2011/01/10 RESOLUTIONS RECONSTRUCTION OF THE BOARD OF TRUSTEES OF THE SYSTEM HARNETT HEALTH SYSTEMRESOLUTIONS
OF THE
BOARD OF COMMISSIONERS
OF HARNETT COUNTY NORTH CAROLINA
The undersigned hereby certifies that the following resolutions were adopted by the
Board of Commissioners of Harnett County, North Carolina ( "Board of Commissioners ") in a
meeting duly convened and with a quorum present on January /o , 2011.
RECONSTRUCTION OF THE BOARD OF TRUSTEES OF THE SYSTEM
WHEREAS, Harnett County, North Carolina, (the "County "), the City of Dunn, North
Carolina (the "City "), Harnett Health System, Inc., formerly known as Betsy Johnson Health
Care Systems, Incorporated (the "System "), Betsy Johnson Hospital Authority (the "Hospital
Authority ") (the County, City, System and Hospital Authority are hereinafter collectively
referred to as the "Merger Participants "), and WakeMed ( "WakeMed ") have entered into that
certain Memorandum of Understanding Relating to a Nonprofit Health Care System for Harnett
County, dated August 10, 2005 ( "MOU "), a copy of which is attached hereto as Exhibit A;
WHEREAS, the MOU provides among other things that the System will operate Betsy
Johnson Regional Hospital and a new hospital, both in Harnett County;
WHEREAS, the MOU provides that, the Board of Trustees of the System shall be re-
constructed to have thirteen (13) total members;
WHEREAS, in accordance with the MOU, the Board of Commissioners of the County
shall appoint seven (7) of the thirteen (13) members of the Board of Trustees of the System (such
seven (7) members, the "County Appointees "), with one (1) of the County Appointees being
appointed from each of the five (5) County Commissioners Districts and the remaining two (2)
County Appointees being residents of Harnett County;
WHEREAS, the County Appointees will be derived from a list of nominees submitted
by the Board of Trustees of the System, which nominees the Commissioners of the County may
accept or reject;
WHEREAS, in connection with such reconstruction of the Board of Trustees of the
System, the Articles of Incorporation and Bylaws of the System, by action of the Board of
Trustees of the System, will be amended to reflect such reconstruction effective as of the time of
the merger of the Hospital Authority into the System (as described below);
20502.3 - 568404 v3
WHEREAS, the Board of Commissioners deems it to be in the best interest of Harnett
County to approve the reconstruction of the Board of Trustees of the System, including, without
limitation, the role of the Board of Commissioners in appointing the County Appointees; and
WHEREAS, the adoption by all of the Merger Participants of resolutions similar to the
Resolutions set forth herein is a condition of the effectiveness of the Resolutions set forth herein.
NOW THEREFORE, BE IT RESOLVED, subject to satisfaction of the conditions set
forth herein, that the Board of Commissioners hereby approves in all respects the reconstruction
of the Board of Trustees of the System, including without limitation the role of the Board of
Commissioners in appointing the County Appointees.
APPROVAL OF MERGER
WHEREAS, in furtherance of the terms and conditions of the MOU, the parties thereto
have agreed that the Hospital Authority will merge with and into the System effective at the time
the Board of Trustees of the System determines that financing is in place for (i) the construction
of the System's new hospital in Lillington, North Carolina and (ii) additions and renovations at
Betsy Johnson Regional Hospital (the "Effective Time ");
WHEREAS, officers of the System and of the Hospital Authority have negotiated the
terms and conditions of such merger, which are reflected in the terms and conditions of the
Agreement and Plan of Merger ( "Plan of Merger ") substantially in the form attached hereto as
Exhibit B;
WHEREAS, the Board of Commissioners deems it advisable and in the best interest of
Harnett County to approve the merger of the Hospital Authority with and into the System at the
Effective Time and to approve the terms of the Plan of Merger and for the merger to be
consummated by the System's filing Articles of Merger with the North Carolina Secretary of
State at the Effective Time; and
WHEREAS, the adoption by all of the Merger Participants of resolutions similar to the
Resolutions set forth herein is a condition of the effectiveness of the Resolutions set forth herein.
