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HomeMy WebLinkAboutResolutions - 2013.10.02 - 21043REPORT (MISC #13254) October 2, 2013 BY: Human Reso.urces Committee, John Scott, Chairperson IN RE: RESOLUTION APPROVING THE 2013 SUPERSEDING OAKLAND COUNTY RETIREE MEDICAL BENEFITS TRUST AGREEMENT BETWEEN THE COUNTY AND THE TRUSTEES DESCRIBED THEREIN, ESTABLISHING THE 2013 SUPERSEDING OAKLAND COUNTY RETIREMENT MEDICAL BENEFITS TRUST To the Finance Committee and Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen: The Human Resources Committee, having reviewed the above referenced resolution on September 25, 2013, reports with the recommendation the resolution be adopted_ Chairperson, on behalf of the Human Resources Committee, I move the acceptance of the foregoing report HUMAN RESOURCES COMMITTEE HUMAN RESOURCES COMMITTEE Motion carried unanimously on a roll call vote with idliteW6tt absent, MISCELLANEOUS RESOLUTION #13254 October 2, 2013 BY: FINANCE COMMITTEE - Thomas Middleton, Chairperson IN RE: RESOLUTION APPROVING THE 2013 SUPERSEDING OAKLAND COUNTY RETIREE MEDICAL BENEFITS TRUST AGREEMENT BETWEEN THE COUNTY AND THE TRUSTEES DESCRIBED THEREIN, ESTABLISHING THE 2013 SUPERSEDING OAKLAND COUNTY RETIREE MEDICAL BENEFITS TRUST TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Chairperson, Ladies and Gentlemen: WHEREAS, the Oakland County VEBA (the "VEBA Trust") is a trust established by the Oakland County VEBA Trust Agreement effective as of October 1, 2000 between the County and the Trustees described therein (or their successors, the "VEBA Trustees"), as amended, for the purposes of (i) accumulating the funds needed to pay for Retiree Medical Benefits and (ii) receiving contributions for that purpose from the County; and WHEREAS, pursuant to an enabling ordinance enacted by the Oakland County Board of Commissioners on June 14, 2007 (the "Funding Ordinance") authorizing an alternate funding mechanism for the County to amortize its estimated unfunded accrued actuarial liabilities for Retiree Medical Benefits for certain retirees and certain active employees of the County, and their eligible dependents, as of October 1, 2006 (the "Designated Liabilities') over a period ending April 1, 2027 (the "Funding Period"); and WHEREAS, the County established an intermediate trust (the "Intermediate Trust") to irrevocably receive a certain amount of the net proceeds (the "Funding Proceeds') from the sale by the 2007 Oakland County Retiree Medical Benefits Funding Trust (the "Funding Trust") of its Taxable Certificates of Participation, Series 2007 (the "Certificates") and to hold, invest and distribute to the Intermediate Trust (defined below) assets, all in accordance with such trust agreement, as it may be amended in accordance with its terms; and WHEREAS, the County has authorized and entered into the 2007 Oakland County Retiree Medical Benefits Contract (the "Contract") with the Funding Trust to assist it in exercising its essential governmental function of providing post-retirement health benefits for its eligible employees, their spouses and eligible dependents and in satisfying its contractual obligations to provide Retiree Medical Benefits by issuing and selling the Certificates and the County has made Contract Payments to the Funding Trust pursuant to the Contract in order to satisfy its obligations to the Funding Trust; and WHEREAS, the Funding Trust provides: In the event that any health care benefits plan, program or arrangement becomes effective during the period that any Certificates are outstanding with the effect of supplanting and superseding the County's obligations to pay for all of the costs of providing retiree medical benefits (the Optional Prepayment Trigger), the Intermediate Trust will have fulfilled its designated purpose, and then (I) all, or the applicable portion (as the case may be), of the then existing assets of the Intermediate Trust, to the extent no longer needed to pay future costs of providing County retiree medical benefits, shall be deemed Surplus Intermediate Trust Assets, and (ii) if the County, at its option and in its sole discretion, gives written notice to the Trustee, with a copy to the Trustees of the Intermediate Trust, of the County's irrevocable election to optionally redeem all or a portion (to the extent of the available Surplus Intermediate Trust Assets) of the then outstanding principal amount of the Certificates through an Optional Prepayment as defined in the Contract, then the Intermediate Trust shall (A) transfer all or a portion (as the case may be) of the available Surplus Intermediate Trust Assets to the Trustee as such optional prepayment for and on behalf of the County and (B) promptly give written notice thereof to the County. WHEREAS, effective October 9, 2012, the Michigan legislature enacted an amendment to Public Act No. 34 of the Public Acts of Michigan of 2001, as amended ("Act 34") into law. Said Act, as amended, FINANCE COMMITTEE VOTE: Motion carried unanimously on a roll call vote with Crawford absent. 