[Amended 11-26-2018 by Ord. No. 57- 2018; 7-22-2019 by Ord. No. 23-2019]
A. Employees shall be entitled to the leave and holiday benefits and to life insurance, health insurance, pension and workers' compensation, as per current collective bargaining agreements and applicable law. There are three individual pension boards: the Officers and Employees Retirement System, the Police Pension Fund and the Firemen's Pension Fund, who administer the funds and determine benefits. The Administrative Services Department shall make accessible a pension plan summary to all employees detailing these benefits.
B. The elected mayor and elected auditor, and those who may replace them if those positions become vacant during their term of service, shall be eligible for the same City provided benefits listed in § 70-401 A herein (for Pension benefit also see Bill 79-1987).
C. Part-time employees, temporary employees and seasonal employees shall only be entitled to workers' compensation.
D. Authorizing the creation of an OPEB (other post-employment benefits) trust agreement to provide for certain post- employment benefits for employees hired prior to January 1, 2011, as set out below.
OTHER POST EMPLOYMENT BENEFITS TRUST AGREEMENT
This OTHER POST EMPLOYMENT BENEFITS TRUST AGREEMENT (hereinafter the "Trust Agreement") is entered into this 26th day of November, 2018 by and between the City of Reading, (the "City") and the City of Reading OPEB Board of Trustees (hereinafter, the "OPEB Board").
RECITALS
WHEREAS, the City of Reading is a Third Class City operating under a Home Rule Charter pursuant to the laws of the Commonwealth of Pennsylvania; and
WHEREAS, the City of Reading has employees and former employees who have since retired; and
WHEREAS, the City is contractually obligated to provide certain post-employment benefits other than pensions (hereinafter "OPEB") to certain employees (hereinafter "Covered Individuals" or "Plan Participants") hired prior to January 1, 2011 who are eligible participants, eligible employees, eligible retirees, their spouses, dependents and beneficiaries; and
WHEREAS, the City, has established and maintained a plan in order to provide such post-employment benefits; and
WHEREAS, the City funds the plan in accordance with collective bargaining agreements that have been entered into between the City and unions representing uniformed and non-uniformed employees; and
WHEREAS, the City also funds the plan with respect to some of the City's non-unionized employees; and
WHEREAS, pursuant to Government Accounting Standards Board Statements No. 74 & 75 ("GASB 74" and "GASB 75," respectively), the City must report the City's liability for the City's OPEB on the City's financial statements to the extent that such liability is not fully funded; and
WHEREAS, pursuant to GASB 74 and GASB 75, the City's liability for the City's OPEB will be considered funded if appropriate amounts are contributed and irrevocably set aside and held in a trust established, maintained, and administered for the purpose of satisfying such liability; and
WHEREAS, the City has determined that it should enter into this Trust Agreement in order to hold contributions from the City for the irrevocable funding of the City's OPEB; and
WHEREAS, the City is exempt from federal income tax pursuant to Section 115 of the Internal Revenue Code of 1986, as amended (the "Code") and is exempt from taxation by the Commonwealth of Pennsylvania; and
WHEREAS, the City intends that the income accruing on contributions made by the City to the Trust be exempt from both federal income tax and Pennsylvania taxes pursuant to Section 115 of the Code and Pennsylvania law, respectively; and
WHEREAS, the City intends that contributions to the Trust on behalf of Plan Participants be irrevocably made and excludable from the income of such individuals to the extent permitted under the Code and permitted under the laws of Pennsylvania; and
WHEREAS, City intends that benefit payments from the Trust on behalf of Plan Participants be excludable from the income of such individuals to the extent permitted under the Code and permitted under the laws of Pennsylvania;
NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows:
Article I
Definitions
Definitions
1.1 Definitions. For the purposes of this Trust Agreement, the following terms shall have the meanings set forth below, unless otherwise expressly provided.
(a) "OPEB Board" or "OPEB Board of Trustees" means the body established by Article 10 of this Trust Agreement, the membership of which, as so constituted from time to time, comprises the OPEB Board of Trustees.
(b) "Code" has the meaning provided in the Recitals.
(c) "City" has the meaning provided in the Preamble.
(d) "City's OPEB" has the meaning provided in the Recitals.
(e) "Covered Individual" or "Covered Individuals" has the meaning provided in the Recitals.