NOW, THEREFORE, BE IT RESOLVED, subject to satisfaction of the conditions set
forth herein, that the Board of Commissioners hereby authorizes and approves the merger of the
Hospital Authority with and into the System at the Effective Time pursuant to the terms and
conditions of the Plan of Merger and authorizes and approves the System's filing of Articles of
Merger with the North Carolina Secretary of State at the Effective Time.
RESOLVED FURTHER, that the MOU previously entered into by the Board of
Commissioners is hereby ratified in all respects as an action of the County effective as of the
date such action was taken.
RESOLVED FURTHER, that the County Manager be, and hereby is, authorized and
empowered, for and on behalf of Harnett County, to execute and deliver all such additional
20502.3 - 568404 0 2
documents after review by the County Attorney as he determines to be appropriate or necessary
in connection with the foregoing resolutions and the transactions contemplated thereby, the
appropriateness or necessity thereof to be conclusively evidenced by the execution and delivery
of such documents; and the County Manager be, and hereby is, authorized and directed to
execute on behalf of the County after review by the County Attorney, any and all documents that
are deemed necessary or desirable to carry out the purposes of the foregoing resolutions.
RESOLVED FURTHER, that the foregoing resolutions be adopted and shall be filed
with the records of the County.
The undersigned hereby certifies the foregoing to be a true, correct and complete copy of
the Resolutions adopted by the Board of Commissioners on January 10, 2011.
This, the 16 day of January, 2011.
,�,,k I U I, I , ,
ATTEST: ` o�F ccpo? ;
;t ReginaWaa�el Wkeeler '7TM� ;QTi'— yB.�cNeill
Clerk VV w ; Ctiairinan o the Board of Commissioners
20502.3 - 568404 A
Exhibit A
Memorandum of Understanding
August !c, 2005
MEMORANDUM OF UNDERSTANDING
RELATING TO A
NONPROFIT HEALTH CARE SYSTEM
FOR
HARNETT COUNTY
The parties to this Memorandum of Understanding ( "MOU') are Harnett County,
North Carolina (the "County'), the City of Dunn, North Carolina (the "City"), Betsy
Johnson Health Care Systems, Incorporated (the "Hospital Corporation'), Betsy Johnson
Hospital Authority (the "Hospital Authority') and WakeMed (collectively, the "Parties'
individually, a "Party').
There are two hospitals in Harnett County, Good Hope Hospital and Betsy
Johnson Regional Hospital. In December 2004, the Governor amended the 2005 State
Medical Facilities Plan to add a "need determination" for a new hospital with not more
than fifty (50) beds and three (3) operating rooms in die central pan of Harnett County
(the "New Hospital ").
The Parties agree that there should be a single, nonprofit health care system (the
"System') in Harnett County and that the System should be managed by WakeMed. The
structure of the System is outlined in this MOU. The Parties will develop and file an
application for a Certificate of Need ( "CON') for the New Hospital. The filing deadline
is August 15, 2005. Each Party agrees that it will not participate in the development of a
competing CON application.
Section 1. Goals of the System.
1.01 The System will be a single health care system with two (2) campuses in
the County.
(a) The System will be operated by a single nonprofit entity;
(b) It will be managed by WakeMed; and
(c) It will be operated and managed primarily for the benefit of the
residents of Harnett County.
1.02 The System will consist of two hospital facilities, the Betsy Johnson
Regional Hospital campus in Dunn and a new hospital campus in the
central part of Harnett County.
(a) The hospital facilities will be operated and maintained together as
a Community General Hospital, as defined in G.S. 131 E -6,
u:; %v 11.03152 v12
20502.3- 568404 v3 Exhibit A
providing the same or similar services as are provided by like
Community General ) lospitals in the state.
(b) The hospital facilities will be operated as branches of a single
hospital, and will operate under one Medicare provider number.
