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DISCLOSURE STATEMENT

August 30, 2015

In accordance with Chapter 58, Article 64 of the North Carolina General Statutes of the State of North Carolina: • This Disclosure Statement may be delivered until revised, up to one (1) year

and 150 days after the date of this Disclosure Statement. This statement may be delivered until revised, but not after January 27, 2017.

• Delivery of this Disclosure Statement to a contracting party before the

execution of a contract for the provision of continuing care is required by North Carolina Law.

• This Disclosure Statement has not been reviewed or approved by any

government agency or representative to ensure accuracy or completeness of the information set out. (North Carolina Statutes do not provide for such governmental approval.)

1000 Salemtowne Drive · Winston-Salem, NC 27106 · 336-767-8130 · Fax 336-767-4090 · www.salemtowne.org

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SALEMTOWNE Disclosure Statement

Disclosure Statement – August 30, 2015

TABLE OF CONTENTS Page

Organization Introduction and Information 5

Continuing Care Retirement Community Description of the Organization and its Operations

Continuing Care Retirement Community Non-Profit Status Mission, Vision and Value Statements Licensure Quality First Community

Board of Trustees, Management and Professional Services Criminal Violation Statement

Location and Description of the Physical Property Bank Services

I. Services 28 Continuing Care Retirement Community

Community Phillips Health Care Center Masten Assisted Living Center Services, which are not Covered Under a Residence and Services Agreement, Which will be at Resident’s Additional Expense

II. Fees (Schedule of Fees) 35 Continuing Care Retirement Community

Direct Entry to the Assisted Living Center or the Health Care Center

Deposit Entrance Fee Monthly/Daily Fees Notification of Fee Increase Historic Changes in Major Fees Refunds Health Insurance Financial Assistance

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Page III. Entry/Admission 46

Continuing Care Retirement Community Criteria Temporary Entry to the Assisted Living Center or the Health Care Center

Cancellations/Terminations Transfers of Changes in Levels of Care Dual Occupancy (married or not) Guests Pet(s) Smoking

IV. Financial Information 54 Continuing Care Retirement Community

Financial Overview Estimated Number of Residents Other Material Information, as applicable

V. Navigation by Salemtowne (Continuing Care at Home Program) 67 Description of the Program Mission Statement Non-Profit Status Board of Trustees, Management and Professional Services Licensure Services Fees Membership

Criteria Cancellations/Terminations Transfers or Changes in Care Providers

INDEX

91

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Page Appendix A

Financial Information 95

• Audited Financial Statements as of March 31, 2015 and 2014 96

• Interim Financial Statements as of July 31, 2015 121

• Summary of Calculation Of Obligation To Provide Future Service as of March 31, 2015 (Continuing Care Retirement Community)

126

• Financial Feasibility Study (including Market Feasibility Study and Five Year Projected Financial Statements) as of March 30, 2016 through 2020

129

Appendix B Agreements (Continuing Care Retirement Community) 215

• Residence And Services Agreement – Direct Entry to Independent Living 216

• Residence And Services Agreement – Direct Entry to Masten Assisted Living Center

254

• Residence And Services Agreement – Direct Entry to Phillips Health Care Center

286

• Short-term Residence And Services Agreement – Phillips Health Care Center or Masten Assisted Living Center

318

• Personal Guaranty Agreement 347

• Financial Assistance Agreement 354

• Reservation Agreement 365

Agreement (Navigation by Salemtowne - Continuing Care At Home Program)

• Member Services Agreement • Consultative Care Plus Agreement

378

379 406

Appendix C Schedule of Fees effective June 1, 2016

436

This section has been left blank at the date of this disclosure statement filing (August 30, 2015). At a future date, an updated Schedule of Fees will be placed herein as applicable.

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Organization Introduction And Information

Moravian Home, Incorporated d/b/a Salemtowne (referenced herein as “the Corporation”, “Salemtowne”, “we”, “our”, “it” or “us”), is a private, continuing care retirement community on a 115 acre site, which offers its Residents use of independent accommodations and care in our on-site Assisted Living Center and Health Care Center. The community is located at 1000 Salemtowne Drive, Winston-Salem, North Carolina, (adjacent to Bethabara Park Boulevard) and has operated at this site since 1972.

Salemtowne has received licensure from the North Carolina Department of Insurance to operate a continuing care services program without lodging pursuant to Chapter 64 Article 58 Paragraph 7. This program is referred to as “Navigation by Salemtowne”. (See Section V for details of the program.)

Salemtowne is a charitable, non-profit corporation affiliated with the Moravian Church in America, Southern Province, and is governed by a volunteer Board of Trustees. The Corporation is a 501(c) (3) tax-exempt organization to which charitable contributions may be made. Our federal tax identification number is 56-0963926.

Neither the Board of Trustees nor the Moravian Church in America, Southern Province is responsible for the financial or contractual obligations of Salemtowne.

Salemtowne is founded on the principles of the Moravian Church. Our mission is to provide a broad variety of services to persons of retirement age.

Mission Statement

Salemtowne is a non-profit continuing care retirement community that promotes the well-being of its residents by providing a caring environment. Salemtowne is an ecumenical community that reflects the Moravian values of individual respect,

hospitality, life-long learning and love of the arts.

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Vision Statement

Salemtowne is a retirement community of excellence that fosters independence, security, wellness, and the growth of its residents to their full potential.

Salemtowne supports older people and caregivers in the broader community through educational and community activities.

Values Statement Salemtowne’s primary values are respect, integrity, and caring. These values guide us in our decision making, program development, use of resources, and operations.

We seek to live our values every day by:

• Treating each resident as a valued individual and with dignity, regardless of age or condition.

• Creating a homelike environment which is as non-institutional as

possible and which promotes quality of life, security, and wellness. • Engaging in continuing education and evaluation to develop associates,

improve services, and live up to our mission. • Striving to be a great place to work which gives associates a sense of

achievement and recognition. • Providing leadership in the field of care for the aging, thus contributing

to improve services for seniors in our society.

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Salemtowne: A Quality First Community

Salemtowne was a charter member of the quality initiative launched by the Leading Age (formerly American Association of Homes and Services for the Aging) and the American Health Care Association (AHCA) in 2003. Salemtowne signed a covenant pledging to achieve excellence by adhering to the Leading Age “Quality First” 10 Elements of Quality. Leading Age “Quality First” 10 Elements of Quality

1. Commitment – Pledging to maintain and promote ethical practices and the highest standards of quality.

2. Governance and Accountability – Achieving and maintaining high

standards of management and governance to improve quality consistent with our mission and values.

3. Leading-Edge Care and Services – Implementing models and practices that are based on evidence of success, represent the tradition of personal service and are adaptable to a changing society.

4. Community Involvement – Engaging in community citizenship and service -

social accountability, volunteer involvement and relationship building.

5. Continuous Quality Improvement – Using CQI methods to enhance existing programs, improve effectiveness and foster a collaborative work environment.

6. Human Resources Development – Providing training, competitive wages/

benefits, and a supportive work environment.

7. Consumer-Friendly Information – Providing accessible and understandable information for older adults, families and caregivers.

8. Consumer Participation – Engaging residents/clients, family members and

consumers in care and services.

9. Research Findings and Education – Using and sharing the latest research findings to improve care and services for older adults.

10. Public Trust and Consumer Confidence – Committing to a policy of outreach, openness

and authenticity to increase public understanding of quality aging services and earn the trust of the people we serve and their families – as well as the media, the public and policy makers.

Salemtowne is a member of the national organization for homes and services for the aged – Leading Age; the North Carolina Association – Leading Age North Carolina; North Carolina Health Care Facilities Association (NCHCFA) and the Winston Salem Chamber of Commerce.

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Board of Trustees and Management Staff: Salemtowne certifies that none of its Trustees nor Management Staff have ever been convicted of a felony or pleaded nolo contendere to a felony charge, or been held liable or enjoined in a civil action by final judgment, for any matter involving fraud, embezzlement, fraudulent conveyance or misappropriation of property. In addition, Salemtowne certifies that none of its Trustees nor Management Staff are currently subject to an injunctive or restrictive court order arising out of a related health care business activity in this or any other state. Finally, Salemtowne certifies that none of the Trustees or Management Staff have had any State or Federal license or permits suspended or revoked. The business and affairs of Salemtowne are directed by a self-perpetuating Board of Trustees composed of up to 18 members. The Board of Trustees currently meets six times per year and at such other times as the Trustees may determine necessary. None of the members of the Board of Trustees of Salemtowne are employees of Salemtowne. All of the Trustees volunteer their time and are not compensated in any fashion except as listed below. Following is a listing of the members of the Board of Trustees, Officers and Management of Salemtowne, their addresses and synopses of their relevant backgrounds and experience: Dr. Francis James, III. Trustee and Chair. One Park Vista Lane, Suite 530, Winston Salem, North Carolina 27101. Dr. James is Professor Emeritus of Anesthesiology at Wake Forest University School of Medicine. Dr. James retired from Wake Forest University School of Medicine in 2001 having served as Associate Dean for Graduate Medical Education at the School of Medicine, Academic Adjunct Professor for the University of North Carolina at Greensboro School of Nursing, Faculty Executive Council, Professor and Chairman of the Department of Anesthesiology for Wake Forest University School of Medicine. Dr. James was an Associate in the Obstetrics and Gynecology Department and Professor and Head of Section of Obstetric Anesthesia for The Bowman Gray School of Medicine at Wake Forest University. He earned a B.A. in Zoology from Swarthmore College and his M.D. from Hahnemann Medical College both in Pennsylvania. Dr. James completed his resident education in Anesthesiology at the Hospital of the University of Pennsylvania. Dr. James has been active in the community having previously served on the Board for Salemtowne as well as serving other organizations such as: Home Moravian Church, Synod of Southern Province of the Moravian Church, Salem Academy and College, Senior Services, Experiment in Self-Reliance, Scepter Pain Foundation, Kybele, Inc., Central YMCA of Winston Salem, Alumni Council of Swarthmore College, Arts Council, Leadership Winston-Salem and the United Way of Winston Salem.

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Peggy C. Carter. Trustee and Vice Chair, 2315 Country Club Road, Winston Salem, North Carolina 27104. Mrs. Carter is retired as Vice President of the Forsyth Medical Center Foundation. The Foundation is the philanthropy arm of the Medical Center. Prior to joining the Medical Center, she was Vice President of corporate affairs for Sara Lee Corporations’ apparel line of business (now Hanesbrands Inc.) from 1998 to 2006. From 1983 to 1998, she held various positions at R.J. Reynolds Tobacco Company (RJR), the last of which was Senior Director of legal regulatory and science affairs. Prior to RJR, she served as Director of marketing services for a New Your Times publishing company, Managing Editor of the new bureau at the University of North Carolina at Chapel Hill and Manager of communications for UNC-TV. Mrs. Carter earned her bachelor’s degree at the University of North Carolina at Chapel Hill and a M.A. in news journalism from the University of Georgia.

She is active in the community and in addition to Salemtowne is currently serving on the boards of the Winston-Salem Chamber of Commerce, Frank Porter Graham Child Development Institute at UNC-Chapel Hill, Winston-Salem State University Foundation, Ronald McDonald House, Marshall B. Bass Children’s Fund, and Centers for Exceptional Children, Winston-Salem Business Inc. and the Winston-Salem Capital Campaign Coordinating Committee. She has also served on boards of the following organizations: The Winston-Salem Foundation, North Carolina Center for Public Policy Research, Crosby Scholars, the Forsyth County United Way, the Better Business Bureau of Winston-Salem, the Arts Council of Winston-Salem/Forsyth County, the Rotary Club of Winston-Salem and two terms on the Winston-Salem Public Facilities Commission. Mrs. Carter has been recognized as “Woman of Vision” by the YWCA and with the “Outstanding Woman Award” by the City of Winston-Salem.

David E. Shaffner. Trustee and Treasurer. 3640 Will Scarlet Road, Winston Salem, North Carolina 27104. Mr. Shaffner was formerly President of Shaffner Coffee Company (d/b/a FilterFresh) in Winston Salem, North Carolina. Previously he served with Daniel, McKee and Co., CPA in Winston Salem, and Frederick B. Hill & Co., CPA in Norfolk, Virginia. He earned a Bachelor of Arts in Commerce with a Certificate in Accounting from Washington and Lee University. He completed graduate studies in accounting at the University of Virginia. He was a Certified Public Accountant in Virginia and in North Carolina. Mr. Shaffner is active in the community currently serving as Finance Chair of the Home Moravian Church Trustees. He has also served the following community organizations: Moravian Church, Southern Province Financial Board, Salem Congregation, NovantHealth, Medical Park Hospital, Carolina Medicorp Trustees (Chair), Historic

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Bethabara Park Trustees, Ronald McDonald House, NC Ronald McDonald Houses (Treasurer), Archives Board of the Moravian Church, Southern Province, Filterfresh Independent Franchise Association Board, Downtown Church Center (Chair, Treasurer), Old Hickory Council Exploring (District Chair), and American Institute of CPAs. Kimberly H. Stogner. Trustee and Secretary. Womble Carlyle Sandridge & Rice, One West Fourth Street, Winston Salem, North Carolina 27101. Kim Stogner is an experienced trust and estates attorney with comprehensive estate planning as well as trust administration, tax and probate law issues with Womble Carlyle in the Winston Salem office. Previously she was a Partner with Vaughn Perkinson Ehlinger Moxley & Stogner, Winston-Salem, N.C., 2001-2009; Associate with Kilpatrick Stockton (formerly Petree Stockton), Winston-Salem, N.C., 1994-2000; Summer Associate with Petree Stockton, 1992 and 1993; and Summer Associate with Smith Moore Leatherwood (formerly Smith, Helms, Mullis & Moore), 1993. Ms. Stogner was admitted to the bar in1994, North Carolina; earned her B.A. in 1986 from Wake Forest University, cum laude and her J.D. in 1994 from Wake Forest University, cum laude. She served as Editor of the Wake Forest Law Review, 1993-1994; Member, Order of Barristers and Member, Moot Court Board, 1992-1994. Before attending law school, she worked as a personal trust officer for two national banking corporations. She also has earned the Certified Financial Planner (CFP) designation. Ms. Stogner has consistently been ranked as one of North Carolina’s top trust and estates attorneys, ranking in Woodward/White Inc’s “Best Lawyers in America” since 2006 and among Business North Carolina’s “North Carolina Legal Elite.” Law and Politics magazine has named her a “Super Lawyer” every year since 2006 and Law and Politics also has named her one of North Carolina’s top 50 female lawyers in 2007-12.

She is active in the North Carolina Bar Association and a number of charities and civic organizations in Forsyth County. Member, Forsyth County and North Carolina Bar Associations; Board of Governors Member, North Carolina Bar Association; Chair, Nominating Committee; Member, Call4All Task Force; Past Chair and Council Member, Fiduciary Law Section; Past Trustee, Health Benefit Trust of North Carolina Bar Association. Member and Past Chair, Wake Forest Planned Giving Advisory Council; Member Winston-Salem Estate Planning Council. Hospice Foundation, Board Member; United Way of Forsyth County, Past Board Member; Crosby Scholars Program, Past Board Member, Member of Capital Campaign Cabinet; First Citizens Bank, Local Board of Directors; Crisis Control Ministry, past Board Chair and Current Member of Board Development Committee; United Way of Forsyth County Foundation, Founding Board

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Member and Executive Committee Member; Children's Museum of Winston-Salem, Founding Board Member; Wake Forest University School of Law National Law Fund Committee, past Board Member; Winston-Salem Downtown Rotary Club, Member and Officer; Junior League of Winston-Salem, Sustaining Member; Hope Presbyterian Church, Member. Per NCGS § 58-64(a)(3)(b) Womble Carlyle Sandridge & Rice (One West Fourth Street, Winston Salem, NC 27101), a full services legal firm, in which is Mrs. Stogner is a Partner, provides legal services to Salemtowne, the anticipated cost of which cannot be estimated. Evelyn P. Acree. Trustee. 8570 Waterford Village, Clemmons, North Carolina 27012. Ms. Acree is a talented, well-regarded banking professional with 28 years of experience in the field. Ms. Acree holds primary responsibility for business development in the Piedmont Triad region, and in that capacity has generated a level of visibility for M&F Bank that belies the number of branches in the area. Before joining M&F Bank, Ms. Acree held various positions of responsibility with Wachovia Bank.

Mrs. Acree believes that community service is a responsibility and a privilege. She serves on numerous boards, including Winston-Salem Alliance Board as Secretary, Greater Winston-Salem Chamber of Commerce Executive Board, Winston-Salem Urban League as Chairman and the Greensboro City Loan Committee. She also facilitates numerous financial literacy workshops for youth and adults throughout the year. Her efforts have been recognized in the form of numerous awards, including the YMCA’s Black Achiever Award, she was named an Outstanding Woman Leader by Visit Winston-Salem and most recently she was given a Leadership Award by Salem Lodge #139. She is member of Alpha Kappa Alpha Sorority, Inc.

Ms. Acree is a graduate of Howard University and holds a Bachelor of Arts degree in political science with a minor in business administration. CarolAnn Adcock. Trustee and Salemtowne Resident. 112 Breslau Circle, Winston-Salem, North Carolina 27106 Mrs. Adcock is a retired Registered Nurse having served as a Head Nurse for the Pediatric ED at UNC – Chapel Hill, Director of Nursing at Hermann Children’s Hospital in Houston Texas, and as the Founder and Director of CareAware, a corporate wellness program, at Hermann Hospital in Houston Texas. She previously served as Director of Community Outreach / Clinical Practice for the Department of Pediatrics at University of Texas Medical School in Houston Texas, Consultant for Nurse Recruitment and retention at Baptist Hospital in Winston Salem North Carolina, Director of Continuing Studies Program for CNAs, LPNs, and RNs at Baptist Hospital in Winton Salem and as a consultant with the Hayes Group International serving clients such as Westinghouse,

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RJR, Darden Restaurant Group, Entergy, GKN, First Citizens Bank and various medical practices. She earned a Bachelor of Science in Nursing from the University of Florida and a Masters from Texas Woman’s University. Mrs. Adcock has been involved in the community with various organizations such as: Home Moravian Church as a board member, Circle Leader, Diener, Candle Tea Treasurer, Chairman of Stewardship Committee, Leader of Capital Campaign Committee and Historical Interpreter. She has served as a board member for United Way of Forsyth County and United Way of North Carolina and as a board member, board chair, volunteer, and co-chair of the capital campaign for the Enrichment Center. Mrs. Adcock has served as a volunteer for a number of organizations including, Habitat for Humanity, and Meals-on-Wheels. She also served on the boards and memberships of various organizations such as: YWCA, Emma Bahnson Service League, Wachovia Historical Society, NC Civil War RoundTable, and Civil War Trust. Betsy Annese. Trustee. 410 West Fourth Street, Suite 200, Winston-Salem, North Carolina 27101 Ms. Annese is the President of Annese Public Relations, Inc. She previously served as Sr. Vice President of External Relations for R. J. Reynolds International, Inc. in Geneva, Switzerland; Vice President of Public Affairs for R. J. Reynolds Tobacco Co. and Vice President of Communications for Lowe’s Home Improvement. Ms. Annese is a graduate of the University of South Carolina with a B.A. in Journalism. She is active in the community and currently serves on the boards Old Salem Museums and Gardens, Winston Salem Chamber of Commerce and the Forsyth County Advisory Board of New Bridge Bank. Ms. Annese has served the Forsyth Court Volunteers, Prodigals Community, Habitat for Humanity and The Library Group. She has served on numerous boards and committees such as Family Services, Inc, Winston Salem Urban League, the Roger Page Business and Technology Center, Horizons, Inc, the Multiple Sclerosis Society, Head Start Program, Brenner Children’s Hospital Annual Antique Show and the Forsyth Medical Center Foundation’s Women’s Council Garden Party. Ms. Annese has served Ardmore Moravian Church through the Board of Elders, 2020 Vision Team, Perspective Course Team, Hispanic Outreach Ministry, Personnel, Publicity and Lay Ministry Committees, Capital Campaign Committee and Volunteer Program Director.

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Rebecca (Becky) Cook. Trustee. 6700 Lake Dale Way, Clemmons, North Carolina 27012. Mrs. Cook is a retired mathematics teacher who attended the University of North Carolina at Greensboro. She has been active in the community serving the following community organizations: Hopewell Moravian Church (Winston Salem), First Moravian Church (Greensboro), Clemmons Moravian Church, Moravian Church - Southern Province Synod, Board of Evangelism and Home Missions, Provincial Financial Board, Southern Province Provincial Elders’ Conference (1st female member), Moravian Archives, Laurel Ridge and Sunnyside Ministry Program. Marty Edwards. Trustee. 3651 Will Scarlet Road, Winston Salem, North Carolina 27104. Mrs. Edwards is active in the community as a member of the boards of the Winston-Salem Rotary and Take the Lead North Carolina. She is also a member of the Women's Fund of Winston-Salem and she served as President of the Emma Bahnson Service League; chair and secretary of the Board of Directors for the Crosby Scholars Community Partnership, and Treasurer of the Mt. Tabor High School Parent Teacher Student Association. Mrs. Edwards received a bachelor’s degree in journalism and a master’s degree in student personnel services in higher education from the University of North Carolina at Chapel Hill and her MBA from Vanderbilt University. She worked for Wake Forest University and Reynolda House Museum of American Art, an affiliate of the University, for over 23 years, most recently as Director of Development and head of the External Relations Division of the Museum. Mrs. Edwards currently serves as Interim Program Associate for the Kate B. Reynolds Charitable Trust.

John Ferguson. Trustee. 915 Riverbend Drive, Advance, North Carolina 27006. Mr. Ferguson serves as a County Commissioner in Davie County, North Carolina. Previously he served as the Mayor of the Town of Bermuda Run. Mr. Ferguson is retired from Wachovia Bank where he served as a Senior Vice President and managed Information Processing, Bond operations, Brokerage operations and Trust operations. He is active in the community currently serving on the board of the Hospice Foundation and Clemmons Moravian Church. Mr. Ferguson has also served as a board member of the Davie County Foundation and as the President of Bermuda Run Country Club Board of Governors.

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Valene F. Franco. Trustee. 102 West Third Street, Suite 460, Winston Salem, North Carolina 27101. Valene Franco is the Interim Managing Attorney for the Winston-Salem Office of Legal Aid of North Carolina. She has worked with Legal Aid since November of 2002. Ms. Franco received her B.A. in English with Distinction in all Subjects from Cornell University in 1995, and her J.D. Degree from Boston College Law School in 1998. While in Law school, she was a 1996 Louis L. Redding Fellow and the Little-McMillan-Stevenson Scholarship Inaugural Winner. Prior to joining Legal Aid, Ms. Franco was an Associate for Kilpatrick Stockton, LLP in Winston-Salem, North Carolina. Ms. Franco has served as President of the Forsyth County Bar Association, an organization of over 1200 attorneys. She has served as a board member for the Fellowship Home of Winston-Salem, Big Sister for Big Brothers, Big Sisters, tutor for the Winston-Salem Forsyth County Schools Victory in Partnership Program, and currently serves as Chair of the Authoring Action Board of Directors. She is 2011 North Carolina Bar Association Citizen Lawyer Award Winner and a 2014 recipient of the City of Winston-Salem Human Relations Commission MLK Young Dreamers’ Award. Donald E. Frey, Ph.D. Trustee. 903 Marguerite Drive, Winston Salem, North Carolina 27106. Dr. Frey is a retired professor of economics from Wake Forest University in Winston Salem, North Carolina. He served for a total of 39 years, including four years as economics department chairman. Dr. Frey earned his Ph.D. from Princeton University, a B.D. from Yale University and a B.A. from Wesleyan University in Connecticut. He was president of the University Senate in 2003-2004. Dr. Frey has numerous op-ed, reviews, articles, chapters in print as well as the following books: Tuition Tax Credits for Private Education: An Economic Analysis; and America’s Economic Moralists: A History of Rival Ethics and Economics. Dr. Frey has served the academic community though a number of organizations such as: American Association of University Professors, academic journal manuscript referee, Wake Forest University as member or chair of many faculty committees, Wake Forest Employees’ Credit Union; and he has served the wider community through Boy Scouts, United Way, Meals on Wheels, Sunnyside Ministry, Moravian Music Foundation, Moravian Church, Southern Province (Moravian-Episcopal dialogue and Unity and Ecumenical Affairs committee), Salem Congregation and Home Moravian Church.

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Deron S. Mabe. Trustee. 1237 Barksdale Road, Lewisville, North Carolina 27023. Deron Mabe is the Director of Finance for Surgical Services with Wake Forest University Baptist Medical Center in Winston Salem, North Carolina and an Adjunct Faculty Member for High Point University in High Point, North Carolina. He earned his Bachelor of Arts in Business Administration from the University of North Carolina at Charlotte in Charlotte North Carolina, his Bachelor of Science in Accounting from High Point University in High Point, North Carolina and a Master of Business Administration from High Point University. Mr. Mabe previously served North Carolina Baptist Hospital in Winston Salem as a “Six Sigma Black Belt”, Project Specialist, Senior Accountant/Cost Specialist, Staff Accountant, Junior Cost and Budget Accountant and as a Cost and Budget Clerk. Mr. Mabe has served the community on the Board of Elders and Board of Trustees for Ardmore Moravian Church and as well as Chief Usher and Sunday School Teacher. He has provided transportation for Salemtowne residents to attend church, has been a team leader for the March of Dimes fundraising campaigns and has participated on Habitat for Humanity builds. Rev. Dr. Bill McElveen. Trustee and Salemtowne Resident. 5065 Salemtowne Drive, Winston Salem, North Carolina 27106. Rev. McElveen is the Visitation Pastor for Trinity Moravian Church, having served since March 2007. Prior to that from 1998, after retiring from 41 years of active ministry in the Moravian Church in America, Southern Province, there were interim pastorates at several North Carolina Moravian Churches—Good Shepherd in Kernersville, King in King, Mizpah in Tobaccoville, and at the Moravian Church Camp and Conference Centre in Ashe, County. He also served from 1993-98 as Assistant to the President of the Provincial Elders’ Conference of the Moravian Church, Southern Province; 1980-93 as the organizing pastor of Unity Moravian Church in Lewisville; from 1970-1980 as the Executive Director of the Board of Christian and Evangelism of the Southern Province; from 1961-70 as the pastor of Messiah Moravian Church in Winston-Salem; from 1958-61 as the Associate Pastor of Home Moravian Church in Salem, Winston-Salem(having been ordained in September of 1958) and by taking a year out of seminary, served as Student Pastor of the Fredricksted Moravian Church in St. Croix, American Virgin Islands. During these years Rev. McElveen served in a number of voluntary leadership positions: Chairman of the Board of Christian Education and Evangelism; Chairman of the Provincial Music and Worship Committee; Chaplain of the Optimist Club of Winston-Salem; Advisory Board of Knollwood Hall Nursing Facility; Board of Trustees of Salem Academy and College; Board of Trustees of Moravian Theological Seminary in Bethlehem, Pa.; the Moravian Co-chair with three different Episcopal Bishops of the Episcopal-Moravian Dialogue leading to “Full Communion” between the two church

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communions; chaired the Capital Campaign in the Southern Province for Moravian Theological Seminary. Rev. McElveen received education from Davidson College, B.A., 1954, Moravian Theological Seminary, M. Divinity, 1958; Clinical Pastoral Education at N.C. Baptist Hospital, 1960; Wake Forest University, M.A., 1971. He was awarded the degree of Doctor of Divinity by Moravian Theological Seminary in1994. Chris Perry. Trustee. 830 Oaklawn Avenue, Winston Salem, North Carolina 27101 Chris Perry left a career on Wall Street moving from Summit NJ to Winston Salem and founding New South Associates NS in early 2004. New South Associates is a consulting company that primarily provides bond-investing advice to corporations and educational institutions.

Chris has an undergraduate degree in history from Vanderbilt University and an MBA from Northwestern University (where he majored in finance and accounting). Chris’s 25-year Wall Street career included holding positions as Managing Director and Head of E-Commerce at HSBC, USA, and Senior Vice President for Taxed Fixable Income at Prudential Securities in both New York and London.

As a consultant, volunteer and an investment banker, Chris has been actively involved in raising money for eleemosynary institutions including his college alma mater, Vanderbilt University, his Church’s in Summit NJ and London and his mission work in Africa. Chris has also served on two senior pastor search committees in both London and New Jersey. For the past ten years alongside the bond consulting work Chris’s “second act” includes teaching AP Macro-Economics to seniors at FCDS and co-founding a men’s Christian group, the Winston Salem chapter of The New Canaan Society. Chris has also been active in mission work especially in Africa, where he sits on the board of Earthwise Ventures, a passenger ferry company operating on Lake Victoria in Kampala, Uganda and the Sure Foundation operating in Malawi.

The Rt. Rev. Dr. Graham Rights. Trustee. 553 Steeple View Court, Winston Salem, North Carolina 27101. Bishop Rights is an ordained minister and bishop in the Moravian Church. He earned a BA Degree from the University of North Carolina at Chapel Hill, a BD from Yale Divinity School, and did further study at Moravian Theological Seminary and New College, University of Edinburgh, Scotland. Bishop Rights has served congregations in Managua, Nicaragua; and Mayodan, Winston Salem, and Greensboro, NC. He has also served as Executive Director of the Board of World Mission of the Moravian Church in America with office in Bethlehem, PA, and as

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President of the Provincial Elders' Conference of the Moravian Church, Southern Province, with office in Winston-Salem. In the community he currently serves on the Board of Crisis Control Ministry of Forsyth County. He has previously served on various boards of the Moravian Church and on boards of the Pastoral Care Foundation of NC Baptist Hospital/Wake Forest Baptist Health, Ecumenical Institute of the Carolinas, Wachovia Historical Society, CareNet of the Triad, and Salemtowne. Charlotte Zamjahn. Trustee. 4814 Hawkwood Trail, Winston Salem, North Carolina 27103. Ms. Zamjahn is a retired Senior Major Gifts Officer in the Office of Development and Alumni Affairs at Wake Forest University Baptist Medical Center having previously served as the Assistant Director of Development at Tulane University Medical Center, and in senior positions with the Southeast Louisiana Girl Scout Council in New Orleans. She earned a Bachelor of Science degree in fine arts from the University of Wisconsin – Madison and a Masters of Business Administration from Loyola University – New Orleans. Ms. Zamjahn is a member of the Association of Fundraising Professionals – Triad Chapter and a member and former President of Kappa Kappa Gamma Forsyth County Alumnae Association. She served on the board of directors of the Volunteer and Information Agency and the board of directors of the National Society of Fund Raising Executives – Greater New Orleans Chapter. She was an active member of the American Society of Training and Development and the Center for Effective Non-Profit Management’s “Board’s Work!” Program. Management Staff - Officers: Mark A. Steele, President and Chief Executive Officer. Mr. Steele is responsible for the overall management of the Corporation. Mr. Steele joined Salemtowne on August 10, 2015, having previously served as President and General Manager of China Operations of Cornerstone Affiliates International (a subsidiary of American Baptist Homes of the West “ABHOW”) in Pleasanton, CA since 2013. In that prior position, he was responsible for planning an expansion into the Chinese market and overall growth and profitability of the organization. Mr. Steele held a number of positions within the ABHOW organization for sixteen years as well positions in the senior living industry such as: Vice President, Regional Operations Manager of Continuing Care Retirement Communities, California and Arizona, 2004 to 2013; Executive Director of The San Joaquin Gardens in Fresno, CA, 1999 to 2005; Associate Director of The Samarkand, Santa Barbara, CA, 1993 to 1999; Administrator of Crista Nursing Home, Seattle, WA, 1992 to 1993; Administrator, Fred Lind Manor, Seattle, WA, 1991 to 1992; Assistant Administrator, Branch Villa

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Health Care Center, Seattle, WA, 1990 to 1991; and Church Pastor at Western District of the Missionary Church, Camarillo, CA, 1983 to 1990.

Mr. Steele completed all but the dissertation for a Doctor of Ministry, Leadership and Global Perspectives from George Fox University, Portland, OR, obtained his Masters of Business Administration from La Verne University, La Verne, CA, his Masters of Divinity from Biola University, La Mirada, CA, and his Bachelors of Arts in Speech Communications from Polytechnic State University, San Luis Obispo, CA.

Carolyn J. Twisdale, CPA. Chief Financial Officer and Assistant Treasurer with responsibility for Information Services and Dining Services. Ms. Twisdale joined Salemtowne in September 2002 having previously served as Director of Financial Planning, Payroll & Accounting for WakeMed, a 746-bed, private, not-for-profit healthcare system in Raleigh, North Carolina, from 1999-2002. Ms. Twisdale was Director of Accounting and Controller for Rex Healthcare, a 394-bed private, not-for-profit healthcare system in Raleigh, North Carolina from 1992-1999. From 1986 to 1992, Ms. Twisdale was a Staff Accountant and Senior Accountant with Deloitte & Touche, an international public accounting firm in Raleigh, North Carolina. Ms. Twisdale is active in the community serving as Treasurer, Finance Committee Chair and Investment Committee member for St. Paul’s Episcopal Church and as a Member of the Leading Age NC Finance Committee. She served as a member of the St. Paul’s Episcopal Church Seniors Committee and as Board Member and Treasurer for CareNet Counseling of the Triad, a subsidiary of Wake Forest Baptist Health. Ms. Twisdale earned her Bachelor of Science in Accounting from East Carolina University, Greenville, North Carolina. Ms. Twisdale is a Certified Public Accountant and a member of the North Carolina Association of Certified Public Accountants. Kathryn S. Wilson. Director of Human Resources, Corporate Compliance Officer and Assistant Secretary. Mrs. Wilson joined Salemtowne in 2004, previously serving as Manager of Operations Training and Employee Development with Blue Cross Blue Shield of N.C. in Winston Salem, N. C.; Director of Corporate Communications and Staff Development with Partners National Health Plans of N.C., Inc. in Winston Salem, N. C.; Personnel Director with WXII-TV in Winston Salem, NC; Personnel Manager with Meridian Corporation in Alexandria, VA.; and Personnel Coordinator with Dynamac Corporation in Lexington Park, MD. Mrs. Wilson earned a Masters in Rehabilitation Counseling and Vocational Evaluation, a Bachelor of Science in Speech, Language, and Auditory Pathology both from East Carolina University in Greenville, N.C. and an Associate of Arts in Liberal Arts from Peace College in Raleigh, N.C. She has earned a Masters in Integrated Marketing Communications from West Virginia University.

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Management Staff: James T. Matthews, II. Health Care and Assisted Living Administrator with responsibility for Health Care and Assisted Living Admissions. Mr. Matthews joined Salemtowne in July 2007 having previously served as administrator for Carolina Rehab Center of Cumberland in Fayetteville, North Carolina. He is licensed as a Nursing Home Administrator in North Carolina and is a Certified Preceptor for the North Carolina Board of Examiners for Nursing Home Administrators. He earned his Bachelor of Science in Business Administration – concentration in Health Care Management as well as a minor in Sociology from Appalachian State University in Boone, North Carolina. Mr. Matthews is involved in the community having been a graduate of Leadership Winston-Salem and serving on the Board of Directors of The Shepherd’s Center of Greater Winston-Salem.

Amanda Kistler, RN. Director of Nursing. Ms. Kistler joined Salemtowne in 2008 previously serving as a Nurse Consultant, Unit Manager and Interim Director of Nursing with Clinical Resources, LLC; Administrator with Dudley’s Home Health; and Director of Nursing with Brian Center Health & Rehabilitation Center. Ms. Kistler has served as Nurse Manager and Interim Director of Nursing for a number of facilities to aide in Division of Facility Services Survey preparation. Ms. Kistler has been employed by Primary Health Concepts, Kimberly Quality Care, Iredell Memorial Hospital and Huntersville Hospital. She has served in a variety of community and professional organizations including: National Association for Directors of Nursing Administration in Long Term Care; Fellows Academy and North Carolina Director of Nursing Association for Long Term Care serving as Vice President and President. In 2011, she received the Nurse Administrator of the year award for the southeast United States and was Chair of the Advisory Board for the nursing Program at Forsyth Technical Community College. Ms. Kistler earned her RN degree from the Cabarrus Memorial Hospital School of Nursing as well as receiving Certification for Director of Nursing Administration in Long Term Care. (CDONA/LTC) Ms. Kistler has completed the North Carolina Health Care Facilities Association Management Institute for Nurse Managers in Long Term Care and the Infection Control Course for long term care and has earned the following certifications: GDCN-Geriatric Diabetic Nurse Certification, CDP-Certified Dementia Practitioner, and Certified Instructor for Alzheimer’s and Dementia Training. Ms. Kistler was awarded the National Nursing Administrator of the year award in June 2013 and received a Circle of Excellence Award for a Deficiency Free Survey in 2013. She serves on the Nursing Advisory Board for ECPI University.

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Kaye P. Brookshire. Director of Volunteers and Special Events. Mrs. Brookshire joined Salemtowne in 1989 previously serving as the Program Leader of Activities for Adults Age 55 and Older for the City of Winston Salem, North Carolina, from 1974 to 1989. Mrs. Brookshire has served on the Advisory Council for RSVP (“Retired Senior Volunteer Program”), the Resource and Community Projects Committee and the Food Entries and Crafts Division of the annual Dixie Classic Fair in Winston Salem, North Carolina. She has also served the Logistic Committee for the Tanglewood Heart & Stroke Walk and Ardmore Moravian Church. Mrs. Brookshire has completed the Duke Non Profit Management Program for Basic and Volunteer Management and the North Carolina Botanical Garden Horticulture for Recreation and Therapy for Older Adults Workshop. Mrs. Brookshire is a member of the North Carolina Activity Professionals Association. Denise Brown. Director of Accounting. Mrs. Brown joined Salemtowne in 2010 having previously served as the Director of Accounting at The Evergreens, Inc. (Evergreens Senior Healthcare System) in Greensboro, NC. She also served in various positions in the following companies: Allegis Group/TekSystems, Integrated Health Services, Staff Builder/Home Health Care & Alpha Medical, Kraft Food Service, Bunge Corporation, Pine Street Builders, Inc. and the Internal Revenue Service. Mrs. Brown earned her Bachelor of Science Degree – Major Accounting from the University of South Carolina at Aiken. She is involved in the community through Evangel Fellowship and Girl Scouts of America as a troop leader in Greensboro, NC. Linda H. Browne, M.A. Ed., M. Div. Chaplain/Director of Spiritual Life. Rev. Browne joined Salemtowne in 2004 having previously served as Chaplain Resident with Wake Forest Baptist Medical Center in Winston Salem, North Carolina, from 2002 to 2004. While in divinity school, Rev. Browne served as Chaplain Intern for Arbor Acres Retirement Community in Winston Salem, NC, from 2000 to 2001. Rev. Browne was ordained by Knollwood Baptist Church in Winston Salem, NC, in 2003. She earned a Master of Divinity from Wake Forest University Divinity School in Winston Salem, NC, in 2002; a Master of Arts in Education, Counseling from Wake Forest in 1985; and a Bachelor of Arts (Major - Psychology, Minor – Christianity) from Mercer University in Macon, Georgia, in 1980. Rev. Browne is endorsed by the Alliance of Baptists, and is Board Certified by the Association of Professional Chaplains. Locally, she is a member of the Coalition of Ministries to Older Adults and serves on the Community Partnership for End of Life Care at Hospice and Palliative Care Center in Winston-Salem. Rev. Browne is a board member of the Congregational Nurse and Health Council of Forsyth County, a project

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Salemtowne helped launch which supports the ministry of parish nurses and health educators in faith communities. She is member of the NC Chaplains Association. Renee B. Brumagin. Marketing Coordinator. Mrs. Brumagin joined Salemtowne in 2004 having previously served in various capacities such as: Corporate Marketing Director, Administrator, and Admissions Director for Baptist Retirement Homes of NC, Inc. from 1997-2004. Mrs. Brumagin also served as Administrator for Britthaven of Kernersville and Enfield Care, Inc. Mrs. Brumagin earned her Bachelor of Science in Social Work from the University of North Carolina at Greensboro in 1994 and her Bachelor of Arts from the University of North Carolina at Chapel Hill in Recreation Therapy in 1992. She is licensed as a Nursing Home Administrator in North Carolina. Nicolette (Nikki) Burris. Director of Independent Living Admissions with responsibility for Marketing. Ms. Burris joined Salemtowne in 2005 having previously served as Director for CONTACT Hopelines, Family Services, Inc. in Winston Salem, N.C.; Social Worker II for Wake Forest University Baptist Medical Center, Winston Salem, N.C.; and Resident Services Manager for Triad United Methodist Home (Arbor Acres – a continuing care retirement community), Winston Salem, N. C. Ms. Burris is a 2006 graduate of Leadership Winston Salem and is an active member of our community. Currently she serves as the Board Chair of the ECHO (Everyone Can Help Out) Network; a Member of the Social Services Day Program Committee for Leadership Winston-Salem; a member of the planning committee for BOOKMARKS Festival of Books. Ms. Burris previously volunteered as an advocate for Sexual Assault and Domestic Violence Victims; was a Guardian Ad Litem in Guildford County; and was a member of the Junior League of Greensboro. Ms. Burris earned her Masters in Social Work from the University of North Carolina at Chapel Hill in 2001, Bachelor of Science in Social Work from the University of North Carolina at Greensboro in 1997 and her Bachelor of Arts in Sociology and Political Studies from Meredith College in Raleigh, N. C. in 1992. Elizabeth A. Chmelo. Director of Life Enrichment which includes responsibility for Spiritual Life, Volunteers and Special Events, Fitness/Wellness Center, and Health Care & Assisted Living Activities . Ms. Chmelo joined Salemtowne in 2015 with significant experience in health behavioral interventions in older adults focused on preventing the loss of physical function and mobility due to aging. She earned her BS in Exercise Sport Science from Elon University in Elon, North Carolina, her MS in Health and Exercise Science and a MS in Clinical and Population Translational Science from Wake Forest School of Medicine, both in Winston Salem, North Carolina.

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She is certified as a Clinical Exercise Specialist with the American College of Sports Medicine and in Basic Life Support for Health Care Providers with the American Heart Association. Ms. Chmelo previously served as Program Manager for the Wake Forest School of Medicine for group-based behavioral weight management and physical activity programs for older adults and for planning and coordinated research studies for National Institute of Health and Institutional Review Board approved studies. She served as the Senior Exercise Coordination for Health Exercise and Lifestyles Program and Lead Exercise Physiologist for Wake Forest University. Ms. Chmelo has published manuscripts and made presentations: Heterogeneity of physical function responses to exercise training in older adults. Journal of American Gerontology Society, March 2015; Physical Activity and Physical Function in Older Adults with Knee Osteoarthritis Journal of Physical Activity & Health August 2012; Intentional weight loss and Physical Disability in Older Adults: Obesity Review November 2009; and Does 400 meter walk time predict VO2 peak in obese, older adults? American College of Sports Medicine, Indianapolis, Indiana.

James Murphy Gregg, III. Director of Dining Services. Mr. Gregg joined Salemtowne in 2012 with significant experience in management, food and beverage, financial reporting and human resources. Mr. Gregg earned his Bachelor of Arts degree with Majors in French and Political Science at Washington and Lee University in Lexington, Virginia. He completed independent study in Paris, France and then completed his Masters of Business Administration at the Babcock Graduate School of Management at Wake Forest University in Winston Salem, North Carolina where he received a second year merit based academic scholarship. He completed a Marketing Field Study for Wake Forest Football. His team placed first in the second year Management Simulation Competition. Mr. Gregg is the owner of Jay Gregg Enterprises, LLC and J. Gregg Enterprises, Inc. who own and operate restaurants and catering entities and provide consulting in a variety of industries. He owns and has operated the following restaurants: 100HIGH Tapas & Restaurant in High Point, NC; Out Back Café in Roaring Gap, NC (sold name to Outback Steakhouse); and Diamondback Grill in Winston Salem, NC. Consulting experience includes: Restaurant, Real Estate, Pharmaceutical, Hosiery and Electronics industries. He has previously served as Director of Operations and Development for Market Square Limited Partnership in High Point, NC; Wine Intern with Christies, Mason, Wood International in Chicago, Illinois; Commercial Broker with Ferrell Realty Company in Winston Salem, NC; Advertising Manager and Writer for the Piedmont Post in Winston Salem, NC and Sommelier, Retail Manager and Wine Bartender with Salem Cotton Company Restaurant in Winston Salem, NC. Mr. Gregg is a licensed Real Estate Broker in North Carolina.

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Mr. Gregg is active in the community serving on various committees at St. Paul’s Episcopal Church in Winston Salem, NC as well as serving other organizations such as: Samaritan Ministries, William G. White Family YMCA, Partner with Youth Campaign; Children’s Home Farm, Habitat for Humanity; Crisis Control Ministry; and the Fallen Fire Department of New York Fund. Dianne E. Limbaugh. Fitness/Wellness Center Coordinator. Ms. Limbaugh joined Salemtowne in 2001. Ms. Limbaugh received her B.S. degree from North Georgia College in Health and Physical Education. She started her career with the Central YMCA where she served as the Women and Girls Director and later as the Health and Physical Education Director for Men and Women. She served as the Associate Executive Director of the Kernersville YMCA where she supervised the professional directors, was responsible for goal setting, branch committees, marketing, and building and grounds. She is a Nationally Certified YMCA Fitness Specialist and a Nationally Certified YMCA Senior Director. She owned and operated her own Fitness Center prior to joining Salemtowne. E. Dale Melton, M.Div. Director of Development with responsibility for Strategic Visioning and Initiatives. Mr. Melton joined Salemtowne in 2012 after serving as the Associate Vice President and Vice President for Seminary Relations at Louisville Presbyterian Theological Seminary in Louisville, KY (2007 to 2012) where he led the fundraising program, including annual giving, major giving, planned giving, grant writing, and external relations programs of the Seminary. He served as Acting Director of the Annual Fund and Alumni/ae Relations from 2006 to 2007; Database Administrator from 2000 to 2007 and Database Assistant from 1997 to 2000. He earned his Bachelors of Art from Wake Forest University in Winston Salem, NC with a major in Sociology and a Minor in Religion. He earned a Masters in Divinity with an emphasis in Christian Theology from Southeastern Baptist Theological Seminary in Wake Forest, NC. He also has been a Masters in Art candidate in Theology and Religion at Wake Forest University in Winston Salem and a PhD candidate in Christian & Systematic Theology at Southern Baptist Theological Seminary in Louisville, KY. Mr. Melton was licensed by the Falling Creek Baptist Church in Goldsboro, NC in 1985 and ordained by the New Bethel Baptist Church, in Henderson, NC in 1986. He is a member of numerous professional organizations, both locally and nationally, such as: The Partnership for Philanthropic Planning (PPP); Association of Prospect Researchers for Advancement (APRA); Association of Fundraising Professionals (AFP). He was formerly involved with the Development and Institutional Advancement Program (DIAP) of the Association of Theological Schools; Kentucky Association of Institutional Research (KAIR); and the Center for Non-Profit Excellence (CNPE).

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Mr. Melton is actively involved at Peace Haven Baptist Church and in the Leadership Winston Salem Flagship Program. Richard Pell. Director of Maintenance, Housekeeping, Grounds and Laundry. Mr. Pell began serving Salemtowne in 2006 as Director of Maintenance having previously served as Electrician for the community since 1995. Mr. Pell also served as Controls Electrician/Crew Leader for Pike Electric, Inc. in Mount Airy, North Carolina; and Inspector/Electronics Technician for Carolina Medical Electronics, Inc. in King , N.C. Mr. Pell is certified for Universal Refrigerant Transition and Recovery (EPA approved) and is a Certified Pool Operator. Mr. Pell attended Surry Community College in Dobson, N.C. where he earned an Associate’s degree in Applied Science in Electronic Engineering Technology. Janet P. Sowers. Director of Information Systems with responsibility for Reception. Mrs. Sowers joined Salemtowne in 1997 previously serving as Director of Computer Services at Blumenthal Jewish Home in Clemmons, North Carolina, from 1985 to 1997. Mrs. Sowers served as Business Office Manager and Food Service Supervisor at Willowbrook Care Center in Kernersville, North Carolina, from 1981 to 1985. Mrs. Sowers earned an Associate Degree in Computer Science in 1994 from Rutledge College in Winston Salem, North Carolina and a Bachelor of Science in Home Economics Education in 1976 from the University of North Carolina at Greensboro. Consulting Professionals:

Access Dental Care. Dental Services, 2275 Vanstory Street, Suite 102 Greensboro, North Carolina 27403.

All Foot Care. (Dr. Robert Wingate). Podiatrist, 1050 South Peace Haven Road, Winston Salem, North Carolina 27103.

Bingham Arbitrage Rebate Services Incorporated. Arbitrage Rebate Services, 1506 West Main Street, Richmond, Virginia 23220 Bank of New York Mellon Trust Company, NA. Bond Trustee, 10160 Centurion Parkway, Jacksonville, Florida 32256. Branch Banking & Trust (BB&T). Public Finance and Purchasing Card Program, 223 W. Nash Street, Wilson, North Carolina 27893.

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Brian Schiff & Associates Strategic Planning Services, 2205 Bradbury Court, Plano, Texas 75093 CCRC Actuaries, LLC. Actuary, 2601 Emory Road, Finksburg, Maryland 21048.

CJMW Architecture. Planning, Engineering and Interior Design Services, 119 Brookstown Avenue, Suite 100, Winston Salem, North Carolina 27101 Dixon Hughes Goodman, LLP. Certified Public Accountants and Advisors, 2501 Blue Ridge Road, Suite 200, Raleigh, North Carolina 27607 and 191 Peachtree Street NE, Suite 2700, Atlanta, GA 30303. ECS Carolinas, LLP. Engineering Consulting Services in geotechnical, environmental, construction materials, and facilities engineering, 4811 Koger Blvd., Greensboro, North Carolina 27407. Frank L. Blum Construction Company. Construction, 830 East 25th Street, Winston Salem, NC 27105.

Gate City Advisors. Investment Consulting for Retirement Plan, 328 Market St. East, Greensboro, North Carolina 27401. Geriatric Healthcare Services, P.C. – Maria Eugenia Iruela, MD. Medical Director and physician services in the Salemtowne clinic for residents, P.O. 24416, Winston Salem, North Carolina 27114. LabCorp of America. Laboratory Services, P.O. Box 12140, Burlington, North Carolina 27216. NEMA Management. Owner’s Representative Services. 2810 Overbrook Drive, Raleigh, North Carolina 27608 North Carolina Digital Imaging, Inc. Radiology Services, 2554 Lewisville-Clemmons Road, Suite 201, Box 11, Clemmons, North Carolina 27012. The PFM Group. Financial Advisory Services, 1245 Thornhill Lane, Winston Salem, North Carolina 27106

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Parker Poe Adams & Bernstein LLP Underwriters’ Counsel, 301 Fayetteville Street, Suite 1400, Raleigh, North Carolina 27601. Quality Mobile X-ray, Inc. Radiology Services, 7830 North Point Blvd. #140, Winston Salem NC 27106. Robinson, Bradshaw & Hinson, P.A. Bond Counsel, 101 N. Tryon Street, Suite 1900, Charlotte, North Carolina 28246. Senn Dunn Insurance. Employee Benefits and Corporate Insurance Broker & Consulting, 3625 N. Elm Street, Greensboro, North Carolina 27429. Stephens, Inc. Investment Counsel, 101 South Stratford Road, Suite 200, Winston Salem, North Carolina 27104. Southern Pharmacy Services, Inc. Pharmacy Services, 4459 Tarheel Drive, Pink Hill, North Carolina 28572 Stimmel Associates, P.A. (SAPA). Landscape Architecture, Land Planning and Civil Engineering, 601 N. Trade Street, Suite 200, Winston Salem, North Carolina 27101 Therapy Partners, LLC and Therapy Partners Consulting, LLC. Therapy Services and Consulting, 5348 Back Sail Court, Raleigh, North Carolina 27613. Total Computer Solutions. Network Support Services, 168 Thatcher Road, Greensboro, North Carolina 27409 Trinity Pension Group, LLC. Third Party Administrator for 403(b) retirement plan, 4194 Mendenhall Oaks Parkway, Suite 180, High Point, NC 27265. Wake Forest University Baptist Medical Center. Medical Director for Navigation by Salemtowne and physician services in the Salemtowne Clinic. Medical Center Boulevard, Winston Salem, North Carolina 27157. Wells Fargo Bank. Commercial Business Banking, 100 North Main Street, Winston Salem, North Carolina 27150.

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Womble Carlyle Sandridge & Rice, PLLC. Legal Counsel, One West Fourth Street, Winston-Salem, North Carolina 27101. B.C. Ziegler and Company Investment Banking - Underwriters, 4800 Cox Road, Richmond, Virginia 23060.

Physical Description of the Community. Salemtowne is located on a 115-acre site, off Bethabara Park Boulevard in Winston Salem, North Carolina. The Community provides housing and services, including health care, to individuals of retirement age and currently consists of:

• 171 Independent Living Accommodations • 46 Assisted Living Center accommodations

• 84 Health Care Center Living Accommodations (All are Medicare certified, of

which 20 are also Medicaid certified.)

• Community Center

• Fitness Center which includes land and equipment exercise areas, an indoor aquatic pool and whirlpool and Wii exercise and entertainment system

• Walking trails

• Over 25 acres of environmentally protected property

• Four acre lake

• Art Galleries

• Complimentary Wi-Fi in common areas

• Emergency Response System for the entire 115 acre campus

Refer to Section III., herein, for a detail listing of the various Living Accommodations. The community also includes reception areas, dining rooms, private dining rooms, coffee shop, art galleries, lounges, multi-purpose rooms, convenience/gift shops, beauty/barber shops, creative arts areas, wood working shop, library, game rooms, as well as housing support services including kitchens, maintenance, laundry and housekeeping.

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I. Services

The services and facilities that are provided through the Entrance and Monthly/Daily Fees are described in detail in the Residence and Services Agreements and are summarized below:

These services are provided to all Residents, regardless of level of accommodation, and are included in the monthly/daily fees. (Fees will not be reduced or unbundled for services that Residents decline such as dining.)

• Flexible dining plan - Independent Living residents’ monthly service fees include flexible dining allowances based on their accommodation and fee plan. Assisted Living and Health Care Center residents do not participate in a dining allowance plan. Three meals per day are provided to these residents as a part of their monthly service fees.

o Independent living apartment residents’ monthly service fees include a dining allowance.

o Independent living residents in cottages entering the community after May 1, 2014 include a dining allowance in their monthly service fee.

o Independent living residents in cottages who entered the community prior to May 1, 2014 were not required to have a dining allowance.

• Country Club Privileges at MapleChase Golf and Country Club (bi-annually renewing agreement)

• Deposit and limited banking services with Wells Fargo Bank and Capital Bank • Capital Bank ATM and - On-site bank teller by appointment • Limited parking (one unassigned space) • Limited storage (based on Living Accommodation) • Computer/internet access • Complimentary Wi-Fi access in common areas • Furnishings and appliances, as described in the literature published by the

Corporation regarding Salemtowne. These will vary by living accommodation selected.

• Common facilities, as available • All utilities, except telephone and internet service • Basic Cable television service • Weekly housekeeping service for Independent Living • Laundry facilities • Maintenance service for company owned property and equipment • Grounds keeping (basic services) • Mail and package delivery (as described in the level of care residence and

services agreement and the resident handbook provided to all residents) • Limited local medical transportation (up to 4 trips per month as described in the

residence and services agreement and the resident handbook) • Activities (Social, spiritual, cultural, wellness, educational and recreational

programs) Additional charges may be incurred for some programs.

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• Pastoral counseling • On-site delivery of pharmaceuticals and pharmaceutical consultations • Routine nursing services through the clinic • Nutritional counseling • Emergency nursing services • Security (24-hour medical emergency call system, security and fire protection) • Check Cashing • Notary Public services

[LEFT INTENTIONALLY BLANK]

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The following additional services are provided with the monthly/daily fee to Assisted Living Center and Health Care Center Residents. (Fees will not be reduced or unbundled for services that Residents decline such as meals or laundry.)

Assisted Living Center Health Care Center • Three meals daily • Three meals daily • Meal service to room, if required • Meal service to room, if required • Dining room assistance • Dining room assistance • Assistance with bathing and

grooming • Assistance with bathing and grooming

• Wheelchair assistance • Wheelchair assistance • Weekly housekeeping service • Daily housekeeping service • Personal laundry service & laundry

facilities • Personal laundry service & laundry

facilities • Medication delivery by a nurse or

medication technician • Medication delivery by a nurse

• Monitoring of vital signs according to

physician’s order • Monitoring of vital signs according to

physician’s order • Nursing assessment • Nursing assessment • Multi-disciplinary care planning • Multi-disciplinary care planning • Skilled care by LPN and CNAs on

duty 24 hours per day • Whirlpool tub

• Access to Fitness Center • Dementia unit • Skilled care by RNs, LPNs and CNAs

on duty 24 hours per day • Access to Fitness Center

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Certain services are not provided by Salemtowne. These are detailed in the Residence and Services Agreements. These services are not included in the Residence and Services Agreements’ Monthly/Daily Fees but can be provided at the Resident’s additional expense. This is not an all- inclusive listing of services you may request or utilize. With respect to services not listed, consult the resident handbook, schedule of charges (both provided to residents) or the Finance Office.

• On-site Physician Visits • On-site Laboratory Services • On-site X-ray Services • On-site Podiatric Care • On-site Rehabilitative Therapy • On-site Dental Care • On-site Occupational Therapy • On-site Therapeutic activities • Pharmacy Services • Telephone/internet installation and service • Additional dining services in excess of dining plan selected • Catering and guest meals • Hospital care • Physician and Specialist services • Private duty nurses and personal aides • Wheelchairs, walkers and other medical equipment and supplies • Certain cultural and sightseeing trips • Special transportation for individual or group trips • Alterations to living accommodation, if approved by Corporation • Grounds keeping, personally requested services, if approved by the Corporation • Limited storage, as available

Phillips Health Care Center. The Health Care Center is provided for the benefit of the Residents. Private or semi-private accommodations are provided in the Health Care Center as well as a Special Care area, which serves the needs of individuals diagnosed with Alzheimer’s or other dementia-related diseases. Nurses are on duty 24 hours a day, and all Living Accommodations are equipped with an emergency call system.

The overall coordination and provision of health care services is provided by the Resident Review Committee and a Medical Director who is a licensed physician selected by the Corporation. A physician is on campus on specified days of each week. Residents may choose to use this physician or continue to use their own private physicians. Residents will be responsible for charges for services by such physicians and any consultants.

Temporary care is available in the Health Care Center or Assisted Living Center for treatment of short-term illnesses or injuries.

Clinic and Related Services. A clinic is maintained for Residents in which nursing staff offer certain non-emergency medical treatment at no additional charge.

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On-Site Emergency Call Response. Each Living Accommodation is equipped with an emergency medical call system. This system covers substantially all of the outside campus areas as well. Salemtowne nursing staff will respond to emergency calls.

Emergency Medical Care. When emergency medical care is necessary, the Resident’s physician is notified. If acute medical care is necessary or upon physician’s or the Resident’s request, the Resident will be transferred to a local hospital Emergency Room.

Masten Assisted Living Center. The Assisted Living Center is provided for the benefit of the Residents who require assistance with activities of daily living such as bathing, dressing, and medication administration in private accommodations. Dining room assistance, monitoring of vital signs, and nursing assessments are also provided in the Assisted Living Center. The Assisted Living Center is staffed with Certified Nursing Assistants and LPNs on duty 24 hours a day.

Other Services Provided. Residents may not engage third parties for services to be rendered within Salemtowne without prior notification to and authorization by Salemtowne Management.

Pharmacy. Pharmacy services are available to all Residents. Independent Residents may choose to use this service or any pharmacy of their choice. Assisted Living and Health Care Center Residents are encouraged to purchase medications through this service since medications for these Residents are distributed by Salemtowne’s nursing staff and must be packaged by unit dose.

Future Expansion Project. Salemtowne implementing a project that includes the construction of a new 100-bed skilled nursing and rehabilitation center with a new 20-bed assisted living memory support center (Phase I), and the renovation and repurposing of the existing skilled nursing center into assisted living accommodations (Phase II). Salemtowne sold and closed a $42,585,000 bond issue of tax-exempt bonds (Bonds) through the North Carolina Medical Care Commission (the “Commission”) to finance Phase I of the project. Bonds are non-rated, tax-exempt, fixed rate, term bonds issued by the North Carolina Medical Care Commission, with interest rates ranging from 5.25 to 5.375 percent per annum. Interest on the Series 2015 Bonds will be payable April 1 and October 1 of each year beginning October 1, 2015. Principal on the Series 2015 Bonds is to be paid annually commencing October 1, 2031 with a final maturity on October 1, 2045. $115,000 of marketing costs are included in the project costs. Series 2015 bonds are on parity with Series 2006 bonds Security for the Bonds. The principal of, premium, if any, and interest on the Bonds will be payable from moneys paid by the Corporation and any other Members of the Obligated Group pursuant to a Loan Agreement between the Commission and the Corporation, and Obligation No. 4, dated as of the date of delivery of the Bonds

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(“Obligation No. 4”), issued by the Corporation to the Commission pursuant to a Master Trust Indenture, dated as of October 1, 1999 (the “Original Master Indenture”), between the Corporation and Branch Banking and Trust Company, succeeded by The Bank of New York Mellon Trust Company, N.A, as trustee (the “Master Trustee”), and a Supplemental Indenture for Obligation No. 4, dated as of July 1, 2015 (“Supplemental Indenture No. 4”), between the Corporation and the Master Trustee. Pursuant to the Master Indenture, the Corporation has granted to the Master Trustee a security interest in its Pledged Assets as security for the payment of amounts due on any Obligations issued thereunder. Pledged Assets consist of all Gross Receipts, Accounts, Equipment, general intangibles, inventory, documents, instruments and chattel paper of each Member of the Obligated Group now owned or hereafter acquired, and all proceeds thereof; provided, however, Pledged Assets do not include contract rights consisting of charitable pledges.

Pursuant to the Corporation Deed of Trust, as security for the payment of amounts due on any Obligations issued under the Master Indenture, the Corporation has granted to the Master Trustee a first lien of record on the Mortgaged Property, as more fully described in the Corporation Deed of Trust, together with all buildings, improvements and fixtures thereon, subject to Permitted Liens and the right of the Members of the Obligated Group to transfer Property, Plant and Equipment free of the lien on the Mortgaged Property under certain circumstances Covenants. The Members of the Obligated Group are subject to covenants under the Master Indenture relating to maintenance of a Long-Term Debt Service Coverage Ratio and restricting, among other things, incurrence of Indebtedness, existence of Liens on Property, consolidation and merger, transfers of assets, addition of Members to the Obligated Group and withdrawal of Members from the Obligated Group. The Members of the Obligated Group are also subject to a liquidity covenant and a rating solicitation covenant under the Loan Agreement.

Rate Covenant. Each Member of the Obligated Group covenants to set rates and collect charges for its Facilities, services and products such that the Long-Term Debt Service Coverage Ratio, calculated as of the end of each Fiscal Year, will not be less than 1.20.

Liquidity Covenant. The Agreement provides that the Corporation shall, and shall cause each other Member of the Obligated Group to, conduct its business so that on the last day of each Fiscal year, the Obligated Group has not less than 150 Days’ Cash on Hand.

Rating Solicitation Covenant. The Loan Agreement provides that the Corporation will, not later than 60 days after receipt of the Financial Statements to the Master Trustee pursuant to the Master Indenture, retain a Retirement Industry Consultant to assess the likelihood of whether the Obligated Group could obtain from any of the Rating Agencies a long-term rating of the Bonds not less than the lowest “investment grade” rating of such Rating Agency.

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The North Carolina Medical Care Commission (the “Commission”) is a commission of the Department of Health and Human Services of the State of North Carolina (the “State”) with the powers, among others, set forth in the Health Care Facilities Finance Act, Chapter 131A of the General Statutes of North Carolina, as amended (the “Act”), to issue tax-exempt revenue bonds to finance construction and equipment projects for nonprofit and public hospitals, nursing homes, continuing care facilities for the elderly and facilities related to the foregoing.

Salemtowne is currently licensed for 46 assisted living (Masten Assisted Living Center) and 84 skilled nursing beds (Phillips Health Care Center). None of these existing beds are closed, or sheltered, which allows for direct admission from outside of the Salemtowne community directly into the assisted living and health care center. Salemtowne has recently developed a strategic plan which includes a master site plan and health care repositioning and expansion plans. The Bonds will finance Phase I of the strategic plan. Specifically, the proceeds of the Bonds will be used to finance the construction and equipping of a new skilled nursing facility which will initially contain 100 skilled nursing beds (40 of which will be rehabilitation beds) and 20 assisted living memory care beds (the “Project”). The total building size will be approximately 126,780 square feet and approximately 14,950 square feet will be devoted to the assisted living memory care beds.

The Corporation has been awarded a Certificate of Need to build and operate 16 sheltered or closed skilled nursing beds and will relocate 84 of its existing skilled nursing beds.

The Corporation has been awarded a Certificate of Need to build and operate 20 sheltered or closed assisted living memory care beds (special care units). However, for the period beginning July 31, 2013 and ending July 1, 2016, the North Carolina Division of Health Service Regulation (NCDHSR) is prohibited from issuing any licenses for assisted living memory care beds, unless NCDHSR grants an exception. NCDHSR has advised the Corporation that it may apply for an exception by following the exception request process established by NCDHSR beginning a few months prior to completion of construction of the units. In the event the moratorium on licenses has not been lifted at that time, the Corporation will apply to NCDHSR for an exception. There can be no guarantee at this time that NCDHSR will grant such exception. The Corporation has designed the special care units so that they meet the requirements for skilled nursing, and in the event NCDHSR does not grant a license for the memory care beds, the Corporation anticipates it will apply for a Certificate of Need to convert the memory care beds to sheltered or closed skill nursing beds. There can be no guarantee at this time that the Corporation will be granted such Certificate of Need.

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The following table sets forth the number of accommodations prior to and after the completion of the Project.

The Project

Level of Care Prior to the

Project New

Units/Beds Replacement Units/Beds

Upon Project

Completion

Independent living units 171 - - 171 Assisted living bed 46 - - 46 Memory support beds - 20 - 20 Skilled nursing beds 84 16 84 100

Total 301 36 84 337 The thirty-six (36) additional beds will be used exclusively to meet the needs of persons with whom the facility has continuing care contracts and who have lived in a non-nursing unit of the CCRC community for a period of at least 30 days, except as otherwise provided in Policy NH-2.

Sheltered/Closed beds meet the needs of people with whom the facility has continuing care contracts, who have lived in a non-nursing unit or adult care unit of the continuing care facility for a period of at least 30 days. Exceptions shall be allowed when one spouse or sibling is admitted to the adult care home unit at the time the other spouse or sibling moves into a non-nursing or adult care unit, or when the medical condition requiring nursing or adult care home care was not known to exist or be imminent when the individual became a party to the continuing care contract.

Phase II of the strategic plan, expected to be pursued after completion of the Project (Phase I), includes renovation of the existing Phillips Health Care Center (skilled nursing facility) to be used as an assisted living center with 46 licensed beds in various unit sizes. The Corporation anticipates borrowing for Phase II but the type and timing is uncertain at this time.

II. Fees (Schedule of Fees)

Salemtowne offers attractive, comfortable Living Accommodations at affordable prices. Salemtowne allows for direct entry into the Assisted Living Center as well as the Health Care Center. Residents who choose to become a part of the Salemtowne community through entry into independent living are required to pay a one-time Entrance Fee, which is determined by the Living Accommodation selected. Monthly/daily fees are also charged for services provided.

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Residents may request Living Accommodation customizations. Such customizations must be approved by Salemtowne. The costs and maintenance of such features are the responsibility of the resident. Residents directly admitted to the Assisted Living Center or the Health Care Center do not pay Entrance Fees but do pay monthly/daily fees for services provided. Residents who have paid an Entrance Fee to the community receive the following benefits:

• Residents, who entered the community under a previous Disclosure Statement, who paid an Entrance Fee, and have a temporary stay in the Health Care Center may use up to twenty-four (24) Entrance Fee Grace Days per fiscal year in the Health Care Center at no charge. These days cannot be carried forward to future fiscal years. Days covered by Medicare or Medicare Advantage plans will not count as days under this program. The Entrance Fee Grace Days program is subject to change. These Residents also enjoy a reduced monthly/daily fee from published room and board rates in the Assisted Living Center

• Residents entering the community under this Disclosure Statement, who have

paid an Entrance Fee, will participate in the Room & Board Discount Program in place of the Entrance Fee Grace Days Program. These Residents, who have a stay in the Health Care Center or the Assisted Living Centers, will receive a discount from published external admission room and board rates. This discount program is subject to change. As of the date of this Disclosure Statement, the discount is 20%.

Priority Entry. Residents are provided priority entry over non-Residents for entry to the Health Care Center or Assisted Living Center. The community will make every effort to accommodate Residents in the Health Care Center and/or Assisted Living Center but cannot guarantee availability of accommodations. In the event the Health Care Center and the Assisted Living Center are fully occupied when a Resident is in need of care, the Resident agrees to relocate to an alternate health care facility that provides services similar (“a Comparable Facility”). In the event of relocation, the community will make every effort to transfer the Resident back to Salemtowne when accommodations become available.

Upon the Resident’s relocation to a Comparable Facility, the Resident will continue to be responsible for the Monthly/Daily Fee (unless their Living Accommodation is surrendered). Salemtowne will not be responsible for the charges associated with the alternate accommodations.

Entrance Fee and Deposit. Payment of an Entrance Fee provides a resident with the lifetime use of a residence and the services and amenities available at the Community as long as the terms and conditions of the residence and services agreement are

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satisfied. Ten percent (10%) of the Entrance Fee will be due and payable upon execution of the Reservation Agreement as a deposit. The balance of the Entrance Fee will be due and payable on or before the date of occupancy. Occupancy is defined as the first day that a Resident either resides in the Living Accommodation or the first day that the Resident’s furnishings or belongings occupy the Living Accommodation or a storage area at Salemtowne. Unless we agree in writing to other arrangements, the Resident must take occupancy within 90 days after notice that the Admissions Committee has determined that the Resident meets the entry requirements and signs a Reservation Agreement. If the Resident does not take occupancy by such time, the Resident shall accept financial responsibility for the Living Accommodation and applicable Monthly/Daily Fees 90 days after notice of availability is provided to hold a particular Living Accommodation.

Adjustments To Fees. The fees (Entrance Fees, Monthly/Daily Fees and Additional/Ancillary Fees) are usually set annually to provide the facilities, programs and services described in this disclosure statement and are intended to meet the cost of debt service, insurance, maintenance, administration, staffing and other expenses associated with the establishment, operation and management of Salemtowne. The Corporation shall have the authority to adjust the fees from time to time as the Corporation in its discretion deems necessary. Any such increase in the fees or other charges may be made by the Corporation upon thirty (30) days written notice to the Residents.

In the event that it should be determined that the Corporation is required to pay ad valorem taxes upon its property, the Monthly/Daily Fee may be adjusted to reflect the amount of such taxes.

In the event Salemtowne is assessed sales or use tax on Monthly/Daily Fee and/or fees for other services, Residents are responsible for all such taxes.

Residents are responsible for all taxes assessed on their personal property.

For a partial first month, the Monthly/Daily Fee is pro-rated on a per diem basis. Thereafter, Monthly/Daily Fees are paid in advance. Current fees are listed on the following Schedule of Fees. These fees are effective for residents who enter the community under this Disclosure Statement. Any future increases will be disclosed as an amendment to the disclosure statement and presented in Appendix A herein.

[INTENTIONALLY LEFT BLANK]

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Independent Living Cottages “New Standard” Fee Program

(This schedule of fees is effective for Residents entering the community on or after May 1, 2014 under the “New Standard” fee program & those residents who bought in to the “New Standard” fee program.)

Monthly Fee Entrance Fee Single Double Wachovia Village

Hatteras – 2BR ~1,172 sf $131,400 - $136,500 $2,318 $2,782 Emerald – 2BR~1,356 sf $142,700 - $163,250 $2,524 $2,988

Salem Village

Bethania – 2BR~1,533 sf $209,600 $2,678 $3,142 Hickory A–2BR~1,560 sf $203,500 - $214,750 $2,575 - $2,730 $3,039 - $3,194 Hickory B- 2BR~1,755 sf $255,000 $2,884 $3,348 Catawba A–2BR~1,678 sf $224,000 - $245,000 $2,936 $3,400 Catawba B–3BR~1,954 sf $270,000 $3,193 $3,657 Catawba C-3BR~2,033 sf $285,900 $3,399 $3,863 Catawba D-3BR~2,101 sf $285,900 $3,399 $3,863 Catawba E-3BR~2,363 sf $330,000 $3,657 $4,121 Catawba F-2BR~3,210 sf (1,678 sf heated)

$260,000 $3,039 $3,503

Bethabara Place Mitchell – 2BR~1,440 sf $201,500 $2,833 $3,297 Shenandoah A–2BR~1,617 sf $231,750 $3,090 $3,554 Shenandoah B–2BR~1,698 sf $242,100 $3,193 $3,657 Appalachian A–2BR~1,640 sf $235,500 $3,142 $3,606 Appalachian B–2BR~1,750 sf $256,000 $3,399 $3,863 Rutherford A – 2BR~1,817 sf $265,000 $3,399 $3,863 Rutherford B – 2BR~1,898 sf $265,000 $3,502 $3,966 Rutherford C - 2BR~2,259 sf $320,000 $3,708 $4,172 Rutherford D – 2BR~2,100 sf $314,150 $3,399 $3,863 Watauga – 2BR~3,200 sf $350,000 $3,805 $4,269

Monthly Fees includes: all utilities (excluding telephone & internet), cable, weekly housekeeping, maintenance and $155 per month per Resident dining allowance. 50% and 90% Entrance Fee Plans are offered. Please contact Salemtowne’s Admissions team for current pricing and availability. Residents moving between independent living residences will be charged for renovation costs. For a second and each subsequent move between independent living residences residents will be charged the greater of the cost of renovation or $10,500 for each move. There may be an additional entrance fee for new residents joining existing residents. Please contact Salemtowne’s Admissions team for information.

Current rates effective 6/1/2015 - 5/31/2016

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Independent Living Apartments “New Standard” Fee Program


Entrance Fee Monthly Fee

Single Double Vogler Building / Bahnson Hall:

Ardmore – studio~250 sf $30,000 $2,400 n/a Forsyth – 1BR~530 sf $58,000 - $63,000 $1,596 $2,228 Winston A – 2BR~790 sf $70,000 - $87,000 $1,905 $2,537 Winston B – 2BR~790 sf $84,000 $1,905 $2,537 West End – 1BR~772 sf $75,000 - $87,000 $1,905 $2,537 Buena Vista – 2BR~1,040 sf $105,060 $2,420 $3,052

Driscoll Apartment Building:

Reynolda – 1BR ~ 751 sf $109,200 - $112,000 $2,163 $2,795

Sherwood – 1BR~ 936 sf $139,050 $2,420 $3,052

Piedmont - 2BR~1,073 sf $162,300 - $167,400 $2,729 $3,361

Brookstown – 2BR~1,107 sf $162,300 $2,729 $3,361

Twin City – 2BR~1,240 sf $181,800 - $189,550 $2,987 $3,619

Monthly Fees includes: all utilities (excluding telephone & internet), cable, weekly housekeeping, maintenance and $323 per month per Resident dining allowance, except the Ardmore which includes $823 dining allowance per Resident per month. Monthly fee includes: Bed and bath linen laundry service for Vogler Building and Bahnson Hall apartments.

Residents moving between independent living residences will be charged for renovation costs. For a second and each subsequent move between independent living residences, residents will be charged the greater of the cost of renovation or $10,500 for each move.

50% and 90% Entrance Fee Plans are offered. Please contact Salemtowne’s Admissions team for current pricing and availability. There may be an additional entrance fee for new residents joining existing residents. Please contact Salemtowne’s Admissions team for information.


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Assisted Living Services “New Standard” Fee Program


Monthly Fee

Assisted Living - Single occupancy

$4,523

Assisted Living Suite - Single occupancy $6,000

Monthly fee includes: 3 meals per day, utilities (excluding telephone & internet), cable, weekly housekeeping & maintenance. Monthly fee includes bed and bath linen laundry. Residents moving between assisted living residences will be charged for renovation costs. For a second and each subsequent move between assisted living residences residents will be charged the greater of the cost of renovation or $10,500 for each move.


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Health Care Services “New Standard” Fee Program

(This schedule of fees is effective for Residents entering the Health Care Center on 3/1/2015 or after. This “New Standard” fee program applies to residents under “New Standard” fee program and & those residents

who bought in to the “New Standard” fee program.)

Daily Fee

Phillips Health Care Center (all rooms Medicare certified effective 1/1/2015 and 20 rooms dually Medicaid certified)

Private room $285/day

Semi-private suite $260/day

Tidewater Hall (300 - Special Care Unit) $305/day

Daily fee includes: 3 meals per day, utilities (excluding telephone & internet), cable, daily housekeeping, maintenance and bed and bath linen laundry service. It will be administration’s discretion to evaluate costs of internal moves and determine their impact on the community. Should Administration determine that the cost of an internal move will adversely impact the community and the community cannot absorb the renovation costs, the renovation costs will be charged to the resident.


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Health Care Services Schedule of Fees – Future Expansion

(This schedule of fees is representative of anticipated Health Care rates in the new building, Assisted Living Memory Support Rates in the new building (both in Phase I of the Project) and Assisted Living rates in the

renovated building (Phase II).)

Fee

Skilled Nursing Private Room $296/day

Assisted Living Memory Support Private Room $6,293/month

Assisted Living Rooms & Suites $4,523 - $6,000/month

Daily fee includes: 3 meals per day, utilities (excluding telephone & internet), cable, daily housekeeping, maintenance and bed and bath linen laundry service. It will be administration’s discretion to evaluate costs of internal moves and determine their impact on the community. Should Administration determine that the cost of an internal move will adversely impact the community and the community cannot absorb the renovation costs, the renovation costs will be charged to the resident.

Rates effective with new construction/renovation

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Historic Changes in Major Fees The following table shows average changes in the monthly/daily service fees over time. Note that it is the average dollar amount of the CHANGE in fees from year to year that is shown – NOT the fees themselves. All changes during this period occurred once per year on June 1st, except as noted below in footnotes (1, 3)

Standard Monthly Service Fees

(3,4) 2015-2016

(2) 2014-2015

(1) 2013-2014

2012-2013

2011-2012

Independent Living Monthly Service Fees

One Occupant ($s per mo.) ($17) $9 $143 $68 $83 Approx. Percentage Increase (0.68%) 0.3% 5.5% 2.7% 3.4% Two Occupants ($s per mo.)

$9

($3)

($178)

$91

$110

Approx. Percentage Increase 0.2% (0.1%) (5.2%) 2.7% 3.4%

Healthcare & Assisted Living Service Fees

Skilled Nursing ($s per day) $17 $6 $8 $7 $8 Approx. Percentage Increase 6.4% 2.2% 3.1% 2.8% 3.4%

Assisted Living Rate ($s per mo.) $132 $94 $124 $114 $133 Approx. Percentage Increase 3% 2.2% 3.0% 2.8% 3.4%

(1) Effective May 1, 2014 - Revised pricing schedule for Independent Living Residents includes dining

allowance of $150/month for each cottage Resident and $307/month for each apartment Resident beginning with new Residents entering the community. Revised pricing for Independent Living Residents also includes a decrease in the second person monthly service fee. Prior years of Independent Living pricing changes did not include dining allowances.

(2) Effective June 1, 2014 - Revised pricing schedule for Independent Living Residents includes dining allowance of $150/month for each cottage Resident and $314/month for each apartment Resident. During this period a number of cottages were re-configured with changes in fees and square footage which affected the weighted average change in fees.

(3) Effective March 1, 2015 – Revised the rates for Health Care due to the Medicare certification of all beds in the Phillips Health Care Center and Revised the suite rate in Assisted Living. Daily rates increase $8 to $33 per day based on type of accommodation. Assisted Living suite rates increased $783 per month. During this period a number of cottages were re-configured with changes in fees and square footage which affected the weighted average change in fees.

(4) Effective June 1, 2015 – Increased overall rates by an average of 3% except for rates adjusted on March 1, 2015. During this period a number of cottages were re-configured with changes in fees and square footage which affected the weighted average change in fees.

Note: Residents within the community staying in the same living accommodation, received the following percentage increases for monthly service fees, except as noted in (1-4) above.

• 2011-2012 – 3.40% • 2012-2013 – 2.98% • 2013-2014 – 2.98% • 2014-2015 – 2.18% • 2015-2016 – 3.00%

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Entrance Fee Refund. The Resident, the Resident’s estate or a revocable trust may be entitled to a refund of a portion of the Entrance Fee paid, when the Resident moves out of the community, as described in the Residence and Services Agreement (Appendix A of this disclosure statement). Any refund provided is conditioned on all of the Resident’s obligations in the Residences and Services Agreement having been met by the Resident, the Resident’s Power of Attorney or the Resident’s estate. The cost to repair damages to the Living Accommodation and storage areas in excess of normal wear and tear will be deducted from the applicable refund. Any refund due to the Resident will be made, within thirty (30) days of the date the Resident’s Living Accommodation shall have been reserved by a prospective Resident and such prospective Resident shall have paid their full Entrance Fee.

Standard Entrance Fee Refund. This Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of two percent (2%) for each month of occupancy, as defined herein, for up to forty-eight (48) months. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. No refund of the Entrance Fee shall be paid after forty-eight (48) months of occupancy.

50% Entrance Fee Refund. This Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of two percent (2%) for each month of occupancy, as defined herein, for up to twenty-three (23) months. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. The refunded Entrance Fees will never be less than 50% of the original Entrance Fee, except for accrued expenses that are deducted.

90% Entrance Fee Refund. This Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of one percent (1%) for each month of occupancy, as defined herein, for up to six (6) months. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. The refunded Entrance Fees will never be less than 90% of the original Entrance Fee, except for accrued expenses that are deducted.

In the event of termination of the Residence and Services Agreement after occupancy, Salemtowne will offset against any Entrance Fee refund due the Resident for the following:

1. The amount of any Monthly/Daily Fees or other amounts payable to us, which remain outstanding, and

2. Any costs incurred to restore the Living Accommodation to good condition, normal wear and tear excepted.

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3. Costs of storage or disposal of any personal belongings left in the Living Accommodation.

Entrance Fees are not subject to refund at the time of transfer to the Assisted Living Center or the Health Care Center. Entrance Fees are not subject to refund if there is dual occupancy and one resident dies or moves out of the community.

Entrance Fees are subject to refund except as noted above only in the following situations:

• Termination prior to occupancy

• Voluntary termination

• Termination upon death

• Termination by the Corporation

Health Insurance. Residents will maintain eligible Medicare coverage and one supplemental health insurance policy or equivalent insurance coverage, which adequately covers hospital, medical, prescription, and skilled nursing deductibles and co-payments required of the primary insurance plan. Both the primary and supplemental health insurance policies must recognize Salemtowne as a health care provider or Residents will assume the financial responsibility for services provided that otherwise could be covered. Residents will be responsible for ensuring that the health insurance coverage does not lapse, and will provide Salemtowne with evidence of such coverage upon request. If health insurance coverage should lapse, Salemtowne may require that Residents reapply for suitable coverage. If Residents are unable to obtain adequate new coverage, Salemtowne will charge Residents for any costs of medical and other health care services provided, that otherwise would have been covered by an approved policy.