(f) "Dependent" means an individual who is considered a dependent eligible for benefits under the terms of the Plan as approved by resolution or policy of the City, or as required by law.
(g) "Effective Date" means the date on which the Trust is funded.
(h) "Eligible" means, with respect to any individual, meeting the requirements for eligibility pursuant to resolution or policy of the City and the terms of the Plan.
(i) "Employee" means an individual who is employed full time by the City and who is in a classification of employees who are eligible or who may become eligible to be Retirees.
(j) "GASB "74" and "GASB "75" have the meaning provided in the Recitals.
(k) "Investment Manager" means the individual or entity appointed by the Trustees who is empowered to manage all or a portion of the investments of the Trust Fund. This Manager has no control or authority over the benefits provided.
(l) "OPEB" means "other postemployment benefits".
(m) "Participant" means an Eligible Employee, Eligible Retiree, Eligible Spouse or other Eligible Dependent for whom coverage is or will be provided under the terms of the Plan.
(n) "Plan" means the methods by which the City of Reading has historically paid such post-employment health benefits which might include any of the following: sickness, accident, medical, disability, or similar welfare benefits, through insurance or otherwise, in existence as of the Effective Date or later adopted by the City for the benefit of its Eligible Employees, Eligible Retirees, and their Eligible Spouses and Eligible Dependents. The right to such benefits derives either from a collective bargaining agreement (in the case of union employees, spouses, or dependents) or from a City issued policy statement as regards certain non-union management retirees.
(o) "Political Subdivision" means a unit of government within the Commonwealth of Pennsylvania, including a county, municipality, city, town, township, village, local public authority, school district, special district, council of governments, or any other regional or intrastate governmental entity or instrumentality of a local government exclusive of institutions of higher learning and hospitals.
(p) "Retiree" means an individual who is a retired Employee of the City who is eligible for benefits under the terms of the Plan.
(q) "Spouse" means the lawful spouse of an Eligible Employee or Eligible Retiree, as determined under the laws of the state in which the Eligible Employee or Eligible Retiree has his or her primary place of residence and the terms of the Plan. Where required by law, Spouse shall include a civil union partner.
(r) "State" means the Commonwealth of Pennsylvania.
(s) "Trust" or "Trust Fund" means those assets, described in Section 2.1 of this Trust Agreement, held by the OPEB Board at any time pursuant to this Trust Agreement.
(t) "Trust Agreement" has the meaning provided in the Preamble.
(u) "Trustee" or "Trustees" has the meaning provided in the Preamble.
Article II
Establishment of the Trust
Establishment of the Trust
2.1 Trust Established. The Trust is hereby established as of the Effective Date, separate and apart from the general assets of the City for the exclusive benefit of Participants. The Trust Fund shall consist of the investments made pursuant to this Trust Agreement, any cash received by the OPEB Board, any other assets held pursuant to the terms of this Trust Agreement, and any increments, proceeds, earnings, and income to the above assets.
2.2 Purpose. This Trust is intended to be a separate trust to accommodate funding of the City's OPEB. Accordingly, as provided in this Trust Agreement, the assets of the Trust are dedicated to providing benefits to Participants in accordance with the Plan and are legally protected from the creditors of the City, the City, and the OPEB Board.
2.3 Trust's Compliance. The Trust is intended to comply with and be a tax-exempt governmental trust under Section 115 of the Code. This Trust Agreement shall be interpreted in a manner consistent with that intent and with the intention of the City that the Trust hereunder satisfies those requirements of GASB 74 (if applicable) and GASB 75.
2.4 Exclusive Benefit. Except as provided under applicable law, no part of the corpus or income of the Trust Fund may be used for, or diverted to, any purpose other than for the exclusive benefit of Participants under any Plan prior to the satisfaction of all liabilities of the Plan with respect to such Participants and payment of expenses of administering the Trust.
2.5 Spendthrift Provision. All assets, income and distributions of the Trust shall be protected against the claims of creditors of the City, the City, and Plan Participants, and shall not be subject to execution, attachment, garnishment, the operation of bankruptcy, the insolvency laws or other process whatsoever, nor shall any assignment thereof be enforceable in any court.