(c) There will be a single medical staff, but clinical privileges will be
specific to each hospital facility; i.e. privileges will be granted
based on the physician's credentials and the services offered by
each hospital facility.
1.03 The System will be organized and operated as a charitable, tax - exempt,
501(c) (3) corporation. The Parties agree that the System will be
converted to a private nonprofit corporation.
1.04 The System will provide care to all persons, without regard to ability to
pay.
1.05 The System will add and expand facilities and services so as to optimize
access to health care for the residents of the County.
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IWO 1403152v12 2
20502.3 - 568404 v3 Exhibit A
t y
Section 2. Ownership and Operation of Betsy Johnson Regional Hospital ( "BJRH ").
2.01 BJRH is a licensed acute care hospital located in Dunn, NC.
(a) BJRH is licensed for one hundred and one (101) acute care beds.
(b) BJRH is owned by Betsy Johnson Hospital Authority (the
"Hospital Authority ") and operated by Hospital Corporation, a
North Carolina nonprofit corporation, pursuant to a lease and
operating agreement dated September 24, 2003 (the "2003 Lease").
(c) The Hospital Authority was created by the City of Dunn (the
'City'. The Hospital Authority is a component unit of a political
subdivision of the State of North Carolina pursuant to G.S. 131E -
15 et. M. and G.S. 159 -39 (a).
(i) The City appoints all six (6) members of the governing
board of the Hospital Authority.
(ii) The City appoints five (5) of the eleven (1 1) members of
the governing board of the Hospital Corporation.
(iii) The Hospital Authority appoints six (6) of the eleven (11)
members of the governing board of the Hospital
Corporation.
(iv) Six (6) of the eleven (11) members of the governing board
of the Hospital Corporation most be residents of
Averasboro Township, Harnett County.
2.02 BJRH is owned by the Hospital Authority.
(a) BJRH was conveyed to the Hospital Authority by the City by deed
in dated September 22, 2003 and recorded in Book 1832, Page
248, Harnett County Registry.
(b) BJRH is subject to certain restrictions and conditions on its use, as
set forth in the Declaration of Covenants, Restrictions and
Conditions (the "Declaration of Restrictions and Covenants'),
dated September 22, 2003 and recorded in Book 1832, Page 239,
Hamen County Registry.
(c) The violation of these restrictions and conditions could cause
ownership of BJRH to revert to the City.
2.03 BJRH is leased by the Hospital Authority to the Hospital Corporation
pursuant to the 2003 Lease.
103W.hna1152 12
(a) The term of the 2003 Lease is fifty (50) years, beginning
September 24, 2003.
20502.3 - 568404 v3 Exhibit A
(b) The 2003 Lease contains restrictions and conditions on the use of
BJRH that are similar to the covenants and conditions in the
Declaration of Restrictions and Conditions.
(c) The violation of these restrictions and conditions could result in the
termination of the 2003 Lease.
(d) The 2003 Lease requires the Hospital Corporation to pay an
amount of money to the City as reimbursement for municipal
services provided by the City to BJRH.
2.04 The Hospital Corporation's leasehold interest in BJRH is mortgaged as
security for a loan (the "Loan ") incurred by the Hospital Corporation in
September 2003.
(a) 7be Loan proceeds were used to renovate BM.
(b) The lender is the North Carolina Medical Care Commission.
(c) The Loan was funded with the proceeds from the sale of Medical
Care Commission bonds.
(d) The obligation of the Hospital Corporation to repay the Loan is
secured by a mortgage on the Hospital Corporation's leasehold
interest in BJRH.
(e) The Hospital Corporation's obligation to repay the Loan is insured
by the U.S. Department of Housing and Urban Development
( "HUD ") pursuant to a mortgage insurance policy issued by the
Federal Housing Administration ( "FHA'J, pursuant to the HUD -
242 program.
2.05 In summary, BJRH is owned by the Hospital Authority and operated by
the Hospital Corporation pursuant to the 2003 Lease. The City appoints
the governing board of the Hospital Authority and the City and the
Hospital Authority appoint the governing board of the Hospital
Corporation. The Hospital Corporation's leasebold interest in BJRH is
mortgaged as security for the Loan.
