10-064 R - Authorizing Creation of an Employee Benefits Trust RESOLUTION NO. 10-064
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER,
TEXAS, AUTHORIZING CREATION OF AN EMPLOYEE BENEFITS
TRUST; DESIGNATING ALL MEMBERS OF THE TOWN COUNCIL TO BE
TRUSTEES OF SAID TRUST; AND AUTHORIZING THE TRUST TO
PURCHASE VARIOUS FORMS OF INSURANCE FOR THE BENEFIT OF
TOWN OFFICERS, EMPLOYEES, QUALIFIED RETIREES, AND THEIR
DEPENDENTS.
WHEREAS, the Town of Prosper, Texas (the "Town") provides or offers various
employee benefits to its employees, including health, dental, and life insurance, and disability
benefits; and
WHEREAS, state law imposes a tax upon the receipt of gross premiums and revenues
associated with such benefits; and
WHEREAS, state law also authorizes the exemption of such premiums and revenues
from state law, provided that the Town establishes and maintains the funds under the ownership
and control of a single, nonprofit trust; and
WHEREAS, the Town Council of the Town finds it to be in the public interest to
authorize the creation of an Employee Benefits Trust for the reasons provided above; now,
therefore,
BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS:
Section 1. The Town Council hereby authorizes creation of an Employee Benefits
Trust, designating all members of the Town Council to be Trustees of said Trust, and authorizing
the Trust to purchase various forms of insurance for the benefit of Town officers, employees,
qualified retirees, and their dependents, all of which is pursuant to the Declaration of Trust
attached as Exhibit "A."
PASSED, APPROVED, AND RESOLVED this 13th day of July 2010.
Ray Smith, Mayor
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Matthew D. Denton, TRMC
Town Secretary s
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EXHIBIT "A"
DECLARATION OF TRUST
I.
CREATION OF TRUST
The Town of Prosper ("Town"), as Settlor or creator of the trust, designates the members
of the Town of Prosper Town Council to be Trustees and declares that the Town holds in trust
the funds described in Schedule A attached hereto and incorporated herein by reference, which is
the property of the Town, and all substitutions and additions to such funds, for the purpose of
providing or offering, whether now or possibly in the future, life, disability, sick, accident, and
other health benefits to the Town's officers, employees, and qualified retirees and their
dependents.
II.
PURPOSE
This is a nonprofit trust created for the purpose of providing or offering, whether now or
possibly in the future, Town officers, employees, and qualified retirees and their dependents with
life, disability, sickness, accident, and other health benefits either directly or through the
purchase of insurance and to perform operations in furtherance thereof. The Trust is intended to
qualify as a tax-exempt trust performing an essential governmental function within the meaning
of Section 115 of the Internal Revenue Code (the "Code").
III.
DURATION
The Trust shall continue until terminated by operation of law or by majority vote of the
Trustees.
IV.
TRUSTEES: COMPOSITION, OFFICERS, COMPENSATION, AND MEETINGS
A. Composition. The Trustees are the members of the Town Council, and each
Trustee's term is contemporaneous with his or her term of office as a Member of the Town
Council. Whenever a Trustee ceases to be a member of the Town Council, the person succeeding
him or her in office will automatically be appointed to serve as a successor Trustee of the Trust.
B. Officers. The Mayor shall serve as Chairman and shall preside at meetings of the
Trustees and shall have all such other powers as are conferred herein or by majority vote of the
Trustees at a duly called meeting at which a quorum is present. The Mayor Pro Tern shall serve
as Vice Chairman and shall preside at meetings of the Trustees whenever the Chairman is absent.
The Secretary shall rotate, coinciding with the Town's Fiscal Year, between the Councilmembers
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based upon their designated places, skipping the Mayor Pro Tern and beginning with the
Councilmember for Place 1. The Secretary will oversee the preparation of meeting agendas,
giving notice of meetings to the Trustees, and the minutes of the meetings of the Trustees.
C. Compensation. The Trustees shall be reimbursed for all reasonable and necessary
expenses incurred by them in the performance of their duties and will otherwise receive no
compensation for their service as Trustees.
D. Meetings. A meeting of the Trustees may be called by the Chairman or on written
request to the Chairman by two or more Trustees. Trustees shall have at least three days written
notice of any meeting. For purposes of this section, electronic mail notice is written notice.
V.