2.6 Named Fiduciary. The Trustees of the OPEB Board shall be the fiduciaries for the Trust Fund and shall have the power to delegate responsibilities under this Trust Agreement. Such delegations may be to officers and employees of the City, the City, or to other individuals or organizations, including an actuary or a third-party administrator or record keeper, all of whom shall hold those delegations at the pleasure of the OPEB Board. Any employee of the City who already receives full-time pay, and who is delegated such fiduciary responsibilities, shall serve without additional compensation except for reimbursement for expenses properly and actually incurred. Whenever the OPEB Board delegates a fiduciary duty in writing, the Trustees of the OPEB Board shall be free from liability for breach of such duty to the fullest extent permitted by law.
2.7 Segregation of Assets. Assets under the Trust may be segregated only for investment purposes. No individual account for any Participant will be maintained at any time under the Trust, and no Participant will have any right or title with respect to any specific assets of the Trust. Accordingly, no Participant will have a preferred claim, lien on, security interest in, or any beneficial interest in, any particular assets of the Trust. Participants will be entitled to receive payments of assets of the Trust (or have such assets paid on behalf of such Participants) only when, as, and if determined by the OPEB Board in accordance with this Trust Agreement.
2.8 Annual Audit. The City of Reading engages an outside accounting firm to conduct an annual audit and to produce an Independent Auditor's Report. Each year, the OPEB Board will engage the services of the same accounting firm that the City of Reading uses for the purpose of conducting an annual audit of the Trust. The outside accounting firm will not be paid out of the Trust. Rather, the City of Reading shall pay for this annual audit. The results of such audit shall be provided to all of the Trustees of the OPEB Board.
2.9 Trust Fund Subject to Investment Risk. The Trust Fund is not insured by the Federal Deposit Insurance Corporation or any other federal agency. The value of the Trust Fund is subject to investment risks, including possible loss of principal.
Article III
Construction
Construction
3.1 Situs of Trust. The Trust will be administered in the Commonwealth of Pennsylvania, and its validity, construction, and all rights hereunder shall be governed by the laws of the Commonwealth of Pennsylvania. All contributions to the Trust Fund shall be deemed to occur in Pennsylvania.
3.2 Gender, Number. Pronouns and other similar words used herein in the masculine gender shall be read as the feminine gender where appropriate, and the singular form of words shall be read as the plural where appropriate.
3.3 Benefits Governed by Terms of Plan. The Plan shall govern eligibility for benefits and the terms and conditions of payment for benefits out of assets held in the Trust.
Article IV
Contributions
Contributions
4.1 Contributions by the City. The City may, but is not required to, contribute to this Trust such funds that are necessary to fund the trust sufficiently. Should the City decide to contribute to this Trust, then the City shall have sole discretion to determine the amount (or amounts) that it decides to contribute.
4.2 Contributions Are Irrevocable; Exception for Mistake of Fact. Each contribution to the Trust by the City shall be an irrevocable and indefeasible transfer to the Trust. Except as provided in subsection (a) hereof, neither the City, the OPEB Board of Trustees, Plan Participant, Covered Individual, nor any Trustee shall have any right, title, interest, claim, or demand whatsoever in or to the funds held by the Trust, other than the right to a proper application thereof and accounting therefore by the OPEB Board of Trustees as provided herein, nor shall any funds revert to the City, the OPEB Board of Trustees, a Plan Participant, a Covered Individual, or any Trustee.
(a) Return of Contributions. Notwithstanding any other provisions of this Trust Agreement, if and to the extent permitted by the Code and other applicable laws and regulations thereunder and by GASB 74, if applicable, and GASB 75, upon a Political Subdivision's request with the approval of the City, a contribution that is deposited into the Trust by a mistake in fact shall be returned by the OPEB Board to the Political Subdivision that contributed it within a reasonable period of time.
4.3 Discontinuance of Contributions. The discontinuance of contributions to the Trust shall not automatically terminate the Trust. The Trustees shall continue to administer the Trust in accordance with this Trust Agreement until its obligations are discharged and satisfied.
Article V
Benefits
Benefits
5.1 Payment of Benefits. Benefits shall be paid to Participants pursuant to the terms of the Plan and any applicable collective bargaining agreement. The OPEB Board shall make distributions from the Trust as directed, in writing, by the City for the purpose of reimbursing the City or its agent for the payment of benefits under the Plan. Pursuant to the City's direction, the OPEB Board may directly pay such amounts to a vendor or service provider designated by the City, or may reimburse the City for insurance premiums or other payments expended or to be expended for permissible benefits under the Plan. OPEB Board shall have no duty to determine the rights or benefits of any person having or claiming OPEB benefits or an interest under the Plan or this Trust Agreement.