10 -59J 03152 r)2
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20502.3. 568404 v3 Exhibit A
I -.1
Section 3. Organization and Ownership of the Harnett Health System
3.01 The Parties will create a new county -wide health care system (the "Harnett
Health System" nr the "Svstcm "), pursuant to the steps described in this
Section 3. The Svstem will include both the existing B1RH and the New
Hospital and will be owned and governed by the Hospital Corporation,
which will change its name to Harnett Health System.
102 The Articles of Incorpuraiion and Bylaws of the Hospital Corporation will
be amended:
n;¢,•;, i ` 111 s: 112
(a) to change the name of the Hospital Corporation to "Harnett Health
System "; and
(b) to provide that the governing board (the "Board') of the Hospital
Corporation will consist of thirteen (13) members
(i) Seven (7) members (the "Appointed Membm'j will be
appointed by the Board of County Commissioners from
nominees submitted by the Board of the Hospital
Corporation.
(ii) The Appointed Members shall include one person from
each of the five (5) County Commissioner Districts and two
other persons who are residents of the County.
(iii) The Board of County commissioners shall have the right to
reject any or all nominees for Appointed Members and to
require the Board of the Hospital Corporation to submit
additional nominees.
(iv) Six (6) members (the "Elected Members ") of the Board
will be elected by the Board.
(v) The terms of the Board members will be staggered.
(vi) If WakeMed guaranties or otherwise enhances the credit of,
or incurs any debt on behalf of, or if WakeMed directly
subsidizes the operations of the Hospital Corporation,
WakeMed will be entitled to appoint one (1) or more
members of the Board of the Hospital Corporation; the
exact number to be established by negotiation, taking into
account the amount of equity funds provided by WakeMed
and the amount of liability assumed by WakeMed -
(vii) The number of Elected Members will be reduced by the
number of Board members appointed by WakeMed
pursuant to paragraph 305(6) (vi).
(c) Notwithstanding die provisions of the foregoing paragraph (b), the
entire initial board of the Hospital Corporation will be appointed
by the Board of County Commissioners, from a list of nominees
provided by a nominating committee.
20502.3.568404 v3 Exhibit A
(i) The nominating committee will be composed of eight (8)
persons, four (4) designated by the City and four (4)
designated by the County.
(ii) The nominees for the Appointed Members shall include
one person from each of the five (5) County Commissioner
Districts and two (2) other persons who we residents of the
County.
(iii) The Board of County Commissioners shall have the right to
reject any or all nominees and to require the nominating
committee to submit additional nominees.
(iv) After the appointment of the initial governing board,
vacancies on the Hospital Corporation board among the
Appointed Members will be fulled by the Board of County
Commissioners by appointment 0 provided in Section 3.05
hereof.
(v) The terms of the board members will be staggered.
3.03 The Loan described in Section 2.04 will be defeased.
3.04 The Hospital Corporation will become the owner of BJRH by merger.
(a) The Hospital Authority and the Hospital Corporation will merge
and the Hospital Corporation will be the surviving entity.
(b) The 2003 Lease from the Hospital Authority to the Hospital
Corporation will terminate and the Hospital Corporation will own
BJRH by operation of law.
(c) The ownership of BJRH by the Hospital Corporation will be
subject to the Declaration of Restrictions and Covenants described
in Section 2.02(b) hereof.
(d) The Parties will support any legislation authorizing the merger
contemplated by this Section 3.04.
3.05 The Hospital Corporation will develop, plan, finance, construct and equip
and own the New Hospital.
(a) The Hospital Corporation will finance the constmction of the New
Hospital with a loan from the North Carolina Medical Care
Commission derived from the proceeds of the sale of tax-exempt
bonds by the Commission.