Salemtowne reserves the right, in its sole discretion, to eliminate or change its participation with any and all insurance plans.

FINANCIAL ASSISTANCE

Subsidy. The Corporation declares its policy that the Residence and Services Agreement will not be terminated solely because of a Resident’s financial inability to continue to pay the Monthly/Daily Fees or other charges payable to Salemtowne by reason of circumstances beyond the Resident’s control, provided, however, this declaration shall not be construed as qualifying the right of the Corporation to terminate the Residence and Services Agreement in accordance with the terms thereof.

In the event that a Resident presents facts which in the opinion of the Corporation justify special financial consideration, the Corporation will give careful consideration to

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subsidizing in whole or in part the Monthly/Daily Fees and other Salemtowne fees payable by the Resident so long as such subsidy can be made without impairing the ability of the Corporation to attain its objectives while operating on a sound financial basis.

In the event that the Corporation may subsidize in whole or in part the Monthly/Daily Fees and other fees payable by the Resident, the Resident will be required to execute a Financial Assistance Agreement with the Corporation.

In the event that Salemtowne continues to provide the services to a Resident under the terms of the Residence and Services Agreement despite their financial inability to continue to pay the Monthly/Daily Fee or other Salemtowne fees payable under the terms of the Residence and Services Agreement, Salemtowne shall be entitled to require the Resident to move to a smaller or less costly Living Accommodation.

Any determination by the Corporation with regard to the granting of financial assistance shall be within the sole discretion of the Corporation.

Financial Assistance Funds. The Corporation has established funds, which will be used to assist Residents who would otherwise not be able to live at Salemtowne.

III. Entry/Admission

Applicants will qualify for entry to Salemtowne upon satisfaction of the following provisions:

Age. The entry requirements for residence at Salemtowne are nondiscriminatory except as to age, and Salemtowne is open to both married and single men and women of all races and religions. Entry to independent living is restricted to persons 62 years of age or older, except in the case of double occupancy, at least one of the persons must be 62 years of age or older. Entry in the Assisted Living Center and the Health Care Center is restricted to persons 62 years of age or older.

Personal Interview. Applicants will have an interview with a representative from Salemtowne prior to taking residency at Salemtowne. Upon review of all information required to be furnished, additional interviews may be requested by the Corporation.

Application, Health History and Financial Statement. Applicants shall submit for review, by the Admissions Committee appointed by the Corporation, an Application for Entry, a Physician’s Health and History, and a Confidential Financial Statement, all on forms furnished by the Corporation.

Notification. Salemtowne will review the submitted application materials as well as the results of the interviews and nursing assessments and will notify applicants whether they meet the entry requirements.

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Health Requirements. Prior to entry, applicants shall submit a report of a physical examination made by a physician of their choice. Such report shall include a statement by such physician that the applicant is able to perform normal living activities. Salemtowne may require applicants to have another physical examination by our Medical Director or by another physician approved by the Corporation. Applicants shall be responsible for the costs of such physical examinations. If an applicant’s health as disclosed by such physical examination differs materially from that disclosed in the application materials, the Corporation shall have the right to decline entry and/or to terminate the Residence and Services Agreement, or in the discretion of the Corporation, to permit the applicant to take occupancy of accommodations at Salemtowne suitable to their needs.

Financial Requirements. Applicants must have assets and income which will be sufficient under foreseeable circumstances to pay the financial obligations under the Residence and Services Agreement and to meet their ordinary living expenses. Salemtowne may require current financial information at any time prior to and subsequent to occupancy.

Financial Resources. You, your current and future responsible parties (i.e. power(s) of attorney, executor(s)) will abide by any and all financial arrangements made with the Corporation for the purpose of securing your ability to pay any and all charges for residing at Salemtowne. You agree not to make any gift or other transfer of assets for the purpose of evading your obligations under this Agreement, or if such gift or transfer would render you unable to meet such obligations under this Agreement. Gifts or transfers of assets in this manner, which result in your inability to meet your financial obligations in accordance with this Agreement, will entitle Salemtowne to terminate this Agreement, and you or your responsible parties, as applicable, will be liable for any unpaid amounts. Temporary Entry. Temporary entry to the Health Care Center is available through the Medicare program (for up to one hundred (100) days) or through private pay sources (for up to thirty (30) days). Temporary entry to the Assisted Living Center is available for up to thirty (30) days. Per diem fees apply. There is no Entrance Fee for any type of temporary entry.

A Resident admitted under a temporary entry is not eligible for permanent entry to the Health Care Center, the Assisted Living Center or the independent living areas at Salemtowne except through the Salemtowne application process of making separate application, approval of the application and execution of a separate Residence and Services Agreement.

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TERMINATION

Termination Prior to Occupancy. The Residence and Services Agreement may be terminated by you at any time prior to taking occupancy at Salemtowne for any reason by giving written notice to the Corporation. The Agreement will automatically be canceled due to death or physical or mental conditions that would make you ineligible for entry to Salemtowne.

The Agreement may be terminated by the Corporation at any time prior to the date that you take occupancy if the Corporation determines that you do not meet the physical, mental or financial requirements for entry.

In the event of such termination (including death, illness, injury, or incapacity), you shall receive a refund of the Entrance Fee paid, less a non-refundable fee equal to 4% of the total amount of the Entrance Fee, and less amounts paid or due to be paid for non-standard features added to the Living Accommodation. Any such refund shall be paid by the Corporation within sixty (60) days following termination pursuant to this paragraph.

Voluntary Termination. At any time, a Resident may terminate the Residence and Services Agreement by giving the Corporation adequate notice:

• fourteen (14) days prior written notice of such termination for independent Living Accommodations,

• fourteen (14) days prior written notice of such termination for Assisted Living Center accommodations, or

• five (5) days prior written notice of such termination for Health Care Center accommodations.

If a Resident does not provide adequate notice, or if no written notice is given, the Resident will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period.

A Resident may be deemed to have abandoned the Living Accommodation and terminated the Residence and Services Agreement if they do not occupy a residence at Salemtowne for a period of one continuous year. Occupancy is defined as the last day that a Resident either resides in the Living Accommodation or the last day that the Resident’s furnishings or belonging occupy the Living Accommodation or a storage area at Salemtowne.

If such termination shall occur within forty-eight (48) months after the date of occupancy, the Resident will receive a partial refund of the Entrance Fee paid in accordance with the Residence and Services Agreement’s Refund section for Voluntary Terminations.

Temporary Absence. Temporary absences because of illness, trips or other will not affect a Resident’s rights to retain occupancy of the Living Accommodation, as long as applicable Monthly/Daily Fees are paid.

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Termination Upon Death. In the event of a Resident’s death and such Resident is not survived by a spouse residing at Salemtowne who has signed the Residence and Services Agreement, the Agreement shall terminate and, subject to the their continuing obligations, described in the Residence and Services Agreement, the portion, if any, of the Entrance Fee to be refunded shall be determined in the same manner as a Voluntary Termination paid to the estate of the deceased Resident.

In the event of a Resident’s death and such Resident is survived by a spouse residing at Salemtowne who has signed the Residence and Services Agreement, the Agreement shall not terminate and no refund will be payable.

In the event a refund becomes due, the date that the deceased Resident’s responsible party/estate executor removes all personal belongings from the Living Accommodation shall determine the termination date. Any refund due the Resident’s estate under this paragraph will be made at such time as such Resident’s Living Accommodation shall have been reserved by a prospective Resident and such prospective Resident shall have paid to the Corporation such prospective Resident’s full Entrance Fee; provided, however, that the Resident’ estate shall continue to be obligated to pay the applicable Monthly/Daily Fee for such Resident’s Living Accommodation until such Resident’s Living Accommodation is vacated and left in good condition except for normal wear and tear. Termination by the Corporation. Salemtowne may terminate the Resident and Services Agreement at any time if there has been a material misrepresentation or omission made by a Resident during the application process; if the Resident fails to make payment to the Corporation of any fees or charges due the Corporation within thirty (30) days after receiving written notice of their failure to pay such fees or charges; if Residents do not abide by the rules and regulations adopted by the Corporation or breach any of the terms and conditions of the Agreement; if the health or safety of other individuals in the Corporation is endangered if a Resident remains in Salemtowne, as determined by a physician, physician assistant or nurse practitioner; or the discharge is necessary for a Resident’s welfare and the Resident’s needs cannot be met by the Corporation as documented by the Resident’s physician, physician assistant or nurse practitioner. Residents will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period and for each day of occupancy. Any refund of the Entrance Fee due to the Resident following voluntary termination of the Agreement by the Corporation will be made in accordance with refund policies. Except in cases of emergency, Residents will receive a notice of the termination by the Corporation at least thirty (30) days prior to the effective date of termination. Residents may be entitled to appeal the Corporation’s decision to terminate this Agreement and, except in cases of emergency, the Corporation will not discharge a Resident before the final decision resulting from the appeal has been rendered.

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Condition of Living Accommodation. At the effective date of termination of the Residence and Services Agreement, Residents will vacate the Living Accommodation, including any storage areas at Salemtowne, and will leave both in good condition except for normal wear and tear. Residents, or their estates, will be liable to the Corporation for any costs incurred in restoring the Living Accommodation and storage areas to good condition except for normal wear and tear. Removal of Personal Property. In the event of termination of the Agreement, Residents agree to surrender the Living Accommodation and any storage areas, which were occupied, within thirty (30) days of the determination. The Corporation reserves the right to remove a Resident’s belongings from the Living Accommodation and any storage areas. Residents will pay a Monthly/Daily storage fee equal to 50% of the Monthly/Daily Fee for the previously occupied Living Accommodation or the actual cost of external storage, whichever is applicable. Property will not be stored for longer than 30 days. Unclaimed property will become the property of Salemtowne after 30 days and will be disposed of at the sole discretion of the Corporation.

In the event of a Resident’s death, while they are a resident of Salemtowne under the Agreement, only the executor(s) named in their Will will be allowed to remove or dispose of furnishings and belongings in the Living Accommodation and any related storage areas at Salemtowne. Members of the family or those to whom a Resident has granted Power of Attorney will not be allowed access to personal property after a Resident’s death, unless they are the executor(s) named in the Resident’s Will.

Release from Termination. Upon termination of the Residence and Services Agreement, Salemtowne is released from any further obligations to Residents except for the payment of any refund which may be due under the Residence and Services Agreement.

Right of Rescission

Notwithstanding anything herein to the contrary, the Residence and Services Agreement may be rescinded by giving written notice of such rescission to the Corporation within thirty (30) days following the later of the execution of the Residence and Services Agreement or the receipt of a disclosure statement that meets the requirements of Section 58-64-1, et seq. of the North Carolina General Statutes. In the event of such rescission, Residents will receive a refund of the Entrance Fee paid, less a non-refundable fee equal to 4% of the total amount of the Entrance Fee, less any Monthly/Daily Fees or portion thereof applicable to any period a Living Accommodation or storage area was actually occupied by the Resident or their belongings. In the event of such rescission, Residents shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. Residents will not be required to move into Salemtowne before the expiration of such thirty (30) day period. Any such refund shall be paid by the Corporation within sixty (60) days following receipt of written notice of rescission pursuant to this paragraph.

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TRANSFER/MOVES

Transfer to Another Living Accommodation. Residents may move to a different Living Accommodation at Salemtowne which becomes available upon payment of such fees, consent by the Corporation and compliance with such guidelines regarding transfers as may be adopted by the Corporation. Fees and guidelines may be changed from time to time by the Corporation.

If a Resident transfers to another Living Accommodation, he or she is responsible for paying any difference in the Entrance Fee, if the amount of the Entrance Fee of the new Living Accommodation is greater than the Entrance Fee for the previous Living Accommodation to be vacated. If the Entrance Fee for the new Living Accommodation is less than the Entrance Fee for the previous Living Accommodation to be vacated, no refund will be paid for the difference. Residents who transfer to another Living Accommodation will be responsible for any transfer fees that may be set by the Corporation and the Monthly/Daily fees in effect at the time for the new Living Accommodation.

Moving Costs. Residents are responsible for arranging and paying for all packing and moving costs for moves into, within and out of Salemtowne. Assistance may be provided by Salemtowne at an additional cost.

Transfer to Phillips Health Care Center or the Assisted Living Center. Residents agree that the Corporation shall have authority to determine that the Resident should be transferred from their Living Accommodation to the Phillips Health Care Center or the Assisted Living Center or a separate area within either center. Such determinations shall be based on the professional opinion of the Resident’s physician and the Resident Review Committee of Salemtowne and shall be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party. Residents agree to surrender storage areas when a permanent transfer is made to the Health Care Center or to the Assisted Living Center.

In the event that a Resident is permanently transferred to the Assisted Living Center or the Health Care Center, the Entrance Fee will not be subject to refund.

Transfer to Hospital or Other Facility. If it is determined by a Resident’s physician that a resident needs care beyond that which can be provided by Salemtowne, the Resident may be transferred to a hospital, center or institution equipped to give such care, which care will be at the Resident’s expense. Such transfer will be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party. Surrender of Living Accommodation. If a determination is made by the Corporation that a transfer is permanent in nature, the Resident agrees to surrender the Living Accommodation and any storage areas, which were occupied prior to such transfer, within 30 days of the determination.

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Residents are responsible for the costs of transfer and moving as well as the Monthly/Daily Fee through the last day of occupancy of the Living Accommodation being vacated. Occupancy is defined as the last day that a Resident either resides in the Living Accommodation or the last day that the Resident’s furnishings or belongings occupy the Living Accommodation or a storage area at Salemtowne.

If the Corporation subsequently determines, based upon the opinion of a Resident’s physician, that a Resident can resume occupancy in accommodations comparable to those occupied prior to such transfer, the Resident shall have priority to such accommodations as soon as they become available. The Resident will be responsible for applicable fees as determined by the Corporation.

DUAL OCCUPANCY

Occupancy by Two Residents. In the event that two Residents (married or unmarried) occupy a Living Accommodation under the terms of the Residence and Services Agreement, upon the permanent transfer to the Health Care Center or the Assisted Living Center or the death of one of such Residents, or in the event of the termination of the Residence and Services Agreement with respect to one of such Residents, the Agreement shall continue in effect as to the remaining or surviving Resident who shall have the option to retain the same Living Accommodation or to move to a smaller Living Accommodation, in which event there will be no refund of the Entrance Fee. The remaining or surviving Resident will thereafter pay the Monthly/Daily Fee for one Resident associated with the Living Accommodation occupied by the Resident.

Sharing Occupancy After Admission/Entry. If a Resident, while occupying a Living Accommodation, marries a person who is also a Resident, or wishes to share a Living Accommodation with a person who is also a Resident, the two Residents may, with the prior written consent of the Corporation, occupy the Living Accommodation of either Resident and shall surrender the Living Accommodation not to be occupied by them. No refund will be payable with respect to the Living Accommodation surrendered. Such Residents will pay the Monthly/Daily Fee for double occupancy associated with the Living Accommodation occupied by them.

In the event that a Resident shall marry a person who is not a Resident of Salemtowne, or wishes to share a Living Accommodation with a person who is not a resident (“Non-Resident”), the Non-Resident may become a Resident if such individual meets all of the then current requirements for entry to Salemtowne, enters into a then current version of the Residence and Services Agreement with the Corporation and pays an Entrance Fee in an amount determined by the Corporation in its sole discretion. The existing Resident and new Resident shall pay the Monthly/Daily Fees for double occupancy associated with the Living Accommodation occupied by them.

If the Non-Resident shall not meet the requirements of Salemtowne for entry as a Resident, the existing Resident may terminate the Residence and Services Agreement in the same manner as provided in the Residence and Services Agreement with respect to a voluntary termination.

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OTHER

Combination of Living Accommodations. Various circumstances may make it desirable that a Living Accommodation occupied by a Resident be combined with an adjoining Living Accommodation to form one combined Living Accommodation. Residents agree that if a determination is made by the Corporation that it is desirable to combine their Living Accommodation with a Living Accommodation, which adjoins their Living Accommodation, the Resident will surrender occupancy of their Living Accommodation, within a reasonable time after receiving notice of such determination.

In the event that the Corporation makes such determination and notifies the Resident of such, the Resident has the option to (a) transfer into the combined Living Accommodation when such combined Living Accommodation is ready for occupancy, or (b) transfer to another Living Accommodation, when available, of the same type as the Living Accommodation previously occupied.

If a Resident elects to occupy the combined Living Accommodation and the Entrance Fee established for such combined Living Accommodation exceeds the Entrance Fee paid for the previous Living Accommodation, the Resident shall pay the amount of such excess upon taking occupancy. The Resident will pay the monthly/daily fees associated with the combined Living Accommodation as established by the Corporation.

If a Resident elects to transfer to a Living Accommodation of the same type as the Living Accommodation previously occupied, the Corporation will repaint and re-carpet, if needed, such Living Accommodation at its expense prior to occupancy.

Living Accommodations. Residents do not acquire ownership in any property at Salemtowne under the Residence and Services Agreement.

Guests. Guests are welcome at Salemtowne. Guests may use Salemtowne guest accommodations, subject to availability and additional fees. Guests may also stay in a Resident’s Independent Living Accommodation for visits of limited duration. At all times, the Resident shall be responsible for any injury to others or damage to the property of others or of Salemtowne caused by a Resident’s guest(s). Salemtowne reserves the right and authority to limit or terminate the stay of any guest at any time and for any reason. Except for short-term guests (less than two weeks), no person other than a Resident may reside in the Living Accommodation without the written approval of Salemtowne Management.

Pets. Residents, who wish to have pets, are responsible for notifying the Admissions office, completing necessary paperwork and following current policies and guidelines. Pets are not allowed in Assisted Living or Health Care Center accommodations. Salemtowne reserves the right to amend or terminate policies and guidelines related to pets, in its discretion.

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Smoking. Smoking is not allowed in buildings, on the grounds or common areas within the Salemtowne community as prescribed in community policies and guidelines. Smoking is not allowed in Assisted Living Center and Health Care Center Living Accommodations. Salemtowne reserves the right to amend or terminate policies and guidelines related to smoking in its discretion.

IV. Financial Information

Financial Overview & Statements An overview of the financial results of Salemtowne’s operations is contained at the end

of this section:

• the audited financial statements for the most recent fiscal year (as of March 31, 2015)

• the unaudited interim financial statements for the most recent period at the date of this disclosure statement (as of July 30, 2015)

• summary of calculation of obligation to provide future services (CCRC) as of March 31, 2015

• the financial feasibility study (including financial projections for the five (5) years following the date of the audited financial statements (for the fiscal years ended March 31, 2016-2020)

Reserves and Trusts. At fiscal year ended March 31, 2015, Salemtowne had

unrestricted investments of $12,278,889 and restricted investments of $13,253,797. Salemtowne had restricted $4,400,000 (1) as the operating reserve fund required by N.C.

General Statute 58-64-33 and expects to continue to meet the requirement into the future.

(1) The restricted operating reserve fund was calculated at fiscal year-end based on the budgeted expenses for the following year. Subsequent to fiscal year end, the financial forecast for the following year was completed. This forecast included the debt service reserve fund for the 2015 tax exempt bond issue as well as the 2006 tax exempt bond issue. The restricted operating reserve fund was not changed as a result of the forecast as the amount reserved was in excess of the required amount of $3,684,000. (See internal unaudited statements which are included in this filing.)

Salemtowne will meet its operating reserve requirements separate and apart from using financial assistance funds. Income from the Financial Assistance Endowment and annual contributions for financial assistance are used to provide charitable assistance to persons who otherwise would not be able to afford residency at Salemtowne.

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Investment of funds is currently in interest-bearing checking accounts and professionally managed mutual funds, money market accounts, stocks and bonds. Future investment strategies will, of course, depend upon future market conditions and demands for funds.

Overall policies and decisions relative to reserve funds and investments are under the direction of the Finance Committee of the Board of Trustees. Trusts. Salemtowne is the beneficiary of several trusts and other split-interest agreements. Upon receipt of a beneficial interest in a trust or other split-interest agreement, the present value of the interest is included in "contributions" on the "Statements of Operations" and “Statements of Changes in Net Assets,” and is carried at the asset’s present value on the "Balance Sheet." The value of these assets totaled $191,751 at fiscal year ended March 31, 2015. At this time, all trusts and split-interest agreements are administered by third parties. Additional information related to reserves and trusts is presented in the notes to the audited financial statements included herein.

Explanations of Material Differences. Following is an explanation of the material differences between (i) the forecasted financial statements of projected revenue and expenses and cash flows of Salemtowne for 2015 contained as a part of the Disclosure Statement dated as of August 28, 2014 filed with the North Carolina Department of Insurance and (ii) the actual results of operations for fiscal 2015 as shown in the audited financial statements of Salemtowne contained at the end of this section. Material differences are defined as 5% or greater of the forecasted amount, but not less than $30,000. Set forth below is a comparison of such information. Note: At fiscal year ended March 31, 2015, Navigation by Salemtowne had enrolled eleven members.

Note: Due to rounding to “thousands”, there may be slight differences in the statements below and the actual statements issued.


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Statement of Revenues and Expenses Forecast 2015

(000’s)

Audited 2015

(000’s)

Material Differences

(000’s)

Notes

Revenues: Salemtowne CCRC:

Entrance fee amortization $2,321

Net resident services

15,334 Net resident services, net of amortization

$17,388 Contributions

360

1,006

646 (1) Investment income

446

230

(216) (2)

Other income

320

348 Net Assets released for benevolent assistance & operations

260

260

(3)

Net realized gains from sale of investments

1,567

1,567 (2)

Navigation by Salemtowne Program:

Membership fee amortization

9

Net resident services

48

Investment income

3

Other income

113 Navigation by Salemtowne Program revenues

173

47

(126) (4)

Total revenues 18,954

20,846

Expenses: Salemtowne CCRC:

Program services - housing and related services:

Healthcare and assisted living and clinic

4,719

4,934

Dining services

2,172

1,913

259 (5)

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Housekeeping, grounds and maintenance

2,934

2,867

Healthcare activities, fitness, events and volunteers

432

419

Depreciation

2,100

2,422

(295) (6)

Amortization

27

Interest expense

1,501

1,410

91 (7)

Babcock property

40

13

Loss on sale of property

5 Supporting services:

Administration and general

4,999

4,933 Development, community relations and admissions

938

826

112 (8)

Salemtowne CCRC expenses

19,862

19,742

Navigation by Salemtowne Program:

Operating expenses

302

441

Depreciation

41

Amortization

108 Navigation by Salemtowne Program expenses

410

482

(72) (9)

Total expenses 20,272

20,224

Operating Income (Loss)

(1,318)

622 Other changes in unrestricted net assets:

Net realized gains on sale of investments

118

118 (2) Net release of assets for property & equipment

3

Increase (decrease) in unrestricted net assets

(1,318)

743

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Temporarily restricted net assets:

Contributions

90

182

92 (1)

Investment income

143

143 (2) Change in value of split-interest agreements

(2)

Net assets released from restrictions

(263)

(263) (3) Increase (decrease) in temporarily restricted net assets

90

60

Permanently restricted net assets:

Contributions

200

53

(146) (1) Change in value of split-interest

agreements

5

Unrealized gains on investments

6

Investment income

14 Increase (decrease) in permanently restricted net assets

214

64

Change in net assets

(1,014)

867

Net assets at beginning of year

29,119

29,119

Net assets at end of year $28,105 $29,986 (1) During the year, Salemtowne received a $680,000 unrestricted estate gift, which had not been forecasted. The majority of contributions had been forecasted in the temporarily restricted and permanently restricted funds to align with prior year’s activity. Temporarily restricted donations exceeded past trends and permanently restricted declined. (2) Limited investment income and no gains or losses on investments could be forecasted according to professional standards. As a result, with the excellent market performance, 2015 actual results exceeded forecasted amounts. (3) Higher than anticipated use of restricted funds for benevolent assistance ($260,000) occurred which was not forecasted.

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(4) Marketing for the Navigation program was delayed until September 2014. As a result, forecasted membership and associated revenue for 18 members was not realized by year end. At year end, there were 10 members and 2 consultative members (fee for service with no monthly service fees) resulting in lower than forecasted revenue. (5) Dining Services reduced expenses in salaries and wages with staffing and overtime management. Non salary operating expenses were also reduced with menu changes and use of locally sourced products at lower costs. (6) Depreciation exceeded forecast due to the increase in the number of renovated independent units and the associated depreciation as well as the depreciation of other significant areas of the community such as health care common areas, assisted living common areas and the independent living dining rooms and server which were renovated this year. (7) Interest expense was forecasted higher than actual due to capitalized interest which was not forecasted. (8) Expenses were not utilized as forecasted for marketing incentives and consulting due to the excellent results experienced with the new fee program implemented in May of 2014. (9) Navigation marketing expenses which had been forecasted to be capitalized were expensed due to the timing of the first member in September 2014.

INTENTIONALLY LEFT BLANK]

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Statement of Cash Flows Forecast 2015

(000’s)

Audited 2015

(000’s)


(000’s) Notes

Cash flows from operating activities: Change in net assets $(1,014) $867 $1,881 Adjustments to reconcile change in net assets to net cash provided by operating activities:

Depreciation

2,100

2,409

(309) (1)

Amortization of deferred costs

27

53

82 (2) Amortization of deferred development costs - Navigation by Salemtowne

108

Amortization of entrance fees

(2,321)

(2,452)

131 (3)

Non-operating in-kind contributions

(48)

48 (4)

Loss on disposal of equipment

5

Amortization of entrance fees – Navigation by Salemtowne Program

(9)

Net change in current assets and liabilities

185

711

(526) (5)

Change in accrued interest

34

Entrance fees received

6,782

4,895

1,887 (6)

Entrance fees refunded

(355)

(355) (6)

Realized gains on sale of investments

(1,612)

Unrealized gains on sale of investments

(123) Membership fees received - Navigation by Salemtowne

460

460 (7)

Membership fees refunded - Navigation by Salemtowne

(36)

(36) (7)

Net cash provided by operating activities 5,961

4,705

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Cash flows from investing activities:

Routine capital additions

(2,000)

(5,676)

3,676 (8)

Capitalized development costs

(163)

(55)

(108) (9)

Change in assets uses limited

-

4,527

(4,527) (10)

Change in investments

(1,421)

(1,421) (11)

Net cash used in investing activities (3,584)

(1,204)

Cash flows from financing activities: (Increase) decrease in deferred initial entrance fees

(1,140)

328

(1,468) (6)

Principal payments

(1,115)

(1,115)

Net cash used in financing activities (2,255)

(787)

Change in cash and cash equivalents

122

2,714 Cash and cash equivalents, beginning of year

1,101

1,101

Cash and cash equivalents, end of year $1,223 $3,815 (1) See comment # 6 under the statement of revenues and expenses. (2) See comment # 9 under the statement of revenues and expenses. With the first member, deferred costs were amortized earlier than forecasted. (3) Amortization of entrance fees exceeded forecast due to the increased number of leases signed during the year. Occupancy in independent living increased approximately 12% during the year. (4) Artwork and furniture was received as a donation during the year. (5) The significant change in current assets and liabilities was the increase in liabilities related to the renovation of units and common spaces such as dining rooms, living rooms, assisted living common areas and health care common areas. Accounts receivable also increased over forecast due the delay in implementing the new EHR billing system which is set to go live in September 2015. (6) See # 3 above. Due to the increase in independent living occupancy, entrance fees received exceeded forecast. (7) Entrance fees were classified in the audit report under advance fees received.

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(8) Expenditures related to capital exceeded forecast due to the renovations needed for the independent living units leased during the year. (9) Capitalized development costs were less than forecasted due to the first members for Navigation being signed in September 2014. (10) During the year, Salemtowne’s occupancy in independent living and assisted living exceeded 90%. As a result the NC Department of Insurance approved a reduction in the statutory operating reserve from 50% to 25% of forecasted expenses. (11) Investment change forecasted in this line item was reflected in other line items in the audit.


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Balance Sheet

Forecast 2015

(000’s)

Audited 2015

(000’s)


(000’s) Notes

Current assets: Cash and cash equivalents $1,223 $3,814 $2,591 (1)

Current portion of assets limited as to use

1,291

706

(585) (2)

Accounts receivable, net

520

681

161 (3) Accounts receivable - Deferred initial entrance fees

1,140

(1,140) (4)

Other receivables

181

261

80 (5)

Prepaid expenses

233

181

(52) (5)

Total current assets 4,588

5,643

Investments 16,399

12,279

4,120

(6)

Assets limited as to use:

Restricted Statutory Operating Reserve 8,330

4,400

3,930 (6)

Assets limited as to use, current portion

8,148

(8,148) (6)

Debt Service Reserve Fund - 2006 Bonds 2,692

2,692 (6)

Board designated funds 1,033

1,033

(6)

Resident deposits 15

Total assets limited as to use, net

12,070

12,548

Property and equipment

71,492 Less: accumulated depreciation

(32,088)

Property and equipment, net

39,404

43,154

Assets in split-interest agreements 189

191

Development costs - Navigation by Salemtowne

392

365

27 (7)

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Deferred costs: Unamortized financing costs, net 443 442 Total Assets $73,485 $74,622

Liabilities and Net Assets Current liabilities:

Accounts payable $770 $1,756 $(986) (8)

Accrued expenses

920

987

Accrued interest

768 706 Current portion of long-term debt

1,170

1,170

Total current liabilities 3,628

4,619

Deposits 15

31

Refundable advance fees

2,422

995

1,427 (9)

Deferred revenue from advance fees

12,083

12,176 Deferred revenue from advance fees – Navigation by Salemtowne Program

415

415 (9)

Long-term debt - Series 2006 Bonds 26,817

26,815

Total liabilities 45,380

44,636

Net assets:

Unrestricted

16,061

17,441

Unrestricted Board Designated

680

680 (10)

Temporarily restricted

1,005

975

Permanently restricted

11,039

10,890

Total net assets

28,105

29,986

Total liabilities and net assets $73,485 $74,622 (1) Cash and Cash equivalents were higher than forecasted at year end to provide for liquidity to pay for capital costs related to units leased and the re-fresh of common areas until entrance fees were received.

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(2) Current portion of assets whose use is limited is less than forecasted based on timing of debt service. (3) Accounts receivable is higher than forecasted due to the delay in the implementation of the new EHR billing system and parallel processing. (4) In the forecast, it was assumed that the increase in independent living occupancy with the new fee plans, would be delayed with an amount for accounts receivable for entrance fees. The occupancy improved earlier in the year with no receivables resulting. (5) Fluctuation is based on timing. (6) Investments were lower than forecasted based on the decision to place the reduction in the restricted operating reserve ($4,400,000) in assets limited as to use rather than in investments to provide a reserve in case assisted living occupancy declined causing a greater operating reserve. The NC Department of Insurance approved, at the end of fiscal year 2015, the reduction in the Operating Reserve because the community’s occupancy in independent living and assisted living was greater than 90%. The forecast separated the components of the assets limited as to use while the audit report grouped them.

(7) see # 9 under Cash Flows (8) Increased accounts payable is the result of the increased capital out lays and the pay cycle timing. (9) Navigation and the CCRC entrance fees were classified together for the audit report rather than separately as per the forecast. Navigation entrance fees were less than forecasted with 12 members vs. 18 budgeted. Entrance fees for the CCRC exceeded the forecast due to the increased occupancy. (10) An unrestricted estate gift was received during the year. The Board designated this to be used for the health care expansion to reduce the borrowed amount.

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Estimated Number of Residents

There were 322 residents living at Salemtowne as of March 31, 2015.

Other Material Information, As Applicable

Salemtowne is not the subject of any bankruptcy filing, receivership, liquidation or the

like. Salemtowne is not involved in any legal proceeding.

Tax Consequences NO INFORMATION IS PROVIDED HEREIN WITH RESPECT TO THE TAX CONSEQUENCES OF ENTERING INTO A RESIDENCE AND SERVICES AGREEMENT UNDER APPLICABLE FEDERAL, STATE OR LOCAL LAWS. THE DECISION BY A RESIDENT TO ENTER INTO A RESIDENCE AND SERVICES AGREEMENT MAY HAVE MATERIAL TAX CONSEQUENCES TO THE RESIDENT. EACH RESIDENT IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ANY TAX CONSEQUENCES OF ENTERING INTO A RESIDENCE AND SERVICES AGREEMENT.


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Navigation by Salemtowne

(Continuing Care at Home Program)

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V. NAVIGATION BY SALEMTOWNE (Continuing Care at Home Program)

o Program Introduction And Information. Moravian Home, Incorporated d/b/a/ Salemtowne is a private, continuing care retirement community who has received licensure from the North Carolina Department of Insurance to operate a continuing care services program without lodging pursuant to Chapter 64 Article 58 Paragraph 7. This statute provides licensure for “a provider of continuing care who has obtained a license pursuant to this Article and desires to provide or arrange for continuing care services, including home care services, to an individual who has entered into a continuing care contract with the provider but is not yet receiving lodging.” This continuing care program is marketed and referred to herein as “Navigation by Salemtowne”, “Salemtowne At Home”, “Salemtowne Continuing Care At Home”, or “Program”. The Program will be marketed in Forsyth County and the following counties surrounding the County of Forsyth where the Salemtowne Continuing Care Retirement Community is located: Davie, Davidson, Stokes, Iredell, Wilkes, Guilford, Rowan, Surry and Yadkin counties.

Mission Statement

Navigation by Salemtowne’s Mission is to provide coordination of care for older adults who wish to remain in their own homes in their

later years. Salemtowne’s goal is to combine the security of a continuing care retirement community with the freedom and

autonomy of living at home. We strive to support older adults to stay healthy and independent throughout their years through education, physical activities and socialization, and the coordination of care

when necessary. Navigation by Salemtowne is operated by the charitable, non-profit corporation – Salemtowne and is governed by the Corporation’s Board of Trustees and managed by the Management Staff of the Corporation.

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o Professional and Service Providers:

Navigation by Salemtowne will utilize industry professional and service providers to provide services to Program Members such as Home Care, Home Health and Transportation.

Comforcare Home Care Services. Home Health and Home Care Services. 233 N. Spring Street, Greensboro, North Carolina 27401. Gromeds To Go, Inc. Transportation Services. 1922 South Martin Luther King Jr. Drive, Suite 1, Winston Salem, North Carolina 27107. Rebecca S. Holder Consulting, LLC. Functional and Safety Assessment Services. 309 Fairview Avenue, Mount Airy, North Carolina 27030. Piedmont Home Health, Inc. Home Health and Home Care Services. 2160-B Country Club Road, Winston Salem, North Carolina 27104. Tilley Home Health, LLC – doing business as Comforcare Home Care. Home Health and Home Care Services. 8005 North Point Blvd., Winston Salem, North Carolina 27106. Visiting Angels. Home Health and Home Care Services. 1540 Westbrook Plaza Drive, Suite 104m Winston Salem, North Carolina 27103.

o Definitions.

All terms not defined here shall have the meanings ascribed to them in the Agreement, or their common meaning.

ADL (Activities of Daily Living) Deficiencies means deficiencies, as determined by the Care Coordination Team, in activities of daily living, such as bathing, dressing, eating, transferring, walking, mobility, grooming and continence. Those persons deemed to have ADL Deficiencies may include, but are not limited to, those who need personal assistance, those with Alzheimer’s Disease or any type of dementia disorder, those who are bed bound or homebound, or those who need special equipment to ambulate (i.e. wheelchair, walker).

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Adult Day Care Services means a facility that offers a program of services in a congregate setting for a scheduled number of hours per week. Elements of an adult day care program may include transportation, meals and activities (both health related and social).

Assisted Living Facility is for persons in need of assistance with activities of daily living. Care Coordination Team means the persons appointed by the Program for the Member, comprised of the Director of Care Coordination (or his/her designee), a representative of administration, and, in the case of medical and health care Services, the Program’s Medical Director (or his/her designee) and other clinical professionals as deemed appropriate, in consultation with the Member and/or Member’s designee. The Care Coordination Team may, at the Program’s sole discretion, change titles and personnel from time to time.

Care Coordinator means the person appointed by the Program to be responsible for handling the needs of the Member for Services; for conducting specific needs assessments; and for making recommendations for Services subject to review and final determination of the Member’s eligibility for Services by the Care Coordination Team.

Care Plan means the written plan of long-term care services, including type of service, start date, quantity, frequency, duration of Service, name of Program Approved Provider or Facility and any special considerations, which is developed and approved by the Care Coordination Team for Member based on a comprehensive needs assessment. The Care Plan is agreed to and signed by Member.

Companion means a person designated by the Program to provide Companion Services to a Member at the Member’s Home, when the Member lives alone or when their family is temporarily away from home.

Companion Services means those services provided by a Companion which may include visiting a Member for conversation and social time, including playing cards, games or going for a walk, supervision of and assistance with activities of daily living, medication reminders, and regular telephone calls. Deferred Fees means any fees owed which are to be paid at a later date. Designated Representative means the person authorized by the Member to make decisions on his/her behalf.

Designated Service Area means the Program’s area of coverage for services, as defined by the Program. The Designated Service Area may be altered from time to time at the sole discretion of the Program. No change in the Designated

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Service Area by the Program will adversely affect this Agreement as long as the Member does not relocate out of the Designated Service Area existing as of the date of the Member’s execution of this Agreement. Determined To Be Appropriate means the Care Coordination Team, utilizing industry standards and accepted standards of healthcare practice, has assessed a Member’s medical and functional status and concluded that Services are necessary and will be provided by the Program. Effective Date means the date the Membership Services Agreement is executed. Emergency Response System means an in-home 24 hour electronic alarm system activated by a signal to a central switchboard. This system allows Members who are deemed to be at high risk to secure immediate help in the event of a medical, physical, emotional or environmental emergency.

Facility means Assisted Living facility or Skilled Nursing facility.

Facility-Based Services means Services provided in a facility other than the Home Site, including Assisted Living and Nursing Home Facilities. Home Health Aide means a qualified person licensed to provide assistance with personal care and designated by the Program to provide Home Health Aide Services to a Member at the Member’s Home Site. Home Health Aide Services may include assistance with bathing and dressing, an established activity regimen, such as range of motion exercises, nutritional needs, such as feeding assistance, and simple maintenance of the Member’s environment.

Homemaker is a person designated by the Program to provide Homemaker Services to the Member at the Member’s Home Site. Homemaker Services are services provided by a Homemaker, which may include assistance with day-to-day chore activities in the Home Site, such as cooking, dishwashing, laundry, light housekeeping and errands. Home or Home Site means the Member’s place of residence as indicated in the first paragraph of this Agreement.

Home Site Services means Services provided by the Program in a Member’s place of residence indicated on Page 1 of this Agreement.

Medical Director means a physician appointed from time to time by the Program to oversee the provision of medical and health care services provided to Members.

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Medical Record means all records relating to the Member’s medical history and condition, which may be maintained by the Program or by a Program Participating Facility or a Program Approved Provider. Medicare means the Health Insurance for the Aging Act, Title XVIII of the Social Security Amendment of 1965, as amended and regulations promulgated there under in effect from time to time. Medicare-Covered Services means all hospital, skilled nursing, home care and medical services covered and paid for by Medicare Parts A and B and the Member’s MediGap or secondary insurance. Member’s Designated Representative means any person appointed by Member to represent Member’s interests, or granted a power of attorney or appointed guardian by a court.

Medicare Supplemental Coverage means a private health insurance plan, which is certified by the Secretary of Health and Human Services as meeting federal requirements for Medicare supplemental policies. In general, Medicare Supplemental Coverage, also referred to as MediGap Insurance or Secondary Insurance, pays some of the balance of the costs of care covered by Medicare parts A and B when full costs are not paid by Medicare. It pays for certain deductibles and copayments.

Member means the person accepted into the Program having signed a Member Services Agreement and paid the Membership Fee. Nursing Home Facility means a facility licensed by the state of North Carolina to provide various levels of nursing care.

Permanent Member means a Member who has resided in an Assisted Living or Nursing Home Facility for 100 consecutive days, and has been determined to be a Permanent Member with respect to such Facility by the Care Coordination Team.

Program has the meaning set forth in the open recitals of this Agreement. Program-Approved Provider means a health care services firm having an agreement with the Program to supply Services to Members. Program-Participating Facility means an Assisted Living or Nursing Home Facility having an agreement with the Program to supply Facility-Based Services to Members.

Provide means that the Program will directly, or through a Program-Participating Facility or other provider make Services available at the Program’s cost, subject to any applicable co-payments and deductibles.

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Prevailing Rate For A Program-Participating Facility means the current per diem rate charged by a particular Program-Participating Facility.

Referral Service means a service provided under the Program whereby the Program, acting as an intermediary between Member and third party vendors of such services, makes referrals to Member for such services as he/she may choose, at costs payable in full by the Member.

Residential Healthcare means a Nursing Home Facility having an agreement with the Program. Services mean any assistance, including care coordination, Member home inspection, annual physical examination, Home Site Services (including skilled home health care, Homemaker Services, Companion Services, Emergency Response System, meals and adult day care), Facility Based Services (including Assisted Living and Nursing Home), transportation services, Referral Services and lifestyle and wellness programs, that are provided to Member in the Program subject to applicable co-payments and deductibles.

o Services Program will provide to Member the Services described in this Disclosure Statement and in the Member Services Agreement (Appendix B), in a manner consistent with the objective of enabling Member to maintain his or her own living arrangement in their Home for as long as is practical and to provide Facility Based-Health Services if needed. Member agrees to accept and pay for the Services in the manner set forth in this Agreement and to abide by the rules and regulations of Program with respect to the Services.

Program agrees to provide the Member the Services, subject to the terms and conditions set forth in the Member Services Agreement, as follows. All services rendered to Consultative Care Plus Plan Members will be at their additional cost as described in the Consultative Care Plus Plan Agreement (Appendix B).

1. Residence. Member shall remain in their existing home (or subsequent

residence of their choice). Should the Member desire to become a Resident of the Salemtowne continuing care retirement community, the Member will comply with entry requirements of the retirement community and applicable payment of fees. In the case of executing a Residence and Services Agreement with the retirement community, Member shall have the right to continue this Agreement or terminate this

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Agreement. Should Member terminate this Agreement, any unamortized portion of the Membership Fee made pursuant to this Agreement shall be credited towards any future Salemtowne retirement community entry fees then charged.

2. Common Facilities. Member shall have coordinated access to common

facilities that are otherwise available for the use and benefit of Residents of Salemtowne retirement community, which may include a central dining room, library and computer center, heated swimming pool, chapel, multi-purpose areas, lounges, arts and crafts room, and others as described in the current literature. Use of the common facilities will be available for use by the Member where there is capacity. Member will be responsible for dining fees as these charges are not included in the entry or monthly Program fees.

3. Activities and Leisure Events. Program will provide planned and

scheduled social, recreational, spiritual, educational and cultural activities and leisure events and, arts and crafts, exercise and health programs, and other special activities designed to meet the needs of the Members. Some of these programs may include a fee. These fees may not be included in the entry or monthly Program fees. Member will be responsible for these additional fees, if any.

4. Care Coordination. A Care Coordinator will be assigned to the

Member. Under the direction of the assigned Care Coordinator, the Care Coordination Team, in consultation with the Member and/or the Member's Designated Representative, shall prepare a Care Plan to meet the Member's particular needs from time to time during the term of this Agreement. All decisions involving the Member's participation in various medical and health care services or permanent transfer from the Home Site to Facility-Based Services will be made by the Care Coordination Team following consultation with the Member or the Member's Designated Representative.

5. Member Home Inspection. During the first year of membership and

every second year thereafter (unless circumstances of a Member's health condition justify more frequent inspections), Program will provide a functional inspection of the Home Site for the purpose of ascertaining any functional and safety problems, and will make recommendations to the Member based on the inspection. Program may require, based on circumstances of previous inspections or Member's health condition, that the Member permit Program to provide a functional inspection of the Home Site. Program does not, however, represent that it will undertake steps necessary to effectuate any of such recommendations. Any recommended changes or corrections are the Member's sole responsibility. It is the Member’s choice to make such recommended

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changes or corrections to his/her Home Site. To aid the Member in securing necessary goods or services, Program will make available a list of possible vendors of such goods and services. The Member is solely responsible for the full cost of any of the improvements to his/her Home Site as a result of the Member’s home inspection.

6. Annual Physical Examination. Program encourages Member to

undergo an annual physical examination performed by Member's personal physician. Program encourages that a medical report be submitted by Member's personal physician to his/her Care Coordinator. Program will reimburse Member for their out of pocket costs for an annual physical examination, exclusive of laboratory work, x-rays, EKG's or testing. Members should consult their Care Coordinator to verify reimbursement by the Program prior to incurring charges.

7. Home Site Services. Home Site Services will be provided as

Determined To Be Appropriate by the Care Coordination Team. Member must exhibit at least one or more ADL Deficiencies to be eligible for the following Home Site Services, and Member must use a Program-Approved Provider to be eligible for coverage. Program may require an examination by the Medical Director (or his or her designee) to determine eligibility for Home Site Services. Home Site Services shall be provided for additional charges, which shall be Member’s sole responsibility. Home Site Services include:

Skilled Home Health Care

Program will provide non-Medicare covered home care services, including personal care provided by a licensed Home Health Aide as Determined To Be Appropriate by the Care Coordination Team and to the extent provided for in the Plan selected by the Member.

Homemaker Services

Program will provide Homemaker Services, including companion, light housekeeping and chore services as Determined To Be Appropriate by the Care Coordination Team and to the extent indicated in the Plan selected by the Member.

Companion Services

Program will provide Companion Services as Determined To Be Appropriate by the Care Coordination Team and to the extent indicated in the Plan selected by the Member.

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8. Emergency Response System. If Determined To Be Appropriate by the Care Coordination Team, Program will provide an emergency response system with 24 hour coverage to the extent indicated in the Plan selected by the Member.

9. Meals. If Determined To Be Appropriate by the Care Coordination

Team, Program will provide meals delivered to the Home Site. Meals shall be provided for additional charges, which shall be Member’s sole responsibility. The maximum number of meals that will be provided is two per day.

10. Adult Day Care. Program will provide Adult Day Care Services as

Determined to be Appropriate by the Care Coordination Team supplied by a Program-Approved Provider to the extent provided for in the Plan selected by the Member.

11. Facility-Based Services. When Determined To Be Appropriate by the

Care Coordination Team and prescribed by a physician, Program will provide or cause to be provided, Facility-Based Services, including Assisted Living in a private or semi-private accommodation and Nursing Home Services in a private or semi-private accommodation as determined by Program in its sole discretion. Program may require an examination of Member by the Program’s Medical Director (or his/her designee) to determine eligibility for Facility-Based Services.

Assisted Living and Nursing Home Services

As Determined To Be Appropriate by the Care Coordination Team, these Facility-Based Services will be provided either in the Salemtowne retirement community’s Assisted Living and Nursing Home facilities, or in similar Program-Participating Facilities approved by the Program. The Program will not be responsible for any ancillary charges such as laundry, prescription drugs, medical supplies, telephone, or television. Such additional charges shall be Member’s sole responsibility.

12. Transportation Services. If the Member is unable to drive or

instructed by his/her physician not to drive, Program will provide transportation to and from medically necessary outpatient surgery or short procedures which may include, but are not limited to, cataract removal, and surgical biopsies. This does not include transportation for regular physician office visits, dialysis, and routine specialist appointments. Such additional charges shall be Member’s sole responsibility.

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13. Referral Service For Additional Services. In addition to the services outlined in this Agreement, a Referral Service for other services is available with additional associated charges. These may include landscape maintenance, legal, financial planning, home maintenance and rental of medical equipment. Such additional charges shall be Member’s sole responsibility.

14. Lifestyle and Wellness Programs. Lifestyle and wellness programs

will be offered from time to time, free of charge or with an applicable fee for service, including but not limited to, exercise classes, arts and crafts, wellness seminars, speakers and day excursions. Members will be advised of the schedules and the cost of these programs on an as-offered basis. Such additional charges shall be Member’s sole responsibility.

15. Limitation of Program Payment for Non-Institutional Health Care

Services. Program may limit payment for Home Site Services (skilled home health care, homemaker, companion, emergency response system, meals and adult day care) if the aggregate published cost of such services for any thirty-day (30) period exceeds the published negotiated cost of care in the Nursing Home Facility at Salemtowne retirement community.

The Program shall limit payment for such services to the equivalent of the published negotiated cost of care in such a Nursing Home Facility for all days following the thirty-day (30) period.

The Member may either transfer to a Program-Participating Facility or pay the difference between the cost of Home Site Services and the published negotiated cost of care in Salemtowne retirement community’s Health Care Services Facility.

For example. If the cost of care required and provided in the Home Site exceeds the cost of similar care in a Nursing Home Facility at Salemtowne retirement community, and the Member chooses to remain in the Home Site receiving said care, the excess cost (following the thirty (30) day period) of the Home Site care over the cost of care at the Nursing Home Facility will be the responsibility of the Member and not the Program.)

16. Hospital, Surgical and Physician Care. Program will have no

responsibility to pay for Member’s surgical, hospital or Physician care costs.

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17. Accident or Illness Outside of Designated Service Area. Should an accident or illness occur outside of the Designated Service Area, Member shall notify the Program as soon as possible. If services under this agreement are required, Member shall arrange to return to Home Site or to a Plan Participating Facility as soon as reasonably possible. Program will have no responsibility for any costs resulting from such accident or illness until Member returns to the Home Site or to a Plan Participating Facility. After Member returns to the Plan Service Area, Program shall assume its responsibility to provide those services as deemed necessary by Program and/or Member’s attending physician as provided in this Agreement. In the event Member suffers an accident or illness while away from the Plan Service Area, Member shall continue to pay the Monthly Service Fee.

18. Other Services and Programs at Additional Charge. Other services

and programs will be available to the Member at the Member’s expense, including but not limited to private transportation, catering, and other special services performed for the Member beyond the normal scope of services offered by Program. The availability and charges for additional services are determined by Program.


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o Fees

The Program offers three payment plan options which provide varying coverage levels for services. The following table summarizes the service coverage levels for the three payment plans: “All Inclusive", “Security”, and “Co-Pay”:

Type of Service

All Inclusive

Security

Co-Pay

Care Coordination 100%

100% 100%

Health Support Services: Home Health Aide 100% 85% 50% Companion / Homemaker 100% 85% 50% Live in Companion

100%

85%

50%

Adult Day Care 100% 85% 50%

Delivered Meals (as limited in the Agreement)

100% 100% 100%

Emergency Response System 100% 100% 100%

Home Inspections 100% 100% 100%

Transportation (as limited in the Agreement)

100% 100% 100%

Residential Healthcare or Assisted Living Care

100% 70% 50%

Nursing Home Care 100% 70% 50%

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Members will pay an initial membership fee (the “Membership Fee”) and an ongoing monthly fee (the “at Home Monthly Fee”). The Membership Fee is actuarially priced based upon the Member’s age and the plan option chosen. The at Home Monthly Fee varies with the plan option chosen. The table below shows the Membership Fee and at Home Monthly Fee for the three plan options for singles and couples (married or not) aged 65, 75 and 85 effective June 1, 2015.

Age All Inclusive Security Co-Pay

Single Couple Single Couple Single Couple

65 $26,410 $50,790 $19,530 $37,720 $15,245 $29,580

75 $35,325 $67,740 $ 27,535 $52,930 $ 20,415 $39,400

85 $44,115 $84,440 $34,445 $66,060 $24,825 $47,790

At Home Monthly

Fee $490 $930 $428 $812 $376 $716

Historic Changes in Major Fees

The following table shows average changes in the monthly service fees over the life of the program which began in 2014. Note that it is the average dollar amount of the CHANGE in fees from year to year that is shown – NOT the fees themselves. All changes during this period occurred once per year on June 1st.

Standard Monthly Service Fees

2015-2016

2014-2015

2013-2014

2012-2013

One Member ($s per mo.) $12 $0 $0 $0

Approx. Percentage Increase 3% 0% 0% 0%

Consultative Care Plus Agreement

The program offers a Consultative Care Plus Agreement for individuals who do not medically qualify for an All Inclusive, Security or Co-Pay membership plan but their spouse or person living in their home does qualify for one of these plans and has entered into a separate Member Services Agreement. There is a one-time non-refundable Membership Fee (currently $5,000). There is no monthly fee for a consultative care plus agreement. The member of a consultative care plus agreement pays separately for all services received.

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Consultative Care Plus Plan

Membership Fee – one time non-refundable fee of $5,000 for each member No monthly fee. All services are provided on a “fee for service” basis at an additional cost to the Member when utilized.

Membership Fee (non-refundable)

$5,000

Types of Service Fee for Service (FFS) • At additional cost to Member • Fees are subject to change based on

costs

Health Support Services: Care Coordination $100 per hour

Home Health Aide

$18 - $25 per hour

Companion / Homemaker

$17 - $20 per hour

Live in Companion $240 - $360 per day

Adult Day Care $35 per day

Delivery of Meals $0.55 - $0.61 per mile (plus cost of meal based on selection)

Emergency Response System $371 per year (includes setup, equipment & monitoring)

Home Inspections (safety)

Internal External

$150 each $500 each

Transportation

$20 one-way $35 round trip


$158 - $165 per day

Nursing Home Care $242 to $312 per day

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Adjustments in the Monthly Fee. The Monthly Fee is made to provide the Services described in this Agreement and are intended to meet the cost of debt service, insurance, maintenance, depreciation, administration, staffing, and other expenses associated with the operation and management of the Program. The Program will usually set fees annually but shall have the authority to adjust the Monthly Fee from time to time during the term of this Agreement as the Program, in its discretion, deems necessary in order to reflect changes in costs of providing the facilities, programs and services described herein consistent with operating on a sound financial basis and maintaining the quality of services called for herein. The Program, upon thirty (30) days written notice to the Member, may make any such increases in the Monthly Fee or other charges.

Vacations and/or Time Away from Home Site. Monthly fees are not subject to change or credit if a Member is away from the Home Site for any period of time. (For example, vacations, hospital stays, etc.)

Monthly Statements. The Program will furnish the Member with monthly statements showing the Monthly Fee and additional service fees owed by the Member that shall be payable by the 10th day of the month. Program may charge interest at a rate of one and one-half percent (1.5%) per month on any unpaid balance. In the event Member does not make payment on a timely basis, Member agrees to pay attorney fees, if any, in the collection of such indebtedness. Transfer to Another Service Plan. You may move to a different Service Plan (All Inclusive, Security or Co-Pay) no more than once per year at the beginning of the calendar year. Member must provide thirty (30) days advance written notice of the desire to change their Service Plan to the Program Executive Director. If you transfer to another Service Plan, you are responsible for paying any difference in the Membership Fee, if the amount of the Membership Fee for the new Service Plan is greater than the Membership Fee for the previous Service Plan. If the Membership Fee for the new Service Plan is smaller than the Membership Fee for the previous Service Plan, no refund will be paid for the difference. Once you move to a new Service Plan, you will be responsible for the monthly fees in effect at that time. The Program reserves the right to amend such policies, guidelines and fees, in its discretion. Application for Benefits. If requested by Program, Members will apply for any or all federal, state, and local benefits for which they may be eligible or entitled; and if requested by Program, Members will apply for any or all such benefits

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toward the cost of care in the Program. These benefits may include: Medicare, Medicaid, and Veterans benefits.

Members who receive Medicaid funding and who permanently reside in a Medicaid certified accommodation at Salemtowne retirement community must have their Social Security, pension or other monthly income paid directly to Salemtowne retirement for their benefit. Salemtowne retirement community will administer and manage these funds, on behalf of the Member (Resident) in accordance with applicable laws and regulations, to pay for the residence and services provided to the Member (Resident).

Assignment of Benefits. Member will from time to time authorize any provider of medical and health services to receive reimbursement as provided under Medicare and any supplementary insurance programs. If requested by Program, you will from time to time make assignments to the Program provider of medical and other health services of all benefits otherwise accruing to you under Medicare and supplementary extended coverage plans to compensate for services rendered.

For example, Member receives Home Care in their Home Site that qualifies for Medicare reimbursement. Member will assign their benefits from the Medicare program to the Home Care Agency to pay for such services. The Home Care Agency will accept this assignment of benefits which means that the Agency will accept the payment from Medicare as payment in full except for Member co-pays and/or deductibles allowed by Medicare to be billed to the Member. Care in Other Assisted Living or Nursing Care Facilities. Should a Member be transferred to a care facility, the Member will continue to pay the Monthly Fee for the Program. The charges incurred at the facility, for the level of services defined within this Agreement, will be the responsibility of the Program. Charges incurred at the facility, which are not defined within this Agreement, will be the Member’s responsibility. Care in Other Facilities. Should Member need a level of care beyond that which Salemtowne retirement community or other similar facility is licensed to provide and Member requires transfer to another facility, all expenses that will result from such transfer and care shall be borne entirely by Member.

Third Party Reimbursement. The Program reserves the right to bill, or have Program providers bill, Medicare, Medicaid and other third party payers, such as insurance and long-term care insurance companies. The Member is responsible for all fees and charges incurred while this Agreement remains in force and the Member will pay any disputed or denied claims within sixty (60) days of the date of service.

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o Membership Requirements and Procedures

A prospective Member will become qualified for services under this Agreement upon satisfaction of the following provisions:

Age. The contract requirements for membership in the Program are non-discriminatory except as to age, and the Program is open to both married and single men and women of all races and religions. This Agreement is restricted to persons 62 years of age or older.

Personal Interview. The prospective Member shall have an interview with a representative from the Program prior to execution of this Agreement. Upon review of all information required to be furnished herein, the Program may request additional personal interviews. prospective Member agrees to meet with a representative of the Program who will review prospective Member's Personal Health History form and determine if the prospective Member meets the health standards determined solely by the Program for execution of this Agreement.

Membership and Financial Applications, and Personal Health History. The prospective Member shall submit for approval by Administration, a Membership and Financial Application and a personal health history, all on forms furnished by the Program.

Notification. The Program shall review the Membership and Financial Applications, the Personal Health History form and the results of the personal interview, and will notify the prospective Member whether the prospective Member meets the Program membership requirements.

Health Requirements. Prior to execution of a Program Agreement, the prospective Member shall submit a report of a physical examination of the prospective Member made by a physician selected by the prospective Member. Such report shall include a statement by such physician that the prospective Member is in good health, is ambulatory or can move about independently and is able to take care of himself or herself in normal living activities. The Program may require the prospective Member to have another physical examination by the Medical Director or by another physician approved by the Program. The Program shall be responsible for the costs of such additional physical examinations. If the health of the prospective Member as disclosed by such physical examination differs materially from that disclosed in the prospective Member’s Membership Application and Personal Health History form, the Program shall have the right to decline the prospective Member and not enter into a contract with the prospective Member.

Financial Requirements. The prospective Member must have assets and income that will be sufficient under foreseeable circumstances to pay the financial

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obligations of the prospective Member under this Agreement and to meet ordinary living expenses of the prospective Member. The Program may require the prospective Member to furnish additional, current financial information as may be needed.

Representations. The prospective Member affirms that the representations made in the Membership and Financial Applications and Personal Health History form are true and correct and may be relied upon by the Program as a basis for entering into this Agreement.

Medical Insurance. All Members age 65 and older shall maintain Medicare Part A, Medicare Part B and one supplemental health insurance policy or equivalent insurance coverage acceptable to the Program and shall furnish the Program with evidence of such coverage upon request. A Member who is not qualified for Medicare coverage due to age will maintain comprehensive health coverage satisfactory to the Program.

Power of Attorney. You agree to execute and maintain in effect a durable power of attorney that is valid under North Carolina law and will survive your incapacity or disability. This durable power of attorney will designate an attorney-in-fact and an alternate attorney-in fact who will act for you in managing your financial affairs and in filing for insurance or other benefits under private and public assistance programs as full and complete a manner as you could do if acting personally for yourself. You will deliver a copy of a fully executed power of attorney to the Program at the time of signing this Agreement. You will not revoke or amend this durable power of attorney except upon execution of a replacement durable power of attorney, a fully executed copy of which will be delivered to the Program. This document also may address at your option, other affairs, such as decisions concerning medical care.

Will. You agree to execute a Will, and to provide to Program a copy of such sections of the Will and any revisions, as applicable during the term of this Agreement to document the name(s) of the person(s) to be contacted in the event of your death (i.e. executor(s)).

In the event of your death, while you are a Member of the Program under this Agreement, only the executor(s) named in your Will will be allowed to effect business transactions on behalf of your estate with the Program. Members of your family or those to whom you have granted Power of Attorney will not be allowed to effect business transactions after your death, unless they are the executor(s) named in your Will. Funeral and Burial. Program will not be responsible for making funeral or burial arrangements and is not responsible for related expenses.

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Advance Directives. You are encouraged to execute a Living Will and a Health Care Power of Attorney and deliver a fully executed copy thereof to the Program and any Program-Approved Providers, as well as any revisions as applicable, during the term of this Agreement.

Appointment of Guardian. If you become unable to care for your business and financial affairs, the Program reserves the right to institute action for the determination of your incompetence and the appointment of a guardian to fulfill the terms of this Agreement; unless such needed arrangements have already been made.

o Transfers or Changes in Levels of Care

Transfer to Assisted Living or Nursing Home Facility. The Member agrees that the Program shall have authority to determine that the Member should be transferred from the Member’s Home Site to an Assisted Living or Nursing Home Facility. Such determination shall be based on the physical and mental assessment to determine the appropriate level of care for the Member and the professional opinion of the management of the Program and shall be made only after consultation to the extent practical with the Member, a representative of the Member’s family and the Member’s attending physician. The costs of Services in these facilities will be paid by the Program, subject to limitations detailed in this Agreement and based on the Program Plan selected.

Transfer to Hospital or Other Facility. The Member may be transferred to a hospital, center, or institution equipped to give such care, which care will be at the expense of the Member. Such transfer of the Member will be made only after consultation to the extent possible with the Member, or a representative of the Member’s family, and the Member’s attending physician.

Decisions Involving Permanent Transfer From Living Accommodation. All decisions involving permanent transfer from Member's current Living Accommodation (including Home Site, Assisted Living Facility, Nursing Home Facility or hospital), to another accommodation will be made by the Care Coordination Team. Such decisions shall be made in consultation with the Member, or in case of incompetency, with the Member's Designated Representative. If a determination is made by the Program that any transfer is permanent in nature, the Member may dispose of (or keep) their private residence as Member sees fit. If the Member disposes of their private residence, services provided for under this Agreement pertaining to such private residence will terminate unless separate arrangements are made between the Member and the Program. Such services may include but are not limited to: Emergency Response System, Homemaker Services and Home Inspections.

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Transfer to Another Service Plan. You may move to a different Service Plan (All Inclusive, Security or Co-Pay) no more than once per year at the beginning of a month. Member must provide thirty (30) days advance written notice of the desire to change their Service Plan to the Program Director. If you transfer to another Service Plan, you are responsible for paying any difference in the Membership Fee, if the amount of the Membership Fee for the new Service Plan is greater than the Membership Fee for the previous Service Plan. If the Membership Fee for the new Service Plan is smaller than the Membership Fee for the previous Service Plan, no refund will be paid for the difference.

Once you move to a new Service Plan, you will be responsible for the monthly fees in effect at that time.

The Program reserves the right to amend such policies, guidelines and fees, in its discretion.

o Rescission, Termination and Refund Provisions.

Rescission. Notwithstanding anything herein to the contrary, this Agreement may be rescinded by Member by giving written notice of such rescission to Program within thirty (30) days following the later of the execution of this Agreement or the receipt of a Disclosure Statement that meets the requirements of Section 58-64-1, et seq. of the North Carolina General Statutes. In the event of such rescission, Member shall receive a refund in an amount equal to the Membership Fee less a non-refundable fee of four percent (4%) of the Membership Fee less any Monthly fee and additional fees or portion thereof applicable to the time period this Agreement was in effect. Notwithstanding anything to the contrary in this Agreement, any such refund shall be paid by the Program within thirty (30) days following receipt of written notice of rescission pursuant to this paragraph.

Voluntary Termination after Effective Date. At any time after the Effective Date, the Member may terminate this Agreement by giving the Program written notice of such termination in writing and provided at least thirty (30) days in advance of the effective date of termination.

If this Agreement is terminated by Member during the first forty-eight (48) months following the Effective Date, the Member will receive a refund, less 4% Administration Fee, of the Membership Fee and two percent (2%) of the Membership Fee for each month (full or partial without prorating) this Agreement remained in effect. If Member terminates this Agreement after the first forty-eight (48) months following the Effective Date, the Member will receive a zero (0%) refund of the Membership Fee.

Any refund due hereunder shall be provided to the Member no later than 120 days after the effective date of termination.

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Determination to move into an Independent Living unit at Salemtowne Retirement Community. If the Member desires to move into an independent living unit at Salemtowne retirement community, he/she must meet the entry requirements of the Independent Living Agreement then in use at Salemtowne retirement community. He/she must be able to live independently, execute the Independent Living Agreement for that unit and pay the then in effect entry fee and monthly service fee for the unit selected.

Member may choose to terminate this Agreement, and any refund due from this Agreement shall be applied to the entry fee due for the independent living unit. Member, however, upon execution of the Independent Living Agreement may deem that they do not want to terminate this Agreement. In that case both Agreements shall remain in effect.

Right of Set-Off; Other Rights. The Program will have the right to set-off against repayment of the Membership Fee, for any Deferred Fees accrued and for any other fees or amount payable to the Program under this Agreement and other agreements or contracts between the parties and their affiliates, including any costs or expenses that might be due, payable or incurred by the Member for the violation of this Agreement. Termination of this Agreement for whatever reason will not affect or impair the exercise of any right or remedy granted to the Program or Member under this Agreement for any claim or cause of action occurring prior to the date of such termination.

Termination Upon Death. In the event of death of the Member at any time after the Effective Date, this Agreement shall terminate and the Membership Fee shall be refunded in accordance with the provisions set forth in “Voluntary Termination after Effective Date” in Section VI. B. of the Agreement.

Termination by the Program. The Program may terminate this Agreement at any time if there has been a material misrepresentation or omission made by the Member in the Member’s Membership and/or Financial Applications or Personal Health History form; if the Member fails to make payment to the Program of any fees or charges due the Program within thirty (30) days of the date when due; or if the Member does not abide by the rules and regulations adopted by Program or breaches any of the terms and conditions of this Agreement.

Termination of this Agreement must be in writing and provided at least thirty (30) days in advance of the effective date of termination. In the event of termination for any of such causes, the refund of the Membership Fee paid by the Member shall be determined in the same manner described in Paragraph VI B of the Agreement and paid within 120 days after the effective date of termination. No agreement for care shall permit discharge of the Member from a Facility providing care before the expiration of this Agreement, without just cause for such a removal. The term “just cause” means a good faith determination that the

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Member is a danger to himself/herself or others while remaining in his/her residence and further refuses to transfer to another facility as described in Section V above.

Upon agreement termination by Salemtowne for “just cause”, Salemtowne will pay to the Member any refund immediately or upon leaving the Program, if at the time of termination the Member is then residing at the Salemtowne retirement community. However, such refund shall further be subject to Paragraph VI B of the Agreement.

Amount Due. Any amounts due and owed by the Member to the Program may be deducted from the amount of any refund. If such refund is insufficient, the Member’s family or the estate will be responsible. Transfer of Property. The Member agrees not to make any gift or other transfer of assets for less than fair market value for the purpose of evading the Member’s obligations under this Agreement, or if such gift or transfer would render such Member unable to meet such obligations under this Agreement.

o Financial Assistance

Financial Assistance. In connection with its charitable mission, it is the desire of the Board of Trustees of the Corporation that no one leave the Program because of lack of funds. Any disposition of Member’s assets in any way other than for care through the Program or related living/medical expenses to the extent that Member cannot adequately provide for Member’s expenses or care will nullify this desire on the part of the Program and entitle the Program to terminate this Agreement.

Program will make reasonable efforts to acquire the funds necessary to meet the Program’s charges for care. However, the resources of the Program to provide care for Members are not unlimited, and the Program reserves the right to terminate the membership of any Member, who cannot pay the full cost of Monthly and other charges, and other costs in connection with such person’s membership and use of services in the Program.

In the event that a Member presents facts which in the opinion of the Program justify special financial consideration, the Program will give careful consideration to subsidizing in whole or in part the Fees and other Program charges payable by the Member hereunder so long as such subsidy can be made without impairing the ability of the Program to attain its objectives while operating on a sound financial basis.

In the event that the Program may subsidize in whole or in part the Fees and other Program charges payable by the Member hereunder, the Member will be required to execute a Financial Assistance Agreement with the Corporation.

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Any determination by the Corporation with regard to the granting or continuation of financial assistance shall be within the sole discretion of the Corporation, under a separate agreement.

Recovery of Subsidies Provided by Salemtowne. When a Member dies, if said Member’s fees have been subsidized wholly or partly by the Program, the Member’s estate, if any, will be liable to the Program for the full amount of the subsidy the Member received for the entire time of residency. This paragraph will apply whether or not the Member is enrolled in the Program at the time of death. This Agreement will operate as a lifetime assignment, transfer and conveyance to Salemtowne of so much of Member’s property as is necessary to cover such liability. Any amount due the Program under this paragraph may be deducted from any refund payable to Member or to the Member’s estate.

Financial Assistance Funds. The Corporation will endeavor to establish funds which will be used to assist Members who would otherwise not be able to participate in the Program or continue to participate in the Program. Such funds may be used for the purposes of providing financial assistance in accordance with the provision of Section VII. A of the Agreement, but no Member shall have any claim to or expectation of receiving or continuing to receive any such assistance.


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INDEX

A

AAHSA “Quality First” 10 Elements of Quality 7

Accident or Illness Outside of Designated Service Area 78

Activities and Leisure Events 74 Adjustments in the Monthly Fee 82 Adjustments To Fees 37 ADL (Activities of Daily Living)

Deficiencies 69 Adult Day Care 76 Adult Day Care Services 70 Advance Directives 86 Age 46, 84 AGREEMENT REQUIREMENTS AND

PROCEDURES 84 Amount Due 89 Annual Physical Examination. 75 Application for Grants 82 Application, Health History and Financial

Statement 46 Appointment of Guardian 86 Assignment of Benefits 83 Assisted Living and Nursing Home Services

76 Assisted Living Facility 70

B

Board of Trustees and Management Staff 8

C

Care Coordination 74 Care Coordination Team 70 Care Coordinator 70 Care in Other Assisted Living or Nursing

Care Facilities 83 Care in Other Facilities 83 Care Plan 70 Clinic and Related Services. 31 Combination of Living Accommodations 53 Common Facilities 74 Companion 70

Companion Services 70, 75 Condition of Living Accommodation 50 Consulting Professionals 24, 69 CONTINUING CARE AT HOME

PROGRAM 68

D

Decisions Involving Permanent Transfer From Living Accommodation 86

Deferred Fees 70 DEFINITIONS 69 Designated Representative 70 Designated Service Area 70 Determination to move into an Independent

Living unit at Salemtowne Retirement Community 88

Determined To Be Appropriate 71 DUAL OCCUPANCY 52

E

Effective Date 71 Emergency Medical Care. 32 Emergency Response System 71, 76 Entrance Fee and Deposit 36 Entrance Fee Refund 44 Entry/Admission 46 Estimated Number of Residents 66 Explanations of Material Differences 55

F

Facility 71 Facility Based Services 76 Facility-Based Services 71 Fees 79 Fees (Schedule of Charges) 35 FINANCIAL ASSISTANCE 45, 89 Financial Assistance Funds 90 Financial Assistance Funds. 46 Financial Information 54 Financial Overview & Statements 54 Financial Requirements 47, 84 Financial Resources 47 Funeral and Burial 85

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G

Guests. 53

H

Health Insurance. 45 Health Requirements 47, 84 Home Health Aide 71 Home Health Aide Services 71 Home Site 71 Home Site Services 71 Home Site Services. 75 Homemaker 71 Homemaker Services 71, 75 Hospital and Surgical Care 77

I

INDEX 91

L

Lifestyle and Wellness Programs 77 Limitation of Program Payment for Non-

Institutional Health Care Services. 77 Living Accommodations 53

M

Management Staff 19 Management Staff - Officers 17 Masten Assisted Living Center. 32 Meals 76 Medical Director 71 Medical Insurance 85 Medical Record 72 Medicare 72 Medicare Supplemental Coverage 72 Medicare-Covered Services 72 Member 72 Member Home Inspection 74 Member’s Designated Representative 72 Membership and Financial Applications,

and Personal Health History 84 Mission Statement 5, 68 Monthly Statements 82 Moving Costs 51

N

Notification 46, 84 Nursing Home Facility 72

O

Occupancy by Two Residents 52 On-Site Emergency Call Response 32 Organization Introduction And Information 5 OTHER 53 Other Material Information, As Applicable

66 Other Services and Programs at Additional

Charge 78 Other Services Provided. 32

P

Permanent Member 72 Personal Interview 84 Personal Interview. 46 Pets 53 Pharmacy. 32 Phillips Health Care Center 31 Physical Description of the Community 27 Power of Attorney 85 Prevailing Rate For A Program Participating

Facility 73 Priority 36 Program 72 Program Approved Provider 72 Program Introduction And Information 68 Program Participating Facility 72 Provide 72

R

Recovery of Subsidies Provided by Salemtowne 90

Referral Service 73 Referral Service For Additional Services 77 Release from Termination 50 Removal of Personal Property 50 Representations 85 RESCISSION, TERMINATION AND

REFUND PROVISIONS 87 Rescission. 87 Reserves and Trusts 54 Residence 73 Residential Healthcare 73 Right of Rescission 50 Right of Set-Off; Other Rights 88

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S

Salemtowne: A Quality First Community 7 Services 28, 73 Sharing Occupancy After Admission/Entry

52 Skilled Home Health Care 75 Smoking 54 Subsidy. 45 Surrender of Living Accommodation 51

T

TABLE OF CONTENTS 2 Tax Consequences 66 Temporary Absence 48 Temporary Admission 47 TERMINATION 48 Termination by the Corporation 49 Termination by the Program 88 Termination Prior to Occupancy 48 Termination Upon Death 49, 88 Third Party Reimbursement 83 Transfer of Property 89 Transfer to Another Living Accommodation

51

Transfer to Another Living Accommodation. 82

Transfer to Another Service Plan 87 Transfer to Assisted Living or Nursing

Home Facility 86 Transfer to Hospital or Other Facility 51, 86 Transfer to Phillips Health Care Center or

the Assisted Living Center 51 TRANSFER/MOVES 51 TRANSFERS OR CHANGES IN LEVELS

OF CARE 86 Transportation Services 76 Trusts 55

V

Vacations and/or Time Away from Home Site 82

Values Statement 6 Vision Statement 6 Voluntary Termination 48 Voluntary Termination after Effective Date

87

W

Will 85

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Page Appendix A

Financial Information 95

• Audited Financial Statements as of March 31, 2015 and 2014 96

• Interim Financial Statements as of July 31, 2015 121

• Summary of Calculation Of Obligation To Provide Future Service as of March 31, 2015 (Continuing Care Retirement Community)

126

• Financial Feasibility Study (including Market Feasibility Study and Five Year Projected Financial Statements) as of March 30, 2016 through 2020

129

Appendix B Agreements (Continuing Care Retirement Community) 215

• Residence And Services Agreement – Direct Entry to Independent Living 216

• Residence And Services Agreement – Direct Entry to Masten Assisted Living Center

254

• Residence And Services Agreement – Direct Entry to Phillips Health Care Center

286

• Short-term Residence And Services Agreement – Phillips Health Care Center or Masten Assisted Living Center

318

• Personal Guaranty Agreement 347

• Financial Assistance Agreement 354

• Reservation Agreement 365

Agreement (Navigation by Salemtowne - Continuing Care At Home Program)

• Member Services Agreement • Consultative Care Plus Agreement

378

379 409

Appendix C

Schedule of Fees effective June 1, 2016

436

This section has been left blank at the date of this disclosure statement filing (August 30, 2015). At a future date, an updated Schedule of Fees will be placed herein as applicable.

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Appendix A

Financial Information

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Moravian Home, Incorporated (d/b/a Salemtowne) Financial Statements March 31, 2015 and 2014 (with Independent Auditors’ Report thereon)

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MORAVIAN HOME, INCORPORATED (D/B/A SALEMTOWNE)

Table of Contents

March 31, 2015 and 2014

Page(s) Independent Auditors’ Report ............................................................................................................... 1 Financial Statements: Balance Sheets .............................................................................................................................. 2 - 3 Statements of Operations ................................................................................................................... 4

Statements of Changes in Net Assets ................................................................................................ 5 Statements of Cash Flows ............................................................................................................ 6 - 7 Notes to Financial Statements ....................................................................................................... 8 - 23

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Independent Auditors’ Report To the Board of Trustees Moravian Home, Incorporated (d/b/a Salemtowne) Winston-Salem, North Carolina We have audited the accompanying financial statements of Moravian Home, Incorporated (d/b/a Salemtowne), which comprise the balance sheets as of March 31, 2015 and 2014, and the related statements of operations, changes in net assets and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Moravian Home, Incorporated (d/b/a Salemtowne) as of March 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Raleigh, North Carolina May 21, 2015

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MORAVIAN HOME, INCORPORATED (d/b/a Salemtowne)

Balance Sheets March 31, 2015 and 2014

Assets 2015 2014 Current assets: Cash and cash equivalents $ 3,814,475 $ 1,100,724 Current portion of assets limited as to use 705,510 733,386 Accounts receivable, net of allowance for uncollectible accounts of approximately $35,000 and $25,000 in 2015 and 2014, respectively 680,855 881,647 Other receivables 261,272 219,988 Prepaid and other current assets 180,711 232,511

Total current assets 5,642,823 3,168,256 Assets limited as to use, net of current portion:

Assets limited as to use, net of current portion 8,148,287 4,283,069 Restricted statutory operating reserve 4,400,000 8,330,000

Total assets limited as to use, net of current portion 12,548,287 12,613,069

Property and equipment, net 43,153,702 39,504,911 Investments 12,278,889 14,977,871 Other assets: Deferred financing costs, net 441,960 470,321 Development costs – Navigation by Salemtowne Net of accumulated amortization of approximately $26,000 in 2015 364,640 336,691 Assets in split-interest agreements 191,751 188,535

Total other assets 998,351 995,547 Total assets $ 74,622,052 $ 71,259,654

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See accompanying notes to the financial statements. Page 3


Balance Sheets (Continued) March 31, 2015 and 2014

Liabilities and Net Assets 2015 2014 Current liabilities: Accounts payable $ 1,756,755 $ 980,973 Accrued expenses 987,115 910,084 Accrued interest payable 705,510 733,386 Current portion of bonds payable 1,170,000 1,115,000

Total current liabilities 4,619,380 3,739,443 Bonds payable, excluding current portion 26,815,483 27,986,476 Deposits 31,100 15,100 Refundable advance fees 994,518 409,176 Deferred revenue from advance fees 12,175,559 9,990,914

Total liabilities 44,636,040 42,141,109 Net assets: Unrestricted: Unrestricted 17,440,881 17,378,311 Board designated 680,000 -

Total unrestricted 18,120,881 17,378,311 Temporarily restricted 974,705 914,869 Permanently restricted 10,890,426 10,825,365

Total net assets 29,986,012 29,118,545 Total liabilities and net assets $ 74,622,052 $ 71,259,654

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Statements of Operations Years Ended March 31, 2015 and 2014

2015 2014 Revenues, gains, and other support: Net resident services, including amortization of advance fees of $2,437,104 in 2015 and $2,049,243 in 2014 $ 17,388,083 $ 16,744,736 Contributions 957,941 210,508 In-kind contributions 47,841 - Net assets released from restrictions used for benevolent assistance 252,000 277,237 Interest and dividends 230,361 262,945 Net realized gains from sale of investments 1,565,933 214,727 Net assets released from restrictions used for operations 7,935 82,949 Other income 348,152 484,477 Navigation by Salemtowne, including amortization of advance fees of $15,110 in 2015 47,492 -

Total revenues, gains, and other support 20,845,738 18,277,579 Expenses: Program services - provision for housing and related services: Healthcare, assisted living, and clinic 4,934,489 4,646,340 Dining services 1,913,439 1,875,728 Housekeeping, grounds and maintenance 2,866,759 2,787,709 Healthcare activities, fitness, events, and volunteers 419,415 371,891 Navigation by Salemtowne 440,632 84,967 Navigation by Salemtowne - depreciation 41,361 1,477 Depreciation and amortization 2,422,341 2,136,723 Interest 1,409,613 1,491,227 Babcock property 13,060 48,812 Loss on sale equipment 5,125 1,436 Supporting services: Administration and general 4,931,532 4,552,820 Development, community relations and admissions 825,874 519,893

Total expenses 20,223,640 18,519,023 Operating income (loss) 622,098 (241,444) Other changes in unrestricted net assets: Net unrealized gains on investments 117,228 2,522,612 Net assets released from restrictions for purchase of property and equipment 3,244 70,627 Increase in unrestricted net assets $ 742,570 $ 2,351,795

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Statements of Changes in Net Assets Years Ended March 31, 2015 and 2014

2015 2014 Unrestricted net assets: Operating income (loss) $ 622,098 $ (241,444) Net unrealized gains on investments 117,228 2,522,612 Net assets released from restrictions for purchase of property and equipment 3,244 70,627

Increase in unrestricted net assets 742,570 2,351,795 Temporarily restricted net assets: Contributions 181,647 196,816 Investment income 143,045 129,554 Unrealized gains on investments - 15,766 Net assets released from restrictions (263,179) (430,813) Change in value of split-interest agreements (1,677) (693) Change in temporarily restricted net assets 59,836 (89,370) Permanently restricted net assets: Contributions 54,273 111,534 Interest and dividends - 7,678 Net realized gains on sale of investments - 5,063 Change in value of split-interest agreements 4,893 20,799 Unrealized gains on investments 5,895 59,657

Increase in permanently restricted net assets 65,061 204,731 Change in net assets 867,467 2,467,156 Net assets at beginning of year 29,118,545 26,651,389 Net assets at end of year $ 29,986,012 $ 29,118,545

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Statements of Cash Flows Years Ended March 31, 2015 and 2014

2015 2014 Operating activities: Change in net assets $ 867,467 $ 2,467,156 Adjustments to reconcile change in net assets to net cash provided by operating activities: Amortization of advance fees (2,452,214) (2,049,243) Depreciation 2,409,240 2,109,839 Amortization 54,462 28,361 Amortization of bond discount/premium (993) (993) Non-operating in-kind contributions (47,841) - Advance fees received 4,894,721 2,885,880 Loss on disposal of equipment 5,125 1,436 Realized gains on investments (1,611,875) (219,790) Net unrealized gains on investments (123,123) (2,598,035) Net changes in: Accounts receivable 200,792 (470,916) Other receivables (41,284) (77,907) Prepaid and other current assets 51,800 (23,447) Accounts payable 436,635 150,057 Accrued expenses 77,031 82,800 Accrued interest payable (27,876) (25,446) Room deposits 16,000 (5,000) Assets in split-interest agreements (3,216) (20,107)

Net cash provided by operating activities 4,704,851 2,234,645

Investing activities: Net change in assets limited as to use and investments 4,526,638 (149,020) Increase in developmental costs – Navigation by Salemtowne (54,050) (66,636) Purchase of property and equipment (5,676,168) (2,020,148)

Net cash used by investing activities (1,203,580) (2,235,804)

Financing activities: Principal payments on bonds payable (1,115,000) (1,060,000) Refundable entrance fees received 693,680 - Refunds of advance fees (366,200) (249,280)

Net cash used by financing activities (787,520) (1,309,280)

Net increase (decrease) in cash and cash equivalents 2,713,751 (1,310,439)

Cash and cash equivalents, beginning of year 1,100,724 2,411,163

Cash and cash equivalents, end of year $ 3,814,475 $ 1,100,724

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Statements of Cash Flows (Continued) Years Ended March 31, 2015 and 2014

2015 2014 Supplemental cash flow disclosure information: Cash paid for interest, including capitalized interest of approximately $28,000 $ 1,466,772 $ 1,517,666

Additions of property and equipment included in accounts payable $ 668,097 $ 328,950

Contributed property and equipment $ 47,841 $ -

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MORAVIAN HOME, INCORPORATED (D/B/A SALEMTOWNE)

Notes to Financial Statements March 31, 2015 and 2014

1. Description of Organization and Summary of Significant Accounting Policies

Organization – Moravian Home, Incorporated (d/b/a Salemtowne) (the “Community”) is a non-profit organization located in Winston-Salem, North Carolina, that provides housing, health care, and other related services to residents through the ownership and operation of a retirement community containing independent living cottages and apartments, assisted living apartments, and a health care center. The Community is subject to various laws and regulations enacted by the state of North Carolina regarding its activities. Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents – Cash and cash equivalents, excluding those classified as assets limited as to use, include certain investments in highly liquid instruments, including short-term debt securities and money market funds with original maturities of three months or less when purchased. Investments – Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value in the balance sheet. The fair values of investments are determined based upon quoted market prices. Investment income or loss (including realized gains and losses on investments, interest and dividends) is included in unrestricted investment income and changes in temporarily restricted and permanently restricted net assets. All changes in unrealized gains and losses on investments are included in other changes in net assets. Contributed investments are stated at the fair market value at the date of receipt. Deferred Financing Costs and Original Issue Premium/Discount – Deferred financing costs are being amortized over the term of the related financing. The original issue premium/discount in connection with the bond financing is being amortized over the term of the related financing using the straight line method, which approximates the effective interest method.