Article VI
Duties of the Trustees
Duties of the Trustees
6.1 Management of Trust Fund. The OPEB Board shall manage the assets of the Trust Fund for investment purposes, as would a prudent person under like circumstances who is familiar with such matters. The OPEB Board shall have no authority over the payment of benefits or bills from the Trust assets absent the approval of the City as stated above. The OPEB Board shall have no duty to determine the rights or benefits of any person having or claiming an interest under the Plan or this Trust Agreement.
6.2 Receipt of Contributions. The OPEB Board agrees to accept contributions to the Trust that are paid to the OPEB Board by the City in accordance with the terms of this Trust Agreement. The OPEB Board shall receive all contributions in cash or in such other form as permitted under the laws of the Commonwealth of Pennsylvania and acceptable to the OPEB Board. The OPEB Board shall be accountable to the City for the funds remitted to it by the City and shall have a duty to see that such contributions comply with the provisions of the Plan and with any statute, regulation or rule applicable to contribution.
6.3 Disbursements. Subject to Sections 2.1 and 2.4 of this Trust Agreement, the OPEB Board shall from time to time make payments or disbursements out of the Trust Fund to persons or other entities in such amounts as are necessary for the payment of OPEB pursuant to and in accordance with the terms of the Plan and for the payment of reasonable and proper expenses of the Plan and this Trust. In addition, the OPEB Board shall from time to time make payments or disbursements out of the Trust Fund to such persons or other entities, including the City, for the reimbursement of the Plan's OPEB obligations or expenses previously satisfied by such persons or other entities. The OPEB Board shall pay all fees and expenses reasonably incurred by them in the administration of OPEB under the Plan and the Trust Fund unless the City directly pays such fees and expenses. Nothing contained in this Trust Agreement or the Plan shall constitute a guarantee that Trust assets will be sufficient to pay any OPEB to any particular Participant. The OPEB Board shall have no duty to determine the rights or benefits of any person having or claiming OPEB benefits or an interest under the Plan or this Trust Agreement.
(b) Expenses. The reasonable and proper expenses of the OPEB of the Plan and the Trust shall include, but not be limited to:
(1) The fees of any third-party record keeper and actuary's fee as agreed upon by the OPEB Board from time to time;
(2) Expenses incurred by the OPEB Board in the operation and administration of the OPEB under the Plan and this Trust Fund;
(3) The fees and other charges against the Trust Fund by any Investment Manager or other person or firm that provides services for the OPEB provided under the Plan or the Trust Fund, including attorney's fees; and
(4) Any income or other taxes properly levied or assessed against the Trust Fund.
6.4 Other Duties.
(c) Records. The OPEB Board shall keep such accounts and records and make such reports and disclosures as shall be required by law and by the Governmental Accounting Standards Board under this Trust Agreement and under the Plan. The records of the Trust pertaining to the City shall be open to inspection by the City at all reasonable times and will be audited on an annual basis by such persons as the City may specify.
(d) Statements. The OPEB Board shall furnish the City with an annual statement of account showing the condition of the Trust Fund and all investments, receipts, disbursements and other transactions effected by the OPEB Board.
(e) Compliance. The OPEB Board shall take such action (or refrain from taking such action, as the case may be) as shall be necessary to comply with the Trust, other agreements between the OPEB Board and the City or applicable Commonwealth of Pennsylvania and federal laws.
(f) Authority to Delegate Duties. The OPEB Board is authorized to delegate any of the duties assigned to them in this Trust Agreement, other than those duties relating to the investment or management of the assets of the Trust Fund, to any individual or organization it deems qualified to perform such duties. The OPEB Board is only authorized to delegate investment and asset management duties to an Investment Manager pursuant to the provisions of Article VII. When delegating duties, the OPEB Board shall document the delegation in either (i) a written amendment to this Trust, (ii) OPEB Board minutes or resolutions, or (iii) a separate written agreement with the delegate.
