Charlestown Community Inc.

“On april 30, 2010, cci entered into a management and marketing agreement with erickson living management, llc ("elm"), consistent with the previous contract terms, to provide the services previously provided by erickson retirement communities ("erc"). Elm is a subsidiary of redwood-erc senior living holdings, llc, now known as erickson living holdings, llc which, together with other related entities, purchased the majority of the assets of erc. Elm is a maryland limited liability company which operates and manages large scale continuing care retirement communities. On january 1, 2011, cci and elm amended the management and marketing agreement. The amended management agreement includes (without limitation) provisions which permit cci to review and renegotiate management fees with the management company after year three and year seven, respectively, if the management fees being paid under the new management deviate from market (as defined in the agreement) at such time. The management agreements is for a term of ten years. Cci may terminate the new management agreement if certain objective performance criteria are not met. Cci also entered into a management fee subordination agreement with redwood-erc management, llc which subordinates the payment of the management fee to the payment of the organization's bond obligations. Clara parker, executive director, neal gantert, director of finance, donald grove, director of sales, sheryl parrish, director of resident life, vinson bankoski, associate executive director, and paulette tansill, director of human resources, are leased employees from the management company. The filing organization reimburses the management company for their compensation which is reported on form 990, part vii, section a.”

“The board chair and the audit committee of the board have the responsibility to review form 990 prior to its filing or to designate another board member to review the form. The full board is given the opportunity to review the final version of form 990 before it is filed and ask questions of the audit committee or the reviewer regarding the form. The board chair designates an officer to sign form 990.”

“Charlestown community, inc.'s conflict of interest policy covers all directors, officers, key employees, employees and volunteers in a position to exercise substantial influence over charlestown community, inc.'s affairs, committee members, prospective directors, and senior staff providing services to the organization under a management agreement. Each covered person completes a conflict of interest disclosure statement annually and as potential conflicts arise during the year. These statements are reviewed by the board chair who may consult with the organization's managing director for governance and/or independent legal counsel in order to determine if there is a conflict of interest. The board chair prepares a report for the executive committee which reviews the findings and recommends appropriate action to the full board. Either the full board or a committee of disinterested directors will determine whether a conflict actually exists. A covered person may not participate in any discussion or debate by the board but may answer questions or provide clarifying information unless any board member objects.”

“Reference to directors is the management directors, not the board of directors. The board has approved a directors' compensation policy which establishes the process by which all director compensation is determined. Board members serve without compensation. A review of the management directors' compensation is conducted each fiscal year. Compensation is approached on an overall basis and the total value of all forms of compensation is established and monitored. An independent compensation consultant is periodically retained to perform an analysis of charlestown community, inc.'s compensation using comparables of both for-profit and non-profit peers. A committee of the organization's board reviews the consultant's report and makes a recommendation to the organization as to appropriate compensation of directors. The full board has access to charlestown community inc.'s consultant's report and an opportunity to question the consultant about the process, metrics, and comparables that were used in determining the recommended compensation. The board then votes on the compensation recommendations and a contemporaneous record is made of the meeting and the vote.”

“The governing documents, conflict of interest policy, and the financial statements are available upon request at the executive director's office.”

“The audit committee of the board oversees the financial statement audit process as well as the selection of an independent accountant that audited the financial statements. The process has been consistent with prior years.”

“Mission statement charlestown community, inc. Is formed exclusively for educational and charitable purposes, including: the promotion of the health of the elderly through the provision of a residential community offering various levels of services for elderly persons; carrying on educational activities related to the promotion of health of the residential community; and performing other activities permitted under the general laws of the state of maryland, to the extent such activities are permitted by organizations which are exempt from federal income tax under section 501(c)(3) of the internal revenue code. In addition, charlestown community, inc.'s exempt purpose is to provide a home for the aged that satisfies the three primary needs of aged persons - - the need for housing, the need for health care, and the need for financial security. Charlestown community, inc. Provides housing by establishing residential facilities that are specifically designed to meet the physical, emotional, recreational, social, religious, and similar needs of aged persons. Charlestown community, inc. Provides health care by directly providing some medical services, and maintaining continuing arrangements with other organizations designed to maintain the physical and mental well-being of its residents. Charlestown community, inc. Provides financial security by having an established policy that provides for the maintaining of residence of any persons who become unable to pay their regular charges to the extent of its financial ability. Charlestown community, inc. Also operates so as to provide its services to the aged at the lowest feasible costs.”