Bylaws of Bethesda Lutheran Foundation, Inc. (As Revised November 16, 2013) TABLE OF CONTENTS ARTICLE I OFFICES... 3 ARTICLE II BOARD OF DIRECTORS... 3 Section 1. GENERAL POWERS AND PURPOSES... 3 Section 2. NUMBER AND QUALIFICATIONS OF DIRECTORS... 3 Section 3. DIRECTOR SELECTION AND TERMS... 4 Section 4. RESIGNATION... 6 Section 5. REMOVAL... 6 Section 6. VACANCIES... 6 Section 7. REGULAR MEETINGS... 6 Section 8. SPECIAL MEETINGS... 6 Section 9. MEETINGS BY TELEPHONE OR OTHER COMMUNICATION TECHNOLOGY... 7 Section 10. NOTICE AND WAIVER OF NOTICE... 7 Section 11. QUORUM... 8 Section 12. MANNER OF ACTING... 8 Section 13. ACTION BY WRITTEN CONSENT OF DIRECTORS... 8 Section 14. PRESUMPTION OF ASSENT... 8 Section 15. COMPENSATION... 8 ARTICLE III COMMITTEES... 9 Section 1. STANDING COMMITTEES GENERALLY.... 9 Section 2. THE EXECUTIVE COMMITTEE.... 9 Section 3. THE GOVERNANCE COMMITTEE.... 10 Section 4. THE AUDIT COMMITTEE.... 11 Section 5. SUBCOMMITTEES.... 12 Section 6. AD HOC COMMITTEES.... 12 ARTICLE IV OFFICERS... 13 Section 1. NUMBER... 13 Section 2. ELECTION AND TERM OF OFFICE... 13 Section 3. REMOVAL... 13 Section 4. VACANCIES... 14 Section 5. CHAIRMAN OF THE BOARD... 14 Section 6. THE VICE-CHAIRMAN OF THE BOARD... 14 Section 7. THE PRESIDENT... 14-1 -
Section 8. THE SECRETARY... 15 Section 9. THE TREASURER... 15 Section 10. OTHER ASSISTANTS AND ACTING OFFICERS... 15 Section 11. ADDITIONAL OFFICERS... 15 Section 12. COMPENSATION... 16 ARTICLE V FUNDING POLICY FOR BETHESDA LUTHERAN COMMUNITIES, INC.... 16 ARTICLE VI INDEMNIFICATION... 16 Section 1. INDEMNIFICATION FOR SUCCESSFUL DEFENSE... 16 Section 2. OTHER INDEMNIFICATION... 16 Section 3. WRITTEN REQUEST... 17 Section 4. NONDUPLICATION... 17 Section 5. DETERMINATION OF RIGHT TO INDEMNIFICATION... 17 Section 6. ADVANCE EXPENSES... 18 Section 7. NONEXCLUSIVITY... 19 Section 8. COURT-ORDERED INDEMNIFICATION... 19 Section 9. INDEMNIFICATION OF EMPLOYEES OR AGENTS... 20 Section 10. INSURANCE... 20 Section 11. LIBERAL CONSTRUCTION... 20 Section 12. DEFINITIONS APPLICABLE TO THIS ARTICLE... 20 Section 13. PRIVATE FOUNDATIONS... 22 ARTICLE VII FISCAL YEAR... 22 ARTICLE VIII SEAL... 22 ARTICLE IX CORPORATE ACTS, LOANS, AND DEPOSITS... 22 Section 1. CORPORATE ACTS.... 22 Section 2. LOANS... 23 Section 3. DEPOSITS... 23 Section 4. FINANCIAL REPORTING... 23 ARTICLE X AMENDMENTS... 23 Section 1. BY THE DIRECTORS... 23 Section 2. IMPLIED AMENDMENTS... 23 ARTICLE XI PARLIAMENTARY AUTHORITY... 24-2 -
ARTICLE I OFFICES Bethesda Lutheran Foundation, Inc. (the Foundation ) shall maintain a principal office in the State of Wisconsin. The Foundation may have such other offices, either within or without the State of Wisconsin, as may be designated from time to time by resolution of the Board of Directors. ARTICLE II BOARD OF DIRECTORS Section 1. GENERAL POWERS AND PURPOSES All corporate powers shall be exercised by or under the authority of, and the affairs of the corporation managed under the direction of, the Board of Directors. The purposes of the corporation as a supporting organization for Bethesda Lutheran Communities, Inc. are set forth in the Articles of Incorporation. To those ends, the Board of Directors duties and responsibilities shall include: (a) The establishment and maintenance of an appropriate investment policy and associated goals and standards; (b) The engagement of professional investment and financial planning counsel to manage the invested assets, and the evaluation of such counsel based upon the goals and standards of the investment policy; (c) The ongoing evaluation and amendment if necessary of the investment policy, to ensure its alignment with and support for the strategic goals and business needs of Bethesda Lutheran Communities, Inc. Section 2. NUMBER AND QUALIFICATIONS OF DIRECTORS (a) The Board of Directors shall be comprised of from eight (8) to thirteen (13) directors. The Chairman shall determine the number of directors in consultation with the Chairperson of the Governance Committee. (b) The four (4) directors who are directors by virtue of their being director officers of Bethesda Lutheran Communities, Inc. shall meet its director qualification requirements. (c) Two (2) of the directors may be communicant members of any Lutheran congregation. (d) All directors other than those described in (b) and (c) of this section shall be communicant members of a Lutheran congregation which (1) on January 1, 1952, - 3 -
agreed in faith and doctrine with, or was affiliated with, a Synod which on that date was affiliated with the Evangelical Lutheran Synodical Conference of North America; or (2) was organized since January 1, 1952, and is now affiliated with a Synod agreeing in faith and doctrine with any or all Synods of the former Evangelical Lutheran Synodical Conference of North America. Section 3. DIRECTOR SELECTION AND TERMS (a) Director Officers of Bethesda Lutheran Communities, Inc. The four (4) director officers of Bethesda Lutheran Communities, Inc., consisting of its Chairman of the Board, Vice-Chairman of the Board, Secretary and Treasurer, shall be directors of the Foundation as an incident of and while occupying their positions as director officers of Bethesda Lutheran Communities, Inc., unless removed as provided herein or by law. (b) Directors Elected by Bethesda Lutheran Communities, Inc. As specified in the table at (f) in this section, from one (1) to three (3) of the director positions shall be elected by the Board of Directors of Bethesda Lutheran Communities, Inc. These candidates shall be nominated by the Foundation s Governance Committee. (c) Directors Elected by the Board. As specified in the table at (f) in this section, from three (3) to six (6) director positions shall be elected by the Board of Directors of the Foundation. These candidates shall be nominated by the Foundation s Governance Committee. (d) When Director Elections May Occur. A director(s) election