1 provided the County the power to take various actions in connection with refunding of the County's existing contractual obligations under the Contract including establishing a new grantor trust to implement the covering of the County's retirees health care liability which was the first step in permitting the County to put in effect a new health care benefits "plan, program or arrangement" (the "Superseding Plan") which will have the effect of supplanting and superseding the County's obligations under the Contract; and WHEREAS, the County Board of Commissioners has adopted a resolution authorizing the County to issue refunding bonds (the "Refunding Bonds") for the purpose of refunding, as used in Public Act No. 329 of the Public Acts of Michigan of 2012, the existing obligations under the Contract which the County either has, or shortly will, issue which either is or will be the second step in implementing the Superseding Plan; and WHEREAS, the County, as permitted by Act 34, wishes to create a new grantor trust which will thereafter enter into a new contract (the "Superseding Contract") with the County under which Superseding Contract, the County will be obligated to the new grantor trust to do the following: A. Pay to the new grantor trust on April 1, 2014, an amount based on the September 30, 2013 actuarial report received by the County from its actuary so that, based on the actuarial assumptions contained therein, as of April 1, 2014 the VEBA Trust will be fully funded with no retiree medical benefits ("RMB") unfunded actuarial accrued liability ("UAAL"). B. In ail future years, after April 1,2014, transfer the actuarially required contribution ("ARC") as determined by the actuary to be made to the VEBA Trust no later than eighteen months after the September 30th for which the actuarial report applies; and WHEREAS, it is the intent of the County to create a new irrevocable grantor trust which is an integral part of the County (the "Superseding Trust") to receive and hold in trust the amounts described above, which must may be paid to it by the County as required in the Superseding Contract between the County and the Superseding Trust to be created. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE COUNTY OF OAKLAND, MICHIGAN, AS FOLLOWS: 1. There is hereby created the 2013 Superseding Oakland County Retiree Medical Benefits Trust (the "Superseding Trust"). 2. The 2013 Superseding Oakland County Retiree Medical Benefits Trust Agreement attached hereto as Appendix A (the "Superseding Trust Agreement") is hereby approved. 3. The initial Trustees of the Superseding Trust shall be the following persons; The Oakland County Executive or his or her Designee The Oakland County Treasurer or his or her Designee The Chairperson of the Oakland County Board of Commissioners or his or her Designee The Oakland County Corporation Counsel or his or her Designee The Oakland County Human Resource Director or his or her Designee 4. All withdrawals from the Superseding Trust's funds shall be made in accordance with the provisions of the Superseding Trust Agreement. 5. The Oakland County Executive or any Deputy County Executive, acting on behalf of the County Executive, or any one or more of them, and each of them is, at any time hereafter and without further action by or authority or direction from the Board of Commissioners of the County, authorized to execute (by manual or facsimile signature) and deliver the Superseding Trust Agreement in substantially the form presented at this meeting, including such changes in or additions to such form (including, but not limited to, completing any blanks therein) as the officials executing the same may determine to be necessary or advisable, and that the execution of the Superseding Trust Agreement by such officials on behalf of this County shall be conclusive evidence of their determination in that respect. 2 6. The Oakland County Executive or any Deputy County Executive, acting on behalf of the County Executive, or any one or more of them, and each of them is, at any time hereafter and without further action by or authority or direction from the Board of Commissioners of the County, authorized to execute and deliver or cause to be executed and delivered all such other and further agreements, requests, statements, instruments and documents and to do or cause to be done all such other and further acts and things as any such official, attorney or agent may determine to be necessary or advisable under or in connection with the Superseding Trust Agreement or this resolution, and that the execution by any such official, attorney or agent of any such agreement, request, statement, instrument or document or the doing of any such act or thing shall be conclusive evidence of his/her or their determination in that respect. 7. This resolution shall take immediate effect upon its adoption and the signature of the Oakland County Executive indicating his approval. Chairperson, on behalf of the Finance Committee, I move the adoption of the foregoing resolution. FINANCE COMMITTEE 3 2013 SUPERSEDING OAKLAND COUNTY RETIREE MEDICAL BENEFITS TRUST AGREEMENT This Trust Agreement is made, effective as of October 3, 2013, by and between the County of Oakland, Michigan (the "County" or the "Grantor") and the Trustees described in Section 2 below, or their successors. The word "Section" means a section of this Agreement. As used herein, capitalized terms are either defined here or in the referenced underlying documents. RECITALS: WHEREAS, the Oakland County VEBA (the "VEBA Trust") is a trust established by the Oakland County VEBA Trust Agreement effective as of October 1, 2000 between the County