1-2 Detroit Pension Lawsuit Exhibit B

8/13/2019 1-2 Detroit Pension Lawsuit Exhibit B

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Form C o~ D---16-C~

STATE OF MICHIGANCity of Detroit

TRUE COPY CERTIFICATE

CITY CLERKS OFFICE, DETROIT

and approved by MayorFebruary 8 2~ 05

as appears from the Journal of said City Council m the office of the City Clerk of Detroit, aforesaid;that I have compared the same with the original, and the same is a correct transcript therefrom, and of thewhole of such original

In Witness Whereof, I have hereunto set my handand affixed the corporate seal of said City, atDetroit, this 2ndday of f~ Iune A.D. 30 05

adopted (passed) by the City Council at sesstonFebruary 4 20 05

x, -- -jacc--e L. Currie , City Clerk of the City of Detroit, in saidRESOLUTIONState, do hereby certify that the annexed paper is a TRUE COPY OF

14-04112-swr Doc 1-2 Filed 01/31/14 Entered 01/31/14 17:33:52 Page 1 of 8


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APPROVED BY DETROIT CITY COUNCILSPECIAL SESSIONFRIDAY FEBRUARY 2005ORDINANCEO. 05-05CHAPTER18TO APPROVE HE FORMOF ASTANDARDSERVICE CONTRACT O

PROVIDEPENSIONFUNDINGSERVICESTOTHE ITY BYREDUCINGTHE BURDENOFUNFUNDEDACTUARIAL ACCRUEDLIABILITIES (UAAL) ANDAUTHORIZE HE CITY TO ENTERINTO TWOSERVICE CONTRACTSFOR 2005 AND TO AUTHORIZEHEDGES N CONNECTION ITH THEFUNDING OFTHE UAAL OFTHERETIREMENTSYSTEMS.AN ORDINANCEo authorize the for-matlon by the City, pursuant to theHomeRule City Act, 1909 PA 279, asamended, f two non-profit corpora-tions under the Nonprofit Corpora-tion, Act, 1982 PA 162, as amended,namely, the Detroit General Retire-ment System Service Corporation,and the Detroit Police and FireRetirement System Service Corpora-t/on, by amendingChapter 18 of the1984 Detroit City Codeby addingDivision 9, entitled "the DetroitRetirement System Service Corpora-t/on, consistingot Sections 18-5-120 through18-5-144 to assist theCity in meeting ts pension obliga-tions; to approve the form of aStandard Service Contract to pro-videpension funding services to theCity by reducing the burden ofUnfunded Actuarial AccruedLiabilities (UAAL)end o authorizethe City to enter Into two ServiceContracts for 2005 and o authorizeHedges n connection with the fund-Ing of the UAAL f the retirementsystems.IT IS HEREBYORDAINEDBY THEPEOPLE OF THE CITY OF DETROITTHAT:Section 1. Chapter 18 of the 1984Detroit City Code,be amendedy addingDivision9 to Article 5 as ollows:DIVISION 9. DETROITRETIREMENTSYSTEM SERWCECORPORATIONSac. 18-5-120. Legislative Findings.TheDetroit City Councilexpressly indsand determineshat:(a) The Home ule City Act, 1909 PA279, at MCL 17.4o(1), authorizes citiessuch as Ihe City of Detroit (the City) toauthorize he formationof a nonprofitcor-poration under he Nonprofit CorporationAct, 1982 PA 162, at MCL 50.2101, etseq., as amendedor valid public pur-poses f the authorizing ity.(b) Article 9, Section 24 of the 1963Michigan onstitutionobligates he City tomaintain the actuarial integrity of itsGenera/ Retirement System(the GRS)and ts Police andFire RetirementSystem(the PFRS), together, the RetirementSystem.(c) Maintainnghe actuarial ntegritythe RetirementSystems both a constitu-tional obligation and an mportantpublicpurpose f the City.(d) By OrdinancesNo. 03-05 and No.04-05 (the Alternative FundingMechanismOrdinances), the City hasprovidedan alternative funding mecha-nism or each, respectively, of the GRSand PFRS (each, an AlternativeFunding Mechanism) to provide forfundingunfunded ctuarial accruediabil-

ity (UAAL)of the GRSGRSUAAL)andthe UAAL f the PFRSPFRSUAALandeither the GRSUAAL r the PFRS AAL,as the context may require, theRetirement System UAAL).(e) The Alternative Funding Mech-anism Ordinances re separate and dis-tinct from this Ordinance, and thisOrdinance rovides only a means f fund-ing particular Retirement SystemUAALand hereby educing he financial burdento the City of such Retirement SystemUAAL.(f) This Ordinance shall notdeemed o affect any benefits undereither the GRSr the PFRS r other sub-jects of collective bargainingor Act 312Arbitration Awards, ndshall be so inter-preted.(g) The respective RetirementSystems ctuaries (the Actuariesof therespective RetirementSystem)estimatethat GRSUAALs $732,958,801 nd hatPFRS AALs $516,076,553, with addi-tional unrecognizedmarket osses of,respective y,. $213,844,162 and