may occur at the annual regular November Board of Directors meeting; or at any regular or special Board of Directors meeting of Foundation or Bethesda Lutheran Communities, Inc., depending upon the electing body, where the Chairman of the Board has decided to either (1) increase the number of directors within the permissible range, or (2) fill a director vacancy. (e)term of Office. Subject to the below, the term of office for an elected director shall be three (3) years. For directors elected at the regular annual November Board of Directors meeting, the election term shall begin at the adjournment of the Board of Directors meeting at which the election was held, and shall end at the adjournment of the regular November Board of Directors meeting held three years after the election. For directors elected not to fill a vacancy other than during the regular annual November Board of Directors meeting election, the election term shall begin at the adjournment of the Board of Directors meeting at which the election was held and shall end at the adjournment of the regular November Board of Directors meeting next following three years after the election. The election term for a director elected to fill a vacancy shall begin at the adjournment of the Board of Directors meeting at which the election was held and shall end when the term would have ended for the director who vacated the position. - 4 -
(f) Director Election Class & Election Year Sub-Class Allocation. Elected directors are organized into two election classes: the directors elected by the Foundation Board of Directors, and the directors elected by the Bethesda Lutheran Communities, Inc. Board of Directors. The number of directors elected by the Foundation and Bethesda Lutheran Communities, Inc. (BLC) shall vary depending on the total number of directorships, and shall be as follows: Total # of Directors Officer- Directors of BLC Elected by Foundation Elected by BLC 13 6 3 4 12 5 3 4 11 5 2 4 10 4 2 4 9 4 1 4 8 3 1 4 The Governance Committee shall assign directors into election classes in compliance with the allocation requirements of this section. In the event that, due to resignation or other cause, the Board of Directors does not meet the director election class allocation requirements, the Governance Committee shall assign one or more directors to the other election class to meet the requirement. In doing so, the Governance Committee shall meet the requirement through a method that changes the election class of the fewest directors possible. Each election class shall be further divided into three (3) election year sub-classes each to consist of, as nearly as possible, an equal number of directors. The term of each election year sub-class shall end in a different year of the three-year election cycle. The Governance Committee shall assign directors into election year sub-classes, and in doing so shall attempt to make the election year sub-classes consist of, as nearly as possible, an equal number of directors. In the event that the Board of Directors election year sub-classes are materially unequal, the Governance Committee may in its discretion assign one or more directors to another election year sub-class to better meet the election year sub-class allocation goal. In doing so, the Governance Committee shall apply a method that changes the election year sub-class of the fewest directors possible. If a director is assigned to another election year sub-class, the director s term and election cycle shall be that of the newly assigned sub-class, except if applicable the director s last eligible election term shall be for one or two years as needed to permit the director to reach the director s term limit. (g) Director Term Limits. A director initially elected during a regular November Board of Directors meetings election shall be ineligible to serve as a director after the adjournment of the regular November Board of Directors meeting held twelve years after the director s initial election. A director not filling a vacancy elected at a time other than the usual - 5 -
November election shall be ineligible to serve as a director after the adjournment of the regular November Board of Directors meeting next following twelve years after the director s initial election. A director elected to fill a vacancy shall be ineligible to serve as a director after having completed serving twelve years from the director s initial regular November Board of Directors meetings election. The initial elected terms of the following directors elected in 2006 and 2007 shall not count for purposes of the application of this standard: Quinten Buechner, James Huebner, Kent Raabe and John Zimdars. Section 4. RESIGNATION A director may resign at any time by filing a written resignation with the Secretary of the Foundation. Section 5. REMOVAL A director may be removed from office with or without cause by the Board of Directors of the Foundation, either at a regular meeting or at any special meeting called for that purpose. Section 6. VACANCIES In the event a vacancy occurs in the Board of Directors, and if the Chairman determines that the vacancy should be filled or the vacancy would reduce the number of directors to less than the minimum of fifteen (15), an interim director shall be elected either by the Board of Directors of Bethesda Lutheran Communities, Inc., or by the Board of Directors of the Foundation, depending upon the applicable election class allocation requirements. An interim director shall serve until a successor is elected upon expiration of the term of office for that director. Section 7. REGULAR MEETINGS The Board of Directors shall have a regular meeting once every three months, ordinarily in February, May, August and November. Section 8. SPECIAL MEETINGS Special meetings of the Board may be called by the Chairman of the Board, or upon the written request of six (6) directors. - 6 -