(g) Liability Limitations. The OPEB Board and its Trustees shall not be liable for the acts or omissions of parties to whom they have specifically delegated duties, except with respect to any acts or omissions in which the Trustee participates knowingly or which the Trustee knowingly undertakes to conceal, and which the Trustee knows constitutes a breach of fiduciary responsibility. Each Trustee shall be held harmless, to the extent provided for in the laws of the Commonwealth of Pennsylvania, by the City and Participants, together with their heirs, successors and assignees, from any and all liability hereunder for acts or omissions performed in good faith and with prudence. Except as otherwise provided by contract or applicable law, no person acting in a fiduciary capacity with respect to the Trust shall be liable for any action taken or not taken with respect to the Trust except for actions that constitute breach of fiduciary duty or willful misconduct.
Article VII
Investment of Trust Assets
Investment of Trust Assets
7.1 General Investment Power. The assets of the Trust shall be invested by the OPEB Board in accordance with Pennsylvania law and the investment policy developed by the City or, to the extent so delegated, the OPEB Board. Except to the extent such duties are specifically delegated to one or more Investment Managers under this Article, the OPEB Board shall manage and control assets of the Trust Fund, including selecting and retaining or disposing of any investment of such assets.
7.2 Investment and Funding Policies. The City or, if the City so delegates such authority, the OPEB Board, shall establish funding policies for contributions under the Trust as may be appropriate from time to time, consistent with the requirements of applicable law. The OPEB Board shall also establish and comply with investment policies for Trust investments. The OPEB Board shall coordinate its investment and funding policies with the Trust's financial needs.
7.3 Full Investment Powers. The OPEB Board shall have full discretion and authority with regard to the investment of the Trust Fund, except to the extent they have delegated such discretion to a properly appointed Investment Manager with respect to Trust assets under such Investment Manager's control or direction. The OPEB Board is authorized and empowered with all investment powers conferred on trustees by the laws of the Commonwealth of Pennsylvania.
7.4 Investment Managers. The provisions in this subsection shall control the appointment and use of Investment Managers, as follows:
(h) Appointment. The OPEB Board may appoint one or more Investment Managers to manage the assets of all or any part of the Trust Fund. Each such Investment Manager shall be duly qualified to act in such capacity under applicable Federal and Pennsylvania law. The OPEB Board shall obtain from any Investment Manager a written statement:
(1) acknowledging that it is a fiduciary with respect to the Trust assets under its management; and
(2) certifying that it is qualified under applicable Federal and Pennsylvania law to be appointed as an Investment Manager under this Trust Agreement.
The OPEB Board shall enter into a written contract or agreement with each such Investment Manager in connection with its appointment as such, and such contract shall be subject to such terms and conditions and shall grant to the Investment Manager such authority and responsibilities as the OPEB Board deems appropriate under the circumstances. The OPEB Board shall not be responsible for any investment decision made by an Investment Manager unless the OPEB Board actually makes that decision.
(i) OPEB Board Duties. Any investment directions or notifications from an Investment Manager to the OPEB Board may be made orally or in writing, or in such manner as shall be agreed upon between the Investment Manager and the OPEB Board, provided, in the event the Investment Manager gives the OPEB Board oral recommendations, directions or notifications, the Investment Manager shall confirm such directions or notifications in writing immediately thereafter.
(j) Violation of Trustees' Fiduciary Duties. Notwithstanding the foregoing, if, in the OPEB Board's sole discretion, the execution of any instruction with respect to, or the continued holding of any assets in, an investment managed by an Investment Manager would be in violation of the OPEB Board's fiduciary responsibilities, the OPEB Board may refuse to execute such instruction or may dispose of such asset or assets, respectively; provided, the OPEB Board shall not be responsible for the acts or omissions of such Investment Manager. In any such case, the OPEB Board shall promptly notify the Investment Manager of such situation.
(k) Failure to Direct. In the event that an appointed Investment Manager shall fail to invest all or any portion of the assets under its management, the OPEB Board shall be responsible for the investment of such assets. If an appointed Investment Manager shall fail to give the OPEB Board instructions or directions relating to the voting of shares held pursuant to an investment directed by the Investment Manager or the execution and delivery of proxies, or relating to the purchase and sale of fractional shares or the exercise of any other ownership right, the OPEB Board shall take such action as they deem to be in the best interest of the Trust, provided such action is consistent with the then existing investment policies established by the OPEB Board.
(l) Termination of Appointment. Upon termination of the appointment of an Investment Manager, the OPEB Board may appoint a successor Investment Manager with respect to the investments formerly under the management of the terminated Investment Manager or may merge or combine such investments with other investments or Trust assets within the guidelines of the investment policies established by the OPEB Board.
