and warrants to the ASRS that Contractor has the skill and knowledge

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects possessed by members of its trade or profession and Contractor will apply that skill and knowledge with care and diligence so Contactor and Contractor's employees and any authorized subcontractors shall perform the Services described in this Contract in accordance with the Statement of Work.

Contractor represents and warrants that the Materials provided through this Contract and Statement of Work shall be free of viruses, backdoors, worms, spyware, malware and other malicious code that will hamper performance of the Materials, collect unlawful personally identifiable information on users or prevent the Materials from performing as required under the terms and conditions of this Contract.

3.10. Offers of Employment

The Contractor shall comply with A.R.S. § 41-2517, as it relates to a person, firm or lobbyist making an offer of employment to an employee having a significant procurement role, as defined in A.R.S. § 41-741 and A.R.S. § 41- 2503.

3.11. Performance in Public Health Emergency. The Contractor warrants that it will:

3.11.1. Have in effect promptly after commencement a plan for continuing performance in the event of a declared public health emergency that addresses, at a minimum: (a) identification of response personnel by name;

(b) key succession and performance responses in the event of sudden and significant decrease in workforce; and (c) alternative avenues to keep sufficient product on hand or in the supply chain; and

3.11.2. Provide a copy of its current plan to the ASRS within three (3) business days after the ASRS’s written request. If Contractor claims relief under paragraph 6.4 (Force Majeure) of the Uniform Terms and Conditions for an occurrence of force majeure that is a declared public health emergency, then that relief will be conditioned on Contractor having first implemented its plan and exhausted all reasonable opportunity for that plan implementation to overcome the effects of that occurrence, or mitigate those effects to the extent that overcoming entirely is not practicable.

For clarification of intent, being obliged to implement the plan is not of itself an occurrence of force majeure, and Contractor will not be entitled to any additional compensation or extension of time by virtue of having to implement it. Furthermore, failure to have or implement an appropriate plan will be a material breach of contract.

4. PRICING AND PAYMENTS

4.1. Price Adjustments

4.1.1. The Contractor shall agree that the prices stated in the original Contract shall not be increased unless otherwise negotiated.

4.1.2. A price increase adjustment shall only be considered at the time of a contract extension and shall be a factor in the extension review process. The ASRS shall determine whether the requested price increase or an alternate option is in the best interest of the ASRS.

4.1.3. Price reduction may be offered at any time during the term of the Contract and shall become effective upon acceptance by the ASRS.

4.1.4. The Contractor understands and agrees the needs of the ASRS may change during the life of the Contract and the ASRS may propose changes to any part of this Contract with a commensurate, fair, and equitable adjustment in price. Any such changes shall be made in accordance with Article 5.1 (Amendments) of the Uniform Terms and Conditions of this Contract.

4.2. Billing

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

4.2.1. All billing notices should be identified by Contractor’s name, list the Contract number, and clearly identify the line item, if applicable. Billing notices or invoices must be submitted by email to: asrsap@azasrs.gov.

4.2.2. Without prejudice to its other rights under the Contract or further obligation to Contractor, the ASRS may, at its discretion, reject any material defective invoice if it is determined that the invoice is materially defective.

4.2.3. If ASRS determines that an over-payment has been made to Contractor on any prior invoice, ASRS may deduct the over-paid amount from amounts then or thereafter due to Contractor.

4.3. Travel. In accordance the Pricing Schedule, travel must be inclusive of all fee. ASRS will not reimburse travel expenses unless ASRS requests travel not related to services contemplated within the Contract. In the case of ASRS approved travel expense reimbursement, Contractor may be reimbursed travel expenses in accordance with the published rates specified in the State of Arizona Travel Policy, located at https://gao.az.gov/travel/welcome-gao-travel, and incorporated herein.

4.4. Discounts. Contractor will apply discounts in accordance with the Pricing Schedule or subsequent Contract Amendment. Payment discount periods shall be computed from the date of receipt of services or correct invoice, whichever is later, to the date the ASRS makes payment. Unless charges are itemized, any discount provided shall be taken on full amount of the invoice. The ASRS shall be entitled to take advantage of any payment discount offered by Contractor provided payment is made within the discount period.

