Capitol Lakes Inc.

“Capitol lakes, inc. Delegates management duties to pacific retirement services, inc.”

“The organization has one member, pacific retirement services, inc.”

“Pacific retirement services, inc. Has the right to elect the directors of the board of capitol lakes, inc.”

“The authority of the board of directors to exercise the following powers is conditioned upon the approval of the corporate member: (a) merger, consolidation or dissolution of the organization; (b) amendment or restatement of the articles of incorporation of the organization; (c) sale, lease, exchange, or other disposition of all, or substantially all the property and assets of the organization; (d) the establishment, formation, acquisition, merger, consolidation or dissolution of any subsidiary organization; (e) the adoption of the aggregate annual operating and capital budgets of the organization; (f) aggregate borrowing for periods of one (1) year or less for any purpose in excess of a dollar amount to be established by the member from time to time; and aggregate borrowing for periods of more than one (1) year for any purpose in excess of a dollar amount to be established by the member from time to time; (g) the purchase, sale, lease disposition hypothecation, exchange, gift, pledge, and encumbrance of any asset, real or personal, with a value in excess of a dollar amount to be established by the member from time to time, not previously included in the capital budget; (h) the appointment of an independent auditor; (i) gifts or gratuitous transfers in excess of $5,000 in a calendar year; (j) adoption or revision of the mission statement and long range plans; and (k) incur any debt or enter into any contract not contemplated by the annual budget if the dollar amount exceeds the sum of $100,000.”

“The form 990 was reviewed by the cfo, assistant controller and the board of directors.”

“The conflict of interest policy and questionnaire are sent to all board members and key employees annually. There are two policies related to conflicts of interest: 1) board of directors; 2)key employees, which identify the purpose, definitions, and procedures. If a conflict is self-identified by a board member or key employee in the questionnaire and/or meeting, procedures are followed and documented according to the policy.”

“A compensation committee of the prs board exists to determine compensation for the executive director of each community. This committee is comprised of the officers of the prs board of directors. The committee has a charter that outlines its duties and responsibilities. It also has agenda elements that describe the activities that the committee undertakes during the year. The vp of human resources provided salary studies from the following resources to the committee relative to executive director compensation: salary.com, payscale.com, 990 review (like size organizations), cemo (chief executive officers of multi-facility organizations) salary study results, and industry state association salary study results based on geographical location. The recommendation for base compensation and bonus are provided by the executive director's direct supervisor (coo or vp of operations).”

“All requests go through corporate counsel.”

“Note that tim conroy is a leased employee of pacific retirement services, inc. And performs services on behalf of capitol lakes, inc. Pursuant to a management services agreement between capitol lakes, inc. And pacific retirement services, inc. Under the management services agreement, his compensation is reimbursed by capitol lakes, inc. Compensation has been reported in part vii, section a in order to highlight amounts paid by capitol lakes, inc., notwithstanding that he is a leased employee of pacific retirement services, inc.”

“Change in value of interest rate cap/swap agreement -484,929. Changes in interest in net assets of foundation 70,260.”