Section 9. MEETINGS BY TELEPHONE OR OTHER COMMUNICATION TECHNOLOGY (a) Any or all directors may participate in a meeting of the Board of Directors, regular or special, or in any committee meeting of the Board of Directors, including a committee empowered to exercise the power of the Board of Directors in designated matters, by or through the use of a computer system, telephone or any other means of communication by which either: (i) all participating directors may simultaneously hear each other during the meeting or (ii) all communication during the meeting is immediately transmitted to each participating director, and each participating director is able to immediately send messages to all other participating directors. (b) If a meeting will be conducted through the use of any means described in subsection (a), all participating directors shall be informed that a meeting is taking place at which official business may be transacted. A director participating in a meeting by any means described in subsection (a) is deemed to be present in person at the meeting. Section 10. NOTICE AND WAIVER OF NOTICE (a) Notice. Each director shall designate to the Secretary a physical address and a telephone number, and if available an email address and fax number, for the receipt of notices. Notice of any meeting shall be given by oral or written notice delivered personally to each director at least twenty-four (24) hours prior thereto; by written notice sent by email, facsimile or overnight delivery service at least forty-eight (48) hours prior thereto; or by United States Mail where the notice is deposited with proper postage prepaid at least one-hundred twenty (120) hours prior thereto, unless a different time shall be provided by Chapter 181 of the Wisconsin Statutes. Facsimile and email notices shall be deemed given at the time of transmission to the recipient. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. The purpose of and the business to be transacted at any special meeting of the Board of Directors need not be specified in the notice or waiver of notice of such meeting. (b) Waiver of Notice. Whenever any notice whatever is required to be given under the provisions of Chapter 181 of the Wisconsin Statutes or under the provisions of the Articles of Incorporation or Bylaws of the Foundation, a waiver thereof in writing, signed at any time by the person or persons entitled to such notice, shall be deemed equivalent to the giving of such notice. - 7 -
Section 11. QUORUM A majority of the number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. If less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. Section 12. MANNER OF ACTING The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by Chapter 181 of the Wisconsin Statutes, or the Articles of Incorporation or Bylaws of the Foundation. Section 13. ACTION BY WRITTEN CONSENT OF DIRECTORS Any action required by the Articles of Incorporation or Bylaws of the Foundation, or any provision of law, to be taken at a meeting of the Board of Directors or any committee of the Board of Directors, including a committee empowered to exercise the power of the Board of Directors in designated matters, or any other action which may be taken at such a meeting, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote. Section 14. PRESUMPTION OF ASSENT A director of the Foundation who is present at a meeting of the Board of Directors, or a committee thereof, at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless such director's dissent shall be entered in the minutes of the meeting or unless such director shall file a written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Foundation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. Section 15. COMPENSATION Directors of the Foundation shall not receive compensation for serving as directors, but may receive reasonable compensation for other personal services rendered which are necessary to carrying out the exempt purposes of the Foundation. In addition, directors may receive reimbursement for reasonable expenses incurred in connection with - 8 -
corporate matters, provided that such reimbursement is authorized by the Board of Directors. ARTICLE III COMMITTEES Section 1. STANDING COMMITTEES GENERALLY. There shall be the following standing committees: an Executive Committee, a Governance Committee and an Audit Committee. It is not required that all directors serve on a standing committee. All standing committee members shall be directors of the Foundation. If not a regular member, the Chairman of the Board shall be an ex-officio member of all standing committees, i.e. has the right to attend meetings with full member rights but is not obligated to do so and is not counted in determining a quorum. The President and Chief Executive Officer shall be advisory to all standing committees. The Chairman of the Board shall annually appoint the chairperson of the Governance Committee and the other appointed members of the standing committees, which shall be done as soon as practicable after the November Board of Directors meeting. In making committee member appointments, the Chairman of the Board shall consult with the standing committee chairpersons, and consider the needs of the standing committee and the qualifications of individual directors. Committee member terms begin upon their appointment, and end upon the appointment of a successor. In the event of a mid-term vacancy in a standing committee, the Chairman of the Board shall fill the vacancy by appointment. Where appropriate, each standing committee shall generate its own areas of concern and determine what future policy, or change in policy, is indicated. It shall make such recommendations to the Board of Directors as are deemed necessary by it. A record of each standing committee meeting shall be made in the form of written minutes. Standing committee minutes shall be made available to the Board as soon as practicable. Section 2. THE EXECUTIVE COMMITTEE. The Executive Committee shall consist of the Chairman of the Board, Vice-Chairman of the Board, Secretary, and Treasurer. The Chairman of the Board shall be the chairperson of the Executive Committee. The Executive Committee shall have the power to transact all business necessary between meetings of the Board of Directors except: (1) review of accounting practices and risk matters assigned to the Audit - 9 -