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MORAVIAN HOME, INCORPORATED (DBA SALEMTOWNE) Notes to Financial Statements, Continued

Page 9

Assets Limited as to Use – Assets limited as to use by Board designation include amounts set aside for future capital expenditures, debt service obligations, and general reserves. The Board also has set aside an amount to meet the operating reserve requirements of N. C. General Statute Chapter 58, Article 64. Assets limited as to use under bond indenture agreement consist of the proceeds of borrowing available to pay accrued interest as well as funds set aside for debt service and principal fund reserves. Property and Equipment – Property and equipment is stated at cost less accumulated depreciation. Contributed property is recorded at the estimated fair value at the date of receipt. Depreciation is computed under the straight-line method and is based on estimated useful lives of 40 years for buildings, 8 to 10 years for principal equipment, 5 years for minor equipment and 5 years for vehicles. The cost of maintenance and repairs is expensed as incurred. Interest costs incurred on borrowed funds during the period of construction of capital assets are capitalized as a component of the cost of acquiring those assets. The Community periodically assesses the realizability of its long-lived assets and evaluates such assets for impairment whenever events or changes in circumstances indicate the carrying amount of any asset may not be recoverable. For assets to be held, impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than carrying amount. For assets to be disposed of, impairment is determined to exist if the estimated net realizable value is less than the carrying amount. At March 31, 2015, the Community has determined that no impairment indicators exist. Deposits on Unoccupied Units – Deposits for cottage and apartment accommodations to be occupied in the future are deferred when received. A portion of the deposit is refundable if the resident terminates the continuing care contract. Deferred Revenue from Advance Fees – Fees paid by a resident upon entering into a continuing care contract, net of the portion thereof which is refundable to the resident, are recorded as deferred revenue and amortized into net resident services revenue using the straight-line method over the estimated remaining life expectancy of the resident, adjusted on an annual basis. When a resident expires, any unamortized advance fees, net of refundable amounts, are recognized as net resident service revenue. Obligation to Provide Future Services – The Community enters into continuing care contracts with various residents. A continuing care contract is an agreement between a resident and the Community specifying the services and facilities to be provided over the resident’s remaining life. Under the contracts, the Community has the ability to increase fees as deemed necessary. As of the end of each year, the Community calculates the present value of the estimated net cost of future services to be provided, including the cost of facilities to current residents, and compares the amount with the deferred revenue from advance fees at that date. If the present value of the net cost of future services and use of facilities exceeds the deferred revenue from advance fees, a liability (obligation to provide future services) is recorded. No liability has been recorded as of March 31, 2015 or 2014, because the present value of the

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Page 10

estimated net costs of future services and use of facilities is less than deferred revenues from advances fees. The present value of the net cost of future services and use of facilities was discounted at 5.5% in both 2015 and 2014. Temporarily and Permanently Restricted Net Assets – Temporarily restricted net assets are those whose use by the Community has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained by the Community in perpetuity. Board designated unrestricted net assets have been restricted by the Board of Trustees for use for campus expansion, but could later be designated for other purposes by the Board of Trustees. Net appreciation on endowment funds is reported as an increase in unrestricted net assets unless such net appreciation is restricted by the donor or by law. Net realized appreciation on endowment funds is classified in the accompanying financial statements as part of unrestricted, temporarily restricted or permanently restricted net assets based on restrictions established by donors and state law. Net Resident Services Revenue – Net resident services revenue represents the estimated net realizable amounts from patients, third-party payors, and others for services rendered, and includes estimated retroactive revenue adjustments due to future audits, reviews, and investigations. Retroactive adjustments are considered in the recognition of revenue on an estimated basis in the period the related services are rendered, and such amounts are adjusted in future periods as adjustments become known or as years are no longer subject to such audits, reviews, and investigations. Historically, such adjustments for the Community have been immaterial in relation to the financial statements as a whole. Revenues under third-party payor agreements are subject to examination and retroactive adjustments. Provisions for estimated third-party payor settlements are provided in the period the related services are rendered. Differences between the amounts accrued and subsequent settlements are recorded in operations in the year of settlement. Navigation by Salemtowne – Navigation by Salemtowne’s mission is to provide coordination of care for older adults who wish to remain in their own homes in their later years. The Community’s goal is to combine the security of a continuing care retirement community with the freedom and autonomy of living at home. The Community supports older adults to stay healthy and independent throughout their years through education, physical activities and socialization, and the coordination of care when necessary. The Community admited its first member into the Navigation by Salemtowne program in fiscal year 2015.

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Page 11

Donor Restrictions – The Community reports contributions of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of operations as net assets released from restrictions. Donor-restricted contributions whose restrictions are met in the same reporting period as received are reflected as unrestricted contributions in the accompanying financial statements. The Community reports contributions of property and equipment (or other long-lived assets) as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Contributions of long-lived assets with explicit restrictions that specify how the assets are to be used and contributions of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long these assets must be maintained, the Community reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Benevolent Assistance – The Community provides benevolent assistance to residents who are unable to pay. Such residents are identified based on financial information obtained from the resident and subsequent review and analysis. The Community utilizes certain temporarily restricted net assets, as well as earnings from certain permanently restricted net assets, to fund the care of such residents.

Operating Income – Changes in unrestricted net assets which are excluded from operating income, consistent with industry practice, include changes in unrealized gains and losses on investments other than trading securities, net assets released from restrictions for purchase of property and equipment, and contributions of long-lived assets (including assets acquired using contributions which by donor restriction were to be used for purposes of acquiring such assets). Income Tax Status – The Community is a tax-exempt organization as described in Section 501(c)(3) of the Internal Revenue Code; accordingly, the accompanying financial statements do not reflect a provision or liability for federal and state income taxes. The Community has determined that it does not have any material unrecognized tax benefits or obligations as of March 31, 2015. In addition, the Community qualified for the charitable contribution deduction under Section 170(b)(1)(a) and is classified as an organization that is not a private foundation under Section 509(a)(2). Subsequent Events – The Community evaluated the effect subsequent events would have on the financial statements through May 21, 2015 which is the date the financial statements were issued.

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2. Fair Values of Assets and Liabilities Fair value as defined under generally accepted accounting principles is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Generally accepted accounting principles establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1: Observable inputs such as quoted prices in active markets. Level 2: Inputs other than quoted prices in active markets that are either directly

or indirectly observable. Level 3: Unobservable inputs about which little or no market data exists,

therefore requiring an entity to develop its own assumptions. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Community’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Asset Measured at Fair Value on a Recurring Basis

When quoted prices are available in active markets for identical instruments, investment securities are classified within Level 1 of the fair value hierarchy. Level 1 investments include common stocks and fixed income mutual funds which are valued based on prices readily available in active markets in which those securities are traded. Level 1 investments also include money market funds which are valued based on transacted values. Level 2 investments include repurchase agreements which are valued based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Community does not have any financial assets or liabilities measured at fair value on a recurring basis categorized as Level 3. There were no transfers in or out of Level 3 during 2015. There were no changes during 2015 to the Community’s valuation techniques used to measure asset and liability fair values on a recurring basis.

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The following tables set forth by level within the fair value hierarchy the Community’s assets accounted for at fair value on a recurring basis on March 31, 2015 and 2014.

March 31, 2015 Total Level 1 Level 2 Level 3

Income and money market funds $ 5,194,793 $ 5,194,793 $ - $ -

Common stocks: Information technology 2,010,868 2,010,868 - - Consumer discretionary 1,267,756 1,267,756 - Health care sector 694,984 694,984 - Industrials 305,504 305,504 - Consumer staples 164,816 164,816 - -

Total common stocks 4,443,928 4,443,928 - - Fixed income mutual funds 18,007,181 18,007,181 - -

Total $ 27,645,902 $ 27,645,902 $ - $ -

The Community has $1,701,259 of cash balances included in cash and cash equivalents, assets limited as to use and investments as of March 31, 2015, which is not included in the fair value hierarchy.

March 31, 2014 Total Level 1 Level 2 Level 3

Income and money market funds $ 4,230,367 $ 4,230,367 $ - $ -

Common stocks: Information technology 2,768,209 2,768,209 - - Consumer discretionary 755,137 755,137 - - Financials 306,424 306,424 - - Health care sector 712,909 712,909 - - Industrials 328,588 328,588 - -

Total common stocks 4,871,267 4,871,267 - - Repurchase agreements 1,129,780 - 1,129,780 - Fixed income mutual funds 18,829,924 18,829,924 - -

Total $ 29,061,338 $ 27,931,558 $ 1,129,780 $ -

The Community has $363,712 of cash balances included in cash and cash equivalents, assets limited as to use and investments as of March 31, 2014, which is not included in the fair value hierarchy.

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3. Investments and Assets Limited as to Use Assets limited as to use and investments are stated at fair value and include: 2015 2014 Cash and cash equivalents $ - $ 199,733 Assets held in professionally managed trust accounts: Short-term income and money market funds 4,211,358 3,293,622 Repurchase agreements - 1,129,780 Common stocks and fixed income mutual funds 21,321,328 23,701,191

Total assets limited as to use and investments $ 25,532,686 $ 28,324,326 The Community allocates its investment portfolios between investments and various categories of assets limited as to use. The allocation of these assets between limited as to use and investments is set forth in the following table:

2015 2014 Assets limited to use: Board designated: For general reserves and depreciation $ 4,963,078 $ 1,033,078 Restricted statutory operating reserve 4,400,000 8,330,000

9,363,078 9,363,078 Under bond indenture agreement: Accrued interest fund 756,896 733,386 Debt service reserve fund 2,589,401 2,692,486 Principal fund 544,422 557,505

3,890,719 3,983,377 Total assets limited as to use 13,253,797 13,346,455

Investments 12,278,889 14,977,871 Total assets limited as to use and investments $ 25,532,686 $ 28,324,326 Investment income for the years ended March 31 follows: 2015 2014 Interest and dividends $ 327,464 $ 400,177 Net realized gains on sale of investments 1,611,875 219,790 Net unrealized gains on investments 123,123 2,598,035 Total investment income $ 2,062,462 $ 3,218,002 Investment income is shown net of investment fees of approximately $139,000 and $130,000 for the years ended March 31, 2015 and 2014, respectively.

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Investments with unrealized losses as of March 31, 2015 and 2014 are summarized as follows:

2015 Less than 12 months 12 months or more Total Description of

Securities Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Mutual funds $1,934,905 $ 35,523 $ 1,959,753 $ 400,710 $ 3,894,658 $ 436,233 Common stock 382,106 17,091 101,763 16,384 483,869 33,475

Total $ 2,317,011 $ 52,614 $ 2,061,516 $ 417,094 $ 4,378,527 $ 469,708

2014 Less than 12 months 12 months or more Total Description of

Securities Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Mutual funds $ 1,795,016 $ 64,260 $ - $ - $ 1,795,016 $ 64,260 Common stock 82,331 5,189 470,285 11,729 552,616 16,918

Total $ 1,877,347 $ 69,449 $ 470,285 $ 11,729 $ 2,347,632 $ 81,178

The Community has adopted investment policies and monitors the allocation of investments between types of investments including corporate bonds, equities, and mutual funds. Other-than-temporary does not mean a permanent impairment. Accounting standards require certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. Declines in fair value below cost that are deemed to be other-than temporary are included in the accompanying statements of operations. The Community determined there were no other-than-temporary declines in the fair value of investments for the years ended March 31, 2015 and 2014.

4. Property and Equipment

A summary of property and equipment at March 31 is as follows:

2015 2014 Land and improvements $ 4,114,882 $ 3,843,193 Buildings 63,623,628 60,129,121 Furniture and equipment 5,185,540 4,872,939 Vehicles 398,470 365,212 Construction in progress 2,162,405 282,039 75,484,925 69,492,504 Accumulated depreciation (32,331,223) (29,987,593) $ 43,153,702 $ 39,504,911

Construction in progress includes various projects, the largest of which is a campus expansion project. The estimated cost to complete the campus expansion project is approximately $43.2 million, which is expected to be paid from a combination of operating funds and the issuance of tax-exempt bonds.

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5. Bonds Payable On October 1, 2006, Series 2006 Bonds were issued in the amount of $35,225,000 by the North Carolina Medical Care Commission, the proceeds from which were loaned to the Community pursuant to a Loan Agreement. The Series 2006 Bonds are limited obligations of the Commission payable solely from revenues of the Community assigned to the Trustee pursuant to the Loan Agreement and Deed of Trust, and to the extent provided in the Trust Agreement, the monies on deposit in certain funds and accounts created by the Trust Agreement.

The Series 2006 Bonds were used to (a) refund all of the outstanding Series 1999 Bonds and a portion of the Series 2001 Bonds, (b) fund a debt service reserve fund, and (c) pay certain expenses incurred in connection with the issuance of the bonds. A summary of the Series 2006 Bonds outstanding at March 31 is as follows: 2015 2014 Serial bonds with principal payments beginning in October 2007 through 2016 with interest rates of 4.20% to 5.00% and payments ranging from $445,000 to $1,230,000 $ 2,400,000 $ 3,515,000 Term bonds with interest rates and October 1 due dates as follows: 5.00%, 2023 10,540,000 10,540,000 5.10%, 2030 15,030,000 15,030,000

27,970,000 29,085,000 Plus unamortized net original issue premium and discount, net 15,483 16,476 $ 27,985,483 $ 29,101,476

The Bonds maturing on or after October 1, 2017 will be subject to redemption by the North Carolina Medical Care Commission, in whole or in part on any date on or after October 1, 2016, at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus accrued interest to the redemption date. The Bonds maturing on October 1, 2023 will be subject to mandatory redemption in part by lot on October 1 in the years and amounts set forth in the bond financing agreement. The Bonds maturing on October 1, 2030 will be subject to mandatory redemption in part by lot on October 1 in the years and amounts set forth in the bond financing agreement. The Series 2006 Bonds dated October 1, 2006 bear interest payable semiannually on April 1 and October 1 and, subject to certain redemption provisions, will mature on the dates and in the amounts described.

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Under the Loan Agreement, the Community granted the Commission a security interest in all assets of the Community. The Master Trust Indenture requires the maintenance of a 1.10 long-term debt service coverage ratio and contains other covenants restricting, among other things, incurrence of indebtedness, existence of liens on property, consolidation and merger, and transfer of assets. The Loan Agreement requires the maintenance of a liquidity ratio of 120 days cash on hand. The Community was in compliance with the long-term debt service coverage ratio covenant as well as the days cash on hand covenant at March 31, 2015. Payment of principal on the bonds by the Community is as follows:

Fiscal Year Series 2006

2016 $ 1,170,000 2017 1,230,000 2018 1,290,000 2019 1,355,000 2020 1,425,000 Thereafter 21,500,000 $ 27,970,000

6. Bank Line of Credit

The Community has a line of credit agreement with a local bank, which allows for borrowing up to $250,000 with interest at prime, plus 0.75%, which was 4.00% at March 31, 2015. The note is payable in full, including principal and accrued interest, on demand. There was no outstanding balance under the line of credit agreement at March 31, 2015 or 2014.

7. Refundable Fees

The Community offers three different continuing care contracts, 1) a standard rate plan, 2) a 50% refundable plan, and 3) a 90% refundable plan. The non-refundable portions of these fees are recorded as deferred revenue. The refundable portion is treated as a long-term liability. Refunds of refundable entrance fees are paid upon termination of the agreement (provided the resident’s independent living unit is reoccupied) or within twenty-four months, whichever occurs first. The Community’s continuing care contracts provide for reimbursement of a portion of the advance fee upon termination of the agreement in the event of move-out, death, or termination by the Community. For a standard contract, the refundable amount is equal to the entrance fee less a non-refundable fee of 4% of the initial entrance fee. The remaining balance becomes non-refundable at a rate of 2% for each month of occupancy for up to 48 months, at which time there is no refundable amount. For a 50% refundable contract, the refundable amount is equal to the entrance fee less a non-refundable fee of 4% of the initial entrance fee with the remaining balance subject to amortization of 2% percent for each month of occupancy, for up to 23 months at which point the 50% refundable amount remains refundable. For a 90% refundable

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contract, the refundable amount is equal to the entrance fee less a non-refundable fee of 4% of the initial entrance fee with the remaining balance subject to amortization of 1% for each month of occupancy, for up to 6 months at which point the 90% refundable amount remains refundable.

Based on the status of continuing care contracts in effect at March 31, 2015 and 2014, the actual amount of contractual refund obligations which existed at those dates was $8,353,582 and $4,225,050 respectively.

The amount of the contractual refund obligations that is expected to be refunded, based on historical experience, is classified as refundable advance fees.

8. Temporarily Restricted Net Assets Balances available at March 31 for the purposes stated below consisted of: 2015 2014 Minister/Missionary $ - $ 52,682 Financial assistance 120,107 81,649 Special use 534,318 545,497 Personnel recruiting 213,760 146,925 Single Sisters Preservation of the Community Fund 50,204 47,604 Lucille Fogle (walking trails, sidewalks and care of residents) 13,204 12,246 Split-interest agreements (time-restricted) 26,612 28,266 Other 16,500 -

$ 974,705 $ 914,869

9. Permanently Restricted Net Assets Permanently restricted net assets are restricted to investments in perpetuity, the income from which is expendable to support residents in financial need, personnel recruiting (health care) and general obligations.

Principal balance invested for the above purposes at March 31 consisted of: 2015 2014 Financial assistance $ 9,363,886 $ 9,304,288 Single Sisters Preservation of the Community Fund 169,354 169,354 Unrestricted endowments 474,159 473,589 Personnel recruiting 526,736 526,736 Lucille Fogle (walking trails, sidewalks and care of residents) 62,380 62,380 Babcock Campus (protected conservation area) 128,750 128,750 Split-interest agreements 165,161 160,268

$ 10,890,426 $ 10,825,365

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10. Split Interest Agreements The Community is a beneficiary of certain split-interest agreements, all of which are held or controlled by various third parties. The estimated present value of the future distributions the Community expects to receive from irrevocable split-interest agreements is recorded as an asset in the financial statements. Changes in the value of irrevocable split-interest agreement are recorded as changes in net assets. The irrevocable split-interest agreements in which the Community has a beneficial interest are categorized as follows:

Charitable Remainder Trust – A charitable remainder trust provides for the payment of distribution to the grantor or other designated beneficiaries over the trust’s term. The term of all charitable remainder trusts which name the Community as a remainder beneficiary are the lifetimes of the respective distribution recipients. At the end of the respective trust’s terms, the remaining assets in which the Community has an interest will be distributed to the Community. Upon receipt of a beneficial interest in a charitable remainder trust, the present value of such interest is recorded as contribution income. The annual change in the present value of the beneficial interest is recorded as a change in value of split-interest agreements on the statement of changes in net assets. Such valuations are based on estimated mortality rates, projected investment returns, and other assumptions that could change in the near term. Beneficial Interest in Perpetual Trust – Beneficial interest in perpetual trust represents assets held in trust and administered by a third party, from which the Community has the irrevocable right to receive a share of income from the trust’s assets in perpetuity. The assets are stated as the fair value of the Community’s share of trust assets, which is an approximation of the present value of the estimated future distributions from this trust. Upon receipt of an irrevocable interest in the income of a perpetual trust administered by a third party, the Community records the fair value of estimated future distributions from the trust as permanently restricted contribution income. Over the term of the perpetual trust, income distributions to the Community are included in investment income. Annual changes in the fair value of trust assets are recorded as permanently restricted gain or loss on the statement of changes in net assets. Such valuations are based on estimated mortality rates and other assumptions that could change in the near future.

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11. Statutory Operating Reserve Requirements North Carolina General Statute Chapter 58, Article 64 sets forth minimum operating reserve requirements. Under this legislation, the Community is required to maintain an operating reserve at least equal to 25% or 50% if the occupancy in independent living and assisted living is below 90% of the upcoming year’s total operating costs as defined by the statute. At March 31, 2015 and 2014, management estimated that $4,353,000 and $8,330,000, respectively, would be required to meet the operating reserve requirement. The Board of Trustees has restricted $4,400,000 (25%) and $8,330,000 (50%) at March 31, 2015 and 2014, respectively, as this reserve.

12. Retirement Savings Plan

The Community maintains a defined contribution retirement savings plan for eligible associates. If associates elect to make contributions to the plan, the Community matched them dollar for dollar up to 3% of gross salary and then at the rate of $.50 per dollar for the next 2% of gross salary. For the years ended March 31, 2015 and 2014, the Community made contributions totaling $157,507 and $155,935, respectively.

13. Benevolent Assistance, Community Outreach and Other Contractual Adjustments

The Community maintains records to identify and monitor benevolent assistance provided. Records include costs to assist Salemtowne residents with entrance and monthly fees, medical expenses, meals, transportation, housekeeping and other programs and activities. The Community also provides financial assistance (Community Outreach) to community not-for-profit organizations who support or provide services to older persons. Benevolent assistance and Community Outreach included in the attached financial statements totals $1,864,408 and $1,777,334 for the years ended March 31, 2015 and 2014, respectively. Residents in the health center and assisted living levels of care may be eligible to participate in the North Carolina Medicaid or federal Medicare programs. Contractual adjustments represent the difference between the Community’s standard rates and the rates paid by third party payors. For the years ended March 31, 2015 and 2014, net patient service revenue was reduced by third party payor contractual adjustments (primarily Medicaid and Medicare) of approximately $860,000 and $668,000, respectively.

14. Concentrations of Credit Risk

The Community maintains its cash accounts at commercial banks. The cash balances in each bank are insured by Federal Deposit Insurance Corporation up to $250,000. The funds on deposit with the brokerage accounts are insured by the Securities Investor Protection Corporation up to $500,000. At times, amounts on deposit may be in excess of the insured limits.

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15. Commitments and Contingencies

The Community has in place insurance coverage for possible litigation in the ordinary course of business related to professional liability claims. Management believes that claims, if asserted, would be settled within the limits of coverage, which is on a claims-made basis. Should the Community not renew its claims-made policy, or replace it with equivalent insurance, occurrences incurred during its term but asserted after its expiration would be uninsured, unless the Community obtains tail coverage. No claims were outstanding during the year or at year-end, therefore, the Community believes that an accrual for unasserted claims is not necessary. The healthcare industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, government health care program participation requirements, reimbursement for patient services and Medicare and Medicaid fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by health care providers. Violations of these laws and regulations could result in expulsion from government health care programs together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed.

16. Endowment Funds

The Community’s endowments consist of individual funds established for a variety of purposes including support for residents in financial need, personnel recruiting, buildings, and other general obligations. The endowments include both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments. As required by generally accepted accounting principles (“GAAP”), net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

Interpretation of Relevant Law

The Board of Trustees of the Community has interpreted the State Prudent Management of Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Community classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. In accordance with SPMIFA, the Community considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

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The duration and preservation of the fund

The purposes of the organization and the donor-restricted endowment fund General economic conditions The possible effect of inflation and deflation The expected total return from income and the appreciation of investments Other resources of the organization The investment policies of the organization.

Endowment Net Asset Composition by Type of Fund as of March 31, 2015

Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowments $ - $ 974,705 $10,890,426 $ 11,865,131 Changes in Endowment Net Assets for the Year Ended March 31, 2015

Temporarily Permanently Unrestricted Restricted Restricted Total

Endowment net assets, beginning of year $ - $ 914,869 $10,825,365 $11,740,234

Contributions to principal - 181,647 54,273 235,920 Investment income - 143,045 5,895 148,940

Change in value of split-interest agreements - (1,677) 4,893 3,216

Released from restriction - (263,179) - (263,179)

Endowment net assets, end of year $ - $ 974,705 $10,890,426 $11,865,131

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Endowment Net Asset Composition by Type of Fund as of March 31, 2014

Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowments $ - $ 914,869 $10,825,365 $ 11,740,234 Changes in Endowment Net Assets for the Year Ended March 31, 2014

Temporarily Permanently Unrestricted Restricted Restricted Total

Endowment net assets, beginning of year $ - $ 1,004,239 $10,620,634 $11,624,873

Contributions to principal - 196,817 111,534 308,351 Investment income - 145,320 72,398 217,718

Change in value of split-interest agreements - (693) 20,799 20,106

Released from restriction - (430,814) - (430,814)

Endowment net assets, end of year $ - $ 914,869 $10,825,365 $11,740,234

Return Objectives and Risk Parameters The Community has adopted investment and spending policies for endowment assets that attempt to emphasize long-term growth of principal while avoiding excessive risk. Short-term volatility will be tolerated in as much as it is consistent with the volatility of a comparable market index. Endowment assets include those assets of donor-restricted funds that the organization must hold in perpetuity as well as board-designated funds. Strategies Employed for Achieving Objectives To satisfy its long-term rate-of-return objectives, the Community relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Community targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints.

Spending Policy and How the Investment Objectives Relate to Spending Policy The Community has a policy of utilizing the interest and dividends earned on these endowments for their restricted purposes. The Community believes the investment policy established will facilitate the growth of these endowed funds and allow for earnings on these endowed funds to be used consistent with the intent of the donors.

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Balance Sheet

Interim - not audited

7/31/2015 3/31/2015

CASH & CASH EQUIVALENTS $2,821,096 $3,814,475ASSETS WHOSE USE IS LIMITED - CURRENT 470,341 705,510ACCOUNTS RECEIVABLE

RESIDENTS, PATIENTS & THIRD PARTIES 700,510 680,855 OTHER 263,627 261,272PREPAID AND OTHER CURRENT ASSETS 175,254 180,711

TOTAL CURRENT ASSETS 4,430,828 5,642,823

ASSETS WHOSE USE IS LIMITED (AWUIL):RESTRICTED OPERATING RESERVE (PER NC GENERAL STATUTE) 4,400,000 4,400,000AWUIL-BOARD DESIGNATED FUNDS 4,963,078 4,963,077AWUIL - BONDS 4,005,540 3,890,720

LESS AWUIL FOR CURRENT LIABILITIES (470,341) (705,510)

TOTAL ASSETS WHOSE USE IS LIMITED 12,898,277 12,548,287

PROPERTY PLANT & EQUIPMENT, NET 44,179,637 43,153,702INVESTMENTS 10,903,443 12,278,889DEFERRED FINANCING COSTS 424,510 433,964DEVELOPMENT COSTS - NAVIGATION BY SALEMTOWNE, NET 351,590 364,640DEVELOPMENT COSTS - HOME CARE LICENSE 7,996 7,996ASSETS IN SPLIT INTEREST AGREEMENTS 191,751 191,751

TOTAL ASSETS 73,388,032 74,622,052

SALEMTOWNEBALANCE SHEET

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Balance Sheet

Interim - not audited

7/31/2015 3/31/2015

SALEMTOWNEBALANCE SHEET

ACCOUNTS PAYABLE 1,072,252 1,756,755ACCRUED SALARIES, BENEFITS AND RELATED TAXES 933,228 987,115ACCRUED INTEREST PAYABLE 470,341 705,510CURRENT PORTION OF BONDS PAYABLE 1,170,000 1,170,000

TOTAL CURRENT LIABILITIES 3,645,821 4,619,380

BONDS PAYABLE 26,815,150 26,815,483DEPOSITS ON UNOCCUPIED UNITS 14,100 14,100ENTRANCE FEE DEPOSITS - TOWNE CLUB 35,000 17,000REFUNDABLE FEES 994,518 994,518DEFERRED REVENUE FROM ADVANCE FEES- CCRC 11,815,112 11,900,043DEFERRED REV FROM ADV FEES-NAVIGATION 316,226 275,516

TOTAL LIABILITIES 43,635,927 44,636,040

NET ASSETS: UNRESTRICTED 17,124,550 17,440,881 UNRESTRICTED - BOARD DESIGNATED 680,000 680,000 TEMPORARILY RESTRICTED 1,004,218 974,705 PERMANENTLY RESTRICTED 10,943,337 10,890,426

TOTAL NET ASSETS 29,752,105 29,986,012

TOTAL LIABILITIES AND NET ASSETS $73,388,032 $74,622,052

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Interim - not auditedACTUAL BUDGET7/31/2015 7/31/2015

REVENUES, GAINS AND OTHER SUPPORTNET RESIDENT SERVICES, INCLUDING AMORTIZATION OF ADVANCE FEES $6,047,727 $5,836,668UNRESTRICTED GIFTS AND BEQUESTS 9,162 107,236NET ASSETS RELEASED FROM RESTRICTION FOR CHARITY CARE 40,000 249,366INVESTMENT INCOME 43,423 281,124REALIZED GAIN/(LOSS)-INVESTMENTS 270,296 0NET ASSETS RELEASED FROM RESTRICTION FOR OPERATIONSOTHER INCOME 130,330 116,871NAVIGATION BY SALEMTOWNE: NET MEMBER SRVS, INCLUDING. AMORT OF ADVANCE FEES 33,166 39,924 INVESTMENT INCOME 4,929 5,938 OTHER INCOME 6,000 37,286

TOTAL REVENUE, GAINS AND OTHER SUPPORT 6,585,033 6,674,413

EXPENSES HEALTH CARE & ASSISTED LIVING 1,634,575 1,601,966 HEALTH CARE & ASSISTED LIVING ACTIVITIES 44,288 63,800 CLINIC 24,143 33,198 DINING SERVICES 651,567 753,292 MAINTENANCE, GROUNDS & HOUSEKEEPING 984,115 956,662 BABCOCK CAMPUS 5,669 13,890 EVENTS/VOLUNTEERS 51,321 50,644 FITNESS CENTER 26,128 26,594LOSS ON DISPOSAL OF EQUIPMENT 0 0 DEPRECIATION & AMORTIZATION 892,108 798,314 INTEREST 470,009 467,610SUPPORTING SERVICES: ADMINISTRATIVE & GENERAL 1,640,291 1,851,746 DEVELOPMENT/COMMUNITY RELATIONS & MARKETING 275,297 262,498

LIFE ENRICHMENT PROGRAM 21,040 35,958 NAVIGATION BY SALEMTOWNE EXPENSES 161,577 210,380 DEPRECIATION & AMORTIZATION 19,041 10,028 INTEREST 0 0

TOTAL EXPENSES 6,901,169 7,136,580

EXCESS OF REVENUE, GAINS AND OTHER SUPPORT OVER EXPENSES (316,136) (462,167)

SALEMTOWNESTATEMENT OF CHANGES IN NET ASSETS

FOR THE FOUR MONTHS ENDING JULY 31, 2015

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Interim - not auditedACTUAL BUDGET7/31/2015 7/31/2015

SALEMTOWNESTATEMENT OF CHANGES IN NET ASSETS

FOR THE FOUR MONTHS ENDING JULY 31, 2015

OTHER CHANGES IN UNRESTRICTED NET ASSETS:

UNREALIZED GAINS (LOSSES) ON OTHER THAN TRADE SECURITIES 10,046 0NET ASSETS RELEASED FROM RESTRICTION 0 0

INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS (306,090) (462,167)

TEMPORARILY RESTRICTED NET ASSETS: CONTRIBUTIONS AND BEQUESTS 29,513 41,245 INVESTMENT INCOME 17,899 0 UNREALIZED GAINS ON OTHER THAN TRADE SECURITIES 104 0 REALIZED GAIN/(LOSS)-INVESTMENTS 2,862 0 NET ASSETS RELEASED FROM RESTRICTIONS (40,000) 0 CHANGE IN VALUE OF SPLIT-INTEREST AGREEMENTS 0

INCREASE (DECREASE) IN TEMPORARILY RESTRICTED NET ASSETS 10,378 41,245

PERMANENTLY RESTRICTED NET ASSETS: CONTRIBUTIONS AND BEQUESTS 52,911 70,941 INVESTMENT INCOME 1,752 4,950 REALIZED GAIN/(LOSS)-INVESTMENTS 7,035 0 CHANGE IN VALUE OF SPLIT-INTEREST AGREEMENTS 0 0 UNREALIZED GAINS OTHER THAN TRADE SECURITIES 107 0

INCREASE (DECREASE) IN PERMANENTLY RESTRICTED NET ASSETS 61,805 75,891

INCREASE (DECREASE) IN NET ASSETS ($233,907) ($345,031)

NET ASSETS, BEGINNING OF YEAR 29,986,012 29,986,012

NET ASSETS, END OF YEAR $29,752,105 $29,640,981

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Cash Flows

Interim - Not Audited

Cash flows from operating activities:Change in net assets ($233,907)Adjustments to reconcile increase in net assets to net cash provided by operating activities: Amortization of advance fees (906,579) Amortization of advance fees-Navigation (13,356) Depreciation 882,654 Amortization 9,454 Amortization of bond discount and premium (331) Advanced fees received 888,846 Advanced fees received-Navigation 58,066 Entrance Fee Deposits - Towne Club 18,000 (Gain)/Loss on sale/disposal of fixed assets 0 Realized gains/(losses) on investments 280,193 Unrealized gains/(losses) on investments 10,257 Net decrease (increase) in accounts receivable and prepaids and other current assets (16,553)

Net (increase) decrease in accounts payable, accrued salaries, benefits, and payroll taxes, accrued interest payable and room deposits (973,559)

(Increase)/decrease in value of split-interest agreements - Net cash provided by (used in) operating activities 3,185

Cash flows from investing activities:(Increase) decrease in assets whose use is limited, investments and deferred financing costs 970,175Development Costs - Navigation 13,050 Development Costs - Home Care License - Acquisition of fixed assets (1,908,589)

Net cash provided by (used in) investing activities (925,364)

Cash flows from financing activities:Principal payments on bonds payable - Payments on line of credit - Refundable fees - Refunds of advance fees (71,200)

Net cash provided by (used in) financing activities (71,200)

Net increase (decrease) in cash and cash equivalents ($993,379)

Cash and cash equivalents at beginning of year $3,814,475

Cash and cash equivalents at end of year $2,821,096

Cash paid for interest $705,509

SALEMTOWNESTATEMENT OF CASH FLOWS

FOR THE FOUR MONTHS ENDED JULY 31, 2015 IN FISCAL YEAR ENDING MARCH 31 , 2016

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Moravian Home Incorporated, d/b/a Salemtowne

Calculation of Obligation to Provide Future Services

As of March 31, 2015

Executive Summary – See Full Report

Report Date: MAY 4, 2015

Page (126)

CCRC Actuaries, LLC Page 1

EXECUTIVE SUMMARY CCRC Actuaries, LLC (CCRC Actuaries) was retained by the management of Moravian Home Incorporated, d/b/a Salemtowne (Salemtowne), a non-profit continuing care retirement community located in Winston-Salem, North Carolina, to calculate the community's Obligation to Provide Future Services and the Use of Facilities to Current Residents (the Obligation) as defined by the AICPA Health Care Auditing Guidelines. This calculation was done as of March 31, 2015. This report includes an actuarial based financial projection that measures Salemtowne's Obligation to provide future services to current residents. In order to calculate the community's Obligation, we projected existing residents through various levels of care until move-out or death. The population projection uses actual resident data to develop assumptions about demographic characteristics of existing residents. The rates of population movement utilized in these projections were developed based on a review of Salemtowne resident demographic experience for the historical period of April 1, 1990 through March 31, 2015 and the CCRC Actuaries demographic database for CCRC residents. The CCRC Actuaries database contains demographic transfer and mortality experience of over 300,000 CCRC resident life years. This information was then aggregated to create reasonable assumptions consistent with Salemtowne's operational and administrative practices. The population assumptions were then used to develop a closed group population projection that reflects only the activity of the current group of Salemtowne's residents. A closed group does not have any new residents entering the community, so as residents die or voluntarily withdraw, the projected group size declines. Closed group projections can be used to anticipate individual revenues and expenses over the life of the group. These calculations can be helpful in setting fees and estimating the present value of future liabilities. The population projection forms the basis of the financial projection that was prepared for the obligation calculation as recommended by the AICPA. We combined the results of our population projection with projected unit revenue and expense items for Salemtowne to develop the net present value of future cash outflows. This value, together with unamortized deferred revenue, unamortized costs of acquiring the initial continuing-care contracts, and allocable depreciation, produces the Obligation. Resident data regarding units, age, gender and couples' ratio was provided by Salemtowne management representatives. Assumptions regarding expected mortality and morbidity experience were derived from actual historical resident movements and the CCRC Actuaries database. Financial information regarding revenues, expenses and depreciation was provided by Salemtowne management and consisted of the budget for fiscal year 2016. No secondary due diligence was conducted by CCRC Actuaries as to the accuracy of these assumptions.

Page (127)

CCRC Actuaries, LLC Page 2

CCRC Actuaries has calculated the Obligation for Future Services for Current Residents at Salemtowne as of March 31, 2015 to be a surplus of ($498,000). This represents an increase in surplus of $181,000 from the prior report as of March 31, 2014. As the Audit Guide specifies that a CCRC should only include a Future Service Obligation amount in financial statements if such amount is positive, Salemtowne’s resulting Future Service Obligation amount for financial statements purposes as of March 31, 2015 is $0. It should be noted that this surplus is based on the assumptions that monthly fees and operating expenses, not including interest expense, depreciation and amortization, will increase 4.0% each year throughout the projection period. The surplus pertains only to the Obligation calculation and does not demonstrate the financial feasibility of the entire community since debt principal repayments, general and administrative expenses and some revenues are not included in the Obligation calculation. It should also be noted that the Obligation calculation is based on the assumption that Salemtowne will reach and maintain approximately 95.9% occupancy (164 out of 171 available units) in the independent living units. The results of our study are based on estimates of the demographic and economic assumptions of the most likely outcome. Considerable uncertainty and variability are inherent in such estimates. Accordingly, the subsequent emergence of actual resident movements and of actual revenues and expenses may not conform to the assumptions used in our analysis. Consequently, the subsequent development of these items may vary considerably from expected. Management should scrutinize future developments that may cause the Obligation to become a liability. These developments include higher apartment vacancy rates, higher expense inflation, and higher nursing care utilization and longer life expectancies at all levels of care than assumed in the current projection.

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Moravian Home, Incorporated

(d/b/a Salemtowne)

Financial Feasibility Study

Five Years Ending March 31, 2020

Page (129)

Moravian Home, Incorporated d/b/a Salemtowne Financial Feasibility Study Five Years Ending March 31, 2020

TABLE OF CONTENTS Independent Accountants’ Examination Report ......................................................................... C-1

Forecasted Financial Statements:

Forecasted Statements of Activities and Changes in Net Assets .................................... C-4 Forecasted Statements of Cash Flows .............................................................................. C-5 Forecasted Balance Sheets ............................................................................................... C-6 Forecasted Financial Ratios .............................................................................................. C-7

Summary of Significant Forecast Assumptions and Accounting Policies

Basis of Presentation ........................................................................................................ C-8 Background Information .................................................................................................. C-8 The Community. ............................................................................................................... C-8 The Project. .................................................................................................................... C-12 Description of the Navigation by Salemtowne Program ................................................ C-14 Membership Agreement – Navigation by Salemtowne Program ................................... C-15 Summary of Financing ................................................................................................... C-17 Description of the Residency Contract ........................................................................... C-19 Characteristics of the Market Area ................................................................................. C-23 Independent Living Penetration Analysis ...................................................................... C-43 Description of Assisted Living ....................................................................................... C-45 Assisted Living Penetration Analysis ............................................................................. C-51 Description of Nursing Care ........................................................................................... C-57 Summary of Significant Accounting Policies ................................................................ C-61 Summary of Revenue and Entrance Fee Assumptions .................................................. C-63 Summary of Expense Assumptions ................................................................................ C-72 Assets Limited as to Use ................................................................................................ C-73 Property and Equipment and Depreciation Expense ...................................................... C-74 Long-Term Debt and Interest Expense .......................................................................... C-75 Current Assets and Current Liabilities ........................................................................... C-76

Independent Accountants’ Report on Supplemental Information ............................................ C-77

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C-1

INDEPENDENT ACCOUNTANTS’ EXAMINATION REPORT Board of Trustees Moravian Home, Incorporated d/b/a Salemtowne Winston-Salem, North Carolina We have prepared a financial feasibility study of the plans of Moravian Home, Incorporated d/b/a Salemtowne (the “Corporation”), a North Carolina nonprofit corporation providing housing, health care and related services to seniors, to complete an expansion project for its continuing care retirement community known as Salemtowne (the “Community”) located in Winston-Salem, North Carolina. The Community currently consists of 171 independent living units, including 98 independent living apartments and 73 independent living cottages, 46 licensed assisted living beds (currently configured in 39 rooms), an 84-bed nursing care facility, and related common areas. Management of the Corporation (“Management”) is planning the construction of a new healthcare facility composed of 100 skilled nursing beds (84 replacement beds and 16 new sheltered beds, with 40 of the beds dedicated to short-term rehabilitation) and 20 memory support assisted living units (collectively, the “Project”). The feasibility study was undertaken to evaluate the Corporation’s ability to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed issuance at a discount of $42,585,000 North Carolina Medical Care Commission Retirement Facilities First Mortgage Revenue Bonds (Salemtowne Project) Series 2015 (the “Series 2015 Bonds”). The Corporation’s managing underwriter, B.C. Ziegler and Company, doing business as Ziegler Capital Markets Group (the “Managing Underwriter”), has provided the assumed structure and terms for the Series 2015 Bonds as non-rated, tax-exempt, fixed rate, term bonds with maturities to October 1, 2045, with average interest rates ranging from 5.250 to 5.375 percent per annum and average yields ranging from 5.250 to 5.450 percent per annum. The proceeds from the sale of the Series 2015 Bonds, interest earnings on trustee held funds, and a contribution from the Corporation are to be used as follows:

To pay all costs for the Project, including reimbursement of certain pre-finance costs; To fund a parity debt service reserve fund for the Series 2015 Bonds and the Series 2006

Bonds (as later defined herein); To fund interest on the Series 2015 Bonds through August 1, 2016; and To pay costs associated with the issuance of the Series 2015 Bonds.

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C-2

Our procedures included analyses of:

The Corporation’s history, objectives, timing and financing; Future demand for the Corporation’s services, including consideration of:

Socioeconomic and demographic characteristics of the Community’s defined primary market areas (“PMAs”);

Locations, capacities and competitive information pertaining to other existing and planned facilities in the PMAs; and

Forecasted occupancy and utilization levels; Debt service requirements and estimated financing costs; Staffing requirements, salaries and wages, related fringe benefits and other operating

expenses; Anticipated entrance fees, monthly fees and per diem charges for the Community’s

residents; Sources of other operating and non-operating revenues; and Revenue/expense/volume relationships.

The accompanying financial forecast for each of the years in the five year period ending March 31, 2020, is based on assumptions that were provided by Management. The financial forecast includes the following financial statements and the related summary of significant forecast assumptions and accounting policies:

Forecasted Statements of Activities and Changes in Net Assets; Forecasted Statements of Cash Flows; Forecasted Balance Sheets; and Forecasted Financial Ratios.

We have examined the financial forecast. Management is responsible for the forecast. Our responsibility is to express an opinion on the forecast based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (“AICPA”) and, accordingly, included such procedures as we considered necessary to evaluate both the assumptions used by Management and the preparation and presentation of the forecast. We believe that our examination provides a reasonable basis for our opinion. Legislation and regulations at all levels of government have affected and may continue to affect the operations of retirement communities. The financial forecast is based upon legislation and regulations currently in effect. If future legislation or regulations related to the Corporation’s operations are subsequently enacted, such legislation or regulations could have a material effect on future operations. Management’s financial forecast is based on the achievement of occupancy levels as determined by Management. We have not been engaged to evaluate the effectiveness of Management and we are not responsible for future marketing efforts and other Management actions upon which actual results will depend.

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C-3

The assumed interest rates, principal payments, and other financing assumptions are described in the section entitled “Summary of Significant Forecast Assumptions and Accounting Policies.” If actual interest rates, principal payments or funding requirements are different from those assumed in this study, the amount of the Series 2015 Bonds and associated debt service requirements will need to be adjusted accordingly from those indicated in the forecast. If such interest rates, principal payments and funding requirements are lower than those assumed, such adjustments will not adversely affect Management’s forecast. Management’s forecast was originally prepared July 14, 2015. Management’s forecast and this feasibility study report were updated on August 6, 2015 to reflect changes in the financing structure for the Series 2015 Bonds (hereinafter defined) resulting from final pricing, including the amount of and interest rates on the Series 2015 Bonds. Our conclusions are presented below:

In our opinion, the accompanying financial forecast is presented in conformity with guidelines for presentation of a financial forecast established by the American Institute of Certified Public Accountants.

In our opinion, the underlying assumptions provide a reasonable basis for Management’s forecast. However, there will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material.

The accompanying financial forecast indicates that sufficient funds could be generated to meet the Corporation’s operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed Series 2015 Bonds, during the forecast period. However, the achievement of any financial forecast is dependent upon future events, the occurrence of which cannot be assured.

We have no responsibility to update this report for events and circumstances occurring after the date of this report.

Atlanta, Georgia August 6, 2015

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Moravian Homes, Incorporated d/b/a Salemtowne

See Summary of Significant Forecast Assumptions and Accounting Policies and Independent Accountants’ Examination Report

C-4

Forecasted Statements of Activities and Changes in Net Assets For the Years Ending March 31,

(In Thousands of Dollars)

2016 2017 2018 2019 2020Revenue:

Independent living monthly service fees 5,650$ 5,709$ 5,768$ 5,826$ 5,888$ Assisted living monthly service fees 1,701 1,742 1,856 1,906 1,950 Memory support monthly service fees - - 995 1,568 1,615 Nursing service fees 9,313 9,646 12,164 14,533 14,788 Other revenue 336 344 371 399 412 Entrance fee amortization 2,322 2,331 2,468 2,619 2,787 Contributions 325 325 325 325 325 Investment income 865 642 1,011 1,200 1,419

Navigation by Salemtowne Program:Membership fee amortization 14 33 52 72 93 Net resident services 110 210 316 429 548 Investment income 5 9 14 18 23 Other revenue 113 113 113 113 113

Total revenue 20,754 21,104 25,453 29,008 29,961

Expenses:Clinic 76 78 81 83 86 Dining services 2,244 2,312 2,512 2,665 2,746 Housekeeping and laundry 724 746 799 830 855 Events and volunteers 152 156 164 172 177 Healthcare center 3,418 3,521 5,799 7,226 7,457 Administration 3,538 3,314 3,780 3,961 4,081 Admissions 589 607 625 644 663 Navigation by Salemtowne operating expenses 531 542 558 575 592 Maintenance 1,851 1,907 2,492 2,691 2,773 Assisted living 634 653 673 693 714 Memory support - - 174 215 222 Development 231 242 210 219 225 Chaplain 83 86 88 91 94 Finance 689 710 731 753 776 Corporate 463 477 491 506 521 Fitness 80 82 85 87 90 Grounds 268 276 285 293 302 Life enrichment program 108 111 115 119 122 Activities 132 136 234 275 284 Human resources 192 198 204 210 216 Certified unit 713 734 756 779 802 Resident council 32 32 33 34 36 Babcock Campus 42 43 44 46 47 Information systems 540 557 573 591 608 Interest expense 1,460 1,409 3,229 3,549 3,480 Depreciation - Navigation by Salemtowne 15 15 15 15 15 Depreciation 2,360 2,770 3,954 4,319 4,480 Amortization - Navigation by Salemtowne 15 15 15 15 15

Total expenses 21,180 21,729 28,719 31,656 32,479

Change in unrestricted net assets (426) (625) (3,266) (2,648) (2,518)

Temporarily restricted net assets:Contributions 125 125 125 125 125

Change in temporarily restricted net assets 125 125 125 125 125

Permanently restricted net assets:Contributions 215 215 215 215 215 Investment income 15 15 15 15 15

Change in permanently restricted net assets 230 230 230 230 230

Change in net assets (71) (270) (2,911) (2,293) (2,163) Net assets, beginning of year 29,986 29,915 29,645 26,734 24,441 Net assets, ending of year 29,915$ 29,645$ 26,734$ 24,441$ 22,278$

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C-5

Forecasted Statements of Cash Flows For the Years Ending March 31,


2016 2017 2018 2019 2020

Cash flows from operating activities:Change in net assets (71)$ (270)$ (2,911)$ (2,293)$ (2,163)$ Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities:

Depreciation - Navigation by Salemtowne 15 15 15 15 15 Depreciation 2,360 2,770 3,954 4,319 4,480 Amortization of bond issuance costs 51 69 69 69 69 Amortization of bond discount and premium 9 16 16 16 16 Amortization of deferred development costs - Navigation by Salemtowne 15 15 15 15 15 Amortization of earned entrance fees (2,322) (2,331) (2,468) (2,619) (2,787) Amortization of membership fees - Navigation by Salemtowne (14) (33) (52) (72) (93) (Decrease) increase in accrued interest 1,124 (31) (33) (34) (35) Net change in other current assets and liabilities (1,031) (619) 752 43 31 Entrance fees received from reoccupancy (non-refundable) 3,260 3,359 3,441 3,547 3,664 Membership fees received - Navigation by Salemtowne 463 477 491 506 521 Membership fees refunded - Navigation by Salemtowne (36) (36) (36) (36) (36)

Net cash provided by (used in) operating activities 3,823 3,401 3,253 3,476 3,697

Cash flows from investing activities:Purchase of property and equipment (20,320) (19,291) (1,545) (1,591) (1,639) Interest cost capitalized during construction period (1,370) (2,226) (357) - - (Increase) decrease in assets limited as to use (22,616) 19,316 (600) (200) (200) (Increase) decrease in assets limited as to use, current 43 (702) (433) (1) (1) (Increase) decrease in investments (1,310) (64) 848 (693) (994)

Net cash provided by (used in) investing activities (45,573) (2,967) (2,087) (2,485) (2,834)

Cash flows from financing activities:Entrance fees received from reoccupancy (refundable) 1,096 1,129 1,163 1,197 1,233 Entrance fees refunded (242) (301) (373) (456) (549) Issuance of long term debt 42,585 - - - - Deferred financing costs (1,001) - - - - Original issue discount (405) - - - - Principal payments - Series 2006 Bonds (1,170) (1,230) (1,290) (1,355) (1,425) (Decrease) increase in resident deposits (31) - - - -

Net cash provided by (used in) financing activities 40,832 (402) (500) (614) (741)

Change in cash and cash equivalents (918)$ 32$ 666$ 377$ 122$

Beginning balance of cash and cash equivalents 3,814 2,896 2,928 3,594 3,971

Ending balance of cash and cash equivalents 2,896$ 2,928$ 3,594$ 3,971$ 4,093$

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C-6

Forecasted Balance Sheets For the Years Ending March 31,


2016 2017 2018 2019 2020Assets Current assets:

Cash and cash equivalents 2,896$ 2,928$ 3,594$ 3,971$ 4,093$ Assets limited as to use 1,293 1,995 2,428 2,429 2,430 Accounts receivable, net 613 633 769 882 902 Prepaid expenses and other assets 285 288 354 391 403 Other receivables 190 804 236 260 268

Total current assets 5,277 6,648 7,381 7,933 8,096

Investments 13,588 13,652 12,804 13,497 14,491

Assets limited as to use:Construction Account 18,467 - - - - Board designated funds 4,963 4,963 4,963 4,963 4,963 Funded Interest Account 1,849 - - - - Debt Service Reserve Fund 4,886 4,886 4,886 4,886 4,886 Restricted statutory operating reserve 4,400 5,400 6,000 6,200 6,400

Total assets limited as to use 34,565 15,249 15,849 16,049 16,249

Property and equipment 97,143 118,660 120,562 122,153 123,792 less accumulated depreciation (34,706) (37,491) (41,460) (45,794) (50,289)

Net property and equipment 62,437 81,169 79,102 76,359 73,503

Other assetsDevelopment costs - Navigation by Salemtowne, net 350 335 320 305 290 Assets in split-interest agreements 192 192 192 192 192

Total assets 116,409$ 117,245$ 115,648$ 114,335$ 112,821$

Liabilities and Net Assets (Deficit) Current liabilities:

Accounts payable 712$ 720$ 884$ 976$ 1,006$ Accrued expenses 964 974 1,196 1,321 1,362 Accrued interest 1,830 1,799 1,766 1,732 1,697 Current maturities of long-term debt 1,230 1,290 1,355 1,425 1,500

Total current liabilities 4,736 4,783 5,201 5,454 5,565

Long-term debt, less current maturities - Series 2006 Bonds 25,570 24,280 22,925 21,500 20,000 Long-term debt, less current maturities - Series 2015 Bonds 42,585 42,585 42,585 42,585 42,585 Bond issuance costs (1,392) (1,323) (1,254) (1,185) (1,116) Bond discount and premium (381) (365) (349) (333) (317) Long-term debt, net of financing costs 66,382 65,177 63,907 62,567 61,152

Deferred revenue from membership fees - Navigation by Salemtowne 689 1,097 1,501 1,899 2,291 Deferred revenue from entrance fees - nonrefundable 12,838 13,866 14,838 15,766 16,642 Refundable advance fees 1,849 2,677 3,467 4,208 4,893 Total liabilities 86,494 87,600 88,914 89,894 90,543

Net assets: Donor restricted:

Temporarily restricted 975 1,100 1,225 1,350 1,475 1,600 Permanently restricted 10,890 11,120 11,350 11,580 11,810 12,040

Other:Undesignated 18,121 17,695 17,070 13,804 11,156 8,638

Net assets 29,915 29,645 26,734 24,441 22,278

Total liabilities and net assets 116,409$ 117,245$ 115,648$ 114,335$ 112,821$

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C-7

Forecasted Financial Ratios For the Years Ending March 31,

(In Thousands of Dollars, Except for Ratios)

Long-Term Debt Service Coverage Ratio 2016 2017 2018 2019 2020Change in unrestricted net assets (426)$ (625)$ (3,266)$ (2,648)$ (2,518)$ Deduct:

Entrance fee amortization (2,322) (2,331) (2,468) (2,619) (2,787) Membership fee amortization (14) (33) (52) (72) (93)

Add:Depreciation - Navigation by Salemtowne 15 15 15 15 15Depreciation 2,360 2,770 3,954 4,319 4,480Amortization - Navigation by Salemtowne 15 15 15 15 15Interest expense 1,460 1,409 3,229 3,549 3,480Entrance fees received from reoccupancy (non-refundable) 3,260 3,359 3,441 3,547 3,664Entrance fees received from reoccupancy (refundable) 1,096 1,129 1,163 1,197 1,233Entrance fees refunded (242) (301) (373) (456) (549)Membership fees received - Navigation by Salemtowne 463 477 491 506 521Membership fees refunded - Navigation by Salemtowne (36) (36) (36) (36) (36)

Income Available for Debt Service 5,629$ 5,848$ 6,113$ 7,317$ 7,425$ Maximum Annual Debt Service (b) 2,617$ 2,617$ 2,617$ 4,886$ 4,886$ Long-Term Debt Service Coverage Ratio 2.15x 2.23x 2.34x 1.50x 1.52x

Days' Cash on Hand 2016 2017 2018 2019 2020Cash and cash equivalents 2,896$ 2,928$ 3,594$ 3,971$ 4,093$ Investments 13,588 13,652 12,804 13,497 14,491Board designated funds 4,963 4,963 4,963 4,963 4,963Restricted statutory operating reserve 4,400 5,400 6,000 6,200 6,400Assets in split-interest agreements 192 192 192 192 192Less:

Permanently restricted assets (3,927) (3,927) (3,927) (3,927) (3,927)Cash on hand 22,112$ 23,208$ 23,626$ 24,896$ 26,212$

Total expenses 21,180 21,729 28,719 31,656 32,479 Less:

Amortization - Navigation by Salemtowne (15) (15) (15) (15) (15) Depreciation - Navigation by Salemtowne (15) (15) (15) (15) (15) Depreciation (2,360) (2,770) (3,954) (4,319) (4,480) Amortization of bond issuance costs and discount/premium (60) (85) (85) (85) (85)

Total expenses less depreciation and amortization 18,730 18,844 24,650 27,222 27,884 Daily operating expenses (a) 51 52 68 75 76 Days' Cash on Hand 434 446 347 332 345

Reserve Ratio 2016 2017 2018 2019 2020Cash and cash equivalents 2,896$ 2,928$ 3,594$ 3,971$ 4,093$ Investments 13,588 13,652 12,804 13,497 14,491Restricted statutory operating reserve 4,400 5,400 6,000 6,200 6,400Board designated funds 4,963 4,963 4,963 4,963 4,963Debt Service Reserve Fund 2,555 2,555 2,555 4,886 4,886Assets in split-interest agreements 192 192 192 192 192 Less:

Permanently restricted assets (3,927) (3,927) (3,927) (3,927) (3,927)Available Reserves 24,667$ 25,763$ 26,181$ 29,782$ 31,098$ Long-Term Indebtedness (c) 25,570$ 24,280$ 22,925$ 64,085$ 62,585$ Reserve Ratio 96% 106% 114% 46% 50%(a) Daily operating expenses are equal to total operating expenses less depreciation and amortization divided by 365 days.(b) The Maximum Annual Debt Service is equal to the greatest Long-Term Indebtedness debt service requirement on the Series 2006 Bonds and the Series 2015 Bonds (beginning in 2019).(c) Long-term indebtedness outstanding includes the Series 2006 Bonds and the Series 2015 Bonds (beginning in 2019).

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Moravian Home, Incorporated d/b/a Salemtowne

Summary of Significant Forecast Assumptions and Accounting Policies

See Independent Accountants’ Examination Report C-8

Basis of Presentation The accompanying financial forecast presents, to the best knowledge and belief of management of Moravian Home, Incorporated d/b/a Salemtowne (the “Corporation”), the Corporation’s consolidated forecasted results of activities, cash flows, and financial position as of and for each of the five years ending March 31, 2020. Accordingly, the accompanying financial forecast reflects the judgment of management of the Corporation (“Management”) as of August 6, 2015, the date of this forecast, based on present circumstances and the expected course of action during the forecast period. The assumptions disclosed herein are those that Management believes are significant to the forecast. There will usually be differences between the forecasted and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. Management’s forecast was originally prepared July 14, 2015. Management’s forecast and this feasibility study report were updated on August 6, 2015 to reflect changes in the financing structure for the Series 2015 Bonds (hereinafter defined) resulting from final pricing, including the amount of and interest rates on the Series 2015 Bonds. Background Information The Corporation owns and operates a continuing care retirement community known as Salemtowne (the “Community”) in Winston-Salem, North Carolina. The mission of the Community is to promote the well-being of its residents by providing a caring environment. The Community is an ecumenical community that reflects the Moravian values of individual respect, hospitality, life-long learning, and love of the arts. The Community is affiliated with the Moravian Church in America, Southern Province. The Corporation is exempt from income tax as an entity described in Section 501(c)(3) of the Internal Revenue Code. The business and affairs of the Corporation are directed by a self-perpetuating Board of Trustees (the “Board”) composed of not less than 12 and not more than 18 members. The Board currently meets six times per year and at such other times as the Board may determine necessary. No members of the Board are employees of the Community. The Community The Community is situated on over 115 acres of land located in northwest Winston-Salem near historic Bethabara, the first Moravian settlement in North Carolina. The Community opened in 1972 and consists of the following residential living units available for occupancy:

98 independent living apartments (the “Independent Living Apartments”) and 73 independent living cottages (the “Independent Living Cottages”), (and, collectively with the Independent Living Apartments, the “Independent Living Units”);

46 licensed assisted living beds, currently configured in 39 units (the “Assisted Living Units”); and

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Moravian Home, Incorporated Summary of Significant Forecast Assumptions d/b/a Salemtowne and Accounting Policies, Continued


An 84-bed Medicare certified nursing care facility (the “Existing Nursing Care Center”) of which 20 beds are also certified for Medicaid and, of which 18 beds are in a special care area which serves the needs of individuals diagnosed with Alzheimer’s or other dementia-related diseases (collectively, the “Existing Nursing Beds”).

In addition, the Community includes common areas and amenities such as a community center, fitness center, walking trails, art galleries, computer room, dining rooms, beauty/barber shops, gift shops, libraries and game rooms.

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The following table summarizes the type, number, approximate square footage, monthly fees (“Monthly Fees”) and entrance fees (“Entrance Fees”) for the Independent Living Units.

Table 1 Independent Living Unit Configuration

Type of Unit Units Square Footage

Entrance Fees(1)

Monthly Fees(2) (3)

Independent Living Apartments Vogler Building/Bahnson Hall

Ardmore (studio) 2 250 $30,000 $2,400 Forsyth (1 bedroom) 13 530 $58,000 – $63,000 $1,596 Winston A (2 bedroom) 15 790 $70,000 – $87,000 $1,905 Winston B (2 bedroom) 1 790 $84,000 $1,905 West End (1 bedroom, den & laundry) 5 772 $75,000 – $87,000 $1,905 Buena Vista (2 bedroom, den & laundry) 3 1,040 $105,060 $2,420

Driscoll Apartment Building Reynolda (1 bedroom) 15 751 $109,200 – $112,000 $2,163 Sherwood (1 bedroom w/den) 9 936 $139,050 $2,420 Piedmont (2 bedroom) 21 1,073 $162,300 – $167,400 $2,729 Brookstown (2 bedroom corner) 4 1,107 $162,300 $2,729 Twin City (2 bedroom w/den) 10 1,240 $181,800 – $189,550 $2,987

Total Independent Living Apartments 98 Independent Living Cottages Wachovia Village

Hatteras (2 bedroom) 8 1,172 $131,400 – $136,500 $2,318 Emerald (2 bedroom w/den) 14 1,356 $142,700 – $163,300 $2,524

Salem Village Bethania (2 bedroom w/den) 2 1,533 $209,600 $2,678 Hickory A (2 bedroom w/sunroom) 9 1,560 $203,500 – $214,750 $2,575 – $2,730 Hickory B (2 bedroom w/den) 1 1,755 $255,000 $2,884 Catawba (2-3 bedroom w/den & sunroom) 19 1,678 – 3,210 $224,000 – $330,000 $2,936 – $3,657

Bethabara Place Mitchell (2 bedroom) 1 1,440 $201,500 $2,833 Shenandoah (2 bedroom w/den) 4 1,617 – 1,698 $231,750 – $242,100 $3,090 – $3,193 Appalachian (2 bedroom w/sunroom) 7 1,640 – 1,750 $235,500 – $256,000 $3,142 - $3,399 Rutherford (2 bedroom w/den & sunroom) 7 1,817 – 2 ,259 $265,000 – $314,150 $3,399 – $3,708 Watauga (2 bedroom w/den & sunroom) 1 3,200 $350,000 $3,805

Total Independent Living Cottages 73 Total Independent Living Units 171

Source: Management (1) The Community offers three Entrance Fee plans under the Residency Agreement: a declining refundable Entrance Fee plan

(the “Traditional Amortizing Plan”, shown in the table for Entrance Fees and Monthly Fees), a 50% refundable plan (the “50% Refundable Plan”), and a 90% refundable plan (the “90% Refundable Plan”). The number of contracts available for the 50% Refundable Plan and the 90% Refundable Plan are limited and subject to availability. Further plan descriptions are provided under the Community Residency Agreement section of the report.

(2) Pricing is effective as of June 1, 2015. Second person monthly fees are $632 for the Independent Living Apartments and $464 for the Independent Living Cottages.

(3) Single occupancy Residents who entered the Community prior to May 1, 2014 pay grandfathered Monthly Fee rates that range from $2,088 to $3,125 for the Independent Living Apartments, and from $2,548 to $3,868 for the Independent Living Cottages. Second person occupants pay an additional $851 per second person plus a $323 meal allowance for Independent Living Apartments; residents in Independent Living Cottages may opt out of the meal allowance plan.

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The Assisted Living Units and the Existing Nursing Care Center are collectively referred to as the “Health Center.” All 84 beds at the Existing Nursing Care Center are certified for Medicare, and 20 are also certified for Medicaid. The Community is currently licensed for 46 assisted living beds. In order to meet the needs of assisted living residents desiring more space, Management began joining two adjacent rooms to create larger suites. Suites may accommodate singles, couples, or be reconfigured for two unrelated residents. As of May 1, 2015, the Assisted Living Units were composed of 32 rooms and 7 larger suites, for a total of 39 units (with 46 licensed beds). Management anticipates that there will be 10 suites and 26 rooms by the end of Fiscal Year 2016, for a total of 36 units with 46 licensed beds. The following table summarizes the type, number, approximate square footage, the Monthly Fees and daily fees (“Daily Fees”) for the Health Center effective June 1, 2015.

Table 2 Health Center Configuration

Type of Unit

Units Beds

Approximate Square Footage (room)

Monthly Fees (1)(2)

Assisted Living Units Assisted living room 32 32 262 $4,523 Assisted living suite 7 14 524 $6,000 (3)

Total Assisted Living Beds/Units: 39 (4) 46

Existing Nursing Care Center Daily Fees (1)(5) Private room 74 74 216 $285 Semi-private room 5 10 426 $260

Total Existing Nursing Beds/Units: 79 84

Total Health Center 118 130 Source: Management (1) Monthly and Daily Fees shown are for direct admission into the Health Center. Residents on the current fee program who

transfer to the Health Center receive a discount of 20% on the Monthly Fee for assisted living or the Daily Fee for nursing. (2) Residents who transferred into assisted living prior to May 1, 2014 pay a grandfathered Monthly Fee of $4,082 for an

assisted living room and $4,934 for an assisted living suite (with a previously paid entrance fee). (3) Single occupancy rate for an assisted living suite. A couple residing in an assisted living suite would be required to pay two

times the assisted living room rate of $4,523. (4) During Fiscal Year 2016, Management plans to continue combining assisted living rooms to create larger suites.

Management anticipates that a total of 36 Assisted Living Units with 46 licensed beds will be available (ten suites and 26 rooms) by March 31, 2016.

(5) The Daily Fee for a special care unit is $305.

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The Project The Corporation is planning an expansion project (the “Project”) at the Community, which is proposed to include the construction of a new health care center with 20 new memory support assisted living units (the “New Memory Support Units”) and 100 skilled nursing beds including 40 rehabilitation beds (the “Replacement Nursing Beds”). The Replacement Nursing Beds will replace the 84 beds at the Existing Nursing Care Center and include an additional 16 sheltered beds. The total building size is expected to approximate 126,780 square feet. Construction of the Project is assumed to begin in July 2015 and the Project is expected to be available for occupancy in June 2017. The existing Community and Project are collectively defined as the “Community”. The following table summarizes the unit types, approximate square footages, Monthly Fees, and Daily Fees for the Project:

Table 3 Project Configuration

The Project Number of Units/Beds

Square Footage

Monthly Fee(1)

New Memory Support Units:

Private room 20 325 $6,293

Replacement Nursing Beds: Daily Fee(2)

Private room 100(3) 300 $296

Total Units/Beds 120

Source: Management (1) The proposed Monthly Fee shown for the New Memory Support Units is as of June 1, 2015. The New Memory Support

Units will be sheltered beds and not open to direct admit residents; therefore, the rate shown in the table is for contract residents transferring from another level of care at the Community.

(2) The proposed Daily Fees shown for the Replacement Nursing Beds are as of June 1, 2015. The Monthly Fees shown are for direct admissions. Certain contract residents who transfer to the Replacement Nursing Beds receive a discount of 20% on the Daily Fee. The 16 net new Replacement Nursing Beds will be sheltered beds and not open to direct admissions.

(3) Forty of the Replacement Nursing Beds are designated for rehabilitation.

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The following table summarizes the Community’s unit configuration prior to and after completion of the Project:

Table 4 The Community - Unit Configuration

The Project Upon

Level of care Prior to

the Project Units/Beds

Constructed Units/Beds Replaced

Net New Units/Beds

Project completion

Independent Living 171 – – – 171

Assisted Living (1) 46 – – – 46

Assisted Living Memory Support – 20 – 20 20

Nursing 84 (2) 100 (84) 16 100

Total 301 120 (84) 36 337

Source: Management (1) The Community is licensed for 46 assisted living beds, currently configured in 39 rooms and anticipated to be 36 units

by March 31, 2016. (2) Eighteen beds are in a special care area which serves the needs of individuals diagnosed with Alzheimer’s or other

dementia-related diseases. For the purpose of this report, the Existing Nursing Beds and the Replacement Nursing Beds will collectively hereinafter be referred to as the “Nursing Beds”. The Assisted Living Units, the New Memory Support Units, and the Nursing Beds will collectively hereinafter be referred to as the “Health Center”. The anticipated timeline for financing, construction completion and fill-up of the Project is shown below.

Table 5 Project Timeline

Begin Construction July 2015Complete Construction February 2017 Available for Occupancy June 2017 Achieve Stabilized Occupancy December 2017 Source: Management

Phase II Project A future project phase (the “Phase II Project”) is currently under consideration by Management. The Phase II Project would involve the renovation and repurposing of the Existing Nursing Care Center into new assisted living units to replace the existing Assisted Living Units. Management’s decision to initiate the Phase II Project is dependent upon a number of factors, and construction, fill-up, and occupancy of the Phase II Project is not certain at this time. Therefore, the financial impact of the Phase II Project is not included in Management’s forecasted financial statements.

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Description of the Navigation by Salemtowne Program The Corporation offers a Continuing Care Services without Lodging Program (the “Navigation by Salemtowne” program), which is designed to provide an option for seniors to age in their homes and access home and community-based services as needed. The program combines the benefits of long term care insurance and care coordination. Services provided on a capitated basis are skilled home health care, homemaker, companion, emergency response system, meals and adult day care. Members of Navigation by Salemtowne (“Members”) have access to many of the amenities of the Community. Navigation by Salemtowne supports older adults to be healthy and independent throughout their years through education, physical activities, socialization, and the coordination of care when necessary. Members must reside in their own home in the program’s designated service area to continue to participate in the Navigation by Salemtowne program. Management offers three payment plan options which provide varying coverage levels for program services. The following table summarizes the service coverage levels for the three payment plans: “All Inclusive”, “Security”, and “Co-Pay”.

Table 6 Navigation by Salemtowne Payment Plans

Service All Inclusive Security Co-Pay Percentage of Service Cost Covered Care Coordination 100% 100% 100% Home Health Aide 100% 85% 50% Companion Care 100% 85% 50% Live-in Companion 100% 85% 50% Adult Day Care 100% 85% 50% Delivered Meals 100% 100% 100% Emergency Response System 100% 100% 100% Home Inspections 100% 100% 100% Transportation 100% 100% 100% Residential or Assisted Living Care 100% 70% 50% Nursing Home Care 100% 70% 50%

Source: Management For the purposes of Management’s forecast, 60 percent (60%) of Members are assumed to choose the All Inclusive Plan, 20 percent are assumed to choose the Security Plan, and 20 percent (20%) are assumed to choose the Co-Pay Plan. The assumed utilization of home health and other healthcare-related services have been provided by the Corporation’s actuary, CCRC Actuaries, LLC (the “Actuary”), based upon the Actuary’s experience with similar programs.

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Members pay an initial membership fee (the “Membership Fee”) and an ongoing monthly fee (the “Navigation by Salemtowne Monthly Fee”). Management engaged the Actuary to perform an actuarial pricing analysis to support utilization and pricing for the Navigation by Salemtowne Program. The Membership Fee is actuarially priced based upon the Member’s age and the plan option chosen. The Navigation by Salemtowne Monthly Fee varies with the plan option chosen. The table below shows the sample Membership Fee and Navigation by Salemtowne Monthly Fee for the three plan options for singles and couples aged 65, 75 and 85, effective for the Corporation’s Fiscal Year 2016.

Table 7 Navigation by Salemtowne Program Sample Pricing

Fiscal Year 2016

Age All Inclusive Security Co-Pay

Single Couple Single Couple Single Couple

65 $25,345 $48,780 $19,530 $37,720 $15,245 $29,580

75 $35,325 $67,740 $27,535 $52,930 $20,415 $39,400

85 $44,115 $84,440 $34,445 $66,060 $24,825 $47,790

Monthly Fee $490 $930 $428 $812 $376 $716

Source: Management Membership Agreement – Navigation by Salemtowne Program The Corporation has a Membership Services Agreement (the “Membership Agreement”) for individuals wishing to enroll in the Navigation by Salemtowne program. The Corporation will accept persons at least 62 years of age into the Navigation by Salemtowne program who are able to meet the financial obligations as a Member in the program. A prospective Member must complete a “Member Application” and sign a medical release form allowing the Corporation to request the past four years of medical records from the Member prospect’s personal physician. A personal interview will be arranged in the prospective Member’s home to assess their ability to function independently within normal living activities and to do a baseline cognitive assessment. Members are expected to obtain and maintain Medicare Parts A and B (or an equivalent substitute policy approved by the Corporation) and suitable supplemental medical insurance. In exchange for payment of the Membership Fee and the Navigation by Salemtowne Monthly Fee, the Corporation is to provide the Member the following services and programs:

Access to the Community, including on-campus amenities and common areas; Activities and leisure events including but not limited to: social, recreational, spiritual,

educational and cultural activities, and exercise and health programs;

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Care coordination, including a care plan developed by the Care Coordination Team to meet the Member’s particular needs;

Home inspection, conducted the first year of membership and every second year thereafter (unless required more frequently), to determine if any functional or safety issues exist which would jeopardize the well-being of the Member;

Reimbursement of Member’s annual physical examination by the Member’s personal physician (excluding laboratory work, x-rays, EKG or testing);

Transportation to and from outpatient surgery or medical office procedures, if the Member is unable to drive;

Referrals for other services such as landscape maintenance, financial planning, and home maintenance;

Lifestyle and wellness programs, such as exercise classes, arts and crafts and wellness seminars; and

Other services deemed to be appropriate by the Care Coordination Team: o Home site services, such as skilled home care, homemaker services, and

companion services, if the Member requires assistance with one or more Activities of Daily Living;

o Emergency response system; o Delivery of up to two meals per day; o Adult day care services; o Facility-based assisted living and nursing home services at either the Community

or a similar facility approved by the Community. Other services and programs are available to Members for an additional charge, such as private transportation, catering, and other designated services. If the Membership Agreement is terminated during the first forty-eight (48) months, the Member is to receive a refund of the Membership Fee, less a four percent (4%) Administration Fee and two percent (2%) of the Membership Fee for each month (full or partial without prorating) the Membership Agreement remained in effect. If the Membership Agreement is terminated after the first forty-eight (48) months, the Member is due no refund of the Membership Fee. Any refund is due to the Member no later than 120 days after the effective date of termination, unless the Membership Agreement is terminated by the Community, in which case the refund is to be paid within sixty (60) days. In the case of a Member’s financial inability to continue to pay the Navigation by Salemtowne Monthly Fee because of reasons beyond the Member’s control, the Corporation may choose to subsidize all or part of the Navigation by Salemtowne Monthly Fee and other costs so long as this subsidy does not impair the Corporation’s ability to attain its objectives while operating on a sound financial basis. A Consultative Care Plan is available on a fee-for-service basis for individuals not accepted into the Navigation by Salemtowne program, as long as he/she is living in the same home as the Member.

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Summary of Financing Total financial requirements for the Project are assumed to approximate $42,934,000. The Corporation proposes to fund these financial requirements primarily through the issuance by the North Carolina Medical Care Commission of its Retirement Facilities First Mortgage Revenue Bonds (Salemtowne Project) Series 2015 (the “Series 2015 Bonds”), at a discount, in the amount of $42,585,000. Management has assumed the following sources and uses of funds in preparing the financial forecast based upon information provided by the Corporation’s managing underwriter, B.C. Ziegler and Company, doing business as Ziegler Capital Markets Group (the “Managing Underwriter”):

Table 8 Sources and Uses of Funds

(In Thousands) Sources of Funds: Series 2015 Bonds(1) $42,585Original Issue Discount (2) (405)Contribution (3) 680Interest Earned on Trustee Held Funds (4) 74

Total Sources of Funds $42,934

Uses of Funds: Direct construction costs (5) $31,053Project contingency (6) 553Design and engineering costs (7) 1,763Project management fees (8) 916Furniture, fixtures and equipment (9) 2,761Indirect construction costs (10) 169Legal, zoning, CON and marketing (11) 225Total Project related costs 37,440

Reserve Fund No. 1 (12) 2,331 Funded Interest (13) 2,162 Costs of issuance (14) 1,001Total Uses of Funds $42,934

Sources: Management and the Managing Underwriter

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(1) According to the Managing Underwriter, $42,585,000 of non-rated tax-exempt fixed rate Series 2015 Bonds are assumed to be issued.

(2) According to the Managing Underwriter, the Series 2015 Bonds are assumed to be issued with an original issue discount of $405,000.

(3) A contribution of approximately $680,000 is assumed to be made by the Corporation.

(4) Management and the Managing Underwriter have estimated interest in the amount of $74,000 to be earned as follows: 0.2 percent average annual rate of return on the Construction Account, a 0.20 percent average annual rate of return on the Funded Interest Account, and a 1.25 percent average annual rate of return on the Series 2015 Bonds Account of the Debt Service Reserve Fund.

(5) Construction, site work and other costs related to the construction of the Project are assumed to approximate $31,053,000, based on a guaranteed maximum price contract totaling $30,187,010 provided by the Corporation’s construction manager, Frank L. Blum Construction Company (which includes a contractor’s contingency of approximately $592,000). An additional owner held contingency of $866,000 is included in the estimate total of $31,053,000.

(6) Management has included a project contingency of approximately $553,000 as part of the overall Project costs.

(7) Design and engineering costs are assumed to approximate $1,763,000 and also include civil engineering, geotechnical and interior design. Costs are based, in part, on contractual agreements with the Corporation’s architect, CJMW Architecture.

(8) Project Management Fees approximate $916,000 paid to the development consultant, Brian Schiff & Associates LLC, and the Owner’s Representative, NEMA Management, LLC.

(9) Furniture, fixtures and equipment for the Project are assumed to approximate $2,761,000 and include furniture and equipment costs and low voltage.

(10) Indirect construction costs for the Project approximate $169,000 and include testing, surveys and stormwater permits.

(11) Costs related to obtaining the Certificate of Need, zoning, legal and marketing for the New Memory Support Units are assumed to approximate $225,000.

(12) The deposit to Reserve Fund No. 1 for the Series 2015 Bonds is assumed to approximate $2,331,000.

(13) The Managing Underwriter has estimated $2,162,000 of the Series 2015 Bonds to be used to fund interest on the Series 2015 Bonds through August 1, 2016.

(14) Costs of issuance related to the Series 2015 Bonds are assumed to approximate $1,001,000 to include the Underwriters’ discount, accounting fees, legal fees, title fees and other issuance costs associated with the issuance of the Series 2015 Bonds.

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Description of the Residency Contract In order to reserve an Independent Living Unit at the Community, a prospective resident must execute a Reservation Agreement (the “Reservation Agreement”) and place a deposit equal to ten percent (10%) of the Entrance Fee for the selected Independent Living Unit. Admittance Standards

The Corporation currently has a residence and services agreement (the “Residency Agreement”) for residents seeking to live independently at the Community. Under the terms of the Residency Agreement, a prospective resident (the “Resident”) must be at least 62 years of age at the time residency is established (in the case of double occupancy, at least one of the persons must be 62 years of age or older), meet health qualifications to live independently at the Community, have financial assets adequate to pay the Entrance Fee, and have sufficient income to meet the anticipated Monthly Fee and other personal expenses not provided under the Residency Agreement. The Resident is expected to obtain and maintain Medicare Parts A and B (or an equivalent substitute policy approved by the Corporation) and suitable supplemental medical insurance. Services and Amenities

On May 1, 2014, the Corporation introduced new fee plans. Residents who had already executed Agreements by May 1, 2014 could choose the new plan or be “grandfathered” into the older plan. Payment of the Entrance Fee and Monthly Fee entitles the Resident to occupy the selected Independent Living Unit and receive the following services and amenities:

Flexible dining plan (depending on dining allowance option chosen or required) Access to dining room and private dining facilities Access to ATM Parking Storage (based on living accommodation) Computer/internet access in the common area computer room Complimentary Wi-Fi in common areas Game rooms All utilities, except telephone and internet service Fitness center (indoor pool, whirlpool, land exercise, exercise equipment, Wii) Basic cable television service Bed and bath linen service (subject to selected residence) Scheduled housekeeping service Maintenance service Limited local medical transportation Art galleries with rotating exhibits by local artists Social, spiritual, and recreational programs Pastoral counseling On-site delivery of pharmaceuticals On-site pharmaceutical consultations

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Certain routine nursing services through the clinic Nutritional counseling Emergency nursing services 24-hour medical emergency call system, security, and fire protection Library Notary Public services

In addition to the services included in the Monthly/Daily Fee, certain services are available to Residents at an additional cost, including special transportation, extra meals, visits with the on-site physician, dental care and rehabilitation care. Entrance Fee Refundability The Corporation offers three Entrance Fee plans under the Residency Agreement. The Entrance Fee options and related amortization schedules are as follows:

Entrance Fee Option Amortization Schedule

Traditional Amortizing Plan The Traditional Amortizing Plan fully amortizes over 48 months – four percent upon initial occupancy and two percent for each month of occupancy

50% Refundable Plan (subject to availability)

The 50% Refundable Plan amortizes four percent upon initial occupancy and two percent for each month of occupancy up to 23 months. Thereafter, 50 percent of the Entrance Fee is refundable.

90% Refundable Plan (subject to availability)

The 90% Refundable Plan amortizes four percent upon initial occupancy and one percent for each month of occupancy up to six months. Thereafter, 90 percent of the Entrance Fee is refundable.