(b) WakeMed will enhance the credit of the Hospital Corporation to
enable the Hospital Corporation to secure bond financing to build
the New Hospital. WakeMed will also enhance the credit of the
Hospital Corporation, and/or provide a line of credit, to cover start-
up expenses for the New Hospital at a pre - determined rate. The
length of term of such extension or enhancement and the other
terms and conditions of such extension or enhancement of credit
I0369 . 1403152tl2
20502.3 - 568404 0 Exhibit A
will be memorialized in an appropriate agreement or agreements
between WakeMed and the Hospital Corporation, which will
contain such covenants and representations as are customary for
North Carolina hospital corporations. Harnett Health's ability to
borrow under the line of credit from WakeMed will expire
eighteen (18) months after patients are first treated at the New
Hospital.
3.06 In summary, when the steps described in this Section 3 have been
completed, both the New Hospital and BM will be owned by the
Hospital Corporation.
(a) The Hospital Corporation will be a private, nonprofit corporation.
(b) The name of the Hospital Corporation will be Harnett Health
System (hereinafter, the Hospital Corporation will be referred to as
"Harnett Health" or the "System'.
(c) A majority of the governing board of Harnett Health will be
appointed by the County.
(d) The BJM property will be subject to a reversionary interest in
favor of the City.
(e) The New Hospital property will be subject to a reversionary
interest in favor of the County, as described in Section 5.02.
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1036^ 14031 1,12
20502.3 - 568404 0 Exhibit A
Section 4. Governance and Operation of the Harnett Health System
4.01 'Ile Board of Hamett Health will govern the System.
4A2 WakeMed will operate the System pursuant to a management agreement.
The Management Agreement will set forth certain retained powers of
Harnett Health which are summarized on "Exhibit A" attached hereto. The
Management Agreement will be substantially in the form attached to the
Certificate of Need Application for the New Hospital.
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I0319 1.93 52 r12
20502.3 - 568404 v3 Exhibit A
•1
Section 5. Additional Obligations of WakeMed and the County
5.01 W akeMed agrees to be responsible for the preparation, at its sole expense,
of an Application for a Certificate of Need ( "CON ") for the New I- lospital.
(a) Such expenses shall include, without )imitation, all preparation
expenses, such as (i) printing, postage, duplicating and secretarial
expenses; CON consultant fees (if any); CON filing fees; and legal
fees associated with the preparation and filing of the CON
application.
(b) Such expenses shall not include consulting and legal fees and
expenses incurred by any other Party relating to the review of the
CON Application.
(c) Each Party will participate in the preparation of the CON
Application and will have the opportunity to review preliminary
drafts and the final version of the completed CON Application
prior to the filing date.
5.02 The County will donate to the System a parcel of land located in central
Harnett County of not fewer than twenty (20) acres suitable for the
construction of the New Hospital; provided, however, that the County will
have sole discretion over the location of the site; and provided, further,
that to the extent that the cost of site preparation for the selected site is less
than the amount included in the proposed budget, the System will pay the
difference to the County. It is the County's understanding that the
proposed budget for lend acquisition and site preparation is $2.5 million.
By way of example, based on the proposed budget, i fain: preparation costs
$1.75 million, the System will pay the County $750,000.00. The land will
be subject to a reversionary interest in favor of the County in the event that
it ceases to be used by the System for a health care facility; provided that
the terns of the document creating the interest shall provide that the
reversionary interest may, with the agreement of the County and the
System, be subordinated to a mortgage or deed of trust on the New
Hospital real estate.
300 -.10; .n
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20502,3 - 568404 v3 Exhibit A
. .1
Section 6. Contingencies; Further Agreements
6.01 The obligations and agreements of the Parties hereunder are contingent on
the occurrence of all of the following:
(a) The approval of this MOU by the governing body of each Party.
(b) The issuance of a Certificate of Need by the Certificate of Need
Section of the North Carolina Department of Health and Human
Resources.
(c) Any other regulatory approvals needed to complete the transactions
contemplated in this MOU.
(d) There will have been no material adverse change in the business,
financial condition or prospects of the System.