Committee, (2) governance matters assigned to the Governance Committee. The Executive Committee shall meet as needed. Meetings shall be called by the Chairman of the Board or may be called on the request of two (2) members of the committee. Section 3. THE GOVERNANCE COMMITTEE. The Governance Committee shall consist of a chairperson and four other directors. The Chairman of the Board shall appoint the members of the Governance Committee, and shall appoint its chairperson. The Chairman of the Board may serve on the Governance Committee, and may act as its chairperson. No more than two (2) directors facing election in the current election year may be appointed to the Governance Committee. No chairperson of the Governance Committee shall serve for more than six consecutive years. The Governance Committee shall have the following authority and responsibilities: A. The Governance Committee shall determine whether incumbent directors seeking an additional term will be placed on the ballot for re-election; B. The Governance Committee shall identify and select candidates for director elections for the Foundation; C. The Governance Committee shall make arrangements for and supervise the conduct of the directors elections consistent with these Bylaws and the policies of the Foundation; D. The Governance Committee shall ensure compliance with the composition requirements for the Board of Directors. It shall assign directors to election classes and election year sub-classes and designate eligible directors as Lutheran-at-Large directors for purposes of synodical affiliation as provided herein. E. The Governance Committee shall evaluate the performance of directors. F. The Governance Committee shall provide for an appropriate orientation for new directors. G. The Governance Committee shall provide for ongoing training and development for all directors. - 10 -
H. The Governance Committee shall on an ongoing basis assess and seek to improve the functioning of the Board of Directors and its systems of governance. I. The Governance Committee shall periodically review the governing documents (Articles of Incorporation, Bylaws and Board governance policies), and recommend any changes it deems advisable to the Board of Directors. Section 4. THE AUDIT COMMITTEE. The Audit Committee shall consist of the Treasurer and from two to four other directors. The Treasurer shall be the chairperson of the Audit Committee. The Chairman of the Board shall determine the size of the Audit Committee, and shall appoint the appointed members of the Audit Committee. The Chairman of the Board may serve on the Audit Committee. The Audit Committee shall have the following authority and responsibilities: A. The Audit Committee shall oversee the accounting practices and policies of the Foundation. B. The Audit Committee shall annually engage independent auditors to examine the finances and accounting systems of the Foundation, and to submit an audit report to the Board of Directors at its November meeting. The independent auditors shall report directly to the Audit Committee. The Audit Committee shall convey to the independent auditors that they are accountable to the Audit Committee and ultimately the Board of Directors. C. The Audit Committee shall resolve any disagreements between management and the independent auditors regarding financial reporting. This authority shall not be delegated to management or the Board of Directors. D. The Audit Committee shall have the power to retain and terminate the services of independent auditors, outside legal counsel, or other consultants as necessary to fulfill its responsibilities as stated herein. E. The Audit Committee shall have the power to require management and others to attend its meetings and provide pertinent information as necessary. It may conduct executive sessions with independent auditors, the President and Chief Executive Officer, the Vice President of Finance, the Vice President of Legal Affairs and other staff or contracted consultants to review any matter relating to the finances and accounting systems of the Foundation or significant risks or exposures facing the Foundation. F. The Audit Committee shall review all legal and regulatory matters that may have a material impact on the Foundation s financial statements. G. The Audit Committee shall promptly report to the Board of Directors any noteworthy findings or potentially damaging circumstances that have the - 11 -
potential to materially and adversely affect the Foundation. H. The Audit Committee shall oversee the Foundation s ethics and compliance program. I. The Audit Committee shall establish procedures to receive and respond appropriately to reports from any source regarding accounting concerns, internal controls, auditing matters or potentially illegal activities. J. The Audit Committee shall at least annually report its activities and findings to the Board of Directors. K. The Audit Committee shall on an ongoing basis consult and coordinate with the Audit Committee of Bethesda Lutheran Communities, Inc. Section 5. SUBCOMMITTEES. A standing committee may create one or more subcommittees to assist with or more efficiently conduct the work of the standing committee. A subcommittee shall be advisory to the standing committee only. The chairperson of any subcommittee shall be a member of the standing committee. The standing committee chairperson shall appoint the members of a subcommittee. Subcommittee members may include any