Entrance Fees are not subject to a refund at the time of the Resident’s transfer to the Health Center. Any refund due to the Resident will be made within thirty (30) days of the date the Resident’s Independent Living Unit will have been reserved by a prospective Resident and such prospective Resident shall have paid their full Entrance Fee. The Traditional Amortizing Plan is the predominant plan that is sold by the Community. The Community began offering a limited number of the 50% Refundable Plan and the 90% Refundable Plan on May 1, 2014. Independent Living Monthly Fees for the 90% Refundable Plan equal the Monthly Fees for the Traditional Amortizing Plan, and are discounted by 15 percent for the 50% Refundable Plan. Entrance Fees for the 50% Refundable Plan and the 90% Refundable Plan are offered at a 1.6x multiple above the Traditional Amortizing Plan pricing.

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Financial Assistance The Corporation reserves the right to terminate the residency of any person, including Residents, who cannot pay the full cost of the Community’s Monthly/Daily Fees and charges, and other costs in connection with such person’s stay at the Community. However, the Corporation will give careful consideration to subsidizing in whole or in part the Monthly/Daily Fees and other Community charges payable by the Resident to the Corporation so long as such subsidy can be made without impairing the ability of the Corporation to attain its objectives while operating on a sound financial basis, and as long as the Resident disposed of his or her assets only for care at the Community or related living/medical expenses. In this event, the Corporation is entitled to require the Resident to move to a smaller or less costly living accommodation. Access to the Health Center The Community also provides accommodations in the Health Center for Residents. Admission to the Health Center is restricted to persons 62 years of age or older. Residents who have paid an Entrance Fee on or after May 1, 2014 and are transferring from the Independent Living Units are to receive the following benefits:

Priority admission to the Health Center; and Twenty percent discount on direct admission room and bed monthly/daily market rate

charges for all private pay stays in the Assisted Living Units and the Nursing Care Center.

Residents who entered the Community prior to May 1, 2014 receive the following benefits:

Priority admission to the Health Center; Reduced Monthly/Daily fees for services provided in the Assisted Living Units; and Twenty-four (24) Entrance Fee grace healthcare days each fiscal year in the Nursing Care

Center (“Grace Days”) at no charge for independent living Residents who have paid an Entrance Fee and have a temporary stay. Unused Grace Days cannot be carried forward into future years. Grace Days are not available to permanent residents of the Nursing Beds. Grace Days are not available for permanent residents of the Assisted Living Units to pay for Assisted Living charges.

Residents entering directly into the Health Center are not required to pay an Entrance Fee. Persons who have not paid an Entrance Fee may be admitted to the Health Center (“Direct Admit Residents”) for short-term respite or rehabilitation stays if beds are available in excess of those needed to satisfy the needs of Residents. Residents requiring care in the Health Center will have priority access to the Health Center over Direct Admit Residents. Residents in the Assisted Living Units are to receive the following:

Three meals daily Meal service to room, if required Dining room assistance

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Assistance with bathing and grooming Wheelchair assistance Weekly housekeeping Personal laundry service Monitoring of vital signs according to physician’s order Medication delivery by a nurse 24-hour on duty LPNs and CNAs Nursing assessment Multi-disciplinary care planning

Residents in the Nursing Beds are to receive the following:

Three meals daily Meal service to room, if required Dining room assistance Assistance with bathing and grooming Daily housekeeping Personal laundry service Monitoring of vital signs according to physician’s order Medication delivery by a nurse 24-hour on duty LPNs and CNAs 24-hour skilled nursing care by RNs, CNAs, LPNs Nursing assessment Multi-disciplinary care planning

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Characteristics of the Market Area Assumptions for the future utilization of the Community were developed by Management based on analysis of the following factors that may affect the demand for the Community’s accommodations and services:

Site description and general area analysis; Defined primary market area for the Community; Demographic and socioeconomic characteristics of the defined primary market areas; Estimated age- and income-qualified households within the defined primary market areas; Description and utilization of existing and proposed comparable retirement communities,

assisted living and nursing care facilities within and near the defined primary market area; Management’s ability to market the Independent Living Units, Assisted Living Units, and

Nursing Beds; and, Penetration rates for independent living and assisted living services.

Each of the above factors and the resulting assumed utilization of the Community are described in the following sections. Site Description The Community is located at 1000 Salemtowne Drive, Winston-Salem, Forsyth County, North Carolina. The Community is located approximately six miles north of downtown Winston-Salem and approximately 37 miles west of Greensboro. General Area Analysis Highways

The Community is located approximately two miles southwest of the John M. Gold Freeway (Highway 52) which is a north/south route through Winston-Salem and connects to Interstate 40 (“I-40”) near downtown Winston-Salem. I-40 provides access to Greensboro to the east and Asheville to the west. I-40 is the third longest Interstate Highway in the United States, starting in North Carolina and ending in California. I-40 also provides access east to Interstate 77, a north/south highway connecting to Charlotte to the south and Cleveland, Ohio to the north. Public Transportation

Winston-Salem Transit Authority (“WSTA”) is the mass transit agency serving Winston-Salem and Forsyth County. WSTA offers fixed routes, half-fare programs for Medicare recipients, trans-aid/paratransit services for disabled and elderly residents, a downtown trolley, and a park & shuttle program. WSTA’s fixed route program operates 27 bus routes and two connector routes, Monday through Friday. The West End Trolley (“WET”) provides rides throughout downtown Winston-Salem, approximately every 25 minutes, Monday through Friday. In addition to serving downtown, the trolley serves WSTA’s Park & Shuttle North Lot. The Park & Shuttle program provides additional route options for downtown commuters. All of WSTA’s routes are wheelchair accessible. The closest WSTA transit stop is located at the residents’ entrance at the front of the Community.

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In addition to the services offered by WSTA, Winston-Salem offers a Greyhound bus stop approximately six miles north of the Community. Greyhound serves more than 3,800 destinations across North America. Airports

The closest airport, Smith Reynolds Airport, is located approximately five miles east of the Community. Smith Reynolds Airport is primarily used for general aviation and flight training; however, it provides a base of operations for corporate aircraft, air charter services, general aviation, and air cargo. The Winston-Salem area is served by two major airports: The Piedmont-Triad Airport (“GSO”) and the Raleigh-Durham International Airport (“RDU”). GSO is located approximately 30 miles east of the Community in the city of Greensboro and serves approximately 280 flights to approximately 15 non-stop destinations. Major airlines that fly into and out of GSO are as follows: Allegiant Air, American Eagle, Delta, Frontier Airlines, United Express and U.S. Airways. RDU, which is located approximately 99 miles east of the Community, serves nearly 400 flights, to nearly 40 non-stop destinations, every day. Major airlines that fly into and out of RDU are as follows: U.S. Airways, United, American Airlines, Delta, Frontier, JetBlue Airways, Southwest, Allegiant, CEI, and Air Canada. Hospitals

The following table identifies the closest hospital access and medical center to the Community.

Table 9 Hospitals Near the Community

Hospital Name Location

Driving Miles from the

Community Type Number of

Beds

Novant Health Medical Park Hospital Winston-Salem 27103 7.7 Short Term Acute Care 22

Novant Health Forsyth Medical Center Winston-Salem 27103 8.0 Tertiary Care 854

Wake Forest Baptist Health Winston-Salem 27157 9.4 Academic Medical

Center 828

Source: American Hospital Directory, March 2015.

Shopping/Cultural

The Community is located approximately two miles from retail shopping, restaurants, grocery, banking, and pharmacy services. Winston-Salem offers a wide variety of culture from historic sites and museums to art galleries and wineries. Winston-Salem also hosts numerous events throughout the year such as: the RiverRun International Film Festival, the NC Wine Festival, the National Black Theatre Festival, the Winston-Salem Open (tennis), the Piedmont Craftsmen’s Fair, and the Festival of Lights.

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Winston-Salem also offers a number of sport and outdoor entertainment including parks recreation facilities and golf clubs. The closest golf course to the Community is Maple Chase Golf Club, located three miles away. Other sport venues offered in Winston-Salem are as follows: Central Park, Old Town Club, Forsyth Country Club, Dan River Company, Winston-Salem State University Sports Facilities, Tanglewood Park, LJVM Coliseum, Maple Leaf Golf Club, and Hanes Park.

Winston-Salem is home to several colleges and universities including: Piedmont International University, Salem College, the University of North Carolina School of Arts, Winston-Salem State University and Wake Forest University.

Primary Market Area for Independent Living

The primary market area for senior living services is typically defined as the geographic area from which the majority of residents resided prior to moving into a senior living community. As of March 31, 2015, there were 161 Independent Living Units occupied out of the total 171 available units (94 percent occupied).

Based on an analysis of origin of Residents of the Independent Living Units, discussions with existing senior living providers in the area and experience with similar communities, Management has defined the primary market area for independent living services to be a 11-zip code area surrounding the Community, spanning approximately 14 miles from north to south and 10 miles east to west, at its longest and widest points, respectively (the “IL PMA”). The following table lists the 11 zip codes and related municipalities comprising the IL PMA and identifies the number of Residents originating from the IL PMA.

Table 10 Independent Living Resident Origin Data

Zip Code/City Number of Residents(1) Percentage of Total 27106 – Winston Salem(2) 53 33.5% 27104 – Winston Salem 22 13.9% 27103 – Winston Salem 8 5.1% 27101 – Winston Salem 6 3.8% 27127 – Winston Salem 6 3.8% 27105 – Winston Salem 5 3.2% 27045 – Rural Hall 4 2.5% 27012 – Winston Salem 3 1.9% 27107 – Winston Salem 3 1.9% 27040 – Pfafftown 1 0.7% 27110 – Winston Salem(3) 0 0.0%

Total from the IL PMA Zip Codes 111 70.3% Other North Carolina areas 22 13.9% Out of state 25 15.8%

Total 158 100.0% Source: Management

(1) Resident origin information as of March 31. 2015. Origin data for three residents was not available. (2) The Community is located in zip code 27106. (3) Zip code 27110 is the zip code used by Winston-Salem State University.

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The following map depicts the IL PMA for the Community and the existing retirement communities within the IL PMA.

Legend

The Primary Market Area

The Community

Existing Retirement Communities within the IL PMA

1 – Brookridge Retirement Community 2 – Arbor Acres 3 – Heritage Woods 4 – Homestead Hills

10-Mile Radius

27103

North Carolina

Source: Microsoft MapPoint and MapInfo

IL PMA

27110

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Population The age distribution of the population in a geographic area is a key factor in the determination of an area’s retirement housing needs. The U.S. Census Bureau has compiled demographic data based on the 2010 census figures. The Nielsen Company, a firm that specializes in the analysis of demographic data, has extrapolated the 2010 census information to derive the estimated 2015 figures and projected statistics for 2020. The following table presents population data by age cohort and the anticipated average annual percentage change between 2000 and 2015 and 2015 and 2020 in the IL PMA, the State of North Carolina (“North Carolina”) and the United States.

Table 11 Historical, Estimated and Projected Populations –

IL PMA, North Carolina and the United States

2010 (Census)

Population(1)

2015 (Estimated) Population

2020 (Projected) Population

Compounded Annual

Percentage Change

2000 – 2015

Compounded Annual

Percentage Change

2015 – 2020 IL PMA Total Population 296,176 307,958 321,802 0.8% 0.9% Age 65 to 74 Population 20,382 25,375 31,261 4.5% 4.3% Age 75 to 84 Population 13,079 13,444 15,263 0.6% 2.6% Age 85 plus Population 5,203 5,990 6,346 2.9% 1.2% Total 65 plus 38,664 44,809 52,870 3.0% 3.4% Total 75 plus 18,282 19,434 21,609 1.2% 2.1%

North Carolina Total Population 9,535,483 9,993,105 10,485,265 0.9% 1.0% Age 65 to 74 Population 697,567 883,105 1,089,636 4.8% 4.3% Age 75 to 84 Population 389,051 428,478 492,958 1.9% 2.8% Age 85 Plus Population 147,461 168,951 186,795 2.8% 2.0% Total 65 Plus 1,234,079 1,480,534 1,769,389 3.7% 3.6% Total 75 Plus 536,512 597,429 679,753 2.2% 2.6%

United States Total Population 308,745,538 319,459,991 330,689,365 0.7% 0.7% Age 65 to 74 Population 21,713,429 27,015,466 33,160,425 4.5% 4.2% Age 75 to 84 Population 13,061,122 13,767,160 15,547,374 1.1% 2.5% Age 85 Plus Population 5,493,433 6,094,345 6,447,122 2.1% 1.1% Total 65 Plus 40,267,984 46,876,971 55,514,921 3.1% 3.3% Total 75 Plus 18,554,555 19,861,505 21,994,496 1.4% 2.1% Source: The Nielsen Company

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The following table presents the percentage of total population by age group for the targeted age population in the IL PMA, North Carolina, and the United States.

Table 12 Percentage of Total Population by Age Cohort

2010 (Census) IL PMA North Carolina United States Age Groupings 65 plus 13.1% 12.9% 13.0% 75 plus 6.2% 5.6% 6.0% 85 plus 1.8% 1.5% 1.8% 2015 (Estimated) IL PMA North Carolina United States Age Groupings

65 plus 14.6% 14.8% 14.7% 75 plus 6.3% 6.0% 6.2% 85 plus 1.9% 1.7% 1.9%

2020 (Projected) IL PMA North Carolina United States Age Groupings

65 plus 16.4% 16.9% 16.7% 75 plus 6.7% 6.5% 6.7% 85 plus 2.0% 1.8% 1.9%

Source: The Nielsen Company

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Estimated Eligible Households within the IL PMA In order to qualify for residency at the Community, a prospective resident must be at least 62 years of age and demonstrate sufficient financial resources to pay the Entrance Fee, Monthly Fee and other expenses related to independent living services not provided for in the Residency Agreement. Accordingly, Management has established certain criteria to identify prospective residents who would be eligible to reside in an Independent Living Unit. Management estimates that prospective residents should have a minimum monthly income of approximately one and one-half times the Monthly Fee (including second person fees when applicable) and an asset level approximately two times the Entrance Fee (prior to payment of the Entrance Fee) required to become a resident of the Community. The average age of Independent Living Unit Residents is currently 85 years of age. For purposes of quantifying the number of income qualified households in the IL PMA, households age 75 or older are considered to be the most likely to establish residency in an Independent Living Unit. The composition of the Independent Living Unit Residents as of March 31, 2015 is described in the table below:

Table 13 Resident Composition

Age Group of Primary Residents Number of Residents(1) Percentage of Total Under 75 16 10.0% 75 and older 144 90.0% Total(1) 160(2) 100.0%

Source: Management (1) Represents the current age of Residents at the Community as of March 31, 2015. (2) Age data was not available for one Resident.

Management has considered the following two income qualification scenarios for estimating the number of income eligible households in the IL PMA:

Annual household income approximately $35,000 or more based on the Monthly Fee of the Independent Living Unit apartments at the Community ($2,302 per month) and applying the 1.5 minimum income qualification estimate; and

Annual household income approximately $50,000 or more based on the Monthly Fee of the Independent Living Unit cottages at the Community ($2,906 per month) and applying the 1.5 minimum income qualification estimate.

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The following table illustrates the 2015 estimated and the 2020 projected household income distribution for householders age 65 to 74 and 75 or over in the IL PMA.

Table 14

Income-Qualified Households for Independent Living Services within the IL PMA

2015 (Estimated) 65 – 74 75+ Total Total Households: 16,474 13,486 29,960 Household Income

Under $35,000 6,261 8,007 14,268 $35,000 and over

$35,000 – 49,000 2,743 2,138 4,881 $50,000 – 74,999 3,025 1,580 4,605 $75,000 – 99,999 2,067 896 2,963 $100,000 – 149,999 1,386 543 1,929 $150,000 plus 992 322 1,314

Total $35,000 and over 10,213 5,479 15,692 Percentage of Income-Qualified Households to Total Households – $35,000 and over 62.0% 40.6% 52.4%


2020 (Projected) 65 – 74 75+ Total Total Households: 20,162 14,910 35,072 Household Income

Under $35,000 7,410 8,657 16,067 $35,000 and over

$35,000 – 49,999 3,333 2,396 5,729 $50,000 – 74,999 3,710 1,766 5,476 $75,000 – 99,999 2,578 1,034 3,612 $100,000 – 149,999 1,810 641 2,451 $150,000 plus 1,321 416 1,737



Source: The Nielsen Company

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The following table compares the percentage of age- and income-qualified households to total households for the $35,000 and $50,000 income qualification level for age 75 and above households within the IL PMA, North Carolina, and the United States.

Table 15 Comparison of Income-Qualified Households – 2020

Age 75 and Above IL PMA North

Carolina United States

Percentage of Income-Qualified Households to Total Households – $35,000 41.9% 40.8% 43.9%

Percentage of Income-Qualified Households to Total Households – $50,000 25.9% 25.8% 28.8%

Source: Nielsen Claritas Market Area Real Estate – Update Pending

The ability of potential residents to sell their home prior to assuming occupancy at the Community may have an impact on the ability of residents to pay the required Entrance Fee. Often, Entrance Fees are paid with funds received through the sale of a prospective resident’s home. Home values fluctuate over time and vary regionally based upon economic conditions. The following table summarizes the real estate statistics for single family homes for each zip code included in the IL PMA.

Table 16 Market Area Real Estate Trends for IL PMA Zip Codes(1)

2013 2014 2015(2)

Zip Code / City Number of Sales

Average Sale Price

Average Days on Market

Number of Sales

Average Sale Price


Number of Sales

Average Sale Price


27106(3) – Winston-Salem 551 $238,119 115 585 $223,959 99 167 $246,991 111 27104 – Winston-Salem 415 $239,359 101 404 $260,521 103 137 $299,626 132 27103 – Winston-Salem 524 $139,900 106 511 $145,738 101 169 $143,159 114 27101 – Winston-Salem 203 $140,724 111 177 $144,212 89 69 $131,984 123 27127 – Winston-Salem 625 $108,103 104 506 $111,768 101 161 $128,474 116 27105 – Winston-Salem 316 $61,228 123 257 $64,830 106 105 $77,765 124 27045 – Rural Hall 93 $121,117 136 91 $128,674 167 23 $137,734 138 27012 – Clemmons 447 $227,114 103 423 $234,978 106 149 $230,599 118 27107 – Winston-Salem 507 $109,604 98 415 $124,960 102 142 $114,776 113 27040 – Pfafftown 155 $171,381 122 166 $183,899 92 59 $198,243 114

Totals/weighted averages 3,836 $160,126 108 3,535 $170,572 103 1,181 $177,789 118 Source: Triad MLS, May 2015

(1) Data was not available for zip code 27110 in Winston-Salem. (2) Data for 2015 is through May 15, 2015. (3) The Community is located in zip code 27106.

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Unemployment Trends The unemployment trends for the City of Winston-Salem, Forsyth County, North Carolina, and the United States are shown in the following table.

Table 17 Unemployment Trends

2012 2013 2014 2015(1) Winston-Salem 9.0% 7.7% 5.9% 5.3%

Forsyth County 8.7% 7.4% 5.9% 5.3%

North Carolina 9.1% 7.8% 6.1% 5.6%

United States 8.1% 7.4% 6.2% 5.6% Source: U.S. Department of Labor, Bureau of Labor Statistics Data, April 2015.

(1) Data for 2015 is through March 31, 2015. Forsyth County is supported by major employers including Wake Forest Baptist Health, Novant Health, Forsyth Medical Center and Affiliates, Winston-Salem/Forsyth County Schools, Reynolds American, Wells Fargo Bank, City of Winston-Salem, Hanesbrands Inc., BB&T, Forsyth County, and Wake Forest University. Continuing Care Regulatory Requirements

In North Carolina, CCRCs are licensed and regulated by the North Carolina Department of Insurance (the “Department”) under Chapter 58, Article 64 of the North Carolina General Statutes (the “General Statutes”) and under Title 11 of the North Carolina Administrative Code. The General Statutes define continuing care as “the furnishing to an individual other than an individual related by blood, marriage, or adoption to the person furnishing the care, of lodging together with nursing services, medical services, or other health related services, under an agreement effective for the life of the individual or for a period longer than one year.”

A CCRC is required to obtain a license from the Department prior to entering into continuing care contracts. Registration must include a disclosure statement, including financial statements and other information required by the Department, which is required to be updated each year subsequent to initial registration (the “Disclosure Statement”). The provider is also required to deliver a Disclosure Statement to prospective residents upon or prior to execution of a residence and service agreement or collection of a deposit. In addition, CCRCs are required to maintain certain minimum levels of operating reserves to provide security to residents that the community will be able to meet its contractual obligations to provide continuing care.

For purposes of determining independent living demand in this report, communities comparable to the Communities include CCRCs and communities offering independent living units and a similar service package. Independent living units may be apartments, cottages, and/or free-standing homes where residents have access to on-site amenities, which typically include a choice of dining venues, library, lounge areas, fitness facilities, banking, game room, multi-purpose room, arts and crafts area, hair salon, a chapel, and more. Services typically include one meal per resident per day, weekly or bi-weekly housekeeping, all utilities except telephone,

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scheduled transportation, activities program, emergency call system in each residence, 24-hour security, interior and exterior maintenance, maintenance of grounds, and discounted health care services in on-site assisted living and nursing care facilities. Comparable Retirement Communities

Comparable retirement communities typically include independent living providers with similar services and amenities offering health care services, such as assisted living and/or nursing care, in a multi-level setting for age restricted seniors. Independent living units may be apartments, cottages, and/or free-standing homes where residents have access to on-site amenities, which typically include a choice of dining venues, library, lounge areas, fitness facilities, banking, game room, multi-purpose room, arts and crafts area, hair salon, a chapel, and more. Services typically include a dining program or allowance, housekeeping services, most utilities except telephone, scheduled transportation, activities program, emergency call system in each residence, 24-hour security, interior and exterior maintenance, maintenance of grounds, and discounted health care services in on-site assisted living and nursing care facilities.

Management has defined comparable facilities as those facilities that: (i) include independent living services; (ii) provide one or more other levels of care such as assisted living, memory support care and/or nursing care services; (iii) offer similar services and amenities; and/or (iv) compete for similar age-and income-qualified residents.

CCRCs may provide a variety of contracts to residents. Generally, the major distinction in contract types relates to the health care benefit. The most common contract types are as follows:

Extensive or Life Care Contract (“Type A”) - Under a Type A contract, a resident typically pays an upfront entrance fee and an ongoing monthly service fee in exchange for the right to lifetime occupancy of an independent living unit with certain services and amenities. Residents of independent living who require assisted living or nursing care may transfer to the appropriate level of care and continue to pay essentially the same monthly service fee they had been paying for their residence, or upon permanent transfer, the fee may be adjusted to the weighted average of all monthly service fees.

Modified Contract (“Type B”) - Under a Type B contract, the resident also generally pays an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under a Type B contract, the CCRC typically provides assisted living or skilled nursing care to residents either (a) at a discounted rate on the per diem, e.g., 20 percent discount; (b) a certain number of days per year or per lifetime, e.g., 60 to 90 days; or, (c) a combination of the two. The Corporation offers a Type B contract.

Fee-for-Service Contract (“Type C”) - A Type C contract also generally requires an upfront entrance fee and an ongoing monthly service fee for the right to lifetime occupancy of an independent living unit with certain services and amenities. However, under the Type C contract, residents who require assisted living or nursing care do not receive any discount on assisted living or skilled nursing services.

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In addition to the three contract types described above, comparable retirement communities may also include rental communities that offer independent living housing and may also include health care services, such as assisted living or nursing care. The resident is not required to pay an entrance fee, but rather signs a lease for the independent living unit selected and pays for various additional services utilized on a monthly or per diem basis at prevailing market rates. There are four existing comparable retirement communities identified within the IL PMA and two existing retirement communities near the IL PMA. The following table profiles the Community and the comparable retirement communities located within the IL PMA. Management considers comparable communities to include independent living units as well as at least one other level of heath care such as assisted living, memory care or nursing care services. In addition, comparable communities are considered those that compete for similar age and income-qualified residents to that of the Community.

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Table 18 Comparable Retirement Communities within the IL Primary Market Area

The Community Brookridge Retirement Community Arbor Acres

Location Winston-Salem – 27106 Winston-Salem – 27106 Winston-Salem – 27104 Miles from the Community 2.4 4.5

Sponsor/Developer Moravian Home, Inc. Baptist Retirement Homes of North Carolina, Inc.

Arbor Acres United Methodist Retirement Community, Inc.

Year Opened 1972 1989 1980 Type of Contract Modified Life Care Modified Life Care Modified Life Care For Profit/Not for Profit Not-For-Profit Not-For-Profit Not-For-Profit Unit Configuration Independent Living Units (ILUs):

Studios 2 24 85 One-bedroom apartments 42 40 8 Two-bedroom apartments 54 29 36 Homes/Cottages/Villas 73 46 139 Total ILUs 171 139 268

Assisted Living Beds 46 29 AL/7 MC 72 AL/30 MC Nursing Care Beds 84 85 65 Independent Living Square Footage:

Studios 250 400 304 800 One-bedroom apartments 530 936 650 991 1,160 Two-bedroom apartments 790 1,240 900 1,200 1,217 1,982 Homes/Cottages/Villas 1,172 3,200 1,150 1,200 775 2,200

Entrance Fees: Studios $30,000 $40,561 $30,533 78,936 One-bedroom apartments $58,000 139,050 $51,200 $147,659 172,840 Two-bedroom apartments $70,000 189,520 $85,251 153,272 $181,333 285,318 Homes/Cottages/Villas $131,325 350,000 $93,947 151,768 $126,650 327,800

2nd Person Entrance Fee $7,100 15,670 $21,165 Monthly Fees:

Studios $2,400 $1,278 $2,238 2,990 One-bedroom apartments $1,596 2,420 $1,657 $2,300 2,546 Two-bedroom apartments $1,905 2,987 $2,044 – 2,573 $2,704 3,661 Homes/Cottages/Villas $2,318 3,399 $2,168 4,099

2nd Person Monthly Fee $464 632 $732 811 $847 Refund Options 0% (shown), 50% & 90% 0% (shown), 50% & 90% 0% Assisted Living Monthly Fee $4,523 – 6,000 $3,982 – 4,720 $5,380 – 8,542 Nursing Care Daily Rate $260 285 $235 – 251 $281 Occupancy Rate Independent living 92% 82% 94% Assisted living 74% 94% 95% Nursing care 96% 94% 91%

Source: Management, surveys and site visits conducted by Dixon Hughes Goodman LLP conducted through May 2015.

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Table 18 (Continued) Comparable Retirement Communities within the Primary Market Area

Heritage Woods Homestead Hills

Location Winston-Salem – 27103 Winston-Salem – 27103 Miles from the Community 8.3 9.7

Sponsor/Developer Kisco Senior Living Senior Living Communities

Year Opened 1989 1999/2013 Type of Contract Rental Fee-For-Service For Profit/Not for Profit For-Profit For-Profit Unit Configuration Independent Living Units (ILUs):

Studios 19 One-bedroom apartments 60 30 Two/Three-bedroom apartments 28 32 Homes/Cottages/Villas 82 Total ILUs 107 144

Assisted Living Beds 29 48 AL/18 MC Nursing Care Beds 48 Independent Living Square Footage:

Studios 384 – 411 649 – 900 One-bedroom apartments 576 – 891 1,178 – 1,390 Two-bedroom apartments 1,000 – 1,200 1,787 – 2,448 Homes/Cottages/Villas

Entrance Fees: Studios One-bedroom apartments $118,000 – 151,000 Two-bedroom apartments $193,000 – 220,000 Homes/Cottages/Villas $231,000 – 328,000

2nd Person Entrance Fee Monthly Fees:

Studios $1,600 – 1,700 $2,500 – 2,590 One-bedroom apartments $2,200 – 2,800 $2,650 – 2,670 Two-bedroom apartments $2,800 – 3,000 $3,020 3,280 Homes/Cottages/Villas

2nd Person Monthly Fee $650 $805 Refund Options 60% (shown) & 90% Assisted Living Monthly Fees $2,800 – 4,150 $4,540 – 4,760 Nursing Care Daily Rate $225 – 350 Occupancy Rate Independent living 85% 97% Assisted living 100% 100%

Nursing care 67% Source: Management, surveys and site visits conducted by Dixon Hughes Goodman LLP conducted through May 2015.

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Notes to Table:

The Community 1) The Project includes the construction of 100 new and replacement nursing beds and 20 new memory support

assisted living units. 2) The Community is licensed for 46 assisted living beds, currently configured in 39 units and anticipated to be

36 units by March 31, 2016. 3) The Entrance Fees and Monthly Fees shown for the Community are effective as of June 1, 2015. 4) Entrance Fees shown are for the Traditional Amortizing Plan, which is the most popular Entrance Fee plan

at the Community. 5) Second person monthly fees are $632 for the Independent Living Apartments and $464 for the Independent

Living Cottages. 6) Occupancy for the Assisted Living Units is based on the 39 assisted living unit configuration. 7) The Existing Nursing Beds offer both private and semi-private rooms. Single occupancy in a semi-private

room is available for $260 per day. Single occupancy in a private room is available for $285 per day. Brookridge Retirement Community

1) The second person entrance fee for independent living ranges from $7,100 to $15,670. 2) The monthly fee for an assisted living unit without an entrance fee is $3,982. The monthly fee for an assisted

living unit with an entrance fee is $4,720. The memory care monthly fee is $5,884. 3) Single occupancy in a semi-private room is available for $235 per day. Single occupancy in a private room

is available for $251 per day. Arbor Acres

1) The Entrance Fee and Monthly Fee pricing is effective as of January 1, 2015. 2) Arbor Acres offers a declining refundable Entrance Fee plan. 3) Arbor Acres is licensed by Department of Health and Human Services for 102 Adult Care Home beds. 4) Arbor Acres is licensed by the Department of Health and Human Services for 65 skilled nursing beds.

Arbor Acres is not a certified Medicare facility and does not participate in Medicaid. 5) There is a $1,000 non-refundable admission fee for direct admits into Arbor Acres. 6) Arbor Acres nursing facility does not accept Medicare residents.

Heritage Woods

1) Monthly fees for independent living units reflect rent only. A personalized service package of “Gold,” “Silver” or “Bronze” ranging between $250 and $450 per month is also required in independent living.

2) A non-refundable community fee of $1,500 is required upon entry. 3) The second person monthly fee in the assisted living units is $650. 4) Additional monthly fees for higher levels of care in assisted living are $1,100, $1,525, $1,960, $2,375 and

$2,775 for levels one through five respectively. Homestead Hills

1) Homestead Hills originally opened in 1999 and the memory care units opened for occupancy in 2013. The 18 memory care units filled up within two weeks of opening.

2) Homestead Hills has a new 33-unit independent living building called “The Forsyth” under construction on the campus to be available for occupancy in August 2015. Approximately half of the units have been reserved with 20 percent deposits.

3) Homestead Hills offers two entrance fee plans: a 60 percent refundable plan (as shown in the table) and a 90 percent refundable plan. Entrance fees under the 60 percent plan decrease 10 percent over four years with a minimum guaranteed refund of 60 percent. The 90 percent refundable plan entrance fees are approximately 25 percent higher than the 60 percent refundable entrance fees shown in the table. Homestead Hills also offers a rental plan but most residents choose an entrance fee plan.

4) Homestead Hills also offers a rental option for independent living apartments. Rental monthly fees for a one bedroom apartment range from $3,550 to $3,940 and for a two bedroom range from $4,360 to $4,620. Rental residents are required to pay a one-time, non-refundable community fee of $2,750.

5) The second person monthly fee in the assisted living units is $2,500. 6) The assisted living monthly fees are all-inclusive.

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The following table profiles two communities as identified by Management that are considered comparable but located outside the IL PMA. Due to their location outside the IL PMA, these communities are profiled for informational purposes only and are not included in the independent living penetration rate calculations following.

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Table 19 Comparable Retirement Communities Near the IL Primary Market Area

Bermuda Village River Landing

Location Winston-Salem – 27006 Colfax – 27235 Driving Miles from the Community 17.8 26.4

Sponsor/Developer Estate of Angell The Presbyterian Homes, Inc.

Year Opened 1983 2003 Type of Contract Rental Modified Life Care For Profit/Not for Profit For-Profit Not-For-Profit Unit Configuration Independent Living Units (ILUs):

Studios – 30 One-bedroom apartments – 100 Two/Three-bedroom apartments – 57 Homes/Cottages/Villas 250 110 Total ILUs 250 297

Assisted Living Beds 21 56

Nursing Care Beds 3 44 Independent Living Square Footage:

Studios – – One-bedroom apartments – 1,050 1,068 Two/Three-bedroom apartments – 1,143 – 1,800 Homes/Cottages/Villas 1,900 – 2,500 1,100 2,097

Entrance Fees: Studios – – One-bedroom apartments – $113,000 Two-bedroom apartments – $144,000 – 263,000 Homes/Cottages/Villas $75,000 – 430,000 $171,000 305,000

2nd Person Entrance Fee – – Monthly Fees:

Studios – – One-bedroom apartments – $2,585 Two/Three-bedroom apartments – $3,180 3,805 Homes/Cottages/Villas $1,915 – 3,459 $3,197 3,499

2nd Person Monthly Fee $374 – 400 $1,171 Refund Options – 0% Assisted Living Entrance Fee – $11,500 20,000 Monthly Fee $3,595 – 5,570 $4,212 6,670 Nursing Care Daily Rate $212 – 326 $287 Occupancy Rate Independent living 96% 95% Assisted living 95% 93% Nursing care 94% 93%

Source: Surveys and site visits conducted by Dixon Hughes Goodman LLP through May 2015

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Notes to Table:

Bermuda Village

1) Bermuda Village is planning a 12-bed expansion to their skilled nursing center which has been approved by the Department of Health and Human Services. Construction of the 23,000 square foot expansion is expected to start in Fall 2015 and be completed by October 2016. The 12 new beds are expected to be private beds housed in 450 square foot rooms.

2) Entrance fees, monthly fees and daily fee shown are effective as of January 12, 2015. 3) Bermuda Village only offers Villas and Condominiums. 4) The second person fee varies with unit model selection.

River Landing

1) River Landing requires a one-time non-refundable community fee upon move-in into independent living. 2) The second person fee is $1,171 a month. 3) River Landing’s traditional assisted living includes 14 studios and 26 one-bedroom units. The assisted living

memory care includes a 16-room memory care area.

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Planned Retirement Communities in the IL PMA Based on discussions with representatives of the local planning and permitting agencies as well as interviews with management at existing retirement communities, there is one planned independent living unit expansion at an existing retirement community and one planned retirement community located within the IL PMA. Homestead Hills is an existing comparable community located approximately 10 miles from the Community off of Burke Mill Road. Homestead Hills is constructing a new independent living building called “The Forsyth at Homestead Hills” to consist of 33 new one-, two- and three-bedroom independent living villa apartments ranging between 923 and 1,429 square feet. Approximately half of the new units have been pre-sold with 20 percent deposits. Entrance fees for the new units range between $125,000 and $400,000 under a 60 percent refundable plan. Currently, approximately half of the planned units at Homestead Hills are reserved with a 20 percent deposit. The Forsyth at Homestead Hills is anticipated to be available for occupancy in August 2015 and are included in the independent living penetration rate analysis that follows. Liberty Healthcare and Rehabilitation Services (“Liberty”) currently owns a 200-bed licensed nursing center called Liberty Commons – Springwood. Liberty is planning to build two 100-bed skilled nursing facilities: one in Winston-Salem (approximately two miles south of the Community near the intersection of Bethabara Road and Silas Creek Parkway) and one in Kernersville (near Novant Health Kernersville Medical Center approximately 20 miles southeast of the Community) by transferring the licensure of the 200-bed nursing center of Liberty Commons – Springwood. The two new 100-bed skilled nursing facilities are expected to open in Fall 2016. The facility in Winston-Salem is also expected to include independent living units, however, the number of independent living units has yet to be determined. Liberty has submitted a proposed site plan to Forsyth County and has until January 2016 to submit plans for construction. The planned independent living units at Liberty are not included in the independent living penetration rates that follow. Summary of Independent Living Units There are 658 existing independent living units at the four existing retirement communities located within the IL PMA. Including the 171 Independent Living Units at the Community and the 33 planned independent living units at Homestead Hills, the total number of existing and planned comparable independent living units within the IL PMA is 862. The following table summarizes the comparable independent living units in the IL PMA.

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Table 20 Summary of Comparable Independent Living Units within the IL PMA

Comparable Retirement Communities within the IL PMA Existing Planned Total

Entrance Fee Units

The Community 171 – 171 Brookridge Retirement Community 139 – 139 Arbor Acres 268 – 268 Homestead Hills 144 33 177

Total Entrance Fee Units 722 33 755

Rental Units

Heritage Woods 107 – 107 Total Rental Units 107 – 107 Total Existing and Planned Comparable Independent

Living Units 829 33 862

Source: Management, surveys and site visits conducted by Dixon Hughes Goodman LLP through April 2015.

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Independent Living Penetration Analysis Penetration rates are one measure of the degree to which the IL PMA is either under-served or saturated. As penetration rates increase, units may become more difficult to fill. However, higher penetration rates may not necessarily be an indication of the difficulty in achieving expected occupancy levels. Some markets may have a higher acceptance level for senior living housing options and may support higher penetration rates. Gross Market Penetration Rate – The Gross Market Penetration Rate is the percentage of age- and income-qualified households that the total market must absorb for the entire market to achieve stabilized occupancy. Market penetration is calculated by dividing the total number of existing and planned independent living units in the IL PMA by the number of age- and income-qualified households in the IL PMA. Calculations are based on demographics for the current year (2015) and projected year (2020). In the calculation, the total independent living units are adjusted to reflect assumptions about the percentage of units expected to be filled from qualified households in the IL PMA and expected occupancy. These rates should be considered in conjunction with one another and with other market factors, such as occupancy levels at existing comparable communities within and near the IL PMA, the number of proposed facilities in the IL PMA, the design of the units and community spaces at the Community, alternatives for potential residents, and the marketing plans and efforts of Management.

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The following table presents the Gross Market Penetration Rate, which represents the percentage of age- and income-qualified households in the IL PMA that the entire market will have captured when the entire market has reached stabilized occupancy, based upon demographic projections for 2015 and 2020.

Table 21 Gross Market Penetration Rate

Age 75 and Above

Income $35,000 and Above

Income $50,000 and Above

2015 2020 2015 2020

Market inventory of retirement communities:

The Community 171 171 171 171

Comparable retirement communities

Existing units within the IL PMA 658 658 658 658

Proposed units(1) – 33 – 33

Total units in the IL PMA 829 862 829 862

Percent to be filled from the IL PMA(2) 70% 70% 70% 70%

Total units to be occupied from the IL PMA 580 603 580 603

Total units to be filled at 95% occupancy (a) 551 573 551 573

Number of age- and income-qualified households (b) 5,479 6,253 3,341 3,857

Market Penetration Rate (a/b) 10.1% 9.2% 16.5% 14.9% Source: Management and Nielsen Claritas

(1) Reflects the 33 planned independent living units at Homestead Hills. (2) Based on the origin of Residents as of March 31, 2015.

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Description and Utilization of Assisted Living Adult Care Homes and Multi-Unit Assisted Housing with Services (“MAHS”) are regulated by Department of Health and Human Services (“DHHS”), under Chapter 131-D, Article 1 of the North Carolina General Statutes and Title 10A, Subchapter 13F of the North Carolina Administrative Code. The North Carolina Medical Care Commission has rulemaking authority over Adult Care Homes. According to DHHS, most assisted living facilities are licensed as Adult Care Homes. Adult Care Homes, licensed by DHHS, are defined as assisted living residences in which the housing management provides 24-hour scheduled and unscheduled personal care services to two or more residents, either directly or for scheduled needs, through formal written agreement with licensed home care or hospice agencies. DHHS defines MAHS as an assisted living residence in which hands-on personal care services and nursing services which are arranged by housing management are provided by a licensed home care or hospice agency through an individualized written care plan. Residents must not be in need of 24-hour supervision. MAHS must register with DHHS and provide a disclosure statement. For purposes of determining bed need and issuing a Certificate of Need (“CON”) for Adult Care Homes, DHHS reviews each application on a case by case basis and applies a bed need methodology to the corresponding county’s bed need. The following factors are used to determine projected bed need by county: bed-to-population ratios, reasonable levels of geographic access for the population, and beds developed as part of a CCRC. CCRCs may qualify for an exemption from the CON requirement for any new or reconfigured Adult Care Home beds by demonstrating that the proposed assisted living beds would be used exclusively to meet the needs of persons with whom the facility has continuing care contracts (or internal resident transfers through the continuum of care) and who have lived in an independent living unit of the CCRC for a period of at least 30 days. For the purpose of the report, the term “assisted living” is utilized to denote both licensed Adult Care Homes and unlicensed MAHS. Management does not consider foster homes or assisted living facilities with less than 20 beds or lower fee structures to be considered comparable to the assisted living units at the Community. The Corporation has been awarded a CON to build and operate 20 sheltered or closed assisted living memory care beds.

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Primary Market Area for Health Care Services Based on the zip code origin of the Community’s Non-Lifecare Residents that were directly admitted into assisted living or nursing from outside the Community, discussions with existing senior living providers in the area and experience with similar communities, Management has defined the primary market area for health care services to be a seven-zip code area (the “HC PMA”). The HC PMA spans approximately 20 miles from north to south at its longest point and 19 miles from east to west at its widest point. The following table illustrates the origin of current Non-Lifecare Residents at the Community in the HC PMA as of March 31, 2015.

Table 22 Assisted Living and Skilled Nursing Resident Origin Data

Zip Code – City

Number of Non-Lifecare

Assisted Living Residents

Number of Non-Lifecare

Nursing Residents

Total Number of

Non-Lifecare Residents(1)

Percentage of Non-Lifecare

Residents 27106 – Winston Salem(2) 7 20 27 24.8% 27104 – Winston Salem 2 10 12 11.0% 27103 – Winston Salem 2 8 10 9.1% 27012 – Clemmons 1 4 5 4.6% 27101 – Winston Salem 2 3 5 4.6% 27127 – Winston Salem – 5 5 4.6% 27105 – Winston Salem – 1 1 0.9%

Total from HC PMA 14 51 65 59.6% Other areas of North Carolina 4 25 29 26.6% Out of state 7 8 15 13.8%

Total Direct Admits 25 84 109 100.0% Source: Management

(1) Based on the origin of Non-Lifecare Residents as of March 31, 2015. (2) The Community is located in zip code 27106.

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Legend The HC PMA The Community Existing Assisted Living Communities within the HC PMA

1 – Brookridge Retirement Community 2 – Brookdale Reynolda Road 3 – Forest Heights 4 – Brighton Gardens of Winston-Salem 5 – Arbor Acres 6 – Heritage Woods 7 – Homestead Hills 8 – Brookdale of Winston Salem 9 – Southfork 10 – Carillon Assisted Living 11 – Trinity Elms

The following map depicts the Community and the existing assisted living facilities within the HC PMA.

HC PMA

North Carolina


7-Mile Radius

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Existing Comparable Assisted Living Facilities There are 11 comparable existing assisted living facilities within the HC PMA with a combined total of 861 assisted living and memory care beds. The following table summarizes the number of units, the percentage occupied, and current monthly fees of the comparable facilities based on surveys conducted through April 2015.

Table 23 Comparable Assisted Living Facilities within the HC PMA

Facility Name

Driving Miles from the

Community Year

Opened

Number of Assisted

Living Beds

Number of Memory

Support Beds

Square Footage

OccupancyPercentage

Assisted Living

Monthly Fees

Memory Support

Monthly Fees

The Project – – – 20 325 – – $6,293

The Community – 1972 46 – 262 – 524 74% $4,523 – 6,000 –

Brookridge Retirement Community 2.4 1983 29 7 300 – 500 95% $3,982 – 4,720 $5,884

Brookdale Reynolda Road 2.5 1999 72 – 340 – 464 96% $2,340 – 3,485 –

Forest Heights 2.9 1995 101 24 240 – 542 94% $3,300 – 4,856 $3,440 – 3,990

Brighton Gardens of Winston-Salem 2.9 1998 89 26 456 – 718 94% $3,314 – 4,469 $5,016

Arbor Acres 4.5 1980 72 30 459 – 547 95% $5,380 – 7,174 $8,542

Heritage Woods 8.3 1989 29 – 255 – 1,200 100% $2,800 – 4,150 –

Homestead Hills 9.7 1999 48 18 296 – 592 100% $4,540 – 4,760 $5,360 – 9,190

Brookdale of Winston Salem 10.1 1994 – 38 360 – 417 92% – $3,845 – 4,725

Southfork 10.4 1986 58 20 360 – 520 96% $2,550 $4,000

Carillon Assisted Living 13.0 2014 76 20 320 – 463 40% $4,800 $5,000

Trinity Elms 13.8 1999 78 26 426 – 650 100% $3,660 $4,050 – 4,410

Total Number of Units (including the Community and excluding the Project) 698 209

Weighted average occupancy (including the Community and excluding the Project and Carillion Assisted Living)

93%

Source: Management and surveys conducted by Dixon Hughes Goodman LLP through May 2015.

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Notes to Table:

The Project (1) The Project includes the construction of 20 New Memory Support Units. Certain residents of the Assisted Living Units

and Existing Nursing Beds are expected to be transferred to the New Memory Support Units upon opening of the Project.

(2) The square footage of the New Memory Support Units will be 325 square feet.

The Community (1) The Community is licensed for 46 assisted living beds, currently configured in 39 units and anticipated to be 36 units by

March 31, 2016. (2) The occupancy for the Assisted Living Units is based on the 39 beds currently in operation.

Brookridge Retirement Community

(1) The second person fee varies based on the unit selected.

Brookdale Reynolda Road (1) Additional levels of care vary based on need and range in price from $76 to $336. (2) There is no second person monthly fee.

Brighton Gardens of Winston-Salem

(1) Additional levels of care for traditional assisted living range in price from $547 to $2,402 per month. (2) Additional levels of care for memory care assisted living range in price from $1,338 to $3,134 per month. (3) Brighton Gardens of Winston-Salem offers companion suites in traditional assisted living for $2,432 per month and in

memory care assisted living for $3,134 per month. Forest Heights

(1) Forest Heights requires a one-time, non-refundable community fee of $1,500. (2) Additional levels of care range in price from $200 to $1,700 a month. (3) The second person monthly fee is $1,575.

Arbor Acres

(1) Arbor Acres added 18 memory support assisted living units to their assisted living building in 2013. (2) The second person monthly fee is $811.

Heritage Woods

(1) Heritage Woods requires a one-time, non-refundable community fee of $1,500. (2) The second person monthly fee for traditional assisted living at Heritage Woods ranges from $2,270 to $2,380

depending on the unit type selected. Homestead Hills

(1) Homestead Hills requires a one-time, non-refundable community fee equal to one month’s rent. (2) Homestead Hills offers five additional levels of care as follows: Level I is $1,100, Level II is $1,525, Level III is

$1,960, Level IV is $2,375 and Level V is $2,775. (3) The second person fee at Homestead Hills is $650 per month plus any applicable level of care fees.

Brookdale of Winston-Salem

(1) Brookdale of Winston-Salem only offers private memory care assisted living units. (2) Brookdale of Winston-Salem requires a one-time, non-refundable community fee of $2,000. (3) Additional levels of care range in price from $500 to $2,500 depending on the level of care required.

Southfork

(1) Southfork does not have a second person fee. For double occupancy, each resident is required to pay the published room rate.

Carillon Assisted Living

(1) Carillon Assisted Living does not have a second person fee. For double occupancy, each resident is required to pay the published room rate.

(2) Carillon Assisted Living opened in September 2014 and is still in its initial fill period.

Trinity Elms (1) Additional levels of care range from $250 to $550 a month. (2) The second person monthly fee is $3,222 per month.

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Planned Assisted Living Development Based on discussions with representatives of the local planning agencies and interviews with existing assisted living facilities and retirement communities, there are no assisted living units planned within the HC PMA in addition to the 20-bed assisted living memory support expansion at the Community.

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Assisted Living Demand Analysis Income characteristics have been applied to determine a range of market penetration rates for age qualified and age- and income-qualified individuals. The income qualification is determined, in part, by Management’s assumption that potential residents with lower income levels will utilize alternative sources of income from family members as well as the “spend down” or proceeds from an asset base to pay for the cost of their care. The following are two sources that contain information about the cost of assisted living care, the income and asset levels of assisted living residents and the sources that assisted living residents use to pay for their care:

The 2009 Overview of Assisted Living, a collaborative research project by the American Association of Homes and Services for the Aging (now known as LeadingAge), American Seniors Housing Association (“ASHA”), Assisted Living Foundation of America (“ALFA”), the National Center for Assisted Living (“NCAL”) and the National Investment Center (“NIC”) that includes survey data from approximately 500 assisted living communities throughout the United States and personal data from 518 residents of the surveyed communities.

“Costs and Concerns Among Residents in Seniors Housing and Care Communities: Evidence from The Residents Financial Survey,” published in April 2012 by the Center for Retirement Research at Boston College. The Residents Financial Survey was designed to measure the income and assets of individuals in freestanding independent living (“IL”), freestanding assisted living (“AL”) and communities that offer both IL and AL. Nearly two thirds of the 2,617 respondents resided in assisted living accommodations.

Table 24

Financial Resources of Assisted Living Residents 2009 Overview of Assisted Living 25th Median 75th Percentile Mean

Annual Income at Arrival $11,472 $18,972 $36,000 $27,260 Asset Value, including home equity $62,000 $205,000 $564,000 $431,020 Asset Value, excluding home equity $26,125 $125,000 $337,274 $238,924 The Residents Financial Survey Annual Income Range Freestanding AL AL in Combined IL/AL Less than $24,000 39.9% 34.2% $24,000 - $36,000 24.6% 17.8% $36,000+ 35.5% 48.0% Total Net Worth Less than $100,000 47.0% 46.4% $100,000 - $500,000 33.3% 30.2% $500,000 - $1,000,000 12.8% 12.9% $1,000,000+ 6.9% 10.5%

Source: 2009 Overview of Assisted Living and The Residents Financial Survey

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The 2009 Overview of Assisted Living also reported that between 10 and 15 percent of residents in assisted living and assisted living/memory care facilities participating in the survey relied on family to contribute to their cost of care as the primary income source and that between 15 percent and 35 percent of residents participating in the survey relied on family to contribute to their cost of care as a secondary income source. According to The Residents Financial Survey, approximately 25 percent of residents in freestanding assisted living facilities rely on contributions from family as a secondary income source and approximately 80 percent of residents who cannot afford the cost of care with using their personal income will spend down their assets to pay for their care. Based on the information above and depending on the type of market in which the assisted living services are provided, Dixon Hughes Goodman typically considers seniors age 75 and older with annual income $25,000 and higher and homeowners earning between $15,000 and $24,999 to be age- and income-qualified (“$25,000 Income Qualification”) for the purpose of calculating assisted living penetration rates. The following table presents the 2015 estimated and 2020 projected household income distribution for householders 75 and older in the HC PMA for the $25,000 Income Qualification.

Table 25 Income Eligible Households for Assisted Living Services within the HC PMA

75+ 2015 (Estimated) 2020 (Projected) Total Households: 5,773 6,368 Household Income Under $15,000 1,017 991 Renters $15,000 – $24,999 317 305 Homeowners $15,000 – $24,999 961 966 Total Under $25,000 2,295 2,262 $25,000 – $34,999 1,057 1,175 $35,000 – $49,999 938 998 $50,000 – $74,999 856 980 $75,000 – $99,999 290 395 $100,000+ 337 558 Total $25,000+ 3,478 4,106

Total Assisted Living Income Eligible Households(1)

4,439 5,072

Percentage of Assisted Living Income Eligible Households 76.9% 79.6%

Source: The Nielsen Company (1) Age and income eligible households include households (age 75 and over) with income over $25,000 and homeowners

(age 75 and over) with income between $15,000 and $24,999 annually.

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The following table compares the percentage of assisted living age- and income-qualified households (age 75 and older with annual income of $25,000 or greater and homeowners with annual incomes between $15,000 and $24,999) to total households age 75 and older within the HC PMA, North Carolina, and the United States.

Table 26 Comparison of Assisted Living Age- and Income-Qualified Households – 2015 and 2020

Percentage of Age- and Income-Qualified Households to Total Households

HC PMA North Carolina United States

Year 2015 76.9% 73.4% 72.9%

Year 2020 79.6% 74.7% 74.5% Source: The Nielsen Company Assisted Living Penetration Analysis The increased size of the private paying frail elderly market has in recent years attracted providers to develop new and creative options for caring for this population. There have been few barriers to entering this market, since existing regulations generally do not restrict or limit supply. Methodologies for projecting bed need or demand for assisted living vary. The DHHS does not have a methodology for determining the need for assisted living units.

Research studies have identified impairment levels in activities of daily living (“ADL”) such as dressing, bathing, eating, toileting, mobility and taking medications, and instrumental activities of daily living (“IADL”) such as meal preparation, home maintenance, shopping and personal finance, all of which generally are used to measure levels of functioning and estimate the care needs of a specific population. The decision by elderly persons to enter an assisted living facility to meet their need for assistance often depends on alternatives available and is somewhat more discretionary than the decision to enter a nursing care facility, according to industry research studies.

Population data and income statistics may be utilized to some extent to estimate the number of qualified households (75+) for assisted living services, yet should not be relied upon entirely as a measure of success for a facility. The amount of cross subsidization that occurs between adult caregivers (assumed to be those households aged 45 to 64 earning in excess of $75,000 annually) and their relatives may provide the financial means for a non-income-qualified senior to afford this level of care. Additionally, non-income-qualified seniors may have an asset base that would provide the financial means to afford this level of care.

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The following table estimates the number of age- and income-qualified individuals living alone and requiring assistance with ADLs in the HC PMA. Estimates of the percentage of households requiring assistance and the percentage living alone are based on the 2010 Census.

Table 27 Estimated Number of Age 75+ Assisted Living Eligible Individuals in the HC PMA

Years 2015, 2017 and 2020 2015 2017 2020 Estimated Age–Eligible Households(1)(2) 5,773 6,011 6,368

Estimated Age– and Income–Qualified Households(1)(3) 4,439 4,692 5,072

Percentage Requiring Assistance(4) 22.3% 22.3% 22.3%

Percentage Living Alone(5) 51.7% 51.7% 51.7%

Estimated Number of Age–Eligible Individuals(1)(2) 666 693 734

Estimated Number of Age– and Income–Qualified Individuals (1)(3) 512 541 585

Source: The Nielsen Company (1) Based on 2015 estimated and 2020 projected population statistics as provided by The Nielsen Company. (2) Age eligible includes age 75 and over. (3) $25,000 Income Qualification includes households with annual incomes of $25,000 and over and homeowners with

income between $15,000 and $24,999 annually. (4) Percentage requiring assistance is a weighted average of the percentage of the population requiring assistance with

activities of daily living as determined by the U.S. Census Bureau (Source: U.S. Census Bureau, Americans with Disabilities: 2010. p.5, Washington, DC, July 2012) and the age- and income-qualified households within the HC PMA.

(5) Based on The Nielsen Company demographic estimates.

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Assisted Living Project Penetration Rate The Project Penetration Rate is the percentage of estimated age- and income-qualified households within the HC PMA that need to move into an assisted living-based Memory Support Unit of the Project in order for the Assisted Living Units and the New Memory Support Units to achieve expected occupancy levels. The following table presents Project Penetration Rates within the HC PMA for the New Memory Support Units which are anticipated to be available for occupancy in June 2017.

Table 28 Assisted Living Project Penetration Rate – 2017

Age-Qualified

Individuals

$25,000 Income

Qualification Number of Qualified Individuals 693 541 Number of Individuals in the Assisted Living Beds at the Community(1) 26 26 Number of Individuals in Existing Comparable Beds(2) 481 481

Total Qualified Individuals (b) 1,200 1,048 Number of Memory Support Beds at the Project(3)(a) 11 11 Project Penetration Rates for the HC PMA (a/b) 0.9% 1.1% Source: Management and The Nielsen Company

(1) Reflects 46 assisted living beds at the Community, assuming 60 percent (28 beds) originate from the HC PMA and assuming 93 percent occupancy (26 beds).

(2) Reflects 861 existing assisted living beds in the HC PMA (excluding the assisted living beds at the Community) assuming that approximately 60 percent (517 beds) have originated from the HC PMA and an assumed occupancy rate of 93 percent (481 beds).

(3) Reflects the 20 new memory support beds assuming 60 percent (12 beds) originate from the HC PMA and assuming 93 percent occupancy (11 beds).

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Assisted Living Market Penetration Rate The assisted living market penetration rate is presented as the percentage of age- and income- qualified individuals that the total market has absorbed or must absorb for the entire market to achieve stabilized occupancy. The assisted living market penetration rate is calculated by dividing the total number of assisted living beds within the HC PMA by the total number of age- and income-qualified individuals residing within the HC PMA. The following table presents market penetration rates for assisted living services.

Source: Management and The Nielsen Company (1) Reflects 46 assisted living beds at the Community, assuming 60 percent (28 beds) originate from the HC PMA and

assuming 93 percent occupancy (26 beds). (2) Reflects 861 existing assisted living beds in the HC PMA (excluding the assisted living beds at the Community)

assuming that approximately 60 percent (517 beds) have originated from the HC PMA and an assumed occupancy rate of 93 percent (481 beds).

(3) Reflects the 20 New Memory Support Units assuming 60 percent (12 units) originate from the HC PMA and assuming 93 percent occupancy (11 units).

Table 29 Assisted Living Market Penetration Rates

Age-Qualified Individuals

$25,000 Income Qualification

2015 2020 2015 2020

Number of Qualified Individuals 666 734 512 585 Number of Individuals in the Assisted Living Beds at the Community (1) 26 26 26 26 Number of Individuals in Existing Comparable Beds2) 481 481 481 481

Total Qualified Individuals (b) 1,173 1,241 1,019 1,092 Number of Individuals in the Assisted Living Beds at the Community (1) 26 26 26 26 Number of Individuals in Existing Comparable Beds(2) 481 481 481 481 Net Number of Planned Memory Support Beds at the Project(3) – 11 – 11 Number of Other Planned Beds in the HC PMA(4) – – – –

Total Beds, Including the Community (a) 507 518 507 518 Market Penetration Rate for the HC PMA (a/b) 43.2% 41.7% 49.8% 47.4%

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Description of Nursing Care DHHS licenses and regulates skilled nursing facilities. Nursing facilities are defined under the North Carolina Nursing Home Licensure Act (Part 1 of Article 6, Chapter 131E of the North Carolina General Statutes) (the “North Carolina Nursing Home Licensure Act”) and Title 10 of the North Carolina Administrative Code as facilities that provide nursing or convalescent care for three or more persons, unrelated to the licensee. According to the North Carolina Nursing Home Licensure Act, a nursing home provides care for persons who have remedial ailments or other ailments for which medical and nursing care are required, but who are not sick enough to require general hospital care. There is currently a CON requirement for new nursing beds under the State Medical Facilities Plan. CCRCs may qualify for an exemption from the CON requirements for any new nursing beds that would be used exclusively to meet the needs of persons with whom the facility has continuing care contracts under the sheltered bed policy. The Corporation currently has a CON to operate 84 skilled nursing beds. The Corporation has been awarded a CON to build and operate 16 additional sheltered skilled nursing beds.

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Legend

The HC PMA

The Community and the Project

Existing Skilled Nursing Facilities within the HC PMA

1 – Brian Center Health & Retirement 2 – Liberty Commons Nursing & Rehab Center of Springwood 3 – Brookridge Retirement Community 4 – Oak Forest Health & Rehabilitation 5 – Arbor Acres 6 – Winston Salem Nursing & Rehabilitation 7 – Trinity Glen 8 – The Oaks 9 – Silas Creek Rehabilitation Center 10 – Homestead Hills

The following map depicts the Community and the 10 existing skilled nursing facilities located within the HC PMA.

7-Mile Radius

North Carolina


HC PMA

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Comparable Skilled Nursing Facilities The following table identifies the Community and the 10 skilled nursing facilities located within the HC PMA and summarizes the number of units, the percentage occupied and lowest daily rate based on surveys conducted through April 2015.

(1) The Project would be a replacement of the Community’s 84 skilled beds in the Nursing Care Center for a net addition of 16 skilled nursing beds.

(2) Liberty Commons – Springwood is licensed for 200 skilled nursing beds and is planning on transferring the licensure into two 100-bed nursing facilities in Winston-Salem and Kernersville.

Table 30 Profile of Competitive Nursing Facilities within the HC PMA

Driving Miles from

the Community

Year Opened

Number of

Beds(1) Private

Beds

Semi-Private

Beds Current

Occupancy

Daily Rates

Private Semi-

Private The Project(1) – – 100 100 – – $296 –

The Community – 1972 84 74 10 96% $285 $260

Brian Center Health & Retirement 0.2 1986 40 – 40 85% – $229

Liberty Commons - Springwood(2) 1.7 1955 127 25 102 94% $230 $210

Brookridge Retirement Community 2.4 1989 85 5 80 94% $251 $235

Arbor Acres 4.5 1995 65 65 – 91% $281 –

Oak Forest Health & Rehabilitation 4.5 2002 170 70 100 93% $238 $226

Winston Salem Nursing & Rehabilitation 6.4 1990 230 25 205 70% $235 $225

Silas Creek Rehabilitation Center 7.6 1998 99 32 67 100% $264 $234

Trinity Glen 8.0 2012 217 87 130 100% $261 $248

Liberty Commons - The Oaks 8.2 1986 127 25 102 95% $240 $216

Homestead Hills 9.7 2013 48 24 24 67% $350 $225

Total Beds/Average Occupancy (excluding the Project) 1,292 90%

Source: Management, surveys and AHCA Nursing Guide through May 2015.

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Planned Nursing Care Developments Based on discussions with representatives of the local planning agencies and interviews with existing assisted living facilities and retirement communities, there are two skilled nursing care developments located within the HC PMA, one skilled nursing expansion at an existing community within the HC PMA and one skilled nursing expansion at an existing community located outside the HC PMA. Liberty Healthcare and Rehabilitation Services (“Liberty”) currently owns a 200-bed licensed nursing center called Liberty Commons – Springwood and the 127-bed nursing center called Liberty Commons – The Oaks. Liberty is planning to build two 100-bed skilled nursing facilities in Winston-Salem (approximately two miles south of the Community near the intersection of Bethabara Road and Silas Creek Parkway) and in Kernersville (near Novant Health Kernersville Medical Center approximately 20 miles southeast of the Community) by transferring the licensure of the 200-bed nursing center of Liberty Commons – Springwood. The two new 100-bed skilled nursing facilities are expected to open in Fall 2016. Arbor Acres is an existing community located approximately five miles southeast of the Community within the HC PMA. As part of a planned renovation of the skilled nursing building, Arbor Acres is planning to add 18 skilled nursing beds in order to provide all private rooms with private baths. Upon completion of the expansion, Arbor Acres will have 83 private skilled nursing beds on their campus. This renovation began in late 2014 and is expected to be complete by summer 2016. Bermuda Village is an existing community located approximately 18 miles from the Community, outside the HC PMA. Bermuda Village is proposing a 12-bed skilled nursing expansion with the construction of a 15,000-square-foot addition to its existing health center that currently consists of 21 assisted living beds and 3 skilled nursing beds. The 12 new skilled beds are anticipated to be approximately 450 square feet private room accommodations. The proposed additions to Bermuda Village is estimated to begin in September 2015.

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Summary of Significant Accounting Policies (a) Basis of Accounting

The Corporation maintains its accounting and financial records according to the accrual basis of accounting.

(b) Cash and Cash Equivalents Cash and cash equivalents, excluding those classified as investments and assets whose use is limited, include certain investments in highly liquid instruments, including short-term debt securities and money market funds with original maturities of three months or less when purchased.

(c) Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value in the balance sheet. The fair values of investments are determined based upon quoted market prices. Investment income is included in unrestricted investment income and changes in temporarily restricted and permanently restricted net assets. Management has not included any unrealized gains or losses on investments within its forecast.

(d) Assets Limited as to Use Assets limited as to use by Board designation include amounts set aside for future capital expenditures, debt service obligations, and general reserves. The Board also has set aside an amount to meet the operating reserve requirements of N. C. General Statute Chapter 58, Article 64. Assets limited as to use under bond indenture agreement consist of the proceeds of borrowing available to pay accrued interest as well as funds set aside for debt service, issuance, and principal fund reserves.

North Carolina General Statute § 58-64-33 requires CCRC’s to maintain an operating reserve (the “Statutory Operating Reserve”) equal to 50 percent of the total operating costs in a given year, or 25 percent of such total operating costs if occupancy as of a certain date exceeds 90 percent of the independent and assisted living unit capacity. The Statutory Operating Reserve shall only be released upon the submittal of a detailed request and must be approved by the Department. This law provides security to residents that the Community is able to meet its contractual obligations to provide continuing care. Management’s forecast shows sufficient cash and investment balances to comply with the Statutory Operating Reserve requirement throughout the forecast period.

(e) Property and Equipment Property and equipment is stated at cost less accumulated depreciation. Contributed property is recorded at the estimated fair value at the date of receipt. Depreciation is computed under the straight-line method and is based on estimated useful lives of 40 years for buildings, 8 to 10 years for principal equipment, 5 years for minor equipment and 5 years for vehicles. The cost of maintenance and repairs is expensed as incurred.

(f) Deferred Financing Costs and Original Issue Premium/Discount Costs associated with the issuance of the related financing are assumed to be capitalized and amortized over the expected life of the bonds using the effective interest method.

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Management has implemented ASU No. 2015-03 “Interest – Imputation of Interest” and simplified the presentation of debt issuance costs. The Corporation previously reported deferred issuance costs as an asset on the balance sheet. Under the new Standard, the debt issuance costs are netted against the related debt on the balance sheet and the amortization is included in interest expense on the statement of operations.

(g) Obligation to Provide Future Services The Community enters into continuing care contracts with residents. A continuing care contract is an agreement between a resident and the Community specifying the services and facilities to be provided over the resident’s remaining life. Under each contract, the Community has the ability to increase fees as deemed necessary. As of the end of each year, the Community calculates the present value of the estimated net cost of future services to be provided to current residents, including the cost of facilities, and compares the amount with the balance of deferred revenue from advance fees at that date. If the present value of the net cost of future services and use of facilities exceeds the balance of deferred revenue from advance fees, a liability (obligation to provide future services) is recorded. Management has calculated that the value will not exceed the balance of deferred entrance fees; therefore, no liability for the obligation to provide future services is required to be recorded for the forecast period.

(h) Income Taxes The Community is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, the accompanying forecasted financial statements do not reflect a provision or liability for federal and state income taxes.

(i) Deferred Revenue from Entrance Fees Fees paid by a resident upon entering into a continuing care contract, net of the portion thereof which is refundable to the resident, are recorded as deferred revenue and amortized into net resident services revenue using the straight-line method over the estimated remaining life expectancy of the resident, adjusted on an annual basis.

(j) Net Resident Service Revenue Net resident services revenue represents the estimated net realizable amounts from residents, third-party payors, and others for services rendered.

(k) Benevolent Assistance The Community has a policy of providing benevolent assistance to Residents who are unable to pay. Such residents are identified based on financial information obtained from the resident and subsequent review and analysis. The Community maintains certain temporarily restricted net assets, as well as earnings from permanently restricted net assets to fund the care of residents in financial need. Management has forecasted benevolent assistance based on historical experience at the Community.

(l) Temporarily and Permanently Restricted Net Assets Temporarily restricted assets are those whose use by the Community has been limited by donors to a specific time period or purpose. Permanently restricted assets have been restricted by donors to be maintained by the Community in perpetuity.

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Summary of Revenue and Entrance Fee Assumptions Independent Living Revenue Independent living service revenue is based upon charges for services provided to Residents of the Independent Living Units. Resident service revenue for Independent Living Units is based upon the assumed occupancy and the Monthly Fee of the respective unit. Management assumes that Monthly Fees for Independent Living Units increase 3.0 percent annually during the forecast period. Assumed Independent Living Unit Utilization The Independent Living Apartments and the Independent Living Cottages are assumed to achieve and maintain an overall 95.9 percent occupancy level during the forecast period. The following table summarizes the forecasted utilization of the Independent Living Apartments and the Independent Living Cottages.

Table 31 Utilization of the Independent Living Units

Years ended March 31, Independent Living Apartments Independent Living Cottages Total ILU (1)

Occupied Available % Occupied Occupied Available % Occupied % Occupied

Historical:

2013 86.0 102.0 84.3% 59.0 73.0 80.8% 82.9%

2014 84.0 99.0 84.8% 60.0 73.0 82.2% 83.7%

2015 89.0 98.0 90.8% 64.0 73.0 87.7% 89.5%

Forecasted:

2016 (2) 94.0 98.0 95.9% 70.0 73.0 95.9% 95.9%

2017 94.0 98.0 95.9% 70.0 73.0 95.9% 95.9%

2018 94.0 98.0 95.9% 70.0 73.0 95.9% 95.9%

2019 94.0 98.0 95.9% 70.0 73.0 95.9% 95.9%

2020 94.0 98.0 95.9% 70.0 73.0 95.9% 95.9% Source: Management

(1) One Independent Living Apartment and one Independent Living Cottage are currently offered as a rental contract. (2) Occupancy in the Independent Living Apartments and the Independent Living Cottages was 89 percent and 97

percent as of July 13, 2015, respectively.

The assumed number of Independent Living Units becoming available due to resident turnover, the double occupancy rate, the number of annual resident Entrance Fee refunds, and the movement of Residents into the Health Center are provided by CCRC Actuaries (the “Actuary”). The double occupancy rate for the Independent Living Units is assumed to approximate 21 percent of the occupied units in 2016 and decrease to 18.4 percent in 2020, as provided by Management and the Actuary.

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Assumed Independent Living Turnover

The assumed turnover for the Independent Living Units due to death, withdrawal or transfer to assisted living, memory support, or nursing accommodations, and double occupancy of the Independent Living Units has been provided by the Actuary. Entrance Fee and Membership Fee Receipts and Refunds

Refunds of Entrance Fees are generated upon termination of the Residency Agreement and withdrawal from the Community, subject to the re-occupancy of the vacated Independent Living Units. Entrance Fees may be generated from Independent Living Units turning over without a corresponding refund because the Resident has not withdrawn from the Community, but has permanently transferred to the Health Center. The assumed number and amount of refunds for the Independent Living Units is provided by the Actuary.

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The following table presents the forecasted attrition Entrance Fees received and the total Entrance Fee refunds.

Table 32 Entrance Fee and Membership Fee Receipts and Refunds

(In Thousands) Fiscal Year Ending March 31, 2016 2017 2018 2019 2020

Fees Received

Membership Fees for Navigation by Salemtowne(1)

Number of Membership Fees received 18.0 18.0 18.0 18.0 18.0

Membership Fees received $463 $477 $491 $506 $521

CCRC Entrance Fees

Turnover:

Number of Entrance Fees received 23.1 23.1 23.0 23.0 23.0

Entrance Fees received $4,356 $4,488 $4,604 $4,744 $4,897

Total Fees Received $ 4,819 $ 4,965 $ 5,095 $ 5,250 $5,418

Fees Refunded

Navigation by Salemtowne Program - Refunds (36) (36) (36) (36) (36)

CCRC Entrance Fees - Refunds (242) (301) (373) (456) (549)

Total Fees Refunded $ (278) $ (337) $ (409) $ (492) $ (585)

Total Entrance Fees and Membership Fees Received, Net of Refunds $ 4,541 $ 4,628 $ 4,686 $ 4,758 $ 4,833

Source: Management and the Actuary (1) The Navigation by Salemtowne Program Membership Fee includes first and second person entrance fees received. Entrance Fees for the Independent Living Units are assumed to increase 3.0 percent annually during the forecast period. Membership Fees for the Navigation by Salemtowne program are assumed to increase 3.0 percent annually.

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Assisted Living Revenue Monthly and Daily Fees are generated from assisted living services provided to Residents transferring from the Independent Living Units as well as Direct Admit Residents. Assisted Living Monthly and Daily Fees are assumed to increase 3.0 percent annually during the forecast period. Assumed Assisted Living Center Utilization The Community is currently licensed for 46 assisted living beds. In order to meet the needs of assisted living residents desiring more space, Management began joining two adjacent rooms to create larger suites. Suites may accommodate singles, couples, or be reconfigured for two unrelated residents. As of May 1, 2015, the Assisted Living Units were composed of 32 rooms and 7 larger suites, for a total of 39 units (with 46 licensed beds). Management anticipates that there will be 10 suites and 26 rooms by the end of Fiscal Year 2016, for a total of 36 units with 46 licensed beds. The Community’s Assisted Living Units are assumed to maintain an 86.1 percent average occupancy throughout the forecast. The following table summarizes the historical and forecasted utilization of the Assisted Living Units.

Table 33 Utilization of the Assisted Living Units

Average Units Occupied

Years ended March 31,

Direct Admits Internal Transfers Total Total Units Available

Average Occupancy

Historical:

2013 24.3 18.0 (1) 42.3 46.0 92.0%

2014 22.6 20.0 (1) 42.6 46.0 92.6%

2015 24.0 14.0 (1) 38.0 46.0 82.6%

Forecasted:

2016 (2) 13.6 17.4 31.0 36.0 (3) 86.1%

2017 13.6 17.4 31.0 36.0 86.1%

2018 (4) 22.2 8.8 31.0 36.0 86.1%

2019 22.2 8.8 31.0 36.0 86.1%

2020 22.1 8.9 31.0 36.0 86.1% Source: Management

(1) Includes assisted living suites (two in 2013, four in 2014, and three in 2015) (2) Actual occupancy in the Assisted Living Units was 83 percent as of July 13, 2015. (3) During Fiscal Year 2016, 20 assisted living rooms are to be joined to result in 10 assisted living suites. (4) Existing contract residents in the Assisted Living Units will transfer to the New Memory Support Units upon opening.

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Memory Support Revenue Monthly and Daily Fees are generated from memory support services provided to Residents transferring from the Independent Living Units as well as Direct Admit Residents. Memory support Monthly and Daily Fees are assumed to increase 3.0 annually during the forecast period. Upon availability in June 2017, the New Memory Support Units are assumed to achieve and maintain 95.0 percent occupancy by December 2017 and remain at that level throughout the remainder of the forecast period. The New Memory Support Units are assumed to be occupied by internal transfers during the forecast period. The following table summarizes the assumed utilization of the New Memory Support Units:

Table 34

Utilization of the New Memory Support Units

Years Ended March 31, Average Units

Occupied (1) Average Units

Available Average

Occupancy

Forecasted

2016 - - 0.0%

2017 - - 0.0%

2018(2) 12.4 16.7 74.3%

2019 19.0 20.0 95.0%

2020 19.0 20.0 95.0%

Source: Management and the Actuary (1) The New Memory Support Units are assumed to fill over a 7-month period at an average of approximately 2.7 units per

month. (2) The Project is anticipated to include the 20 New Memory Support Units available for occupancy in June 2017.

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The following table summarizes the move-in assumptions for the New Memory Support Units during the forecast period through stabilized occupancy.

Table 35 Fill-Up Schedule – New Memory Support Units

Fiscal Year/Month Internal

Transfers New Residents Cumulative Occupied

Cumulative Occupancy(1)

2018

June 2017 10.0 - 10.0 50.0% July 2017 1.5 - 11.5 57.5% August 2017 1.5 - 13.0 65.0%

September 2017 1.5 - 14.5 72.5% October 2017 1.5 - 16.0 80.0% November 2017 1.5 - 17.5 87.5% December 2017 1.5 - 19.0 95.0%

Total 19.0 - 95.0% Source: Management (1) Cumulative occupancy based on 20 New Memory Support Units.

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Nursing Revenue Skilled nursing revenue is based upon charges for services provided to Residents transferring from the Independent Living Units, Assisted Living Units, and New Memory Support Units. All Nursing Beds are certified for Medicare, and 20 are also certified for Medicaid. Management assumes that the Daily Fees increase annually throughout the forecast period as follows: 3.0 percent for private pay, 1.0 percent for Medicare and 0 percent for Medicaid. Additionally, private pay rates will increase an additional 2.0 percent in 2018 and 2019 (for a total increase of 5.0 percent) for new residents entering the Replacement Nursing Beds. Assumed Nursing Bed Utilization The Community’s Existing Nursing Beds are assumed to maintain a 98.0 percent average occupancy until the Replacement Nursing Beds open. Upon opening of the Replacement Nursing Beds, approximately 72 residents of the Existing Nursing Beds are expected to be transferred to the Replacement Nursing Beds. The Replacement Nursing Beds are assumed to achieve and maintain 95.0 percent occupancy by December 2017 and remain at that level throughout the forecast period. The following table summarizes the historical and forecasted utilization of the Nursing Beds.

Table 36 Utilization of the Nursing Beds


Average Units

Occupied-Direct Admit

Average Units Occupied-Contract Residents

Average Units

Occupied-Medicaid

Average Units

Occupied-Medicare

Average Units

Occupied

Total Average

Units Available

Average Occupancy

Historical:

2013 39.4 29.0 10.0 4.3 82.7 84.0 98.4%

2014 22.5 41.0 13.1 4.7 81.3 84.0 96.8%

2015 20.2 41.0 13.0 6.9 81.1 84.0 96.5%

Forecasted:

2016 (1) 26.9 35.4 10.0 10.0 82.3 84.0 98.0%

2017 22.3 35.0 10.0 15.0 82.3 84.0 98.0%

2018 (2)(3) 9.5 30.9 11.0 34.3 85.7 97.3 88.1%

2019 12.3 24.0 11.0 47.7 95.0 100.0 95.0%

2020 12.5 23.8 11.0 47.7 95.0 100.0 95.0% Source: Management (1) Occupancy of the Existing Nursing Beds was 92 percent as of July 13, 2015. (2) Certain existing contract residents in the Nursing Beds will transfer to the New Memory Support Units upon opening. (3) The Replacement Nursing Beds are forecasted to be available for occupancy as of June 2017.

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The following table summarizes the move-in assumptions for the Replacement Nursing Beds during the forecast period through stabilized occupancy.

Table 37 Fill-Up Schedule – Replacement Nursing Beds

Fiscal Year/Month Internal

Transfers New Residents Cumulative Occupied

Cumulative Occupancy(1)

2018

June 2017 72.3 - 72.3 72.3% July 2017 - 3.8 76.1 76.1% August 2017 - 3.8 79.9 79.9%

September 2017 - 3.8 83.7 83.7% October 2017 - 3.8 87.5 87.5% November 2017 - 3.8 91.3 91.3% December 2017 - 3.7 95.0 95.0%

Total 72.3 22.7 95.0% Source: Management (1) Cumulative occupancy based on 100 Replacement Nursing Beds

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Assumed Navigation by Salemtowne Program Utilization Management began accepting Members into the Navigation by Salemtowne program in fiscal year 2015. The following table summarizes the forecasted utilization of the Navigation by Salemtowne program:

Table 38 Navigation by Salemtowne Utilization


New Members (net)

Total Members at March 31,

Average Number of Members

Historical:

2015 12.0 12.0 6.0

Forecasted:

2016(1) 18.0 30.0 21.0

2017 18.0 48.0 39.0

2018 18.0 66.0 57.0

2019 18.0 84.0 75.0

2020 18.0 102.0 93.0 Source: Management (1) Membership of the Navigation by Salemtowne Program was 10.0 members as of April 12, 2015.

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Earned Entrance Fees Earned Entrance Fees are based on the non-refundable portion of the Entrance Fees received each year amortized over the life expectancy of each Resident in the Independent Living Units. In addition, the refundable portion of the Entrance Fees received is assumed to be recorded as a liability until such time as the agreement is terminated and payment is made. Entrance Fees for the Independent Living Units are to increase 3.0 percent annually. Investment Income Management forecasts an assumed average annual rate of return of 1.0 percent in Fiscal Year 2016 increasing to 4.0 percent in Fiscal Year 2020 on the Corporation’s cash and investment account. Based on information provided by the Underwriter, Management has assumed a 0.2 percent average annual rate of return on the Construction Account, a 0.20 percent average annual rate of return on the Funded Interest Account, and a 1.25 percent average annual rate of return on the Series 2015 Bond Account of the Debt Service Reserve Fund. Other Income Other revenue consists of revenues from additional resident meals and snacks, guest meals, guest apartment rentals, barber and beauty fees, and other miscellaneous sources. These revenues are forecasted by Management to increase 3.0 percent annually throughout the forecast period. Summary of Expense Assumptions Operating expenses are estimated by Management based upon the historical experience of the Corporation. Staff salaries and wages are forecasted by Management based on its historical experience and prevailing local salary and wage rates. Salary and wage costs are assumed to increase 3.0 percent annually throughout the forecast period. The cost of employee fringe benefits, consisting primarily of payroll taxes, health insurance and other costs are assumed to approximate 25 percent of salaries and wages throughout the forecast.

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The following table summarizes the staffing levels during the forecast period for all departments as provided by Management.

Source: Management

Other non-salary operating expenses are assumed to include ongoing marketing costs, raw food costs, utilities, supplies, maintenance, building and general liability insurance, legal and accounting fees, and other miscellaneous expenses. The cost of these non-salary operating expenses is assumed by Management to increase 3.0 percent annually throughout the forecast period. Assets Limited as to Use The following funds and accounts are assumed to be held in association with the Series 2006 Bonds (defined hereinafter) and, upon issuance, the Series 2015 Bonds:

Debt Service Reserve Fund – 2006 Account has been funded with proceeds received from the issuance of the Series 2006 Bonds.

Debt Service Reserve Fund – 2015 Account is assumed to be funded with the proceeds to be received upon closing of the Series 2015 Bonds.

Construction Fund is assumed to be gross funded at the closing of the Series 2015 Bonds to be used to pay for construction and related costs for the Project.

Funded Interest Account of the Construction Fund, funded from the Series 2015 Bonds, to be used to fund interest on the Series 2015 Bonds through August 1, 2016.

Bond Fund, which contains the bond principal and interest payments to be used for payment of debt service on the Series 2015 Bonds.

Table 39 Schedule of Staffing Levels (FTEs) – Fiscal Year 2020

Department Existing Project TotalHealth Center 83.5 9.0 92.5 Administration & General 25.6 3.4 29.0 Plant, Maintenance and Security 17.7 4.6 22.3 Food Services 51.7 4.1 55.8 Navigation by Salemtowne 3.7 - 3.7 Environmental Services 22.3 1.5 23.8 Assisted Living 15.8 8.0 23.8 Other Resident Services 9.2 2.5 11.7 Total FTE’s 229.5 33.1 262.6

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In addition, the Corporation maintains the following funds and accounts based on restrictions of the Board, outside donors, or other legal or regulatory requirements and include the following:

Board Designated Funds – The Board has designated certain amounts to be held for future financial assistance to residents.

Restricted Statutory Operating Reserve – The Community is required to maintain a statutory operating reserve. The combined occupancy in the Independent Living Units, the Assisted Living Units, and the New Memory Support Units is assumed to be greater than 90 percent throughout the forecast period.

Property and Equipment and Depreciation Expense

The Corporation is assumed to incur routine capital additions during the forecast period that will be capitalized as property and equipment. Depreciation expense is computed based on the straight-line method for buildings and equipment over the estimated average useful lives of the related assets. The Corporation’s property and equipment costs, net of accumulated depreciation, during the forecast period are summarized in the table below.

