Elk Regional Health System Foundation

“Members: elk regional health center, inc. (elk) is the sole member. Additionally, penn highlands healthcare (phh) holds certain powers, including the approval of the election and removal of officers and directors and approval of any and all amendments to the bylaws or other organizational/governance documents. Phh and elk shall have the following powers with respect to the election and removal of directors: prior to the end of phh's fiscal year, the phh board will meet to elect the directors, with the exception of ex-officio directors. At least sixty (60) days in advance of this meeting, elk shall provide to phh's governance/nominating committee (the "phh governance/nominating committee") a list of one or more candidates (the number of candidates to be determined in the phh governance/nominating committee's discretion) for each expiring director position, with the exception of any ex-officio directors. The list of candidates shall have been developed by elk in consultation with this organization's board. The phh governance/nominating committee shall review each candidate in accordance with the criteria set forth in the phh bylaws, the criteria, if any, set forth in this organization's bylaws or policies for which said candidate is being considered for board service, and the policies and rules of phh, including, without limitation, the conflict interest policy (all of which shall be referred to collectively herein as the "eligibility criteria") and develop a list of one or more candidates for each open position (the number of candidates to be determined in the phh governance/nominating committee's discretion). Once the slate of candidates is nominated by the phh governance/nominating committee, the board of elk shall submit to the phh board for election such slate of candidates for the open board positions. The phh board may elect by a vote of the majority or refuse to elect each candidate submitted by the board of elk and may not elect any candidate not submitted by the board of elk and nominated by the phh governance/nominating committee. The board of phh has the power to remove such director at any time with or without cause. In the event that this organization desires to fill a vacancy occurring on its board, the phh governance/nominating committee and the board of phh, at the request of elk, shall act to fill such vacancy. Subject to the approval of elk and phh as set forth in the bylaws, the articles and the bylaws may be altered, amended, or repealed and new bylaws or articles may be adopted by the affirmative vote of two-thirds (2/3) of the board. Written notice of the intent to amend the bylaws or the articles and a draft of the proposed change shall be sent to all directors, by the secretary, at least five (5) days prior to any meeting at which amendment of the bylaws or the articles is intended.”

“Form 990 review process: the form 990 is prepared by an independent accounting firm based on the audited financial statements and information provided by the accounting department of the organization. The draft form 990 is reviewed by the cfo and the controller. After all suggested changes from the cfo and controller are made, the updated draft form 990 is provided for review to the full board. Any questions or comments from the board are addressed before filing.”

“Monitoring compliance with the conflict of interest policy: penn highlands healthcare, inc. (phh), maintains a conflict of interest policy which applies to all subsidiaries. The conflict of interest policy applies to board members, officers, executive employees, and any other manager or supervisor exercising substantial influence over operations. Each covered person will promptly and fully disclose all material facts of every actual or potential dual interest existing at the time when he/she becomes a covered person, and annually through each phh system entity's disclosure statement, which requests disclosure of relationships, investments, and transactions that may lead to an actual conflict of interest. All completed disclosure statements will be provided to the phh governance/nominating committee. This committee, in consultation with the chairperson or vice chairperson of each phh system entity's board, shall evaluate the completed disclosure statements and determine if there are any conflicts that are so pervasive as to render any covered person ineligible for service. The chairperson of each phh system entity's board will disclose to the full board of said phh system entity all dual interests reported to him or her under the policy and will also make the disclosure statements of all covered persons available to directors at any time during the year. If a potential dual interest arises as a result of a contemplated phh system entity board (or committee) action, the chairperson of said phh system entity's board or the interested person shall, or any other director may, raise the question of the interested person's dual interest. The disinterested members of the phh system entity's board (or committee) will evaluate the disclosures and the material facts relating to the transaction, arrangement, or policy giving rise to the dual interest to determine whether they involve actual conflicts of interest and may attempt to develop alternatives to remove the conflict from the transaction, arrangement, or policy. A covered person who has a dual interest shall not be present for or shall leave any portion of a meeting at which a phh system entity's board (or committee) is voting to determine whether a conflict exists, but may be present prior to the vote to make a presentation to said board (or committee), to disclose additional facts, or to respond to questions. If a phh system entity's board (or committee) determines that an actual conflict of interest exists, the interested person shall be so advised and the chairperson of a phh system entity's board or committee shall, if appropriate, appoint a disinterested person or committee or direct management to investigate alternatives to the proposed transaction or arrangement, if this has not already been done. Any interested person who has an actual conflict of interest with respect to the transaction or arrangement does not participate in and is not present for the vote regarding any such transaction or arrangement. If an individual whose company or employer has a business relationship with a phh system entity, but the individual does not have an actual conflict of interest with respect to this business relationship, the individual may nonetheless voluntarily recuse him/herself from voting on any matters related to the relationship.”

“Compensation determination: penn highlands healthcare, inc. (phh) performs the compensation review for the phh executives, including the ceo of phh elk and erpg. An independent compensation consultant, yaffe & company, is contracted to complete an annual compensation review. Included in this review is comparative data. The phh board reviews and approves the compensation. The ceo also has an annual evaluation completed by the phh elk board that is shared with the phh board during an executive session at each of the boards. These processes are documented in the board minutes.”

“Governing document availability: the governing documents, conflict of interest policy, and financial statements are available upon written request from lori scutella, administrative secretary. Documents may be mailed, e-mailed, faxed, or held for pickup by requesting persons.”

“Board member compensation: no directors receive any compensation for their director duties. Laurie macdonald, cfo/director, is paid by erhc as the cfo/vp of finance. Rose campbell is compensated for her duties as ceo of phh and phh elk.”

“Changes in net assets: $ (67,857) transfer to affiliates (12,371) fundraising income payable to affiliate ---------- $ (80,228)”