and the Trustees described therein (or their successors, the "VEBA Trustees"), as amended, for the purposes of (i) accumulating the funds needed to pay for Retiree Medical Benefits and (ii) receiving contributions for that purpose from the County; WHEREAS, pursuant to an enabling ordinance enacted by the Oakland County Board of Commissioners on June 14, 2007 (the "Funding Ordinance') authorizing an alternate funding mechanism for the County to amortize its estimated unfunded accrued actuarial liabilities for Retiree Medical Benefits for certain retirees and certain active employees of the County, and their eligible dependents, as of October 1, 2006 (the "Designated Liabilities") over a period ending April 1, 2027 (the "Funding Period"); WHEREAS, the County established an intermediate trust (the "Intermediate Trust") to irrevocably receive a certain amount of the net proceeds from the sale by the 2007 Oakland County Retiree Medical Benefits Funding Trust (the "Funding Trust") of its Taxable Certificates of Participation, Series 2007 (the "Certificates") and to hold, invest and distribute to the Intermediate Trust (defined below) assets, all in accordance with such trust agreement, as it may be amended in accordance with its terms; WHEREAS, the County has authorized and entered into the 2007 Oakland County Retiree Medical Benefits Contract (the "Contract") with the Funding Trust to assist it in exercising its essential governmental function of providing post-retirement health benefits for its eligible employees, their spouses and eligible dependents and in satisfying its contractual obligations to provide Retiree Medical Benefits by issuing and selling the Certificates and the County has made Contract Payments to the Funding Trust pursuant to the Contract in order to satisfy its obligations to the Funding Trust; WHEREAS, the Funding Trust provides: In the event that any health care benefits plan, program or arrangement becomes effective during the period that any Certificates are outstanding with the effect of supplanting and superseding the County's obligations to pay for all of the costs of 1 providing retiree medical benefits (the Optional Prepayment Trigger), the Intermediate Trust will have fulfilled its designated purpose, and •then (i) all, or the applicable portion (as the case may be), of the then existing assets of the Intermediate Trust, to •the extent no longer needed to pay future costs of providing County retiree medical benefits, shall be deemed Surplus Intermediate Trust Assets, and (ii) if the County, at its option and in its sole discretion, gives written notice to the Trustee, with a copy to the Trustees of the Intermediate Trust, of the County's irrevocable election to optionally redeem all or a portion (to the extent of the available Surplus Intermediate Trust Assets) of the then outstanding principal amount of the Certificates through an Optional Prepayment as defined in the Contract, then the intermediate Trust shall (A) transfer all or a portion (as the case may be) of the available Surplus Intermediate Trust Assets to the Trustee as such optional prepayment for and on behalf of the County and (B) promptly give written notice thereof to the County. WHEREAS, effective October 9, 2012, the Michigan legislature enacted an amendment to Public Act No. 34 of the Public Acts of Michigan of 2001, as amended ("Act 34") into law. Said Act, as amended, provided the County the power to take various actions in connection with refunding of the County's existing contractual obligations under the Contract including establishing a new grantor trust to implement the covering of the County's retirees health care liability which was the first step in permitting the County to put in effect a new health care benefits "plan, program or arrangement' (the "Superseding Plan") which will have the effect of supplanting and superseding the County's obligations under the Contract; WHEREAS, the County Board of Commissioners has adopted a resolution authorizing the County to issue refunding bonds (the "Refunding Bonds") for the purpose of refunding, as used in Public Act No. 329 of the Public Acts of Michigan of 2012, the existing obligations under the Contract which the County either has, or shortly will, issue which either is or will be the second step in implementing the Superseding Plan; WHEREAS, the County, as permitted by Act 34, wishes to create a new grantor trust which will thereafter enter into a new contract (the "Superseding Contract") with the County under which Superseding Contract, the County will be obligated to the new grantor trust to do the following: A. Pay to the new grantor trust on April 1, 2014, an amount based on the September 30, 2013 actuarial report received by the County from its actuary so that, based on the actuarial assumptions contained therein, as of April 1, 2014 the VEBA Trust will be fully funded with no retiree medical benefits ("RMB") unfunded actuarial accrued liability ("UAAL"). B. In all future years, after April 1, 2014, transfer the actuarially required contribution ("ARC") as determined by the actuary to be made to the 2 VEBA Trust no later than eighteen months after the September 30 th for which the actuarial report applies; and WHEREAS, it is the intent of the County to create a new irrevocable grantor trust which is an integral part of the County (the "Superseding Trust") to receive and hold in trust the amounts described above, which must may be paid to it by the County as required in the Superseding Contract between the County and the Superseding Trust to be created. NOW, THEREFORE, the County and the Superseding Trustees agree as follows: 1 Establishment and Name of the Superseding Trust, The County, as Grantor, hereby establishes, and the Superseding Trustees hereby accept, the 2013 Superseding Oakland County Retiree Medical Benefits Trust Agreement, which shall be known as the "Superseding Trust", for the purpose of contracting with the County in a way which when taken with other actions to be taken by the County in the future (including entering into the Superseding Contract) will result, at the conclusion of these steps, in placing in effect the Superseding Plan which will have the effect of supplanting and superseding the County's obligations under the Contract. The Superseding Trust is intended to be a trust governed by Subpart E of Part I of Subchapter J of Chapter 1 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Department regulations promulgated thereunder, under which the County is treated as the owner of the Superseding Trust for U.S. federal income tax purposes (the "Grantor Trust"). 2. Trustees. The provisions of this Section 2 shall govern the identification and appointment of the initial Superseding Trustees, the appointment of successor Superseding Trustees, the resignation of the Superseding Trustees, and the duties of a successor Superseding Trustee with respect to the Superseding Trust, The term "Superseding Trustees" means all persons or entities who occupy the office of Superseding Trustee under this Agreement, while such persons or entities occupy such office, whether one or more persons or entities occupy the office of Superseding Trustees at the same time or times, and includes any successor Superseding Trustee or Trustees. (a) The Trustees of the Superseding Trust shall be the following persons: 1. The Oakland County Executive or his or her Designee; 2. The Oakland County Treasurer or his or her Designee; e. The Chairperson of the Oakland County Board of Commissioners or his or her Designee: 4. The Oakland County Corporation Counsel or his or her Designee; 5. The Oakland County Human Resource Director or his or her Designee. 3 The foregoing persons shall, upon each of them signing an acceptance of trust, be the initial Trustees of the Superseding Trust (the "Superseding Trustees"). (b) The County's Board of Commissioners has the power to remove and appoint any of the Superseding Trustees. (c) The term of office of each of the Superseding Trustees shall be the same term of office as they serve in the position described under subparagraph (a) above. (d) The term of office of any Designee of the person holding the offices described under subparagraph (a) above, shall cease at the time the person holding such office shall cease to hold such office. (e) At the request of the County, upon removal or resignation of any of the Superseding Trustees at any time other than due to their death, disability or when their term of office expires, such Superseding Trustee shall file a final account with the County within thirty (30) days of written request therefor, as to any funds or expenses they were solely responsible for or entitled to reimbursement. Such Superseding Trustee shall cooperate with the County as to the appointment of a successor Superseding Trustee, including any documentation requested by any investment advisor to this Trust. If, for any reason, all of the Superseding Trustees under this Agreement die or cannot or will not act as Superseding Trustees, and if no successor Superseding Trustees are designated under this Section 2, or are designated but unwilling to act as Superseding Trustees, then successor Superseding Trustees shall be named by order of a court of competent jurisdiction. (g) The appointment of a successor Superseding Trustee shall be effective when such Superseding Trustee signs an acceptance of trust. Notice of the acceptance of trust shall be given to the County. (h) Each successor Superseding Trustee shall have the identical powers, rights, duties and obligations as the initial Superseding Trustees named in this Agreement. 3. Contributions to the Superseding Trust. The County, as Grantor, shall cause the payments to be made to the Superseding Trust in accordance with the Superseding Contract. The Superseding Trustees shall receive such contributions made to them from the County and shall hold such funds as a separate trust designated as the Superseding Trust, and shall hold and administer such funds, invest and reinvest such funds, and make distributions from such funds only in accordance with the provisions of this Agreement and the Superseding Contract. The Superseding Trustees shall receive, hold, invest and administer as part of the Superseding Trust, subject to the terms of this 4 Agreement, all income earned by the corpus of the Superseding Trust (and all losses in the value of the corpus of the Superseding Trust shall be charged to the corpus of the Superseding Trust), but no other contributions to the Superseding Trust from any source other than the County or on behalf of its employees shall be made to or accepted by the Superseding Trustees. 