$327,251,711, as o tnmr respuut~vt~reports (each, an ActuaryReport) as ofJune 30, 2003, with UAAL of eachRetirementSystem xpected o increasein the future.(h) TheCity desires o act pursuantHome uleCityAct and authorize the for-mation of a nonprofit corporation withrespect to eachRetirementSystem, o beknown respectively as the DetroitGeneral Retirement System ServiceCorporation and the Detroit Policeand Fire Retirement System ServiceCorporation (each, a Corporation), toassist he City in maintaininghe actuarialintegrity of the respective RetirementSystemhrough he respective AlternativeFunding Mechanism y funding the par-ticular Retirement System UAALandthereby chievinginancial benefits or theCity.(i) EachCorporationwill be actingan nstrumentality and enterprise of theCity and performing an mportant publicpurpose y assisting the City to meet tsconstitutional obligations with respect othe particular Retirement Systemandtherebys an ntegral part of the City forfederal income ax purposes and t isintended that the income of eachCorporationwill not be subject o federalincomeaxation or any axation under helawsof the State of Michigano the extentthe same pplies o the City.(j) EachCorporation hall be separateanddistinct from the City, and he Cityshall not be responsible or any debts orother obligations of either Corporation,andno such debt or obligation shall con-stitute "indebtedness" ithin the meaningof Tt~eHome ule City Act.(k) It is in thebest nterestof the Cityobtain the servicesof eachCorporationnconnectionwith the Alternative FundingMechanismor the respective GRS ndPFRS y approving the form of servicecontracts between each of theCorporations and the City (each,Service Contract) to be funded bymeansf a funding rust for the respectiveRetirement System (each, a FundingTrust) in connectionherewith.(I) It is further n the best nterestof theCity that it enter nto twospecific ServiceContracts o fund, respectively, not morethan (i) the GRSUAALn an amount otin excess of the UAALn the ActuaryReport as of June 30, 2003, or in lheActuary Report as of June 30, 2004,whichever is greater (MaximumGRSUAAL)and (ii) the PFRSUAAL namount ot in excessof the UAALn theActuaryReportas of June30, 2003,or inthe Actuary Report as of June 30, 2004,whichever is greater (MaximumPFRSUAAL).Sac.18.5.121. Certain Definitions.The ollowing termsshall have he fol-lowing respective meanings nless thecontext otherwise equires:Accreted Valuemeans,at any particu-lar time, the denominationsf the CapitalAppreciation COPs s then accreted.Capital Appreciation COPsmeansZero CouponCOPshat have denomina-tions that accrete n amountn a mannercustomary n municipal finance for theaccretions n valueof capital appreciationbonds.Certificates, Certificates of Parti-cipation or COPshave the meaninggiven such erms n Sec. 18-5-133)Costs of Issuance means (i) theexpense,as an nitial one-timeexpense,of formingeachCorporation; nd ii) withrespect o COPsssued o fund a particu-lar ServiceContract,all itemsof expenserelated to the authorization, sale andissuance of such COPs, which mayinclude, but are not limited to, printingcosts, costs of reproducing documents,filing and recording fees, fees andcharges f the Trustee,original issue dis-count, legal tees andcharges,underwrit-ing fee or discount, professionalconsultants fees (including COPsoun-sel and he financial advisor o the City),costs of credit ratings, fees and chargesfor execution, transportation and safe-keeping of such COPs,ees and chargesof any Providers, and other costs,chargesand ees in connection with theforegoingor in connection ith the autho-rization, sale and ssuanceof such COPsthen o be authenticated r delivered.

