10-104 - R RESOLUTION NO. 10-104
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER,
TEXAS, AMENDING RESOLUTION NO. 10-064 TO CONFORM TO STATE
LANGUAGE REQUIREMENTS, 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 he 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 l. The Town Council hereby amends Resolution No. 10-064, concerning the
creation of an employee benefits trust, to conform to language requirements from the Texas State
Comptroller's Office authorizing the 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 thisa
yo'NIr 2010,.
. Ray Siniti , M a tIR I
�k OF
t
thew D. Denton TRMC maw
1 own Secretary
1
t t,�
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 Tem 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 Tem 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 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.
B. Quorum and Voting. 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.
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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 premiums on group health, accident and life policies or contracts;
2. to make authorized investments and paying fund management fees from the
proceeds of the investment.
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 Town 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 Town shall
pay or reimburse a Trustee for expenses incurred (i) in advance of the final disposition of a
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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 1NT1"N11ON11LLYBLANK; 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 e as of the °t date of signature below.
May Smitll, Settlor Date
P16110
Da Ben 6 d, T Lnstee Date
i d 23 �?-Dr0
enneth u ggTr'Stee Date
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David VeslYl, "h'llis Date
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Wye Miller, l"rustee ,. Date
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ain 'I s 1 r 1 ee _.. ate
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J- ,o axon °l�rust��e Date
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ACKNOWLEDGMENTS
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this .......
r of
2010, by Ray Smith, Mayor of the Town of Prosper on behalf of the Town.
p , W D. DEN,
Notary Public,
State of Texas
�� """-• ..
N� airy 4PublicIn ankFor State of Texas
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN § /
7
This instrument was acknowledged before me on this day of
2010, by Dave Benefield.
a
Notary Public,
4F � State of Texas
o114"im.�'T,08-21-12
ry Public In and For the T tate of Texas
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN §
2,7
This instrument was acknowledged before me on this 0day of
2010, by Kenneth Dugger,
AY 4
,add„
� Notary Public, ;� °.
stare or Texaa t public 'n &�he State of Texas
(SEAL)
9
THE STATE OF TEXAS §
COUNTY Of COLLIN §
g
This instrument was acknowledged before me on this � day o1'
2010, by David Vestal.
------------------
MATTHEW
-- ..-- „
Notary Public, r
" w State of Texas ww
r eryrr�srra* C317b°YIT1. K08
2
stary Public In and For the State of Texas
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this ay of
2010, by Meigs Miller.
����� Stare of Texas „w.
Nc Lary Public In and For the State of Texas
(SEAL)
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this 2 3� day of
2010, by Danny Wilson.
MATtHfW 0.DiNION
_. w.
Notary Public. .µ... � .�,... ,� ,.
Slaw of Texas
A a ary Public In and For the State of Texas
(SEAL)
10
THE STATE OF TEXAS §
COUNTY Of COLLIN §
This instrument was acknowledged before me on this Zjwdayof
2010, by Jason Dixon. .
», -1
�� 06M21�1-� .: tart' Public In and For the State of Texas
f
(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 (December 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 (December 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/1 7690/0102/0625 1 0