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HomeMy WebLinkAboutResolutions - 2007.06.14 - 28449• MISCELLANEOUS RESOLUTION #07147 June 14, 2007 BY: Finance Committee, Mike Rogers, Chairperson IN RE: RESOLUTION APPROVING THE 2007 OAKLAND COUNTY INTERMEDIATE RETIREE MEDICAL BENEFITS TRUST AGREEMENT BETWEEN THE COUNTY AND THE TRUSTEES DESCRIBED THEREIN, ESTABLISHING THE 2007 OAKLAND COUNTY INTERMEDIATE RETIREE MEDICAL BENEFITS TRUST TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Chairperson, Ladies and Gentlemen: WHEREAS the County of Oakland, Michigan (the "County") provides post-retirement medical benefits to eligible retirees and/or their spouses and eligible dependents, as provided by the Oakland County Merit System and its policies and County- sponsored retiree medical benefit plans (the "Retiree Medical Benefits"); and WHEREAS, as permitted by Federal and State laws the County established the Oakland County VEBA (the "VEBA Trust") as documented 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 accumulating the funds needed to pay for Retiree Medical Benefits and receiving contributions for that purpose from the County and its employees; 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 fulfill its obligations to provide for funding a specified amount of the County's estimated unfunded accrued actuarial liabilities for Retiree Medical Benefits (the "Designated Liabilities") over a period ending April 1, 2027 (the "Funding Period"), the County desires to establish an 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 the Intermediate Trust (as defined below) assets, all in accordance with the Intermediate Trust Agreement attached hereto as Appendix A, as it may be amended in accordance with its terms; and WHEREAS, it is the intent of the County to create hereby an irrevocable grantor trust which is an integral part of the County (the "Intermediate Trust") to receive and hold in trust the Funding Proceeds and to distribute the Funding Proceeds and investment earnings thereon in specified amounts at scheduled intervals during the Funding Period to the VEBA Trust, to be used by the VEBA Trust to pay for the Retiree Medical Benefits. FINANCE COMMITTEE Motion carried unanimously on a roll call vote. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE COUNTY OF OAKLAND, MICHIGAN, AS FOLLOWS: 1. There is hereby created the 2007 Oakland County Intermediate Retiree Medical Benefits Trust (the "Intermediate Trust"). 2. The 2007 Oakland County Intermediate Retiree Medical Benefits Trust Agreement attached hereto as Appendix A (the "Intermediate Trust Agreement") is hereby approved. 3. The initial Trustees of the Intermediate Trust shall be the same persons who are the Commissioners of the Oakland County Employees Retirement System, as designated by the Oakland County Board of Commissioners. 4. All withdrawals from the Intermediate Trust's funds shall be solely for the payment of Retiree Medical Benefits and administrative expenses of the Intermediate Trust. 5. The persons who are eligible to have health care benefits paid by the Intermediate Trust are those current retirees and active employees of the County who are now eligible or who will become eligible for Retiree Medical Benefits. 6. The Intermediate Trust and the funds therein will be established on an actuarial basis. 7. 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 Intermediate 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 Intermediate Trust Agreement by such officials on behalf of this County shall be conclusive evidence of their determination in that respect. 8. 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 Intermediate Trust Agreement or this 2 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. 9. This resolution shall take immediate effect upon its adoption and the signature of the Oakland County Executive indicating his approval. A roll call vote on the foregoing resolution was then taken, and was as follows: YES: NO: ABSTAIN: The resolution was declared adopted. STATE OF MICHIGAN ) )ss. COUNTY OF OAKLAND ) CERTIFICATION The undersigned, being the Clerk of the County of Oakland, hereby certifies that the foregoing is a true and complete copy of a resolution duly adopted by the County of Oakland Board of Commissioners at its meeting held on the day of , 2007, at which meeting a quorum was present and remained throughout and that an original thereof is on file in the records of the County. I further certify that the meeting was conducted, and public notice thereof was given, pursuant to and in full compliance with Act No. 267, Public Acts of Michigan, 1976, as amended, and that minutes of such meeting were kept and will be or have been made available as required thereby. COUNTY CLERK DATED: , 2007 las.r6-ocvb5j 3 APPENDIX A 2007 OAKLAND COUNTY INTERMEDIATE RETIREE MEDICAL BENEFITS TRUST AGREEMENT This Trust Agreement is made, effective as of July 1, 2007, 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. 