Table 40 Schedule of Property and Equipment

(In Thousands)

Years Ending March 31, 2016 2017 2018 2019 2020 Property and equipment, net beginning balance $75,453 $97,143 $118,660 $120,562 $122,153 Capital additions 17,320 17,791 - - - Capitalized interest, net 1,370 2,226 357 - - Routine capital additions 3,000 1,500 1,545 1,591 1,639 Property and equipment, gross $97,143 $118,660 $120,562 $122,153 123,792 Accumulated depreciation, net (34,706) (37,491) (41,460) (45,794) (50,289) Property and equipment, net Ending Balance $62,437 $81,169 $79,102 $76,359 $73,503

Source: Management

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Long-Term Debt and Interest Expense Series 2006 Bonds

In November 2006 the Corporation entered into a loan agreement with the North Carolina Medical Care Commission (“NCMCC”) pursuant to which the NCMCC loaned the Corporation the proceeds of its $35,225,000 Health Care Facilities First Mortgage Revenue Refunding Bonds (Salemtowne) Series 2006 (the “Series 2006 Bonds”) for purposes of refinancing previously existing debt. As of March 31, 2015, approximately $27,970,000 of the Series 2006 Bonds remained outstanding. The Series 2006 Bonds are comprised of non-rated, tax-exempt, fixed rate, serial and term bonds with coupon rates ranging from 4.20 percent to 5.10 percent per annum. Interest on the Series 2006 Bonds is due on April 1 and October 1 of each year the Series 2006 Bonds are outstanding. Principal on the Series 2006 Bonds is paid annually on October 1 with a final maturity on October 1, 2030. Series 2015 Bonds The Community intends to use the proceeds from the Series 2015 Bonds to finance construction and other costs related to the Project. The Series 2015 Bonds are assumed to be $42,585,000 non-rated, tax-exempt, fixed rate, term bonds issued by the North Carolina Medical Care Commission, with average interest rates ranging from 5.250 to 5.375 percent per annum and average yields ranging from 5.250 to 5.450 percent per annum. Interest on the Series 2015 Bonds is assumed to be payable April 1 and October 1 of each year beginning October 1, 2015. Principal on the Series 2015 Bonds is to be paid annually commencing October 1, 2031 with a final maturity on October 1, 2045. The following table presents the estimated annual debt service during the forecast period.

Source: Management and the Managing Underwriter

Table 41 Schedule of Annual Debt Service

Years Ending Series 2006 Bonds Series 2015 Bonds Total March 31, Principal Interest Principal Interest Debt Service

2016 $ 1,170,000 $ 1,411,000 $ - $ 271,036 $ 2,852,036 2017 1,230,000 1,355,000 - 2,269,144 4,854,144

2018 1,290,000 1,294,000 - 2,269,144 4,853,144 2019 1,355,000 1,229,000 - 2,269,144 4,853,144 2020 1,425,000 1,161,280 - 2,269,144 4,855,424

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Current Assets and Current Liabilities Operating expenses exclude amortization, depreciation, other non-cash expenses and interest expense. Operating revenues include Monthly Fees and Health Center per diem fees. Working capital components have been estimated based on industry standards and Management’s historical experience as follows:

Table 42 Working Capital – Days on Hand

Accounts receivable 13 days operating revenues Other receivables 4 days operating expenses

Prepaid expenses 6 day operating expenses Accounts payable 15 days operating expenses Other accrued expenses 20 days operating expenses

Source: Management

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C-77

INDEPENDENT ACCOUNTANTS’ REPORT ON SUPPLEMENTAL INFORMATION

Board of Directors Moravian Home, Incorporated d/b/a Salemtowne Winston-Salem, North Carolina Our examination of the financial forecast presented in the preceding section of this document was made for the purpose of forming an opinion on whether the financial forecast is presented in conformity with AICPA guidelines for the presentation of a forecast and that the underlying assumptions provide a reasonable basis for the forecast. The examination was undertaken to evaluate the Corporation’s ability to generate sufficient funds to meet its operating expenses, working capital needs and other financial requirements, including the debt service requirements associated with the proposed Series 2015 Bonds based on Management’s assumptions of future operations of the Corporation. However, future events could occur which could adversely affect the financial forecast of the Corporation and its ability to meet debt service requirements. These factors include, among others, legislation and regulatory action, changes in assumptions concerning occupancy, the rate of entrance fee producing unit turnover, per diem rates, financing and operating costs. The following supplemental analysis is presented for purposes of demonstrating the significance of certain assumptions and is not a required part of the financial forecast nor considered an all-inclusive list. Such information has not been subjected to procedures applied in the examination of the financial forecast and, accordingly, we express no opinion or any other form of assurance on it. The following supplemental analyses are presented for the purpose of demonstrating the significance of certain assumptions and are not to be considered an all-inclusive list.

Atlanta, Georgia August 6, 2015

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Moravian Home, Incorporated d/b/a Salemtowne Supplemental Disclosure

C-78

Sensitivity Analysis I – Occupancy Occupancy rates can vary depending upon economic conditions, the competitive environment, and Management’s ability to execute the marketing and sales plan. The period of time it takes to achieve and maintain stabilized occupancy could be longer than Management has assumed in the accompanying forecast. Management expects the New Memory Support Units and Replacement Nursing Beds to achieve and maintain a 95.0 percent occupancy level by December 2017. Additionally, Management expects the Independent Living Units and the Assisted Living Units to maintain occupancy levels of 95.9 percent and 86.1 percent, respectively, throughout the forecast period. The data presented in the table below provides a “Breakeven Analysis” assuming a proportionally lower stabilized occupancy across all levels of care such that the Corporation’s Debt Service Coverage Ratio would approximate 1.00x.

Source: Management (1) For purposes of the sensitivity analysis, occupancy was reduced without a corresponding adjustment to expenses. (2) For purposes of the sensitivity analysis, the assumed schedule for the repayment of the Series 2015 Bonds remained as

originally forecasted.

Table 43 Sensitivity Analysis – I

Estimated Financial Information For the Year Ending March 31, 2020

As Forecasted Sensitivity I

Occupancy:

Independent Living Units 95.9% 88.7%

Assisted Living Units 86.1% 78.9%

New Memory Support Units 95.0% 87.8%

Replacement Nursing Beds 95.0% 87.8%

Community Total 94.5% 85.8%

Debt Service Coverage Ratio (1) (2) 1.52x 1.00x

Days Cash on Hand (1) (2) 345 230

Reserve Ratio (1) (2) 50% 36%

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C-79

Sensitivity Analysis II – Impact of Navigation by Salemtowne Similar to the overall occupancy at the Community, the financial impact of Navigation by Salemtowne is dependent upon economic conditions, product acceptance, and Management’s ability to execute the marketing and sales plan. Sensitivity Analysis IIA

The data presented in the table below are provided to demonstrate the impact on the overall financial performance of the Corporation assuming that the financial impact of Navigation by Salemtowne is excluded from the calculation of the financial ratios. Sensitivity Analysis IIB

The data presented in the table below are provided to demonstrate the impact of assuming the number of Navigation by Salemtowne Members remain at fiscal year 2015 levels.

Source: Management (1) For purposes of this analysis, Revenues and Expenses include investment income but exclude amortization of

Membership Fees, depreciation and amortization expense. (2) For purposes of the sensitivity analysis, a reduction in Membership occupancy was made without a corresponding change to

expenses.

Table 44 Sensitivity Analysis – II


As Forecasted Sensitivity IIA Sensitivity IIB

Navigation by Salemtowne:

Number of Members 93 - 21

Revenues(1) $684,000 - $71,000

Expenses(1)(2) ($592,000) - ($592,000)

Membership Fees (net) $485,000 - -

Debt Service Coverage Ratio 1.52x 1.40x 1.27x

Days Cash on Hand 345 326 285

Reserve Ratio 50% 47% 42%

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C-80

Sensitivity Analysis III – Entrance Fee Cash Flow Predictability Actual Entrance Fee cash flow receipts from turnover may vary from Management’s assumptions included in the forecast. Estimates regarding turnover of the Independent Living Units are based on average age, percentage of couples, morbidity tables, assumed transfer rates to other levels of care, the historical experience of Management and estimates from the Actuary. Assumptions regarding the timing of Entrance Fee refunds and pricing are also subject to variances. Accordingly, the following analyses have been presented for the purpose of demonstrating the significance of entrance fee cash flow assumptions on the financial forecast. Sensitivity Analysis III

The data presented in the table below is provided to demonstrate the impact of assuming no turnover Entrance Fee cash flow receipts or refunds in the stabilized year of 2020.

(1) For purposes of the sensitivity analysis, the assumed schedule for the repayment of the Series 2015 Bonds remains as originally forecasted.

Table 45 Sensitivity Analysis – III


As Forecasted Sensitivity III

Turnover Entrance Fees Received $4,897,000 -

Entrance Fee Refunds Paid $(549,000) -

Net Entrance Fees Received $4,348,000 -

Debt Service Coverage Ratio (1) 1.52x 0.59x

Days Cash on Hand (1) 345 229

Reserve Ratio (1) 50% 36%

Source: Management

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C-81

The Phase II Project Although Management plans to construct, finance and operate the Phase II Project, Management has not, as of the date of this report, finalized estimated construction costs, secured financing or obtained necessary development approvals and permits related to the Phase II Project. Management has not forecasted the construction, financing or operations of Phase II Project since Management has no assurance that these items will be obtained. Management has provided (a) a description of the Phase II Project; (b) sources and uses of funds for the potential financing of the Phase II Project; (c) fill-up and stabilized occupancy assumptions; and (d) summary of financial indicators for the Phase II Project in the following sections which should not be considered a presentation of expected future results. Description of the Phase II Project The Phase II Project is expected to include the renovation and conversion of the Existing Nursing Care Center into a 46-bed (42 units) residential model assisted living facility with expanded size accommodations (the “Phase II Assisted Living Units”). The Phase II Assisted Living Units are to be configured as 38 private one bedroom and 4 two bedroom units. For purposes of this analysis, renovation and construction associated with the Phase II Project is anticipated to begin July 2017 and is to be completed by January 2018. Occupancy of the Phase II Assisted Living Units is anticipated to begin in February 2018 and is anticipated to be completed by the end of May 2018. Upon completion of construction of the Phase II Project, existing assisted living residents will transfer to the Phase II Assisted Living Units, and the former assisted living space will be repurposed.

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C-82

Summary of Financing Management has assumed the following sources and uses of funds for the Phase II Project based on information provided by the Managing Underwriter:

Table 46 Sources and Uses of Funds –Phase II Project

(In Thousands) Sources of Funds:

Bank Loan(1) $5,885Contribution 82

Total Sources of Funds $5,967

Uses of Funds:

Direct construction costs $3,990Design, engineering, indirect construction and other costs 407Furniture, fixtures & equipment costs 560Project contingency 673Project management 137

Total Phase II Project Related Costs $5,767

Cost of Issuance and Other Costs $200

Total Uses of Funds $5,967Source: Management and the Managing Underwriter (1) A bank loan of approximately $5,885,000 is assumed to be obtained in July 2017 at a 4.00 percent interest rate per annum,

and with a maturity date of July 1, 2042.

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C-83

Assumed Utilization of the Phase II Assisted Living Units The following table summarizes both the historical and assumed utilization of the Assisted Living Units and the Phase II Assisted Living Units.

Table 47 Utilization of the Assisted Living Units

Average Units Occupied


Direct Admits Internal Transfers Total Total Units Available

Average Occupancy

Historical:

2013 24.3 18.0 (1) 42.3 46.0 92.0%

2014 22.6 20.0 (1) 42.6 46.0 92.6%

2015 24.0 14.0 (1) 38.0 46.0 82.6%

Forecasted:

2016 (2) 13.6 17.4 31.0 36.0 (3) 86.1%

2017 13.6 17.4 31.0 36.0 86.1%

2018 (4) 23.7 8.8 32.5 37.7 86.2%

2019 25.0 17.5 42.5 46.0 92.4%

2020 26.1 17.6 43.7 46.0 95.0% Source: Management

(1) Includes assisted living suites (two in 2013, four in 2014, and three in 2015) (2) Actual occupancy in the Assisted Living Units was 73.9 percent as of April 12, 2015. (3) During Fiscal Year 2016, 20 assisted living rooms are to be joined to result in 10 assisted living suites. (4) The Phase II Assisted Living Units are anticipated to be available for occupancy in February 2018 and would fill to a 95.0

percent occupancy level over a four month period. Management anticipates that the Phase II Assisted Living Units would initially be filled with existing resident transfers.

Operating Expenses Additional operating expenses associated with the Phase II Project are estimated by Management based on anticipated increases in healthcare, plant maintenance, dietary and other operating expenses.

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C-84

Financial Ratios The table below presents the estimated financial ratios for the Corporation, assuming that Management is able to successfully finance, construct, fill and operate the Phase II Project. The financial ratios shown below are based upon hypothetical assumptions which may or may not occur as expected, and are presented for informational purposes only.

Source: Management

Table 48 Sensitivity Analysis – Phase II Project


As Forecasted Sensitivity

Debt Service Coverage Ratio 1.52x 1.61x

Days Cash on Hand 345 348

Reserve Ratio 50% 47%

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Appendix B

Agreements

(Continuing Care Retirement Community)

Page (215)

Independent Living Agreement – August 30, 2015 Page 1 of 38

Independent Living

Residence and Services Agreement

(With continuing care in the Assisted Living and Health Care Centers)

Resident(s): _____________________________________________________________

Living Accommodation: ___________________________________________________

1000 Salemtowne Drive∙ Winston-Salem, NC 27106 ∙ 336-767-8130 ∙ Fax 336-767-4090 ∙ www.salemtowne.org

Page (216)

http://www.salemtowne.org/


INDEPENDENT LIVING RESIDENCE AND SERVICES AGREEMENT

TABLE OF CONTENTS

I. ACCOMMODATIONS AND SERVICES ....................................................... 3

II. FINANCIAL ARRANGEMENTS ..................................................................10

III. ENTRY REQUIREMENTS .............................................................................15

IV. TERMS OF RESIDENCY ...............................................................................18

V. TRANSFERS OR CHANGES IN LEVELS OF CARE..................................24

VI. TERMINATION AND REFUND PROVISIONS ...........................................25

VII. RIGHT OF RESCISSION ................................................................................29

VIII. FINANCIAL ASSISTANCE ...........................................................................30

IX. GENERAL .......................................................................................................31

X. ACKNOWLEDGEMENT OF RECEIPT ........................................................36

XI. INDEX ..............................................................................................................37

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INDEPENDENT LIVING RESIDENCE AND SERVICES AGREEMENT

This Agreement (the “Agreement”) is made this (date of occupancy) _______day of _____________, _______ by and between MORAVIAN HOME, INCORPORATED d/b/a SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”, “Salemtowne”, “we”, us” or “our”) and ____________ (hereinafter “Resident”, “you”, “your” or when two persons “ Resident”, “you” or “your” shall apply to both persons, except where the context otherwise requires).

WHEREAS, the Corporation is a continuing care retirement community located at 1000 Salemtowne Drive in Winston Salem, North Carolina, known as “Salemtowne”; and

WHEREAS, You desire to become a Resident of Salemtowne and to use and enjoy the facilities, programs and services provided by the Corporation subject to the terms and conditions of this Agreement;

NOW, THEREFORE, You and the Corporation agree as follows:

I. ACCOMMODATIONS AND SERVICES

Subject to the terms and conditions set forth in this Agreement, we agree to provide you the Living Accommodation, services and programs at Salemtowne described as follows:

A. Living Accommodation. Unit number (address) ______________, a(n) (cottage or apartment type of Living Accommodation) ___________________________ (as described in materials presented to you and as shown to you during a physical tour), located at (name of village or building) ______________ in Salemtowne (hereinafter referred to as the “Living Accommodation”). You have the exclusive right to occupy and use the Living Accommodation subject to the terms and conditions set forth in this Agreement. You, with the prior written consent of the Corporation and subject to the terms and conditions of this Agreement, may from time to time transfer from one Living Accommodation in Salemtowne to another. Transfer charges may apply. In the event of such a transfer, the reference to the “Living Accommodation” designated above shall be automatically amended to reflect such a transfer.

B. Security. We will use reasonable care in providing security on the premises of Salemtowne. We will furnish an emergency call system that is monitored twenty-four (24) hours a day as well as a staffed entrance. Smoke detectors are provided in all Living Accommodations. We are not responsible for loss or damage to your personal property. You are responsible for securing your Living Accommodation.

Initials ___________ __________ Corporation Resident(s)

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C. Utilities. We will furnish ordinary electricity, heating, air conditioning, water, sewer, gas, basic cable television service and trash removal. You are responsible for any telephone and internet installation charges and the cost of telephone and internet services.

D. Furnishings and Appliances. The Corporation will provide furnishings and appliances in the Living Accommodation as described in the literature published by the Corporation regarding Salemtowne. All other furniture and furnishings for the Living Accommodation shall be provided by the Resident and shall be maintained by you at your risk.

E. Dining. You will have access to three (3) nutritionally well-balanced meals each day. These meals, as well as any dining plans, are offered by the Corporation in accordance with the Corporation’s policies and procedures, which may be changed and amended by the Corporation.

Delivery service and meals containing substitute or special diets will be provided when approved by the Corporation. An extra charge may be made for special diets, dietary supplements and for delivery service.

F. Housekeeping Services. We agree to maintain the Living Accommodation by providing weekly housekeeping and trash removal for Independent Living and Assisted Living Residents. Housekeeping includes vacuuming, dusting, cleaning of baths and kitchen and changing of bed and bath linens, and trash removal. Daily services will be provided in the Health Care Center. Additional housekeeping services may be made available at your expense.

G. Laundry. Laundry facilities will be provided free of charge for personal laundry. You are responsible for arranging and paying for dry cleaning services.

Bed and bath linens and linen laundry service (washing, drying and folding) will be provided for Residents in Bahnson Hall and Vogler Building apartments, the Assisted Living Center and the Health Care Center. The costs of these services are included in the Monthly/Daily Fees.

Salemtowne is not responsible for loss or damage to personal items laundered by Salemtowne.

H. Maintenance and Repairs. We will maintain and keep in repair the

improvements, furnishings, appliances, and equipment owned by the Corporation. Maintenance and repair of your personal property is your responsibility. You will be responsible for the cost of repairing any damage to property of the Corporation caused by your negligence and/or that of any guest of yours, ordinary wear and tear excepted.

I. Alterations to Living Accommodation. Any structural or physical change or redecoration of any kind within the Living Accommodation will require the prior approval of the Corporation. The cost of any change, repairs or maintenance for

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that change and the subsequent cost to return the Living Accommodation to its original condition in the event of such change, or redecoration, will be paid by you. Any such improvement or change will be owned by the Corporation and will not be considered in determining the amount of any refund to you upon termination of this Agreement.

J. Use of and Changes to Living Accommodation. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws, or regulations. The Living Accommodation may not be used in any manner in violation of any zoning ordinances or other governmental laws or regulations.

K. Groundskeeping. We will furnish basic groundskeeping service for the grounds of Salemtowne, including lawn, tree and shrubbery care. Subject to approval by the Corporation, you may plant and maintain certain areas designated for such purpose by the Corporation. The cost of these plantings and maintenance of such plantings will be at your expense.

L. Parking. The Corporation will provide one (1) unassigned parking area for your personal vehicle and limited parking for guests.

M. Mail. Mail will be delivered by the postal service to Salemtowne. The postal service delivers mail directly to the central mail areas for independent Living Accommodations. Salemtowne staff deliver mail to central mail areas for Assisted Living Accommodations and directly to each Health Care Living Accommodations.

Package deliveries vary by carrier. If a carrier does not deliver packages directly to the Resident’s Living Accommodation, Salemtowne staff will notify the Resident so that the package can be picked up from a central location. Packages for assisted living and health care Residents are delivered to the individual Living Accommodations by Salemtowne staff.

N. Storage. Additional storage space is provided on a “first come first serve” basis for some independent living apartment building Living Accommodations. Additional charges may be incurred for storage. Additional storage space is not provided for cottages, Bahnson Hall, the Assisted Living Center or Health Care Center Living Accommodations.

O. Common Facilities. We will provide common facilities for the use and/or benefit of all Residents. Such common facilities currently include an enclosed swimming pool and exercise facility, dining rooms, mail room, multi-purpose rooms, library, computer area, game/television area, lounges, and sitting areas.

P. Transportation. We will provide local transportation for scheduled medical appointments Monday through Friday between 9:00 a.m. and 4:30 p.m. except holidays. Forty-eight (48) hours’ notice is required. Additional charges will be incurred for appointments exceeding four (4) per month and those appointments

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outside of normal service hours noted above. Additional charges will be incurred for Residents who require staff accompaniment.

We will provide local transportation for Residents as part of the Activity program for the following: weekly shopping, scheduled meal outings, day trips, and other special events. An additional charge may be made for transportation for special, personal or group trips.

Q. Activities. Wellness, social, recreational, spiritual, educational and cultural activities will be available to Residents. Additional charges may be incurred for some programs.

R. Other Services Available. Residents engaging third parties for services within Salemtowne may do so only with prior notification and authorization by Salemtowne (i.e. companions, private duty nurses, maintenance workers, etc.). This is not an all- inclusive listing of services you may request or utilize. With respect to services not listed, consult the resident handbook, schedule of charges (both provided to residents) or the Finance Office.

S. Professional Management of Salemtowne and its Facilities. The Corporation will employ associates and/or agents to manage the operations of Salemtowne and its facilities.

T. Nursing and Health Care. We will provide nursing and health care for each Resident as follows:

Phillips Health Care Center. The Health Care Center will be provided for the benefit of the Residents. The Corporation is licensed by the North Carolina Department of Health and Human Services, Division of Health Service Regulation to operate intermediate and skilled nursing care for Residents who are temporarily ill or who require long-term nursing care. Private or semi-private accommodations will be provided for Residents in the Health Care Center. Included in the Health Care Center is a Special Care Unit which serves the needs of individuals diagnosed with Alzheimer’s or other dementia-related diseases. Some of the beds in the Health Care Center are certified for Medicare and Medicaid reimbursement.

• Twenty-four (24) hour nursing staff maintained in the Phillips Health Care Center.

• The overall coordination of health care services by the Corporation provided through the Resident Review Committee, which is comprised of a Medical Director, a licensed physician selected by the Corporation, the Corporation’s licensed Nursing Home Administrator, the Corporation’s Director of Nursing, and other nursing/clinical staff of the Corporation.

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• Charges for Health Care Center accommodations and services are described in the Schedule of Fees and other literature published by the Corporation and distributed to Residents at least annually.

• Residents may choose their own personal physician and are responsible for charges for services by such physicians and any consultants. Residents may choose to use the Corporation’s Medical Director as their personal physician and Residents are responsible for applicable charges.

• Other health care services may be made available to the Resident at the Resident’s expense, including, but not limited to: pharmacy services, radiology services, dental services, laboratory tests, physical therapy, occupational therapy, therapeutic activities, rehabilitative treatments, wheelchairs, medical equipment and supplies. The cost of such services shall not be covered by the Monthly/Daily Fees described herein.

• Temporary care (up to 30 days) is also available in the Health Care Center for treatment of short-term illnesses or injuries for independent living and assisted living Residents.

1. Clinic and Related Services. We maintain a clinic for Residents in which nursing staff offer certain non-emergency medical treatment at no additional charge during scheduled time periods.

2. On-Site Emergency Call Response. Each Living Accommodation is equipped with an emergency call system. Salemtowne nursing staff will respond to emergency calls.

3. Emergency Medical Care. We will notify your physician when emergency medical care is necessary. If acute medical care is necessary or upon physician’s or your request, you will be transferred to a local hospital Emergency Room.

4. Masten Assisted Living Center. The Assisted Living Center will be provided for the benefit of the Residents. The Corporation is licensed by the North Carolina Department of Health and Human Services, Division of Health Service Regulation to provide support services for Residents who require assistance with activities of daily living. Private accommodations will be provided for Residents in the Assisted Living Center. The Assisted Living Center is licensed to provide services to individuals who require some assistance with activities of daily living, including but not limited to: bathing, dressing, and medication administration, dining room assistance, monitoring of vital signs, and nursing assessments.

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U. Services. The services and facilities that are provided through the Entrance and Monthly/Daily Fees (may also be described further herein) are summarized below:


• Flexible dining plan (depending on dining allowance option chosen or required)

• Country Club Privileges at Pine Brook Country Club (annually renewing agreement)

• Deposit and limited banking services with Wells Fargo Bank • Capital Bank ATM and - On-site bank teller by appointment • Limited parking • Limited storage (based on Living Accommodation *) • Computer/internet access • Complimentary Wi-Fi access in common areas • All utilities, except telephone and internet service • Basic Cable television service • Housekeeping service • Maintenance service • Limited local medical transportation • Social, spiritual, and recreational programs • Pastoral counseling • On-site delivery of pharmaceuticals and pharmaceutical consultations • Routine nursing services through the clinic • Nutritional counseling • Emergency nursing services • 24-hour medical emergency call system, security and fire protection • Check Cashing • Notary Public services

* Additional storage space is not provided for cottages, Bahnson Hall, the Assisted Living Center or Health Care Center Living Accommodations.

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• Wheelchair assistance • Wheelchair assistance • Weekly housekeeping service • Daily housekeeping service • Personal laundry service • Personal laundry service • Medication delivery by a nurse or








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II. FINANCIAL ARRANGEMENTS

A. Entrance Fee Choices. You agree to pay the Corporation one of the following Entrance Fees (selected option checked below) as a condition of becoming a Resident of Salemtowne. This Entrance Fee is refundable in whole or in part as described below and in Section VIII of this Agreement.

□ Standard Refund Entrance Fee $ _______________. Your Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of two percent (2%) for each month of occupancy, as defined herein, for up to forty-eight (48) months, except for accrued expenses that will be deducted. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. No refund of the Entrance Fee shall be paid after forty-eight (48) months of occupancy.

□ 50% Refund Entrance Fee $__________________. Your Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of two percent (2%) for each month of occupancy, as defined herein, for up to twenty-three (23) months. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. The refunded Entrance Fee will never be less than 50% of the original Entrance Fee, except for accrued expenses that will be deducted.

□ 90% Refund Entrance Fee $___________. Your Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of one percent (1%) for each month of occupancy, as defined herein, for up to six (6) months. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. The refunded Entrance Fee will never be less than 90% of the original Entrance Fee, except for accrued expenses that will be deducted.

Initials ___________ __________

Corporation Resident(s)

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1. It is agreed that

$ _____________, representing the Application Fee and

$ _____________, representing 10% of the Entrance Fee and

$ _____________, representing 100% of the cost of non-standard features

are payable upon execution of a Reservation Agreement or prior to the installation of the applicable non-standard features, whichever occurs earlier.

The Entrance Fee balance and unpaid non-standard feature costs will be due and payable 10 days prior to the date of occupancy. We will give you reasonable notice prior to the projected date of occupancy. Occupancy is defined as the first day that a Resident either resides in the Living Accommodation or the first day that the Resident’s furnishings or belongings occupy the Living Accommodation or a storage area at Salemtowne.

Notwithstanding the foregoing, unless we agree in writing to other arrangements, you must take occupancy within thirty (30) days after the date the Living Accommodation is available for occupancy in accordance with the Reservation Agreement. If you do not take occupancy by such time, you shall accept financial responsibility for the Living Accommodation and pay the balance of the Entrance Fee, balance of any Non-Standard Costs, and begin paying the applicable Monthly / Daily Fees beginning with the 30th day after the date the Living Accommodation is available for occupancy, unless this Agreement is terminated prior to the 30th day after the date the Living Accommodation is available for occupancy.

The Corporation has consented to your request to add the following non-standard features in your Living Accommodation and you agree to pay the following amount to cover the additional costs, maintenance and removal of these features. This additional amount is not subject to any refund provision herein.

Initials ___________ __________ Corporation Resident(s)

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Non-Standard Features Added: Cost

$

$

$

$

$

Total of Non-Standard Features Added $

B. Monthly/Daily Fee. In addition to the Entrance Fee and any other charges provided for under this Agreement, you agree to pay a Monthly/Daily Fee during the term of this agreement which shall be payable in advance by the 10th day of each month. As of the date of this Agreement, the Monthly/Daily Fee associated with the Living Accommodation will be:

Estimated Monthly Fee

Monthly Fee Resident (includes dining allowance plan)

(current dining allowance value is $_____________)

$

Monthly Fee for 2nd Resident occupying Living Accommodation (includes dining allowance plan), if applicable

$

Total Estimated Monthly Fee for Living Accommodation $

No credit will be provided to you should you refuse services, which are included in the Monthly/Daily Fee, such as laundry, housekeeping, dining, etc.

Initials ___________ __________


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Unless we agree in writing to other arrangements, you must take occupancy within thirty (30) days after the date the Living Accommodation is available for occupancy or thirty (30) days after the Reservation Agreement is signed, whichever is later and begin paying the Monthly/ Daily Fee. If you do not take occupancy by such time, you shall accept financial responsibility for the Living Accommodation and begin paying the applicable Monthly/Daily Fees beginning with the 30th day, unless this Agreement is terminated prior to the 30th day.

C. Adjustments in the Monthly/Daily Fee. The Corporation usually sets fees annually but shall have the authority to adjust the Monthly/Daily Fee from time to time during the term of this Agreement as it, in its discretion, deems necessary. Any such increase in the Monthly/Daily Fee or other charges may be made by the Corporation upon thirty (30) days written notice to the Resident.

In the event that it should be determined that the Corporation is required to pay ad valorem taxes upon its property, the Monthly/Daily Fee may be adjusted to reflect the amount of such taxes. You will pay all taxes assessed on your personal property.

In the event Salemtowne is assessed sales or use tax on Monthly/Daily Fee and/or fees for other services, you agree to pay Salemtowne the amount of such taxes.

D. Schedule of Fees. You have been given a current copy of the Schedule of Fees

as adopted by the Board of Trustees of the Corporation. You understand that these fees may change from time to time.

E. Monthly Statements. We will furnish the Resident with monthly statements showing the total amount of fees and other charges owed by the Resident, which shall be payable by the 10th of the month. Late payments are subject to an interest charge of one and one-half percent (1.5%) per month from the first of the month. Salemtowne offers and encourages an automatic bank draft for the Monthly/Daily Fees. Salemtowne may terminate this Agreement if you have a past due amount in excess of thirty (30) days. Termination of this Agreement does not end the obligation of you or your estate to pay all amounts due, no matter when incurred.

You, and your current and future responsible parties (i.e. power(s) of attorney, executor(s)) on your behalf, from your assets and income agree to pay all costs, expenses, and reasonable attorneys' fees, in the event same must be expended in the collection of any sums due and owed by you to the Corporation.

The Corporation reserves the right, with 30 days’ notice, to change the billing date and the payment due date. For a partial first month, the Monthly/Daily Fee is pro-rated on a per diem basis. Thereafter, Monthly/Daily Fees are paid in advance and are not pro-rated at termination for Independent Living and the

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Assisted Living Center. Monthly/Daily Fees are paid in advance and are pro-rated at termination for the Health Care Center.

F. Health Care Center and Assisted Living Center Fees and Charges.

1. Priority Entry. Residents are provided priority entry over non-Residents for entry to the Health Care Center or Assisted Living Center. Salemtowne will make every effort to accommodate Residents in the Health Care Center and/or Assisted Living Center but cannot guarantee availability of accommodations. In the event the Health Care Center and the Assisted Living Center are fully occupied when a Resident is in need of care, the Resident agrees to relocate to an alternate health care facility (“a Comparable Facility”). In the event of relocation, Salemtowne will make every effort to transfer the Resident back to Salemtowne when accommodations become available.

Upon your relocation to a Comparable Facility, the Resident will continue to be responsible for the Monthly/Daily Fee (unless their Living Accommodation is surrendered). Salemtowne will not be responsible for the charges associated with the alternate health care accommodations.

2. Room and Bed Discount Program. If You are admitted to the Health

Care Center or the Assisted Living Center, You are entitled to participate in the Room and Bed Discount Program, which provides Residents, who have paid an Entrance Fee and have a stay in the Health Care Center or Assisted Living Center a 20% discount from published rates.

G. Application for Benefits. If requested by Salemtowne, you will apply for any or all federal, state, and local benefits for which you may be eligible or entitled; and if requested by Salemtowne, you will apply for any or all such benefits toward the cost of your care at Salemtowne. These benefits may include: Medicare, Medicaid, prescription, and Veterans benefits.

Residents who receive Medicaid funding and who reside in a Medicaid certified accommodation must have their Social Security, pension or other monthly income paid directly to Salemtowne. Salemtowne will administer and manage these funds, on behalf of the Resident in accordance with applicable laws and regulations, to pay for the residence and services provided to the Resident.

H. Assignment of Benefits. You will from time to time authorize any provider of medical and health services to receive reimbursement as provided under Medicare/Medicaid, any or all Federal, State and local benefits for which you may be eligible or entitled and any supplementary insurance programs. If requested by Salemtowne, you will from time to time make assignments to the provider of medical and other health services of all benefits otherwise accruing to you under Medicare/Medicaid or other programs and supplementary extended coverage plans to compensate for services rendered.

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I. Managed Care. If you have chosen to participate in a managed care program as an alternative to Medicare Part A, Medicare Part B, or other programs, and supplemental insurance coverage, the terms of this Agreement governing nursing care will include the following provisions:

1. Participating Provider. If Salemtowne is a participating provider with your managed care program, the Corporation agrees to be reimbursed at the rate negotiated with your managed care program.

2. Not a Participating Provider. If Salemtowne is not an approved participating provider with your managed care program and you choose to receive health care services at a managed care participating provider, then you agree that you must relocate for as long as necessary for those services to be provided, and be responsible for all costs. In addition, while receiving health care services at the managed care participating provider, you agree that unless this Agreement is terminated, you will continue to pay the Monthly/Daily Fee for your Living Accommodation, unless your Living Accommodation has been surrendered.

3. No Negotiated Managed Care Rate. If Salemtowne is not a participating provider in your managed care program and a negotiated rate is not agreed upon by Salemtowne and you would still like to receive health care and services at Salemtowne, then you will be responsible for the full amount of applicable charges not paid by your insurance carrier.

4. Medicaid. In the event you receive financial assistance through the Medicaid program while occupying a Medicaid certified bed in the Health Care Center, you will be charged in advance for your liability portion established by the local county department of social services. You will be responsible for all charges for additional items and services requested by you and furnished to you which are not covered under the Medicaid program. Charges shall be made only as permitted under the Social Security Act and applicable regulations.

III. ENTRY REQUIREMENTS

You will become approved for residency at Salemtowne upon satisfaction of the following provisions:

A. Age. The entry requirements for residency at Salemtowne are nondiscriminatory except as to age, and Salemtowne is open to both married and single men and women of all races and religions. Entry to independent living is restricted to persons 62 years of age or older, except in the case of double occupancy at least one Resident must be 62 years of age or older. Entry to the Assisted Living Center and the Health Care Center is restricted to persons 62 years of age or older.

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B. Personal Interview. You shall have an interview with a representative from Salemtowne (including nursing assessment) prior to taking residency at Salemtowne. Upon review of all information required to be furnished herein, additional personal interviews may be requested by the Corporation.

C. Application, Health History and Financial Statement. You shall submit for review by the Corporation, an Application for Entry, a Physician’s Health and History form, and a Confidential Financial Statement, all on forms furnished by the Corporation.

D. Notification. We shall review the application materials as well as the results of the Personal Interview(s) and will notify you whether you meet the entry requirements. We will also notify you as early as possible of the date on which the Living Accommodation is expected to be available for occupancy.

E. Health Requirements. Prior to residency at Salemtowne, you shall submit a Physician’s Health and History form from a physician selected by you. Such report shall include a statement by such physician that you are able to care for yourself without assistance with activities of daily living. We may require you to have another physical examination by our Medical Director or by another physician approved by the Corporation. You shall be responsible for the costs of such physical examinations. If your health as disclosed by such physical examination differs materially from that disclosed in your Application for Entry and Personal Health History, the Corporation shall have the right to decline entry and to terminate this Agreement, or in the discretion of the Corporation, to permit you to take occupancy of accommodations at Salemtowne suitable to your needs.

F. Psychiatric Illness, Dangerous Communicable Disease, Drug or Alcohol Abuse. Salemtowne is not designed to care for persons who have an active psychiatric illness, a dangerous communicable disease or who require treatment for drug or alcohol abuse. Should Salemtowne, in consultation with the Medical Director, determine that your physical or psychiatric illness, or that your condition as a result of drug or alcohol abuse, is such that your continued presence is either dangerous or detrimental to your life, health, safety or peace, or the life, health, safety, or peace of others in the community, then Salemtowne may transfer you to another facility of your choosing and/or require you to terminate your residency at Salemtowne.

G. Financial Requirements. You must have assets and income which will be sufficient under foreseeable circumstances to pay the financial obligations under this Agreement and to meet your ordinary living expenses. We may require you to furnish current financial information at any time prior to and subsequent to occupancy.

H. Financial Resources. You, your current and future responsible parties (i.e. power(s) of attorney, executor(s)) will abide by any and all financial arrangements made with the Corporation for the purpose of securing your ability

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to pay any and all charges for residing at Salemtowne. You agree not to make any gift or other transfer of assets for the purpose of evading your obligations under this Agreement, or if such gift or transfer would render you unable to meet such obligations under this Agreement. Gifts or transfers of assets in this manner, which result in your inability to meet your financial obligations in accordance with this Agreement, will entitle Salemtowne to terminate this Agreement, and you or your responsible parties, as applicable, will be liable for any unpaid amounts.

I. Power of Attorney. You agree to execute and maintain in effect a durable power of attorney that is valid under North Carolina law and will survive your incapacity or disability. This durable power of attorney will designate an attorney-in-fact and an alternate attorney-in-fact who will act for you in managing your financial affairs and in filing for insurance or other benefits under private and public assistance programs as full and complete a manner as you could do if acting personally for yourself. You will deliver a copy of a fully executed power of attorney to Salemtowne prior to occupancy. You will not revoke or amend this durable power of attorney except upon execution of a replacement durable power of attorney, a fully executed copy of which will be delivered to Salemtowne. This document also may address at your option, other affairs, such as decisions concerning medical care.

J. Will. You agree to execute a Will, and to provide to Salemtowne a copy of such sections of the Will and any revisions, as applicable during the term of this Agreement to document the name(s) of the person(s) to be contacted in the event of your death (i.e. executor(s)).

In the event of your death, while you are a Resident of Salemtowne under this Agreement, only the executor(s) named in your Will will be allowed to remove or dispose of your furnishings and belongings in your Living Accommodation and any related storage areas at Salemtowne. Members of your family or those to whom you have granted Power of Attorney will not be allowed access to your personal property after your death, unless they are the executor(s) named in your Will.

K. Funeral and Burial. Salemtowne will not be responsible for making funeral or burial arrangements and is not responsible for related expenses.

L. Advance Directives. You are encouraged to execute a Living Will and a Health Care Power of Attorney and deliver a fully executed copy thereof to Salemtowne, as well as any revisions as applicable, during the term of this Agreement.

M. Representations. You affirm that the representations made during the application process are true and correct and may be relied upon by the Corporation as a basis for entering into this Agreement.

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N. Appointment of Guardian. If you become unable to care for your business and financial affairs, the Corporation reserves the right to institute action for the determination of your incompetence and the appointment of a guardian to fulfill the terms of this Agreement; unless such needed arrangements have already been made.

O. Emergency Notifications. You agree to provide Salemtowne with the following information prior to the date of occupancy as well as updates of this information during the term of this Agreement:

• Names, addresses and phone numbers of persons to notify in an emergency (minimum of two are required)

• Names of persons having the right of entry into your residence

• Name, address and phone number of funeral home (prior arrangements are encouraged)

• Names, addresses and phone numbers of lawyer and executor

• Names, addresses and phone numbers for Powers of Attorney

• Names, addresses and phone numbers for emergency pet contacts, if applicable

IV. TERMS OF RESIDENCY

A. Rights of Resident. You have the right to occupy and enjoy the Living Accommodation described herein during your lifetime unless this Agreement shall be terminated as provided herein. It is understood that this Agreement does not transfer or grant any interest in the real or personal property owned by the Corporation other than the right to use or occupy the Living Accommodation in accordance with the terms hereof. The Living Accommodation may not be used for commercial purposes. The Living Accommodation may not be occupied or used in any manner in violation of any ordinance, law or regulation.

B. Subordination. You agree that all of your rights under this Agreement shall at all times be subordinate and junior to the lien of all mortgages or other documents creating liens encumbering the Corporation, which have been or will be executed by us. Upon request, you agree to execute, acknowledge and deliver to such lender or lenders such further written evidence of such subordination as such lenders may reasonably require. You shall not be liable for any such indebtedness.

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C. Resident. When Resident consists of more than one person, the rights and obligations of each are joint and severally except as the context otherwise requires.

D. Policies, Rules and Regulations. You understand and agree that: (i) in order for Salemtowne to operate in the best interests of the entire community, it is essential that we have cooperation of and compliance with applicable policies, rules and regulations by you, your family, guests, responsible party and others who may intervene, speak or act or purport to intervene, speak or act, for or on behalf of you or who may come on the premises of Salemtowne in any capacity or for any purpose in connection with or as a result of your residency at Salemtowne; (ii) a continuing or repeated failure or refusal by any such persons to so cooperate and comply may result in a determination by Salemtowne that it is impracticable or impossible for Salemtowne to continue to accommodate you as a Resident; and (iii) upon such determination by Salemtowne, we shall have the right to terminate this Agreement. Salemtowne reserves the right to make changes to policies, rules and regulations at its sole discretion.

E. Weapons. No weapons of any type shall be brought on to the Salemtowne property by you or your guests without the express prior written permission of the Corporation.

F. Resident Representation. Residents have the right of self-organization through a Residents’ council which may convene to review the interests of the Resident population. You shall have Resident representation on the Salemtowne Board of Trustees as outlined in the Bylaws of Salemtowne.

G. Guests and Visitors. Guests and visitors are welcome at Salemtowne. Guests may use Salemtowne guest accommodations, subject to availability and additional charges. Guests may also stay in your Living Accommodation for visits of limited duration (less than two weeks, except with Salemtowne approval). Guests approved for stays in your Living Accommodation for longer than two weeks may result in additional charges.

At all times, you shall be responsible for any injury to others or damage to the property of others or Salemtowne caused by you or your guest(s). Salemtowne reserves the right and authority to limit or terminate the stay of any guest at any time and for any reason.

H. Relationships Between Residents and Employees (“Associates”). Salemtowne is built on mutual respect and instructs its Associates to be cordial and helpful to Residents. The relationship is to remain professional. Associates must not be delayed or deterred by Residents in the performance of their duties. Management is solely responsible for the supervision of staff. Complaints or requests for special assistance must be made to the appropriate supervisor. Giving gratuities or bequests to Associates or Associates’ families is not permitted. Residents will

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not employ Salemtowne Associates nor hire former Salemtowne Associates without the prior written consent of Salemtowne Management.

I. Loss of Property. The Corporation maintains insurance on all of its property and its operations to include general public liability insurance, property insurance including coverage for acts of God, vandalism and theft, professional liability insurance and worker’s compensation.

The Corporation will not be responsible for the loss of any property belonging to the Resident or their guest(s) due to theft, mysterious disappearance, fire or any other cause. You will have the responsibility for obtaining “renters insurance” to cover such losses.

J. Right of Entry. Salemtowne recognizes your right to privacy, and shall limit entry to your Living Accommodation to legitimate emergencies and to scheduled work, including housekeeping, repairs, maintenance, and inspections. You hereby authorize Associates or agents of Salemtowne to enter your Living Accommodation, upon reasonable notice for all such purposes.

K. Appliances. Salemtowne is not obligated to determine your ability to safely utilize the appliances, if any, in your Living Accommodation. However, should we determine that you have demonstrated an inability to safely utilize appliances in your Living Accommodation; we will have the right to turn off the power servicing such appliance(s) and/or to remove any and all such appliances. In any such instance, you shall remain obligated to pay for the Full Month/Daily fee for your Living Accommodation, any extra meals and any fire alarm charges issued by the fire department.

L. Changes in Living Accommodations. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws or regulations.

M. Occupancy by Two Residents. In the event that two Residents occupy a Living Accommodation under the terms of this Agreement, upon the permanent transfer to the Health Care Center or the Assisted Living Center or the death of one of such Residents, or in the event of the termination of this Agreement with respect to one of such Residents, such as in the case of death or divorce, the Agreement shall continue in effect as to the remaining or surviving Resident who shall have the option to retain the same Living Accommodation or to move to a smaller Living Accommodation, in which event there will be no refund of the Entrance Fee. The remaining or surviving Resident will thereafter pay the Monthly/Daily Fee for one Resident associated with the Living Accommodation occupied by the Resident. No refund will be payable with respect to the Living Accommodation surrendered, except as provided in the Termination and Refund Provisions of Section VIII. Any fees paid for a second Resident are not transferable to a future second Resident such as in the case of a subsequent marriage.

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N. Health Insurance. You will maintain eligible Medicare coverage and one supplemental health insurance policy or equivalent insurance coverage, which adequately covers hospital, medical, prescriptions, and skilled nursing deductibles and co-payments required of your primary insurance plan. Both your primary and supplemental health insurance policies must recognize Salemtowne as a health care provider, or you will assume the financial responsibility for services provided that otherwise could be covered.

You will be responsible for ensuring that the health insurance coverage does not lapse, and will provide Salemtowne with evidence of such coverage upon request. If your health insurance coverage should lapse, Salemtowne may require that you reapply for suitable coverage. If you are unable to obtain adequate new coverage, Salemtowne will charge you for any costs of medical and other health care services provided that otherwise would have been covered by an approved policy.

O. Filing for and Rights to Insurance Benefits. Salemtowne is a participating provider with Medicare, Medicaid and Blue Medicare only.

• Salemtowne will file claims with Medicare for all covered services. By law, the patient is responsible for payment of the deductible, co-insurance, and any non-covered service. Non-covered services include, but are not limited to beauty shop charges.

• As a courtesy, Salemtowne will file claims to your secondary insurance carrier for your Medicare Parts A & B co-insurance, unless we are prohibited from filing due to participation requirements of the carrier.

• The Medicare Part A co-insurance will be billed on your monthly Salemtowne statement as services are rendered prior to any insurance filings. You are responsible for payment of all Medicare Part A co-insurance billed by Salemtowne upon receipt of the bill. Payments received from your insurance carrier for Medicare Part A co-insurance will be applied to your monthly Salemtowne statement when received.

• Medicare Part B co-insurance (i.e. therapy co-insurance) not paid by a Resident’s insurance carrier within 90 days of the date of service will become due and payable by the Resident unless the claim is subject to Medicare, Medicaid, or an insurance plan in which Salemtowne participates.

• Co-pays related to Blue Medicare plans will be billed on the Salemtowne statement as services are rendered and are due and payable upon receipt of the bill.

• In the event a Resident’s health insurance determines a service is “not covered”, the Resident will be responsible for payment. Salemtowne tries to inform Residents when services may not be covered; however, it is the Resident’s responsibility to understand his/her policy limitations.

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• Charges not paid by a Resident’s insurance company within 90 days of the date of service will become due and payable by the Resident unless the claim is subject to Medicare, Medicaid, or an insurance plan in which Salemtowne participates.

• If, for any reason, Salemtowne cannot apply directly for benefits payable under insurance required by this Agreement, you agree to make such application and to pay Salemtowne the proceeds received.

• Salemtowne reserves the right, in its discretion, to eliminate or change its participation with any and all insurance plans.

P. Sharing Occupancy After Admission/Entry. If a Resident, while occupying a

Living Accommodation, marries a person who is also a Resident, or wishes to share a Living Accommodation with a person who is also a Resident, the two Residents may, with the prior written consent of the Corporation, occupy the Living Accommodation of either Resident and shall surrender the Living Accommodation not to be occupied by them. No refund will be payable with respect to the Living Accommodation surrendered, except as provided in the Termination and Refund Provisions of Section VIII. Such Residents will pay the Monthly/Daily Fee for double occupancy associated with the Living Accommodation occupied by them.

In the event that a Resident shall marry a person who is not a Resident of Salemtowne, or wish to share a Living Accommodation with a person who is not a Resident (“Non-Resident”), the Non-Resident may become a Resident if such individual meets all of the then current requirements for entry to Salemtowne; enters into a then current version of the Residence and Services Agreement with the Corporation; and pays an Entrance Fee in an amount determined by the Corporation in its sole discretion. The Resident and new Resident shall pay the Monthly/Daily Fee for double occupancy associated with the Living Accommodation occupied by them. If the Non-Resident does not meet the requirements of Salemtowne for entry as a Resident, the Resident may terminate this Agreement in the manner as provided in Section VIII. B. with respect to a voluntary termination.

Q. Combination of Living Accommodations. Various circumstances may make it

desirable that a Living Accommodation occupied by a Resident be combined with an adjoining Living Accommodation to form one combined Living Accommodation. You agree that if a determination is made by the Corporation that it is desirable to combine your Living Accommodation with a Living Accommodation which adjoins your Living Accommodation, you will surrender occupancy of your Living Accommodation, within a reasonable time after receiving notice of such determination. In the event that the Corporation makes such determination and notifies you of such, you have the option to (a) transfer

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into the combined Living Accommodation when such combined Living Accommodation is ready for occupancy, or (b) transfer to another Living Accommodation, when available, of the same type as the Living Accommodation previously occupied by you.

If you elect to occupy the combined Living Accommodation and the Entrance Fee established for such combined Living Accommodation exceeds the Entrance Fee paid by you for your previous Living Accommodation, you shall pay the amount of such excess upon taking occupancy. You will pay the Monthly/Daily charge associated with the combined Living Accommodation as established by the Corporation.

If you elect to transfer to a Living Accommodation of the same type as the Living Accommodation previously occupied, the Corporation will repaint and re-carpet, if needed, such Living Accommodation at our expense prior to occupancy.

R. Transfer to Another Living Accommodation. You may move to a different Living Accommodation at Salemtowne, when it becomes available, upon payment of such fees, consent by the Corporation and compliance with such guidelines regarding transfers as may be adopted by the Corporation. Salemtowne reserves the right to amend such policies, guidelines and fees, in its discretion.

If you transfer to another Living Accommodation, you are responsible for paying any difference in the Entrance Fee, if the amount of the Entrance Fee of the new Living Accommodation is greater than the Entrance Fee for the previous Living Accommodation to be vacated. If the Entrance Fee for the new Living Accommodation is smaller than the Entrance Fee for the previous Living Accommodation to be vacated, no refund will be paid for the difference.

S. Room Assignment in Health Care Center and Assisted Living Center. You understand that you acquire no ownership in any property at Salemtowne under this Agreement; also, that no particular room or unit in the Assisted Living Center or the Health Care Center is subject to reservation or permanent assignment, and that we may change your room assignment in the Assisted Living Center or the Health Care Center. Though we retain the right to change your room assignment, we agree that we will make changes only as we find such changes to be necessary or advisable.

T. Moving Costs. You are responsible for arranging and paying for all packing and moving costs for moves into, within and out of Salemtowne. Assistance may be provided by Salemtowne at an additional cost.

U. Pets. Residents, who meet requirements to have pets, are responsible for notifying the Admissions office, completing necessary paperwork and following current policies and guidelines. Salemtowne reserves the right to amend or terminate policies and guidelines related to pets, in its discretion.

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V. Smoking/Tobacco Products. Salemtowne is a “Tobacco Free” Community. Smoking and use of tobacco products is not permitted anywhere on Salemtowne property including, campus buildings (Phillips Health Care Center, Masten Assisted Living Center, and Community Center, etc), building entrances or common areas. The same applies to Salemtowne’s Babcock campus. The only exceptions are:

• Independent Living Residents and their personal visitors may continue to smoke in their own private residences. In the event concentrated oxygen is required by the Resident, smoking will no longer be permitted in that residence.

• The Health Care Center Administrator may permit smoking for a Resident, if so, a designated smoking area would be created outside. However, the prohibition will remain in effect for a family member or caregiver who may accompany the Resident to the designated area.

W. Absences. Monthly/Daily fees are not subject to change or credit if a Resident is

away from the Living Accommodation for any period of time for Assisted Living or Health Care accommodations. (For example, vacations, hospital stays, etc.)

You agree to inform Salemtowne (Clinic, Billing Office & Dining Services) when you are going to be away for three (3) days or more, and to give us the names of people we can contact in an emergency. In order to provide adequate time for medications to be available, if applicable, you must provide at least 24 hours advance notice of an absence.

You will be entitled to an “away” discount on your Independent Living Monthly/Daily Fee, when You (and the 2nd resident, if applicable) are (both) away from your Independent Living Residence for more than thirty (30) consecutive days, in accordance with the program in place at the time of the absence. The “away” discount program is subject to change. No credit or additional carry forward for missed meals will be given during absences. As of the date of this Disclosure Statement, this “away” discount is $150 per month per Living Accommodation.

V. TRANSFERS OR CHANGES IN LEVELS OF CARE. (A change in Living

Accommodations within independent living or to the Assisted Living Center or the Health Care Center will require no additional residence and services agreement. This Agreement will remain in effect, subject to any applicable amendments referred to in this Agreement.)

A. Transfer to Phillips Health Care Center or Masten Assisted Living Center. You agree that the Corporation shall have authority to determine that you should be transferred from your Living Accommodation to the Phillips Health Care Center or the Assisted Living Center or a separate area within either center. Such determinations shall be based on the professional opinion of the Resident’s

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physician and the Resident Review Committee of Salemtowne and shall be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party.

In the event that you are permanently transferred to the Assisted Living Center or the Health Care Center, your Entrance Fee will not be subject to refund at the time of the transfer. Entrance Fees are subject to refund when a resident leaves the community in accordance with section VIII.

B. Transfer to Hospital or Other Facility. If it is determined by your physician that you need care beyond that which can be provided by Salemtowne you may be transferred to a hospital, center or institution equipped to give such care, which care will be at your expense. Such transfer will be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party.

In the event it becomes necessary for you to be transferred to a hospital, Salemtowne will provide any information available to meet the provisions of any hospital admissions agreement, and you agree that Salemtowne has the right to provide such information, which may include part or all of your records.

C. Surrender of Living Accommodation. If a determination is made by the Corporation that any transfer described in this Section is permanent in nature, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you prior to such transfer, within 30 days of the determination.

You are responsible for the costs of transfer and moving as well as the Monthly/Daily Fee through the last day of occupancy of the Living Accommodation being vacated. For the purposes of this Section XIV. C., occupancy is defined as the last day that a Resident either resides in the Living Accommodation or the last day that the Resident’s furnishings or belongings occupy the Living Accommodation or a storage area at Salemtowne.

If the Corporation subsequently determines based upon the opinion of your physician that you can resume occupancy in accommodations comparable to those occupied by you prior to such transfer you shall have priority to such accommodations as soon as they become available and you will be responsible for applicable fees as determined by the Corporation.

VI. TERMINATION AND REFUND PROVISIONS

A. Termination Prior to Occupancy. This Agreement may be terminated by you at any time prior to taking occupancy at Salemtowne for any reason by giving written notice to the Corporation. This Agreement will automatically be canceled

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due to death or physical or mental conditions that would make you ineligible for entry to Salemtowne.

This Agreement may be terminated by the Corporation at any time prior to the date that you take occupancy if the Corporation determines that you do not meet the physical, mental or financial requirements for entry.

In the event of such termination (including death, illness, injury, or incapacity), you shall receive a refund of the Entrance Fee paid in accordance with Section II. Any such refund shall be paid by the Corporation within sixty (60) days following termination pursuant to this paragraph.

B. Voluntary Termination. Except as provided in subsection A of this Section XV., you may terminate this Agreement at any time by giving the Corporation written notice of such termination. Fourteen (14) days advance notice is required for independent living and the Assisted Living Center and five (5) days advance notice is required for the Health Care Center. If required notice is given, or if no written notice is given, you will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period and for each day of occupancy except when a delay in discharge or transfer would jeopardize your health or safety or that of others at Salemtowne. Any refund of the Entrance Fee due to the Resident following voluntary termination of this Agreement will be made in accordance with Section II A.

C. Abandoned Living Accommodation. You may be deemed to have abandoned the Living Accommodation and terminated this Agreement if you do not occupy a residence at Salemtowne for a period of one continuous year.

In the event of such termination (including death, illness, injury, or incapacity), you shall receive a refund of the Entrance Fee paid in accordance with Section II. Any such refund shall be paid by the Corporation within sixty (60) days following termination pursuant to this paragraph.

D. Temporary Absence. Temporary absence because of illness, trips or other will

not affect your rights to retain occupancy of your Living Accommodation, as long as applicable Monthly/Daily Fees are paid.

E. Termination Upon Death. In the event of your death and you are not survived by a co-Resident residing at Salemtowne, who has signed this Agreement, this Agreement shall terminate and, subject to your continuing obligations described herein, the portion, if any, of the Entrance Fee paid by you to be refunded shall be determined in the same manner described in Section II. herein.

Any refund to which you are entitled shall be paid to your Estate unless you execute a designation and name a trust, revocable by you at the time of your death, to receive applicable refunds. Should you execute a revocable trust subsequent to signing this agreement, you or your estate’s executor may submit a

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written beneficiary designation form designating a trust, revocable by you at the time of your death, to receive applicable refunds. In the event of your death and you are survived by a co-Resident residing at Salemtowne who has signed this Agreement, then this Agreement shall not terminate and no refund will be payable.

In the event a refund becomes due, the date that the deceased Resident’s responsible party/estate executor removes all personal belongings from the Living Accommodation shall determine the termination date. Any refund due the Resident’s estate under this paragraph will be made at such time as such Resident’s Living Accommodation shall have been reserved by a prospective Resident and such prospective Resident shall have paid to the Corporation such prospective Resident’s full Entrance Fee; provided, however, that the Resident’s estate shall continue to be obligated to pay the applicable Monthly/Daily Fee for such Resident’s Living Accommodation until such Resident’s Living Accommodation is vacated and left in good condition except for normal wear and tear.

F. Termination by the Corporation. We may terminate this Agreement at any

time if there has been a material misrepresentation or omission made by you during the application process; if you fail to make payment to the Corporation of any fees or charges due the Corporation within thirty (30) days after receiving written notice of your failure to pay such fees or charges; if you do not abide by the rules and regulations adopted by the Corporation or breach any of the terms and conditions of this Agreement; if the health or safety of other individuals in the Corporation is endangered if you remain in Salemtowne, as determined by a physician, physician assistant or nurse practitioner; or the discharge is necessary for your welfare and your needs cannot be met by the Corporation as documented by your physician, physician assistant or nurse practitioner.

You will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period and for each day of occupancy. Any refund of the Entrance Fee due to the Resident following voluntary termination of this Agreement by the Corporation will be made in accordance with Section II herein.

Except in cases of emergency, you will receive a notice of the termination by the Corporation at least thirty (30) days prior to the effective date of termination. You may be entitled to appeal the Corporation’s decision to terminate this Agreement and, except in cases of emergency, the Corporation will not discharge you before the final decision resulting from the appeal has been rendered.

G. Condition of Living Accommodation. At the effective date of termination of this Agreement, you will vacate the Living Accommodation, including any storage areas at Salemtowne, and will leave both in good condition except for

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normal wear and tear. You, or your estate, will be liable to the Corporation for any costs incurred in restoring the Living Accommodation and storage areas to good condition except for normal wear and tear.

H. Removal of Personal Property. In the event of termination of this Agreement, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you, within thirty (30) days of the determination.

The Corporation reserves the right to remove your belongings from the Living Accommodation and any storage areas. You will pay a Monthly/Daily storage fee equal to 50% of the Monthly/Daily Fee for the previously occupied Living Accommodation or the actual cost of external storage, whichever is applicable. Your property will not be stored for longer than 30 days. Unclaimed property will become the property of Salemtowne after 30 days and will be disposed of at the sole discretion of the Corporation.

In the event of your death, while you are a Resident of Salemtowne under this Agreement, only the executor(s) named in your Will will be allowed to remove or dispose of your furnishings and belongings in your Living Accommodation and any related storage areas at Salemtowne. Members of your family or those to whom you have granted Power of Attorney will not be allowed access to your personal property after your death, unless they are the executor(s) named in your Will.

I. Refund.

1. Refund of Entrance Fee. You or your estate, or a revocable trust designated by you may be entitled to a refund of the Entrance Fee, provided you or your estate have met all of your obligations under this Agreement. Your refund, if applicable, shall be calculated in accordance with Section II herein. The cost to repair damages to the Living Accommodation and storage areas in excess of normal wear and tear, the cost of storage paid by the Corporation and any amounts due and unpaid relating to the cost of care provided by Salemtowne or any third party health care provider, including without limitation, the Monthly/Daily Fee or other amounts payable to Salemtowne which remain outstanding and the amount of any charges due by Salemtowne on behalf of the Resident, or by the Resident, to the pharmacy, rehabilitation services or any other third party, will be deducted from any applicable refund.

Any refund due you under this paragraph will be made within thirty (30) days from the date that your Living Accommodation shall have been reserved by a prospective Resident and such prospective Resident shall have paid to the Corporation such prospective Resident’s full Entrance Fee.

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If, after an extended period of time, a Living Accommodation has not been reoccupied, the Corporation may return, in its sole discretion, the applicable refundable portion of your Entrance Fee, to you or your estate. If a refund is returned prior to a former Living Accommodation being reoccupied, it will be reduced by ten percent (10%) of its original value.

Entrance Fees will not be refunded upon transfer to the Assisted Living Center or the Health Care Center.

2. Refund of Fee Related to Cost of Care. You or your estate, or a

revocable trust designated by you may be entitled to a refund of that portion of the fee which is related to the cost of health care services provided by Salemtowne or any third party health care provider less any amounts payable to Salemtowne or any third party health care provider through the date the refund is due hereunder. In the case of your death, any refund of the amount of the fee related to the cost of health care services provided by Salemtowne will be made no later than thirty (30) days from the date of your death.

If the Agreement is terminated by you or the Corporation in an emergency situation (i.e. because the Corporation is no longer able to meet your urgent health care needs, or termination is necessary to protect your health and safety or that of another person at Salemtowne), the refund of the amount of the fee related to the cost of health care services will be made within fourteen (14) days after you leave Salemtowne.

If this Agreement is terminated for any other reason, the refund of the amount of the Fee related to the cost of health care services provided by Salemtowne will be made no later than fourteen (14) days after you leave Salemtowne.

Nothing in this Section shall apply in the event of a transfer to the Assisted Living Center or the Health Care Center.

J. Release from Obligations Upon Termination. Upon termination of this Agreement, Salemtowne is released from any further obligations to you except for the payment of any refund which may be due under this Agreement.

VII. RIGHT OF RESCISSION

Notwithstanding anything herein to the contrary, this Agreement may be rescinded by you giving written notice of such rescission to the Corporation within thirty (30) days following the later of the execution of this Agreement or the receipt of a disclosure statement that meets the requirements of Section 58-64-1, et seq. of the North Carolina General Statutes. In the event of such rescission, you shall receive a refund in an amount equal to the Entrance Fee less a non-refundable fee of four percent 4% of the Entrance Fee less any Monthly/Daily Fees (in accordance with Section II herein) or portion thereof

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applicable to any period a Living Accommodation or storage area was actually occupied by you or your belongings. In the event of such rescission, you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. You will not be required to move into Salemtowne before the expiration of such thirty (30) day period. Notwithstanding anything to the contrary in this Agreement, any such refund shall be paid by the Corporation within fourteen (14) days following receipt of written notice of rescission pursuant to this paragraph.

VIII. FINANCIAL ASSISTANCE

A. Subsidy. In connection with its charitable mission, it is the desire of the Board of Trustees of Salemtowne that no one leave Salemtowne because of lack of funds. Any disposition of Resident’s assets in any way other than for care at Salemtowne or related living/medical expenses to the extent that Resident cannot adequately provide for Resident’s expenses or care will nullify this desire on the part of Salemtowne and entitle Salemtowne to terminate Resident’s right to reside in Salemtowne.

Salemtowne will make reasonable efforts to acquire the funds necessary to meet Salemtowne’s fees for care. However, the resources of Salemtowne to provide care for Residents are not unlimited, and Salemtowne reserves the right to terminate the residency of any person, including Resident, who cannot pay the full cost of Salemtowne’s Monthly/Daily Fees and charges, and other costs in connection with such person’s stay at Salemtowne.

In the event that a Resident presents facts which in the opinion of the Corporation justify special financial consideration, the Corporation will give careful consideration to subsidizing in whole or in part the Monthly/Daily Fees and other Salemtowne charges payable by the Resident hereunder so long as such subsidy can be made without impairing the ability of the Corporation to attain its objectives while operating on a sound financial basis.

In the event that the Corporation may subsidize in whole or in part the Monthly/Daily Fees and other Salemtowne charges payable by the Resident hereunder, the Resident will be required to execute a separate Financial Assistance Agreement with the Corporation.

In the event that we continue to provide the services to you under the terms of this Agreement despite your financial inability to continue to pay the Monthly/Daily Fee or other Salemtowne charges payable under the terms of this Agreement, Salemtowne shall be entitled to require you to move to a smaller or less costly Living Accommodation.


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B. Recovery of Subsidies Provided by Salemtowne. When a Resident dies or moves out of the community, if said Resident’s fees have been subsidized wholly or partly by Salemtowne, the Resident or Resident’s estate, if any, will be liable to Salemtowne for the full amount of the subsidy the Resident received for the entire time of residency. This paragraph will apply whether or not the Resident is in residence at Salemtowne at the time of death. This Agreement will operate as a lifetime assignment, transfer and conveyance to Salemtowne of so much of Resident’s property as is necessary to cover such liability. Any amount due Salemtowne under this paragraph may be deducted from any refund payable to Resident or to the Resident’s estate.

C. Financial Assistance Funds. The Corporation has established funds which will be used to assist Residents who would otherwise not be able to live at Salemtowne. Such funds may be used for the purposes of providing financial assistance, but no Resident shall have any claim to or expectation of receiving or continuing to receive any such assistance.

IX. GENERAL

A. Compliance with Applicable Laws. Resident and Salemtowne will comply with all laws, rules, regulations and ordinances promulgated by lawful governmental authorities.

B. Confidentiality. Salemtowne has the responsibility to keep all of the personal, medical and financial information you have supplied to it confidential. You agree that Salemtowne can disclose such information to those who have a need, in its judgment, or right to know (e.g., to provide information for transfer to a hospital).

C. Assignment. Your rights and privileges under this Agreement to the facilities, services and programs of the Corporation are personal to you and may not be transferred or assigned by you or otherwise.

D. Management of the Corporation. The absolute rights of management are reserved by the Corporation, its Board of Trustees and its administrators as delegated by said Board of Trustees. The Corporation reserves the right to accept or deny any person for residency. Residents do not have the right to determine entry or terms of entry of any other Resident. Salemtowne reserves the right to amend, implement or terminate policies and/or guidelines related to the operation of the community in its sole discretion.

E. Moravian Affiliation. Salemtowne is affiliated with the Moravian Church in America, Southern Province (“Southern Province). The Southern Province is not responsible for the financial and contractual obligations of Salemtowne.

F. Indemnity. You agree to indemnify, defend and hold us harmless from claims, damages or expenses, including attorneys’ fees and court costs, resulting from any injury or death to persons and any damages to property caused by, resulting

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from, attributable to or in any way connected with your negligent or intentional act or omission or those of your guests, including private duty nurses, companions, or other.

G. Severability. The invalidity of any restriction, condition or other provision of this Agreement, or any part of the same, shall not impair or affect in any way the validity or enforceability of the rest of this Agreement.

H. Resident Contracted Services. If you wish to privately employ outside assistance, including Salemtowne employed Associates, for whatever reason, all Salemtowne policies must be upheld, and prior written approval by Salemtowne management must be obtained. You agree to hold Salemtowne harmless in all situations related to the provisions of such outside services. The Corporation has the right to require termination of such a service at any time.

I. Resident Handbook. You will be given a current copy of the Resident’s Handbook as adopted by the Corporation. You understand that these documents will change from time to time but that they are the procedural documents for those occupying Living Accommodations at Salemtowne.

J. Entire Agreement. This Agreement constitutes the entire contract between the Corporation and Resident. The Corporation shall not be liable or bound in any manner by any statements, representations or promises made by any person representing or assuming to represent the Corporation, unless such statements, representations or promises are set forth in this Agreement or in an amendment to this Agreement signed by Salemtowne’s President/CEO and by you. Electronic (e.g., pdf) versions of this Agreement shall have the same legal effect as originals, and all of which, when fully executed, shall constitute one and the same instrument.

K. Successors and Assigns. Except as set forth herein, this Agreement shall bind and inure to the benefit of the successors and assigns of the Corporation and the heirs, executors, responsible parties, powers of attorney, administrators and assigns of you.

L. Capacity. This Agreement has been executed on our behalf by our duly authorized agent, and no officer, trustee, agent or employee of ours shall have any personal liability hereunder to you under any circumstances.

M. Tax Considerations. You should consult with your tax advisor regarding the tax considerations associated with this Agreement.

N. Governing Law. This Agreement shall be governed by the laws of the State of North Carolina without regard to conflict of laws principles.

O. Amendments and Partial Invalidation. Generally, this Agreement can be changed only by mutual written consent. However, we can make changes without your consent to keep the Agreement in compliance with applicable laws

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and regulations provided, that the changes we make do not substantially reduce your benefits under the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

P. Mediation. In the event a dispute, claim or controversy of any kind arises between the parties regarding the care or treatment of the Resident that cannot be resolved by mutual agreement, the parties agree to submit such dispute, claim or controversy to a neutral mediator for possible resolution. The parties will jointly agree on a neutral mediator. Each party shall submit all evidence or information in writing to the mediator in support of its contentions or allegations and any defense either party may have with respect to the dispute, claim or controversy. Each party shall have the right to a hearing before the mediator and to personally present information pertinent to such dispute, claim or controversy. The mediator shall assist each party, in an unbiased manner, in reaching amicable agreement regarding the dispute, claim or controversy. If an amicable agreement is not reached, or if either party fails or refuses to negotiate or mediate in good faith to resolve the matter, or if a neutral mediator cannot be agreed upon between the parties, then the parties agree to submit such dispute, claim or controversy to an arbitration process as outlined below.

Q. Arbitration. In the event a dispute, claim or controversy of any kind arising out of or relating to this Agreement cannot be resolved through mediation as described herein, the parties agree to submit such dispute, claim or controversy to binding arbitration to be held in Winston-Salem, North Carolina in accordance with the then-current commercial arbitration rules of the American Arbitration Association. The parties will jointly agree on an arbitrator. If the parties are unable to agree in good faith and within a reasonable time on the selection of an arbitrator, then either party may request appointment of an arbitrator by the American Arbitration Association. Costs of arbitration, such as arbitrators' fees and similar costs, will be borne equally by the parties, provided that the arbitrator may award the costs of arbitration against a party who the arbitrator determines has acted in bad faith or fraudulently. Unless the arbitrator determines a party has acted in bad faith or fraudulently, attorneys' fees shall not be considered "costs of arbitration" and are to be borne by the incurring party. The parties will each be required to submit a proposed resolution of each issue in such dispute, claim or controversy to the arbitrator. The arbitrator shall base his/her decision upon the proposed resolutions in addition to any evidence presented at any hearing. The decision of the arbitration shall be final and binding unless the arbitration is determined by a court to be fraudulent or so grossly erroneous as to necessitate the inference of bad faith. Judgment on the award rendered by the arbitrators may be entered in any federal or state court having jurisdiction thereof. The arbitrators shall have no authority to make legal determinations which are, or are based on, material errors of law, to award punitive damages, or to add to, modify or refuse to enforce any valid and enforceable agreement(s) between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award that could not have been made by a court of law or that would cause any party to be in violation of any governmental law or

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regulation. Nothing herein shall prohibit a party to the dispute, controversy or claim from seeking equitable relief in a court of law to maintain the status quo while a mediation or arbitration is pending.

R. Gender. Throughout this Agreement, the use of the masculine gender shall include the feminine, and the use of singular shall include the plural.

S. Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

T. Waivers. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power, or privilege (“Right”) under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

U. Survival. Those rights and obligations that have accrued as a result of the operation of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms, as shall any obligation of Resident to pay costs or expenses of his or her stay at Salemtowne that remain unpaid as of such termination.

V. Notice Provisions. Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:

Salemtowne: Office of the President/CEO Salemtowne 1000 Salemtowne Drive Winston Salem, North Carolina 27106 Resident: Your address for the purpose of giving notice prior to your move to Salemtowne is the address appearing after your signature below. Your address for the purpose of giving notice after your move to Salemtowne will be the current Living Accommodation address at the applicable time. You are responsible for notifying us of any changes in address and/or telephone number.

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Salemtowne will stand behind all of the statements, promises and representations in this Agreement, but no others. If you feel something has been promised to you, but it is not specifically mentioned in this Agreement, now is the time to discuss it – before you sign this Agreement.

I (we) understand this matter involves a financial commitment and associated risk as well as a legally binding contract. I (we) was (were) encouraged to consult with an attorney and/or financial advisor who could advise me (us) concerning this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate, as of the day and year first above written, one duplicate copy of this Agreement being retained by each party.

Your signature below certifies that you have read, understand and accept this Agreement as of this (current date) ___________day of __________, ______.

SALEMTOWNE

RESIDENT(S) (or Resident(s)’s Attorney in Fact) (*)

By (signature) (signature) (SEAL)

Printed Name (signature) (SEAL)

Title

(*) If Attorney–in-Fact signs on behalf of the Resident(s), a Filed Power of Attorney document must be attached to this Agreement.

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ACKNOWLEDGEMENT OF RECEIPT OF DSCLOSURE STATEMENT

Salemtowne 1000 Salemtowne Drive

Winston Salem, N. C. 27106

As of the day and year above written in this Residence and Services Agreement, the undersigned Resident(s) acknowledges receipt of the Disclosure Statement of Moravian Home, Incorporated D/B/A Salemtowne dated August 30, 2015. The Disclosure Statement was received prior to the execution of this Agreement or prior to or at the time of the transfer of any money or other property to the facility, whichever occurred first.

As a prospective Resident, the facility’s representatives have encouraged me to read the Disclosure Statement in its entirety before entering into any contract or written agreement or paying any fee.

I understand the facility, like all other continuing care facilities in the State of North Carolina, is subject to an act concerning registration and disclosure by continuing care facilities (the “Act”). Registration under the Act does not constitute approval, recommendation, or endorsement of the facility by the Department of Insurance or the State of North Carolina, nor does such registration evidence the accuracy or completeness of the information in the Disclosure Statement.

I understand this matter involves a financial commitment and associated risk as well as a legally binding contract. In evaluating the Disclosure Statement and the Financial Statements prior to any commitment, I was encouraged to consult with an attorney and/or financial advisor who could review these documents with me, if any matters contained herein are not clear, including an understanding of solvency and deficit fund balance levels for this and other continuing care facilities.

SALEMTOWNE




Title


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INDEX

Abandoned Living Accommodation. ........ 26 Absences. .................................................. 24 ACCOMMODATIONS AND SERVICES .............................................. 3 ACKNOWLEDGEMENT OF RECEIPT .............................................. 36 Activities ..................................................... 6 Adjustments in the Monthly/Daily Fee ..... 13 Advance Directives ................................... 17 Age ............................................................ 15 Alterations to Living Accommodation ....... 4 Amendments and Partial Invalidation ....... 32 Appliances................................................. 20 Application for Benefits ............................ 14 Application, Health History and Financial Statement ............................... 16 Appointment of Guardian ......................... 18 Arbitration ................................................. 33 Assignment of Benefits ............................. 14 Assignment. .............................................. 31 Capacity. ................................................... 32 Changes in Living Accommodations ........ 20 Clinic and Related Services ........................ 7 Combination of Living Accommodations. ................................. 22 Common Facilities ...................................... 5 Compliance with Applicable Laws ........... 31 Condition of Living Accommodation ....... 27 Confidentiality. ......................................... 31 Emergency Medical Care ............................ 7 Emergency Notifications .......................... 18 Entire Agreement. ..................................... 32 Entrance Fee.............................................. 10 ENTRY REQUIREMENTS ..................... 15 Filing for and Rights to Insurance Benefits ................................................. 21 FINANCIAL ARRANGEMENTS ........... 10 FINANCIAL ASSISTANCE .................... 30 Financial Assistance Funds ....................... 31 Financial Requirements ............................ 16 Financial Resources .................................. 16 Funeral and Burial..................................... 17 Furnishings and Appliances ........................ 4

Gender ....................................................... 34 GENERAL ................................................ 31 Governing Law ......................................... 32 Groundskeeping .......................................... 5 Guests and Visitors ................................... 19 Health Care Center and Assisted Living Center Fees and Charges ........... 14 Health Insurance. ...................................... 21 Health Requirements ................................. 16 Housekeeping Services ............................... 4 Indemnity. ................................................. 31 Interpretation ............................................. 34 Laundry ....................................................... 4 Living Accommodation .............................. 3 Loss of Property ........................................ 20 Mail ............................................................. 5 Maintenance and Repairs ............................ 4 Managed Care ........................................... 15 Management of the Corporation. .............. 31 Masten Assisted Living Center ................... 7 Meals ........................................................... 4 Mediation. ................................................. 33 Medicaid ................................................... 15 Monthly Statements .................................. 13 Monthly/Daily Fee .................................... 12 Moravian Affiliation ................................. 31 Moving Costs. ........................................... 23 No Negotiated Managed Care Rate .......... 15 Not a Participating Provider...................... 15 Notice Provisions. ..................................... 34 Notification ............................................... 16 Nursing and Health Care ............................. 6 Occupancy by Two Residents. .................. 20 On-Site Emergency Call Response ............. 7 Other Services Available ............................ 6 Parking ........................................................ 5 Participating Provider ............................... 15 Personal Interview .................................... 16 Pets ............................................................ 23 Phillips Health Care Center ........................ 6 Policies, Rules and Regulations ................ 19 Power of Attorney ..................................... 17 Priority ...................................................... 14

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Professional Management of Salemtowne and its Facilities.................. 6 Psychiatric Illness, Dangerous

Communicable Disease, Drug or Alcohol Abuse ...................................... 16 Recovery of Subsidies Provided by

Salemtowne ........................................... 31 Refund ....................................................... 28 Refund of Entrance Fee Related to Cost of Care. ......................................... 29 Refund of Entrance Fee Unrelated to Cost of Care. ......................................... 28 Relationships Between Residents and

Employees (“Associates”) .................... 19 Release from Obligations Upon Termination ........................................... 29 Removal of Personal Property .................. 28 Representations ......................................... 17 Resident..................................................... 19 Resident Contracted Services. .................. 32 Resident Handbook ................................... 32 Resident Representation............................ 19 Right of Entry ........................................... 20 RIGHT OF RESCISSION ........................ 29 Rights of Resident ..................................... 18 Room Assignment in Health Care Center and Assisted Living Center ....... 23 Schedule of Fees ....................................... 13 Security ....................................................... 3 Separability. .............................................. 32 Sharing Occupancy After Admission/ Entry ...................................................... 22 Smoking .................................................... 24

Smoking/Tobacco Products ...................... 24 Storage ........................................................ 5 Subordination ............................................ 18 Subsidy ...................................................... 30 Successors and Assigns............................. 32 Surrender of Living Accommodation ....... 25 Survival ..................................................... 34 TABLE OF CONTENTS ............................ 2 Tax Considerations ................................... 32 Temporary Absence .................................. 26 Temporary Stay ......................................... 14 TERMINATION AND REFUND

PROVISIONS ....................................... 25 Termination by the Corporation................ 27 Termination Prior to Occupancy ............... 25 Termination Upon Death .......................... 26 TERMS OF RESIDENCY ........................ 18 Transfer to Another Living

Accommodation. ................................... 23 Transfer to Hospital or Other Facility ....... 25 Transfer to Phillips Health Care Center or Masten Assisted Living Center......... 24 TRANSFERS OR CHANGES IN LEVELS OF CARE. ............................. 24 Transportation ............................................. 5 Use of and Changes to Living

Accommodation ...................................... 5 Utilities ........................................................ 4 Voluntary Termination.............................. 26 Waivers ..................................................... 34 Weapons .................................................... 19 Will ........................................................... 17

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Assisted Living Agreement – August 30, 2015 Page 1 of 32

Masten Assisted Living Center


(With continuance of care in the Health Care Center)

Resident: __________________________________________

Living Accommodation: _________________________________


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ASSISTED LIVING RESIDENCE AND SERVICES AGREEMENT

TABLE OF CONTENTS

I. ACCOMMODATIONS AND SERVICES .................................................. 3

II. FINANCIAL ARRANGEMENTS .............................................................10

III. ENTRY REQUIREMENTS .......................................................................13

IV. TERMS OF RESIDENCY ..........................................................................15

V. TRANSFERS OR CHANGES IN LEVELS OF CARE ..........................20

VI. TERMINATION PROVISIONS ................................................................21

VII. RIGHT OF RESCISSION ..........................................................................24

VIII. FINANCIAL ASSISTANCE ......................................................................24

IX. GENERAL ....................................................................................................25

X. ACKNOWLEDGEMENT OF RECEIPT .................................................30

XI. INDEX...........................................................................................................31

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ASSISTED LIVING RESIDENCE AND SERVICES AGREEMENT

This Agreement (the “Agreement”) is made this (date of occupancy) ___________ day of __________, _____ by and between MORAVIAN HOME, INCORPORATED d/b/a SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”, “Salemtowne”, “we”, us” or “our”) and _____________________________________________ (hereinafter “Resident”, “you”, “your”).


WHEREAS, You desire to become a resident of Salemtowne’s Assisted Living Center and to use and enjoy the facilities, programs and services provided by the Corporation subject to the terms and conditions of this Agreement;




• Living Accommodation. Unit (street address) _______________________, an apartment type of Living Accommodation (as described in materials presented to you and as shown to you during a physical tour), located in Salemtowne’s Masten Assisted Living Center (hereinafter referred to as the “Living Accommodation”). You have the exclusive right to occupy and use the Living Accommodation subject to the terms and conditions set forth in this Agreement. You, with the prior written consent of the Corporation and subject to the terms and conditions of this Agreement, may from time to time transfer from one Living Accommodation at Salemtowne to another. Transfer charges may apply. In the event of such a transfer, the reference to the “Living Accommodation” designated above shall be automatically amended to reflect such a transfer.

• Security. We will use reasonable care in providing security on the premises of Salemtowne. We will furnish an emergency call system that is monitored twenty-four (24) hours a day as well as a staffed entrance. Smoke detectors are provided in all Living Accommodations. We are not responsible for loss or damage to your personal property. You are responsible for securing your Living Accommodation.

Initials ___________ __________


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• Utilities. We will furnish ordinary electricity, heating, air conditioning, water, sewer, gas, basic cable television service and trash removal. You are responsible for any telephone and internet installation charges and the cost of telephone and internet services.

• Furnishings and Appliances. The Corporation will provide furnishings and appliances in the Living Accommodation as described in the literature published by the Corporation regarding Salemtowne. All other furniture and furnishings for the Living Accommodation shall be provided by you and shall be maintained by you at your risk.

• Meals. The Corporation will make available, to you, three (3) nutritionally well-balanced meals each day, the cost of which is included in your Monthly/Daily Fee.