4. Permitted Uses of Assets of the Superseding Trust. (a) No part of the Superseding Trust's corpus or income shall be used for, or diverted to, purposes other than (i) to be distributed to the VEBA Trust at times and in amounts in accordance with the provisions of the Superseding Contract, (ii) to pay the reasonable administrative expenses of the Superseding Trust and (iii) to payments to the holders of the Refunding Bonds. Notwithstanding the foregoing, the Superseding Trust corpus or income may be distributed to the VEBA Trust to pay any part of the required payment thereto for an annual required contribution or to pay the "normal costs" to provide retiree health care benefits as may be identified in a future actuarial valuation report. Notwithstanding the foregoing, the Superseding Trust corpus or income may be used to pay the employer provided contribution to individual retiree health savings accounts established in compliance with Code §223 for active employees of the County who were hired after December 31, 2005 and are not otherwise eligible for benefits provided by the VEBA. (b) Notwithstanding anything to the contrary in the preceding sentence, the Superseding Trustees may distribute money to holders of the Refunding Bonds or pay the VEBA Trust from such assets as they have. Further, upon receipt of either a private letter ruling issued by the Internal Revenue Service ("PLR") or an opinion of outside legal counsel for the County that the Surplus Superseding Trust Assets may be used to repay any interest expense on said outstanding debt without adversely affecting this Trust being treated as a Code §115 exempt trust as providing an essential governmental function, as that term is used therein. Nothing contained herein shall preclude or prevent the County from using the surplus Superseding Trust Assets to pay any fees, taxes or otherwise future, but currently unanticipated expenses, required to be paid by the County as an employer under federal law, including but not limited to the Patient Protection and Affordable Care Act of 2010. (c) No participants (or their eligible beneficiaries) in the applicable County- sponsored retiree medical plans shall have a preferred claim on, or any beneficial ownership interest in, any Superseding Trust assets, except to the extent that the assets of the Superseding Trust have been distributed to the VEBA Trust for the payment of the Retiree Medical Benefits that said participants or their eligible beneficiaries are otherwise entitled. 5 5. Powers and Duties of Superseding Trustees. (a) Immediately upon receipt by the Superseding Trustees of payments made by the County in accordance with the Superseding Contract, the Superseding Trustees shall issue a notice to the VEBA Trust that such funds have been received. (b) The Superseding Trustees shall have the entire care and custody of all assets of the Superseding Trust. The Superseding Trustees shall have the power to do everything permitted under this Agreement which the Superseding Trustees in good faith deem advisable, without necessity of any judicial authorization or approval, (c) If more than two Superseding Trustees are empowered to participate in the decision to exercise or not exercise any fiduciary power granted by this Agreement or by law, a majority of such Superseding Trustees shall be empowered to make such decision; provided, however, if a majority of the Superseding Trustees have delegated the power to make such decision to one or more Superseding Trustees or one or more other persons, then such decision shall be made pursuant to such delegation. If two Superseding Trustees are empowered to participate in the decision to exercise or not exercise any fiduciary power granted by this Agreement, then such Superseding Trustees shall make such decisions unanimously; provided, however, that if such Superseding Trustees unanimously delegated the power to make such decisions to one Superseding Trustee or one or more other persons, such decisions shall be made pursuant to such delegation. The powers of the Superseding Trustees under this Agreement shall be in addition to those powers granted to a Trustee by law and may be exercised even after termination of the Superseding Trust under this Agreement until actual distribution of all trust assets. (d) The Superseding Trustees shall make distributions from the Superseding Trust's assets in any calendar year only in accordance with the Superseding Contract to the VEBA Trust, which is the primary beneficiary of the Superseding Trust, which transfers shall be made as provided in the Superseding Contract. (e) The Superseding Trustees shall keep accurate, detailed records of all Superseding Trust investments, receipts, distributions and other transactions, including such specific records as shall be agreed upon in writing among the County and the Superseding Trustees. Within thirty (30) days following the close of each County fiscal year (October 1 - September 30), the Superseding Trustees shall deliver to the County a written account of their administration of the Superseding Trust during such fiscal year setting forth all investments, receipts, distributions and other transactions concerning the Superseding Trust. 