(m) Asset Transfer. If the OPEB Board directs an Investment Manager to hold a portion of the assets of the Trust as well as make the investment decisions for such funds, the OPEB Board shall enter into such contractual or other arrangements as are necessary for the transfer and custody of such assets of the Trust Fund. If the OPEB Board terminates such Investment Manager, it shall take such action to recapture and take directly into the Trust Fund any assets so transferred.
(n) Reports and Valuations. An Investment Manager who has custody of any portion of the assets of the Trust shall keep accurate and detailed books and records on all investments, receipts, disbursements and other transactions for such account and shall determine the fair market value of the assets of such account as of each reporting date determined by the OPEB Board, and, further, shall file a copy of such books and records and valuations with the OPEB Board on or before such deadlines as the OPEB Board shall reasonably set. The OPEB Board also shall have the right to request that any person who is responsible for making the investment decisions for an investment account determine the fair market value of any asset, or all of the assets, held for that account and file a copy of such valuation with the OPEB Board before such deadlines as the OPEB Board reasonably shall set, and each such person shall comply with any such request.
7.5 Assets. No assets from the Trust shall be withdrawn for the first five (5) years of the existence of the Trust. Thereafter, no more than five percent (5%) of the total assets of the Trust as shall be used as a contribution from the Trust against the annual OPEB expenses of the City in the following year.
Article VIII
Powers of the Trustees
Powers of the Trustees
8.1 General Authority. Except to the extent such powers are specifically delegated to an Investment Manager under Article VII of this Trust Agreement, the OPEB Board shall receive, hold, manage, convert, sell, exchange, invest, reinvest, disburse and otherwise deal with the assets of the Trust, including contributions to the Trust and the income and profits therefrom, without distinction between principal and income and in the manner and for the uses and purposes set forth in this Trust Agreement.
8.2 Specific Powers. In the management of the Trust, the OPEB Board or their delegates, as the case may be, shall have the following powers in addition to the powers customarily vested in trustees by the laws of the Commonwealth of Pennsylvania but in no way in derogation thereof, and such powers shall be exercised in accordance with proper directions and the investment policy established by the OPEB Board and without order of, and report to, any court:
(o) Sales. To sell, exchange, convey, transfer, or otherwise dispose of any property held in the Trust, by private contract or at public auction. No person dealing with the OPEB Board shall be bound to see the application of the purchase money or other property delivered to the OPEB Board or to inquire into the validity, expediency, or propriety of any such sale or other disposition;
(p) Purchase of Property. The OPEB Board and the Investment Manager shall not purchase or acquire any ownership interest in any real property, nor shall the OPEB Board sell, mortgage or lease real property related to the operation of the Trust. Likewise, the OPEB Board and Investment Manager shall not purchase or acquire any interest in any investment whose primary purpose is the ownership of real property;
(q) Retention of Cash. To hold cash without interest in such amounts as may be in their opinion reasonable for the proper operation of the Trust;
(r) Exercise of Owner's Rights. To give general or special proxies or powers of attorney with or without power of substitution with respect to any corporate stock or other security; to exercise any conversion privileges, subscription rights or other options, and to make any payments incidental thereto; to oppose, consent to, or otherwise participate in reorganizations or other changes affecting any stock, bond, note or other property, and to delegate discretionary powers and pay any assessments or charges in connection therewith, and generally to exercise any of the powers of an owner, including voting rights, with respect to any stock, bond, note or other property held as part of the Trust;
(s) Registration of Investment. To cause any stock, bond, other security or other property held as part of the Trust to be registered in its own name or in the name of one or more of its nominees; provided, the books and records of the OPEB Board shall at all times show that all such investments are part of the Trust;
(t) Disbursement. To make disbursements for the payment of the City's OPEB under the Plan and for the payment of reasonable and proper expenses of this Trust or of the Plan as related to the City's OPEB;
(u) Retention of Disputed Funds. To retain any funds or property subject to any dispute without liability for the payment of interest; and to decline to make payment or delivery of the funds or property until final adjudication is made by a court of competent jurisdiction;
(v) Execution of Instruments. To make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments, which may be necessary or appropriate to carry out the powers herein granted;
(w) Settlement of Claims and Debts. To settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust, to commence or defend legal or administrative proceedings and to represent the Trust in all legal and administrative proceedings;
(x) Employment of Agents, Advisors and Counsel. To employ and to act or refrain from acting on the advice or opinion of suitable agents, actuaries, accountants, investment advisers, brokers and counsel, and to pay their reasonable expenses and compensation;
(y) Power to do any Necessary Act. To do all acts which it may deem necessary or proper and to exercise any and all powers of the OPEB Board under the Plan and this Trust Agreement upon such terms and conditions as it may deem in the best interests of the Trust;
(z) Loans. To borrow money only for such periods of time and upon such terms and conditions as the OPEB Board deems necessary and proper to cover any temporary, short-term overdrafts, and to secure such loans by mortgaging, pledging or conveying any property of the Trust; and
(aa) Appointment of Custodian. To appoint a custodian to safeguard the assets of the Trust. The City hereby authorizes and directs the OPEB Board to enter into such agreements with any such custodian as may be necessary to establish an account with the custodian. For administrative purposes, contributions deposited to the appointed custodian shall be deemed as contributions deposited with the OPEB Board on behalf of the Trust.