6.02 Withdrawal of County from Certain Pending Lawsuits.
As soon after the execution of this Memorand an of Understanding by all
parties as practicable, the County will notify the North Carolina Court of
Appeals that it withdraws its amicus curiae briefs in Good Hope Hospital,
et al. v. North Carolina Dep't of Health and Human Services, et al., Case
No. COA 05 -183 and Good Hope Hospital, Inc., at al. v. North Carolina
Dep't of Health and Human Services, el al., Case No_ COA 05 -123.
6.03 Counterparts.
This Memorandum of Understanding may be executed in two or more
counterparts, each of which may be deemed an original and all of which
together shall constitute one and the same instrument.
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110.1 ;40315202 10
20502.3. 568404 v3 Exhibit A
The Parties hereby execute this Memorandum of Understanding as of the 20 day
of August 10, 2005.
County of Hamet4 North Carolina
ommissioner,
Board of Commissioners
City of D`y , No MI olina
7. Wipes, Mayor
WakpMed
William K. AWmn, Ph.D.
President and CEO
I WI 140315202
Betsy Johnson Health Care Systems,
Incorporated
� ov�eo O
Ray AAEfdks, Chair,
Board of Trustees
Betsy Johnson Hospital Authority
0"'&'e&pazi
�IJ tay A. WAks, Chair,
Board of Commissioners
20502.3. 568404 v3 Exhibit A
EXHIBIT A
Subject to and in accordance with the terms of the Management Agreement, the System shall
appoint WakeMed as the sole and exclusive manager of the System hospitals and grants to
WakeMed the authority and responsibility to supervise and manage the day - today operations of
the System hospitals, including all revenue and non - revenue producing activities.
By entering into the Management Agreement, the System shall not delegate to WakeMed any of
the powers customarily vested in the Board of Trustees (the "Board ") of the System by law or by
the System's Articles of incorporation or Bylaws. The Board of Trustees of the System shall be
and shall remain responsible for the business and affairs of the System. Notwithstanding the
foregoing sentence, timing the term of the Management Agreement, the System shall not amend
is Articles of Incorporation or Bylaws in any manner that will have a material adverse effect on
WakeMed's ability to perform is obligations under the Management Agreement WakeMed
shall consult with and obtain the approval of the Board (which approval shall not be unreasonably
withheld) regarding matters of more than routine significance, including without limitation, the
following matters:
1. Strategic plans;
2. Review and adopt Budges (as that term is defined in the Management Agreement),
including setting rates and fees;
3. The addition and deletion of clinical programs and services or any material components
thereof,
4. Adopting and amending Medical Staff Bylaws and Rules and Regulations, acting on
recommendations for granting clinical privileges and appointing and reappointing
members of the Medical Staff and reviewing quality improvement activities of the
Medical Staff, including without limitation, peer review and disciplinary activities, and
acting on Medical Staff recommendations in respect thereto;
5. Participating in the appointment, retention and evaluation of the System's CEO, os
provided in the Management Agreement;
& Receiving reports and acting on recommendations regarding quality assurance and risk
management activities;
7. Marketing and public relations programs, as pars of and consistent with the strategic plat;
g. Significant System policies and procedures developed by WakeMed;
9. Appointing the independent auditors; and
10. Incurring material indebtedness.
10369 ).403152 viz 12
20502.3 - 568404 v3 Exhibit A
Exhibit B
Agreement and Plan of Merger
See attached.
20502.3- 566392 v7
AGREEMENT AND
PLAN OF MERGER
OF
BETSY JOHNSON HOSPITAL AUTHORITY
WITH AND INTO
HARNETT HEALTH SYSTEM, INC.
This Agreement and Plan of Merger (this "Plan ") is made and entered into as of
2011 between HARNETT HEALTH SYSTEM, INC., a North Carolina nonprofit
corporation ("Harnett Health System ") and BETSY JOHNSON HOSPITAL AUTHORITY, a North
Carolina hospital authority ( "Hospital Authority ").