Credit Facility means ny COPsnsur-ance, etter of credit, line of credit, pur-chase apreement, surety bond or otherfinancial arrangementntended o protectholders of COPsssued by the respectiveFunding rust from oss arising fromdelin-quent Service Payments.Credit Facilityalso meansany financial arrangementintended o protect a HedgeCounterpartyfroma failure of the Corporationo timelypay HedgePedodic Payables and HedgeTerminationPayables.Deep-Discount COPemeans ZeroCouponCOPshat are issued at a deeporiginal issue discount.Disclosure Documentmeansany pre-liminary or final official statementr otherdisclosure document repared or use bythe Underwriters n connection with theInitial public offering of COPs.Financial Facility means,as the con-text may equire, any Credit Facility orLiquidity Facility or any combined reditandLiquidityFacility.Finance Director means he FinanceDirector f the City of Detroit.Hedgemeans ny nterest rate swap rother means f hedging Interest ratevolatility permitted under he City ofDetroit SwapManagementlan.Liquidity Facility means ny etter ofcredit, line of credit, purchase greement,or other financial arrangementntended oprovide funds for the purchase of anyCOPn the eventof a failure of the remar-keting hereof.Mayor means the Chief ExecutiveOfficer of the City of Detroit pursuant oSection 5-101 of the 1997 Detroit CityCharter.Ordinance when used as =thisOrdinance"meanshis ordinancewith thenumbern the captionhereof as originallyadopted y the City and hereafter as itmay be amendedby ordinance of theCity; provided that, the term "thisOrdinance"does not include any amend-ment of this Ordinance as originallyadopted ffecting either ServiceContract2005unless such amendmentxpresslyso providesand hen only if such amend-ment oesnot materially mpair any oblig-ations to any holdersof any Certificatesissued in respect of either ServiceContract 2005 or the Trustee of theFunding Trust under which suchCertificates were ssued.Person meansany natural person,firm, association, orporation,rust, part-nership, joint venture, Joint-stock com-pany, municipal corporation, public bodyor other entity, however rganized.Provider meansa Person obligatedunder a Financial Facility to make ay-ments n respect of COPs r AuthorizedHedges.Provider Scheduled PaymentsmeansScheduled aymentsepresenting unpaiddisbursements owing to a Provider inrespect of a Financial Facility, and mayInclude Service Charges o the extentrequiredby the Provider.Representative means he Personselected by the Financial Director as therepresentative f the Underwriters.Service Contract 2005 means itherthe GRSService Contract 2005 or thePFRS ervice Contract 2005, as the con-text may equire. Thedesignation "2005"is descriptive and not prescriptive andmeanshe calendaryear n which he Cityenters nto the first ServiceContract orthe respective RetirementSystem.Trustee means he Person acting astrustee of a Funding rust.Underwriting Agreementmeans heagreement etween he Corporation, theCity and he Underwrilers for the pur-chase f the Certificatesof Participation.Underwriters means he Representa-tive and other Personsdentified in theUnderwriting Agreement as "Under-writers.*Zero CouponCOPemeansCOPs hatdo not provide for periodic paymentsnrespect of "interest." Zero Coupon OPsare either Capital Appreciation COPsrDeepDiscount COPs.Sac. 18-5-122.OtherDaflnltlons.The ollowing terms are defined else-wheren this Ordinance:Term Defined InAct 4.............................. Sac. 18-5-138Authorizededge............ Sac. 18-5-137Additional Service



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Payment....................... Sec. 18-5-134City nformation............... Sac. 18-5-142Fundingosts................. Sec. 18-5-132Fundingate................... Sec. 18-5-132Funding RateMethodology................ Sac. 18-5-133GRS ervice Contract2005.............................Sec. 18-5-130Hedge ounterparty........ Sec. 18-5-135HedgePeriodicPayable........................ Sac. 18-5-132HedgePeriodicReceipt........................ Sac. 18-5-135HedgeTerminationPayable........................ Sec. 18-5-132HedgeTerminationReceipt........................ Sac. 18-5-135Maximum undingRate............................. Sec. 18-5-133PFRSServiceContract005.............. Sac. 18-5-130ProviderPrepayments..... Sac. 18-5-133Providerate.................. Sec. 18-5-133Rule................................. Sec. 18-5-142Scheduledayments....... Sac. 18-5-132Service harges.............. Sac.18-5-132Service ContractGeneralerms............. Sac. 18-5-131Service ayments............ Sec. 18-5-132Sinking FundInstallments................. Sec. 18-5-133Subject AAL.................. Sec. 18-5-132Swap ManagementPlan.............................Sec. 18-5-138Underwriters iscount.... Sac. 18-5-141Sac. 18-5-123. Approvals ndDetermi-nations.Any approval or determination autho-rized to be given or made y any ndivid-ual pursuant o this Ordinance hall beconclusivelyevidencedf an nstrumentordocumentexecuted by such individualprovides for the subject matter of suchdetermination,and t shall not be neces-sary that suchdeterminationor the basistherefor be specifically recited in suchinstrument or document.Sac. 18-5-124.General nterpretation.(a) Wordsof-the masculine genderinclude correlative word of the feminineand neuter gender.(b) Unless he context clearly other-wise requires, words mporting the singu-lar include he plural andvice versa.(c) References to Sections andnumber refer to the correspondingSectionsol this Ordinance nlessother-wisestated.(d) The ermshereby, hereto, herein,hereunder ndany similar terms refer tothis Ordinance s a wholeand not to anyparticular previsionhereof.(e) The ermor is not exclusive unlessthe context otherwise equires.(f) Theenumerationf things after thetermncludings to be nterpreted s llus-trative andnot restrictive.(g) Referenceso sections of a PublicAct, or to a Public Act as a whole, alsoinclude any amendmentshereto unlessotherwise indicated and analogoussec-tions or Public Acts enactedas substi-tutes herefor.Sac. 18-5-125. Nonprofit Corporation;Authorization to incorporate; Pur-pose.(A) The Mayor,or the FinanceDirectoracting at the direction of the Mayor, sherebyauthorized o incorporate or pro-vide for the incorporation f two nonprofitcorporations, espectively to be known sthe Detroit General RetirementSystem Service Corporation and theDetroit Police and Fire RetirementSystemService Corporation, under heMichiganNonprofit CorporationAct.(B) EachCorporationshall be ncorpo-rated solely for the charitable purpose fassisting the City in maintaininghe actu-arial integrity of the Retirement ystemyproviding for funding of the respectiveRetirement SystemUAAL.Sac. 18-5-126, Nonprofit Corporation;Articles of Incorporation.(a) Theoriginal articles of incorpora-tion for eachCorporation s filed by heincorporator shall contain provisions totheeffect set forth in this Section.(1) TheCorporations an nstrumental-ity andenterprise f the City, constitutingan ntegralpart of theCity in assistingt inmeetingts obligationswith respect o theRetirement System;provided, however,the Corporation shall be a legal entityseparateanddistinct from the City, aridthe City shall not be responsible or anydebts or other obligations of theCorporation.(2) TheCorporation hall be subjectall local, state and ederal aws hat applyto the City as provided n The Home uleCity Act, andshall be a "public body" orpurposes of the Michigan CampaignFinance Act, 1976 PA 388, as amended,as further provided in The HomeRuleCity Act.