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, the County currently pays for the benefits available to eligible retirees and their eligible dependents under County-sponsored retiree medical benefit plans ("Retiree Medical Benefits") by making contributions to the VEBA Trust; 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"); WHEREAS, thereafter on June 14, 2007 the Oakland County Board of Commissioners approved a resolution authorizing the execution of this Agreement; 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 satisfying its contractual obligations to provide for Retiree Medical Benefits by issuing and selling the Certificates and the County will make Contract Payments to the Funding Trust pursuant to the Contract in order to satisfy its obligations to the Funding Trust; WHEREAS, the County desires to establish an 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 the Intermediate Trust assets, all in accordance with this Trust Agreement, as it may be amended in accordance with its terms (the "Agreement"); 1 WHEREAS, it is the intent of the County to create hereby an irrevocable Grantor Trust which is an integral part of the County (the "Intermediate Trust") to receive and hold in trust the Funding Proceeds and distribute the Funding Proceeds and investment earnings thereon in specified amounts at scheduled intervals during the Funding Period to the VEBA Trust, to be used by the VEBA Trust to pay for Retiree Medical Benefits; and WHEREAS, the trustee of the Funding Trust will have contributed the Funding Proceeds to the trustees of the Intermediate Trust as a contribution by the County to the Intermediate Trust. NOW, THEREFORE, the County and the Intermediate Trustees agree as follows: 1. Establishment and Name of the Intermediate Trust. (a) The County, as Grantor, hereby establishes, and the Intermediate Trustees hereby accept, the Intermediate Trust, which shall be known as the 2007 Oakland County Intermediate Retiree Medical Benefits Trust, for the purpose of assisting the County in fulfilling its contractual obligations to provide Retiree Medical Benefits by establishing an alternative funding mechanism to satisfy the Designated Liabilities and not to look to the County for contributions therefor, except as may be needed in any given year over and above distributions from the Intermediate Trust up to the Scheduled Amount for such year and the Intermediate Trustees shall receive, hold, invest, administer and make distributions from the Intermediate Trust only in accordance with the provisions of this Agreement. (b) The Intermediate 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 Intermediate 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 Intermediate Trustees, the appointment of successor Intermediate Trustees, the resignation of the Intermediate Trustees, and the duties of a successor Intermediate Trustee with respect to the Intermediate Trust. The term "Intermediate Trustees" means all persons or entities who occupy the office of Intermediate Trustee under this Agreement, while such persons or entities occupy such office, whether one or more persons or entities occupy the office of Intermediate Trustees at the same time or times, and includes any successor Intermediate Trustee or Trustees. (a) The Intermediate Trustees shall be the same persons who are the Commissioners of the Oakland County Retirement System (the "Retirement System"), as designated by the Oakland County Board of Commissioners. James H. Van Leuven, Jr., whose term expires December 31, 2007, Shane Murphy, whose term expires August 31, 2007, Patrick M. Dohany, whose term expires June 30, 2009, Bill Bullard, Jr., whose term expires December 31, 2008, Van E. Conway, whose term expires 2 6 December 31, 2009, Mike Rogers, whose term expires December 31, 2008, L. Brooks Patterson, whose term expires December 31, 2008, Jack Sato Smith, whose term expires December 31, 2010 and Janet Whitefield, whose term expires December 31, 2008, shall, upon each of them signing an acceptance of trust, be the initial Intermediate Trustees. (b) The Oakland County Board of Commissioners has the power to remove and appoint any Intermediate Trustee. (c) The term of office of each Intermediate Trustee shall be the same term of office as the Retirement Commission. (d) At the request of the County, upon removal or resignation of any Intermediate Trustee, such Intermediate Trustee shall file a final account with the County. (e) If, for any reason, all of the Intermediate Trustees under this Agreement die or cannot or will not act as Intermediate Trustees under this Agreement, and if no successor Intermediate Trustees are designated under this Section 2, or are designated but unwilling to act as Intermediate Trustees, then successor Intermediate Trustees shall be named by order of a court of competent jurisdiction. (f) The appointment of a successor Intermediate Trustee shall be effective when such Intermediate Trustee signs an acceptance of trust. Notice of the acceptance of trust shall be given to the County. (g) Each successor Intermediate Trustee shall have the identical powers, rights, duties and obligations of the initial Intermediate Trustees named in this Agreement. 3. Contributions to the Intermediate Trust. The County, as Grantor, shall cause the Funding Proceeds to be irrevocably transferred to the Intermediate Trustees on the date of delivery of the Certificates to the initial purchasers thereof. The Intermediate Trustees shall receive such contributions made to them on behalf of the County from the Funding Trust and shall hold such funds as a separate trust designated as the Intermediate 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. The Intermediate Trustees shall receive, hold, invest and administer as part of the Intermediate Trust, subject to the terms of this Agreement, all income earned by the corpus of the Intermediate Trust held by the Intermediate Trustees (and all losses in the value of the corpus of the Intermediate Trust shall be charged to the corpus of the Intermediate Trust), but no other contributions to the Intermediate Trust from any source shall be made to or accepted by the Intermediate Trustees. 