ARTICLE I
THE MERGER
1.1 Merger. Subject to the terms and conditions of this Plan and in accordance with the
North Carolina Nonprofit Corporation Act (the "Act ") and the North Carolina Hospital Authorities
Act (the "Hospital Authorities Act "), Hospital Authority shall be merged with and into Harnett
Health System (the "Merger ").
1.2 Surviving Corporation. At the Effective Time (as defined in Section 1.3 below),
Hospital Authority shall be merged with and into Harnett Health System and the separate existence
of Hospital Authority shall cease. Harnett Health System shall be the surviving corporation of the
Merger (the "Surviving Corporation ") and shall continue its corporate existence under the laws of the
State of North Carolina. The Surviving Corporation shall succeed, insofar as permitted by law, to all
of the rights, assets, liabilities, and obligations of Hospital Authority.
1.3 Effective Time. Upon the terms and subject to the conditions hereof, the parties shall
cause the Merger to be consummated by filing Articles of Merger with the North Carolina Secretary
of State in such form as required by and executed in accordance with the Act. The Merger shall be
effective on the date and time that such filing is made with the North Carolina Secretary of State (the
"Effective Time ").
1.4. Effects of the Merger. The Merger shall have the effects set forth in Section 55A -11-
05 of the Act.
1.5 Articles of Incorporation. The articles of incorporation of Harnett Health System
shall be shall be the articles of incorporation of the Surviving Corporation after the Merger, which
articles of incorporation are being further amended in the form attached hereto as Exhibit A
immediately following the Effective Time (as so amended, the "Articles of Incorporation'), such
Articles of Incorporation to remain the articles of incorporation of the Surviving Corporation until
thereafter amended in accordance with their terms and as provided by law.
1.6 Bylaws. The bylaws of Harnett Health System shall be amended to read in their
entirety in the form attached hereto as Exhibit B and, as so amended, such bylaws shall be the bylaws
20502.3- 568392 v8
(the `Bylaws') of the Surviving Corporation after the Merger, until thereafter amended in
accordance with their terms and as provided by law.
1.7 Trustees and Officers. The trustees and officers of Harnett Health System shall be
appointed or elected, as applicable, immediately following the Effective Time in the manner
prescribed by the Bylaws of the Surviving Corporation, each to hold office until his or her successor
may be elected or appointed in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation.
1.8 No Members. Harnett Health System, as the Surviving Corporation, shall continue to
have no members after the Merger.
ARTICLE II
CORPORATE APPROVALS
This Plan has been adopted and approved, in accordance with Section 55A -11 -03 of the Act,
by the Board of Trustees of Harnett Health System, and, in accordance with Section 55A -11 -10 of
the Act, by the City Council of Dunn, North Carolina, the Board of Commissioners of Harnett
County, North Carolina and the Board of Commissioners of Hospital Authority, effective as of the
day of 2011.
ARTICLE III
GENERAL
3.1 Termination and Abandonment. At any time prior to the filing of the Articles of
Merger with the North Carolina Secretary of State, this Plan may be terminated and the Merger
abandoned by the Board of Trustees of Harnett Health System or the Board of Commissioners of
Hospital Authority.
3.2 Amendment. This Plan may be amended, modified, or supplemented at any time
prior to the filing of the Articles of Merger with the North Carolina Secretary of State with the
written consent of the Board of Trustees of Harnett Health System and the Board of Commissioners
of Hospital Authority; provided, however, that this Plan may not be amended in any manner that
would alter the tax- exempt status of Harnett Health System or Hospital Authority or in any manner
not permitted by the Act or the Hospital Authorities Act.
[Signatures Appear on the Following Page]
20502.3- 568392 A
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of
Merger as of the date first written above.