i3) Nopart of the net earmngs f theCorporation hall inure to the benefit ofanydirector or individual.(4) TheCorporation hall be organizedin a directorship asis.(5) TheCorporation hall have ive (5)directors to be appointed s ollows:(i) Twodirectors shall be membersthe Detroit City Council the Council ),asselectedby he Council rom ime to time,who hall serveas directors at the plea-sureof the Council.0i) The ollowing three City officersshall serve as directors of theCorporation: Finance Director, BudgetDirector, and Corporation Counsel, orpersonsserving in such positions in aninterim or actingcapacity.(6) TheFinanceDirector shall servepresidentof the Corporation.(7) Each irector shall serveex officioand, uponeaving he position by virtue ofwhich uchperson s a director or, in thecase of Council members,esigning asdirector or being removed r replacedasa director by Council,shall submit writ-ten resignation or shall be deemedohave been emoved.Upon uch resigna-tion or removal, such director shall notlonger serve as a director of theCorporation;provided,however,hat suchdirector may ontinue s a director until asuccessors selectedas providedherein,if specifically authorized n writing toremain s a director by the party entitledto fill suchdirectors position notwith-standing uch esignationor removal.(8) Upon issolution of the Corpora-tion, all assetsof the Corporationemain-ing after the payment f its obligationsand iabilities shall be distributed to andshall becomehe propertyof the City.(9) No amendment f any provisionrequired by this Ordinance o be con-tained n the articles of incorporationhallbecomeeffective unless approved byordinance r resolutionof the City.(b) Theoriginal articles of incorpora-tion as filed by the incorporator mayotherwisecontain such provisions as theincorporator deems ecessaryor desir-able.Sac. 18-5-127. Nonprofit Corporation;Dissolution by FinanceDirector.When Corporation as existed or fif-teen (15) years, he Finance irectorshalltake appropriate action to dissolve theCorporation when t has no obligationsoutstanding and no COPSre outstand-ing if dissolution is then permittedunderthe Nonprofit Corporation ct.Sac. 18-5-128. Nonprofit Corporation;Corporate Actlons RequiringApprovalby Ordinance.(a) Additional Provisions Raqutredin the Articles of incorporation.In additon to the other provisionsrequired by this Ordinance o appear nthe original articles of incorporation ofeachCorporation, he original articles ofincorporationas iled by he incorporatorshall containprovisions o the effect setforth in this Section.(b) Corporate Existence; Disposi-tion of Assets.Noneof the following actions by theCorporation shall be effective unlessapprovedby ordinance or resolution ofthe City:(1) Anydissolution of the Corporationother than as provided n its articles ofincorporation.(2) The iquidation of the Corporation.(3) Themergeror consolidation of theCorporationwith or into any other entity,unless:(i) the resulting or survivingentity (ifother than the Corporation) s organizedas an nstrumentality and enterprise ofthe City under he Nonprofit CorporationAct; expressly assumes ll outstandingobligationsof the Corporation; nd s sub-ject to limitations o the same ffect as heCorporation is subject under thisOrdinance;and(ii) Immediately fter giving effectthe transaction, no default or event ofdefault has occurred and s continuingunder any agreement f the Corporationor to whichts propertys subject.(4) TheCorporationhall not sell all,substantiallyall, of its assets n a singletransactionor series of transactions;pro-videdthat,his limitation shall not apply osales, ransfersor grantsof security nter-ests in assets to obtain funding for anyRetirement SystemUAAL.(c) Bankruptcy.(1) TheCorporation hall not:(i) Commenceny case, proceedingother action or file a petition underanyexisting or future bankruptcy, nsolvencyor similar law seekinga) to adjudicateheCorporation bankrupt r insolvent, (b)have an order for relief entered withre.specto theCorporatio.n.,r (c) .reor._ga~-