5. CONTRACT CHANGES

5.1. Contract Amendments. The Contract may be modified only through a Contract Amendment within the scope of the Contract. Changes to the Contract, including the addition of Work or Materials, the revision of payment terms, or the substitution of Work or Materials, directed by a person who is not specifically authorized by the Procurement Officer in writing or made unilaterally by Contractor are violations of the Contract and of applicable law. Such changes, including unauthorized written Contract Amendments shall be void and without effect, and Contractor shall not be entitled to any claim under this Contract based on those changes.

5.1.1. Signing of Contract Amendments. Both ASRS and Contractor signatures are required to give effect to a Contract Amendment, except that Contractor’s countersignature – or “approval” in the Arizona Procurement Portal (APP) – is not required to give effect if the Contract Amendment only covers either:

5.1.1.1. extension of the term of the Contract within the maximum aggregate term; or

5.1.1.2. modifications of a clerical nature that have no effect on terms, conditions, price, scope, or other material aspect of the Contract.

5.2. Contract Assignment. Contractor may not assign, transfer or convey any of its rights or obligations under this Contract without the written permission of the ASRS.

6. CONTRACT TERMINATION

6.1. Termination for Default

6.1.1. The ASRS reserves the right to terminate the whole or any part of this Contract due to failure of Contractor to carry out any obligation, term, or condition of the Contract, subject to sections 6.2 and 6.3 below.

6.1.1.1. The ASRS will issue a written ten (10) day notice of default to the Contractor for acting or failing to act, including in doing the following:

6.1.1.2. The Contractor fails to adequately perform the services set forth in the Scope of Work of the Contract;

https://gao.az.gov/travel/welcome-gao-travel

Description: Investment Consulting Services: Private Equity and Illiquid Credit & Public Markets Projects

6.1.1.3. The Contractor fails to complete the work required within the time stipulated in the Contract;

6.1.1.4. The Contractor attempts to impose on the ASRS, personnel which are of an unacceptable quality;

6.1.1.5. The Contractor fails to make progress in the performance of the Contract and/or gives the ASRS reason to believe the Contractor will not or cannot perform to the requirements of the Contract.

6.1.2. If the Contractor does not correct the above problem(s) within ten (10) days after receiving the notice of default, the ASRS may terminate the Contract. If the ASRS terminates the Contract pursuant to this clause, the ASRS reserves all rights or claims to damage for breach of contract.

6.1.3. The ASRS may recover reasonable excess costs from the Contractor by:

6.1.3.1. Deduction from an unpaid balance;

6.1.3.2. Collection against the offer and/or performance bond; or

6.1.3.3. Any combination of the above or any other remedies as provided by law.

6.2. Termination for Convenience. The Contract is for the convenience of the ASRS and as such may be terminated without default by the ASRS when in the best interest of the ASRS by providing a written thirty (30) day notice of termination to Contractor, and by Contractor by providing a written ninety (90) day notice of termination to the

ASRS.

6.3. Performance of Contract Following Termination or Expiration

6.4. In the event the Contract expires or is terminated for any reason or cause, Contractor agrees to continue performance of its duties, if so requested by the ASRS, as though no expiration or termination had occurred for a period not to exceed six (6) months from the first day of the month following termination. Contractor shall cooperate fully with a replacement service contractor (“Replacement Contractor”) who assumes the Services under the Contract. In such event, Contractor shall continue to receive compensation set forth in the Contract unless modified by Contract Amendment to address unforeseen transition costs.

6.5. Data Relating to Contract

6.5.1. In the event of the expiration, termination or non-renewal of the Contract, Contractor, at its own expense, is obligated to return all data and records relating to the acquisition and performance of the Contract (“Data”) to the ASRS and to provide such Data to the Replacement Contractor in a format acceptable to the Replacement Contractor and that will ensure no loss of crucial data is incurred and no Services are interrupted.

6.5.2. The ASRS does not expect the Contractor to release any proprietary or trade secret information to the Replacement Contractor.

7. RISK AND LIABILITY

7.1. Risk of Loss. Contractor shall bear all risk of loss to Materials while in pre-production, production, storage, transit, staging, assembly, installation, testing, and commissioning, if and as those duties are within the scope of the Work, until they have been accepted as conforming by State in the…