6 (f) The Superseding Trustees shall have no liability for any action pursuant to a direction, request or approval given by the County which is contemplated by, and in conformity with, the terms of this Agreement and given in writing by the County. (g) If the Superseding Trustees undertake or defend any litigation arising in connection with the Superseding Trust, the County agrees to indemnify the Superseding Trustees against their costs, expenses and liabilities (including, without limitation, reasonable and actual attorneys' fees and expenses incurred) relating thereto and to be primarily liable for such payments; provided, however, that the County shall not indemnify the Superseding Trustees for any litigation arising from any Superseding Trustee's actions that are determine by a court of competent jurisdiction to be fraudulent, in bad faith, illegal or grossly negligent. (h) Except as otherwise provided in this Agreement, the Superseding Trustees shall invest and reinvest the assets of the Superseding Trust subject to the terms, conditions, limitations and restrictions imposed by the State of Michigan on the investments of public employee retirement systems by 1965 P.A. 314, MCL §§38.1132 et seq., the Public Employees Retirement System Investment Act, as now or hereafter amended, made applicable to public employee health care funds through 1999 PA, 149, MCL. §§38.1211 et seq., the Public Employee Health Care Fund Investment Act, as now or hereafter' amended, and specifically, MCL §38.1214. in exercising their discretionary authority with respect to the management of the Trust Fund, the Superseding Trustees shall exercise the care, skill, prudence and diligence under circumstances then prevailing, that a prudent person, acting in a similar capacity and familiar with those matters would use in the conduct of a similar enterprise with similar aims, as further described in MCL §38.1133(3), and shall not engage in the transactions prohibited by law and as described in MCL §§38.1133(6) and (9). This shall include diversifying the assets of the Superseding Trust so as to minimize the risk of large losses, unless under the circumstances it appears prudent not to do so. This standard shall not be applied to investments in isolation, but rather in the context of the Superseding Trust's overall portfolio and as part of the overall investment strategy, which shall incorporate risk and return objectives reasonably suited to the purposes of the Superseding Trust. Subject to the foregoing, the Superseding Trustees shall have the following rights, powers and duties with respect to the assets of the Superseding Trust (the "Trust Fund"): (i) to retain manage, improve, repair, operate and control all property, real or personal, at any time comprising part of the Trust Fund; (ii) to manage, sell, contract to sell, grant options to purchase, convey, exchange, partition, lease for any term (even though such term commences in the future or may extend beyond the duration of the 7 Superseding Trust), and otherwise dispose of the Trust Fund from time to time and in such manner, for such consideration, and upon such terms and conditions as the Superseding Trustees in their discretion shall determine; (iii) to retain all or any part of the Trust Fund (without regard to the proportion that any one asset or class of assets may bear to the whole) in the form in which such assets were received or acquired by the Superseding Trustees; (iv) to hold all or part of the Trust Fund in cash or in bank accounts without the necessity of investing the same; (v) to vote any corporate stock either in person or by proxy for any purpose; to exercise or sell any stock subscription or conversion right; to participate in voting trusts; to consent to, take any action in connection with, and receive and retain any securities resulting from, any merger, consolidation, reorganization, readjustment of the financial structure, liquidation; sale, lease or other organization the securities of which may constitute a portion of the Trust Fund; (vi) to keep property in the name of a nominee with or without disclosure of any fiduciary relationship; to have evidence of ownership of any security maintained in the records of a Federal Reserve Bank under the Federal Reserve Book Entry System; to deposit funds in any bank or trust company; to carry in the name of the Superseding Trustees or the nominee or nominees or the Superseding Trustees and with or without the designation of fiduciary capacity, or to hold in bearer form, securities or other property which are required or permitted to be registered; and to cause any securities to be held by a depository corporation of which an Superseding Trustee shall be a member or by an agent under a safekeeping contract; provided, however, that the books and records of the Superseding Trustee shall at all times show that such investments are part of the Trust Fund; to loan all or any part of the Trust Fund at any time and upon such terms as to payment security or otherwise; to assume such obligations or to give such guarantees; to borrow money, and to lease, mortgage, pledge, grant a security interest in, or otherwise encumber the Trust fund or any part thereof, as the Superseding Trustees determine; (viii) to take any action with respect to conserving or realizing upon the value of any property in the Trust Fund; to collect, pay, contest, compromise or abandon demands of or against the Trust Fund; (ix) to litigate, defend, compromise, settle, abandon, or submit