• Housekeeping Services. We agree to maintain the Living Accommodation by providing weekly housekeeping for Assisted Living Residents and daily services for the Health Care Center. Housekeeping includes vacuuming, dusting, cleaning of bath and changing of bed and bath linens, and trash removal. Additional housekeeping services may be made available at your expense.

• Laundry. Bed and bath linens as well as linen laundry service and personal laundry service (washing, drying and folding) will be provided for Residents in the Assisted Living Center and the Health Care Center. The costs of these services are included in the Monthly/Daily fee. You are responsible for arranging and paying for dry cleaning services. Salemtowne is not responsible for loss or damage to personal items laundered by Salemtowne.

• Maintenance and Repairs. We will maintain and keep in repair the improvements, furnishings, appliances, and equipment owned by the Corporation. Maintenance and repair of your personal property is your responsibility. You will be responsible for the cost of repairing any damage to property of the Corporation caused by your negligence and/or that of any guest of yours, ordinary wear and tear excepted.

• Alterations to Living Accommodation. Any structural or physical change or redecoration of any kind within the Living Accommodation will require the prior approval of the Corporation. The cost of any change, repairs or maintenance for that change and the subsequent cost to return the living unit to its original condition in the event of such change, or redecoration, will be paid by you. Any such improvement or change will be owned by the Corporation and will not be considered in determining the amount of any refund to you upon termination of this Agreement.

• Use of and Changes to Living Accommodation. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws, or regulations. The Living Accommodation may not be used in any manner in violation of any zoning ordinances or other governmental laws or regulations.

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• Groundskeeping. We will furnish basic groundskeeping service for the grounds of Salemtowne, including lawn, tree and shrubbery care. Subject to approval by the Corporation, you may plant and maintain certain areas designated for such purpose by the Corporation. The cost of these plantings and maintenance of such plantings will be at your expense.

• Parking. The Corporation will provide one (1) unassigned parking area for your personal vehicle and limited parking for guests.

• Mail. Mail will be delivered by the postal service to Salemtowne. Salemtowne staff deliver mail to central mail areas for assisted Living Accommodations. Salemtowne staff deliver mail directly to each health care Living Accommodation.

Package deliveries vary by carrier. If a carrier does not deliver packages directly to the resident’s Living Accommodation, Salemtowne staff will deliver packages directly to assisted living and health care Residents.

• Common Facilities. We will provide common facilities for the use and/or benefit of all Residents. Such common facilities currently include an enclosed swimming pool and exercise facility, dining rooms, mailroom, multi-purpose rooms, library, computer area, game/television area, lounges, and sitting areas.

• Transportation. We will provide local medical transportation for scheduled medical appointments Monday through Friday between 9:00 a.m. and 4:30 p.m. except some holidays. Forty-eight (48) hours notice is required. Additional charges will be incurred for appointments exceeding four (4) per month and those appointments outside of normal service hours noted above. Additional charges will be incurred for Residents who require staff accompaniment.


• Activities. Wellness, social, recreational, spiritual, educational and cultural activities will be available to Residents. Additional charges may be incurred for some programs.

• Services. The services and facilities that are provided through the Entrance and Monthly/Daily Fees (may also be described further herein) are summarized below:

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• Flexible dining plan (depending on dining allowance option chosen or

required) • Country Club Privileges at Pine Brook Country Club (annually renewing

agreement) • Deposit and limited banking services with Wells Fargo Bank • Capital Bank ATM and - On-site bank teller by appointment • Limited parking • Limited storage (based on Living Accommodation *) • Computer/internet access • Complimentary Wi-Fi access in common areas • All utilities, except telephone and internet service • Basic Cable television service • Housekeeping service • Maintenance service • Limited local medical transportation • Social, spiritual, and recreational programs • Pastoral counseling • On-site delivery of pharmaceuticals and pharmaceutical consultations • Routine nursing services through the clinic • Nutritional counseling • Emergency nursing services • 24-hour medical emergency call system, security and fire protection • Check Cashing • Notary Public services


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on duty 24 hours per day

• Access to Fitness Center

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• Other Services Available. Residents engaging third parties for services within Salemtowne may do so only with prior notification and authorization by Salemtowne (i.e. companions, private duty nurses, maintenance workers, etc.). This is not an all- inclusive listing of services you may request or utilize. With respect to services not listed, consult the resident handbook, schedule of charges (both provided to residents) or the Finance Office.

• Professional Management of Salemtowne and its Facilities. The Corporation will employ associates and/or agents to manage the operations of Salemtowne and its facilities.

• Nursing and Health Care. We will provide nursing and health care for each Resident as follows:

1. Phillips Health Care Center. The Health Care Center will be provided for the benefit of the Residents. The Corporation is licensed by the North Carolina Department of Health and Human Services, Division of Health Service Regulation to operate 84 beds offering intermediate and skilled nursing care for Residents who are temporarily ill or who require long-term nursing care. Private or semi-private accommodations will be provided for Residents in the Health Care Center. Included in the Health Care Center is a Special Care Unit, which serves the needs of individuals, diagnosed with Alzheimer’s or other dementia-related diseases. Some of the beds in the Health Care Center are certified for Medicare and Medicaid reimbursement.

• Twenty-four (24) hour nursing staff maintained in the Phillips Health Care

Center.



• Residents may choose their own personal physician and are responsible for charges for services by such physicians and any consultants. Residents may choose to use the Corporation’s Medical Director as their personal physician. Residents are responsible for applicable charges.

• Other health care services may be made available to the Resident at the Resident’s expense, including, but not limited to: pharmacy services, radiology services, dental services, laboratory tests, physical therapy, occupational therapy, therapeutic activities, rehabilitative treatments,

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wheelchairs, medical equipment and supplies. The cost of such services shall not be covered by the Monthly/Daily Fees described herein.

• Temporary care (up to 30 days) is also available in the Health Care Center and Assisted Living Center for treatment of short-term illnesses or injuries.




5. Masten Assisted Living Center. The Assisted Living Center will be provided for the benefit of the Residents. The Corporation is licensed by the North Carolina Department of Health and Human Services, Division of Health Service Regulation to operate 46 beds to provide support services for Residents who require assistance with activities of daily living. Private accommodations will be provided for Residents in the Assisted Living Center. The Assisted Living Center is licensed to provide services to individuals who require some assistance with activities of daily living, including but not limited to: bathing, dressing, medication administration, dining room assistance, monitoring of vital signs, and nursing assessments.


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• Entrance Fee. No Entrance Fee is required for direct entry into our Assisted Living Center.

• Non-Standard Features. The Corporation has consented to your request to add the following non-standard features in your Living Accommodation and you agree to pay the following amount to cover the additional costs, maintenance and removal of these features. This additional amount is not subject to any refund provision herein and is payable prior to the installation of the applicable non-standard features.

Non-Standard Features Added:

Cost

$

$

$

$


• Monthly/Daily Fee. You agree to pay a Monthly/Daily Fee during the term of this agreement which shall be payable in advance by the 10th day of each month. As of the date of this Agreement, the Monthly/Daily Fee associated with the Living Accommodation will be approximately $ ___________.

The Monthly/Daily Fee will begin on the date of Occupancy. Occupancy is defined as the first day that a Resident either resides in the Living Accommodation or the first day that the Resident’s furnishings or belongings are placed in the Living Accommodation or in a storage area at Salemtowne.

No credit will be provided to you should you refuse services, which are included in the Monthly/Daily Fee, such as laundry, housekeeping and meals.

• Vacations and/or Time Away from Living Accommodation. Monthly/Daily fees are not subject to change or credit if a Resident is away from the Living Accommodation for any period of time. (For example, vacations, hospital stays, etc.)

Initials ___________ __________


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• Adjustments in the Monthly/Daily Fee. The Corporation usually sets fees annually but shall have the authority to adjust the Monthly/Daily Fee from time to time during the term of this Agreement as it, in its discretion, deems necessary. Any such increase in the Monthly/Daily Fee or other charges may be made by the Corporation upon thirty (30) days written notice to the Resident.



• Schedule of Fees. You have been given a current copy of the Schedule of Fees as adopted by the Board of Trustees of the Corporation. You understand that these fees may change from time to time.

• Monthly Statements. We will furnish the Resident with monthly statements showing the total amount of fees and other charges owed by the Resident, which shall be payable by the 10th of the month. Late payments are subject to an interest charge of one and one-half percent (1.5%) per month from the first of the month. Salemtowne offers and encourages an automatic bank draft for the Monthly/Daily Fees. Salemtowne may terminate this agreement if You have a past due amount in excess of thirty (30) days. Termination of this Agreement does not end the obligation of You or Your estate to pay all amounts due, no matter when incurred.


The Corporation reserves the right, with 30 days notice, to change the billing date and the payment due date. For a partial first month, the Monthly/Daily Fee is pro-rated on a per diem basis. Thereafter, Monthly/Daily Fees are paid in advance and are not pro-rated at termination for the Assisted Living Center. Monthly/Daily Fees are paid in advance and are pro-rated at termination for the Health Care Center.

• Health Care Center and Assisted Living Center Priority Entry. Residents are provided priority entry over non-Residents for entry to the Health Care Center or Assisted Living Center. Salemtowne will make every effort to accommodate Residents in the Health Care Center and/or Assisted Living Center but cannot guarantee availability of accommodations. In the event the Health Care Center and the Assisted Living Center are fully occupied when a resident is in need of care, the resident agrees to relocate to an alternate health care facility (“a Comparable Facility”). In the event of relocation, Salemtowne will make every effort to transfer the resident back to Salemtowne when accommodations become available.

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Upon your relocation to a Comparable Facility, the resident will continue to be responsible for the Monthly/Daily Fee (unless their Living Accommodation is surrendered). Salemtowne will not be responsible for the charges associated with the alternate health care accommodations.

• Application for Benefits. If requested by Salemtowne, you will apply for any or all federal, state, and local benefits for which you may be eligible or entitled; and if requested by Salemtowne, you will apply for any or all such benefits toward the cost of your care at Salemtowne. These benefits may include: Medicare, Medicaid, prescription, and Veterans benefits.

Residents who receive Medicaid funding and who reside in a Medicaid certified accommodation must have their Social Security, pension or other monthly income paid directly to Salemtowne. Salemtowne will administer and manage these funds, on behalf of the Resident in accordance with applicable laws and regulations, to pay for the residence and services provided to the resident.

• Assignment of Benefits. You will from time to time authorize any provider of medical and health services to receive reimbursement as provided under Medicare/Medicaid, any or all Federal, State and local benefits for which you may be eligible or entitled, and any supplementary insurance programs. If requested by Salemtowne, you will from time to time make assignments to the provider of medical and other health services of all benefits otherwise accruing to you under Medicare/Medicaid, or other programs and supplementary extended coverage plans to compensate for services rendered.

• Managed Care. If you have chosen to participate in a managed care program as an alternative to Medicare Part A, Medicare Part B, or other programs and supplemental insurance coverage, the terms of this Agreement governing nursing care will include the following provisions:


2. Not a Participating Provider. If Salemtowne is not an approved participating provider with your managed care program and you choose to receive health care services at a managed care participating provider, then you agree that you must relocate for as long as necessary for those services to be provided, and be responsible for all costs. In addition, while receiving health care services at the managed care participating provider, you agree that unless this Agreement is terminated, you will continue to pay the Monthly/Daily Fee for your Living Accommodation, unless your Living Accommodation has been surrendered to us.

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You will become qualified for entry to Salemtowne upon satisfaction of the following provisions:

A. Age. The entry requirements for residency at Salemtowne are nondiscriminatory except as to age, and Salemtowne is open to both married and single men and women of all races and religions. Entry to the Health Care Center and the Assisted Living Center is restricted to persons 62 years of age or older.


C. Application, Health History and Financial Statement. You shall submit for review, by the Admissions Committee appointed by the Corporation, an Application for Entry, a FL-2, and a Confidential Financial Statement, all on forms furnished by the Corporation.

D. Notification. We shall review the application materials as well as the results of the personal interviews and will notify you whether you meet the entry requirements. We will also notify you as early as possible of the date on which the Living Accommodation is expected to be available for occupancy.

E. Health Requirements. Prior to residency at Salemtowne, you shall submit a report of a physical examination (FL-2) from a physician selected by you. Such report shall include a statement by such physician that you require assisted Living Accommodations. We may require you to have another physical examination by our Medical Director or by another physician approved by the Corporation. You shall be responsible for the costs of such physical examinations. If your health as disclosed

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by such physical examination differs materially from that disclosed in your Application for Entry and FL-2, the Corporation shall have the right to decline entry and to terminate this Agreement, or in the discretion of the Corporation, to permit you to take occupancy of accommodations at Salemtowne suitable to your needs.


G. Financial Requirements. You must have assets and income, which will be sufficient under foreseeable circumstances to pay the financial obligations under this Agreement and to meet your ordinary living expenses. We may require you to furnish current financial information at any time prior to and subsequent to occupancy.

H. Financial Resources. You, your current and future responsible parties (i.e. power(s) of attorney, executor(s)) will abide by any and all financial arrangements made with the Corporation for the purpose of securing your ability to pay any and all charges for residing at Salemtowne. You agree not to make any gift or other transfer of assets for the purpose of evading your obligations under this Agreement, or if such gift or transfer would render you unable to meet such obligations under this Agreement. Gifts or transfers of assets in this manner, which result in your inability to meet your financial obligations in accordance with this Agreement, will entitle Salemtowne to terminate this Agreement, and you or your responsible parties, as applicable, will be liable for any unpaid amounts.

I. Power of Attorney. You agree to execute and maintain in effect a durable power of attorney that is valid under North Carolina law and will survive your incapacity or disability. This durable power of attorney will designate an attorney-in-fact and an alternate attorney-in fact who will act for you in managing your financial affairs and in filing for insurance or other benefits under private and public assistance programs as full and complete a manner as you could do if acting personally for yourself. You will deliver a copy of a fully executed power of attorney to Salemtowne prior to occupancy. You will not revoke or amend this durable power of attorney except upon execution of a replacement durable power of attorney, a fully executed copy of which will be delivered to Salemtowne. This document also may address at your option, other affairs, such as decisions concerning medical care.

J. Will. You agree to execute a Will, and to provide to Salemtowne a copy of such sections of the Will and any revisions, as applicable during the term of this

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Agreement to document the name(s) of the person(s) to be contacted in the event of your death (i.e. executor(s)).

In the event of your death, while you are a resident of Salemtowne under this Agreement, only the executor(s) named in your Will will be allowed to remove or dispose of your furnishings and belongings in your Living Accommodation and any related storage areas at Salemtowne. Members of your family or those to whom you have granted Power of Attorney will not be allowed access to your personal property after your death, unless they are the executor(s) named in your Will.



M. Representations. You affirm that the representations made during the entry process are true and correct and may be relied upon by the Corporation as a basis for entering into this Agreement.









• Rights of Resident. You have the right to occupy and enjoy the Living Accommodation described herein during your lifetime unless this Agreement shall be terminated as provided herein. It is understood that this Agreement does not transfer or grant any interest in the real or personal property owned by the Corporation other

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than the right to use or occupancy of the Living Accommodation in accordance with the terms hereof. The Living Accommodation may not be used for commercial purposes. The Living Accommodation may not be occupied or used in any manner in violation of any ordinance, law or regulation.

• Subordination. You agree that all of your rights under this Agreement shall at all times be subordinate and junior to the lien of all mortgages or other documents creating liens encumbering the Corporation, which have been or will be executed by us. Upon request, you agree to execute, acknowledge and deliver to such lender or lenders such further written evidence of such subordination as such lenders may reasonably require. You shall not be liable for any such indebtedness.

• Policies, Rules and Regulations. You understand and agree that: (i) in order for Salemtowne to operate in the best interests of the entire community, it is essential that we have cooperation of and compliance with applicable policies, rules and regulations by you, your family, guests, responsible party and others who may intervene, speak or act or purport to intervene, speak or act, for or on behalf of you or who may come on the premises of Salemtowne in any capacity or for any purpose in connection with or as a result of your residency at Salemtowne; (ii) a continuing or repeated failure or refusal by any such persons to so cooperate and comply may result in a determination by Salemtowne that it is impracticable or impossible for Salemtowne to continue to accommodate you as a resident; and (iii) upon such determination by Salemtowne, we shall have the right to terminate this Agreement.

• Weapons. No weapons of any type shall be brought on to the Salemtowne property by you or your guests without the express prior written permission of the Corporation.

• Resident Representation. Residents have the right of self-organization through a Residents’ council, which may convene to review the interests of the resident population. You shall have resident representation on the Salemtowne Board of Trustees as outlined in the Bylaws of Salemtowne.

• Guests and Visitors. Guests and visitors are welcome at Salemtowne. Guests may use Salemtowne guest accommodations, subject to availability and additional charges. At all times, you shall be responsible for any injury to others or damage to the property of others or Salemtowne caused by you or your guest(s). Salemtowne reserves the right and authority to limit or terminate the stay of any guest at any time and for any reason.

• Relationships Between Residents and Employees (“Associates”). Salemtowne is built on mutual respect and instructs its Associates to be cordial and helpful to Residents. The relationship is to remain professional. Associates must not be delayed or deterred by Residents in the performance of their duties. Management is solely responsible for the supervision of staff. Complaints or requests for special assistance must be made to the appropriate supervisor. Giving gratuities or bequests to Associates or Associates’ families is not permitted. Residents will not employ Salemtowne Associates nor hire former Salemtowne Associates without the prior written consent of Salemtowne Management.

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• Loss of Property. The Corporation maintains insurance on all of its property and its operations to include general public liability insurance, property insurance including coverage for acts of God, vandalism and theft, professional liability insurance and worker’s compensation.

The Corporation will not be responsible for the loss of any property belonging to the Resident due to theft, mysterious disappearance, fire or any other cause. You will have the responsibility for obtaining “renters insurance” to cover such losses.

• Right of Entry. Salemtowne recognizes your right to privacy, and shall limit entry to your Living Accommodation to legitimate emergencies and to scheduled work, including housekeeping, repairs, maintenance, and inspections. You hereby authorize Associates or agents of Salemtowne to enter your Living Accommodation, upon reasonable notice for all such purposes.

• Appliances. Salemtowne is not obligated to determine your ability to safely utilize the appliances, if any, in your Living Accommodation. However, should we determine that you have demonstrated an inability to safely utilize appliances in your Living Accommodation; we will have the right to turn off the power servicing such appliance(s) and/or to remove any and all such appliances. In any such instance, you shall remain obligated to pay for the Full Month/Daily fee for your Living Accommodation, any extra meals and any fire alarm charges issued by the fire department.

• Changes in Living Accommodations. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws or regulations.

• Health Insurance. You will maintain eligible Medicare coverage and one supplemental health insurance policy or equivalent insurance coverage, which adequately covers hospital, medical, prescription and skilled nursing deductibles and co-payments required of your primary insurance plan. Both your primary and supplemental health insurance policies must recognize Salemtowne as a health care provider, or you will assume the financial responsibility for services provided that otherwise could be covered.


• Filing for and Rights to Insurance Benefits. Salemtowne is a participating provider with Medicare, Medicaid and Blue Medicare only.

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• In the event a Resident’s health insurance determines a service is “not covered”, the Resident will be responsible for payment. Salemtowne tries to inform Residents when services may not be covered; however, it is the resident’s responsibility to understand his/her policy limitations.




• Combination of Living Accommodations. Various circumstances may make it desirable that a Living Accommodation occupied by a Resident be combined with an adjoining Living Accommodation to form one combined Living Accommodation. You agree that if a determination is made by the Corporation that it is desirable to combine your Living Accommodation with a Living Accommodation, which adjoins your Living Accommodation, you will surrender occupancy of your Living

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Accommodation, within a reasonable time after receiving notice of such determination. In the event that the Corporation makes such determination and notifies you of such, you have the option to (a) transfer into the combined Living Accommodation when such combined Living Accommodation is ready for occupancy, or (b) transfer to another Living Accommodation, when available, of the same type as the Living Accommodation previously occupied by you. You will pay the Monthly/Daily charge associated with the combined Living Accommodation as established by the Corporation.


• Transfer to Another Living Accommodation. You may move to a different Assisted Living Accommodation at Salemtowne, when it becomes available, upon payment of such fees, consent by the Corporation and compliance with such guidelines regarding transfers as may be adopted by the Corporation. Salemtowne reserves the right to amend such policies, guidelines and fees, in its discretion.

• Transfer to a Heath Care Center Living Accommodation. Should your needs change, you may request entry to a Health Care Center Living Accommodation, when it becomes available, upon payment of such fees, consent by the Corporation and compliance with such guidelines regarding transfers as may be adopted by the Corporation. Fees and guidelines may be changed from time to time by the Corporation.

• Transfer to an Independent Living Accommodation. Should your needs change, you may request entry to an independent Living Accommodation. You would be required to complete the applicable entry process, provide requested information and execute a separate residence and services agreement. You would be required to pay an Entrance Fee at the time of transfer to an independent Living Accommodation. Fees and guidelines may be changed from time to time by the Corporation. Salemtowne reserves the right to amend such policies, guidelines and fees, in its discretion.

• Room Assignment in Health Care Center and Assisted Living Center. You understand that you acquire no ownership in any property at Salemtowne under this Agreement; also, that no particular room or unit in the Assisted Living Center or the Health Care Center is subject to reservation or permanent assignment, and that we may change your room assignment in the Assisted Living Center or the Health Care Center. Though we retain the right to change your room assignment, we agree that we will make changes only as we find such changes to be necessary or advisable.

• Moving Costs. You are responsible for arranging and paying for all packing and moving costs for moves into, within and out of Salemtowne. Assistance may be provided by Salemtowne at an additional cost.

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• Pets/Smoking. Pets are not allowed in the Assisted Living Center and Health Care

Center Living Accommodations.

Smoking / Tobacco Products. Salemtowne is a “Tobacco Free” Community. Smoking and use of tobacco products is not permitted anywhere on Salemtowne property including, campus buildings (Phillips Health Care Center, Masten Assisted Living Center, and Community Center, etc.), building entrances or common areas. The same applies to Salemtowne’s Babcock campus. The only exception is:


• Absences. You agree to inform Salemtowne (Nurse in Charge) when you are going to be away for any length of time. In order to provide adequate time for medications to be available, if applicable, you must provide at least 24 hours advance notice of an absence. No credits (i.e. missed meals) will be given during absences for assisted living and health care Residents.

V. TRANSFERS OR CHANGES IN LEVELS OF CARE. (A change in Living Accommodations within the Assisted Living Center or to the Health Care Center will require no additional residence and services agreement. This agreement will remain in effect.)

• Transfer to Phillips Health Care Center. You agree that the Corporation shall have authority to determine that you should be transferred from your Living Accommodation to the Health Care Center or a separate area within either Center. Such determinations shall be based on the professional opinion of the Resident’s physician and the Resident Review Committee of Salemtowne and shall be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party.

• Transfer to Hospital or Other Facility. If it is determined by your physician that you need care beyond that which can be provided by Salemtowne you may be transferred to a hospital, center or institution equipped to give such care, which care will be at your expense. Such transfer will be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party.

In the event it becomes necessary for you to be transferred to a hospital, Salemtowne will provide any information available to meet the provisions of any hospital admissions agreement and you agree that Salemtowne has the right to provide such information, which may include part or all of your records.

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• Surrender of Living Accommodation. If a determination is made by the Corporation that any transfer described in this Section is permanent in nature, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you prior to such transfer, within 30 days of the determination.

You are responsible for the costs of transfer and moving as well as the Monthly/Daily Fee through the last day of occupancy of the Living Accommodation being vacated. For the purposes of this Section V. C., occupancy is defined as the last day that a Resident either resides in the Living Accommodation or the last day that the Resident’s furnishings or belongings occupy the Living Accommodation or a storage area at Salemtowne.


VI. TERMINATION PROVISIONS

• Termination Prior to Occupancy. This Agreement may be rescinded by you at any time prior to taking occupancy at Salemtowne for any reason by giving written notice to the Corporation. This Agreement will automatically be canceled due to death or physical or mental conditions that would make you ineligible for entry to Salemtowne. This Agreement may be terminated by the Corporation at any time prior to the date that you take occupancy if the Corporation determines that you no longer meet the physical, mental or financial requirements for entry.

In the event of such termination (including death or physical or mental conditions making you ineligible for entry to Salemtowne), you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. Notwithstanding anything to the contrary in this Agreement, if the Resident has paid the applicable Monthly/Daily Fee prior to occupying the Living Accommodation, any refund of such amounts (expressly excluding any amounts paid for non-standard features added to the Living Accommodation) shall be paid by Salemtowne within fourteen (14) days following such termination pursuant to this paragraph.

• Voluntary Termination. Except as provided in subsection A in this Section VI. herein, you may terminate this Agreement by giving the Corporation prior written notice of such termination. Fourteen (14) days’ notice (non refundable fee) is required for the Assisted Living Center and five (5) days’ notice (non refundable fee) is required for the Health Care Center. If required notice is given, or if no written notice is given, you will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period (non refundable fee) and for each day of occupancy except when a delay in discharge or transfer would jeopardize your health or safety or that of others at Salemtowne. Any refund due following termination will be made in accordance with Section VI.I.

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• Abandoned Living Accommodation. You may be deemed to have abandoned the Living Accommodation and terminated this Agreement if you do not occupy a residence at Salemtowne for a period of one continuous year.

• Temporary Absence. Temporary absence because of illness, trips or otherwise will not affect your rights to retain occupancy of Living Accommodation, as long as applicable Monthly/Daily Fees are paid.

• Termination Upon Death. In the event of your death, this Agreement shall terminate as of the date that your Living Accommodation is vacated provided, however, that the Resident’s estate shall continue to be obligated to pay the applicable Monthly/Daily Fee for such Resident’s Living Accommodation until such Resident’s Living Accommodation is vacated and left in good condition except for normal wear and tear.

In the event of such termination, you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. Any refund due following the Resident’s death, will be made in accordance with Section VI.I.

Any refund to which you are entitled shall be paid to your Estate unless you execute a designation and name a trust, revocable by you at the time of your death, to receive applicable refunds. Should you execute a revocable trust subsequent to signing this agreement, you or your estate’s executor may submit a written beneficiary designation form designating a trust, revocable by you at the time of your death, to receive applicable refunds.

• Termination by the Corporation. We may terminate this Agreement at any time if there has been a material misrepresentation or omission made by you during the application process; if you fail to make payment to the Corporation of any fees or charges due the Corporation within thirty (30) days after receiving written notice of your failure to pay such fees or charges; if you do not abide by the rules and regulations adopted by the Corporation or breach any of the terms and conditions of this Agreement; if the health or safety of other individuals in the Corporation is endangered if you remain in Salemtowne, as determined by a physician, physician assistant or nurse practitioner; or the discharge is necessary for your welfare and your needs cannot be met by the Corporation as documented by your physician, physician assistant or nurse practitioner.

You will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period and for each day of occupancy. Except in cases of emergency, you will receive a notice of the termination by the Corporation at least thirty (30) days prior to the effective date of termination. You may be entitled to appeal the Corporation’s decision to terminate this Agreement and, except in cases of emergency, the Corporation will not discharge you before the final decision resulting from the appeal has been rendered.

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• Condition of Living Accommodation. At the effective date of termination of this Agreement, you will vacate the Living Accommodation and will leave it in good condition except for normal wear and tear. You, or your estate, will be liable to the Corporation for any costs incurred in restoring the Living Accommodation and storage areas to good condition except for normal wear and tear.

• Removal of Personal Property. In the event of termination of this Agreement, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you, within thirty (30) days of the determination.



• Refund. You or your estate, or a revocable trust designated by you may be entitled to a refund of any amounts related to the cost of health care services provided by Salemtowne or any third party health care provider less any amounts payable to Salemtowne or any third party health care provider through the date the refund is due hereunder. This refund shall not include the cost of non-standard features that were added to your Living Accommodation at your request. Any refund will be made no later than thirty (30) days from the date of your death.

If the Agreement is terminated by you or the Corporation in an emergency situation (i.e. because the Corporation is no longer able to meet your urgent health care needs, or termination is necessary to protect your health and safety or that of another person at Salemtowne), the refund will be made within fourteen (14) days after you leave Salemtowne. If this Agreement is terminated for any other reason, the refund will be made no later than fourteen (14) days after you leave Salemtowne.

• Release from Obligations Upon Termination. Upon termination of this Agreement, Salemtowne is released from any further obligations to you except for the payment of any refund, which may be due under this Agreement.

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Notwithstanding anything herein to the contrary, this Agreement may be rescinded by you giving written notice of such rescission to the Corporation within thirty (30) days following the later of the execution of this Agreement or the receipt of a disclosure statement that meets the requirements of Section 58-64-1, et seq. of the North Carolina General Statutes. In the event of such rescission, you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. You will not be required to move into Salemtowne before the expiration of such thirty (30) day period. Notwithstanding anything to the contrary in this Agreement, any refund that may be due to you following rescission of this Agreement, shall be paid by the corporation within fourteen (14) days following receipt of written notice of rescission pursuant to this paragraph.


• Subsidy. In connection with its charitable mission, it is the desire of the Board of

Trustees of Salemtowne that no one leave Salemtowne because of lack of funds. Any disposition of Resident’s assets in any way other than for care at Salemtowne or related living/medical expenses to the extent that Resident cannot adequately provide for Resident’s expenses or care will nullify this desire on the part of Salemtowne and entitle Salemtowne to terminate Resident’s right to reside in Salemtowne. Salemtowne will make reasonable efforts to acquire the funds necessary to meet Salemtowne’s fees for care. However, the resources of Salemtowne to provide care for Residents are not unlimited, and Salemtowne reserves the right to terminate the residency of any person, including Resident, who cannot pay the full cost of Salemtowne’s Monthly/Daily Fees and charges, and other Salemtowne costs in connection with such person’s stay at Salemtowne. In the event that a Resident presents facts which in the opinion of the corporation justify special financial consideration, the Corporation will give careful consideration to subsidizing in whole or in part the Monthly/Daily Fees and other Salemtowne charges payable by the Resident hereunder so long as such subsidy can be made without impairing the ability of the Corporation to attain its objectives while operating on a sound financial basis. In the event that the Corporation may subsidize in whole or in part, the Monthly/Daily Fees and other Salemtowne charges payable by the Resident hereunder, the Resident will be required to execute a separate Financial Assistance Agreement with the Corporation.

In the event that we continue to provide the services to you under the terms of this Agreement despite your financial inability to continue to pay the Monthly/Daily Fee or other Salemtowne charges payable under the terms of this Agreement, Salemtowne

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shall be entitled to require you to move to a smaller or less costly Living Accommodation.


• Recovery of Subsidies Provided by Salemtowne. When a Resident dies or moves out of the community, if said Resident’s fees have been subsidized wholly or partly by Salemtowne, the Resident or Resident’s estate, if any, will be liable to Salemtowne for the full amount of the subsidy the Resident received for the entire time of residency. This paragraph will apply whether or not the Resident is in residence at Salemtowne at the time of death. This Agreement will operate as a lifetime assignment, transfer and conveyance to Salemtowne of so much of Resident’s property as is necessary to cover such liability. Any amount due Salemtowne under this paragraph may be deducted from any refund payable to Resident or to the Resident’s estate.

• Financial Assistance Funds. The Corporation has established funds, which will be used to assist Residents who would otherwise not be able to live at Salemtowne. Such funds may be used for the purposes of providing financial assistance, but no Resident shall have any claim to or expectation of receiving or continuing to receive any such assistance.

IX. GENERAL

• Compliance with Applicable Laws. Resident and Salemtowne will operate in full compliance with all laws, rules, regulations and ordinances promulgated by lawful governmental authorities.

• Confidentiality. Salemtowne has the responsibility to keep all of the personal, medical and financial information you have supplied to it confidential. You agree that Salemtowne can disclose such information in accordance with all applicable laws to those who have a need, in its judgment, or right to know (e.g., to provide information for transfer to a hospital).

• Assignment. Your rights and privileges under this Agreement to the facilities, services and programs of the Corporation are personal to you and may not be transferred or assigned by you or otherwise.

• Management of the Corporation. The absolute rights of management are reserved by the Corporation, its Board of Trustees and its administrators as delegated by said Board of Trustees. The Corporation reserves the right to accept or deny any person for residency. Residents do not have the right to determine entry or terms of entry of any other Resident. Salemtowne reserves the right to amend, implement or terminate

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policies and/or guidelines related to the operation of the community in its sole discretion.

• Moravian Affiliation. Salemtowne is affiliated with the Moravian Church in America, Southern Province (“Southern Province). The Southern Province is not responsible for the financial and contractual obligations of Salemtowne.

• Indemnity. You agree to indemnify, defend and hold us harmless from claims, damages or expenses, including attorneys’ fees and court costs, resulting from any injury or death to persons and any damages to property caused by, resulting from, attributable to or in any way connected with your negligent or intentional act or omission or those of your guests, including private duty nurses, companions or other.

• Separability. The invalidity of any restriction, condition or other provision of this Agreement, or any part of the same, shall not impair or affect in any way the validity or enforceability of the rest of this Agreement.

• Resident Contracted Services. If you wish to privately employ outside assistance, including Salemtowne employed Associates, for whatever reason, all Salemtowne policies must be upheld, and prior written approval by Salemtowne management must be obtained. You agree to hold Salemtowne harmless in all situations related to the provisions of such outside services. The Corporation has the right to require termination of such a service at any time.

• Resident Handbook. You will be given a current copy of the Resident’s Handbook as adopted by the Corporation. You understand that these documents will change from time to time but that they are the procedural documents for those occupying Living Accommodations at Salemtowne.

• Entire Agreement. This Agreement constitutes the entire contract between the Corporation and Resident. The Corporation shall not be liable or bound in any manner by any statements, representations or promises made by any person representing or assuming to represent the Corporation, unless such statements, representations or promises are set forth in this Agreement or in an amendment to this Agreement signed by Salemtowne’s President/CEO and by you. Electronic (e.g., pdf) versions of this Agreement shall have the same legal effect as originals, and all of which, when fully executed, shall constitute one and the same instrument.

• Successors and Assigns. Except as set forth herein, this Agreement shall bind and inure to the benefit of the successors and assigns of the Corporation and the heirs, executors, responsible parties, powers of attorney, administrators and assigns of you.

• Capacity. This Agreement has been executed on our behalf by our duly authorized agent, and no officer, trustee, agent or employee of ours shall have any personal liability hereunder to you under any circumstances.

• Tax Considerations. You should consult with your tax advisor regarding the tax considerations associated with this Agreement.

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• Governing Law. This Agreement shall be governed by the laws of the State of North Carolina without regard to conflict of laws principles.

• Amendments and Partial Invalidation. Generally, this Agreement can be changed only by mutual written consent. However, we can make changes without your consent to keep the Agreement in compliance with applicable laws and regulations provided, that the changes we make do not substantially reduce your benefits under the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

• Mediation. In the event a dispute, claim or controversy of any kind arises between the parties regarding the care or treatment of the Resident that cannot be resolved by mutual agreement, the parties agree to submit such dispute, claim or controversy to a neutral mediator for possible resolution. The parties will jointly agree on a neutral mediator. Each party shall submit all evidence or information in writing to the mediator in support of its contentions or allegations and any defense either party may have with respect to the dispute, claim or controversy. Each party shall have the right to a hearing before the mediator and to personally present information pertinent to such dispute, claim or controversy. The mediator shall assist each party, in an unbiased manner, in reaching amicable agreement regarding the dispute, claim or controversy. If an amicable agreement is not reached, or if either party fails or refuses to negotiate or mediate in good faith to resolve the matter, or if a neutral mediator cannot be agreed upon between the parties, then the parties agree to submit such dispute, claim or controversy to an arbitration process as outlined below.

• Arbitration. In the event a dispute, claim or controversy of any kind arising out of or relating to this Agreement cannot be resolved through mediation as herein above, the parties agree to submit such dispute, claim or controversy to binding arbitration to be held in Winston-Salem, North Carolina in accordance with the then-current commercial arbitration rules of the American Arbitration Association. The parties will jointly agree on an arbitrator. If the parties are unable to agree in good faith and within a reasonable time on the selection of an arbitrator, then either party may request appointment of an arbitrator by the American Arbitration Association. Costs of arbitration, such as arbitrators' fees and similar costs, will be borne equally by the parties, provided that the arbitrator may award the costs of arbitration against a party who the arbitrator determines has acted in bad faith or fraudulently. Unless the arbitrator determines a party has acted in bad faith or fraudulently, attorneys' fees shall not be considered "costs of arbitration" and are to be borne by the incurring party. The parties will each be required to submit a proposed resolution of each issue in such dispute, claim or controversy to the arbitrator. The arbitrator shall base his/her decision upon the proposed resolutions in addition to any evidence presented at any hearing. The decision of the arbitration shall be final and binding unless the arbitration is determined by a court to be fraudulent or so grossly erroneous as to necessitate the inference of bad faith. Judgment on the award rendered by the arbitrators may be entered in any federal or state court having jurisdiction thereof. The arbitrators shall have no authority to make legal determinations which are, or are based on, material errors of law, to award punitive damages, or to add to, modify or

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refuse to enforce any valid and enforceable agreement(s) between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award that could not have been made by a court of law or that would cause any party to be in violation of any governmental law or regulation. Nothing herein shall prohibit a party to the dispute, controversy or claim from seeking equitable relief in a court of law to maintain the status quo while a mediation or arbitration is pending.

• Gender. Throughout this Agreement, the use of the masculine gender shall include the feminine, and the use of singular shall include the plural.

• Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

• Waivers. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power, or privilege ("Right") under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

• Survival. Those rights and obligations that have accrued as a result of the operation of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms, as shall any obligation of Resident to pay costs or expenses of his or her stay at Salemtowne that remain unpaid as of such termination.

• Notice Provisions. Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:

Salemtowne: Office of the President/CEO Salemtowne 1000 Salemtowne Drive Winston Salem, North Carolina 27106 Resident: Your address for the purpose of giving notice prior to your move to Salemtowne is the address appearing after your signature below. Your address for the purpose of giving notice after your move to Salemtowne will be the current Living Accommodation address at the applicable time of notice.

You are responsible for notifying us of any changes in address and/or telephone number.

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I (we) understand this matter involves a financial commitment and associated risk as well as a legally binding contract. I (we) was (were) encouraged to consult with an attorney and/or financial advisor who could advise me (us) concerning this Agreement.



SALEMTOWNE




Title Current Address: Street

City, State, Zip Code

Telephone


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ACKNOWLEDGEMENT OF RECEIPT OF

DISCLOSURE STATEMENT Salemtowne

1000 Salemtowne Drive Winston Salem, N. C. 27106


As a prospective resident, the facility’s representatives have encouraged me to read the Disclosure Statement in its entirety before entering into any contract or written agreement or paying any fee.

I understand the facility, like all other continuing care facilities in the State of North Carolina is subject to an act concerning registration and disclosure by continuing care facilities (the “Act”). Registration under the Act does not constitute approval, recommendation, or endorsement of the facility by the Department of Insurance or the State of North Carolina, nor does such registration evidence the accuracy or completeness of the information in the Disclosure Statement.


SALEMTOWNE




Title


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INDEX

Abandoned Living Accommodation. ........ 22 Absences ................................................... 20 ACCOMMODATIONS AND SERVICES 3 ACKNOWLEDGEMENT OF RECEIPT . 30 Activities. .................................................... 5 Adjustments in the Monthly/Daily Fee ..... 11 Advance Directives ................................... 15 Age ............................................................ 13 Alterations to Living Accommodation ....... 4 Amendments and Partial Invalidation. ...... 27 Appliances................................................. 17 Application for Benefits ............................ 12 Application, Health History and Financial

Statement ............................................... 13 Appointment of Guardian. ........................ 15 Arbitration. ................................................ 27 Assignment ............................................... 25 Assignment of Benefits ............................. 12 Capacity. ................................................... 26 Changes in Living Accommodations ........ 17 Clinic and Related Services. ....................... 9 Combination of Living Accommodations. 18 Common Facilities. ..................................... 5 Compliance with Applicable Laws ........... 25 Condition of Living Accommodation ....... 23 Confidentiality .......................................... 25 Emergency Medical Care. ........................... 9 Emergency Notifications. ......................... 15 Entire Agreement. ..................................... 26 Entrance Fee.............................................. 10 ENTRY REQUIREMENTS ..................... 13 Filing for and Rights to Insurance Benefits

............................................................... 17 FINANCIAL ARRANGEMENTS ........... 10 FINANCIAL ASSISTANCE .................... 24 Financial Assistance Funds ....................... 25 Financial Requirements. ........................... 14 Financial Resources .................................. 14 Funeral and Burial..................................... 15 Furnishings and Appliances ........................ 4 Gender ....................................................... 28

GENERAL ................................................ 25 Governing Law. ........................................ 27 Groundskeeping .......................................... 5 Guests and Visitors. .................................. 16 Health Care Center and Assisted Living

Center Priority Admission. .................... 11 Health Insurance. ...................................... 17 Health Requirements. ................................ 13 Housekeeping Services. .............................. 4 Indemnity. ................................................. 26 Interpretation ............................................. 28 Laundry ....................................................... 4 Living Accommodation .............................. 3 Loss of Property. ....................................... 17 Mail ............................................................. 5 Maintenance and Repairs. ........................... 4 Managed Care. .......................................... 12 Management of the Corporation ............... 25 Masten Assisted Living Center. .................. 9 Meals ........................................................... 4 Mediation. ................................................. 27 Medicaid ................................................... 13 Monthly Statements .................................. 11 Monthly/Daily Fee .................................... 10 Moravian Affiliation ................................. 26 Moving Costs ............................................ 19 No Negotiated Managed Care Rate .......... 13 Non-Standard Features.............................. 10 Not a Participating Provider...................... 12 Notice Provisions. ..................................... 28 Notification ............................................... 13 Nursing and Health Care ............................. 8 On-Site Emergency Call Response ............. 9 Other Services Available ............................ 8 Parking ........................................................ 5 Participating Provider. .............................. 12 Personal Interview .................................... 13 Pets/Smoking. ........................................... 20 Phillips Health Care Center. ....................... 8 Policies, Rules and Regulations ................ 16 Power of Attorney ..................................... 14

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Professional Management of Salemtowne and its Facilities ....................................... 8

Psychiatric Illness, Dangerous Communicable Disease, Drug or Alcohol Abuse. .................................................... 14

Recovery of Subsidies Provided by Salemtowne. .......................................... 25

Refund ....................................................... 23 Relationships Between Residents and

Employees (“Associates”). .................... 16 Release from Obligations Upon Termination

............................................................... 23 Removal of Personal Property .................. 23 Representations ......................................... 15 Resident Contracted Services ................... 26 Resident Handbook. .................................. 26 Resident Representation............................ 16 Right of Entry ........................................... 17 RIGHT OF RESCISSION ........................ 24 Rights of Resident ..................................... 15 Room Assignment in Health Care Center

and Assisted Living Center.................... 19 Schedule of Fees ....................................... 11 Security. ...................................................... 3 Separability. .............................................. 26 Services ....................................................... 5 Subordination. ........................................... 16 Subsidy ...................................................... 24 Successors and Assigns............................. 26

Surrender of Living Accommodation. ...... 21 Survival. .................................................... 28 Tax Considerations. .................................. 26 Temporary Absence. ................................. 22 Termination by the Corporation................ 22 Termination Prior to Occupancy ............... 21 TERMINATION PROVISIONS .............. 21 Termination Upon Death. ......................... 22 TERMS OF RESIDENCY ........................ 15 Transfer to a Heath Care Center Living

Accommodation..................................... 19 Transfer to an Independent Living

Accommodation..................................... 19 Transfer to Another Living Accommodation

............................................................... 19 Transfer to Hospital or Other Facility ....... 20 Transfer to Phillips Health Care Center. ... 20 TRANSFERS OR CHANGES IN LEVELS

OF CARE .............................................. 20 Transportation ............................................. 5 Use of and Changes to Living

Accommodation....................................... 4 Utilities ........................................................ 4 Vacations and/or Time Away from Living

Accommodation..................................... 10 Voluntary Termination.............................. 21 Waivers. .................................................... 28 Weapons. ................................................... 16 Will ........................................................... 14

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Health Care Center Agreement – August 30, 2015 Page 1 of 32

Phillips Health Care Center


(With continuance of care in the Assisted Living Center)

Resident: __________________________________________



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HEALTH CARE CENTER RESIDENCE AND SERVICES AGREEMENT

TABLE OF CONTENTS

I. ACCOMMODATIONS AND SERVICES ................................. 3

II. FINANCIAL ARRANGEMENTS ............................................ 10

III. ENTRY REQUIREMENTS ...................................................... 13

IV. TERMS OF RESIDENCY ........................................................ 15

V. TRANSFERS OR CHANGES IN LEVELS OF CARE ........... 20

VI. TERMINATION PROVISIONS ............................................... 21

VII. RIGHT OF RESCISSION ......................................................... 24 VIII. FINANCIAL ASSISTANCE .................................................... 24

IX. GENERAL ................................................................................. 25

X. ACKNOWLEDGEMENT OF RECEIPT ................................. 30

XI. INDEX ....................................................................................... 31

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HEALTH CARE CENTER RESIDENCE AND SERVICES AGREEMENT

This Agreement (the “Agreement”) is made this (date of occupancy) ___________ day of __________, _____ by and between MORAVIAN HOME, INCORPORATED d/b/a SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”, “Salemtowne”, “we”, us” or “our”) and _____________________________________________ (hereinafter “Resident”, “you”, “your”).


WHEREAS, You desire to become a resident of Salemtowne’s Health Care Center and to use and enjoy the facilities, programs and services provided by the Corporation subject to the terms and conditions of this Agreement;




A. Living Accommodation. Unit number __________________________ , a bed accommodation (as described in materials presented to you and as shown to you during a physical tour), located in the Phillips Health Care Center in Salemtowne (hereinafter referred to as the “Living Accommodation”). You have the exclusive right to occupy and use the Living Accommodation subject to the terms and conditions set forth in this Agreement. You, with the prior written consent of the Corporation and subject to the terms and conditions of this Agreement, may from time to time transfer from one Living Accommodation in Salemtowne to another. Transfer charges may apply. In the event of such a transfer, the reference to the “Living Accommodation” designated above shall be automatically amended to reflect such a transfer.

B. Security. We will use reasonable care in providing security on the premises of Salemtowne. We will furnish an emergency call system that is monitored twenty-four (24) hours a day as well as a staffed entrance. Smoke detectors are provided in all Living Accommodations. We are not responsible for loss or damage to your personal property. You are responsible for securing your Living Accommodation.

Initials ___________ __________


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C. Utilities. We will furnish ordinary electricity, heating, air conditioning, water, sewer, gas, basic cable television service and trash removal. You are responsible for any telephone and internet installation charges and the cost of telephone and internet services.

D. Furnishings and Appliances. The Corporation will provide furnishings and appliances in the Living Accommodation as described in the literature published by the Corporation regarding Salemtowne. All other furniture and furnishings for the Living Accommodation shall be provided by the Resident and shall be maintained by you at your risk.

E. Meals. The Corporation will make available, to you, three (3) nutritionally well-balanced meals each day, the cost of which is included in your Monthly/Daily Fee.

F. Housekeeping Services. We agree to maintain the Living Accommodation by providing daily housekeeping for Health Care Residents and weekly services for Assisted Living Residents. Housekeeping includes vacuuming, dusting, cleaning of bath and changing of bed and bath linens, and trash removal. Additional housekeeping services may be made available at your expense.

G. Laundry. Bed and bath linens as well as linen laundry service and personal laundry service (washing, drying and folding) will be provided for Residents in the Assisted Living Center and the Health Care Center. The costs of these services are included in the Monthly/Daily fee. You are responsible for arranging and paying for dry cleaning services. Salemtowne is not responsible for loss or damage to personal items laundered by Salemtowne.

H. Maintenance and Repairs. We will maintain and keep in repair the improvements, furnishings, appliances, and equipment owned by the Corporation. Maintenance and repair of your personal property is your responsibility. You will be responsible for the cost of repairing any damage to property of the Corporation caused by your negligence and/or that of any guest of yours, ordinary wear and tear excepted.

I. Alterations to Living Accommodation. Any structural or physical change or redecoration of any kind within the Living Accommodation will require the prior approval of the Corporation. The cost of any change, repairs or maintenance for that change and the subsequent cost to return the living unit to its original condition in the event of such change, or redecoration, will be paid by you. Any such improvement or change will be owned by the Corporation and will not be considered in determining the amount of any refund to you upon termination of this Agreement.

J. Use of and Changes to Living Accommodation. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws, or regulations. The Living Accommodation may not be used in any manner in violation of any zoning ordinances or other governmental laws or regulations.

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K. Groundskeeping. We will furnish basic groundskeeping service for the grounds of Salemtowne, including lawn, tree and shrubbery care. Subject to approval by the Corporation, you may plant and maintain certain areas designated for such purpose by the Corporation. The cost of these plantings and maintenance of such plantings will be at your expense.


M. Mail. Mail will be delivered by the postal service to Salemtowne. Salemtowne staff deliver mail to central mail areas for assisted Living Accommodations. Salemtowne staff deliver mail directly to each health care Living Accommodation.


N. Common Facilities. We will provide common facilities for the use and/or benefit of all Residents. Such common facilities currently include an enclosed swimming pool and exercise facility, central dining rooms, mail room, multi-purpose rooms, library, computer area, game/television area, lounges, and sitting areas.

O. Transportation. We will provide local medical transportation for scheduled medical appointments Monday through Friday between 9:00 a.m. and 4:30 p.m. except holidays. Forty-eight (48) hours’ notice is required. Additional charges will be incurred for appointments exceeding four (4) per month and those appointments outside of normal service hours noted above. Additional charges will be incurred for Residents who require staff accompaniment.


P. Activities. Wellness, social, recreational, spiritual, educational and cultural activities will be available to Residents. Additional charges may be incurred for some programs.

Q. Other Services Available. Residents engaging third parties for services within Salemtowne may do so only with prior notification and authorization by Salemtowne (i.e. companions, private duty nurses, maintenance workers, etc.). This is not an all- inclusive listing of services you may request or utilize. With respect to services not listed, consult the resident handbook, schedule of charges (both provided to residents) or the Finance Office.

R. Services. The services and facilities that are provided through the Entrance and Monthly/Daily Fees (may also be described further herein) are summarized below:

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1. Phillips Health Care Center. The Health Care Center will be provided for the benefit of the Residents. The Corporation is licensed by the North Carolina Department of Health and Human Services, Division of Health Service Regulation to operate 84 beds offering intermediate and skilled nursing care for Residents who are temporarily ill or who require long-term nursing care. Private or semi-private accommodations will be provided for Residents in the Health Care Center. Included in the Health Care Center is a Special Care Unit which serves the needs of individuals diagnosed with Alzheimer’s or other dementia-related diseases. Some of the beds in the Health Care Center are certified for Medicare and Medicaid reimbursement.





• Other health care services may be made available to the Resident at the Resident’s expense, including, but not limited to: pharmacy services, radiology services, dental services, laboratory tests, physical therapy, occupational therapy, including therapeutic activities, rehabilitative treatments, wheelchairs, other medical equipment and supplies. The cost of such services shall not be covered by the Monthly/Daily Fees described herein.

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• Temporary care (up to 30 days) is also available in the Health Care Center and Assisted Living Center for treatment of short-term illnesses or injuries for Assisted Living Residents.






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A. Entrance Fee. No Entrance Fee is required for direct admission into our Health Care Center or Assisted Living Center.

B. Non-Standard Features. The Corporation has consented to your request to add the following non-standard features in your Living Accommodation and you agree to pay the following amount to cover the additional costs, maintenance and removal of these features. This additional amount is not subject to refund and is payable prior to the installation of the applicable non-standard features.

Non-Standard Features Added: Cost

$

$

$

$


C. Monthly/Daily Fee. You agree to pay a Monthly/Daily Fee during the term of this agreement which shall be payable in advance by the 10th day of each month. As of the date of this Agreement, the Monthly/Daily Fee associated with the Living Accommodation will be approximately $ ___________.

The Monthly/Daily Fee will begin on the date of occupancy. Occupancy is defined as the first day that a Resident either resides in the Living Accommodation or the first day that the Resident’s furnishings or belongings are placed in the Living Accommodation or in a storage area at Salemtowne.


Initials ___________ __________


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D. Vacations and/or Time Away from Living Accommodation. Monthly/Daily Fees not subject to change or credit if a Resident is away from the Living Accommodation for any period of time. (For example, vacations, hospital stays, etc.)

E. Adjustments in the Monthly/Daily Fee. The Corporation usually sets fees annually but shall have the authority to adjust the Monthly/Daily Fee from time to time during the term of this Agreement as it, in its discretion, deems necessary. Any such increase in the Monthly/Daily Fee or other charges may be made by the Corporation upon thirty (30) days written notice to the Resident.



F. Schedule of Fees. You have been given a current copy of the Schedule of Fees as adopted by the Board of Trustees of the Corporation. You understand that these fees may change from time to time.

G. Monthly Statements. We will furnish the Resident with monthly statements showing the total amount of fees and other charges owed by the Resident, which shall be payable by the 10th of the month. Late payments are subject to an interest charge of one and one-half percent (1.5%) per month from the first of the month. Salemtowne offers and encourages an automatic bank draft for the Monthly/Daily Fees. Salemtowne may terminate this agreement if You have a past due amount in excess of thirty (30) days. Termination of this Agreement does not end the obligation of You or Your estate to pay all amounts due, no matter when incurred.


The Corporation reserves the right, with 30 days’ notice, to change the billing date and the payment due date. For a partial first month, the Monthly/Daily Fee is pro-rated on a per diem basis. Thereafter, Monthly/Daily Fees are paid in advance and are not pro-rated at termination for the Assisted Living Center. Monthly/Daily Fees are paid in advance and are pro-rated at termination for the Health Care Center.

H. Health Care Center and Assisted Living Center Priority Admission. Residents are provided priority admission over non-Residents for entry to the Health Care Center or Assisted Living Center. Salemtowne will make every effort to accommodate Residents in the Health Care Center and/or Assisted Living Center but cannot guarantee availability of accommodations. In the event the Health Care Center and the Assisted Living Center are fully occupied when a resident is in need of care, the resident agrees to relocate to an alternate health care facility (“a Comparable

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Facility”). In the event of relocation, Salemtowne will make every effort to transfer the resident back to Salemtowne when accommodations become available.


I. Application for Benefits. If requested by Salemtowne, you will apply for any or all federal, state, and local benefits for which you may be eligible or entitled; and if requested by Salemtowne, you will apply for any or all such benefits toward the cost of your care at Salemtowne. These benefits may include: Medicare, Medicaid, prescription, and Veterans benefits.

Residents who receive Medicaid funding and who reside in a Medicaid certified accommodation must have their Social Security, pension or other monthly income paid directly to Salemtowne. Salemtowne will administer and manage these funds, on behalf of the Resident in accordance with applicable laws and regulations, to pay for the residence and services provided to the resident.

J. Assignment of Benefits. You will from time to time authorize any provider of medical and health services to receive reimbursement as provided under Medicare/Medicaid, any or all Federal, State and local benefits for which You may be eligible or entitled, and any supplementary insurance programs. If requested by Salemtowne, you will from time to time make assignments to the provider of medical and other health services of all benefits otherwise accruing to you under Medicare/Medicaid, or other programs and supplementary extended coverage plans to compensate for services rendered.

K. Managed Care. If you have chosen to participate in a managed care program as an alternative to Medicare Part A, Medicare Part B, or other programs, and supplemental insurance coverage, the terms of this Agreement governing nursing care will include the following provisions:


2. Not a Participating Provider. If Salemtowne is not an approved participating provider with your managed care program and you choose to receive health care services at a managed care participating provider, then you agree that you must relocate for as long as necessary for those services to be provided, and be responsible for all costs. In addition, while receiving health care services at the managed care participating provider, you agree that unless this Agreement is terminated, you will continue to pay the Monthly/Daily Fee for your Living Accommodation, unless your Living Accommodation has been surrendered to us.

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A. Age. The entry requirements for residency at Salemtowne are nondiscriminatory except as to age, and Salemtowne is open to both married and single men and women of all races and religions. Entry in the Assisted Living Center and the Health Care Center is restricted to persons sixty-two (62) years of age or older.


C. Application, Health History and Financial Statement. You shall submit for review, by the Corporation, an Application for Admission, a FL-2, and a Confidential Financial Statement, all on forms furnished by the Corporation.


E. Health Requirements. Prior to residency at Salemtowne, you shall submit a report of a physical examination (FL-2) made by a physician selected by you. Such report shall include a statement by such physician that you require health care accommodations. We may require you to have another physical examination by our Medical Director or by another physician approved by the Corporation. You shall be responsible for the costs of such physical examinations. If your health as disclosed by such physical examination differs materially from that disclosed in your Application for Entry and FL-2, the Corporation shall have the right to decline entry

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and to terminate this Agreement, or in the discretion of the Corporation, to permit you to take occupancy of accommodations at Salemtowne suitable to your needs.






In the event of your death, while you are a resident of Salemtowne under this Agreement, only the executor(s) named in your Will will be allowed to remove or

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dispose of your furnishings and belongings in your Living Accommodation and any related storage areas at Salemtowne. Members of your family or those to whom you have granted Power of Attorney will not be allowed access to your personal property after your death, unless they are the executor(s) named in your Will.












A. Rights of Resident. You have the right to occupy and enjoy the Living Accommodation described herein during your lifetime unless this Agreement shall be terminated as provided herein. It is understood that this Agreement does not transfer or grant any interest in the real or personal property owned by the Corporation other than the right to use or occupancy of the Living Accommodation in accordance with the terms hereof. The Living Accommodation may not be used for commercial purposes. The Living Accommodation may not be occupied or used in any manner in violation of any ordinance, law or regulation.

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C. Policies, Rules and Regulations. You understand and agree that: (i) in order for Salemtowne to operate in the best interests of the entire community, it is essential that we have cooperation of and compliance with applicable policies, rules and regulations by you, your family, guests, responsible party and others who may intervene, speak or act or purport to intervene, speak or act, for or on behalf of you or who may come on the premises of Salemtowne in any capacity or for any purpose in connection with or as a result of your residency at Salemtowne; (ii) a continuing or repeated failure or refusal by any such persons to so cooperate and comply may result in a determination by Salemtowne that it is impracticable or impossible for Salemtowne to continue to accommodate you as a resident; and (iii) upon such determination by Salemtowne, we shall have the right to terminate this Agreement.

D. Weapons. No weapons of any type shall be brought on to the Salemtowne property by you or your guests without the express prior written permission of the Corporation.

E. Resident Representation. Residents have the right of self-organization through a Residents’ council which may convene to review the interests of the resident population. You shall have resident representation on the Salemtowne Board of Trustees as outlined in the Bylaws of Salemtowne.

F. Guests and Visitors. Guests and visitors are welcome at Salemtowne. Guests may use Salemtowne guest accommodations, subject to availability and additional charges. At all times, you shall be responsible for any injury to others or damage to the property of others or Salemtowne caused by you or your guest(s). Salemtowne reserves the right and authority to limit or terminate the stay of any guest at any time and for any reason.

G. Relationships Between Residents and Employees (“Associates”). Salemtowne is built on mutual respect and instructs its Associates to be cordial and helpful to Residents. The relationship is to remain professional. Associates must not be delayed or deterred by Residents in the performance of their duties. Management is solely responsible for the supervision of staff. Complaints or requests for special assistance must be made to the appropriate supervisor. Giving gratuities or bequests to Associates or Associates’ families is not permitted. Residents will not employ Salemtowne Associates nor hire former Salemtowne Associates without the prior written consent of Salemtowne Management.

H. Loss of Property. The Corporation maintains insurance on all of its property and its operations to include general public liability insurance, property insurance including coverage for acts of God, vandalism and theft, professional liability insurance and worker’s compensation.

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The Corporation will not be responsible for the loss of any property belonging to the Resident or their guest(s) due to theft, mysterious disappearance, fire or any other cause. You will have the responsibility for obtaining “renters insurance” to cover such losses.

I. Right of Entry. Salemtowne recognizes your right to privacy, and shall limit entry to your Living Accommodation to legitimate emergencies and to scheduled work, including housekeeping, repairs, maintenance, and inspections. You hereby authorize Associates or agents of Salemtowne to enter your Living Accommodation, upon reasonable notice for all such purposes.

J. Appliances. Salemtowne is not obligated to determine your ability to safely utilize the appliances, if any, in your Living Accommodation. However, should we determine that you have demonstrated an inability to safely utilize appliances in your Living Accommodation; we will have the right to turn off the power servicing such appliance(s) and/or to remove any and all such appliances. In any such instance, you shall remain obligated to pay for the Full Month/Daily fee for your Living Accommodation, any extra meals and any fire alarm charges issued by the fire department.

K. Changes in Living Accommodations. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws or regulations.

L. Health Insurance. You will maintain eligible Medicare coverage and one supplemental health insurance policy or equivalent insurance coverage, which adequately covers hospital, medical, prescription, and skilled nursing deductibles and co-payments required of your primary insurance plan. Both your primary and supplemental health insurance policies must recognize Salemtowne as a health care provider, or you will assume the financial responsibility for services provided that otherwise could be covered.


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M. Filing for and Rights to Insurance Benefits. Salemtowne is a participating provider with Medicare, Medicaid and Blue Medicare only.

• Salemtowne will file claims with Medicare for all covered services. By law, the

patient is responsible for payment of the deductible, co-insurance, and any non-covered service. Non-covered services include, but are not limited to beauty shop charges.









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N. Combination of Living Accommodations. Various circumstances may make it desirable that a Living Accommodation occupied by a Resident be combined with an adjoining Living Accommodation to form one combined Living Accommodation. You agree that if a determination is made by the Corporation that it is desirable to combine your Living Accommodation with a Living Accommodation which adjoins your Living Accommodation, you will surrender occupancy of your Living Accommodation, within a reasonable time after receiving notice of such determination. In the event that the Corporation makes such determination and notifies you of such, you have the option to (a) transfer into the combined Living Accommodation when such combined Living Accommodation is ready for occupancy, or (b) transfer to another Living Accommodation, when available, of the same type as the Living Accommodation previously occupied by you. You will pay the Monthly/Daily charge associated with the combined Living Accommodation as established by the Corporation.


O. Transfer to Another Living Accommodation. You may move to a different Health Care Center Living Accommodation at Salemtowne, when it becomes available, upon payment of such fees, consent by the Corporation and compliance with such guidelines regarding transfers as may be adopted by the Corporation. Fees and guidelines may be changed from time to time by the Corporation.

P. Transfer to an Assisted Living Accommodation. Should your needs change, you may request entry to an Assisted Living Accommodation, when it becomes available, upon payment of such fees, consent by the Corporation and compliance with such guidelines regarding transfers as may be adopted by the Corporation. Fees and guidelines may be changed from time to time by the Corporation.

Q. Transfer to an Independent Living Accommodation. Should your needs change, you may request entry to an independent Living Accommodation. You would be required to complete the applicable entry process, provide requested information and execute a separate residence and services agreement. You would be required to pay an Entrance Fee at the time of transfer to an independent Living Accommodation. Fees and guidelines may be changed from time to time by the Corporation. Salemtowne reserves the right to amend such policies, guidelines and fees in its discretion.

R. Room Assignment in Health Care Center and Assisted Living Center. You understand that you acquire no ownership in any property at Salemtowne under this Agreement; also, that no particular room or unit in the Assisted Living Center or the Health Care Center is subject to reservation or permanent assignment, and that we may change your room assignment in the Assisted Living Center or the Health Care Center. Though we retain the right to change your room assignment, we agree that we will make changes only as we find such changes to be necessary or advisable.

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S. Moving Costs. You are responsible for arranging and paying for all packing and moving costs for moves into, within and out of Salemtowne. Assistance may be provided by Salemtowne at an additional cost.

T. Pets/Smoking. Pets are not allowed in the Assisted Living Center and Health Care

Center Living Accommodations.

Smoking / Tobacco Products. Salemtowne is a “Tobacco Free” Community. Smoking and use of tobacco products is not permitted anywhere on Salemtowne property including, campus buildings (Phillips Health Care Center, Masten Assisted Living Center, and Community Center, etc), building entrances or common areas. The same applies to Salemtowne’s Babcock campus. The only exception is:

The Health Care Center Administrator may permit smoking for a Resident, if so, a designated smoking area would be created outside. However, the prohibition will remain in effect for a family member or caregiver who may accompany the Resident to the designated area.

U. Absences. You agree to inform Salemtowne (Nurse in Charge) when you are going to be away for any length of time. In order to provide adequate time for medications to be available, if applicable, you must provide at least 24 hours advance notice of an absence. No credits (i.e. missed meals) will be given during absences for Assisted Living and Health Care Residents.

V. TRANSFERS OR CHANGES IN LEVELS OF CARE. (A change in Living Accommodations within the Health Care Center or to the Assisted Living Center will require no additional residence and services agreement. This Agreement will remain in effect.)

A. Transfer within the Phillips Health Care Center or to Masten Assisted Living Center. You agree that the Corporation shall have authority to determine that you should be transferred from your Living Accommodation to the Assisted Living Center or a separate area within either center. Such determinations shall be based on the professional opinion of the Resident’s physician and the Resident Review Committee of Salemtowne and shall be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party.

B. Transfer to Hospital or Other Facility. If it is determined by your physician that you need care beyond that which can be provided by Salemtowne you may be transferred to a hospital, center or institution equipped to give such care, which care will be at your expense. Such transfer will be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party.

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In the event it becomes necessary for you to be transferred to a hospital, Salemtowne will provide any information available to meet the provisions of any hospital admissions agreement and you agree that Salemtowne has the right to provide such information, which may include part or all of your records.

C. Surrender of Living Accommodation. If a determination is made by the Corporation that any transfer described in this Section is permanent in nature, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you prior to such transfer, within 5 days of the determination.

You are responsible for the costs of transfer and moving as well as the Monthly/Daily Fee through the last day of occupancy of the Living Accommodation being vacated. For the purposes of this Section V.C., occupancy is defined as the last day that a Resident either resides in the Living Accommodation or the last day that the Resident’s furnishings or belongings occupy the Living Accommodation.


VI. TERMINATION PROVISIONS

A. Termination Prior to Occupancy. This Agreement may be rescinded by you at any time prior to taking occupancy at Salemtowne for any reason by giving written notice to the Corporation.

This Agreement may be terminated by the Corporation at any time prior to the date that you take occupancy if the Corporation determines that you no longer meet the physical, mental or financial requirements for admission.

In the event of such termination (including death or physical or mental conditions making you ineligible for admission to Salemtowne), you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. Notwithstanding anything to the contrary in this Agreement, if the Resident has paid the applicable Monthly/Daily Fee prior to occupying the Living Accommodation, any refund of such amounts (expressly excluding any amounts paid for non-standard features added to the Living Accommodation) shall be paid by Salemtowne within fourteen (14) days following such termination pursuant to this paragraph.

B. Voluntary Termination. Except as provided herein in subsection A of this Section VI., you may terminate this Agreement by giving the Corporation prior written notice of such termination. Fourteen (14) days’ notice (nonrefundable fee) is required for the Assisted Living Center and five (5) days’ notice (nonrefundable fee) is required for the Health Care Center. If required notice is given, or if no written notice is given, you will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period (nonrefundable fee) and for each day of occupancy except when a delay in discharge or transfer would jeopardize your health

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or safety or that of others at Salemtowne. Any refund due following termination will be made in accordance with Section VI.I.

C. Abandoned Living Accommodation. You may be deemed to have abandoned the Living Accommodation and terminated this Agreement if you do not occupy a residence at Salemtowne for a period of one continuous year.

D. Temporary Absence. Temporary absence because of illness, trips or otherwise will not affect your rights to retain occupancy of Living Accommodation, as long as applicable Monthly/Daily Fees are paid.

E. Termination Upon Death. In the event of your death, this Agreement shall terminate as of the date that your Living Accommodation is vacated provided, however, that the Resident’s estate shall continue to be obligated to pay the applicable Monthly/Daily Fee for such Resident’s Living Accommodation until such Resident’s Living Accommodation is vacated and left in good condition except for normal wear and tear.

In the event of such termination, you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. Any refund due following the Resident’s death, will be made in accordance with Section VI.I.


F. Termination by the Corporation. We may terminate this Agreement at any time if there has been a material misrepresentation or omission made by you during the application process; if you fail to make payment to the Corporation of any fees or charges due the Corporation within thirty (30) days after receiving written notice of your failure to pay such fees or charges; if you do not abide by the rules and regulations adopted by the Corporation or breach any of the terms and conditions of this Agreement; if the health or safety of other individuals in the Corporation is endangered if you remain in Salemtowne, as determined by a physician, physician assistant or nurse practitioner; or the discharge is necessary for your welfare and your needs cannot be met by the Corporation as documented by your physician, physician assistant or nurse practitioner.

You will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period and for each day of occupancy. Except in cases of emergency, you will receive a notice of the termination by the Corporation at least thirty (30) days prior to the effective date of termination. You may be entitled to appeal the Corporation’s decision to terminate this Agreement and, except in cases of

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emergency, the Corporation will not discharge you before the final decision resulting from the appeal has been rendered.

G. Condition of Living Accommodation. At the effective date of termination of this Agreement, you will vacate the Living Accommodation and will leave it in good condition except for normal wear and tear. You, or your estate, will be liable to the Corporation for any costs incurred in restoring the Living Accommodation and storage areas to good condition except for normal wear and tear.

H. Removal of Personal Property. In the event of termination of this Agreement, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you, within five (5) days of the determination.



I. Refund. You or your estate, or a revocable trust designated by you may be entitled to a refund of any amounts related to the cost of health care services provided by Salemtowne or any third party health care provider less any amounts payable to Salemtowne or any third party health care provider through the date the refund is due hereunder. This refund shall not include the cost of non-standard features that were added to your Living Accommodation at your request. Any refund will be made no later than thirty (30) days from the date of your death.



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Notwithstanding anything herein to the contrary, this Agreement may be rescinded by you giving written notice of such rescission to the Corporation within thirty (30) days following the later of the execution of this Agreement or the receipt of a disclosure statement that meets the requirements of Section 58-64-1, et seq. of the North Carolina General Statutes. In the event of such rescission, you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. You will not be required to move into Salemtowne before the expiration of such thirty (30) day period. Notwithstanding anything to the contrary in this Agreement, any refund that may be due to you following rescission of this Agreement, shall be paid by the corporation within fourteen (14) days following receipt of written notice of rescission pursuant to this paragraph.


Subsidy. In connection with its charitable mission, it is the desire of the Board of Trustees of Salemtowne that no one leave Salemtowne because of lack of funds. Any disposition of Resident’s assets in any way other than for care at Salemtowne or related living/medical expenses to the extent that Resident cannot adequately provide for Resident’s expenses or care will nullify this desire on the part of Salemtowne and entitle Salemtowne to terminate Resident’s right to reside in Salemtowne.

Salemtowne will make reasonable efforts to acquire the funds necessary to meet Salemtowne’s fees for care. However, the resources of Salemtowne to provide care for Residents are not unlimited, and Salemtowne reserves the right to terminate the residency of any person, including Resident, who cannot pay the full cost of Salemtowne’s Monthly/Daily Fees and charges, and other Salemtowne costs in connection with such person’s stay at Salemtowne.

In the event that a Resident presents facts which in the opinion of the corporation justify special financial consideration, the Corporation will give careful consideration to subsidizing in whole or in part the Monthly/Daily Fees and other Salemtowne charges payable by the Resident hereunder so long as such subsidy can be made without impairing the ability of the Corporation to attain its objectives while operating on a sound financial basis.

In the event that the Corporation may subsidize in whole or in part the Monthly/Daily Fees and other Salemtowne charges payable by the Resident hereunder, the Resident will be required to execute a separate Financial Assistance Agreement with the Corporation.

In the event that we continue to provide the services to you under the terms of this Agreement despite your financial inability to continue to pay the Monthly/Daily Fee or other Salemtowne charges payable under the terms of this Agreement, Salemtowne shall be entitled to require you to move to a smaller or less costly Living Accommodation.

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A. Recovery of Subsidies Provided by Salemtowne. When a Resident dies or moves out of the community, if said Resident’s fees have been subsidized wholly or partly by Salemtowne, the Resident or Resident’s estate, if any, will be liable to Salemtowne for the full amount of the subsidy the Resident received for the entire time of residency. This paragraph will apply whether or not the Resident is in residence at Salemtowne at the time of death. This Agreement will operate as a lifetime assignment, transfer and conveyance to Salemtowne of so much of Resident’s property as is necessary to cover such liability. Any amount due Salemtowne under this paragraph may be deducted from any refund payable to Resident or to the Resident’s estate.

B. Financial Assistance Funds. The Corporation has established funds which will be used to assist Residents who would otherwise not be able to live at Salemtowne. Such funds may be used for the purposes of providing financial assistance but no Resident shall have any claim to or expectation of receiving or continuing to receive any such assistance.

IX. GENERAL

A. Compliance with Applicable Laws. Resident and Salemtowne will operate in full compliance with all laws, rules, regulations and ordinances promulgated by lawful governmental authorities.

B. Confidentiality. Salemtowne has the responsibility to keep all of the personal, medical and financial information you have supplied to it confidential. You agree that Salemtowne can disclose such information in accordance with all applicable laws to those who have a need, in its judgment, or right to know (e.g., to provide information for transfer to a hospital).


D. Management of the Corporation. The absolute rights of management are reserved by the Corporation, its Board of Trustees and its administrators as delegated by said Board of Trustees. The Corporation reserves the right to accept or deny any person for residency. Residents do not have the right to determine admission or terms of admission of any other Resident. Salemtowne reserves the right to amend, implement or terminate policies and/or guidelines related to the operation of the community in its sole discretion.


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F. Indemnity. You agree to indemnify, defend and hold us harmless from claims, damages or expenses, including attorneys’ fees and court costs, resulting from any injury or death to persons and any damages to property caused by, resulting from, attributable to or in any way connected with your negligent or intentional act or omission or those of your guests, including private duty nurses, companions, or other.

G. Separability. The invalidity of any restriction, condition or other provision of this Agreement, or any part of the same, shall not impair or affect in any way the validity or enforceability of the rest of this Agreement.


I. Resident Handbook. You will be given a current copy of the Resident’s Handbook as adopted by the Corporation. You understand that these documents will change from time to time but that they are the procedural documents for those occupying Living Accommodations at Salemtowne.






O. Amendments and Partial Invalidation. Generally, this Agreement can be changed only by mutual written consent. However, we can make changes without your consent to keep the Agreement in compliance with applicable laws and regulations provided, that the changes we make do not substantially reduce your benefits under

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the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

P. Waivers. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power, or privilege ("Right") under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

Q. Survival. Those rights and obligations that have accrued as a result of the operation of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms, as shall any obligation of Resident to pay costs or expenses of his or her stay at Salemtowne that remain unpaid as of such termination.

R. Mediation. In the event a dispute, claim or controversy of any kind arises between the parties regarding the care or treatment of the Resident that cannot be resolved by mutual agreement, the parties agree to submit such dispute, claim or controversy to a neutral mediator for possible resolution. The parties will jointly agree on a neutral mediator. Each party shall submit all evidence or information in writing to the mediator in support of its contentions or allegations and any defense either party may have with respect to the dispute, claim or controversy. Each party shall have the right to a hearing before the mediator and to personally present information pertinent to such dispute, claim or controversy. The mediator shall assist each party, in an unbiased manner, in reaching amicable agreement regarding the dispute, claim or controversy. If an amicable agreement is not reached, or if either party fails or refuses to negotiate or mediate in good faith to resolve the matter, or if a neutral mediator cannot be agreed upon between the parties, then the parties agree to submit such dispute, claim or controversy to an arbitration process as outlined below.

S. Arbitration. In the event a dispute, claim or controversy of any kind arising out of or relating to this Agreement cannot be resolved through mediation as described herein, the parties agree to submit such dispute, claim or controversy to binding arbitration to be held in Winston-Salem, North Carolina in accordance with the then-current commercial arbitration rules of the American Arbitration Association. The parties will jointly agree on an arbitrator. If the parties are unable to agree in good faith and within a reasonable time on the selection of an arbitrator, then either party may request appointment of an arbitrator by the American Arbitration Association. Costs of arbitration, such as arbitrators' fees and similar costs, will be borne equally by the parties, provided that the arbitrator may award the costs of arbitration against a party who the arbitrator determines has acted in bad faith or fraudulently. Unless the arbitrator determines a party has acted in bad faith or fraudulently, attorneys' fees shall not be considered "costs of arbitration" and are to be borne by the incurring party. The parties will each be required to submit a proposed resolution of each issue in such dispute, claim or controversy to the arbitrator. The arbitrator shall base his/her decision upon the proposed resolutions in addition to any evidence presented at any hearing. The decision of the arbitration shall be final and binding unless the

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arbitration is determined by a court to be fraudulent or so grossly erroneous as to necessitate the inference of bad faith. Judgment on the award rendered by the arbitrators may be entered in any federal or state court having jurisdiction thereof. The arbitrators shall have no authority to make legal determinations which are, or are based on, material errors of law, to award punitive damages, or to add to, modify or refuse to enforce any valid and enforceable agreement(s) between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award that could not have been made by a court of law or that would cause any party to be in violation of any governmental law or regulation. Nothing herein shall prohibit a party to the dispute, controversy or claim from seeking equitable relief in a court of law to maintain the status quo while a mediation or arbitration is pending.

T. Gender. Throughout this Agreement, the use of the masculine gender shall include the feminine, and the use of singular shall include the plural.

U. Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

V. Notice Provisions. Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:

Salemtowne: Office of the President/CEO Salemtowne 1000 Salemtowne Drive Winston Salem, North Carolina 27106 Resident: Your address for the purpose of giving notice prior to your move to Salemtowne is the address appearing after your signature below. Your address for the purpose of giving notice after your move to Salemtowne will be the current Living Accommodation address at the applicable time of notice.


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I(we) understand this matter involves a financial commitment and associated risk as well as a legally binding contract. I(we) was(were) encouraged to consult with an attorney and/or financial advisor who could advise me(us) concerning this Agreement.



SALEMTOWNE



Printed Officer Name (signature) (SEAL)



Telephone


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SALEMTOWNE




Title


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INDEX

Abandoned Living Accommodation ......... 22 Absences ................................................... 20 ACCOMMODATIONS AND SERVICES .............................................. 3 ACKNOWLEDGEMENT OF RECEIPT ............................................... 30 Activities ..................................................... 5 Adjustments in the Monthly/Daily Fee ..... 11 Advance Directives. .................................. 15 Age ............................................................ 13 Alterations to Living Accommodation ....... 4 Amendments and Partial Invalidation ....... 26 Appliances................................................. 17 Application for Benefits ............................ 12 Application, Health History and Financial Statement ............................... 13 Appointment of Guardian ......................... 15 Arbitration ................................................. 27 Assignment ............................................... 25 Assignment of Benefits ............................. 12 Capacity .................................................... 26 Changes in Living Accommodations ........ 17 Clinic and Related Services ........................ 9 Combination of Living Accommodations ................................... 19 Common Facilities ...................................... 5 Compliance with Applicable Laws ........... 25 Condition of Living Accommodation ....... 23 Confidentiality .......................................... 25 Emergency Medical Care ............................ 9 Emergency Notifications .......................... 15 Entire Agreement. ..................................... 26 Entrance Fee.............................................. 10 ENTRY REQUIREMENTS ..................... 13 Filing for and Rights to Insurance Benefits .................................................. 18 FINANCIAL ARRANGEMENTS ........... 10 FINANCIAL ASSISTANCE .................... 24 Financial Assistance Funds ....................... 25 Financial Requirements ............................ 14 Financial Resources .................................. 14 Funeral and Burial..................................... 15

Furnishings and Appliances ........................ 4 Gender. ...................................................... 28 GENERAL ................................................ 25 Governing Law ......................................... 26 Groundskeeping .......................................... 5 Guests and Visitors ................................... 16 Health Care Center and Assisted Living

Center Priority Admission ..................... 11 Health Insurance ....................................... 17 Health Requirements ................................. 13 Housekeeping Services ............................... 4 Indemnity .................................................. 26 Interpretation ............................................. 28 Laundry ....................................................... 4 Living Accommodation .............................. 3 Loss of Property. ....................................... 16 Mail ............................................................. 5 Maintenance and Repairs ............................ 4 Managed Care ........................................... 12 Management of the Corporation ............... 25 Masten Assisted Living Center ................... 9 Meals ........................................................... 4 Mediation .................................................. 27 Medicaid ................................................... 13 Monthly Statements. ................................. 11 Monthly/Daily Fee .................................... 10 Moravian Affiliation ................................. 25 Moving Costs ............................................ 20 No Negotiated Managed Care Rate .......... 13 Non-Standard Features.............................. 10 Not a Participating Provider...................... 12 Notice Provisions. ..................................... 28 Notification ............................................... 13 Nursing and Health Care ............................. 8 On-Site Emergency Call Response ............. 9 Other Services Available ............................ 5 Parking ........................................................ 5 Participating Provider ............................... 12 Personal Interview .................................... 13 Pets/Smoking ............................................ 20 Phillips Health Care Center ........................ 8 Policies, Rules and Regulations ................ 16

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Power of Attorney ..................................... 14 Professional Management of Salemtowne

and its Facilities ....................................... 8 Psychiatric Illness, Dangerous

Communicable Disease, Drug or Alcohol Abuse ....................................... 14 Recovery of Subsidies Provided by

Salemtowne ........................................... 25 Refund. ...................................................... 23 Relationships Between Residents and

Employees (“Associates”). .................... 16 Release from Obligations Upon Termination ........................................... 23 Removal of Personal Property .................. 23 Representations ......................................... 15 Resident Contracted Services ................... 26 Resident Handbook ................................... 26 Resident Representation............................ 16 Right of Entry ........................................... 17 RIGHT OF RESCISSION ........................ 24 Rights of Resident ..................................... 15 Room Assignment in Health Care Center and Assisted Living Center ........ 19 Schedule of Fees ....................................... 11 Security ....................................................... 3 Separability ............................................... 26 Services ....................................................... 5 Subordination ............................................ 16 Subsidy ...................................................... 24 Successors and Assigns............................. 26 Surrender of Living Accommodation ....... 21

Survival. .................................................... 27 Tax Considerations ................................... 26 Temporary Absence .................................. 22 Termination by the Corporation................ 22 Termination Prior to Occupancy ............... 21 TERMINATION PROVISIONS .............. 21 Termination Upon Death .......................... 22 TERMS OF RESIDENCY ........................ 15 Transfer to an Assisted Living

Accommodation..................................... 19 Transfer to an Independent Living

Accommodation..................................... 19 Transfer to Another Living

Accommodation..................................... 19 Transfer to Hospital or Other Facility ....... 20 Transfer within the Phillips Health Care

Center or to Masten Assisted Living Center..................................................... 20

TRANSFERS OR CHANGES IN LEVELS OF CARE............................... 20 Transportation ............................................. 5 Use of and Changes to Living

Accommodation....................................... 4 Utilities. ....................................................... 4 Vacations and/or Time Away from Living Accommodation ......................... 11 Voluntary Termination.............................. 21 Waivers ..................................................... 27 Weapons .................................................... 16 Will ........................................................... 14

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Short Term Residence and Services Agreement – August 30, 2015 Page 1 of 29

Short-Term Residence and Services Agreement

(Phillips Health Care Center or Masten Assisted Living Center)

Resident(s): __________________________________________



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SHORT TERM RESIDENCE AND SERVICES AGREEMENT

TABLE OF CONTENTS

I. ACCOMMODATIONS AND SERVICES .................................................. 3

II. FINANCIAL ARRANGEMENTS ............................................................... 9

III. ENTRY REQUIREMENTS .......................................................................12

IV. TERMS OF RESIDENCY ..........................................................................14

V. TRANSFERS OR CHANGES IN LEVELS OF CARE ..........................18

VI. TERM AND TERMINATION ...................................................................19

VII. GENERAL ....................................................................................................22

VIII. ACKNOWLEDGEMENT OF RECEIPT .................................................27

IX. INDEX...........................................................................................................28

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Short-Term Residence and Services Agreement

This Agreement (the “Agreement”) is made this (date of occupancy)___________ day of __________, _____ by and between MORAVIAN HOME, INCORPORATED d/b/a SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”, “Salemtowne”, “we”, us” or “our”) and _____________________________________________ (hereinafter “Resident”, “you”, “your” or when two persons “ Resident”, “you” or “your” shall apply to both persons, except where the context otherwise requires).