member of the Board of Directors or any other person selected by the standing committee chairperson. The Chairman of the Board shall be an ex-officio member of all subcommittees. Section 6. AD HOC COMMITTEES. Ad hoc committees may be appointed as deemed necessary by the Board of Directors. These committees shall be advisory to the Board of Directors or any of its committees and shall have no other legal status. Unless the enabling resolution appoints the members and chairperson of an ad hoc committee, the Chairman of the Board shall appoint the members of an ad hoc committee and its chairperson. An ad hoc committee may include any member of the Board of Directors or any other person selected by the Chairman of the Board. The initial charge shall advise the ad hoc committee when and to whom it should make its report and recommendations. Each ad hoc committee shall automatically cease to exist as soon as it has completed its assigned task unless extended by a resolution of the Board of Directors. The Chairman of the Board shall be an ex-officio member of all ad hoc committees. - 12 -
ARTICLE IV OFFICERS Section 1. NUMBER The Foundation shall have five principal officers: a Chairman of the Board, a Vice- Chairman of the Board, a President, a Treasurer and a Secretary. Subject to the approval of the Board of Directors, the President may designate principal executive staff as officers of the Foundation. Any officers so designated shall have an officer title including the phrase Vice President. The Board of Directors shall elect the Chairman of the Board, Vice-Chairman of the Board, Treasurer and the Secretary. Subject to sections 3 and 4 below, the President shall be the President and Chief Executive Officer of Bethesda Lutheran Communities, Inc., and shall hold the office of President as an incident of and while occupying that position, unless removed by the Board of Directors. The same person may hold any of the following combinations of offices: Vice-Chairman of the Board and Secretary; Treasurer and Secretary. The President shall hold no other office. The four (4) directors who are directors by virtue of their being director officers of Bethesda Lutheran Communities, Inc. shall not be eligible to be officers of the Foundation. Section 2. ELECTION AND TERM OF OFFICE The elected officers of the Foundation shall be elected annually by the Board of Directors at its annual regular Board of Directors meeting in November. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each elected officer shall hold office from the close of the annual meeting for a term of one year, or until a qualified successor is elected upon expiration of the term of that officer, or until that officer's death, or until that officer shall resign or shall have been removed in the manner hereinafter provided. Section 3. REMOVAL Any officer or agent of the Foundation may be removed by the Board of Directors, whenever in its judgment the best interests of the Foundation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. - 13 -
Section 4. VACANCIES A vacancy in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the Board of Directors for the unexpired portion of the term. If the office of President is vacant because the position of President and Chief Executive Officer of Bethesda Lutheran Communities, Inc. is unoccupied, the Board of Directors may fill the position until such time as the position of President and Chief Executive Officer of Bethesda Lutheran Communities, Inc. is occupied. If the office of President is vacant because the Board of Directors has removed the President but the position of President and Chief Executive Officer of Bethesda Lutheran Communities, Inc. remains occupied, then the Board of Directors may appoint a President for a term specified by it. Section 5. CHAIRMAN OF THE BOARD The Chairman of the Board, subject to the control of the Board of Directors, shall have general supervision and control of the business and affairs of the Foundation. The Chairman of the Board shall, when present, preside at all meetings of the Board of Directors. The Chairman of the Board may sign and execute contracts and other written instruments in the name of the Foundation. The Chairman of the Board shall be authorized to perform all duties usually incident to that office, and such other duties as may be prescribed by the Board of Directors from time to time. Section 6. THE VICE-CHAIRMAN OF THE BOARD In the absence of the Chairman of the Board, or in the event of the Chairman of the Board 's death, inability or refusal to act, the Vice-Chairman of the Board shall perform the duties of the Chairman of the Board, and when so acting shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board. The Vice- Chairman of the Board shall perform such other duties as from time to time may be assigned by the Chairman of the Board or by the Board of Directors. Section 7. THE PRESIDENT The President shall be the principal executive officer of the Foundation and, subject to the control of the Board of Directors, shall have day-to-day charge and control of its business affairs. The President shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Foundation as he or she shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. The President may sign and execute contracts and other written instruments in the name of the Foundation. The President shall be authorized to perform all duties usually incident to that office, and such other - 14 -