8.3 Standard of Care. The OPEB Board Trustees shall discharge their duties under this Trust Agreement with the care and skill required with respect to such duties. The Trustees shall not be responsible for the title, validity, or genuineness of any property or evidence of title thereto received by them or delivered by them pursuant to this Trust Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification, or other instrument believed by them to be genuine and delivered by the proper party or parties.
Article IX
Administration
Administration
9.1 Bonds and Reports to Court. Each Trustee shall be bonded to the extent required by law, except that, to the extent the requirement of any such bond may be waived, such waiver shall be deemed to have been exercised, and no such bond shall be required. Neither the OPEB Board nor its Trustees shall be required to make any inventory or appraisal or report to any court or to secure any order of any court for the exercise of any power herein contained.
9.2 Accounting. The OPEB Board shall maintain accurate records and detailed accounts of all investments, receipts, disbursements, earnings, and other transactions related to the Trust, and those records shall be available at all reasonable times to the City and its independent auditor. The OPEB Board shall provide such reports to the City at mutually agreeable times.
9.3 Right to Audit. The City may conduct an independent audit of the Trust Fund at least annually. The City may engage an independent auditor of its own choosing to assist in or conduct the audit. The City shall have the right at all reasonable times during the terms of the Trust and for three (3) years after the termination of the Trust to examine documents of the OPEB Board relating to the Trust and the OPEB Board's performance hereunder.
9.4 Action of the OPEB Board. A majority of the Trustees of the OPEB Board shall constitute a quorum and acts of a majority of the Trustees present at any meeting at which a quorum is present or acts approved by all Trustees in writing shall be deemed to be valid acts. Notwithstanding the above, the duly elected chairperson of the OPEB Board as designated by the Trustees to perform ministerial acts, may execute any documents relating to the Trust, including contracts relating to the investment or reinvestment of the assets of the Trust, documents necessary for the exercise of any ownership rights thereunder, service agreements or other related documents, and may perform other such ministerial acts. The OPEB Board shall keep minutes of its proceedings and complete and accurate records which may be examined at any reasonable time on behalf of the City by any officer or employee designated in writing by the City.
Article X
Selection and Term of Board of Trustees
Selection and Term of Board of Trustees
10.1 Membership. The OPEB Board shall be made up of the following Trustees: (a) a currently employed City of Reading employee who must be a Certified Public Accountant, unless there are not currently employed CP As. This person shall be appointed to the OPEB Board by the Mayor; (b) the Managing Director the City of Reading; (c) the Director of Administrative Services; (d) a member of City Council who shall be appointed by a majority vote of City Council; and (e) a retired employee who shall be appointed by the Mayor. For purposes of this paragraph, in the event that the position of Managing Director or Director of Administrative Services is vacant, then the Mayor may appoint any city employee as an interim Trustee of the OPEB Board until the vacancy is filled. The OPEB Board shall, by majority vote, designate a Chair. The OPEB Board shall meet at least twice a year with dates to be determined by the OPEB Board or shall meet as often as reasonably necessary as determined by a majority of the OPEB Board.
10.2 Term. Each Trustee shall serve as Trustee until such time as the Trustee resigns or is removed by the City, as the case may be.