nlzatlon, arrangement, djustmentw~nu-up, llquidal on, dissolution, compositionrother relief with respect o the Corporationor ts obligations.(il) Consento the institution of bank-ruptcy or insolvency proceedings gainstthe Corporation;(ill) Seekor consent o the appoint-ment f a receiver, custodian, iquidator,assignee, rustee, sequestrator or othersimilar official) of the Corporation rsubstanti,11art of its assets;(iv) Except s requiredby aw, admit tsinability to pay ts obligations as theybecomedue;(v) Fail generally o pay ts obligationsas the same become due within themeaning f the United States BankruptcyCode,as determined by a bankruptcycourt of competenturisdiction;(vl) Make general assignmentor thebenefitof creditors;(vii) Authorize, akeany action n fur-therenceof, consent o or acquiescenany of the foregoingor anysimilar actionor other proceedingsunder any U.nitedStates or state bankruptcy, nsolvencyorsimilar aw.(2) If a court of competenturisdictiondetermines that the Corporation may,notwithstandinghe prohibition set forth inparagraph1), above, take an actionotherwise prohibited, the Corporationshall not take anysuch action without tbeing approved y ordinance f the City.-Sec. 18-5-129. NonprofitCorporation;Funding rusts Established.(a) NoFunding rust tself shall createany debt, indebtednessr other obligationof the City, whether indebtedness" ithinthe meaning f The Home ule City Actor otherwiseunderMichiganaw.(b) Each Funding Trust and allCertificates of Participation ssued here-undershall contain a statement o thateffect set forth In subsection A) above,but t shall not be e violation thereof f aFunding rust grants participation in thesubject Service Contract or ServicePayments o be made hereunder, orgrants a secudty interest in any suchService Contract or such ServicePayments.Sac. 18-5-130. NonprofitCorporation;Service Contracts; Service Contract2005; GeneralAuthorization.TheFinanceDirector is authorized oenter nto ServiceContracts, n the nameof and on behalf of the City, with therespective Corporation o fund all or aportion of GRSUAAL the GRSServiceContract2005)and o fund all or a por-tion of PFRSUAAL the PFRSServiceContract 2005).Sac. 18-5-131. Nonprofit Corporation;Service Contract2005.(a) The General Terms nd Conditionsfor RetirementSystem ervice Contractsof the City of Detroit (the ServiceContract GeneralTerms)hall be in sub-stanllally the form submitted with thisOrdinance with such changesas maybeapproved y the FinanceDirector.(b) Service Contract2005shall Incor-porate the Service Contract GeneralTermsby reference, and he particulartermsof ServiceContract2005 hall be Insubstantially the form submittedwith thisOrdinance ith such changes r additionsas may be approved by the FinanceDirector.Sac. 18-5-132. NonprofitCorporation;Service Contract 2005; Changes ndAdditions.The uthority of the Finance irector tomake hanges r additions to the form ofService Contract 2005 s subject to thelimitations contained n this Sectionandother Sections f this Ordinance.(1) The UAALhat maybe funded pur-suant o the respective Service Contract2005 Subject UAAL)hall not exceet:l.(t) in the case of the GRSServiceContract 2005, the amountof GRSUAALas determined y the FinanceDirector notin excess of the MaximumGRSUAAL;and(li) In the case of the PFRS erviceContract 2005, the amount of PFRSUAALas determined bythe FinanceDirector not in excessof the MaximumPFRSUAAL.(2) EachService Contract 2005 shallprovide for payments o be made y theCity for the services of the respectiveCorporation n reducing he present andfuture costs of the respective SubjectUAAL. These payments (ContractPayments) consist of (I) ServicePayments (described in paragraphbelow) and (11) Additional ServicePaymentsdescribed n Sac. 18-5-134).(3) Service Payments (ServicePayments)onsist of the following:



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(i) amountso be paid in installments(Scheduled Payments) epresenting inthe aggregate he amount f the SubjectUAAL nd any additional amounts ermit-ted by Sac. 18-5-133(a)(1) ubject tolimitations contained in Sac. 18-5-133(a)(2) hrough(if) amounts payable periodically(Service Charges)ufficient to pay peri-odic expensesFunding Costs), incurredby the respectiveFunding rust n fundingthe Subject UAALand the additionalamountseferred to in clause (i) aboveand calculated in the samemannerasinterest (a Funding Rate) on the out-standing Scheduled ayments, ubject tothe limitations contained n Sac. 18-5-133(b); and(ill) such periodic amounts HedgePeriodic Payables)and ermination pay-ments HedgeTermination Payables) asmaybecome ayable by the Corporationin acco, rdance with any AuthorizedHedge.(4) EachService Contract 2005 shall permit the sale of participation interestsunder the respective Funding Trust insuch Service Contract 2005 and in theService Paymentsf the City to be madethereunder n the formof Certificates ofParticipation.See. 18-5-133. Nonprofit Corporation;

Service Contract 2005; Limitationson Service Payments.(a) ScheduledPayments(1) In addition to the amount f theSubject UAAL, he aggregate amount fScheduled Payments may includeamounts,not in excess of sevenpercent(7%) of Subject UAAL cceptable o theFinanceDirector, in connectionwith theCorporation unding ts obligations underthe Service Contract through theissuance of COPs, ncluding: Costs ofIssuance, prefundedService Charges,areserve against delinquent ServicePayments,Underwriters Discount plusaccretions n connectionwith any CapitalAppreciation COPsso long as theAccreted Value of Capital AppreciationCOPs oes not result in such COPs av-ing a yield-to-maturity (computed naccordance with customary municipalfinance practice) that exceeds theMaximum unding Rate.(2) ScheduledPayments hall be paidover a periodof not morehan ifteen (15)years, as determined by the FinanceDirector, provided hat, suchperiod maybeextendedo not in excess t anyexten-sion authorized y the Board f the partic-ular Retirement System amortizingperiod.(3) Scheduled Paymentsmaybe pre-paid in accordancewith a schedule ofmandatory prepayment installments(Sinking Fund nstallments) as deter-mined y the FinanceDirector.(4) Provider ScheduledPaymentsmaybe subject to such mandatory prepay-ment as maybe required by the respec-tive Provider (Provider Prepayments).(5) Except or Sinking Fund nstall-ments and Provider Prepayments, noScheduledPayment hall be subject tomandatoryprepayment r acceleration;providedhat, nothing n this prohibitionshall prohibit the paymentof amountsnecessary to purchase COPswith amandatory r optional tender option fea-ture.(b) Service Charges(1) NoService Charge hall be basedon a Funding Rate (expressed as anannualpercentage) ate in excessof themaximumate permitted by law (theMaximumunding Rate).(2) FundingRatesmay e fixed or vari-able (or anycombination f fixed or vari-able) and l vadable maybe determinedby Dutch auction, index (such as theLondon Interbank Offered Rate or"LIBOR")or by remarketingor any othermeanscustomarily used to determinevariable rates in municipal finance(Funding Rate Methodology).(3) tt is not required that ServiceChargesor all installments of ScheduledPayments nder a Service Contract 2005be computed n the basis of one FundingRate or under one Funding RateMethodology. Service Charges withrespect to different installments ofScheduled Payments under a ServiceContract 2005 maybe computed nder adifferent FundingRate or FundingRateMethodologyubject in all cases o para-graphb(1) above.(4) Service Chargesmayprovide forrate or rote methodologyequired by aProvider (a Provider Rate) to compen-sate t for any unrepaiddisbursementsnrespect f its Financial acility. A ProvderRate shall not exceed he maximumatepermittedby aw.

