Common use of Adverse Impact on ABAG Clause in Contracts

Adverse Impact on ABAG. If, as a result of an Adverse Determination, ABAG incurs a payment obligation to CalPERS with respect to service credit accrued by Transitioned Employees on or after July 1, 2017 while employed by MTC, irrespective of CalPERS’ determination regarding the common law employment status of Transitioned Employees, MTC shall do the following: (i) Provide funds to ABAG, in the manner set forth in Section 6.2(a)(ii), in an amount equal to ABAG’s ongoing CalPERS liabilities with respect to pension benefits accrued by Transitioned Employees as of July 1, 2017 until the termination of their employment by MTC. The determination of any amounts due under this provision shall be made by a state-recognized actuarial entity with CalPERS expertise, selected by mutual agreement of MTC and ABAG. Such amount shall be calculated, at least annually, by reference to the normal cost and unfunded actuarial accrued liability in the annual CalPERS actuarial valuation report for ABAG, and shall include any administrative fees assessed by CalPERS on ABAG. MTC’s obligations under this Section 6.2(a)(i) shall continue until ABAG no longer has an obligation to fund CalPERS liabilities with respect to service credit accrued by Transitioned Employees on or after July 1, 2017. (ii) Upon an Adverse Determination, establish a trust under Internal Revenue Code Section 115 (“115 Trust”), for the limited purpose of prefunding pension liabilities, and shall contribute to the 115 Trust the amounts due under Section 6.2(a)(i). The 115 Trust shall be funded by MTC according to a schedule agreed upon by the parties, but no less than annually. The 115 Trust shall be held in ABAG’s name in order to allow ABAG to control disbursement of funds from the 115 Trust to CalPERS in satisfaction of ABAG’s CalPERS liabilities with respect to service credit accrued by Transitioned Employees on or after July 1, 2017. MTC shall have control over the investment of the 115 Trust assets. (iii) During ABAG’s continued receipt of the funds described in Section 6.2(a)(i) from MTC, the Transitioned Employees shall have sole recourse to ABAG, and ABAG will indemnify and hold MTC harmless from any claims of such Transitioned Employees related to CalPERS retirement benefits. ABAG’s indemnification obligations described in the preceding sentence shall cease in the event that MTC fails to make a scheduled funding payment under Section 6.2(a)(ii) and such failure is not corrected within 90 days of the scheduled payment date.