to arbitration on such terms as the Superseding Trustees reasonably determine, any claims in favor of or against the Superseding Trust or the Trust Fund; (x) to employ such agents, experts, investment fiduciaries, counsel and other persons (any of whom may also be employed or represent the County) deemed by the Superseding Trustees to be necessary or proper for the administration of the Superseding Trust: to rely and act on information and advice furnished by such agents, experts, investment fiduciaries, counsel, and other persons; and to pay their reasonable expenses and compensation for services to the Superseding Trust from the Trust Fund; (xi) to transfer to an investment fiduciary (as defined in MCL §38.1132(c)(1)) the authority and accompanying duty to direct the investment and management of all or a portion of the Trust Fund, provided that such an investment fiduciary shall acknowledge in writing fiduciary status with respect to the Trust Fund; and (xii) to make, execute, and deliver, any and all such instruments in writing as shall be necessary or proper to carry out any power, right, duty or obligation of the Superseding Trustees or any disposition whatsoever of the Trust Fund and to perform any and all acts which in the judgment of the Superseding Trustees are necessary or desirable for the proper and advantageous administration and distribution of the Trust Fund. 6. Compensation and Expenses. (a) The Superseding Trustees shall not be separately compensated for their services as Superseding Trustees hereunder. The Superseding Trustees shall be reimbursed for all reasonable costs, expenses, charges and liabilities incurred or paid in connection with the performance of their duties administering the Superseding Trust, including fees and expenses of counsel or any other agents hired by the Superseding Trustees, and the Superseding Trustees shall not be liable therefore individually. The Superseding Trustees have discretion to pay such expenses or be reimbursed for such expenses from the Trust Fund, without obtaining judicial authorization or approval. (b) Notwithstanding any provision in this Agreement to the contrary, no Superseding Trustee shall be entitled to any fees or expenses claimed to be owing because such Superseding Trustee is resigning, being removed, or is no longer serving as an Superseding Trustee for any other reason; provided, however, that any Superseding Trustee shall be eligible to receive all pension and any other retiree benefits to which he or she is entitled by virtue of their employment by the County. 9 (c) To the extent the Trust Fund proves insufficient or the Superseding Trustees determine that the payment of administrative expenses for a given period would inhibit the payment of amounts required by the Superseding Contract to be paid to the VEBA Trust, the reasonable costs, expenses, charges and liabilities incurred on paid in connection with administering the Superseding Trust shall be paid by the County. 7. Amendment or Termination of the Superseding Trust. This Agreement and the Superseding Trust are irrevocable. (a) The County, in its sole and absolute discretion, may amend this Agreement upon written notice to the Superseding Trustees. (b) The Superseding Trust may be terminated by the County, but only in the following limited circumstances: (I) Circumstances have occurred which have resulted in supplanting and superseding the County's obligations to provide retirees health care benefits to its retired employees, by another health care benefit program that is not sponsored by the County, and the remaining assets have thereby been deemed Surplus Superseding Trust assets. Surplus Superseding Trust assets may be used to make any payments of principal of or interest on the Refunding Bonds. If, after such payments, the Trust Fund of the Superseding Trust has not been depleted, the County may terminate the Superseding Trust and any part of the Trust Fund of the Superseding Trust still remaining will then revert to the County. (ii) If all the assets of the Superseding Trust have been distributed in accordance with Superseding Contract, and the Superseding Trust no longer has any assets, the County may then terminate the Superseding Trust acting on its own, after certification of that fact to the Superseding Trustees. 8. Applicable Law. This Agreement shall be construed under the laws of the State of Michigan. Any provision of this Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions of this Agreement. 9. Rights of Participants. The County's participation in the Superseding Trust shall not give any retiree (or his or her eligible beneficiaries), entitlement to medical benefits under a County-sponsored retiree medical plan, any right or claim to any benefit under any plan sponsored by the County beyond what they are entitled to under the terms of such plan. 10. Third Party Reliance. Third Parties may rely on the representation of the Superseding Trustees relating to any authority granted to them under this Agreement, and such third parties shall not be obligated to inquire whether such 10 Superseding Trustee may act or is properly exercising such power, and are not bound to assure the proper application of assets paid or delivered to such Superseding Trustee; provided, however, that this Section 10 shall not apply to any person who claims to be, but is not, an Superseding Trustee pursuant to this Agreement. 