10.3 Compensation. Trustees shall not receive any compensation for their services rendered as Trustees.
Article XI
Miscellaneous Provisions
Miscellaneous Provisions
11.1 Taxes.
(bb) Until advised to the contrary by the City, the OPEB Board shall consider the Trust to be exempt from federal, state, local and foreign income taxes. However, if the OPEB Board has reason to believe that such exemption does not or ceases to apply, the OPEB Board shall notify the City of its belief, in writing. The OPEB Board shall not be responsible for filing any federal, state, local or foreign tax or information returns relating to the Plan or the Trust other than information returns required as a result of any distribution from the Trust.
(cc) The OPEB Board shall promptly notify the City of any taxes levied upon or assessed against the Trust. If the City wishes to contest the tax assessment, it must give appropriate written instructions to the OPEB Board within thirty (30) days of notification. If the OPEB Board does not receive written instructions within thirty (30) days of notification, the OPEB Board will pay the tax from the Trust.
11.2 No Third Party Beneficiaries. The provisions of this Trust Agreement are intended to benefit only the parties hereto, their respective successors and assigns, and Participants under each Plan. There are no other third party beneficiaries.
11.3 Waiver. No waiver by either party of any failure or refusal to comply with an obligation hereunder shall be deemed a waiver of any other or subsequent failure or refusal to so comply.
11.4 Partial Invalidity. If any term or provision of this Trust Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Trust Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Trust Agreement shall be valid and enforceable to the fullest extent permitted by law.
11.5 Execution in Counterparts. This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and said counterparts shall constitute one and the same instrument and may be sufficiently evidenced by one counterpart.
11.6 References to Statutes, etc. Unless the context clearly indicates to the contrary, a reference to a statute, regulation, document, or provision shall be construed as referring to any subsequently enacted, adopted, or re-designated statute or regulation or executed counterpart.
Article XII
Amendment and Termination
Amendment and Termination
12.1 Amendment. This Trust Agreement may be amended at any time by written agreement signed by the City and the OPEB Board, provided that such amendment shall not operate to violate any applicable law or regulation.
12.2 Termination of Trust. The City reserves the right at any time to terminate this Trust; provided, however, that under no circumstance shall any portion of the Trust revert to or become property of the City or a Political Subdivision, except as provided in this Trust Agreement. Upon termination, the OPEB Board shall continue to administer the Trust in accordance with the provisions contained herein until all obligations under the Plan have been discharged and satisfied or all funds have been paid out. Upon termination of the Trust, and after the satisfaction of outstanding liabilities under the Plan to provide benefits and pay reasonable expenses, the assets of the Trust shall not be returned to the City, but instead shall solely be applied toward the provision of sickness, accident, medical, disability or similar welfare benefits through another trust, as the City appropriately directs, with the intent that all income on such assets be exempt from tax under Section 115 or other applicable section of the Code.
12.3 Termination of Plan. The City reserves the right to terminate any Plan at any time. Upon such termination, the applicable part of the Trust shall be distributed by the Trustees in accordance with directions from the City for the purpose of providing permissible benefits. The OPEB Board is under no obligation to review written instructions from the City for compliance with the Plan. From the date of termination of the Plan until the final distribution of the Trust Fund, the OPEB Board shall continue to have all the powers provided under this Trust Agreement with respect to the assets of the Plan held in the Trust, and if not directly paid by the City, Trustee shall be entitled to debit the Trust for its out of pocket expenses (including counsel fees) incurred during this period.
Article XIII
Limited Effect of Plan and Trust
Limited Effect of Plan and Trust
14.1 Rights Limited to Terms of Plan and Trust Agreement. Subject to applicable law, neither the establishment of the Plan nor the Trust, nor any modification thereof, the creation of any fund or account, nor the payment of any benefits, shall be construed as giving to any person covered under the Plan or other person any legal or equitable right against the OPEB Board or the City or any right to benefits under the Plan, except as may otherwise be expressly provided in the Plan or in this Trust Agreement.
Article XIV
Protective Clause
Protective Clause
15.1 Insured Benefits. Neither the City nor the OPEB Board shall be responsible for the validity of any contract of insurance or other arrangement maintained in connection with the Plan, or for the failure on the part of the insurer or provider to make payments provided by such contract, or for the action of any person which may delay payment or render a contract void or unenforceable in whole or in part.