RIGHTS, POWERS, AND DUTIES OF TRUSTEES; QUORUM AND VOTING
A. Rights, Powers, and Duties. In addition to all other powers and duties conferred
on them by this Trust document and imposed or authorized by law, the Trustees shall have the
following powers and duties, but only to the extent permissible for a single purpose non-profit
trust under Section 222.002(c)(5) of the Texas Insurance Code:
1. The Trustees shall carry out all of the duties necessary for the proper operation
and administration of the Trust on behalf of the covered persons and shall have all the powers
necessary and desirable for the effective administration of the affairs of the Trust.
2. The Trustees have the general power to make and enter into all contracts, leases,
and agreements necessary or convenient to carry out any of the powers granted by this Trust
document or by law or to effectuate the purpose of the Trust. All such contracts, leases, and
agreements or any other legal documents herein authorized shall be approved by the Trustees by
majority vote at a duly called meeting at which a quorum is present and signed by the Chairman
on behalf of the Trust. The Trustees may also designate another Trustee to sign such documents.
3. The Trustees shall use the Trust's funds to accomplish the purpose of the Trust, as
described in Section II herein, and to operate and administer the Trust solely in the interest of the
covered Town officers, employees, and qualified retirees and dependents thereof and for the
exclusive purpose of providing or offering benefits to such persons and defraying the reasonable
expenses of administration of the Trust. To this end, the Trustees may purchase life, disability,
or accident and health insurance to provide or offer coverage for participating Town officers,
employees, and qualified retirees and their dependents. The Trustees may also adopt a health
benefits plan that covers eligible Town officers, employees, and qualified retirees, and their
dependents.
4. The Trustees may accept contributions to the Trust funds from any source
including contributions from covered persons receiving benefits from the Trust.
5. The Trustees shall be authorized to contract with any qualified organization to
perform any of the functions necessary for providing or offering life, disability, sick, accident,
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and other health benefits, including but not limited to excess loss insurance, stop loss insurance,
claims administration, administrative services, and any other services that the Trustees shall
deem expedient for the proper operation of the Trust. When required by law or desired by the
Trustees, the Trustees shall seek sealed competitive bids or sealed competitive proposals with
respect to contracts required to carry out the operations of the Trust and to affect the purpose of
the Trust.
6. The Trustees shall arrange for the investing of the funds of the Trust so as to keep
the same invested according to law and at the best interest rates obtainable for the benefit of the
covered persons. The Trustees may hire money managers and shall adopt an investment policy
for its own use and that of its agents in making investments. The Trustees shall select a
depository for the Trust's funds and provide for the proper security of any and all investments.
The Trustees shall designate signatories for the Trust's depository accounts.
7. The Trustees may purchase, out of the Trust Funds, insurance for the Trustees and
any other fiduciaries appointed by the Trustees and for the Trust itself to cover liability or losses
occurring by reason of the act or omission of any one or more of the Trustees or any other
fiduciary appointed by them. Any insurance purchased by the Trustees must give the insurer
recourse against the Trustees or other fiduciaries concerned for breach of any fiduciary
obligation or fiduciary duty owed to the Trust.
8. The Trustees shall arrange for proper accounting and reporting procedures for the
Trust's funds and shall also provide for an annual audit of the Trust's financial affairs by a
certified public accountant.
9. The Trustees may retain legal counsel to represent the Trust and the Trustees in
all legal proceedings as well as to advise the Trust and the Trustees on all matters pertaining to
the operation and administration of the Trust.
10. The Trustees have the authority to terminate the Trust at any time.
11. Upon termination of the Trust, the Trustees shall provide for the payment of Trust
obligations, debts, losses, and other liabilities and shall provide for the disposition of the
remaining Trust funds in accordance with Section IX herein.
12. The Trustees shall have the power to acquire, by purchase or otherwise; retain,
invest, reinvest, and manage, temporarily or permanently; any interest (including an undivided
interest) in any realty or personalty; to alter, improve, repair, replace, abandon, and demolish
assets; to sell, exchange, encumber, lease for any period, or otherwise dispose of any asset of the
Trust, publicly or privately, with or without notice, wholly or partly for cash or credit, without
appraisal, and to give options for those purposes; to abandon, compromise, contest, and arbitrate
claims; to hold title in the name of a nominee; to adopt policies and regulations for the efficient
operation of the Trust; to determine all matters of trust accounting as established by controlling
law or customary practices; to set up and maintain reasonable reserves for taxes, assessments,
insurance premiums, repairs, improvements, depreciation, depletion, amortization, obsolescence,
general maintenance of buildings or other property, and any other purpose; to employ agents,
accountants, brokers, attorneys-in-fact, attorneys-at-law, tax specialists, realtors, investment
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counsel, and other assistants and advisers; and to delegate powers and duties to other persons,
partnerships, corporations, and financial or business organizations.