11. Addresses for Notices. All notices and other communications provided for hereunder shall be in writing unless otherwise stated herein mailed, sent or delivered: If to the County, at County of Oakland, Michigan If to the Superseding Trust or the Superseding Trustees, at or to such other address as such person may specify to the other person and shall be effective (i) if given by mail, three business days after such communication is deposited in the mails with first class postage prepaid or (ii) if given by any other means, when delivered at the address specified in or pursuant to this Section. 12. Tax Status of the Superseding Trust; Opinions of Counsel or Internal Revenue Service Ruling. (a) Unless the County receives an opinion of counsel experienced in such matters that: (i) The Superseding Trust will be treated as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of the Code which is treated as wholly owned by the County for U.S. federal income tax purposes, and, accordingly the Superseding Trust will not be subject to U.S. federal income tax, and/or the income of the Superseding Trust from the transactions contemplated by this Agreement will constitute gross income described in Code § 115, such that the Superseding Trust will not be subject to U.S. federal income tax with respect to any income derived from the transactions contemplated by this Agreement, and/or 11 the Superseding Trust is treated as an integral part of the County such that the Superseding Trust will not be subject to U.S. federal income tax in respect of any income derived from the transactions contemplated by this Agreement, then, and in such event, the County shall submit the Superseding Trust to the Internal Revenue Service for one or more private letter rulings or other administrative determinations that: (A) the Superseding Trust will be treated as a grantor trust under Subpart, E, Part I of Subchapter J of Chapter 1 of the Code which is treated as wholly owned by the. County for U.S. federal income tax purposes, and, accordingly the Superseding Trust will not be subject to U.S. federal income tax, (B) the income of the Superseding Trust from the transactions contemplated by this Agreement will-constitute gross income described in Code § 115, such that the Superseding Trust will not be subject to U.S. federal income tax in respect of any income derived from the transactions contemplated by this Agreement, and/or (C) the Superseding Trust is treated as an integral part of the County such that the Superseding Trust will not be subject to U.S. federal income tax in respect of any income derived from the transactions contemplated by this Agreement. References to any "tax" also include any interest or penalties thereon. (b) Notwithstanding any other provision of this Agreement to the contrary, in the event the County submits the Superseding Trust to the Internal Revenue Service for one or more private letter rulings or other administrative determinations in accordance with this Section, and the Internal Revenue Service does not provide a favorable private letter ruling or other administrative determination (or in the County's sole and absolute discretion, the internal Revenue Service conditions the favorable determination(s) on significant required trust modification(s) unacceptable to the County), then the assets of the Superseding Trust shall promptly be distributed by the Trustees to the VEBA Trust, to be held in a segregated account within the VEBA Trust, and the Superseding Trust and this Agreement shall terminate. (c) If the County receives a favorable Internal Revenue Service private letter ruling or other administrative determination, the Superseding Trust will be operated in accordance with its terms. 13. Action by County. Wherever in this Agreement the County is required or permitted to take action, such action shall be taken by a resolution adopted by the Oakland County Board of Commissioners, IN WITNESS WHEREOF, the County and the Trustees have caused this Agreement, which constitutes an irrevocable grantor trust agreement, to be executed effective as of the date first written above. 12 THE COUNTY OF OAKLAND, MICHIGAN By: Its: TRUSTEES OF THE 2013 SUPERSEDING OAKLAND COUNTY RETIREE MEDICAL BENEFITS TRUST AGREEMENT By: Oakland County Executive or Designee Oakland County Treasurer or Designee Chairperson of the Oakland County Board of Commissioners or Designee Oakland County Corporation Counsel or Designee Oakland County Human Resource Director or Designee By: By: By: By: Las si 0-oal(248 13 Resolution #13254 October 2, 2013 Moved by Hoffman Supported by Zack the resolutions (with fiscal notes attached) on the amended Consent Agenda be adopted (with accompanying reports being accepted), AYES: Dwyer, Gershenson, Gingell, Gosselin, Hatchett, Hoffman, Jackson, Long, Matis, McGillivray, Middleton, Runestad, Scott, Spisz, Taub, Weipert, Woodward, Zack, Bosnic, Crawford, (20) NAYS: None, (0) A sufficient majority having voted in favor, the resolutions (with fiscal notes attached) on the amended Consent Agenda be adopted (with accompanying reports being accepted). STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on October 2, 2013, with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 2 nd day of October 2013, Lisa Brown, Oakland County