01-0421R

RESOLUTION FOR APPROVING AMENDMENT TO BYLAWS OF MILLER-DWAN MEDICAL CENTER, INC.

BY PRESIDENT EDWARDS:

        WHEREAS, in 1997 the board of directors of trusts of Miller-Dwan Medical Center submitted a unanimous recommendation that the city council request the Minnesota legislature to adopt legislation authorizing the board of directors of trusts to create a nonprofit corporation and transfer the assets and liabilities of Miller-Dwan Medical Center to such corporation; and

        WHEREAS, a task force jointly established by the city of Duluth and the Miller-Dwan Medical Center board of directors of trusts reviewed the recommendations of the board of directors of trusts and unanimously concurred with such recommendations; and

        WHEREAS, such task force specifically recommended adoption of the draft legislation, articles of incorporation and bylaws on file in the office of the city clerk as Public Document No. 97-0225-09; and

        WHEREAS, the Miller-Dwan Medical Center board of directors of trusts indicated its approval of the form of such draft legislation, articles of incorporation and bylaws, and its agreement to adopt such articles of incorporation and bylaws prior to or upon enactment of such draft legislation; and

        WHEREAS, the Duluth City Council reviewed the recommendations of the task force and determined that it was in the best interests of the citizens of Duluth that they be implemented; and

        WHEREAS, on February 25, 1997, the Duluth City Council adopted resolution 97-0174 which requested the Minnesota legislature to adopt the above referred to legislation authorizing the creation of a Minnesota nonprofit corporation and the transfer of the assets and liabilities of Miller-Dwan Medical Center to such nonprofit corporation, provided that such legislation would be subject to approval by the Duluth City Council before it became effective; and

        WHEREAS, the above referred to legislation was enacted as Chapter 101 of the 1997 laws of Minnesota which legislation was subsequently approved by the Duluth City Council by resolution 97-0434 adopted May 27, 1997; and

        WHEREAS, pursuant to the above referred to legislation all of the tangible and intangible assets used or held in connection with and all liabilities related to or arising out of the operation of Miller-Dwan Medical Center were transferred to Miller-Dwan Medical Center, Inc., a Minnesota nonprofit corporation, as of 12:00 a.m on January 1, 1998; and

        WHEREAS, St. Mary's/Duluth Clinic Health System (SMDC) is a Minnesota nonprofit corporation which has been recognized as a tax exempt charitable organization described in Section 501(c)(3) of the Internal Revenue Code. SMDC is affiliated with the Duluth Clinic, a Minnesota nonprofit corporation which has been recognized as a tax exempt charitable organization described in section 501(c)(3) of the Internal Revenue Code. The Duluth Clinic provides medical care in Minnesota, Wisconsin and Michigan. SMDC also is affiliated with St. Mary's Medical Center, a Minnesota nonprofit corporation which is been recognized as a tax exempt charitable organization described in Section 501(c)(3) of the Internal Revenue Code. St. Mary's Medical Center owns and operates an acute care hospital in Duluth, Minnesota; and

        WHEREAS, the board of directors of Miller-Dwan Medical Center, Inc., has determined that it is in the best interests of the citizens of Duluth and in furtherance of its charitable trust purposes to affiliate with SMDC; and

        WHEREAS, SMDC and Miller-Dwan Medical Center, Inc., desire to affiliate in order to bring together two systems which currently offer many complementary services in order to reduce costs, improved quality and maintain or improve access to needed health care services consistent with an in furtherance of the charitable trust obligations of SMDC and Miller-Dwan; and

        WHEREAS, Section 8.4 of the bylaws of Miller-Dwan Medical Center, Inc., provides that no amendments shall be made to Article I, Section 4.7, Section 8.4, Section 8.8 or Section 8.9 unless such amendment has been approved by the board of directors of Miller-Dwan Medical Center, Inc., and the city council of Duluth Minnesota; and

        WHEREAS, in connection with the affiliation between SMDC and Miller-Dwan Medical Center, Inc., it is contemplated that the bylaws of Miller-Dwan Medical Center, Inc. will be amended and restated as set forth in Attachment A to this resolution (Public Document No. _____________), including amendments to Article I, Section 8.4 and Section 8.9; and

        WHEREAS, the board of directors of Miller-Dwan Medical Center, Inc., has requested the approval of such amendments by the city council pursuant to Section 8.4 of the bylaws of Miller-Dwan Medical Center, Inc.

        NOW, THEREFORE, IT IS HEREBY RESOLVED, that the Duluth City Council hereby approves the amendments to Article I, Section 8.4 and Section 8.9 of the bylaws of Miller-Dwan Medical Center, Inc., as set forth in the amended and restated bylaws of Miller-Dwan Medical Center, Inc., filed as Public Document No. _____________ (Exhibit A).



STATEMENT OF PURPOSE:  The purpose of this resolution is to approve certain amendments to the bylaws of Miller-Dwan Medical Center, Inc. (Miller-Dwan Inc.).

Prior to 1997, Miller-Dwan Medical Center was owned by a unique entity controlled by the city of Duluth. After study, the city council approved a resolution recommending the adoption of legislation which would permit Miller-Dwan Medical Center to be transferred to a new nonprofit corporation. The legislation was passed and confirmed by the city council. In 1998, the assets and liabilities of the medical center were transferred to Miller-Dwan, Inc. The bylaws of Miller-Dwan, Inc., require the approval of the city council for amendment to certain sections of its bylaws.

In accordance with the bylaws of the Miller-Dwan, Inc., the board of directors of Miller-Dwan, Inc., convened a public meeting to receive comments on the board's preliminary determination to affiliate with St. Mary's/Duluth Clinic Health System (SMDC). Following consideration of those comments, the board of directors has determined that it would be in the best interests of the citizens of Duluth and promote the fulfillment of its charitable purposes to affiliate Miller-Dwan, Inc., with SMDC.

The affiliation agreement between Miller-Dwan, Inc., and SMDC will require the establishment of a new nonprofit corporation to be named Generations Health Care Initiatives, Inc. (Generations). Prior to the affiliation with SMDC, Miller-Dwan, Inc., will transfer approximately $13 million to Generations to be used for the same charitable purposes applicable to Miller-Dwan, Inc. At the outset, the board of directors of Generations will be comprised of substantially the same persons who now are on the board of directors of Miller-Dwan, Inc. As a party to the affiliation agreement, Generations will be specifically authorized to bring legal action to enforce the commitment of SMDC to maintain Miller-Dwan as a secular facility with an open medical staff.

The form of the affiliation transaction which the parties have selected requires the amendment of the bylaws of Miller-Dwan, Inc. This resolution approves the amendments to the bylaws.