B. Quorum and Votine. A majority of the Trustees shall constitute a quorum for the
transaction of business at any meeting of the Trustees and the vote of a majority of the Trustees
present shall be required for approval of any action at such meeting. The vote of such majority
of the Trustees at such meeting shall constitute action of the Trustees as a group.
VI.
BENEFICIARIES
The beneficiaries of the Trust are the Town officers, employees, and qualified retirees
and their dependents who are covered by a life, disability, sick, accident, or other health benefits
plan purchased or adopted by the Trust (also called "covered persons" herein). Beneficiaries
may make contributions to the Trust for use by the Trustees in fulfilling the purposes of the
Trust. No beneficiary shall have any claim against the funds or any other property of the Trust.
The rights and interests of the beneficiaries are limited to the insurance or health benefits
specified in any policy purchased or plan adopted by the Trustees.
VII.
TRUST FUNDS
The Trust funds consist of the funds described in Schedule A hereto as provided by the
Settlor to institute this Trust, future contributions by the Settlor, beneficiary contributions,
investment income, and any other money or property which shall come into the hands of the
Trustees in connection with the administration of the Trust. The funds of the Trust shall not
inure to the benefit of, or be distributed to, any private person, except for the payment of
necessary costs and benefits described below. The Trustees may use the Trust's funds as
follows:
1. to pay all expenses which the Trustees consider necessary in establishing the
Trust and in administering the Trust and all reasonable expenses incurred by the Trustees in the
performance of their duties;
2. to pay premiums on any insurance policies purchased by the Trust;
3. to make authorized investments;
4. to pay claims under any health benefits plan adopted by the Trustees;
5. to pay for all necessary professional services, property, and equipment required
for the proper operation of the Trust;
6. to pay all legal obligations of the Trust; and
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7. to pay any judgment entered against the Trust or to compromise and settle
litigation in which the Trust is a party.
VIII.
LIABILITY OF TRUSTEES AND OFFICERS
The Trustees shall use ordinary care and reasonable diligence in the exercise of their
powers and the performance of their duties hereunder; and they shall not be liable for any
mistake of judgment or other action made, taken or omitted by them in good faith, nor for any
action taken or omitted by any agent, employee or independent contractor selected with
reasonable care; nor for loss incurred through investment of the Trust funds or failure to invest.
No Trustee shall be liable for any action taken or omitted by any other Trustee. No Trustee shall
be required to give a bond or other security to guarantee the faithful performance of his or her
duties hereunder. To the fullest extent permitted by law: (a) the Trust shall indemnify each
Trustee who was, is, or is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding ("Proceeding"), any appeal therein, or any inquiry or investigation
preliminary thereto, by reason of the fact that the Trustee is or was a Trustee; (b) the Trust shall
pay or reimburse a Trustee for expenses incurred (i) in advance of the final disposition of a
Proceeding to which such Trustee was, is or is threatened to be made a party, and (ii) in
connection with such Trustee's appearance as a witness or other participation in any Proceeding.
IX.
AMENDMENT, REVOCATION AND TERMINATION
This Declaration of Trust and the Trust created herein shall terminate when and if
required by operation of law. The Trustees shall have the power to amend, modify, terminate or
revoke, in whole or in part, this Declaration of Trust and the Trust created herein by majority
vote at a duly called meeting at which a quorum is present. Notwithstanding the foregoing, the
Trustees shall have no power to amend Section II of this Declaration of Trust. Beneficiaries of
the Trust shall have no right to amend this Declaration of Trust, and their approval shall not be a
condition or requirement for an authorized amendment by the Trustees. Upon termination of the
Trust, the Trustees shall pay all obligations, debts, losses, and other liabilities of the Trust.