WHEREAS, You desire to become a resident of Salemtowne’s Health Care Center or Assisted Living Center on a short-term basis for the period of ______________ (date of occupancy) through _______________ and to use and enjoy the facilities, programs and services provided by the Corporation subject to the terms and conditions of this Agreement;




A. Living Accommodation. Unit (number or address) _________________________, an accommodation (as described in materials presented to you and as shown to you during a physical tour), located in the (building) ______________________ at Salemtowne (hereinafter referred to as the “Living Accommodation”). You have the exclusive right to occupy and use the Living Accommodation subject to the terms and conditions set forth in this Agreement.

B. Long-Term Permanent Entry. Should you desire permanent entry to the Health Care Center, Assisted Living Center or the retirement facilities of Salemtowne, you will need to complete the Salemtowne entry process of making separate application, approval of the application and execution of a separate residence and services agreement.

C. Security. We will use reasonable care in providing security on the premises of Salemtowne. We will furnish an emergency call system that is monitored twenty-four (24) hours a day as well as a staffed entrance. Smoke detectors are provided in all Living Accommodations. We are not responsible for loss or damage to your personal property. You are responsible for securing your Living Accommodation.

Initials ____________ __________


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D. Utilities. We will furnish ordinary electricity, heating, air conditioning, water, sewer, gas, basic cable television service and trash removal. You are responsible for any telephone and internet installation charges and the cost of telephone and internet services.

E. Furnishings and Appliances. The Corporation will provide furnishings and appliances in the Living Accommodation as described in the literature published by the Corporation regarding Salemtowne. All other furniture and furnishings for the Living Accommodation shall be provided by the Resident and shall be maintained by you at your risk.

F. Meals. The Corporation will make available, to you, three (3) nutritionally well-balanced meals each day, the cost of which is included in your Monthly/Daily Fee.

G. Housekeeping Services. We agree to maintain the Living Accommodation by providing weekly housekeeping for Assisted Living Residents and daily services for Health Care Residents. Housekeeping includes vacuuming, dusting, cleaning of bath and changing of bed and bath linens, and trash removal. Additional housekeeping services may be made available at your expense.

H. Laundry. Bed and bath linens as well as linen laundry service and personal laundry service (washing, drying and folding) will be provided for Residents in the Assisted Living Center and the Health Care Center. The costs of these are included in the Monthly/Daily fee. You are responsible for arranging and paying for dry cleaning services. Salemtowne is not responsible for loss or damage to personal items laundered by Salemtowne.

I. Maintenance and Repairs. We will maintain and keep in repair the improvements, furnishings, appliances, and equipment owned by the Corporation. Maintenance and repair of your personal property is your responsibility. You will be responsible for the cost of repairing any damage to property of the Corporation caused by your negligence and/or that of any guest of yours, ordinary wear and tear excepted.

J. Alterations to Living Accommodation. Any structural or physical change or redecoration of any kind within the Living Accommodation will require the prior approval of the Corporation. The cost of any change, repairs or maintenance for that change and the subsequent cost to return the living unit to its original condition in the event of such change, or redecoration, will be paid by you. Any such improvement or change will be owned by the Corporation and will not be considered in determining the amount of any refund to you upon termination of this Agreement.

K. Use of and Changes to Living Accommodation. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws, or regulations. The Living Accommodation may not be used in

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any manner in violation of any zoning ordinances or other governmental laws or regulations.


M. Mail. Mail will be delivered by the postal service to Salemtowne. Salemtowne staff deliver mail to central mail areas for assisted Living Accommodations. Salemtowne staff deliver mail directly to each health care Living Accommodation.


N. Common Facilities. We will provide common facilities for the use and/or benefit of all Residents. Such common facilities currently include an enclosed swimming pool and exercise facility, dining rooms, mailroom, multi-purpose rooms, library, computer area, game/television area, lounges, and sitting areas.

O. Transportation. We will provide local medical transportation for scheduled medical appointments Monday through Friday between 9:00 a.m. and 4:30 p.m. except holidays. Forty-eight (48) hours’ notice is required. Additional charges will be incurred for appointments exceeding four (4) per month and those appointments outside of normal service hours noted above. Additional charges will be incurred for Residents who require staff accompaniment.


P. Activities. Wellness, social, recreational, spiritual, educational and cultural activities will be available to Residents. Additional charges may be incurred for some programs.

Q. Other Services Available. Residents engaging third parties for services within Salemtowne may do so only with prior notification and authorization by Salemtowne (i.e. companions, private duty nurses, maintenance workers, etc.). This is not an all-inclusive listing of services you may request or utilize. With respect to services not listed, consult the resident handbook, schedule of charges (both provided to residents) or the Finance Office.

R. Services. The services and facilities that are provided through the Entrance and

Monthly/Daily Fees (may also be described further herein) are summarized below:

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1. Phillips Health Care Center. The Health Care Center will be provided for the benefit of the Residents. The Corporation is licensed by the North Carolina Department of Health and Human Services, Division of Health Service Regulation to operate 84 beds offering intermediate and skilled nursing care for Residents who are temporarily ill or who require long-term nursing care. Private or semi-private accommodations will be provided for Residents in the Health Care Center. Included in the Health Care Center is a Special Care Unit which serves the needs of individuals diagnosed with Alzheimer’s or other dementia-related diseases. Some of the beds in the Health Care Center are certified for Medicare and Medicaid reimbursement.





• Other health care services may be made available to the Resident at the Resident’s expense, including, but not limited to: pharmacy services, radiology services, dental services; laboratory tests; physical therapy; occupational therapy, including therapeutic activities; rehabilitative treatments; and wheelchairs and other medical equipment and supplies. The cost of such services shall not be covered by the Monthly/Daily Fees described herein.

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3. Emergency Medical Care. We notify your physician when emergency medical care is necessary. If acute medical care is necessary or upon physician’s or your request, you will be transferred to a local hospital Emergency Room.



(There is no Entrance Fee for short-term direct entries into the Health Care or Assisted Living Centers.)

A. Monthly/Daily Fee. You agree to pay a Monthly/Daily Fee during the term of this agreement. This fee shall be due and payable upon entry (except for a Medicare qualified stay). Should additional/ancillary charges be incurred during the term of this agreement that have not been paid in advance, such charges will be due and payable by the 10th day of the subsequent month. As of the date of this Agreement the Monthly/Daily Fee associated with the Living Accommodation will be $ ______________.

The Monthly/Daily Fee will begin on the date of occupancy. Occupancy is defined as the first day that a Resident either resides in the Living Accommodation or the first day that the Resident’s furnishings or belongings are placed in the Living Accommodation.


Initials ____________ __________ Corporation Resident(s)

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B. Vacations and/or Time Away from Living Accommodation. Monthly/Daily fees are not subject to change or credit if a Resident is away from the Living Accommodation for any period of time. (For example, vacations, hospital stays, etc.)

C. Adjustments in the Monthly/Daily Fee. The Corporation usually sets fees annually but shall have the authority to adjust the Monthly/Daily Fee from time to time during the term of this Agreement as it, in its discretion, deems necessary. Any such increase in the Monthly/Daily Fee or other charges may be made by the Corporation upon thirty (30) days written notice to the Resident.



D. Schedule of Fees. You have been given a current copy of the Schedule of Fees as adopted by the Board of Trustees of the Corporation. You understand that these fees may change from time to time.

E. Statements. We will furnish the Resident with monthly statements showing the

total amount of fees and other charges owed by the Resident, which shall be payable by the 10th of the month. Late payments are subject to an interest charge of one and one-half percent (1.5%) per month from the first of the month. Salemtowne offers and encourages an automatic bank draft for the Monthly/Daily Fees. Salemtowne may terminate this agreement if You have a past due amount in excess of thirty (30) days. Termination of this Agreement does not end the obligation of You or Your estate to pay all amounts due, no matter when incurred.


The Corporation reserves the right, with 30 days’ notice, to change the billing date and the payment due date. For a partial first month, the Monthly/Daily Fee is pro-rated on a per diem basis. Thereafter, Monthly/Daily Fees are paid in advance and are not pro-rated at termination for the Assisted Living Center.

Monthly/Daily Fees are paid in advance and are pro-rated at termination for the Health Care Center.

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F. Health Care Center and Assisted Living Center Fees Priority Entry. Residents are provided priority entry over non-Residents for entry to the Health Care Center or Assisted Living Center. Salemtowne will make every effort to accommodate Residents in the Health Care Center and/or Assisted Living Center but cannot guarantee availability of accommodations. In the event the Health Care Center and the Assisted Living Center are fully occupied when a resident is in need of care, the resident agrees to relocate to an alternate health care facility (“a Comparable Facility”). In the event of relocation, Salemtowne will make every effort to transfer the resident back to Salemtowne when accommodations become available.


G. Assignment of Benefits. You will from time to time authorize any provider of

medical and health services to receive reimbursement as provided under Medicare/Medicaid, any or all Federal, State and local benefits for which you may be eligible or entitled and any supplementary insurance programs. If requested by Salemtowne, you will from time to time make assignments to the provider of medical and other health services of all benefits otherwise accruing to you under Medicare/Medicaid, or other program, and supplementary extended coverage plans to compensate for services rendered.

H. Managed Care. If you have chosen to participate in a managed care program as an alternative to Medicare Part A, Medicare Part B, and supplemental insurance coverage, the terms of this Agreement governing nursing care will include the following provisions:


2. Not a Participating Provider. If Salemtowne is not an approved participating provider with your managed care program and you choose to receive health care services at a managed care participating provider, then you agree that you must relocate for as long as necessary for those services to be provided, and be responsible for all costs for health care services. In addition, while receiving health care services at the managed care participating provider, you agree that unless this Agreement is terminated, you will continue to pay the Monthly/Daily Fee for your Living Accommodation, unless your Living Accommodation has been surrendered to us.

3. No Negotiated Managed Care Rate. If Salemtowne is not a participating provider in your managed care program and a negotiated rate is not agreed

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upon by Salemtowne and you would still like to receive health care and services at Salemtowne, then you will be responsible for the full amount of applicable charges not paid by your insurance carrier.




A. Age. The entry requirements for residence at Salemtowne are nondiscriminatory except as to age, and Salemtowne is open to both married and single men and women of all races and religions. Entry in the Health Care Center and the Assisted Living Center is restricted to persons 62 years of age or older.


C. Application, Health History and Financial Statement. You shall submit for review, by the Corporation, an Application for Entry, FL-2, and a Confidential Financial Statement, all on forms furnished by the Corporation.


E. Health Requirements. Prior to residency at Salemtowne, you shall submit a report of a physical examination (FL-2) from a physician selected by you. Such report shall include a statement by such physician that you require assisted living or health care accommodations. We may require you to have another physical examination by our Medical Director or by another physician approved by the Corporation. You shall be responsible for the costs of such physical examinations. If your health as disclosed by such physical examination differs materially from that disclosed in your Application for Entry and FL-2, the Corporation shall have the right to decline entry and to terminate this Agreement, or in the discretion of the Corporation, to permit you to take occupancy of accommodations at Salemtowne suitable to your needs.

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In the event of your death, while you are a resident of Salemtowne under this Agreement, only the executor(s) named in your Will will be allowed to remove or dispose of your furnishings and belongings in your Living Accommodation. Members of your family or those to whom you have granted Power of Attorney will not be allowed access to your personal property after your death, unless they are the executor(s) named in your Will.


L. Advance Directives. You are encouraged to execute a Living Will and a Health

Care Power of Attorney and deliver a fully executed copy thereof to Salemtowne, as well as any revisions as applicable, during the term of this Agreement.










A. Rights of Resident. You have the right to occupy and enjoy the Living Accommodation during the term of this Agreement as described herein unless this Agreement shall be terminated as provided herein. It is understood that this Agreement does not transfer or grant any interest in the real or personal property owned by the Corporation other than the right to use or occupancy of the Living

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Accommodation in accordance with the terms hereof. The Living Accommodation may not be used for commercial purposes. The Living Accommodation may not be occupied or used in any manner in violation of any ordinance, law or regulation.


C. Policies, Rules and Regulations. You understand and agree that: (i) in order for Salemtowne to operate in the best interests of the entire community, it is essential that we have cooperation of and compliance with applicable policies, rules and regulations by you, your family, guests, responsible party and others who may intervene, speak or act or purport to intervene, speak or act, for or on behalf of you or who may come on the premises of Salemtowne in any capacity or for any purpose in connection with or as a result of your residency at Salemtowne; (ii) a continuing or repeated failure or refusal by any such persons to so cooperate and comply may result in a determination by Salemtowne that it is impracticable or impossible for Salemtowne to continue to accommodate you as a resident; and (iii) upon such determination by Salemtowne, we shall have the right to terminate this Agreement.

D. Weapons. No weapons of any type shall be brought on to the Salemtowne property by you or your guests without the express prior written permission of the Corporation.

E. Resident Representation. Residents have the right of self-organization through a Residents’ council, which may convene to review the interests of the resident population. You shall have resident representation on the Salemtowne Board of Trustees as outlined in the Bylaws of Salemtowne.

F. Guests and Visitors. Guests and visitors are welcome at Salemtowne. Guests may use Salemtowne guest accommodations, subject to availability and additional charges. At all times, you shall be responsible for any injury to others or damage to the property of others or Salemtowne caused by you or your guest(s). Salemtowne reserves the right and authority to limit or terminate the stay of any guest at any time and for any reason.

G. Relationships Between Residents and Employees (“Associates”). Salemtowne is built on mutual respect and instructs its Associates to be cordial and helpful to Residents. The relationship is to remain professional. Associates must not be delayed or deterred by Residents in the performance of their duties. Management is solely responsible for the supervision of staff. Complaints or requests for

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special assistance must be made to the appropriate supervisor. Giving gratuities or bequests to Associates or Associates’ families is not permitted. Residents will not employ Salemtowne Associates nor hire former Salemtowne Associates without the prior written consent of Salemtowne Management.

H. Loss of Property. The Corporation maintains insurance on all of its property and its operations to include general public liability insurance, property insurance including coverage for acts of God, vandalism and theft, professional liability insurance and worker’s compensation.

The Corporation will not be responsible for the loss of any property belonging to the Resident due to theft, mysterious disappearance, fire or any other cause. You will have the responsibility for obtaining “renters insurance” to cover such losses.

I. Right of Entry. Salemtowne recognizes your right to privacy, and shall limit entry to your Living Accommodation to legitimate emergencies and to scheduled work, including housekeeping, repairs, maintenance, and inspections. You hereby authorize Associates or agents of Salemtowne to enter your Living Accommodation, upon reasonable notice for all such purposes.

J. Appliances. Salemtowne is not obligated to determine your ability to safely utilize the appliances, if any, in your Living Accommodation. However, should we determine that you have demonstrated an inability to safely utilize appliances in your Living Accommodation; we will have the right to turn off the power servicing such appliance(s) and/or to remove any and all such appliances. In any such instance, you shall remain obligated to pay for the Full Month/Daily fee for your Living Accommodation, any extra meals and any fire alarm charges issued by the fire department.

K. Changes in Living Accommodations. The Corporation has the right to change the Living Accommodation to meet requirements of any applicable statutes, laws or regulations. The Living Accommodation may not be used in any manner in violation of any zoning ordinances or other governmental laws or regulations.

L. Health Insurance. You will maintain eligible Medicare coverage and one supplemental health insurance policy or equivalent insurance coverage, which adequately covers hospital, medical, prescription and skilled nursing deductibles and co-payments required of your primary insurance plan. Both your primary and supplemental health insurance policies must recognize Salemtowne as a health care provider, or you will assume the financial responsibility for services provided that otherwise could be covered.

You will be responsible for ensuring that the health insurance coverage does not lapse, and will provide Salemtowne with evidence of such coverage upon request. If your health insurance coverage should lapse, Salemtowne may require that you reapply for suitable coverage. If you are unable to obtain adequate new coverage,

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Salemtowne will charge you for any costs of medical and other health care services provided that otherwise would have been covered by an approved policy.

V. Filing for and Rights to Insurance Benefits. Salemtowne is a participating provider with Medicare, Medicaid and Blue Medicare only.










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VI. Room Assignment in Health Care Center and Assisted Living Center. You understand that you acquire no ownership in any property at Salemtowne under this Agreement; also, that no particular room or unit in the Assisted Living Center or the Health Care Center is subject to reservation or permanent assignment, and that we may change your room assignment in the Assisted Living Center or the Health Care Center. Though we retain the right to change your room assignment, we agree that we will make changes only as we find such changes to be necessary or advisable.

A. Moving Costs. You are responsible for arranging and paying for all packing and moving costs for moves into, within and out of Salemtowne. Assistance may be provided by Salemtowne at an additional cost.

B. Pets/Smoking. Pets are not allowed in the Assisted Living Center and Health Care Center Living Accommodations.

Smoking / Tobacco Products. Salemtowne is a “Tobacco Free” Community. Smoking and use of tobacco products is not permitted anywhere on Salemtowne property including, campus buildings (Phillips Health Care Center, Masten Assisted Living Center, and Community Center, etc), building entrances or common areas. The same applies to Salemtowne’s Babcock campus. The only exception is:


C. Absences. You agree to inform Salemtowne (Clinic, Billing Office & Dining

Services) when you are going to be away for three days or more, and to give us the names of people we can contact in an emergency. In order to provide adequate time for medications to be available, if applicable, you must provide at least 24 hours advance notice of an absence. No credits (i.e. missed meals) will be given during absences.

VII. TRANSFERS OR CHANGES IN LEVELS OF CARE

A. Transfer to Hospital or Other Facility. If it is determined by your physician that you need care beyond that which can be provided by Salemtowne you may be transferred to a hospital, center or institution equipped to give such care, which care will be at your expense. Such transfer will be made only after consultation to the extent practical with the Resident, the Resident’s physician, a representative of the Resident’s family or the Resident’s responsible party.

In the event it becomes necessary for you to be transferred to a hospital, Salemtowne will provide any information available to meet the provisions of any

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hospital admissions agreement and you agree that Salemtowne has the right to provide such information, which may include part or all of your records.

B. Surrender of Living Accommodation. If a determination is made by the Corporation that any transfer described in this Section is permanent in nature, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you prior to such transfer, within 30 days of the determination.

You are responsible for the costs of transfer and moving as well as the Monthly/Daily Fee through the last day of occupancy of the Living Accommodation being vacated. For the purposes of this Section VII. B. occupancy is defined as the last day that a Resident either resides in the Living Accommodation or the last day that the Resident’s furnishings or belongings occupy the Living Accommodation.


VIII. TERM AND TERMINATION

A. Term. This Agreement shall commence on the date set forth in the first paragraph above and shall continue, unless earlier terminated as provided herein, through the date set forth in the third paragraph of this Agreement. The parties may, by mutual written agreement, extend the term of this Agreement.

B. Termination Prior to Occupancy. This Agreement may be rescinded by you at any time prior to taking occupancy at Salemtowne for any reason by giving written notice to the Corporation.

This Agreement may be terminated by the Corporation at any time prior to the date that you take occupancy if the Corporation determines that you no longer meet the physical, mental or financial requirements for entry.

In the event of such termination (including death or physical or mental conditions making you ineligible for entry to Salemtowne), you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. Notwithstanding anything to the contrary in this Agreement, if the Resident has paid the applicable Monthly/Daily Fee prior to occupying the Living Accommodation, any refund of such amounts (expressly excluding any amounts paid for non-standard features added to the Living Accommodation) shall be paid by Salemtowne within fourteen (14) days following such termination pursuant to this paragraph.

C. Voluntary Termination. At any time, you may terminate this Agreement by giving the Corporation five (5) days prior written notice of such termination. If

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required notice is given, or if no written notice is given, you will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period and for each day of occupancy except when a delay in discharge or transfer would jeopardize your health or safety or that of others at Salemtowne. Any refund due the following voluntary termination pursuant to this Section will be made in accordance with Section VIII.I.

D. Temporary Absence. Temporary absence because of illness, trips or otherwise will not affect your rights to retain occupancy of Living Accommodation, as long as applicable Monthly/Daily Fees are paid.

E. Termination Upon Death. In the event of your death, this Agreement shall terminate as of the date that your Living Accommodation is vacated provided, however, that the Resident’s estate shall continue to be obligated to pay the applicable Monthly/Daily Fee for such Resident’s Living Accommodation until such Resident’s Living Accommodation is vacated and left in good condition except for normal wear and tear.

In the event of such termination, you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. Any refund due following the Resident’s death, will be made in accordance with Section VIII. I.


F. Termination by the Corporation. We may terminate this Agreement at any time if there has been a material misrepresentation or omission made by you during the application process; if you fail to make payment to the Corporation of any fees or charges due the Corporation within thirty (30) days after receiving written notice of your failure to pay such fees or charges; if you do not abide by the rules and regulations adopted by the Corporation or breach any of the terms and conditions of this Agreement; if the health or safety of other individuals in the Corporation is endangered if you remain in Salemtowne, as determined by a physician, physician assistant or nurse practitioner; or the discharge is necessary for your welfare and your needs cannot be met by the Corporation as documented by your physician, physician assistant or nurse practitioner.

You will be responsible for paying the Monthly/Daily Fee for the applicable Living Accommodation for the full notice period and for each day of occupancy. Except in cases of emergency, you will receive a notice of the termination by the Corporation at least thirty (30) days prior to the effective date of termination.

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You may be entitled to appeal the Corporation’s decision to terminate this Agreement and, except in cases of emergency, the Corporation will not discharge you before the final decision resulting from the appeal has been rendered.

G. Condition of Living Accommodation. At the effective date of termination of this Agreement, you will vacate the Living Accommodation and will leave it in good condition except for normal wear and tear. You, or your estate, will be liable to the Corporation for any costs incurred in restoring the Living Accommodation and storage areas to good condition except for normal wear and tear.

H. Removal of Personal Property. In the event of termination of this Agreement, you agree to surrender the Living Accommodation and any storage areas, which were occupied by you, within five (5) days of the determination.



I. Refund. You or your estate, or a revocable trust designated by you, may be entitled to a refund of any amounts related to the cost of health care services provided by Salemtowne or any third party health care provider less any amounts payable to Salemtowne or any third party health care provider through the date the refund is due hereunder. This refund shall not include the cost of non-standard features that were added to your Living Accommodation at your request. Any refund will be made no later than thirty (30) days from the date of your death.


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IX. GENERAL

A. Compliance with Applicable Laws. Resident and Salemtowne will operate in full compliance with all laws, rules, regulations and ordinances promulgated by lawful governmental authorities.

B. Confidentiality. Salemtowne has the responsibility to keep all of the personal, medical and financial information you have supplied to it confidential. You agree that Salemtowne can disclose such information to those who have a need, in its judgment, or right to know (e.g., to provide information for transfer to a hospital).


D. Management of the Corporation. The absolute rights of management are reserved by the Corporation, its Board of Trustees and its administrators as delegated by said Board of Trustees. The Corporation reserves the right to accept or deny any person for residency. Residents do not have the right to determine entry or terms of entry of any other Resident. Salemtowne reserves the right to amend, implement or terminate policies and/or guidelines related to the operation of the community in its sole discretion.


F. Indemnity. You agree to indemnify, defend and hold us harmless from claims, damages or expenses, including attorneys’ fees and court costs, resulting from any injury or death to persons and any damages to property caused by, resulting from, attributable to or in any way connected with your negligent or intentional act or omission or those of your guests, including private duty nurses, companions or others.



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I. Resident Handbook. You will be given a current copy of the Resident’s Handbook as adopted by the Corporation. You understand that these documents will change from time to time but that they are the procedural documents for those occupying Living Accommodations at Salemtowne






O. Amendments and Partial Invalidation. Generally, this Agreement can be changed only by mutual written consent. However, we can make changes without your consent to keep the Agreement in compliance with applicable laws and regulations provided, that the changes we make do not substantially reduce your benefits under the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

P. Waivers. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power, or privilege (“Right”) under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

Q. Survival. Those rights and obligations that have accrued as a result of the operation of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must

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survive to give effect to their terms, as shall any obligation of Resident to pay costs or expenses of his or her stay at Salemtowne that remain unpaid as of such termination.

R. Mediation. In the event a dispute, claim or controversy of any kind arises between the parties regarding the care or treatment of the Resident that cannot be resolved by mutual agreement, the parties agree to submit such dispute, claim or controversy to a neutral mediator for possible resolution. The parties will jointly agree on a neutral mediator. Each party shall submit all evidence or information in writing to the mediator in support of its contentions or allegations and any defense either party may have with respect to the dispute, claim or controversy. Each party shall have the right to a hearing before the mediator and to personally present information pertinent to such dispute, claim or controversy. The mediator shall assist each party, in an unbiased manner, in reaching amicable agreement regarding the dispute, claim or controversy. If an amicable agreement is not reached, or if either party fails or refuses to negotiate or mediate in good faith to resolve the matter, or if a neutral mediator cannot be agreed upon between the parties, then the parties agree to submit such dispute, claim or controversy to an arbitration process as outlined below.

S. Arbitration. In the event a dispute, claim or controversy of any kind arising out

of or relating to this Agreement cannot be resolved through mediation as described herein above, the parties agree to submit such dispute, claim or controversy to binding arbitration to be held in Winston-Salem, North Carolina in accordance with the then-current commercial arbitration rules of the American Arbitration Association. The parties will jointly agree on an arbitrator. If the parties are unable to agree in good faith and within a reasonable time on the selection of an arbitrator, then either party may request appointment of an arbitrator by the American Arbitration Association. Costs of arbitration, such as arbitrators' fees and similar costs, will be borne equally by the parties, provided that the arbitrator may award the costs of arbitration against a party who the arbitrator determines has acted in bad faith or fraudulently. Unless the arbitrator determines a party has acted in bad faith or fraudulently, attorneys' fees shall not be considered "costs of arbitration" and are to be borne by the incurring party. The parties will each be required to submit a proposed resolution of each issue in such dispute, claim or controversy to the arbitrator. The arbitrator shall base his/her decision upon the proposed resolutions in addition to any evidence presented at any hearing. The decision of the arbitration shall be final and binding unless the arbitration is determined by a court to be fraudulent or so grossly erroneous as to necessitate the inference of bad faith. Judgment on the award rendered by the arbitrators may be entered in any federal or state court having jurisdiction thereof. The arbitrators shall have no authority to make legal determinations which are, or are based on, material errors of law, to award punitive damages, or to add to, modify or refuse to enforce any valid and enforceable agreement(s) between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award that

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could not have been made by a court of law or that would cause any party to be in violation of any governmental law or regulation. Nothing herein shall prohibit a party to the dispute, controversy or claim from seeking equitable relief in a court of law to maintain the status quo while a mediation or arbitration is pending.

T. Gender. Throughout this Agreement, the use of the masculine gender shall include the feminine, and the use of singular shall include the plural.

U. Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

V. Notice Provisions. Any notices, consents, or other communications to the

Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:

Salemtowne:

Office of the President/CEO Salemtowne 1000 Salemtowne Drive Winston Salem, North Carolina 27106

Resident:

Your address for the purpose of giving notice prior to your move to Salemtowne is the address appearing after your signature below.

Your address for the purpose of giving notice after your move to Salemtowne will be the current Living Accommodation address at the applicable time of notice.


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I understand this matter involves a financial commitment and associated risk as well as a legally binding contract. I was encouraged to consult with an attorney and/or financial advisor who could advise me concerning this Agreement.



SALEMTOWNE






Telephone


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ACKNOWLEDGEMENT OF RECEIPT OF DISCLOSURE STATEMENT

Salemtowne 1000 Salemtowne Drive

Winston Salem, N. C. 27106

As of the day and year above written in this Residence and Services Agreement, the undersigned Resident(s) acknowledges receipt of the Disclosure Statement of Moravian Home, Incorporated D/B/A Salemtowne dated August 30 2015. The Disclosure Statement was received prior to the execution of this Agreement or prior to or at the time of the transfer of any money or other property to the facility, whichever occurred first.




SALEMTOWNE




Title


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INDEX

Absences ................................................... 18 ACCOMMODATIONS AND SERVICES 3 ACKNOWLEDGEMENT OF RECEIPT . 27 Activities ..................................................... 5 Adjustments in the Monthly/Daily Fee ..... 10 ADMISSION REQUIREMENTS ............ 12 Advance Directives ................................... 14 Age ............................................................ 12 Alterations to Living Accommodation ....... 4 Amendments and Partial Invalidation ....... 23 Appliances................................................. 16 Application, Health History and Financial

Statement............................................... 12 Appointment of Guardian ......................... 14 Arbitration ................................................. 24 Assignment ............................................... 22 Assignment of Benefits ............................. 11 Capacity .................................................... 23 Changes in Living Accommodations ........ 16 Common Facilities ...................................... 5 Compliance with Applicable Laws ........... 22 Condition of Living Accommodation ....... 21 Confidentiality .......................................... 22 Emergency Medical Care. ........................... 9 Emergency Notifications .......................... 14 Entire Agreement ...................................... 23 Filing for and Rights to Insurance Benefits

............................................................... 17 FINANCIAL ARRANGEMENTS ............. 9 Financial Requirements ............................ 13 Financial Resources .................................. 13 Funeral and Burial..................................... 14 Furnishings and Appliances ........................ 4 Gender ....................................................... 25 GENERAL ................................................ 22 Governing Law ......................................... 23 Guests and Visitors ................................... 15 Health Care Center and Assisted Living

Center Fees Priority Admission ............ 11 Health Insurance ....................................... 16 Health Requirements ................................. 12 Housekeeping Services ............................... 4

Indemnity .................................................. 22 Interpretation ............................................. 25 Laundry ....................................................... 4 Living Accommodation .............................. 3 Long-Term Permanent Entry ...................... 3 Loss of Property ........................................ 16 Mail ............................................................. 5 Maintenance and Repairs ............................ 4 Managed Care ........................................... 11 Management of the Corporation ............... 22 Masten Assisted Living Center ................... 9 Meals ........................................................... 4 Mediation .................................................. 24 Medicaid ................................................... 12 Monthly/Daily Fee ...................................... 9 Moravian Affiliation ................................. 22 Moving Costs ............................................ 18 No Negotiated Managed Care Rate .......... 11 Not a Participating Provider...................... 11 Notice Provisions ...................................... 25 Notification ............................................... 12 Nursing and Health Care. ............................ 8 On-Site Emergency Call Response ............. 9 Other Services Available ............................ 5 Parking. ....................................................... 5 Participating Provider ............................... 11 Personal Interview .................................... 12 Pets/Smoking ............................................ 18 Phillips Health Care Center ........................ 8 Policies, Rules and Regulations ................ 15 Power of Attorney ..................................... 13 Professional Management of Salemtowne

and its Facilities ...................................... 8 Psychiatric Illness, Dangerous

Communicable Disease, Drug or Alcohol Abuse .................................................... 13

Refund ....................................................... 21 Relationships Between Residents and

Employees (“Associates”). ................... 15 Release from Obligations Upon Termination

............................................................... 22 Removal of Personal Property .................. 21

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Representations ......................................... 14 Resident Contracted Services ................... 22 Resident Handbook ................................... 23 Resident Representation............................ 15 Right of Entry ........................................... 16 Rights of Resident ..................................... 14 Room Assignment in Health Care Center

and Assisted Living Center ................... 18 Schedule of Fees. ...................................... 10 Security. ...................................................... 3 Separability ............................................... 22 Services ....................................................... 5 Statements ................................................. 10 Subordination ............................................ 15 Successors and Assigns............................. 23 Surrender of Living Accommodation ....... 19 Survival ..................................................... 23 Tax Considerations ................................... 23 Temporary Absence .................................. 20

Term .......................................................... 19 TERM AND TERMINATION ................. 19 Termination by the Corporation................ 20 Termination Prior to Occupancy ............... 19 Termination Upon Death .......................... 20 TERMS OF RESIDENCY ........................ 14 Transfer to Hospital or Other Facility ....... 18 TRANSFERS OR CHANGES IN LEVELS

OF CARE .............................................. 18 Transportation ............................................. 5 Use of and Changes to Living

Accommodation ...................................... 4 Utilities ........................................................ 4 Vacations and/or Time Away from Living

Accommodation .................................... 10 Voluntary Termination.............................. 19 Waivers ..................................................... 23 Weapons .................................................... 15 Will ........................................................... 13

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Personal Guaranty Agreement – August 30, 2015 Page 1 of 7

PERSONAL GUARANTY AGREEMENT

Guarantor(s): __________________________________________

Resident(s): __________________________________________



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This Agreement (the “Agreement”) is made this ___________ day of __________, _____ by and between MORAVIAN HOME, INCORPORATED d/b/a SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”, “Salemtowne”, “we”, us” or “our”) and _____________________________________________ (hereinafter “you”, “your” or when two persons “you”, “your” shall apply to both persons, except where the context otherwise requires).


WHEREAS, you have requested that Salemtowne admit and provide continued services to _______________________________________ (the “Resident”), and Salemtowne agrees to admit and provide services to the Resident by reason of such request and in reliance upon this Agreement of Responsible Party/Guaranty Agreement (the “Guaranty”) and the attached Residence and Services Agreement between Salemtowne and the Resident;

NOW, THEREFORE, in consideration of the admission and provision of continued services to the Resident, you hereby unconditionally guarantee, through the use of personal/business assets, the punctual payment when due of all charges to the account of the Resident now existing or hereafter arising (the “Charges”). You agree to pay all costs, expenses, and reasonable attorneys’ fees, in the event same must be expended in the collection of any Charges due and owing by you to the Corporation. The Corporation reserves the right, with thirty (30) days’ notice, to change the billing date and the payment due date.

You consent that any of the provisions of any agreement evidencing any Charges of the

Resident may be modified or waived; that neither the death, bankruptcy nor disability of any one or more of the guarantors shall affect the continuing obligation of any other guarantor; and that no claim need be asserted against the personal representative, guardian, trustee in bankruptcy or receiver of any deceased, incompetent bankrupt or insolvent guarantor, all without notice to or further assent by you, who shall remain bound hereon, notwithstanding any such exchange, compromise, surrender, extension, renewal, acceleration, modification, waiver, indulgence, release, or failure to file or assert any claim. Initials __________ _________


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You expressly waive: (a) notice of acceptance of this Guaranty and of all extensions of credit to the Resident; (b) presentment and/or demand for payment of any of the Charges of the Resident; (c) protest and notice of dishonor or of default to the undersigned or to any party with respect to any of the Charges of the Resident; (d) all other notices to which the undersigned might otherwise be entitled; and (e) demand for payment under this Guaranty. You also expressly waive all rights provided by N.C.G.S. § 26-7 through N.C.G.S. § 26-9. (See Appendix A) If you, the Resident, or any third party makes any payment to Salemtowne that is subsequently or required to be repaid (as a preferential, or fraudulent transfer or for any other reason) to a trustee, receiver or other party pursuant to bankruptcy or other law, then any such amount repaid to Salemtowne shall again become a Charge subject to the terms of this Guaranty as if such payment to Salemtowne had never been made.

This Agreement shall be governed by the laws of the State of North Carolina without regard to conflict of laws principles. This Guaranty is a guaranty of payment and not of collection. Your liability for this Guaranty shall be direct and immediate and not conditioned or contingent upon either the pursuit of any remedies against the Resident or any other person or foreclosure of any security interests or liens available to Salemtowne, its successors, endorsees or assigns. If the Charges of the Resident are partially paid, you shall remain liable for the balance of such Charges. You acknowledge and agree that if any Charges are not paid within sixty (60) days after written demand for payment of such Charges is given by Salemtowne to the Resident, the undersigned, and any additional guarantors, Salemtowne has the right to discharge the Resident.

Except as set forth herein, this Agreement shall bind and inure to the benefit of the successors and assigns of the Corporation and the heirs, executors, responsible parties, powers of attorney, administrators and assigns of you.

Separability. The invalidity of any restriction, condition or other provision of this Agreement, or any part of the same, shall not impair or affect in any way the validity or enforceability of the rest of this Agreement.

Capacity. This Agreement has been executed on our behalf by our duly authorized agent, and no officer, trustee, agent or employee of ours shall have any personal liability hereunder to you under any circumstances.

Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

Waivers. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power, or privilege ("Right") under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

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Survival. Those rights and obligations that have accrued as a result of the operation of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms.

Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:

Salemtowne: Office of the President/CEO Salemtowne 1000 Salemtowne Drive Winston Salem, North Carolina 27106 Guarantor(s): Your address for the purpose of giving notice is the address appearing after your signature(s) below.


The provisions of this guaranty shall not apply to obligations of the Resident incurred while the Resident occupies a nursing bed certified by the

Medicare or Medicaid Programs during a certified stay.


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I (we) understand this matter involves a financial commitment, of personal and/or business assets, and associated risk as well as a legally binding contract. I (we) was (were) encouraged to consult with an attorney and/or financial advisor who could advise me (us) concerning this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate, as of the day and year first above written, one duplicate copy of this Agreement being retained by each party.


SALEMTOWNE Guarantor(s) or Guarantor(s)’s Attorney in Fact(*) (Not Resident)

By(signature) (signature) (SEAL)




(*) If Attorney–in-Fact signs on behalf of the Guarantor(s), a Filed Power of Attorney document must be attached to this Agreement. North Carolina ______________________ County I, _____________________________________________, a Notary Public for said County and State, do hereby certify that ____________________________________________ personally appeared before me this day and acknowledged the due execution of the foregoing instrument. Witness my hand and official seal, this the ______________ day of ________________, 20____. (Official Seal) ___________________________________ (Notary Public)

My commission expires ________________________, 20____.

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Appendix A


North Carolina General Statute Chapter 26. Suretyship.

§ 26-7. Surety, indorser, or guarantor may notify creditor to take action.

(a)After any note, bill, bond, or other obligation becomes due and payable, any surety, indorser, or guarantor thereof may give written notice to the holder or owner of the obligation requiring him to use all reasonable diligence to recover against the principal and to proceed to realize upon any securities which he holds for the obligation. (b) The surety, indorser or guarantor who gives notice to the holder or owner of the obligation as provided by subsection (a) shall forthwith give written notice to all co-sureties, co-indorsers and co-guarantors of the fact that such notice is being given to the holder or owner of the obligation, and such co-sureties, co-indorsers and co-guarantors shall have ten days after receipt of the notice in which themselves to give written notice to the holder or owner of the obligation and to their co-sureties, co-indorsers, and co-guarantors, that they join in or adopt the notice given pursuant to subsection (a). Failure of such surety, indorser or guarantor to give the required notice to co-sureties, co-indorsers or co-guarantors whose names and residences are known to him or can be obtained by due diligence bars such surety indorser or guarantor from any of the benefits of G.S. 26-9. (c) The holder or owner of the obligation shall on demand disclose to any surety, indorser, or guarantor of the obligation the names and addresses of all other sureties, indorsers and guarantors which appear on the obligation or of which he has knowledge. (d) Nothing herein contained shall apply to official bonds, or bonds given by any person acting in a fiduciary capacity. (1868-9, c. 232, s. 1; Code, s. 2097; Rev., s. 2846; C.S., s. 3967; 1951, c. 763, s. 1.)

§ 26-8. Notice; how given; prima facie evidence thereof.

(a)Any notice authorized or required to be given by G.S. 26-7 shall- (1) Be served by the sheriff by delivering a copy thereof to the person entitled to the notice, or (2) Be sent by the person giving notice, by registered mail, with return receipt requested, to the last

known address of the person being notified. (b) Upon serving the notice, the sheriff shall return the original thereof, with his return thereon, to the person who caused the notice to be given. (c) The sheriff's return, when the notice is served by the sheriff, or the return receipt, when the notice is sent by registered mail, shall be prima facie evidence of the giving of the notice. (1868-9, c. 232, s. 3; Code, s. 2099; Rev., s. 2848; C.S., s. 3968; 1951, c. 763, s. 2.)

§ 26-9. Effect of failure of creditor to take action.

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(a)If the holder or owner of the obligation refuses or fails, within 30 days from the service or receipt of such notice, to take appropriate action pursuant thereto, the following persons shall be discharged on any such note, bond, bill or other obligation to the extent that they are prejudiced thereby: (1) The surety, endorser or guarantor giving such notice, and (2) All co-sureties, co-endorsers or co-guarantors joining therein or adopting such notice as provided by G.S. 26-7, and (3) All the co-sureties, co-endorsers, or co-guarantors whose names or addresses such holder or owner of the obligation failed to disclose on demand as required by subsection (c) of G.S. 26-7. (b) The fact that an instrument contains a provision waiving any defense of any surety, endorser or guarantor by reason of the extension of the time for payment does not prevent the operation of this section. Any such notice to the holder or owner of the obligation as is authorized by G.S. 26-7 may be given at or subsequent to the time such obligation is due or at or subsequent to the termination of a period of extension. (c) The failure of any co-surety, co-endorser or co-guarantor to join in or adopt a notice to the holder or owner of the obligation as authorized by subsection (b) of G.S. 26-7 does not prevent such co-surety, co-endorser or co-guarantor from giving a separate notice as authorized by subsection (a) of G.S. 26-7. (1868-9, c. 232, s. 2; Code, s. 2098; Rev., s. 2847; C.S., s. 3969; 1951, c. 763, s. 3.)

INDEX

Capacity. ..................................................... 3 Interpretation ............................................... 3 North Carolina General Statute ................... 6

Separability ................................................. 3 Survival ....................................................... 4 Waivers ....................................................... 3

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Financial Assistance Agreement – August 30, 2015 Page 1 of 11

FINANCIAL ASSISTANCE AGREEMENT

Resident(s): __________________________________________



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TABLE OF CONTENTS

FINANCIAL RESOURCES .............................................................................. 3

PROCEDURES REGARDING FINANCIAL ASSISTANCE ....................... 3

FINANCIAL AFFAIRS ..................................................................................... 4

RESIDENT’S CONTRIBUTION...................................................................... 6

LIVING ACCOMMODATION ........................................................................ 6

TERM AND TERMINATION .......................................................................... 6

GENERAL MATTERS ...................................................................................... 7

INDEX ................................................................................................................11

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This Financial Assistance Agreement (“Agreement”) is made and entered into this ____day of ________, ______ by and between Moravian Home, Incorporated, d/b/a Salemtowne, a North Carolina non-profit corporation, (“Salemtowne”), and _________ (“Resident(s)”). WHEREAS, Salemtowne has established and maintains a financial assistance program in an effort to assist Residents of Salemtowne in covering their costs incurred in connection with their stay at Salemtowne when their personal financial resources and funds from other available sources may otherwise be inadequate to cover such costs; WHEREAS, Resident desires to participate in such financial assistance program as necessary in the event Resident’s personal financial resources and other funds available to Resident are or become inadequate to pay Salemtowne’s Monthly/Daily fees and charges and to take other actions to ensure that the costs associated with his or her stay at Salemtowne will be satisfied; NOW THEREFORE, Resident and Salemtowne agree as follows:

1. Financial Resources. In connection with its charitable mission, it is the desire of the Board of Trustees of Salemtowne that no one leave Salemtowne because of lack of funds. Any disposition of Resident’s assets in any way other than for care at Salemtowne or related living/medical expenses to the extent that Resident cannot adequately provide for Resident’s expense or care will nullify this commitment on the part of Salemtowne and entitle Salemtowne to terminate Resident’s right to reside in Salemtowne. Salemtowne will make reasonable efforts to acquire the funds necessary to meet the fees for care. However, the resources of Salemtowne to provide care for Residents are not unlimited, and Salemtowne reserves the right to terminate the residency of any person, including Resident, who cannot pay the full cost of Salemtowne’s Monthly/Daily Fees and charges, and other costs in connection with such person’s stay at Salemtowne. 2. Procedures Regarding Financial Assistance. (a) Resident agrees to cooperate with Salemtowne in determining Resident’s eligibility for financial assistance (“Financial Assistance”) under Salemtowne’s financial assistance program (the “Program”) in accordance with Salemtowne’s policies and procedures, as amended from time to time by Salemtowne. Salemtowne shall administer the Program in accordance with applicable laws and regulations. At the request of Salemtowne, Resident agrees to apply for Medicaid, public assistance, or other public benefit programs for which Resident may be eligible.

Initials ___________ __________


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(b) Eligible Expenses/Personal Expenses. Any Financial Assistance for which Salemtowne determines Resident is eligible shall be applied solely toward the costs of Monthly/Daily Fees and other charges payable to Salemtowne. At its discretion, Salemtowne may also contribute toward a personal spending money allowance for Resident in amounts determined consistent with applicable Medicaid regulations and Salemtowne’s policies and procedures (“Resident’s Personal Funds”). Other than from Resident’s Personal Funds, Financial Assistance shall not be used to cover personal items, as determined by Salemtowne which shall include without limitation beauty and barber fees (other than haircuts & shampoos), telephone fees, health related fees from other providers, and any non-health related fees (“Resident’s Personal Expenses”). Other than from Residents’ Personal Funds, Financial Assistance shall not be used to cover funeral and or burial expenses. Resident’s Personal Expenses will be deducted from Resident’s Personal Funds to the extent available, which funds shall be maintained in a Resident Account (as defined in Section 3 of this Agreement). To the extent that Resident’s Personal Funds are not sufficient to cover Resident’s Personal Expenses, Resident must provide the additional funds necessary to cover such expenses, or such personal items will not be furnished to Resident by Salemtowne or paid for out of a Resident Account or from Financial Assistance Funds.

3. Financial Affairs. (a) Resident hereby authorizes Salemtowne to receive into an account or accounts that Salemtowne will administer and manage on behalf of Resident (each a “Resident Account”) payments made under Resident’s Social Security, any pension or retirement insurance of Resident, any Financial Assistance for which Salemtowne has determined Resident is eligible, and any other benefit program in which Resident is a beneficiary, in accordance with applicable laws and regulations. Salemtowne will make payments or offset costs, from such Resident Account, to cover the Monthly/Daily costs of Resident’s room and board, health care, and other care provided to Resident by Salemtowne as a Resident of Salemtowne; to pay premiums or other costs associated with insurance maintained by or on behalf of Resident to cover health or long-term care costs; and otherwise manage Resident’s financial affairs with respect to costs of care and services provided in connection with Resident’s stay at Salemtowne (collectively, “Resident’s Costs”). Resident’s Personal Funds will be maintained in a Resident Account, from which funds Salemtowne will make payments or offset costs for Resident’s Personal Expenses. Resident agrees to execute any and all documents necessary or desirable for Salemtowne to receive payments into a Resident Account and to manage and administer such account as set forth in this Section 3(a).

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Salemtowne will provide the services set forth in this Section 3(a) in accordance with the applicable requirements of North Carolina law, including applicable accounting requirements set forth therein, other applicable laws and regulations, and Salemtowne’s policies and procedures, as amended from time to time by Salemtowne.

(b) Termination of Residency. Resident acknowledges and agrees that in the event of termination of Resident’s residency at Salemtowne for any reason (including, but not limited to, Resident’s death), Salemtowne will make all payments or offsets from the appropriate Resident Account as necessary to cover any and all remaining Resident’s Costs and Resident’s Personal Expenses incurred prior to such termination. Resident also acknowledges and agrees that Salemtowne will retain an amount equal to, but not exceeding, the total amount of Financial Assistance provided to Resident by Salemtowne under the Program from any funds remaining in each Resident Account at the time of such termination solely for purposes of funding the Program with respect to other eligible Residents of Salemtowne. Resident or Resident’s estate shall be entitled to receive, in accordance with Salemtowne’s standard payment procedures, all funds, if any, left over in each Resident Account after the payment or offset there from all remaining Resident’s Costs and Resident’s Personal Expenses incurred prior to termination of Resident’s residency at Salemtowne and the total amount of Financial Assistance received by Resident.

In the event that upon termination of Resident’s residency, and after making any such payments or offsets, there remain outstanding amounts of Financial Assistance provided hereunder, Salemtowne reserves the right to recover such amounts in full to the extent that Resident or Resident’s estate has or acquires additional assets from which such amounts may be repaid, and Resident agrees that such amounts shall constitute a valid debt against Resident or Resident’s estate. Salemtowne may file a legal claim against Resident or Resident’s estate in such manner as may be prescribed by law to recover repayment of such debt.

(c) Entrance Fee Refund. Resident or Resident’s Estate shall be entitled to receive, in accordance with Salemtowne’s residence and services agreements, a refund of part of the Entrance Fee paid by said Resident depending on the length of occupancy less reductions for damages and applicable administrative fees, as stated in the residence and services agreements.

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The amount of Entrance Fee refund will also be reduced by the amount of financial assistance paid on behalf of the Resident by Salemtowne, which is not offset by the retention of funds remaining in the Resident’s Account as defined in paragraph 3 (b) herein. RESIDENT AGREES AND ACKNOWLEDGES THAT IN EXCHANGE FOR FINANCIAL ASSISTANCE FROM SALEMTOWNE, RESIDENT MAY FORFEIT A PORTION OF THE ENTRANCE FEE REFUND AS PROVIDED IN THIS PARAGRAPH. (d) Insurance. In the event that Resident is the insured under any policy of life insurance that pays a cash benefit to Resident’s estate upon Resident’s death, Salemtowne reserves the right to require Resident to designate Salemtowne as the beneficiary of such policy to the extent necessary to reimburse Salemtowne for any financial assistance provided on behalf of Resident, and Resident agrees to execute any documentation necessary to give effect to such designation. In no event shall Salemtowne retain any such life insurance proceeds in excess of the amount of financial assistance provided by Salemtowne. In the event that Resident is the insured under any policy of life insurance that has a present cash value, Resident must contribute the amount of such cash value toward Salemtowne’s Monthly/Daily Fees and charges before being eligible for Financial Assistance.

4. Resident’s Contribution. Resident acknowledges, understands, and agrees that in the event he or she is not eligible for public or other financial assistance or such assistance fails to cover all costs and fees associated with Resident’s stay at Salemtowne, Resident will be required to assist in the payment of such costs and fees from Resident’s personal or other available financial resources. Without limiting the generality of the foregoing, Resident will be required to pay supplemental insurance costs from Resident’s personal or other available financial resources.

5. Living Accommodation. In the event that Salemtowne continues to provide the services to you under the terms of your Residence and Services Agreement despite your financial inability to continue to pay the Monthly/Daily Fees or other charges payable under the terms of said Agreement, Salemtowne shall be entitled to require the Resident to move to a smaller or less costly Living Accommodation.

6. Term and Termination. The term of this Agreement shall be from the date first written above until the termination of Resident’s residency in Salemtowne for any reason. Notwithstanding any contrary provision of this Agreement, either party may terminate the provisions of Section 3(a) of this Agreement at any time upon at least five (5) days’ notice to the other party in accordance with North Carolina G.S. 131E-117(9) to the extent applicable to the provisions of Section 3(a).

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7. General Matters

(a) Assignment. The rights and privileges of the Resident under this Agreement are personal to the Resident and may not be transferred or assigned by the Resident.

(b) Binding Effect. This Agreement shall be binding upon Salemtowne and Resident, the successors and assigns of Salemtowne, and the heirs, executors, responsible parties, powers of attorney, administrators, and assigns of Resident.

(c) Applicable Law. This Agreement shall be governed by the laws of the State of North Carolina.

(d) Entire Agreement. This Agreement, together with any written Residence and Services Agreement or other agreement regarding continuing care or nursing care services between Salemtowne and Resident that is presently in effect, constitute the entire agreement between Salemtowne and Resident with respect to the matters provided herein and therein and supersede any and all prior oral or written agreements between these parties with respect to such matters. Electronic (e.g., pdf) versions of this Agreement shall have the same legal effect as originals, and all of which, when fully executed, shall constitute one and the same instrument.

(e) Conflicts. In the event of a conflict between the terms of this Agreement and the terms of the residence and services agreement between the parties (including without limitation provisions relating to refund of the Entrance Fee), this Agreement shall control, and the residence and services agreement shall be deemed amended to confirm to the terms of this Agreement.

(f) Enforceability and Waiver. The invalidity and unenforceability of any term or provision of this Agreement shall in no way affect the validity or enforceability of any other term or provision.

(g) Waivers. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power, or privilege ("Right") under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

(h) Survival. Those rights and obligations that have accrued as a result of the operation of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms, as shall any obligation of Resident to pay costs or expenses of his or her stay at Salemtowne that remain unpaid as of such termination.

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(i) Capacity. This Agreement has been executed on our behalf by our duly authorized agent, and no officer, trustee, agent or employee of ours shall have any personal liability hereunder to you under any circumstances.

(j) Tax Considerations. You should consult with your tax advisor regarding the tax considerations associated with this Agreement.

(k) Amendments and Partial Invalidation. Generally, this Agreement can be changed only by mutual written consent. However, we can make changes without your consent to keep the Agreement in compliance with applicable laws and regulations provided, that the changes we make do not substantially reduce your benefits under the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

(l) Mediation. In the event a dispute, claim or controversy of any kind arises between the parties regarding the care or treatment of the Resident that cannot be resolved by mutual agreement, the parties agree to submit such dispute, claim or controversy to a neutral mediator for possible resolution. The parties will jointly agree on a neutral mediator. Each party shall submit all evidence or information in writing to the mediator in support of its contentions or allegations and any defense either party may have with respect to the dispute, claim or controversy. Each party shall have the right to a hearing before the mediator and to personally present information pertinent to such dispute, claim or controversy. The mediator shall assist each party, in an unbiased manner, in reaching amicable agreement regarding the dispute, claim or controversy. If an amicable agreement is not reached, or if either party fails or refuses to negotiate or mediate in good faith to resolve the matter, or if a neutral mediator cannot be agreed upon between the parties, then the parties agree to submit such dispute, claim or controversy to an arbitration process as outlined below.

(m) Arbitration. In the event a dispute, claim or controversy of any kind arising out of or relating to this Agreement cannot be resolved through mediation as described in section (j), above, the parties agree to submit such dispute, claim or controversy to binding arbitration to be held in Winston-Salem, North Carolina in accordance with the then-current commercial arbitration rules of the American Arbitration Association. The parties will jointly agree on an arbitrator. If the parties are unable to agree in good faith and within a reasonable time on the selection of an arbitrator, then either party may request appointment of an arbitrator by the American Arbitration Association. Costs of arbitration, such as arbitrators' fees and similar costs, will be borne equally by the parties, provided that the arbitrator may award the costs of arbitration against a party who the arbitrator determines has acted in bad faith or fraudulently. Unless the arbitrator determines a party has acted in bad faith or fraudulently, attorneys' fees shall not be considered "costs of arbitration" and are to be borne by the incurring party. The parties will each be required to submit a proposed resolution of each issue in such dispute, claim or controversy to the arbitrator. The arbitrator shall base his/her decision upon the proposed resolutions in addition to any evidence presented at

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any hearing. The decision of the arbitration shall be final and binding unless the arbitration is determined by a court to be fraudulent or so grossly erroneous as to necessitate the inference of bad faith. Judgment on the award rendered by the arbitrators may be entered in any federal or state court having jurisdiction thereof. The arbitrators shall have no authority to make legal determinations which are, or are based on, material errors of law, to award punitive damages, or to add to, modify or refuse to enforce any valid and enforceable agreement(s) between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award that could not have been made by a court of law or that would cause any party to be in violation of any governmental law or regulation. Nothing herein shall prohibit a party to the dispute, controversy or claim from seeking equitable relief in a court of law to maintain the status quo while a mediation or arbitration is pending.

(n) Gender. Throughout this Agreement, the use of the masculine gender shall include the feminine, and the use of singular shall include the plural.

(o) Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

(p) Notice Provisions. Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:

Salemtowne: Office of the President/CEO Salemtowne 1000 Salemtowne Drive Winston Salem, North Carolina 27106 Resident: Your address for the purpose of giving notice prior to your move to Salemtowne is the address appearing after your signature below. Your address for the purpose of giving notice after your move to Salemtowne will be the current Living Accommodation address at the applicable time.


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I(we) understand this matter involves a financial commitment and associated risk as well as a legally binding contract. I (we) was (were) encouraged to consult with an attorney and/or financial advisor who could advise me (us) concerning this Agreement.



SALEMTOWNE



Printed Officer Name Current Address: Street

Title City, State, Zip Code

Telephone


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INDEX

A

Amendments and Partial Invalidation ......... 8 Applicable Law ........................................... 7 Arbitration. .................................................. 8 Assignment ................................................. 7

B

Binding Effect ............................................. 7

C

Capacity ...................................................... 8 Conflicts ...................................................... 7

E

Eligible Expenses/Personal Expenses ......... 4 Enforceability and Waiver .......................... 7 Entire Agreement ........................................ 7 Entrance Fee Refund ................................... 5

F

Financial Affairs. ........................................ 4 Financial Resources .................................... 3

G

Gender ......................................................... 9 General Matters ........................................... 7

I

Insurance. .................................................... 6 Interpretation ............................................... 9

L

Living Accommodation. ............................. 6

M

Mediation .................................................... 8

N

Notice Provisions ........................................ 9

P

Procedures Regarding Financial Assistance 3

R

Resident’s Contribution .............................. 6

S

Survival ....................................................... 7

T

Tax Considerations ..................................... 8 Term and Termination ................................ 6 Termination of Residency. .......................... 5

W

Waivers ................................................................... 7

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Reservation Agreement – August 30, 2015 Page 1 of 13

Reservation Agreement

Applicants (s): __________________________________________



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RESERVATION AGREEMENT

TABLE OF CONTENTS

TERM ................................................................................................................... 3

THE RESERVED LIVING ACCOMMODATION ........................................ 3

PROJECTED DATE OF AVAILABLITY ...................................................... 4

FEES ..................................................................................................................... 4

BENEFITS / RIGHTS ........................................................................................ 6

TERMINATION AND REFUND ..................................................................... 7

RIGHT OF RESCISSION ................................................................................. 8

PRELIMINARY AGREEMENT ...................................................................... 8

GENERAL ........................................................................................................... 8

ACKNOWLEDGEMENT OF RECEIPT ......................................................12

INDEX ................................................................................................................13

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RESERVATION AGREEMENT

The undersigned applicant(s) (“you)”) hereby tender(s) this Reservation Agreement (“Agreement”), together with payment of Reservation Fee (described below) to MORAVIAN HOME, INCORPORATED d/b/a SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”, “Salemtowne”, “we”, us” or “our”) for the purpose of reserving a Living Accommodation at Salemtowne.


WHEREAS, You desire to reserve a residence at Salemtowne and Salemtowne has approved your application for admission.


I. TERM. This Agreement becomes effective when signed by both You and Salemtowne, and Salemtowne receives your Reservation Fee. The Agreement terminates:

a) when You sign a Residence and Services Agreement with Salemtowne or

b) on the Projected Date of Availability as noted in Section III. herein.

This Agreement can be terminated earlier than noted above in I. a) or I. b) by you or by Salemtowne in accordance with the terms of this Agreement.

II. THE RESERVED LIVING ACCOMMODATION. You have reserved the Living Accommodation identified below (the “Reserved Accommodation”). This Reservation Agreement gives you first priority to enter into a Residence and Services Agreement for the Reserved Accommodation before the accommodation is made available to other applicants.

Living Accommodation (address) ______________________________ , a(n) (cottage, apartment or room)____________________ type of living accommodation (as described in materials presented to you and as shown to you during a physical tour), located at (village or building)_____________________________________ in Salemtowne (hereinafter referred to as the “Reserved Accommodation”).

Initials ____________ __________


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Salemtowne has made every effort to accurately describe the Reserved Accommodation and the Salemtowne community in the information materials and Disclosure Statement furnished to you. The Reserved Accommodation and Salemtowne Community may vary somewhat from the information furnished to you.

III. PROJECTED DATE OF AVAILABLITY. The date of availability is the date at which the Living Accommodation will be declared by Salemtowne to be available for occupancy, and such date of availability is projected to be on or about ________________________.

IV. FEES.

A. Entrance Fee Choices. You agree to pay the Corporation one of the following Entrance Fees (selected option checked below) as a condition of becoming a Resident of Salemtowne. This Entrance Fee is refundable in whole or in part as described below and in Section VI. herein.

□ Standard Refund Entrance Fee $ _______________. Your Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of two percent (2%) for each month of occupancy, as defined herein, for up to forty-eight (48) months, except for accrued expenses that will be deducted. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. No refund of the Entrance Fee shall be paid after forty-eight (48) months of occupancy.

□ 50% Refund Entrance Fee $__________________. Your Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of two percent (2%) for each month of occupancy, as defined herein, for up to twenty-three (23) months. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. The refunded Entrance Fee will never be less than 50% of the original Entrance Fee, except for accrued expenses that will be deducted.

Initials ____________ __________


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□ 90% Refund Entrance Fee $___________. Your Entrance Fee refund, if applicable, shall be equal to the Entrance Fee less a non-refundable fee of four percent (4%) of the Entrance Fee; the remaining balance is subject to amortization of one percent (1%) for each month of occupancy, as defined herein, for up to six (6) months. In calculating amortization for purposes of this section, a period of more than fifteen (15) days will be considered as a full month; fifteen (15) days or less will be disregarded for purposes of this calculation. The refunded Entrance Fee will never be less than 90% of the original Entrance Fee, except for accrued expenses that will be deducted.

B. Non-Standard Features. The Corporation has consented to the following non-

standard features in your living accommodation and you agree to pay the following amount to cover the additional costs, maintenance and removal of these features. This additional amount is not subject to the refund.

Non-Standard Features Added Cost

$


C. Terms of Payment. The Reservation Fee and Entrance Fee for the Reserved Accommodation shall be payable as follows:

• Ten Percent Deposit. The Reservation Fee shall equal ten percent (10%) of the Entrance Fee plus 100% of the Non-Standard Features as set forth herein. It shall be paid upon execution of this Reservation Agreement prior to the installation of the applicable non-standard features, if any. The 10% of the Entrance Fee will be credited to the total Entrance Fee. The Entrance Fee for your Reserved Unit shall not be increased above the Entrance Fee set forth herein unless this Agreement is terminated pursuant to Section I. (b) herein.

Initials ____________ __________


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• Balance of Entrance Fee. The Entrance Fee balance will be due and payable 10 days prior to the projected date of occupancy. Occupancy is defined as the first day that a Resident either resides in the Living Accommodation or the first day that the Resident’s furnishings or belongings occupy the Living Accommodation or a storage area at Salemtowne. We will give reasonable notice prior to the projected date of occupancy.

• Monthly/Daily Fee. In addition to the Entrance Fee, you agree to pay a Monthly/Daily fee for services. As of the date of this Agreement, the Monthly/Daily Fee (including dining plan, if applicable) based on the Living Accommodation reserved is estimated to be $___________ per month, for _______________ occupancy (single or dual). The Monthly/Daily Fee will begin on the date of occupancy, unless otherwise agreed to in writing by Salemtowne. The Monthly/Daily Fee is subject to change as described in the Disclosure Statement.

Notwithstanding the foregoing, unless we agree in writing to other arrangements, you must take occupancy within thirty (30) days after the date the Living Accommodation is available for occupancy in accordance with Section III. herein.

If you do not take occupancy by such time, you shall accept financial responsibility for the Living Accommodation and pay the balance of the Entrance Fee, balance of any Non-Standard Costs, and begin paying the applicable Monthly / Daily Fees beginning with the 30th day after the Projected Date of Availability in Section III. herein, unless this Agreement is terminated prior to the 30th day after the Projected Date of Availability in Section III. herein.

V. BENEFITS / RIGHTS. In addition to the priority established for residency, you may enjoy the following benefits, once you have paid your deposit as described herein:

A. Meals in the Dining Room at Salemtowne with reservations at established resident rates.

B. The use of common areas within Salemtowne including the Dining Rooms, Lounges, Private Dining Room, Library, Game Room, Arts/Crafts Room, Chapel/Multipurpose Room, Beauty/Barber Shop, Fitness Center, other recreational areas, common areas, and amenities from time to time with prior reservations at rates established by Salemtowne, if any.

C. Participation in present and future planned wellness, social, recreational, education, cultural, spiritual, arts and crafts, exercise, and other programs provided by Salemtowne at established rates, if any.

Initials ____________ __________


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VI. TERMINATION AND REFUND. This Agreement will terminate upon any of the following occurrences:

A. You fail to pay the deposit;

B. You die (or one of you dies if co-applicants) before the Residence and Services Agreement becomes effective;

C. You submit to Salemtowne written notice of termination of Agreement for any reason;

D. You fail to sign a Residence and Services Agreement or to pay the balance of applicable fees in accordance with the terms of this Agreement;

E. You experience changes in your financial status prior to occupancy at Salemtowne that cause you to fail to meet Salemtowne’s financial qualifications for admission; or

F. Your future health care needs exceed the level of service provided in the Assisted Living Center or Health Care Center.

If you or Salemtowne terminate this Agreement for a reason other than your signing a Residence and Services Agreement, Salemtowne shall have the right to reassign the Reserved Living Accommodation, and you will have no further rights to that unit except that a surviving Co-applicant shall be given the opportunity to enter into a new Reservation Agreement for the Reserved Living Accommodation based on single occupancy or on joint occupancy with another Co-applicant before the Living Accommodation is offered to others.

In case of termination of this Agreement for reasons set forth above, in addition to any fees charged by Salemtowne, Salemtowne reserves the right to withhold an administrative charge of four percent (4%) of the total Entrance Fee plus 100% of the costs of any upgrades and/or customized additions/options (“Non-Standard Features”) that you selected. The sum of these charges shall be retained by Salemtowne from all deposited funds owed to you to the extent permitted by law.

In the event this Agreement is terminated for any reason other than your signing a Residence and Services Agreement, Salemtowne shall refund any Entrance Fees, subject to conditions noted above, within sixty (60) working days after either: (i) Salemtowne receives written notification of your termination of this Agreement or (ii) Salemtowne notifies you in writing of termination of this Agreement by Salemtowne.

If you die before occupying a living accommodation, or if, on account of illness, injury, or incapacity, you would be precluded from occupying a living accommodation under the terms of the agreement for continuing care, the agreement is automatically cancelled. Salemtowne reserves the right to withhold an administrative charge of four percent (4%) of the total Entrance Fee plus 100% of the costs of any upgrades and/or customized additions/options (“Non-Standard Features”) that you selected. The sum of these charges shall be retained by Salemtowne from all deposited funds owed to you to the extent permitted by law.

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VII. RIGHT OF RESCISSION Notwithstanding anything herein to the contrary, this Agreement may be rescinded by you giving written notice of such rescission to the Corporation within thirty (30) days following the later of the execution of this Agreement or the receipt of a disclosure statement that meets the requirements of Section 58-64-1, et seq. of the North Carolina General Statutes. In the event of such rescission, you shall receive a refund in an amount equal to the Entrance Fee less a non-refundable fee of four percent 4% of the Entrance Fee less any Monthly/Daily Fees or portion thereof applicable to any period a Living Accommodation or storage area was actually occupied by you or your belongings. In the event of such rescission, you shall not receive a refund of any amounts paid for non-standard features added to the Living Accommodation. You will not be required to move into Salemtowne before the expiration of such thirty (30) day period. Notwithstanding anything to the contrary in this Agreement, any such refund shall be paid by the Corporation within fourteen (14) days following receipt of written notice of rescission pursuant to this paragraph.

VIII. PRELIMINARY AGREEMENT. This Agreement is preliminary in nature and precedent to the Residence and Services Agreement.

IX. GENERAL

A. Compliance with Applicable Laws. You and Salemtowne will operate in full compliance with all laws, rules, regulations and ordinances promulgated by lawful governmental authorities.

B. Confidentiality. Salemtowne has the responsibility to keep all of the personal, medical and financial information you have supplied to it confidential. You agree that Salemtowne can disclose such information to those who have a need, in its judgment, or right to know.

C. Assignment. Your rights and privileges under this Agreement are personal to you and may not be transferred or assigned by you or otherwise.

D. Management of the Corporation. The absolute rights of management are reserved by the Corporation, its Board of Trustees and its administrators as delegated by said Board of Trustees. The Corporation reserves the right to accept or deny any person for residency. Residents do not have the right to determine admission or terms of admission of any other Resident. Salemtowne reserves the right to amend, implement or terminate policies and/or guidelines related to the operation of the community in its sole discretion.


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F. Indemnity. You agree to indemnify, defend and hold us harmless from claims, damages or expenses, including attorneys’ fees and court costs, resulting from any injury or death to persons and any damages to property caused by, resulting from, attributable to or in any way connected with your negligent or intentional act or omission.


H. Schedule of Fees. You have been given a current copy of the Schedule of Fees as adopted by the Corporation. You understand that these documents will change from time to time as described in the Disclosure Statement.

I. Entire Agreement. This Agreement constitutes the entire contract between the Corporation and you. The Corporation shall not be liable or bound in any manner by any statements, representations or promises made by any person representing or assuming to represent the Corporation, unless such statements, representations or promises are set forth in this Agreement or in an amendment to this Agreement signed by Salemtowne’s President/CEO and by you. Electronic (e.g., pdf) versions of this Agreement shall have the same legal effect as originals, and all of which, when fully executed, shall constitute one and the same instrument.

J. Successors and Assigns. Except as set forth herein, this Agreement shall bind and inure to the benefit of the successors and assigns of the Corporation and the heirs, executors, responsible parties, powers of attorney, administrators and assigns of you.

K. Transfer of Property. You agree not to make any gift or other transfer of assets for the purpose of evading your obligations under this Agreement, or if such gift or transfer would render you unable to meet such obligations under this Agreement. Gifts or transfers of assets in this manner, which result in your inability to meet your financial obligations in accordance with this Agreement, will entitle Salemtowne to terminate this Agreement.




O. Amendments and Partial Invalidation. Generally, this Agreement can be changed only by mutual written consent. However, we can make changes without your consent to keep the Agreement in compliance with applicable laws and regulations provided, that the changes we make do not substantially reduce your benefits under

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the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

P. Waivers. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power, or privilege ("Right") under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

Q. Survival. Those rights and obligations that have accrued as a result of the operation of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms, as shall any obligation of Resident to pay costs or expenses of his or her stay at Salemtowne that remain unpaid as of such termination.

R. Gender. Throughout this Agreement, the use of the masculine gender shall include the feminine, and the use of singular shall include the plural.

S. Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

T. Notice Provisions. Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:

Salemtowne: Office of the President/CEO Salemtowne 1000 Salemtowne Drive Winston Salem, North Carolina 27106 Resident: Your address for the purpose of giving notice is the address appearing after your signature below.


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I(we) understand this matter involves a financial commitment and associated risk as well as a legally binding contract. I(we) was(were) encouraged to consult with an attorney and/or financial advisor who could advise me(us) concerning this Agreement.



SALEMTOWNE






Telephone


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As of the day and year above written in this Reservation Agreement, the undersigned Resident(s) acknowledges receipt of the Disclosure Statement of Moravian Home, Incorporated D/B/A Salemtowne dated August 30, 2015. The Disclosure Statement was received prior to the execution of this Agreement or prior to or at the time of the transfer of any money or other property to the facility, whichever occurred first.




SALEMTOWNE




Title


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INDEX

A

ACKNOWLEDGEMENT OF RECEIPT . 12 Amendments and Partial Invalidation ......... 9 Assignment. ................................................ 8 B

Balance of Entrance Fee. ............................ 6 BENEFITS / RIGHTS. ............................... 6

C

Capacity ...................................................... 9 Compliance with Applicable Laws ............. 8 Confidentiality. ........................................... 8

E

Entire Agreement ........................................ 9 Entrance Fee................................................ 4

F

FEES ........................................................... 4

G

Gender. ...................................................... 10 GENERAL .................................................. 8 Governing Law ........................................... 9

I

Indemnity .................................................... 9 Interpretation ............................................. 10

M

Management of the Corporation ................. 8

Monthly/Daily Fee. ..................................... 6 Moravian Affiliation ................................... 8

N

Non-Standard Features................................ 5 Notice Provisions ...................................... 10

P

PRELIMINARY AGREEMENT................ 8 PROJECTED DATE OF AVAILABLITY 4

R

RIGHT OF RESCISSION .......................... 8

S

Schedule of Fees ......................................... 9 Separability ................................................. 9 Successors and Assigns............................... 9 Survival ..................................................... 10

T

Tax Considerations ..................................... 9 Ten Percent Deposit .................................... 5 TERM ......................................................... 3 TERMINATION AND REFUND .............. 7 Terms of Payment ....................................... 5 THE RESERVED LIVING

ACCOMMODATION ............................. 3 Transfer of Property .................................... 9

W

Waivers ..................................................... 10

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Appendix B

Agreements

(Navigation by Salemtowne Continuing Care At Home Program)

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Navigation by Salemtowne Member Agreement – August 30, 2015 Page 1 of 30

Member Services Agreement

Member(s): ____________________________________ ____________________________________ Home Address: ______________________________ ______________________________ Check Plan Selected: All Inclusive Plan Security Plan

Co-Pay Plan

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TABLE OF CONTENTS

PAGE I. DEFINITIONS ................................................................................................. 3 II. ACCOMMODATIONS AND SERVICES ..................................................... 7

III. FEES, TERMS AND CONDITIONS .......................................................... 12

IV. AGREEMENT REQUIREMENTS AND PROCEDURES ...................... 14

V. TRANSFERS OR CHANGES IN LEVELS OF CARE ............................. 17

VI. RESCISSION, TERMINATION AND REFUND PROVISIONS............ 18

VII. FINANCIAL ASSISTANCE ........................................................................ 20

VIII. GENERAL .................................................................................................... 21

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MEMBER SERVICES AGREEMENT

This Agreement (the “Agreement”) is made this _______day of _____________,

_______ (Effective Date) by and between MORAVIAN HOME, INCORPORATED d/b/a NAVIGATION BY SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”), and ________________________________ (hereinafter “Member(s)”), whose place of residence is outside of the Salemtowne Continuing Care Retirement Community at ________________________________________________________________________________________________________(“Home”, “Home Site”).

WHEREAS, Corporation operates a continuing care retirement community (CCRC) located at 1000 Salemtowne Drive in Winston-Salem, North Carolina, known as “Salemtowne”; and

WHEREAS, Corporation has established and wishes to offer a program known as Navigation by Salemtowne (“Program”) which allows for Members to remain in their private residence while enjoying the traditional benefits of a continuing care retirement community.

WHEREAS, you desire to become a Member of the Program and to use and enjoy the

facilities, programs and services provided by the Program subject to the terms and conditions of this Agreement;

NOW, THEREFORE, Member and Corporation agree as follows: I. DEFINITIONS



Initials _________ __________ Program Member(s)

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Adult Day Care Services means a facility that offers a program of services in a congregate setting for a scheduled number of hours per week. Elements of an adult day care program may include transportation, meals and activities (both health related and social). Assisted Living Facility is for persons in need of assistance with activities of daily living. Care Coordination Team means the persons appointed by the Program for the Member, comprised of the Director of Care Coordination (or his/her designee), a representative of administration, and, in the case of medical and health care Services, the Program’s Medical Director (or his/her designee) and other clinical professionals as deemed appropriate, in consultation with the Member and/or Member’s designee. The Care Coordination Team may, at the Program’s sole discretion, change titles and personnel from time to time.

Care Coordinator means the person appointed by the Program to be responsible for handling the needs of the Member for Services; for conducting specific needs assessments; and for making recommendations for Services subject to review and final determination of the Member’s eligibility for Services by the Care Coordination Team.



Companion Services means those services provided by a Companion which may include visiting a Member for conversation and social time, including playing cards, games or going for a walk, supervision of and assistance with activities of daily living, medication reminders, and regular telephone calls. Deferred Fees means any fees owed which are to be paid at a later date. Designated Representative means the person authorized by the Member to make decisions on his/her behalf.

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Designated Service Area means the Program’s area of coverage for services, as defined by the Program. The Designated Service Area may be altered from time to time at the sole discretion of the Program. No change in the Designated Service Area by the Program will adversely affect this Agreement as long as the Member does not relocate out of the Designated Service Area existing as of the date of the Member’s execution of this Agreement. Determined To Be Appropriate means the Care Coordination Team, utilizing industry standards and accepted standards of healthcare practice, has assessed a Member’s medical and functional status and concluded that Services are necessary and will be provided by the Program. Effective Date means the date the Membership Services Agreement is executed. Emergency Response System means an in-home 24 hour electronic alarm system activated by a signal to a central switchboard. This system allows Members who are deemed to be at high risk to secure immediate help in the event of a medical, physical, emotional or environmental emergency. Facility means Assisted Living facility or Skilled Nursing facility. Facility-Based Services means Services provided in a facility other than the Home Site, including Assisted Living and Nursing Home Facilities. Home Health Aide means a qualified person licensed to provide assistance with personal care and designated by the Program to provide Home Health Aide Services to a Member at the Member’s Home Site. Home Health Aide Services may include assistance with bathing and dressing, an established activity regimen, such as range of motion exercises, nutritional needs, such as feeding assistance, and simple maintenance of the Member’s environment. Homemaker is a person designated by the Program to provide Homemaker Services to the Member at the Member’s Home Site. Homemaker Services are services provided by a Homemaker, which may include assistance with day-to-day chore activities in the Home Site, such as cooking, dishwashing, laundry, light housekeeping and errands. Home or Home Site means the Member’s place of residence as indicated in the first paragraph of this Agreement. Home Site Services means Services provided by the Program in a Member’s place of residence indicated on Page 3 in the recitals of this Agreement.

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Medical Director means a physician appointed from time to time by the Program to oversee the provision of medical and health care services provided to Members. Medical Record means all records relating to the Member’s medical history and condition, which may be maintained by the Program or by a Program Participating Facility or a Program Approved Provider. Medicare means the Health Insurance for the Aging Act, Title XVIII of the Social Security Amendment of 1965, as amended and regulations promulgated there under in effect from time to time. Medicare-Covered Services means all hospital, skilled nursing, home care and medical services covered and paid for by Medicare Parts A and B and the Member’s MediGap or secondary insurance. Member’s Designated Representative means any person appointed by Member to represent Member’s interests, or granted a power of attorney or appointed guardian by a court.

Medicare Supplemental Coverage means a private health insurance plan, which is certified by the Secretary of Health and Human Services as meeting federal requirements for Medicare supplemental policies. In general, Medicare Supplemental Coverage, also referred to as MediGap Insurance or Secondary Insurance, pays some of the balance of the costs of care covered by Medicare parts A and B when full costs are not paid by Medicare. It pays for certain deductibles and copayments. Member means the person accepted into the Program having signed a Member Services Agreement and paid the Membership Fee. Nursing Home Facility means a facility licensed by the state of North Carolina to provide various levels of nursing care.


Program has the meaning set forth in the open recitals of this Agreement. Program-Approved Provider means a health care services firm having an agreement with the Program to supply Services to Members. Program-Participating Facility means an Assisted Living and Nursing Home Facility having an agreement with the Program to supply Facility-Based Services to Members.

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Provide means that the Program will directly, or through a Program-Participating Facility or other provider make Services available at the Program’s cost, subject to any applicable co-payments and deductibles.


Referral Service means a service provided under the Program whereby the Program, acting as an intermediary between Member and third party vendors of such services, makes referrals to Member for such services as he/she may choose, at costs payable in full by Member. Residential Healthcare means a Nursing Home Facility having an agreement with the Program. Services mean any assistance, including care coordination, Member home inspection, annual physical examination, Home Site Services (including skilled home health care, Homemaker Services, Companion Services, Emergency Response System, meals and adult day care), Facility Based Services (including Assisted Living and Nursing Home), transportation services, Referral Services and lifestyle and wellness programs, that are provided to Member in the Program subject to applicable co-payments and deductibles.

II. ACCOMMODATIONS AND SERVICES

By execution of this Agreement concurrent with payment of applicable fees, Program will immediately provide to Member the Services described in this Agreement and in Attachment A, in a manner consistent with the objective of enabling Member to maintain his or her own living arrangement in their Home for as long as is practical and to provide Facility Based-Health Services if needed. Member agrees to accept and pay for the Services in the manner set forth in this Agreement and to abide by the rules and regulations of Program with respect to the Services.

In the event Program is assessed sales or use tax upon fees, services or other charges under this agreement, you agree to pay Salemtowne the amount of such taxes.

Salemtowne agrees to provide the Member the Services, subject to the terms and conditions set forth in this Agreement, as follows:

A. Residence. Member shall remain in their existing home (or subsequent residence of their choice). Should the Member desire to become a resident of the Salemtowne continuing care retirement community, the Member will comply with entry requirements of the retirement community and applicable payment of fees. In the case of executing a Residence and Services Agreement with the retirement community, Member shall have the right to continue this Agreement or terminate this Agreement. Should Member terminate this Agreement, any unamortized portion of the Membership Fee made

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pursuant to this Agreement shall be credited towards any future Salemtowne retirement community entry fees.

B. Common Facilities. Member shall have access to all common facilities that are

otherwise available for the use and benefit of residents of Salemtowne retirement community, which may include a central dining room, library and computer center, heated swimming pool, chapel, multi-purpose auditorium, lounges, arts and crafts room, and others as described in the current literature. Use of the common facilities will be available for use by the Member where there is capacity. Member will be responsible for dining and applicable activity charges as these charges are not included in the entry or monthly Program fees.

C. Activities and Leisure Events. Program will provide planned and scheduled social,

recreational, spiritual, educational, cultural, leisure, arts and crafts, exercise, health, and other special activities or programs designed to meet the needs of the Members. Some of these programs may include a fee. Member will be responsible for these additional fees, if any.

D. Care Coordination. A Care Coordinator will be assigned to the Member. Under the

direction of the assigned Care Coordinator, the Care Coordination Team, in consultation with the Member and/or the Member's Designated Representative, shall prepare a Care Plan to meet the Member's particular needs from time to time during the term of this Agreement. All decisions involving the Member's participation in various medical and health care services or permanent transfer from the Home Site to Facility-Based Services will be made by the Care Coordination Team following consultation with the Member or the Member's Designated Representative.

E. Member Home Inspection. During the first year of membership and every second year

thereafter (unless circumstances of a Member's health condition justify more frequent inspections), Program will provide a functional inspection of the Home Site for the purpose of ascertaining any functional and safety problems, and will make recommendations to the Member based on the inspection. Program may require, based on circumstances of previous inspections or Member's health condition, that the Member permit Program to provide a functional inspection of the Home Site. Program does not, however, represent that it will undertake steps necessary to effectuate any of such recommendations. Any recommended changes or corrections are the Member's sole responsibility. It is the Member’s choice to make such recommended changes or corrections to his/her Home Site. To aid the Member in securing necessary goods or services, Program will make available a list of possible vendors of such goods and services. The Member is solely responsible for the full cost of any of the improvements to his/her Home Site as a result of the Member’s home inspection.