duties as may be prescribed by the Board of Directors from time to time. Section 8. THE SECRETARY The Secretary shall: (a) be responsible for the creation of the minutes of all meetings of the Foundation, the Board of Directors and the Executive Committee; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) develop and maintain systems to keep and appropriately secure the minutes and records of the Board of Directors; (d) attend to the correspondence of the Foundation, countersign all documents required by the Board of Directors and attach the corporate seal thereto, if one is authorized by the Board of Directors, in which case the Secretary shall see that the seal of the Foundation is affixed to all documents, the execution of which on behalf of the Foundation under its seal is duly authorized; and (e) perform all duties usually incident to the office of Secretary and such other duties as from time to time may be assigned by the Chairman of the Board, the President, or by the Board of Directors. Section 9. THE TREASURER If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall: (a) have the oversight responsibility for all funds and securities of the Foundation and for moneys due and payable to the Foundation from any source whatsoever, including the deposit of such moneys in the name of the Foundation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these Bylaws; and (b) perform all of the duties usually incident to the office of Treasurer and such other duties as from time to time may be assigned by the Chairman of the Board or by the Board of Directors. Section 10. OTHER ASSISTANTS AND ACTING OFFICERS The Board of Directors shall have the power to appoint any person to act as assistant to any officer, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer so appointed by the Board of Directors shall have the power to perform all the duties of the office to which such person is so appointed to be assistant, or as to which such person is so appointed to act, except as such power may otherwise be defined or restricted by the Board of Directors. Section 11. ADDITIONAL OFFICERS Any additional officer appointed by the Board of Directors shall have only such authority, - 15 -
duties and responsibilities as shall be specifically authorized and designated by the Board of Directors or as provided by these bylaws. Section 12. COMPENSATION Officers of the Foundation shall not receive compensation for serving as officers, but may receive reasonable compensation for other personal services rendered which are necessary to carrying out the exempt purposes of the Foundation. In addition, officers may receive reimbursement for reasonable expenses incurred in connection with corporate matters, provided that such reimbursement is authorized by the Board of Directors. ARTICLE V FUNDING POLICY FOR BETHESDA LUTHERAN COMMUNITIES, INC. The Foundation shall automatically fund, without the need for Board of Directors action or approval, the operating deficits and capital expenditures of Bethesda Lutheran Communities, Inc. up to an annually computed Funding Limit, as specifically defined in the Funding Policy Agreement between the Foundation and Bethesda Lutheran Communities, Inc. To fund spending of Bethesda Lutheran Communities, Inc. proposed to exceed the annually computed Funding Limit, the Board of Directors must specifically approve that portion of the proposed spending that exceeds the annually computed Funding Limit by a simple majority vote of the directors present at a meeting of the Board of Directors. ARTICLE VI INDEMNIFICATION Section 1. INDEMNIFICATION FOR SUCCESSFUL DEFENSE Within 20 days after receipt of a written request pursuant to Section 3, the Foundation shall indemnify a director or officer, to the extent he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer of the Foundation. Section 2. OTHER INDEMNIFICATION (a) In cases not included under Section 1, the Foundation shall indemnify a director or officer against all liabilities and expenses incurred by the director or officer in a - 16 -
proceeding to which the director or officer was a party because he or she is a director or officer of the Foundation, unless liability was incurred because the director or officer breached or failed to perform a duty he or she owes to the Foundation and the breach or failure to perform constitutes any of the following: (1) A willful failure to deal fairly with the Foundation in connection with a matter in which the director or officer has a material conflict of interest. (2) A violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful. (3) A transaction from which the director or officer derived an improper personal profit. (4) Willful misconduct. (b) Determination of whether indemnification is required under this Section shall be made pursuant to Section 5. (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the director or officer is not required under this Section. Section 3. WRITTEN REQUEST A director or officer who seeks indemnification under Section 1 or 2 shall make a written request to the Foundation. Section 4. NONDUPLICATION The Foundation shall not indemnify a director or officer under Section 1 or 2 if the director or officer has previously received indemnification or allowance of expenses from any person, including the Foundation, in connection with the same proceeding. However, the director or officer has no duty to look to any other person for indemnification. Section 5. DETERMINATION OF RIGHT TO INDEMNIFICATION (a) Unless otherwise provided by the Articles of Incorporation or by written agreement between the director or officer and the Foundation, the director or officer seeking indemnification under Section 2 shall select one of the following means for determining - 17 -