4. Permitted Uses of Assets of the Intermediate Trust. (a) No part of the Intermediate 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 Schedule A to this Agreement, but subject to Section 5(d) 3 below, for the payment of Retiree Medical Benefits, and (ii) to pay the reasonable administrative expenses of the Intermediate Trust. (b) Notwithstanding anything to the contrary in the preceding sentence, however, in the event that any other health care benefits plan, program or arrangement becomes effective during the remainder of the Funding Period 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 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 of the Funding Trust (the "Funding Trustee'), with a copy to the Intermediate Trustees, 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 under and as defined in the Contract, then the Intermediate Trustees shall (x) transfer all or a portion (as the case may be) of the available Surplus Intermediate Trust Assets to the Funding Trustee as such optional prepayment (the "Optional Prepayment") for and on behalf of the County and (y) promptly give written notice thereof to the County. (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 Intermediate Trust assets, except to the extent that the assets of the Intermediate Trust have been distributed to the VEBA Trust for the payment of the Retiree Medical Benefits to which they are entitled. 5. Powers and Duties of Intermediate Trustees. (a) Immediately upon receipt by the Intermediate Trust from the Funding Trust of the proceeds of the sale of the Certificates net of the payment of the Costs of Issuance of the Certificates, the Intermediate Trustees shall issue a notice to the Funding Trustee that such funds have been received. (b) The Intermediate Trustees shall have the entire care and custody of all assets of the Intermediate Trust. The Intermediate Trustees shall have the power to do everything permitted under this Agreement which the Intermediate Trustees in good faith deem advisable, without necessity of any judicial authorization or approval. (c) If more than two Intermediate 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 Intermediate Trustees shall be empowered to make such decision; provided, however, if a majority of the Intermediate Trustees have delegated the power to make such decision to one or more Intermediate Trustees or one or more other persons, then such decision shall be made pursuant to such delegation. If two Intermediate Trustees are empowered to participate in the decision to exercise or not exercise any fiduciary power granted by this Agreement, then such Intermediate 4 8 Trustees shall make such decisions unanimously; provided, however, that if such Intermediate Trustees unanimously delegated the power to make such decisions to one Intermediate Trustee or one or more other persons, such decisions shall be made pursuant to such delegation. The powers of the Intermediate 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 Intermediate Trust under this Agreement until actual distribution of all trust assets. (d) The Intermediate Trustees shall make distributions from the Intermediate Trust's assets in any calendar year only as follows: i. All distributions to the VEBA Trust shall be made only pursuant to a written request by the VEBA Trustees, which request shall be made with sufficient notice to allow for a transfer of assets on April 1 of each year (or if that date is not a business day, then on the immediately preceding business day). Distributions may be made more frequently than once a year, but in no case shall the aggregate amount distributed to the VEBA Trust in any calendar year exceed the amount for that year set forth on Schedule A to this Agreement (the "Scheduled Amount"). The Scheduled Amounts are amounts that have been actuarially determined as the amounts that can be distributed annually from the Intermediate Trust so that the assets of the Intermediate Trust will last for the duration of the Funding Period. Distributions pursuant to this Section 5(d)(i) shall be made from the income of the Intermediate Trust and, to the extent that the income is insufficient, from the corpus of the Intermediate Trust. ii. Except as provided in Section 7(b), no transfer of funds from the Intermediate Trust to the VEBA Trust shall be made or accepted unless the Intermediate Trustees and the VEBA Trustees, respectively, have received from, or on behalf of, the County satisfactory evidence that the County has paid to the Funding Trust all Scheduled Payments due under Contract during the twelve months immediately prior to the noticed April 1 transfer date. (e) The Intermediate Trustees shall keep accurate, detailed records of all Intermediate Trust investments, receipts, distributions and other transactions, including such specific records as shall be agreed upon in writing among the County, the VEBA Trustees and the Intermediate Trustees. Within thirty (30) days following the close of each County fiscal year (October 1 — September 30), the Intermediate Trustees shall deliver to the County and the VEBA Trustees a written account of their administration of the Intermediate Trust during such fiscal year setting forth all investments, receipts, distributions and other transactions concerning the Intermediate Trust. (f) The Intermediate Trustees shall have no liability for any action pursuant to a direction, request or approval given by the County or the VEBA Trustees which is contemplated by, and in conformity with, the terms of this Agreement and given in writing by the County or the VEBA Trustees. 