F. Annual Physical Examination. Program encourages Member to undergo an annual

physical examination performed by Member's personal physician. Program encourages that a medical report be submitted by Member's personal physician to his/her Care Coordinator. Program will reimburse Member for their annual physical examination,

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exclusive of laboratory work, x-rays, EKG's or testing. Members should consult their Care Coordinator to verify reimbursement by the Program prior to incurring charges.

G. Home Site Services. Home Site Services will be provided as Determined To Be Appropriate by the Care Coordination Team. Member must exhibit at least one or more ADL Deficiencies to be eligible for the following Home Site Services, and Member must use a Program-Approved Provider to be eligible for coverage. Program may require an examination by the Medical Director (or his or her designee) to determine eligibility for Home Site Services. Home Site Services include:

1) Skilled Home Health Care

Program will provide non-Medicare covered home care services, including personal care provided by a licensed Home Health Aide as Determined To Be Appropriate by the Care Coordination Team and to the extent provided for in the Plan selected by the Member.

2) Homemaker Services Program will provide Homemaker Services, including companion, light housekeeping and chore services as Determined To Be Appropriate by the Care Coordination Team and to the extent indicated in the Plan selected by the Member.

3) Companion Services Program will provide Companion Services as Determined To Be Appropriate by the Care Coordination Team and to the extent indicated in the Plan selected by the Member.

H. Emergency Response System. If Determined To Be Appropriate by the Care Coordination Team, Program will provide an emergency response system with 24 hour coverage to the extent indicated in the Plan selected by the Member.

I. Meals. If Determined To Be Appropriate by the Care Coordination Team, Program will

provide meals delivered to the Home Site. Meals shall be provided for additional charges, which shall be Member’s sole responsibility. The maximum number of meals that will be provided is two per day.

J. Adult Day Care. Program will provide Adult Day Care Services as Determined to be Appropriate by the Care Coordination Team supplied by a Program-Approved Provider to the extent provided for in the Plan selected by the Member.

K. Facility-Based Services. When Determined To Be Appropriate by the Care Coordination Team and prescribed by a physician, Program will provide or cause to be provided, Facility-Based Services, including Assisted Living in a semi-private accommodation and Nursing Home Services in a semi-private accommodation as determined by Program in

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its sole discretion. Program may require an examination of Member by the Program’s Medical Director (or his/her designee) to determine eligibility for Facility-Based Services.

1) Assisted Living and Nursing Home Services As Determined To Be Appropriate by the Care Coordination Team, these Facility-Based Services will be provided either in the Salemtowne retirement community’s Assisted Living and Nursing Home facilities, or in similar Program-Participating Facilities approved by the Program. The Program will not be responsible for any ancillary charges such as laundry, prescription drugs, medical supplies, telephone, or television.

L. Transportation Services. If the Member is unable to drive or instructed by his/her

physician not to drive, Program will provide transportation to and from medically necessary outpatient surgery or short procedures which may include, but are not limited to, cataract removal, and surgical biopsies. This does not include transportation for regular physician office visits, dialysis, and routine specialist appointments.

M. Referral Service For Additional Services. In addition to the services outlined in this

Agreement, a Referral Service for other services is available with additional associated charges. These may include landscape maintenance, legal, financial planning, home maintenance and rental of medical equipment.

N. Lifestyle and Wellness Programs. Lifestyle and wellness programs will be offered

from time to time, free of charge or with an applicable fee for service, including but not limited to, exercise classes, arts and crafts, wellness seminars, speakers and day excursions. Members will be advised of the schedules and the cost of these programs on an as-offered basis.

O. Limitation of Program Payment for Non-Institutional Health Care Services.

Program may limit payment for Home Site Services (skilled home health care, homemaker, companion, emergency response system, meals and adult day care) if the aggregate published cost of such services for any thirty-day (30) period exceeds the published negotiated cost of care in the Nursing Home Facility at Salemtowne retirement community.

The Program shall limit payment for such services to the equivalent of the published negotiated cost of care in such a Nursing Home Facility for all days following the thirty-day (30) period.

The Member may either transfer to a Program-Participating Facility or pay the difference between the cost of Home Site Services and the published negotiated cost of care in Salemtowne retirement community’s Health Care Services Facility.

For example. If the cost of care required and provided in the Home Site exceeds the cost of similar care in a Nursing Home Facility at Salemtowne retirement community, and the Member chooses to remain in the Home Site receiving said care, the excess cost (following the thirty (30) day period) of the Home Site care

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over the cost of care at the Nursing Home Facility will be the responsibility of the Member and not the Program.)

P. Hospital, Surgical and Physician Care. Program will have no responsibility to pay for Member’s surgical, hospital or Physician care.

Q. Accident or Illness Outside of Designated Service Area. Should an accident or illness occur outside of the Designated Service Area, Member shall notify the Program as soon as possible. If services under this agreement are required, Member shall arrange to return to Home Site or to a Plan Participating Facility as soon as reasonably possible. Program will have no responsibility for any costs resulting from such accident or illness until Member returns to the Home Site or to a Plan Participating Facility. After Member returns to the Plan Service Area, Program shall assume its responsibility to provide those services as deemed necessary by Program and/or Member’s attending physician as provided in this Agreement. In the event Member suffers an accident or illness while away from the Plan Service Area, Member shall continue to pay the Monthly Service Fee.

R. Other Services and Programs at Additional Charge. Other services and programs will be available to the Member at the Member’s expense, including but not limited to private transportation, catering, and other special services performed for the Member beyond the normal scope of services offered by Program. The availability and charges for additional services are determined by Program.


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III. FEES, TERMS AND CONDITIONS

A. Membership Fee. The Member agrees to pay the Program a nontransferable, non-interest bearing membership fee of $___________________________as a condition of becoming a Member in the Program. The “Membership Fee” is a one-time fee and shall not be increased or changed during the duration of this Agreement. This Membership Fee is payment for the __________________ Program Plan, the payments and benefits of which are described in Attachment A.

B. Monthly Fee. In addition to the Membership Fee, Member agrees to pay a monthly fee

(“Monthly Fee”) for the term of this Agreement, which shall be payable in advance by the 10th day of each month. After paying the Membership Fee, Member will commence paying the Monthly Fee. As of the date of this Agreement, the Monthly Fee associated with the Program Plan selected will be $________________ per month.

Check Plan Selected:

□ All Inclusive Plan

□ Security Plan

□ Co-Pay Plan C. Transfer to Another Service Plan. You may move to a different Service Plan (All

Inclusive, Security or Co-Pay) no more than once per year at the beginning of the calendar year. Member must provide thirty (30) days advance written notice of the desire to change their Service Plan to the Program Executive Director.

If you transfer to another Service Plan, you are responsible for paying any difference in the Membership Fee, if the amount of the Membership Fee for the new Service Plan is greater than the Membership Fee for the previous Service Plan. If the Membership Fee for the new Service Plan is smaller than the Membership Fee for the previous Service Plan, no refund will be paid for the difference. Once you move to a new Service Plan, you will be responsible for the monthly fees in effect at that time. The Program reserves the right to amend such policies, guidelines and fees, in its discretion.


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D. Adjustments in the Monthly Fee. The Monthly Fee is made to provide the Services described in this Agreement and are intended to meet the cost of debt service, insurance, maintenance, depreciation, administration, staffing, and other expenses associated with the operation and management of the Program. The Program will usually set fees annually but shall have the authority to adjust the Monthly Fee from time to time during the term of this Agreement as the Program, in its discretion, deems necessary in order to reflect changes in costs of providing the facilities, programs and services described herein consistent with operating on a sound financial basis and maintaining the quality of services called for herein. The Program, upon thirty (30) days written notice to the Member, may make any such increases in the Monthly Fee or other charges.

E. Vacations and/or Time Away from Home Site. Monthly fees are not subject to change

or credit if a Member is away from the Home Site for any period of time. (For example, vacations, hospital stays, etc.)

F. Monthly Statements. The Program will furnish the Member with monthly statements showing the Monthly Fee and additional service fees owed by the Member that shall be payable by the 10th day of the month. Program may charge interest at a rate of one and one-half percent (1.5%) per month on any unpaid balance. The Program reserves the right, with 30 days notice, to change the billing date and the payment due date. The Program may terminate this agreement if You have a past due amount in excess of thirty (30) days. You, and your current and future responsible parties (i.e. power(s) of attorney, executor(s)) on your behalf, from your assets and income agree to pay all costs, expenses, and reasonable attorneys' fees, in the event same must be expended in the collection of any sums due and owed by you to the Program.

G. Application for Benefits. If requested by Program, you will apply for any or all federal, state, and local benefits for which you may be eligible or entitled; and if requested by Program, you will apply for any or all such benefits toward the cost of your care in the Program. These benefits may include: Medicare, Medicaid, prescription, and Veterans benefits.

H. Assignment of Benefits. Member will from time to time authorize any provider of

medical and health services to receive reimbursement as provided under Medicare and any supplementary insurance programs. If requested by Program, you will from time to time make assignments to the Program provider of medical and other health services of all benefits otherwise accruing to you under Medicare, or other programs and supplementary extended coverage plans to compensate for services rendered.

For example, Member receives Home Care in their Home Site that qualifies for Medicare reimbursement. Member will assign their benefits from the Medicare program to the Home Care Agency to pay for such services. The Home Care Agency will accept this assignment of benefits which means that the Agency will accept the payment from Medicare as payment in full except for Member co-pays and/or deductibles allowed by Medicare to be billed to the Member.

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I. Care in Other Assisted Living or Nursing Care Facilities. Should a Member be transferred to a care facility, the Member will continue to pay the Monthly Fee for the Program. The charges incurred at the facility, for the level of services defined within this Agreement, will be the responsibility of the Program. Charges incurred at the facility, which are not defined within this Agreement, will be the Member’s responsibility.

J. Care in Other Facilities. Should Member need a level of care beyond that which

Salemtowne retirement community or other similar facility is licensed to provide and Member requires transfer to another facility, all expenses that will result from such transfer and care shall be borne entirely by Member.

K. Third Party Reimbursement. The Program reserves the right to bill, or have Program

providers bill, Medicare, Medicaid and other third party payers, such as insurance and long-term care insurance companies. The Member is responsible for all fees and charges incurred while this Agreement remains in force and the Member will pay any disputed or denied claims within thirty (30) days of the date of service.

IV. AGREEMENT REQUIREMENTS AND PROCEDURES

A prospective Member will become qualified for services under this Agreement upon satisfaction of the following provisions:

A. Age. The contract requirements for membership in the Program are non-discriminatory

except as to age, and the Program is open to both married and single men and women of all races and religions. This Agreement is restricted to persons 62 years of age or older.

B. Personal Interview. The prospective Member shall have an interview with a representative from the Program prior to execution of this Agreement. Upon review of all information required to be furnished herein, the Program may request additional personal interviews. Prospective Member agrees to meet with a representative of the Program who will review prospective Member's Personal Health History form and determine if the prospective Member meets the health standards determined solely by the Program for execution of this Agreement.

C. Membership and Financial Applications, and Personal Health History. The prospective Member shall submit for approval by Administration, a Membership and Financial Application and a personal health history, all on forms furnished by the Program.

D. Notification. The Program shall review the Membership and Financial Applications, the Personal Health History form and the results of the personal interview, and will notify the prospective Member whether the prospective Member meets the Program membership requirements.

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E. Health Requirements. Prior to execution of a Program Agreement, the prospective Member shall submit a report of a physical examination of the prospective Member made by a physician selected by the prospective Member. Such report shall include a statement by such physician that the prospective Member is in good health, is ambulatory or can move about independently and is able to take care of himself or herself in normal living activities.

The Program may require the prospective Member to have another physical examination by the Medical Director or by another physician approved by the Program. The Program shall be responsible for the costs of such additional physical examinations. If the health of the prospective Member as disclosed by such physical examination differs materially from that disclosed in the prospective Member’s Membership Application and Personal Health History form, the Program shall have the right to decline the prospective Member and not enter into a contract with the prospective Member.

F. Financial Requirements. The prospective Member must have assets and income that will be sufficient under foreseeable circumstances to pay the financial obligations of the prospective Member under this Agreement and to meet ordinary living expenses of the prospective Member. The Program may require the prospective Member to furnish additional, current financial information as may be needed.

G. Representations. The prospective Member affirms that the representations made in the Membership and Financial Applications and Personal Health History form are true and correct and may be relied upon by the Program as a basis for entering into this Agreement.

H. Medical Insurance. Member will maintain, at Member’s cost, Medicare Parts A and B,

or other program, and one Medicare supplemental insurance policy (or equivalent coverage i.e. Medicare Advantage Plan). Member shall furnish to Program evidence of such coverage as it may from time to time request. The purpose of the insurance is to cover the cost of medical treatment for Member and for physician services; physical, occupational or speech therapy; audiology services; pharmaceuticals, including but not limited to prescription medications, intravenous medications, antibiotics, and wound management; radiology services; laboratory services; dermatology services; specialty medical supplies and the like.

Members under the age of 65 will maintain, at Member’s cost, insurance coverage that is equivalent to Medicare and Medicare supplemental insurance and shall furnish to Program evidence of such coverage as it may from time to time request. Member shall be responsible to pay the cost of the before mentioned items that are not covered by insurance. If Member fails to purchase or maintain this insurance the Program will not be responsible for any expense that would have been covered by this insurance.

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I. Power of Attorney. You agree to execute and maintain in effect a durable power of attorney that is valid under North Carolina law and will survive your incapacity or disability. This durable power of attorney will designate an attorney-in-fact and an alternate attorney-in fact who will act for you in managing your financial affairs and in filing for insurance or other benefits under private and public assistance programs as full and complete a manner as you could do if acting personally for yourself. You will deliver a copy of a fully executed power of attorney to the Program at the time of signing this Agreement. You will not revoke or amend this durable power of attorney except upon execution of a replacement durable power of attorney, a fully executed copy of which will be delivered to the Program. This document also may address at your option, other affairs, such as decisions concerning medical care.

J. Will. You agree to execute a Will, and to provide to Program a copy of such sections of

the Will and any revisions, as applicable during the term of this Agreement to document the name(s) of the person(s) to be contacted in the event of your death (i.e. executor(s)).

In the event of your death, while you are a Member of the Program under this Agreement, only the executor(s) named in your Will will be allowed to effect business transactions on behalf of your estate with the Program. Members of your family or those to whom you have granted Power of Attorney will not be allowed to effect business transactions after your death, unless they are the executor(s) named in your Will.

K. Funeral and Burial. Program will not be responsible for making funeral or burial arrangements and is not responsible for related expenses.

L. Advance Directives. You are encouraged to execute a Living Will and a Health Care

Power of Attorney and deliver a fully executed copy thereof to the Program and any Program-Approved Providers, as well as any revisions as applicable, during the term of this Agreement.

M. Appointment of Guardian. If you become unable to care for your business and

financial affairs, the Program reserves the right to institute action for the determination of your incompetence and the appointment of a guardian to fulfill the terms of this Agreement; unless such needed arrangements have already been made.

N. Emergency Notifications. You agree to provide Program with the following

information prior to the effective date of this Agreement as well as updates of this during the term of this Agreement:

• Names, addresses and phone numbers of persons to notify in an emergency

(minimum of two are required)



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• Names, addresses and phone numbers for pet emergency contacts, if applicable

V. TRANSFERS OR CHANGES IN LEVELS OF CARE

(Members are responsible for arranging for and paying the costs of all packing and moving into, within and out of their HomeSite. Assistance may be provided by the Program at an additional cost .)

A. Transfer to Assisted Living or Nursing Home Facility. The Member agrees that the Program shall have authority to determine that the Member should be transferred from the Member’s Home Site to an Assisted Living or Nursing Home Facility. Such determination shall be based on the physical and mental assessment to determine the appropriate level of care for the Member and the professional opinion of the management of the Program and shall be made only after consultation to the extent practical with the Member, a representative of the Member’s family and the Member’s attending physician. The costs of Services in these facilities will be paid by the Program, subject to limitations detailed in this Agreement and based on the Program Plan selected.

B. Transfer to Hospital or Other Facility. The Member may be transferred to a hospital,

center, or institution equipped to give such care, which care will be at the expense of the Member. Such transfer of the Member will be made only after consultation to the extent possible with the Member, or a representative of the Member’s family, and the Member’s attending physician.

C. Decisions Involving Permanent Transfer From Living Accommodation.

All decisions involving permanent transfer from Member's current living accommodation (including Home Site, Assisted Living Facility, Nursing Home Facility or hospital), to another accommodation will be made by the Care Coordination Team. Such decisions shall be made in consultation with the Member, or in case of incompetency, with the Member's Designated Representative. If a determination is made by the Program that any transfer is permanent in nature, the Member may dispose of (or keep) their private residence as Member sees fit. If the Member disposes of their private residence, services provided for under this Agreement pertaining to such private residence will terminate unless separate arrangements are made between the Member and the Program. Such services may include but are not limited to: Emergency Response System, Homemaker Services and Home Inspections.

D. Transfer to Another Service Plan. You may move to a different Service Plan (All Inclusive, Security or Co-Pay) no more than once per year at the beginning of a month. Member must provide thirty (30) days advance written notice of the desire to change their Service Plan to the Program Director.

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If you transfer to another Service Plan, you are responsible for paying any difference in the Membership Fee, if the amount of the Membership Fee for the new Service Plan is greater than the Membership Fee for the previous Service Plan. If the Membership Fee for the new Service Plan is smaller than the Membership Fee for the previous Service Plan, no refund will be paid for the difference.

Once you move to a new Service Plan, you will be responsible for the monthly fees in effect at that time.

The Program reserves the right to amend such policies, guidelines and fees, in its discretion.

VI. RESCISSION, TERMINATION AND REFUND PROVISIONS

A. Rescission. Notwithstanding anything herein to the contrary, this Agreement may be rescinded by Member by giving written notice of such rescission to Program within thirty (30) days following the later of the execution of this Agreement or the receipt of a Disclosure Statement that meets the requirements of Section 58-64-1, et seq. of the North Carolina General Statutes. In the event of such rescission, Member shall receive a refund in an amount equal to the Membership Fee less a non-refundable fee of four percent (4%) of the Membership Fee less any Monthly fee and additional fees or portion thereof applicable to the time period this Agreement was in effect. Notwithstanding anything to the contrary in this Agreement, any such refund shall be paid by Salemtowne within thirty (30) days following receipt of written notice of rescission pursuant to this paragraph.

B. Voluntary Termination after Effective Date. At any time after the Effective Date, the

Member may terminate this Agreement by giving the Program written notice of such termination in writing and provided at least thirty (30) days in advance of the effective date of termination.

If this Agreement is terminated by Member during the first forty-eight (48) months following the Effective Date, the Member will receive a refund, less 4% Administration Fee, of the Membership Fee and two percent (2%) of the Membership Fee for each month (full or partial without prorating) this Agreement remained in effect. If Member terminates this Agreement after the first forty-eight (48) months following the Effective Date, the Member will receive a zero (0%) refund of the Membership Fee. Any refund due hereunder shall be provided to the Member no later than 120 days after the effective date of termination.

C. Determination to move into an Independent Living unit at Salemtowne Retirement

Community. If the Member desires to move into an independent living unit at Salemtowne retirement community, he/she must meet the entry requirements of the Independent Living Agreement then in use at Salemtowne retirement community. He/She

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must be able to live independently, execute the Independent Living Agreement for that unit and pay the then in effect entry fee and monthly service fee for the unit selected. Member may choose to terminate this Agreement, and any refund due from this Agreement shall be applied to the entry fee due for the independent living unit. Member, however, upon execution of the Independent Living Agreement may deem that they do not want to terminate this Agreement. In that case both Agreements shall remain in effect.

D. Right of Set-Off; Other Rights. The Program will have the right to set-off against

repayment of the Membership Fee, for any Deferred Fees accrued and for any other fees or amount payable to the Program under this Agreement and other agreements or contracts between the parties and their affiliates, including any costs or expenses that might be due, payable or incurred by the Member for the violation of this Agreement. Termination of this Agreement for whatever reason will not affect or impair the exercise of any right or remedy granted to the Program or Member under this Agreement for any claim or cause of action occurring prior to the date of such termination.

E. Termination Upon Death. In the event of death of the Member at any time after the

Effective Date, this Agreement shall terminate and the Membership Fee shall be refunded in accordance with the provisions set forth in “Voluntary Termination after Effective Date” in Section VI. B., subject to Member’s continuing obligations described in this Agreement. Any refund to which you are entitled shall be paid to your Estate unless you execute a designation and name a trust, revocable by you at the time of your death, to receive applicable refunds. Should you execute a revocable trust subsequent to signing this agreement, you or your estate’s executor may submit a written beneficiary designation form designating a trust, revocable by you at the time of your death, to receive applicable refunds.

F. Termination Upon Death, Injury, Illness or Incapacity. In the event of death, injury,

illness or incapacity that would preclude you from becoming a member under this Agreement, you shall receive a refund in an amount equal to the Membership Fee less an administrative fee of $1,000 less any fees or charges for services received. Notwithstanding anything to the contrary in this Agreement, any such refund shall be paid by the Corporation within fourteen (14) days following receipt of written notice of rescission pursuant to this paragraph.

Upon death any refund to which you are entitled shall be paid to your Estate unless you execute a designation and name a trust, revocable by you at the time of your death, to receive applicable refunds. Should you execute a revocable trust subsequent to signing this agreement, you or your estate’s executor may submit a written beneficiary designation form designating a trust, revocable by you at the time of your death, to receive applicable refunds.

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G. Termination by the Program. The Program may terminate this Agreement at any time

if there has been a material misrepresentation or omission made by the Member in the Member’s Membership and/or Financial Applications or Personal Health History form; if the Member fails to make payment to the Program of any fees or charges due the Program within thirty (30) days of the date when due; or if the Member does not abide by the rules and regulations adopted by Program or breaches any of the terms and conditions of this Agreement.

Termination of this Agreement must be in writing and provided at least thirty (30) days in advance of the effective date of termination. In the event of termination for any of such causes, the refund of the Membership Fee paid by the Member shall be determined in the same manner described in Paragraph VI B above and paid within 120 days after the effective date of termination. No agreement for care shall permit discharge of the Member from a Facility providing care before the expiration of this Agreement, without just cause for such a removal. The term “just cause” means a good faith determination that the Member is a danger to himself/herself or others while remaining in his/her residence and further refuses to transfer to another facility as described in Section V above. Upon agreement termination by Salemtowne for “just cause”, Salemtowne will pay to the Member any refund immediately or upon leaving the Program, if at the time of termination the Member is then residing at the Salemtowne retirement community. However, such refund shall further be subject to Paragraph VI B above.

H. Amount Due. Any amounts due and owed by the Member to the Program may be

deducted from the amount of any refund. If such refund is insufficient, the Member’s family or the estate will be responsible.

I. Transfer of Property. The Member agrees not to make any gift or other transfer of

assets for the purpose of evading the Member’s obligations under this Agreement, or if such gift or transfer would render such Member unable to meet such obligations under this Agreement.

VII. FINANCIAL ASSISTANCE

A. Financial Assistance. In connection with its charitable mission, it is the desire of the

Board of Trustees of the Corporation that no one leave the Program because of lack of funds. Any disposition of Member’s assets in any way other than for care through the Program or related living/medical expenses to the extent that Member cannot adequately provide for Member’s expenses or care will nullify this desire on the part of the Program and entitle the Program to terminate this Agreement.

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Program will make reasonable efforts to acquire the funds necessary to meet the Program’s fees. However, the resources of the Program to provide care for Members are not unlimited, and the Program reserves the right to terminate the membership of any Member, who cannot pay the full cost of Monthly and other charges, and other costs in connection with such person’s membership and use of services in the Program.


In the event that the Program may subsidize in whole or in part the Fees and other Program charges payable by the Member hereunder, the Member will be required to execute a separate Financial Assistance Agreement with the Corporation.

Any determination by the Corporation with regard to the granting or continuation of financial assistance shall be within the sole discretion of the Corporation.

B. Recovery of Subsidies Provided. When a Member dies, or terminates this Agreement, and if said Member’s fees have been subsidized wholly or partly by the Program, the Member’s estate, if any, will be liable to the Program for the full amount of the subsidy the Member received for the entire time of residency. This paragraph will apply whether or not the Member is enrolled in the Program at the time of death. This Agreement will operate as a lifetime assignment, transfer and conveyance to Salemtowne of so much of Member’s property as is necessary to cover such liability. Any amount due the Program under this paragraph may be deducted from any refund payable to Member or to the Member’s estate.

C. Financial Assistance Funds. The Corporation will endeavor to establish funds which

will be used to assist Members who would otherwise not be able to participate in the Program or continue to participate in the Program. Such funds may be used for the purposes of providing financial assistance, but no Member shall have any claim to or expectation of receiving or continuing to receive any such assistance.

VIII. GENERAL

A. Compliance with Applicable Laws. Program and Member will operate in full compliance with all laws, rules, regulations and ordinances promulgated by lawful governmental authorities.

B. Confidentiality. Program has the responsibility to keep all of the personal, medical and

financial information you have supplied to it confidential. You agree that Program can disclose such information to those who have a need, in its judgment, or right to know (e.g., to provide information for transfer to a hospital).

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D. Management of the Corporation. The absolute rights of management are reserved by

the Corporation, its Board of Trustees and its administrators as delegated by said Board of Trustees. The Corporation reserves the right to accept or deny any person membership or residency. Members do not have the right to determine membership or terms of membership of any other Member. Corporation reserves the right to amend, implement or terminate policies and/or guidelines related to the operation of the Program in its sole discretion.

E. Moravian Affiliation. Navigation by Salemtowne is affiliated with the Moravian

Church in America, Southern Province (“Southern Province”). The Southern Province is not responsible for the financial and contractual obligations of the Program.

F. Indemnity. Member agrees to indemnify, defend and hold the Program harmless from

claims, damages or expenses, including attorneys’ fees and court costs, resulting from any injury or death to persons and any damages to property caused by, resulting from, attributable to or in any way connected with Member’s negligent or intentional act or omission or those of Member’s guests or those employed by Member, including, without limitation to private duty nurses, companions, or other.

G. Severability. The invalidity of any restriction, condition or other provision of this

Agreement, or any part of the same, shall not impair or affect in any way the validity or enforceability of the rest of this Agreement.

H. Member Handbook. Member will be given a current copy of the Member’s Handbook

as adopted by the Program. You understand that these documents will change from time to time but that they are the procedural documents for Members of the Program and those occupying living accommodations at Salemtowne retirement community.

I. Entire Agreement. This Agreement constitutes the entire agreement between the

Corporation and Member regarding the Program. The Corporation shall not be liable or bound in any manner by any statements, representations or promises made by any person representing or assuming to represent the Corporation, unless such statements, representations or promises are set forth in this Agreement or in an amendment to this Agreement signed by Program’s Executive Director or the Corporation’s Chief Executive Officer and by Member. Electronic (e.g., pdf) versions of this Agreement shall have the same legal effect as originals, and all of which, when fully executed, shall constitute one and the same instrument.

J. Successors and Assigns. Except as set forth herein, this Agreement shall bind and inure

to the benefit of the successors and assigns of the Corporation and the heirs, executors, responsible parties, powers of attorney, administrators and assigns of Member.

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K. Capacity. This Agreement has been executed on our behalf by our duly authorized agent, and no officer, trustee, agent or employee of the Corporation’s shall have any personal liability hereunder to Member under any circumstances.

L. Tax Considerations. Member should consult with tax advisors regarding the tax

considerations associated with this Agreement.

M. Governing Law. This Agreement shall be governed by the laws of the State of North Carolina without regard to principles of conflict law.

N. Amendments and Partial Invalidation. Generally, this Agreement can be changed only

by mutual written consent. However, Corporation can make changes without Member’s consent to keep the Agreement in compliance with applicable laws and regulations provided that the changes Corporation makes do not substantially reduce your benefits under the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

O. Mediation. In the event a dispute, claim or controversy of any kind arises between the

parties regarding the care or treatment of the Member that cannot be resolved by mutual agreement, the parties agree to submit such dispute, claim or controversy to a neutral mediator for possible resolution. The parties will jointly agree on a neutral mediator. Each party shall submit all evidence or information in writing to the mediator in support of its contentions or allegations and any defense either party may have with respect to the dispute, claim or controversy. Each party shall have the right to a hearing before the mediator and to personally present information pertinent to such dispute, claim or controversy. The mediator shall assist each party, in an unbiased manner, in reaching amicable agreement regarding the dispute, claim or controversy. If an amicable agreement is not reached, or if either party fails or refuses to negotiate or mediate in good faith to resolve the matter, or if a neutral mediator cannot be agreed upon between the parties, then the parties agree to submit such dispute, claim or controversy to an arbitration process as outlined below.

P. Arbitration. In the event a dispute, claim or controversy of any kind arising out of or relating to this Agreement cannot be resolved through mediation as described in herein above, the parties agree to submit such dispute, claim or controversy to binding arbitration to be held in Winston-Salem, North Carolina in accordance with the then-current commercial arbitration rules of the American Arbitration Association. The parties will jointly agree on an arbitrator. If the parties are unable to agree in good faith and within a reasonable time on the selection of an arbitrator, then either party may request appointment of an arbitrator by the American Arbitration Association. Costs of arbitration, such as arbitrators' fees and similar costs, will be borne equally by the parties, provided that the arbitrator may award the costs of arbitration against a party who the arbitrator determines has acted in bad faith or fraudulently. Unless the arbitrator determines a party has acted in bad faith or fraudulently, attorneys' fees shall not be considered "costs of arbitration" and are to be borne by the incurring party. The parties

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will each be required to submit a proposed resolution of each issue in such dispute, claim or controversy to the arbitrator. The arbitrator shall base his/her decision upon the proposed resolutions in addition to any evidence presented at any hearing. The decision of the arbitration shall be final and binding unless the arbitration is determined by a court to be fraudulent or so grossly erroneous as to necessitate the inference of bad faith. Judgment on the award rendered by the arbitrators may be entered in any federal or state court having jurisdiction thereof. The arbitrators shall have no authority to make legal determinations which are, or are based on, material errors of law, to award punitive damages, or to add to, modify or refuse to enforce any valid and enforceable agreement(s) between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award that could not have been made by a court of law or that would cause any party to be in violation of any governmental law or regulation. Nothing herein shall prohibit a party to the dispute, controversy or claim from seeking equitable relief in a court of law to maintain the status quo while a mediation or arbitration is pending.

Q. Gender. Throughout this Agreement, the use of the masculine gender shall include the

feminine, and the use of singular shall include the plural.

R. Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

S. Waivers. Neither the failure nor any delay on the part of any party to exercise any right,

remedy, power, or privilege (“Right”) under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

T. Survival. Those rights and obligations that have accrued as a result of the operation of

this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms, as shall any obligation of Member to pay costs or expenses of his or her participation in the Program that remain unpaid as of such termination.

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U. Notice Provisions. Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:


Program Executive Director or Salemtowne Chief Executive Officer 1000 Salemtowne Drive Winston-Salem, North Carolina 27106

Member:

Member’s address for the purpose of giving notice appearing after Member’s signature below. Member is responsible for notifying Corporation of any changes in address and/or telephone number.


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Corporation will stand behind all of the statements, promises and representations in this Agreement, but no others. If you feel something has been promised to you, but it is not specifically mentioned in this Agreement, now is the time to discuss it – before you sign this Agreement.

Member understands this matter involves a financial commitment and associated risk, as well as a legally binding contract. Member was encouraged to consult with an attorney and/or financial advisor who could advise me concerning this Agreement.



NAVIGATION BY SALEMTOWNE

MEMBER(S) (or Member’s Attorney in Fact) (*)





Telephone

(*) If Attorney–in-Fact signs on behalf of the Member, a Filed Power of Attorney document must be attached to this Agreement.

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Navigation by Salemtowne 1000 Salemtowne Drive

Winston-Salem, NC 27106

As of the day and year above written in this Membership Services Agreement, the undersigned Member acknowledges receipt of the Disclosure Statement of Moravian Home, Incorporated d/b/a Navigation by Salemtowne dated August 30, 2015. The Disclosure Statement was received prior to the execution of this Agreement or prior to or at the time of the transfer of any money to the Program, whichever occurred first.

As a prospective member, Program’s representatives have encouraged me to read the Disclosure Statement in its entirety before entering into any contract or written agreement or paying any fee.

I understand the Program, like all other continuing care facilities and programs in the State of North Carolina, is subject to an act concerning registration and disclosure by continuing care facilities (the “Act”). Registration under the Act does not constitute approval, recommendation, or endorsement of the facility by the Department of Insurance or the State of North Carolina, nor does such registration evidence the accuracy or completeness of the information in the Disclosure Statement.

I understand this matter involves a financial commitment and associated risk as well as a legally binding contract. In evaluating the Disclosure Statement and the Financial Statements prior to any commitment, I was encouraged to consult with an attorney and/or financial advisor who could review these documents with me, if any matters contained herein are not clear, including an understanding of solvency and deficit fund balance levels for this and other continuing care facilities and programs.





Title


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ATTACHMENT A

NAVIGATION BY SALEMTOWNE SERVICE PLAN OPTIONS (*)

(*) EACH PLAN PAYS THE FOLLOWING PERCENTAGE OF COSTS ASSOCIATED

WITH THE SERVICES BEING PROVIDED

Type of Service

All Inclusive

Security

Co-Pay

Care Coordination 100%

100% 100%

Health Support Services: 100% 85% 50% Home Health Aide 100% 85% 50% Companion / Homemaker 100% 85% 50% Live in Companion 100% 85% 50%

Adult Day Care 100% 85% 50%

Delivered Meals (as limited in the Agreement)

100% 100% 100%

Emergency Response System 100% 100% 100%

Home Inspections 100% 100% 100%

Transportation (as limited in the Agreement)

100% 100% 100%


100% 70% 50%

Nursing Home Care 100% 70% 50%

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INDEX

Accident or Illness Outside of Designated Service Area ....................... 11 ACCOMMODATIONS AND SERVICES .............................................. 7 ACKNOWLEDGEMENT OF RECEIPT OF ........................................ 27 Activities and Leisure Events ..................... 8 Adjustments in the Monthly Fee ............... 13 ADL (Activities of Daily Living)

Deficiencies............................................. 3 Adult Day Care ........................................... 9 Adult Day Care Services ............................. 4 Advance Directives ................................... 16 Age ............................................................ 14 AGREEMENT REQUIREMENTS AND PROCEDURES ........................... 14 Amendments and Partial Invalidation ....... 23 Amount Due .............................................. 20 Annual Physical Examination. .................... 8 Application for Benefits ............................ 13 Appointment of Guardian ......................... 16 Arbitration ................................................. 23 Assignment of Benefits ............................. 13 Assignment. .............................................. 22 Assisted Living and Nursing Home Services ................................................. 10 Assisted Living Facility .............................. 4 Capacity. ................................................... 23 Care Coordination ....................................... 8 Care Coordination Team ............................. 4 Care Coordinator ......................................... 4 Care in Other Assisted Living or Nursing Care Facilities ......................... 14 Care in Other Facilities ............................. 14 Care Plan ..................................................... 4 Common Facilities ...................................... 8 Companion .................................................. 4 Companion Services ................................... 9 Compliance with Applicable Laws ........... 21 Confidentiality. ......................................... 21 Decisions Involving Permanent Transfer

From Living Accommodation............... 17

Deferred Fees .............................................. 4 DEFINITIONS ............................................ 3 Designated Representative .......................... 4 Designated Service Area ............................. 5 Determination to move into an Independent Living unit at Salemtowne Retirement Community .... 18 Determined To Be Appropriate .................. 5 Effective Date ............................................. 5 Emergency Notifications .......................... 16 Emergency Response System ................. 5, 9 Entire Agreement. ..................................... 22 Facility ........................................................ 5 Facility Based Services ............................... 9 Facility-Based Services ............................... 5 FEES, TERMS AND CONDITIONS ....... 12 FINANCIAL ASSISTANCE .................... 20 Financial Assistance Funds ....................... 21 Financial Requirements ............................ 15 Funeral and Burial..................................... 16 Gender ....................................................... 24 GENERAL ................................................ 21 Governing Law ......................................... 23 Health Requirements ................................. 15 Home Health Aide ...................................... 5 Home Health Aide Services ........................ 5 Home Site.................................................... 5 Home Site Services ..................................... 5 Home Site Services. .................................... 9 Homemaker ................................................. 5 Homemaker Services .............................. 5, 9 Hospital and Surgical Care ....................... 11 Indemnity. ................................................. 22 Interpretation ............................................. 24 Lifestyle and Wellness Programs.............. 10 Limitation of Program Payment for Non-

Institutional Health Care Services. ....... 10 Management of the Corporation. .............. 22 Meals ........................................................... 9 Mediation. ................................................. 23 Medical Director ......................................... 6 Medical Insurance ..................................... 15

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Medical Record ........................................... 6 Medicare ..................................................... 6 Medicare Supplemental Coverage .............. 6 Medicare-Covered Services ........................ 6 Member ....................................................... 6 Member Handbook ................................... 22 Member Home Inspection........................... 8 Member’s Designated Representative ........ 6 MEMBERSHIP AGREEMENT ................. 3 Membership and Financial Applications,

and Personal Health History ................. 14 Membership Fee........................................ 12 Monthly Fee .............................................. 12 Monthly Statements .................................. 13 Moravian Affiliation ................................. 22 Notice Provisions. ..................................... 24 Notification ............................................... 14 Nursing Home Facility ................................ 6 Other Services and Programs at Additional Charge ................................. 11 Permanent Member ..................................... 6 Personal Interview .................................... 14 Power of Attorney ..................................... 16 Prevailing Rate For A Program Participating Facility ............................... 7 Program ....................................................... 6 Program Approved Provider ....................... 6 Program Participating Facility .................... 6 Provide ........................................................ 7 Recovery of Subsidies Provided ............... 21 Referral Service .......................................... 7 Referral Service For Additional Services . 10 Representations ......................................... 15

RESCISSION, TERMINATION AND REFUND PROVISIONS ...................... 18

Rescission. ................................................ 18 Residence .................................................... 7 Residential Healthcare ................................ 7 Right of Set-Off; Other Rights .................. 19 Separability. .............................................. 22 SERVICE PLAN OPTIONS..................... 28 Services ....................................................... 7 Skilled Home Health Care .......................... 9 Successors and Assigns............................. 22 Survival ..................................................... 24 Tax Considerations ................................... 23 Termination by the Program ..................... 20 Termination Upon Death .......................... 19 Termination Upon Death, Injury, Illness or Incapacity.......................................... 19 Third Party Reimbursement ...................... 14 Transfer of Property .................................. 20 Transfer to Another Living

Accommodation. ................................... 12 Transfer to Another Service Plan. ............. 17 Transfer to Assisted Living or Nursing

Home Facility........................................ 17 Transfer to Hospital or Other Facility ....... 17 TRANSFERS OR CHANGES IN LEVELS OF CARE .............................. 17 Transportation Services ............................ 10 Vacations and/or Time Away from Home

Site ........................................................ 13 Voluntary Termination after Effective Date ....................................................... 18 Waivers ..................................................... 24 Will ........................................................... 16

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Consultative Care Plus Plan Agreement – August 30, 2015 Page 1 of 27

Consultative Care Plus Plan Agreement

Member: ____________________________________ Home Address: ______________________________ ______________________________

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TABLE OF CONTENTS

I. DEFINITIONS ...................................................................................................................... 3

II. ACCOMMODATIONS AND SERVICES ......................................................................... 7

III. FEES, TERMS AND CONDITIONS ............................................................................... 11

IV. AGREEMENT REQUIREMENTS AND PROCEDURES ............................................ 12

V. TRANSFERS OR CHANGES IN LEVELS OF CARE .................................................. 15

VI. RESCISSION, TERMINATION AND REFUND PROVISIONS ................................. 15

VII. FINANCIAL ASSISTANCE ............................................................................................. 17

VIII. GENERAL………… ......................................................................................................... 18

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CONSULTATIVE CARE PLUS PLAN AGREEMENT

This Consultative Care Plus Plan Agreement (the “Agreement”) is made this

_______day of _____________, _______ (Effective Date) by and between MORAVIAN HOME, INCORPORATED d/b/a NAVIGATION BY SALEMTOWNE, a North Carolina nonprofit corporation (hereinafter the “Corporation”), and ________________________________ (hereinafter “Member(s)” or “you”), whose place of residence is outside of the Salemtowne Continuing Care Retirement Community at ________________________________________________________________________________________________________(“Home”, “Home Site”).

WHEREAS, Corporation operates a continuing care retirement community (CCRC)

located at 1000 Salemtowne Drive in Winston-Salem, North Carolina, known as “Salemtowne”;

WHEREAS, Corporation has established and wishes to offer a program known as Navigation by Salemtowne (“Program”) which allows for Members to remain in their private residence while enjoying the traditional benefits of a continuing care retirement community;

WHEREAS, you desire to become a Member of the Program and to use and enjoy the

facilities, programs and services provided by the Program subject to the terms and conditions of this Agreement; and

WHEREAS, you do not medically qualify for an All Inclusive, Security or Co-Pay membership plan but your spouse or person living in your home does qualify for one of these plans and has entered into a separate Member Services Agreement with the Corporation;

NOW, THEREFORE, Member and Corporation agree as follows: I. DEFINITIONS




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Adult Day Care Services means a facility that offers a program of services in a congregate setting for a scheduled number of hours per week. Elements of an adult day care program may include transportation, meals and activities (both health related and social). Assisted Living Facility is for persons in need of assistance with activities of daily living. Care Coordination Team means the persons appointed by the Program for the Member, comprised of the Director of Care Coordination (or his/her designee), a representative of administration, and, in the case of medical and health care Services, the Program’s Medical Director (or his/her designee) and other clinical professionals as deemed appropriate, in consultation with the Member and/or Member’s designee. The Care Coordination Team may, at the Program’s sole discretion, change titles and personnel from time to time.

Care Coordinator/Wellness Navigator means the person appointed by the Program to be responsible for handling the needs of the Member for Services; for conducting specific needs assessments; and for making recommendations for Services subject to review and final determination of the Member’s eligibility for Services by the Care Coordination Team.



Companion Services means those services provided by a Companion which may include visiting a Member for conversation and social time, including playing cards, games or going for a walk, supervision of and assistance with activities of daily living, medication reminders, and regular telephone calls. Coordinate means that the Program will directly, or through a Program-Participating Facility or other provider make Services available to the Member at additional costs payable by the Member. Deferred Fees means any fees owed which are to be paid at a later date. Designated Representative means the person authorized by the Member to make decisions on his/her behalf.

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Designated Service Area means the Program’s area of coverage for services, as defined by the Program. The Designated Service Area may be altered from time to time at the sole discretion of the Program. No change in the Designated Service Area by the Program will adversely affect this Agreement as long as the Member does not relocate out of the Designated Service Area existing as of the date of the Member’s execution of this Agreement. Determined To Be Appropriate means the Care Coordination Team, utilizing industry standards and accepted standards of healthcare practice, has assessed a Member’s medical and functional status and concluded that Services are necessary and will be coordinated by the Program. Effective Date means the date the Consultative Care Plus Plan Agreement is executed. Emergency Response System means an in-home 24 hour electronic alarm system activated by a signal to a central switchboard. This system allows Members who are deemed to be at high risk to secure immediate help in the event of a medical, physical, emotional or environmental emergency. Facility means Assisted Living facility or Skilled Nursing facility. Facility-Based Services means Services provided in a facility other than the Home Site, including Assisted Living and Skilled Nursing Facilities. Home Health Aide means a qualified person licensed to provide assistance with personal care and designated by the Program to provide Home Health Aide Services to a Member at the Member’s Home Site. Home Health Aide Services may include assistance with bathing and dressing, an established activity regimen, such as range of motion exercises, nutritional needs, such as feeding assistance, and simple maintenance of the Member’s environment. Homemaker is a person designated by the Program to provide Homemaker Services to the Member at the Member’s Home Site. Homemaker Services are services provided by a Homemaker, which may include assistance with day-to-day chore activities in the Home Site, such as cooking, dishwashing, laundry, light housekeeping and errands. Home or Home Site means the Member’s place of residence as indicated in the first paragraph of this Agreement. Home Site Services means Services coordinated by the Program in a Member’s place of residence indicated on Page 3 in the recitals of this Agreement.

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Medical Director means a physician appointed from time to time by the Program to oversee the provision of medical and health care services provided to Members. Medically Qualify. To become a member, you must be 62 or older, be in good health, ambulatory or can move about independently and are able to take care of yourself in normal living activities. Medical Record means all records relating to the Member’s medical history and condition, which may be maintained by the Program or by a Program Participating Facility or a Program Approved Provider. Medicare means the Health Insurance for the Aging Act, Title XVIII of the Social Security Amendment of 1965, as amended and regulations promulgated there under in effect from time to time. Medicare-Covered Services means all hospital, skilled nursing, home care and medical services covered and paid for by Medicare Parts A and B and the Member’s MediGap or secondary insurance. Member’s Designated Representative means any person appointed by Member to represent Member’s interests, or granted a power of attorney or appointed guardian by a court.

Medicare Supplemental Coverage means a private health insurance plan, which is certified by the Secretary of Health and Human Services as meeting federal requirements for Medicare supplemental policies. In general, Medicare Supplemental Coverage, also referred to as MediGap Insurance or Secondary Insurance, pays some of the balance of the costs of care covered by Medicare parts A and B when full costs are not paid by Medicare. It pays for certain deductibles and copayments. Member means the person accepted into the Program having signed a Consultative Care Plus Plan Agreement and paid the Membership Fee. Nursing Home Facility means a facility licensed by the state of North Carolina to provide various levels of nursing care.


Program has the meaning set forth in the open recitals of this Agreement. Program-Approved Provider means a health care services firm having an agreement with the Program to supply Services to Members.

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Program-Participating Facility means an Assisted Living and Nursing Home Facility having an agreement with the Program to supply Facility-Based Services to Members.


Referral Service means a service coordinated under the Program whereby the Program, acting as an intermediary between Member and third party vendors of such services, makes referrals to Member for such services as he/she may choose, at additional costs payable by Member. Residential Healthcare means a Nursing Home Facility having an agreement with the Program. Services mean any assistance, including care coordination, Member home inspection, annual physical examination, Home Site Services (including skilled home health care, Homemaker Services, Companion Services, Emergency Response System, meals and adult day care), Facility Based Services (including Assisted Living and Nursing Home), transportation services, Referral Services and lifestyle and wellness programs, that are coordinated for or provided to Member in the Program, subject to the terms of this Agreement and applicable co-payments and deductibles.

II. ACCOMMODATIONS AND SERVICES

By execution of this Agreement, Program will coordinate for Member the Services described in this Agreement and in Attachment A, in a manner consistent with the objective of enabling Member to maintain his or her own living arrangement in their Home for as long as is practical and to coordinate Facility-Based Services if needed. Member agrees to accept and pay for the Services in the manner set forth in this Agreement and to abide by the rules and regulations of Program with respect to the Services.

In the event Program is assessed sales or use tax upon fees, services or other charges under this Agreement, you agree to pay the Program the amount of such taxes.

The Program agrees to coordinate for Member the Services, subject to the terms and conditions set forth in this Agreement, as follows: A. Residence. Member shall remain in existing home (or subsequent residence of his or

her choice). Should Member desire to become a resident of the Salemtowne continuing care retirement community, Member will comply with entry requirements of the retirement community and applicable payment of fees. In the case of executing a Residence and Services Agreement with the retirement community, Member shall have the right to continue this Agreement or terminate this Agreement.

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B. Common Facilities. Member shall have access to all common facilities that are otherwise available for the use and benefit of residents of Salemtowne retirement community, which may include a central dining room, library and computer center, heated swimming pool, chapel, multi-purpose auditorium, lounges, arts and crafts room, and others as described in the current literature. Use of the common facilities will be available for use by the Member where there is capacity. Member will be responsible for dining and applicable activity charges.

C. Activities and Leisure Events. Program will coordinate planned and scheduled

social, recreational, spiritual, educational, cultural, leisure, arts and crafts, exercise, health, and other special activities or programs designed to meet the needs of the Members. Some of these programs may include a fee, for which the Member will be responsible.

D. Care Coordination. A Care Coordinator will be assigned to the Member. Under the

direction of the assigned Care Coordinator, the Care Coordination Team, in consultation with the Member and/or the Member's Designated Representative, shall prepare a Care Plan to meet the Member's particular needs from time to time during the term of this Agreement. All decisions involving the Member's participation in various medical and health care services or permanent transfer from the Home Site to Facility-Based Services will be made by the Care Coordination Team following consultation with the Member or the Member's Designated Representative.

E. Member Home Inspection. Program may require, based on circumstances of

previous inspections or Member's health condition, that the Member permit Program to provide a functional inspection of the Home Site. The Member will be responsible for the costs of such inspection. Program does not, however, represent that it will undertake steps necessary to effectuate any of such recommendations. Any recommended changes or corrections are the Member's sole responsibility. It is the Member’s choice to make such recommended changes or corrections to his/her Home Site. To aid the Member in securing necessary goods or services, Program will make available a list of possible vendors of such goods and services. The Member is solely responsible for the full cost of any of the improvements to his/her Home Site as a result of the Member’s home inspection.

F. Annual Physical Examination. Program encourages Member to undergo an annual

physical examination performed by Member's personal physician. Program encourages that a medical report be submitted by Member's personal physician to his/her Care Coordinator. Such examination will be at the additional cost of the Member.

G. Home Site Services. Home Site Services will be coordinated as Determined To Be

Appropriate by the Care Coordination Team. The costs of such services will be at the additional cost of the Member. Member must use a Program-Approved Provider for continuity of care and quality assurance standards. Program may require an examination by the Medical Director (or his or her designee) to determine

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appropriate level of care and services required by the Member. Home Site Services include:

1) Skilled Home Health Care

Program will coordinate home care services, including personal care provided by licensed Home Health Aides as Determined To Be Appropriate by the Care Coordination Team.

2) Homemaker Services

Program will coordinate Homemaker Services, including companion, light housekeeping and chore services as Determined To Be Appropriate by the Care Coordination Team.

3) Companion Services Program will coordinate Companion Services as Determined To Be Appropriate by the Care Coordination Team.

H. Emergency Response System. If Determined To Be Appropriate by the Care Coordination Team, Program will provide an emergency response system with 24 hour coverage at an additional cost to the Member.

I. Meals. If Determined To Be Appropriate by the Care Coordination Team, Program

will coordinate meals delivered to the Home Site, at additional costs to the Member. The maximum number of meals that will be provided is two per day.

J. Adult Day Care. Program will coordinate Adult Day Care Services as Determined

to be Appropriate by the Care Coordination Team supplied by a Program-Approved Provider at additional costs to the Member.

K. Facility-Based Services. When Determined To Be Appropriate by the Care Coordination Team and prescribed by a physician, Program will coordinate Facility-Based Services, including Assisted Living and Nursing Home Services

As Determined To Be Appropriate by the Care Coordination Team, these Facility-Based Services will be provided either in the Salemtowne retirement community’s Assisted Living and Nursing Home facilities, or in similar Program-Participating Facilities approved by the Program. The Program will not be responsible for any charges in either the Salemtowne Facilities or the Program-Participating Facilities. The costs of these facilities will be at additional costs to the Member.

L. Transportation Services. If the Member is unable to drive or instructed by his/her

physician not to drive, Program will coordinate transportation to and from medically necessary outpatient surgery or short procedures which may include, but are not

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limited to, cataract removal, and surgical biopsies. This does not include transportation for regular physician office visits, dialysis, and routine specialist appointments. Applicable transportation costs are at additional costs to the Member.

M. Referral Service For Additional Services. In addition to the Services outlined in this Agreement, a Referral Service for other services is available with additional associated charges. These may include landscape maintenance, legal, financial planning, home maintenance and rental of medical equipment.

N. Lifestyle and Wellness Programs. Lifestyle and wellness programs will be offered

from time to time, free of charge or with an applicable fee for service, including but not limited to, exercise classes, arts and crafts, wellness seminars, speakers and day excursions. Members will be advised of the schedules and the cost of these programs on an as-offered basis.

O. Limitation of Program Payment for Non-Institutional Health Care Services. The

Program will directly, or through a Program-Participating Facility or other provider coordinate Services available to the Member at additional costs to the Member, except as set forth in this Agreement.

All decisions involving your participation in various medical and health care services or permanent transfer from your home to a Facility-Based Service(s) will be made jointly by the Care Coordination Team and your and our Designated Representative. Your Care Coordinator will contact you on a periodic basis to determine changes in your health and functional status in order to coordinate needed services.

P. Hospital, Surgical and Physician Care. Program will have no responsibility to pay for Member’s surgical, hospital or Physician care.

Q. Accident or Illness Outside of Designated Service Area. Should an accident or illness occur outside of the Designated Service Area, Member shall notify the Program as soon as possible. If services under this agreement are required, Member shall arrange to return to Home Site or to a Plan Participating Facility as soon as reasonably possible. Program will have no responsibility for any costs resulting from such accident or illness. After Member returns to the Plan Service Area, Program shall assume its responsibility to coordinate those services as deemed necessary by Program and/or Member’s attending physician as provided in this Agreement.

R. Other Services and Programs at Additional Charge. Other services and programs will be available to the Member at the Member’s expense, including but not limited to private transportation, catering, and other special services coordinated for the Member beyond the normal scope of services offered by Program.

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III. FEES, TERMS AND CONDITIONS

A. Membership Fee. The Member agrees to pay the Program a nontransferable membership fee of $5,000 as a condition of becoming a Member in the Program. The “Membership Fee” is a one-time non-refundable fee. This Membership Fee is payment for the Consultative Care Plus Plan, the payments and benefits of which are described herein and in Attachment A. Except as otherwise provided in this Agreement, the costs and expenses of providing the facilities, programs and services by the Program to Member shall be in addition to the Membership Fee and shall be the responsibility of Member.

B. Adjustments in Fees. The Program will usually set fees annually but shall have the

authority to adjust the fees and other charges from time to time during the term of this Agreement as the Program, in its discretion, deems necessary in order to reflect changes in costs of providing the facilities, programs and services described herein consistent with operating on a sound financial basis and maintaining the quality of services called for herein. The Program, upon thirty (30) days written notice to the Member, may make any such adjustments in the Fees or other charges.

C. Monthly Statements. At the beginning of each month, the Program will furnish the Member with monthly statements showing fees and additional charges owed by the Member that shall be payable by the 10th day of the month following the statement date. Program may charge interest at a rate of one and one-half percent (1.5%) per month on any unpaid balance. The Program reserves the right, with 30 days’ notice, to change the billing date and the payment due date. The Program may terminate this Agreement if you have a past due amount in excess of thirty (30) days. You, and your current and future responsible parties (i.e. power(s) of attorney, executor(s)) on your behalf, from your assets and income agree to pay all costs, expenses, and reasonable attorneys' fees, in the event same must be expended in the collection of any sums due and owed by you to the Program.

D. Application for Benefits. If requested by Program, you will apply for any or all federal, state, and local benefits for which you may be eligible or entitled; and if requested by Program, you will apply for any or all such benefits toward the cost of your care in the Program. These benefits may include: Medicare, Medicaid, prescription, and Veterans benefits.

E. Assignment of Benefits. Member will from time to time authorize any provider of

medical and health services to receive reimbursement as provided under Medicare and any supplementary insurance programs. If requested by Program, you will from time to time make assignments to the Program provider of medical and other health services of all benefits otherwise accruing to you under Medicare, or other programs and supplementary extended coverage plans to compensate for services rendered.

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For example, Member receives Home Care in their Home Site that qualifies for Medicare reimbursement. Member will assign their benefits from the Medicare program to the Home Care Agency to pay for such services. The Home Care Agency will accept this assignment of benefits which means that the Agency will accept the payment from Medicare as payment in full except for Member co-pays and/or deductibles allowed by Medicare to be billed to the Member.

F. Care in Other Facilities, Assisted Living Facilities or Nursing Care Facilities. Should

a Member be transferred to a care facility, the charges incurred at the applicable facility will be the responsibility of the Member.

G. Third Party Reimbursement. The Program reserves the right to bill, or have Program

providers bill, Medicare, Medicaid and other third party payers, such as insurance and long-term care insurance companies. The Member is responsible for all fees and charges incurred while this Agreement remains in force, and the Member will pay any disputed or denied claims within thirty (30) days of the date of service.

IV. AGREEMENT REQUIREMENTS AND PROCEDURES

A prospective Member will become qualified for Services under this Agreement upon satisfaction of the following provisions:

A. Age. The contract requirements for membership in the Program are non-discriminatory

except as to age, and the Program is open to both married and single men and women of all races and religions. This Agreement is restricted to persons 62 years of age or older.

B. Spouse or Household Member. The contract requirements for membership in the

Consultative Care Plus Plan require your spouse or person living in your home to qualify for one of the Membership Plans (All Inclusive, Security or Co-Pay) and to have entered into a separate Member Services Agreement with Navigation by Salemtowne.

C. Personal Interview. The prospective Member shall have an interview with a representative from the Program prior to execution of this Agreement. Upon review of all information required to be furnished herein, the Program may request additional personal interviews. Prospective Member agrees to meet with a representative of the Program who will review prospective Member's Personal Health History form and determine if the prospective Member meets the health standards determined solely by the Program for execution of this Agreement.

D. Membership and Financial Applications, and Personal Health History. The prospective Member shall submit to Admissions for approval by Administration, a Membership and Financial Application and a personal health history, all on forms furnished by the Program.

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E. Notification. The Program shall review the Membership and Financial Applications, the Personal Health History form and the results of the personal interview, and will notify the prospective Member whether the prospective Member meets the Program membership requirements.

F. Health Requirements. Prior to execution of a Program Agreement, the prospective

Member shall submit a report of a physical examination of the prospective Member made by a physician selected by the prospective Member. Prospective Members who meet the health requirements of the Membership Plans (All Inclusive, Security or Co-pay) will not be allowed participation in the Consultative Care Plus Plan.

G. Financial Requirements. The prospective Member must have assets and income that will be sufficient under foreseeable circumstances to pay the financial obligations of the prospective Member under this Agreement and to meet ordinary living expenses of the prospective Member. The Program may require the prospective Member to furnish additional, current financial information as may be needed.

H. Representations. The prospective Member affirms that the representations made in the Membership and Financial Applications and Personal Health History form are true and correct and may be relied upon by the Program as a basis for entering into this Agreement.

I. Medical Insurance. Member will maintain, at Member’s cost, Medicare Parts A and B,

or other program, and one Medicare supplemental insurance policy (or equivalent coverage i.e. Medicare Advantage Plan). Member shall furnish to Program evidence of such coverage as it may from time to time request. The purpose of the insurance is to cover the cost of medical treatment for Member and for physician services; physical, occupational or speech therapy; audiology services; pharmaceuticals, including but not limited to prescription medications, intravenous medications, antibiotics, and wound management; radiology services; laboratory services; dermatology services; specialty medical supplies and the like.

Members under the age of 65 will maintain, at Member’s cost, insurance coverage that is equivalent to Medicare and Medicare supplemental insurance and shall furnish to Program evidence of such coverage as it may from time to time request. Member shall be responsible to pay the cost of the before mentioned items that are not covered by insurance. If Member fails to purchase or maintain this insurance the Program will not be responsible for any expense that would have been covered by this insurance.

J. Power of Attorney. You agree to execute and maintain in effect a durable power of

attorney that is valid under North Carolina law and will survive your incapacity or disability. This durable power of attorney will designate an attorney-in-fact and an alternate attorney-in fact who will act for you in managing your financial affairs and in filing for insurance or other benefits under private and public assistance programs as full

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and complete a manner as you could do if acting personally for yourself. You will deliver a copy of a fully executed power of attorney to the Program at the time of signing this Agreement. You will not revoke or amend this durable power of attorney except upon execution of a replacement durable power of attorney, a fully executed copy of which will be delivered to the Program. This document also may address at your option, other affairs, such as decisions concerning medical care.

K. Will. You agree to execute a Will, and to provide to Program a copy of such sections of

the Will and any revisions, as applicable during the term of this Agreement to document the name(s) of the person(s) to be contacted in the event of your death (i.e. executor(s)).

Only the executor(s) in your Will, in the event of your death while you are a Member of the Program under this Agreement, will be allowed to effect business transactions on behalf of your estate with the Program. Members of your family or those to whom you have granted Power of Attorney will not be allowed to effect business transactions after your death, unless they are the executor(s) named in your Will.

L. Funeral and Burial. Program will not be responsible for making nor coordinating

funeral or burial arrangements and is not responsible for related expenses. M. Advance Directives. You are encouraged to execute a Living Will and a Health Care

Power of Attorney and deliver a fully executed copy thereof to the Program and any Program-Approved Providers, as well as any revisions as applicable, during the term of this Agreement.

N. Appointment of Guardian. If you become unable to care for your business and

financial affairs, the Program reserves the right to institute action for the determination of your incompetence and the appointment of a guardian to fulfill the terms of this Agreement; unless such needed arrangements have already been made.

O. Emergency Notifications. You agree to provide Program with the following

information prior to the effective date of this Agreement as well as updates of this during the term of this Agreement:

• Names, addresses and phone numbers of persons to notify in an emergency

(minimum of two are required)




• Names, addresses and phone numbers for pet emergency contacts, if applicable

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V. TRANSFERS OR CHANGES IN LEVELS OF CARE

(Members are responsible for arranging for and paying the costs of all packing and moving into, within and out of their HomeSite. Assistance may be provided by the Program at an additional cost to the Member.) A. Transfer to Assisted Living or Nursing Home Facility. The Member agrees that

the Program shall have authority to determine that the Member should be transferred from the Member’s Home Site to an Assisted Living or Nursing Home Facility. Such determination shall be based on the physical and mental assessment to determine the appropriate level of care for the Member and the professional opinion of the management of the Program and shall be made only after consultation to the extent practical with the Member, a representative of the Member’s family and the Member’s attending physician. The costs of Services in these facilities will be paid by the Member.

B. Transfer to Hospital or Other Facility. The Member may be transferred to a

hospital, center, or institution equipped to give such care, which care will be at the expense of the Member. Such transfer of the Member will be made only after consultation to the extent possible with the Member, or a representative of the Member’s family, and the Member’s attending physician.

C. Decisions Involving Permanent Transfer From Living Accommodation. All

decisions involving permanent transfer from Member's current living accommodation (including Home Site, Assisted Living Facility, Nursing Home Facility or hospital), to another accommodation will be made by the Care Coordination Team. Such decisions shall be made in consultation with the Member, or in case of incompetency, with the Member's Designated Representative.

If a determination is made by the Program that any transfer is permanent in nature, the Member may dispose of (or keep) their private residence as Member sees fit. If the Member disposes of their private residence, services provided for under this Agreement pertaining to such private residence will terminate unless separate arrangements are made between the Member and the Program. Such services may include but are not limited to: Emergency Response System and Home Inspections.

VI. RESCISSION, TERMINATION AND REFUND PROVISIONS

Rescission. Notwithstanding anything herein to the contrary, this Agreement may be rescinded by you giving written notice of such rescission to the Corporation within thirty (30) days following the later of the execution of this Agreement or the receipt of a disclosure statement that meets the requirements of Section 58-64-25(a)(3) of the North Carolina General Statutes. In the event of such rescission, you shall receive a refund in an amount equal to the Membership Fee less an administrative fee of $1,000 less any fees or charges for services received.

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Notwithstanding anything to the contrary in this Agreement, any such refund shall be paid by the Corporation within fourteen (14) days following receipt of written notice of rescission pursuant to this paragraph.

• Voluntary Termination after Effective Date. At any time after the rescission period expires, the Member may terminate this Agreement by giving the Program written notice of such termination in writing and provided at least thirty (30) days in advance of the effective date of termination. There will be no refund of the Membership Fee in this instance.

• Determination to move into an Independent Living unit at Salemtowne

Retirement Community. If the Member desires to move into an independent living accommodation at the Salemtowne retirement community, he/she must meet the entry requirements then in use at Salemtowne. He/She must be able to live independently, execute the Independent Living Agreement for that living accommodation and pay the then in effect entry fee and monthly service fee for the accommodation selected. The Membership Fee paid by Member under this Agreement shall not count towards such Entry Fee or Monthly Service Fee.

Member may choose to terminate this Agreement. Member, however, upon execution of the Independent Living Agreement may deem that they do not want to terminate this Agreement. In that case both Agreements shall remain in effect.

• Other Rights. Termination of this Agreement for whatever reason will not affect or

impair the exercise of any right or remedy granted to the Program or Member under this Agreement for any claim or cause of action occurring prior to the date of such termination.

• Termination Upon Death, Injury, Illness or Incapacity. In the event of death,

injury, illness or incapacity that would preclude you from becoming a member under this Agreement, you shall receive a refund in an amount equal to the Membership Fee less an administrative fee of $1,000 less any fees or charges for services received.

Notwithstanding anything to the contrary in this Agreement, any such refund shall be paid by the Corporation within fourteen (14) days following receipt of written notice of rescission pursuant to this paragraph.

Upon death any refund to which you are entitled shall be paid to your Estate unless you execute a designation and name a trust, revocable by you at the time of your death, to receive applicable refunds. Should you execute a revocable trust subsequent to signing this agreement, you or your estate’s executor may submit a written beneficiary designation form designating a trust, revocable by you at the time of your death, to receive applicable refunds.

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• Spouse or Household Member Death, Termination, or Move From The Residence. Should the qualifying spouse or household member who has entered into a separate Member Services Agreement with Navigation by Salemtowne die, terminate his or her membership or move from the Member’s residence, which originally qualified you for membership under this Consultative Care Plus Plan, such event(s) will not terminate your membership in the Consultative Care Plus Plan.

• Termination by the Program. The Program may terminate this Agreement at any

time if there has been a material misrepresentation or omission made by the Member in the Member’s Membership and/or Financial Applications or Personal Health History form; if the Member fails to make payment to the Program of any fees or charges due the Program within thirty (30) days of the date when due; if the Member does not abide by the rules and regulations adopted by Program or breaches any of the terms and conditions of this Agreement; or for “just cause” (as defined below). Termination of this Agreement must be in writing and provided at least thirty (30) days in advance of the effective date of termination. No agreement for care shall permit discharge of the Member from a Facility providing care before the expiration of this Agreement, without just cause for such a removal. The term “just cause” means a good faith determination that the Member is a danger to himself/herself or others while remaining in his/her residence and further refuses to transfer to another facility as described in Section V above.

• Amount Due. Any amounts due and owed by the Member to the Program may be

deducted from the amount of any refund. If such refund is insufficient to cover the amounts due and owed by the Member to the Program, the Member’s family or estate will be responsible, if applicable.

• Transfer of Property. The Member agrees not to make any gift or other transfer of

assets for the purpose of evading the Member’s obligations under this Agreement, or if such gift or transfer would render such Member unable to meet such obligations under this Agreement.

VII. FINANCIAL ASSISTANCE A. Financial Assistance. In connection with its charitable mission, it is the desire of the

Board of Trustees of the Corporation that no one leave the Program because of lack of funds. Any disposition of Member’s assets in any way other than for care through the Program or related living/medical expenses to the extent that Member cannot adequately provide for Member’s expenses or care will nullify this desire on the part of the Program and entitle the Program to terminate this Agreement.

Program will make reasonable efforts to acquire the funds necessary to meet the Program’s fees. However, the resources of the Program to provide care for Members are not unlimited, and the Program reserves the right to terminate the membership of any

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Member, who cannot pay the full costs and expenses in connection with such person’s membership and use of Services in the Program.


In the event that the Program may subsidize in whole or in part the Fees and other Program charges payable by the Member hereunder, the Member will be required to execute a separate Financial Assistance Agreement with the Corporation.

Any determination by the Corporation with regard to the granting or continuation of financial assistance shall be within the sole discretion of the Corporation.

B. Recovery of Subsidies Provided. When a Member dies, or terminates this Agreement, and if said Member’s fees, costs and expenses have been subsidized wholly or partly by the Program, the Member’s estate, if any, will be liable to the Program for the full amount of the subsidy the Member received for the entire time of membership in the Program. This paragraph will apply whether or not the Member is enrolled in the Program at the time of death. This Agreement will operate as a lifetime assignment, transfer and conveyance to Salemtowne of so much of Member’s property as is necessary to cover such liability. Any amount due the Program under this paragraph may be deducted from any refund payable to Member or to the Member’s estate.

C. Financial Assistance Funds. The Corporation will endeavor to establish funds which

will be used to assist Members who would otherwise not be able to participate in the Program or continue to participate in the Program. Such funds may be used for the purposes of providing financial assistance, but no Member shall have any claim to or expectation of receiving or continuing to receive any such assistance.

VIII. GENERAL

A. Compliance with Applicable Laws. Program and Member will operate in full compliance with all laws, rules, regulations and ordinances promulgated by lawful governmental authorities.

B. Confidentiality. Program has the responsibility to keep all of the personal, medical

and financial information you have supplied to it confidential. You agree that Program can disclose such information to those who have a need, in its judgment, or right to know (e.g., to provide information for transfer to a hospital).

C. Assignment. Your rights and privileges under this Agreement to the facilities,

services and programs of the Corporation are personal to you and may not be transferred or assigned by you or otherwise.

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D. Management of the Corporation. The absolute rights of management are reserved

by the Corporation, its Board of Trustees and its administrators as delegated by said Board of Trustees. The Corporation reserves the right to accept or deny any person membership or residency. Members do not have the right to determine membership or terms of membership of any other Member. Corporation reserves the right to amend, implement or terminate policies and/or guidelines related to the operation of the Program in its sole discretion.

E. Moravian Affiliation. Navigation by Salemtowne is affiliated with the Moravian

Church in America, Southern Province (“Southern Province”). The Southern Province is not responsible for the financial and contractual obligations of the Program.

F. Indemnity. Member agrees to indemnify, defend and hold the Program harmless

from claims, damages or expenses, including attorneys’ fees and court costs, resulting from any injury or death to persons and any damages to property caused by, resulting from, attributable to or in any way connected with Member’s negligent or intentional act or omission or those of Member’s guests or those employed by Member, including, without limitation to private duty nurses, companions, or other.

G. Severability. The invalidity of any restriction, condition or other provision of this

Agreement, or any part of the same, shall not impair or affect in any way the validity or enforceability of the rest of this Agreement.

H. Member Handbook. Member will be given a current copy of the Member’s

Handbook as adopted by the Program. You understand that these documents will change from time to time but that they are the procedural documents for Members of the Program and those occupying living accommodations at Salemtowne retirement community.

I. Entire Agreement. This Agreement constitutes the entire agreement between the

Corporation and Member regarding the Program. The Corporation shall not be liable or bound in any manner by any statements, representations or promises made by any person representing or assuming to represent the Corporation, unless such statements, representations or promises are set forth in this Agreement or in an amendment to this Agreement signed by Program’s Executive Director or the Corporation’s Chief Executive Officer and by Member. Electronic (e.g., pdf) versions of this Agreement shall have the same legal effect as originals, and all of which, when fully executed, shall constitute one and the same instrument.

J. Successors and Assigns. Except as set forth herein, this Agreement shall bind and

inure to the benefit of the successors and assigns of the Corporation and the heirs, executors, responsible parties, powers of attorney, administrators and assigns of Member.

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K. Capacity. This Agreement has been executed on our behalf by our duly authorized agent, and no officer, trustee, agent or employee of the Corporation’s shall have any personal liability hereunder to Member under any circumstances.

L. Tax Considerations. Member should consult with tax advisors regarding the tax

considerations associated with this Agreement.

M. Governing Law. This Agreement shall be governed by the laws of the State of North Carolina without regard to principles of conflict law.

N. Amendments and Partial Invalidation. Generally, this Agreement can be changed

only by mutual written consent. However, Corporation can make changes without Member’s consent to keep the Agreement in compliance with applicable laws and regulations provided that the changes the Corporation makes do not substantially reduce your benefits under the Agreement. If any provision in this Agreement is invalidated, all other provisions will remain in force.

O. Mediation. In the event a dispute, claim or controversy of any kind arises between

the parties regarding the care or treatment of the Member that cannot be resolved by mutual agreement, the parties agree to submit such dispute, claim or controversy to a neutral mediator for possible resolution. The parties will jointly agree on a neutral mediator. Each party shall submit all evidence or information in writing to the mediator in support of its contentions or allegations and any defense either party may have with respect to the dispute, claim or controversy. Each party shall have the right to a hearing before the mediator and to personally present information pertinent to such dispute, claim or controversy. The mediator shall assist each party, in an unbiased manner, in reaching amicable agreement regarding the dispute, claim or controversy. If an amicable agreement is not reached, or if either party fails or refuses to negotiate or mediate in good faith to resolve the matter, or if a neutral mediator cannot be agreed upon between the parties, then the parties agree to submit such dispute, claim or controversy to an arbitration process as outlined below.

P. Arbitration. In the event a dispute, claim or controversy of any kind arising out of or

relating to this Agreement cannot be resolved through mediation as described herein above, the parties agree to submit such dispute, claim or controversy to binding arbitration to be held in Winston-Salem, North Carolina in accordance with the then-current commercial arbitration rules of the American Arbitration Association. The parties will jointly agree on an arbitrator. If the parties are unable to agree in good faith and within a reasonable time on the selection of an arbitrator, then either party may request appointment of an arbitrator by the American Arbitration Association. Costs of arbitration, such as arbitrators' fees and similar costs, will be borne equally by the parties, provided that the arbitrator may award the costs of arbitration against a party who the arbitrator determines has acted in bad faith or fraudulently. Unless the arbitrator determines a party has acted in bad faith or fraudulently, attorneys' fees shall not be considered "costs of arbitration" and are to be borne by the incurring party. The parties will each be required to submit a proposed resolution of each issue

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in such dispute, claim or controversy to the arbitrator. The arbitrator shall base his/her decision upon the proposed resolutions in addition to any evidence presented at any hearing. The decision of the arbitration shall be final and binding unless the arbitration is determined by a court to be fraudulent or so grossly erroneous as to necessitate the inference of bad faith. Judgment on the award rendered by the arbitrators may be entered in any federal or state court having jurisdiction thereof. The arbitrators shall have no authority to make legal determinations which are, or are based on, material errors of law, to award punitive damages, or to add to, modify or refuse to enforce any valid and enforceable agreement(s) between the parties. The arbitrator shall make findings of fact and conclusions of law and shall have no authority to make any award that could not have been made by a court of law or that would cause any party to be in violation of any governmental law or regulation. Nothing herein shall prohibit a party to the dispute, controversy or claim from seeking equitable relief in a court of law to maintain the status quo while a mediation or arbitration is pending.

Q. Gender. Throughout this Agreement, the use of the masculine gender shall include

the feminine, and the use of singular shall include the plural.

R. Interpretation. Headings are for convenience and reference purposes only and shall not affect the interpretation of any provision of this Agreement.

S. Waivers. Neither the failure nor any delay on the part of any party to exercise any

right, remedy, power, or privilege (“Right”) under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any Right preclude any other or further exercise of the same or of any Right, nor shall any waiver of any Right with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

T. Survival. Those rights and obligations that have accrued as a result of the operation

of this Agreement shall survive its termination, as shall those rights and obligations that by their terms survive termination and any provisions that must survive to give effect to their terms, as shall any obligation of Member to pay costs or expenses of his or her participation in the Program that remain unpaid as of such termination.


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U. Notice Provisions. Any notices, consents, or other communications to the Corporation hereunder (collectively “notices”) will be in writing and addressed as follows:


Program Executive Director or Salemtowne Chief Executive Officer 1000 Salemtowne Drive Winston-Salem, North Carolina 27106

Member:

Member’s address for the purpose of giving notice appearing after Member’s signature below. Member is responsible for notifying Corporation of any changes in address and/or telephone number.


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Corporation will stand behind all of the statements, promises and representations in this Agreement, but no others. If you feel something has been promised to you, but it is not specifically mentioned in this Agreement, now is the time to discuss it – before you sign this Agreement.

Member understands this matter involves a financial commitment and associated risk, as well as a legally binding contract. Member was encouraged to consult with an attorney and/or financial advisor who could advise me concerning this Agreement.









Telephone


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Navigation by Salemtowne 1000 Salemtowne Drive

Winston-Salem, NC 27106

As of the day and year above written in this Membership Services Agreement, the undersigned Member acknowledges receipt of the Disclosure Statement of Moravian Home, Incorporated d/b/a Navigation by Salemtowne dated August 30, 2015. The Disclosure Statement was received prior to the execution of this Agreement or prior to or at the time of the transfer of any money to the Program, whichever occurred first.

As a prospective member, Program’s representatives have encouraged me to read the Disclosure Statement in its entirety before entering into any contract or written agreement or paying any fee.

I understand the Program, like all other continuing care facilities and programs in the State of North Carolina, is subject to an act concerning registration and disclosure by continuing care facilities (the “Act”). Registration under the Act does not constitute approval, recommendation, or endorsement of the facility by the Department of Insurance or the State of North Carolina, nor does such registration evidence the accuracy or completeness of the information in the Disclosure Statement.

I understand this matter involves a financial commitment and associated risk as well as a legally binding contract. In evaluating the Disclosure Statement and the Financial Statements prior to any commitment, I was encouraged to consult with an attorney and/or financial advisor who could review these documents with me, if any matters contained herein are not clear, including an understanding of solvency and deficit fund balance levels for this and other continuing care facilities and programs.





Title


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ATTACHMENT A

NAVIGATION BY SALEMTOWNE CONSULTATIVE CARE PLUS PLAN

Membership Fee (non-refundable)

$5,000

Types of Service Fee for Service (FFS) • At additional cost to Member • Fees are subject to change

Health Support Services: Care Coordination $100 per hour

Home Health Aide

$18 - $25 per hour

Companion / Homemaker

$17 - $20 per hour

Live in Companion $240 - $360 per day

Adult Day Care $35 per day

Delivery of Meals $0.55 - $0.61 per mile (plus cost of meal based on selection)

Emergency Response System $371 per year (includes setup, equipment & monitoring)

Home Inspections (safety)

Internal External

$150 each $500 each

Transportation

$20 one-way $35 round trip


$158 - $165 per day

Nursing Home Care $242 to $312 per day

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INDEX

Accident or Illness Outside of Designated Service Area .......................................... 10

ACCOMMODATIONS AND SERVICES .............................................. 7 ACKNOWLEDGEMENT OF RECEIPT OF ........................................ 24 Activities and Leisure Events ..................... 8 Adjustments in the Monthly Fee ............... 11 ADL (Activities of Daily Living)

Deficiencies............................................. 3 Adult Day Care ........................................... 9 Adult Day Care Services ............................. 4 Advance Directives ................................... 14 Age ............................................................ 12 AGREEMENT REQUIREMENTS AND PROCEDURES ........................... 12 Amendments and Partial Invalidation ....... 20 Amount Due .............................................. 17 Annual Physical Examination. .................... 8 Application for Benefits ............................ 11 Appointment of Guardian ......................... 14 Arbitration ................................................. 20 Assignment of Benefits ............................. 11 Assignment. .............................................. 18 Assisted Living Facility .............................. 4 ATTACHMENT A ................................... 25 Capacity. ................................................... 20 Care Coordination ....................................... 8 Care Coordination Team ............................. 4 Care Coordinator/Wellness Navigator ........ 4 Care in Other Assisted Living or Nursing Care Facilities ......................... 12 Care Plan ..................................................... 4 Common Facilities ...................................... 8 Companion .................................................. 4 Companion Services ............................... 4, 9 Compliance with Applicable Laws ........... 18 Confidentiality. ......................................... 18 Coordinate ................................................... 4 Decisions Involving Permanent Transfer From Living Accommodation .................................... 15

Deferred Fees .............................................. 4 DEFINITIONS ............................................ 3 Designated Representative .......................... 4 Designated Service Area ............................. 5 Determination to move into an Independent Living unit at Salemtowne Retirement Community .... 16 Determined To Be Appropriate .................. 5 Effective Date ............................................. 5 Emergency Notifications .......................... 14 Emergency Response System ................. 5, 9 Entire Agreement. ..................................... 19 Facility ........................................................ 5 Facility Based Services ............................... 9 Facility-Based Services ............................... 5 FEES, TERMS AND CONDITIONS ....... 11 Financial Assistance.................................. 17 Financial Assistance Funds ....................... 18 Financial Requirements ............................ 13 Funeral and Burial..................................... 14 Gender ....................................................... 21 GENERAL ................................................ 18 Governing Law ......................................... 20 Health Requirements ................................. 13 Home Health Aide ...................................... 5 Home Health Aide Services ........................ 5 Home Site.................................................... 5 Home Site Services ..................................... 5 Home Site Services. .................................... 8 Homemaker ................................................. 5 Homemaker Services .............................. 5, 9 Hospital and Surgical Care ....................... 10 Indemnity. ................................................. 19 Interpretation ............................................. 21 Lifestyle and Wellness Programs.............. 10 Limitation of Program Payment for Non-Institutional Health Care Services. ................................................ 10 Management of the Corporation. .............. 19 Meals ........................................................... 9 Mediation. ................................................. 20 Medical Director ......................................... 6

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Medical Insurance ..................................... 13 Medical Record ........................................... 6 Medically Qualify ....................................... 6 Medicare ..................................................... 6 Medicare Supplemental Coverage .............. 6 Medicare-Covered Services ........................ 6 Member ....................................................... 6 Member Handbook ................................... 19 Member Home Inspection........................... 8 Member’s Designated Representative ........ 6 MEMBERSHIP AGREEMENT ................. 3 Membership and Financial Applications,

and Personal Health History ................. 12 Membership Fee........................................ 11 Monthly Statements .................................. 11 Moravian Affiliation ................................. 19 Notice Provisions. ..................................... 22 Notification ............................................... 13 Nursing Home Facility ................................ 6 Other Services and Programs at Additional Charge ................................. 10 Permanent Member ..................................... 6 Personal Interview .................................... 12 Power of Attorney ..................................... 13 Prevailing Rate For A Program Participating Facility ............................... 7 Program ....................................................... 6 Program Approved Provider ....................... 6 Program Participating Facility .................... 7 Recovery of Subsidies Provided ............... 18 Referral Service .......................................... 7

Referral Service For Additional Services . 10 Representations ......................................... 13 RESCISSION, TERMINATION AND

REFUND PROVISIONS ...................... 15 Rescission. ................................................ 15 Residence .................................................... 7 Residential Healthcare ................................ 7 Right of Set-Off; Other Rights .................. 16 Separability. .............................................. 19 Services ....................................................... 7 Skilled Home Health Care .......................... 9 Successors and Assigns............................. 19 Survival ..................................................... 21 Tax Considerations ................................... 20 Termination by the Program ..................... 17 Termination Upon Death, Injury, Illness or Incapacity .............................. 16 Third Party Reimbursement ...................... 12 Transfer of Property .................................. 17 Transfer to Assisted Living or Nursing

Home Facility........................................ 15 Transfer to Hospital or Other Facility ....... 15 TRANSFERS OR CHANGES IN LEVELS OF CARE .............................. 15 Transportation Services .............................. 9 VII. FINANCIAL ASSISTANCE ........... 17 Voluntary Termination after Effective Date ....................................................... 16 Waivers ..................................................... 21 Will ........................................................... 14

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Appendix C

Schedule of Fees Effective June 1, 2016

(This section has been left blank at the date of this disclosure statement filing (August 30, 2015). At a future date, an updated Schedule of Fees

will be placed herein as applicable.)

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view disclosure statement

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