(5) Each Service Contracl 2005 mayprovide that Funding Costs of theCorporation shall be the Provider Ratewith respect to Service Paymentsepre-senting unrepaidamounts n respect ofthe FinancialFacility and hat the relevantService Charges shall be adjustedaccordingly.Sac. 18-5-134. Nonprofit Corporation;Service Contract 2005; AdditionalService Payments."Each Service Contract 2005 maypro-vide for the following in addition to theService PaymentsAdditional ServicePayments):(1) Periodic amounts qual o custom-ary trustee fees and expenses o com-pensate achTrusteeof a FundingTrust;(2) Periodic amounts qual o custom-ary fees of remarker(noagents, auctionagentsand broker-dealers f the FinanceDirector determineshat it is in the bestinterest of the City that some r all of theCOPsre of the vadable ate type.(3) Periodic amounts qual to custom-ary fees and expenses f a Provider orProviders f the FinanceDirector deter-mineshat it is in the best nterest of theCity that some r all of the COPsave hebenefit of a FinancialFacility provided yany such Provider;(4) Periodic amounts or the generaladministration f the Corporation.Sac. 18-5-135. Nonprofit Corporation;Service Contract 2005; HedgeProvisions.(a) No Service Contract shall providefor Service Payments asedon paymentsin respect of a Hedgeother than anAuthorized Hedge.(b) A Service Contract 2005 hall con-tain provisions o the following effect ilsuch Service Contract2005 provides forService Payments n :espect of anAuthorized Hedge:(1) Any amount due the respectiveCorporation as a periodic paymentofService Charges hall be offset by anyamount (a Hedge Periodic Receipt)receivedby the Trusteeon behalf of suchCorporation s a correlative periodic pay-ment rom the counlerparty to the Hedge(the HedgeCounterpart)) to the extentthe City is otherwise current in makingService Payments.(2) Payments f HedgePeriodic Pay-ables and HedgeTermination Payablesshall be made y the City to the Trusteeon behalf of the respectiveCorporationnthe amounts nd on the due dates there-of.(3) Any amount received by theTrusteeon behalf of the Corporation s aTermination Payment rom the HedgeCounterparty (a Hedge ermin tionReceipt)shall be paid to the City to theextent the City is current in makingService Payments.Sac. 18-5-136. Nonprofit Corporation;Service Contract 2005; FinancialFacilities.

If the FinanceDirector determineshatoneor more inancialFacilities will resultin more avorable terms o the City, theFinanceDirector is authorized o sign aService Contract on behalf of the Citycontainingprovisions with respect o anysuchFinancialFacility.Sac. 18-5-137, Nonprofit Corporation;Service Contract 2005; Hedges;ExpressApproval.Such nstruments as are acceptable othe FinanceDirector as being in accor-dancewith Sac.18-5-139 hall constitutea Hedge (an Authorized Hedge) forwhich the City may make ServicePaymentsnder a Service Contract 2005.Oneor moreAuthorized Hedges re per-mitred for eachService Contract 2005with HedgeCounterparties selected bythe FinanceDirector.Sac. 18-5-138. Nonprofit Corporation;Service Contract 2005; Hedges,References to Act 34 and SwapManagement lan.(a) The City Council recognizes hatneither the Revised Municipal FinanceAct, being 2001 PA 34, as amendedAct34), nor the City of Detroit, Michigan,SwapManagement /an as adopted onNovember 6, 2002, as the samemaybethereafter amendedthe SwapManage-ment Plan), is applicable Io theCorporation; however, since a ServiceContract 2005will obligate the City tomake ayments orrelative to paymentsmade by the Corporation under anAuthorized Hedge, he C~ty has deter-minedo generallyapplycriteria of Act 34and the Swap ManagementPlan as aprudential matter as they relate toAuthorized Hedges.(b) The use of Act 34 and the SwapManagementlan as prudential critedashall not make r be nterpreted to makeAct 34 or the SwapMan.agementPlan

applicable o the Corporation r its trans-actionsas a matterof law.Sac. 18-5-139. Nonprofit Corporation;Service Contract 2005; Hedges;Requirements.(a) Counterparty. The counterpartyshall meet he applicable equirements fAct 34.(b) Term.The erm of the Hedge hallnot extendbeyondhe duedate of the lastScheduled aymentnstallment.(c) Notional Amount. The notionalamountshall not exceed he aggregateamount f the ScheduledPayments.(d) CorporationRate.The ate payableby the Corporation shall not exceed heMaximum unding Rate.(e) Counterparty Rate. The ratepayableby the counlerparty shall notunduly expose he Corporation o materi-al basis risk in the opinionof the FinanceDirector.if) Termination. he ermination eventsshall be customaryor interest rate swapsof the nature of the Hedge ndshall com-ply with the SwapManagementlan.(g) Compliance. he Hedge hall con-form to the requirements of Act 34 andcomply with the SwapManagementlanin all material espects.Sac, 18-5-140. NonprofitCorporation;Service Contract 2005; Hedges;Risk