his or her right to indemnification: (1) By a majority vote of a quorum of the Board of Directors consisting of directors not at the time parties to the same or related proceedings. If a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the Board of Directors and consisting solely of 2 or more directors not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee. (2) By independent legal counsel selected by a quorum of the Board of Directors or its committee in the manner prescribed in sub. (1) or, if unable to obtain such a quorum or committee, by a majority vote of the full Board of Directors, including directors who are parties to the same or related proceedings. (3) By a panel of 3 arbitrators consisting of one arbitrator selected by those directors entitled under sub. (2) to select independent legal counsel, one arbitrator selected by the director or officer seeking indemnification and one arbitrator selected by the 2 arbitrators previously selected. (4) By a court under Section 8. (5) By any other method provided for in any additional right to indemnification permitted under Section 7. (b) In any determination under (a), the burden of proof is on the Foundation to prove by clear and convincing evidence that indemnification under Section 2 should not be allowed. (c) A written determination as to a director's or officer's indemnification under Section 2 shall be submitted to both the Foundation and the director or officer within 60 days of the selection made under (a). (d) If it is determined that indemnification is required under Section 2, the Foundation shall pay all liabilities and expenses not prohibited by Section 4 within 10 days after receipt of the written determination under (c). The Foundation shall also pay all expenses incurred by the director or officer in the determination process under (a). Section 6. ADVANCE EXPENSES Within 10 days after receipt of a written request by a director or officer who is a party to a proceeding, the Foundation may, if funds are available pay or reimburse his or her reasonable expenses as incurred if the director or officer provides the Foundation with all of the following: - 18 -
(1) A written affirmation of his or her good faith belief that he or she has not breached or failed to perform his or her duties to the Foundation. (2) A written undertaking, executed personally or on his or her behalf, to repay the allowance to the extent that it is ultimately determined under Section 5 that indemnification under Section 2 is not required and that indemnification is not ordered by a court under Section 8(b)(2). The undertaking under this subsection shall be an unlimited general obligation of the director or officer and may be accepted without reference to his or her ability to repay the allowance. The undertaking may be secured or unsecured. Section 7. NONEXCLUSIVITY (a) Except as provided in (b), Sections 1, 2 and 6 do not preclude any additional right to indemnification or allowance of expenses that a director or officer may have under any of the following: (1) The Articles of Incorporation. (2) A written agreement between the director or officer and the Foundation. (3) A resolution of the Board of Directors. (b) Regardless of the existence of an additional right under (a), the Foundation shall not indemnify a director or officer, or permit a director or officer to retain any allowance of expenses unless it is determined by or on behalf of the Foundation that the director or officer did not breach or fail to perform a duty he or she owes to the Foundation which constitutes conduct under Section 2(a)(1), (2), (3) or (4). A director or officer who is a party to the same or related proceeding for which indemnification or an allowance of expenses is sought may not participate in a determination under this subsection. (c) Sections 1 to 12 do not affect the Foundation's power to pay or reimburse expenses incurred by a director or officer in any of the following circumstances: (1) As a witness in a proceeding to which he or she is not a party. (2) As a plaintiff or petitioner in a proceeding because he or she is or was an employee, agent, director or officer of the Foundation. Section 8. COURT-ORDERED INDEMNIFICATION (a) Except as provided otherwise by written agreement between the director or officer and the Foundation, a director or officer who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent - 19 -
jurisdiction. Application may be made for an initial determination by the court under Section 5(a)(5) or for review by the court of an adverse determination under Section 5(a)(1), (2), (3), (4) or (6). After receipt of an application, the court shall give any notice it considers necessary. (b) The court shall order indemnification if it determines any of the following: (1) That the director or officer is entitled to indemnification under Section 1 or 2. (2) That the director or officer is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, regardless of whether indemnification is required under Section 2. (c) If the court determines under (b) that the director or officer is entitled to indemnification, the Foundation shall pay the director's or officer's expenses incurred to obtain the court-ordered indemnification. Section 9. INDEMNIFICATION OF EMPLOYEES OR AGENTS The Foundation may indemnify and allow reasonable expenses of an employee or agent who is not a director or officer by general or specific action of the Board of Directors or by contract. Section 10. INSURANCE The Foundation may purchase and maintain insurance on behalf of an individual who is an employee, agent, director or officer of the Foundation against liability asserted against or incurred by the individual in his or her capacity as an employee, agent, director or officer, regardless of whether the Foundation is required or authorized to indemnify or allow expenses to the individual against the same liability under Sections 1, 2, 6, and 9. Section 11. LIBERAL CONSTRUCTION In order for the Foundation to obtain and retain qualified directors and officers, the foregoing provisions shall be liberally administered in order to afford maximum indemnification of directors and officers and, accordingly, the indemnification above provided for shall be granted in all cases unless to do so would clearly contravene applicable law, controlling precedent or public policy. Section 12. DEFINITIONS APPLICABLE TO THIS ARTICLE - 20 -