Thereafter, the Trustees shall first use the remaining trust funds to pay covered claims of persons
covered under the Town's health benefits plan that may be in effect at the time of termination of
the Trust and then, either apply any remaining balance of the funds to provide the benefits
described herein or transfer such funds to a successor whose income is excluded under Section
115(1) of the Code. Notwithstanding the foregoing, the Trustees, upon termination of the Trust
and payment of all Trust obligations may, by vote of a majority of the Trustees, transfer the
remaining funds or any portion thereof to the trustees of any trust or trusts established by the
Town for a substantially similar purpose to be applied for uses substantially similar to those set
forth in Section II herein.
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X.
GOVERNING LAW
This Declaration of Trust and the Trust created herein shall be construed and governed by
the laws of the State of Texas in force from time to time.
XI.
MISCELLANEOUS
Whenever the context so admits and such treatment is necessary to interpret this
Declaration of Trust in accordance with its apparent intent, the use herein of the singular shall
include the plural, and vice versa, and the use of the feminine, masculine, or neuter gender shall
be deemed to include the other genders.
The captions or headings above the various Sections of this Declaration of Trust have
been included only to facilitate the location of the subjects covered by each Section but shall not
be used in construing this Declaration Trust.
If any clause or provision of this Declaration of Trust proves to be or is adjudged invalid
or void for any reason, such invalid or void clause, provision, or portion shall not affect the
whole, but the balance of the provisions hereof shall remain operative and shall be carried into
effect insofar as is legally possible.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS HEREOF, the undersigned parties have executed this Declaration of Trust,
consisting of ten (10) pages and Schedule A attached hereto, on the dates of their respective
acknowledgments below. By joining in the execution of this Declaration of Trust, the Trustees
acknowledge receipt of the property described in Schedule A, signify acceptance of the Trust
created hereunder, and covenant that the Trust will be executed with all due fidelity. This Trust
is effective as of th st date of signature below.
MaMay Smith, Settlor Date
Da Be field, stee Date to
1�imYeth ger, rus oe Date
t
David estal, T ee Date
meigs'Miller, Trustee •� Date
Dann is �`I rustee Date /
��l)ixon, Trustee Date
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ACKNOWLEDGMENTS
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this day of � �'S
2010, by Ray Smith, Mayor of the Town of Prosper on behalf of the Town.
YII Noic"L,y�
'. State a?Text
_wwI1O„M� .Comm.,Exp 08-21-l' �j"
'Notary Public In and For the State of Texas
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this (�J day of
2010, by Dave Benefield. l
"
IMAIrHEW D.OW..ON
ic. .
arose or T"=
06.21 12 s I gdary Public In and For the State of Texas
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this day of
2010, by Kenneth Dugger.
MATTHEW D.DcN`.ON r
Y P4
YI Ems= Notary Public.
stwe or Texas = Notary Public In and For the State of Texas
—"-.,°; ,comm.Exp;OS,21 12
(SEAL)
9
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this / �1 day of
2010, by David Vestal.
2/y(�.�1k��MATTHEW D.NN'.ON
TC^'
f. Nui
c'�� Notary Public.
Em.08-21-12 "99(ary Public In and For the State of Texas
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this day of
2010, by Meigs Miller.
MATTHEW D. IMN'•OPI
=r° Notary Public. '
$tote of Tft= 'N` ary Public In and For the State of Texas
"IM Comm.fxp.0 8-21-12
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this day of
2010, by Danny Wilson.
-
' --yriyw MATTHEW D.NNION
Notary Public.
State of Texas
-,;;f°F�, XP__.. I tary Public In and For the State of Texas
�;
(SEAL)
10
THE STATE OF TEXAS §
COUNTY Of COLLIN §
i /
This instrument was acknowledged before me on this day of ` ���
2010, by Jason Dixon.
s 'pRV PGA��MAII NEW D. D2N
L 'OW
Nofory Public,
+; +�}�-
State of Texoa
��
No r Y Public In and For the State of Texas
08,21-12 '
(SEAL)
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SCHEDULE
The following is a list of the assets initially transferred by the Town of Prosper,
Texas, to the Trust:
Town of Prosper's first month (August 2010) contributions for Employee and
Dependents Medical/Pharmacy Benefits, Dental Benefits, Life Insurance Benefits, and
Long-Term Disability Benefits.
Town of Prosper's Employee and Dependents first month (August 2010) of
Plan Year's payroll deductions or contributions for Medical/Pharmacy Benefits,
Dental Benefits, Life Insurance Benefits, and Long-Term Disability Insurance
Benefits.
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3107200.3/SP/17690/0102/062510