Acknowledgment..(a) Hedges have inherent risks.Inherent dsks that are generally recog-nized and reasonably foreseen are setforth In the SwapManagementlan aspreviously approved y the City Council.Any evaluation of risks necessarilyinvolves expectations and assumptionsabout uture events, whichby heir natureare uncertainandmay ot occur as antic-ipated. Furthermore, unforeseeneventsmayoccur which may have materialadverseeffects on present expectationsandassumptions.Hence, here can be noassurance hat all risks, regardless ofremoteness r other unforeseeability,havebeen evaluated.(b) Subjecto the imitations n any iskevaluation, the City Council expresslyacknowledgeshe dsks associated witheach Authorized Hedge.(c) The City Council understandshatIn order to prudently manage erviceCharges nd reduceFundingCost volatll-Ity, a Service Contract2005may bligatethe City to makeService Payments nrespect of Hedge eriodic PayablesandHedge Termination Payables eventhough, due o events beyondhe controlof the City or the Corporation,he SubjectUAAL~=not funded.Sac. 18-5-141. Nonprofit Corporation;Service Contract 2005; PublicOffering of Certificates, of Participa-tion; Underwriting Agreement.(a) Since the public offering of theCOPss for the benefit of the City, theFinanceDirector shall make he City aparty to the Underwriting Agreement yexecuting t in the name ndon behalf ofthe City.(b) TheCity shall not be a party to theUnderwritingAgreementf it provides orcompensationo underwriters in excessof one percent (1%) of the aggregateamount of Scheduled Payments(Underwriters Discount)or If the origi-nal issue discount n connectionwith theinitial public offedng f any COPs greaterthan en pement10%)except n the caseof DeepDiscount COPs.(c) The odginal issue discount for anyDeepDiscount COPs hall not result Insuch DeepDiscount COPs aving a yield-to-maturity (computedn accordance ithcustomary municipal finance practice)that exceeds he MaximumundingRate.(d) An Underwriting Agreementmayprovide for liquidated damages ayableby he City in the event he closing condi-tions required o be satisfied by either theCity or the Corporationre not satisfied. Ifa good aith check n the amount f theliquidated damages payable by theUnderwriterss required o be provided ythe Representative, hen such good aithcheckshall bepayable o the order of theCity.Sac. 18-5-142. Disclosure Information.(a) The FinanceDirector is authorizedto prepare or cause he preparation ofinformation relating to the City (the CityInformation) for inclusion In theDisclosure Document; o deem he CityInformation "final" for purposes f Rule15c2-12promulgatedby the Securitiesand Exchange Commission under theSecurities and Exchange ct of 1934,asamendedthe Rule); and o sign the CilyInformation n the name f and on behalfof theCity.(b) The Finance Director mayautho-rize the distribution of the City Informationby he Underwritersn connectionwith theinitial public offedng 1 the COPs.



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Sec. 18-5-143. Continuing Disclosure.The FinanceDirector mayenter into aContinuing Disclosure Agreementn thename f and on behalf of the City withrespect o the City Information n custom-ary form in order to permit the Under-writers and other Persons ubject to theRule to comply herewith in connectionwith the purchaseandsale of COPs.Sec. 18-5-144. Actlona on Behalf ofthe City.In addition to the authority hereinexpressly ranted o the FinanceDirector,.the FinanceDirector is herebyauthorizedanddirected to do all things and ake allactions necessaryor desirable to con-summatehe other transactions contem-plated by his Ordinance.Section 2. If any word, clause, sen-tence, paragraph, rovision, or section ofthis ordinances invalidated by any Courtof competenturisdiction, the remainingwords, clauses, provisions, paragraphs,and sections shall not be alfected andshall continuen full force andeffect.Section 3. All ordinances,or parts ofordinances,n conflict with this ordinanceare repealed.Section 4. This ordinance s declarednecessary o preserve the public peace,health, safety, andwelfareof the People ftheCity of Detroit.Section5. In the event hat this ordi-nance s approvedby a two-thirds (2/3)majodty f City CouncilMem~-e-rserving,this ordinanceshall be given mmediateeffect and shall become ffective uponpublication n accordance ith Section4-116of the 1997Detroit City Charter.See Sec, 18-5-122 for other termsdefinedelsewheren this Ordinance,(J.C.C, . )Passed: February4, 2005Approved: February8, 2005Published: February14, 2005Effective: February14, 2005JACKIEL. CURRIECity Clerk



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AFFIDAVIT OF PUBLICATIONIN THE MATTEROF

STATEOF MICHIGANCountyof WaynePushpa ayaprakash being duly sworn,deposes ndsays he annexedrinted copyof a notice was aken rom:TheDetroit Legal Newsa newspaperrinted andcirculated n said State andCounty n:February07

A.D.

new~.p__~per,ndknows ell the facts statedherein.

PushpaJayaprakashSubscribed ndsworn o before me his7th ~ [~ da_.y_.,.~ Febr)4aryChristina ~l~coSs " ~Notary Public, Oakland Gou~lMyCommissionxpires February24, 2007Acting in Wayne ounty, MI

2005 that (s)he s the agent f the printersof said

A.D. 2005



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Mor, DAy, EBRUARY, 200:: lhe Detroit Legal News,



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Page 6, The Detrwt Legal ~IONDAY,b~BRLIARY, 2UU~)


Documents

1-2 Detroit Pension Lawsuit Exhibit B