(a) "Affiliate" shall include, without limitation, any Foundation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Foundation. (b) "Foundation" means this corporation and any domestic or foreign predecessor of this corporation where the predecessor corporation's existence ceased upon the consummation of a merger or other transaction. (c) "Director or Officer" means any of the following: (1) A natural person who is or was a director or officer of the Foundation. (2) A natural person who, while a director or officer of the Foundation, is or was serving at the Foundation's request as a director, officer, partner, trustee, member of any governing or decision-making committee, employee or agent of another corporation or foreign corporation, partnership, joint venture, trust or other enterprise. (3) A natural person who, while a director or officer of the Foundation, is or was serving an employee benefit plan because his or her duties to the Foundation also impose duties on, or otherwise involve services by, the person to the plan or to participants in or beneficiaries of the plan. (4) Unless the context requires otherwise, the estate or personal representative of a director or officer. For purposes of this Article, it shall be conclusively presumed that any Director or Officer serving as a director, officer, partner, trustee, member of any governing or decision-making committee, employee, or agent of an Affiliate shall be so serving at the request of the Foundation. (d) "Expenses" include fees, costs, charges, disbursements, attorney fees, and other expenses incurred in connection with a proceeding. (e) "Liability" includes the obligation to pay a judgment, settlement, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employee benefit plan, and reasonable expenses. (f) "Party" includes a natural person who was or is, or who is threatened to be made, a name defendant or respondent in a proceeding. (g) "Proceeding" means any threatened, pending or completed civil, criminal, administrative, or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the Foundation or by any other person. - 21 -
Section 13. PRIVATE FOUNDATIONS Notwithstanding the foregoing, whenever the Foundation is a private foundation as defined in I.R.C. Section 509(a), it shall not make any indemnification which would give rise to a penalty excise tax under I.R.C. Chapter 42. ARTICLE VII FISCAL YEAR The fiscal year of the Foundation shall begin on the first day of September and end on the last day of August in each year. ARTICLE VIII SEAL The Board of Directors may provide a corporate seal and prescribe the form thereof. ARTICLE IX CORPORATE ACTS, LOANS, AND DEPOSITS Section 1. CORPORATE ACTS. Each officer shall have authority to sign, execute and acknowledge on behalf of the Foundation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports, and all other documents or instruments necessary or proper to be executed in the course of the Foundation's regular business, or which shall be authorized by resolution of the Board of Directors. Except as otherwise provided by law or directed by the Board of Directors, the Chairman of the Board or the President may authorize in writing any officer or agent of the Foundation to sign, execute and acknowledge such documents and instruments in his or her place and stead. The Secretary of the Foundation is authorized and empowered to sign in attestation all documents so signed, and to certify and issue copies of any such document and of any resolution adopted by the Board of Directors of the Foundation, provided, however, that an attestation is not required to enable a document to be an act of the Foundation. Each and all of said officers of the Foundation shall also have the further powers and shall discharge the duties not herein before specifically mentioned which are usually incidental to their respective offices in similar corporations organized under the laws of the State of Wisconsin and such other or further powers and duties as may from time to time be given and granted or required by the Bylaws of the Foundation or by due resolution of its members or Board of Directors. - 22 -
Section 2. LOANS No moneys shall be borrowed on behalf of the Foundation and no evidences of such indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 3. DEPOSITS All funds of the Foundation, not otherwise employed, shall be deposited from time to time to the credit of the Foundation in such banks or other depositories as the Board of Directors may select. Section 4. FINANCIAL REPORTING Within 180 days after the conclusion of each fiscal year, the Foundation shall furnish complete and accurate financial statements for the fiscal year to the Board of Directors of Bethesda Lutheran Communities, Inc., and shall promptly supply such additional financial or other information as may be requested from time to time by the Board of Directors of Bethesda Lutheran Communities, Inc. ARTICLE X AMENDMENTS Section 1. BY THE DIRECTORS These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by the Board of Directors at any regular or special meeting thereof by the vote of twothirds (2/3) of the directors. However, Sections 2, 3, 5 and 6 of Article II, Section 4 of Article IX and this Section of these Bylaws may be amended only by concurrent action through (a) the vote of two-thirds (2/3) of the directors of the Foundation then in office and (b) the vote of a majority of the Board of Directors of Bethesda Lutheran Communities, Inc., then in office, at regular or special meetings of said corporations called for that purpose; and Article V of these Bylaws may be amended only by concurrent action through (a) the vote of two-thirds (2/3) of the directors of the Foundation then in office and (b) the vote of two-thirds of the Board of Directors of Bethesda Lutheran Communities, Inc., then in office, at regular or special meetings of said corporations called for that purpose. Section 2. IMPLIED AMENDMENTS Any action taken or authorized by the Board of Directors, which would be inconsistent - 23 -