5 (g) If the Intermediate Trustees undertake or defend any litigation arising in connection with the Intermediate Trust, the County agrees to indemnify the Intermediate Trustees against their costs, expenses and liabilities (including, without limitation, reasonable attorneys' fees and expenses) relating thereto and to be primarily liable for such payments; provided, however, that the County shall not indemnify the Intermediate Trustees for any litigation arising from any Intermediate 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 Intermediate Trustees shall invest and reinvest the assets of the Intermediate 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 P.A. 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 Intermediate 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 Intermediate 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 Intermediate 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 Intermediate Trust. Subject to the foregoing, the Intermediate Trustees shall have the following rights, powers and duties with respect to the assets of the Intermediate 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 Intermediate 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 Intermediate 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 Intermediate Trustees; 6 10 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 Intermediate Trustees or the nominee or nominees or the Intermediate 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 Intermediate Trustee shall be a member or by an agent under a safekeeping contract; provided, however, that the books and records of the Intermediate Trustee shall at all times show that such investments are part of the Trust Fund; vii. 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 Intermediate 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 Intermediate Trustees determine, any claims in favor of or against the Intermediate 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 Intermediate Trustees to be necessary or proper for the administration of the Intermediate 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 Intermediate Trust from the Trust Fund; 7 11 xi. to transfer to an investment fiduciary (as defined in MCL §38.1132c(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; 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 Intermediate Trustees or any disposition whatsoever of the Trust Fund and to perform any and all acts which in the judgment of the Intermediate Trustees are necessary or desirable for the proper and advantageous administration and distribution of the Trust Fund. 6. Compensation and Expenses. (a) The Intermediate Trustees shall not be compensated for their services as Intermediate Trustees hereunder. The Intermediate 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 Intermediate Trust, including fees and expenses of counsel or any other agents hired by the Intermediate Trustees, and the Intermediate Trustees shall not be liable therefore individually. The Intermediate 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 Intermediate Trustee shall be entitled to any fees or expenses claimed to be owing because such Intermediate Trustee is resigning, being removed, or is no longer serving as an Intermediate Trustee for any other reason; provided, however, that any Intermediate 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. (c) To the extent the Trust Fund proves insufficient or the Intermediate Trustees determine that the payment of administrative expenses for a given period would inhibit the distribution of the Scheduled Amount to the VEBA Trust, the reasonable costs, expenses, charges and liabilities incurred or paid in connection with administering the Intermediate Trust shall be paid by the County. 7. Amendment or Termination of the Intermediate Trust. This Agreement and the Intermediate Trust are irrevocable. (a) The County, in its sole and absolute discretion, may amend this Agreement upon written notice to the Intermediate Trustees and the VEBA Trustees; provided, however, that it may not amend the Intermediate Trust to make the distribution of assets under Section 5(d) inconsistent with Schedule A, nor may it eliminate the notice requirement set forth in Section 5(d)(ii). (b) The Intermediate Trust, though irrevocable, may be terminated by the County, but only in the following limited circumstances: 8 12 I. The circumstances set forth in Section 4(b) that reference the supplanting and superseding, by another health care benefit program that is not sponsored by the County, of the County's obligations to pay for all or any costs of providing Retiree Medical Benefits have come to pass, and the remaining assets have been deemed Surplus Intermediate Assets and used to make an Optional Prepayment for and on behalf of the County. Under such circumstances, if, after all obligations of the County to the Funding Trust have been satisfied, the Trust Fund has not been fully depleted, the County may terminate the Intermediate Trust, and any part of the Trust Fund still remaining will then revert to the County. ii. At the end of the Funding Period and after all the distributions have been made pursuant to Schedule A all the remaining Trust Fund assets shall be distributed to the VEBA Trust. The Intermediate Trust, being without any assets, the County may terminate the Intermediate Trust. iii. Should, before the end of the Funding Period, all the assets of the Intermediate Trust, having been distributed in accordance with Schedule A, and the Intermediate Trust no longer has any assets, the County may then terminate the Intermediate Trust. 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 regard to the Intermediate Trust shall not give any retiree (or his or her eligible beneficiaries), entitled 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 Intermediate Trustees relating to any authority granted to them under this Agreement, and such third parties shall not be obligated to inquire whether such Intermediate 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 Intermediate Trustee; provided, however, that this Section 10 shall not apply to any person who claims to be, but is not, an Intermediate 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 9 1 if to the County, at County of Oakland, Michigan if to the Intermediate Trust or the Intermediate Trustees, at if to the VEBA Trust or the VEBA 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. Agreement by VEBA Trustees. The VEBA Trustees agree: (a) for moneys to pay the costs of Retiree Medical Benefits and subject to Section 5(d) above, to look to the Intermediate Trust for distributions from the Intermediate Trust up to the applicable annual maximum Scheduled Amount in any calendar year during the Funding Period, as set forth in Schedule A hereto, (b) not to look to the County for contributions therefor, except as may be needed in any given year over and above the distributions actually received from the Intermediate Trust with respect to the Scheduled Amount for such year, and (c) not to look to the Funding Trust for contributions over and above the Funding Proceeds. 13. Tax Status of the Intermediate 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 Intermediate 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 Intermediate Trust will not be subject to U.S. federal income tax, and/or ii. the income of the Intermediate Trust from the transactions contemplated by this Agreement will constitute gross income described in section 115 of the Code, such that the Intermediate 10 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 the Intermediate Trust is treated as an integral part of the County such that the Intermediate 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 Intermediate Trust to the Internal Revenue Service for one or more private letter rulings or other administrative determinations that: (A) the Intermediate 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 Intermediate Trust will not be subject to U.S. federal income tax, (B) the income of the Intermediate Trust from the transactions contemplated by this Agreement will constitute gross income described in section 115 of the Code, such that the Intermediate 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 Intermediate Trust is treated as an integral part of the County such that the Intermediate 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 includes any interest or penalties thereon. (b) Notwithstanding any other provision of this Agreement to the contrary, in the event the County submits the Intermediate 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 Intermediate 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 Intermediate Trust and this Agreement shall terminate. (c) If the County receives a favorable Internal Revenue Service private letter ruling or other administrative determination, the Intermediate Trust will be operated in accordance with its terms. 14. 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. [The next page is a signature page] Las.r2-ocvb5i 11 15 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. THE COUNTY OF OAKLAND, MICHIGAN By: Its: TRUSTEES OF THE 2007 OAKLAND COUNTY INTERMEDIATE RETIREE MEDICAL BENEFITS TRUST By: L. Brooks Patterson By: Patrick M. Dohany By: Janet Whitefield By: Jack Sato Smith By: James H. VanLeuven, Jr. By: Shane F. Murphy By: Van E. Conway By: Bill Bullard, Jr. By: Mike Rogers 12 We acknowledge reading the above Agreement, and we agree to the provisions in it on the part of the VEBA Trust and the VEBA Trustees (as such terms are defined above), effective as of the date first written above. TRUSTEES OF THE OAKLAND COUNTY VEBA By: L. Brooks Patterson By: Patrick M. Dohany By: Janet Whitefield By: Jack Sato Smith By: James H. VanLeuven, Jr. By: Shane F. Murphy By: Van E. Conway By: Bill Bullard, Jr. By: Mike Rogers Las.r2-ocvb5i 13 17 SCHEDULE A ( TO BE SUPPLIED LATER) 14 'son, County Clerk 6 Resolution #07147 June 14, 2007 Moved by Rogers supported by Zack the resolution be adopted. AYES: Douglas, Gershenson, Gingell, Gosselin, Gregory, Greimel, Hatchett, Jacobsen, Kowall, Long, Middleton, Nash, Potter, Potts, Rogers, Scott, Spector, Suarez, Woodward, Zack, Bullard, Burns, Coulter, Crawford. (24) NAYS: None. (0) A sufficient majority having voted in favor, the resolution was adopted. I EERY APPROVE ,DIE FOREGOING RESOLUTION STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Ruth Johnson, 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 June 14, 2007, 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 14th day of June, 2007.