HARNETT HEALTH SYSTEM, INC. BETSY JOHNSON HOSPITAL
AUTHORITY
By: _
Name:
Title:
20502.3- 568392 v8
By: _
Name:
Title:
EXHIBIT A
Amendments to the Amended and Restated Articles of Incorporation
of Harnett Health System, Inc., as amended
A. Article 3 of the Amended and Restated Articles of Incorporation of Harnett
Health System, Inc., as amended (the "Articles "), is hereby amended by deleting the present
text thereof in its entirety and substituting in its place the following:
"3. The purposes for which the corporation is organized are:
(a) To provide comprehensive, quality patient care, to facilitate the educational
process in medicine in allied health, to provide equitable health care services to the total
community served;
(b) To own, maintain and operate one or more institutions for the examination,
diagnosis or treatment of patients or applicants, under the direction and supervision of skilled
physicians and surgeons, said institution or institutions to be named appropriately by the
Board of Trustees (each member of the Board of Trustees, a "Trustee ", and collectively, the
"Board of Trustees ") of the corporation;
(c) To provide an adequate nursing service for the patients of the institution or
institutions, either with or without a school for the training of professional nurses;
(d) To appoint a single medical staff operating under a single medical provider
number, with clinical privileges specific for each institution as may be deemed appropriate or
desirable, composed of such physicians and surgeons as, in the judgment of the Board of
Trustees, are properly qualified to conduct the professional work of the institution or
institutions, and to promulgate rules governing the conduct of all physicians and surgeons
who are permitted to practice in the institution or institutions.
(e) To act exclusively for religious, charitable, educational and scientific
purposes as set forth in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(or the corresponding provision of any future United States Internal Revenue Law);
(f) Except as hereinbefore provided or limited, the corporation, in addition to the
powers granted nonprofit corporations under the laws of the State of North Carolina, shall
have full power and authority to receive gifts, devises and bequests of real, personal and
mixed property; to purchase, lease, and otherwise acquire and hold, and to mortgage, convey,
and otherwise dispose and contract to dispose of all kinds of property, real, personal and
mixed, both in the State of North Carolina and in all other States, territories and dependencies
of the United States; to borrow and to lend money and to negotiate loans; to draw, accept,
endorse, discount, buy, sell, issue and deliver bills of exchange, promissory notes, bonds,
coupons, or other negotiable instruments and securities; and generally to do any and all acts
which may be deemed necessary or expedient for the proper and successful prosecution of
the purposes hereinbefore set forth; and
20502.3- 568392 v8 A -1
(g) To exercise any power which may be exercised and to carry on any lawful
activity which may be carried on by a nonprofit corporation under Chapter 55A of the
General Statutes of North Carolina.
The corporation is a charitable or religious corporation within the meaning of Section
55A -1 -40 of Chapter 55A of the General Statutes of North Carolina. Notwithstanding any
other provision of these articles of incorporation, the purposes for which the corporation are
organized are exclusively religious, charitable, educational and scientific within the meaning
of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (or the corresponding
provision of any future United States Internal Revenue Law)."
B. Article 4 of the Articles is hereby amended by deleting the present text thereof
in its entirety and substituting in its place the following:
"4. The corporation shall not have members."
C. Article 7 of the Articles is hereby amended by deleting the present text thereof
in its entirety and substituting in its place the following:
"7. The corporation shall be managed by the Board of Trustees. The number, manner,
election or appointment and qualification and the term of Trustees shall be as set forth in the
bylaws of the corporation and as set forth herein below:
The Board of Trustees shall have thirteen (13) members, with seven (7)
members being appointed (the "Appointed Members ") by the Harnett County
Board of Commissioners (the "County ") from nominees submitted by the
Board of Trustees. The Appointed Members shall include one (1) person
from each of the five (5) County Commissioner Districts, and the remaining
two (2) Appointed Members shall be residents of Harnett County. The
County may reject any or all of the nominees that are submitted by the Board
of Trustees and require the Board of Trustees to submit additional nominees.
Six (6) members of the Board of Trustees (the "Elected Members ") shall be
elected by the Board of Trustees which is subject to change per the terms and
conditions of the Memorandum of Understanding Relating to a Nonprofit
Health Care System for Harnett County, dated August 10, 2005 by and
between Harnett County, North Carolina, the City of Dunn, North Carolina,
the corporation, Betsy Johnson Hospital Authority and WakeMed. Trustees
shall be appointed for three (3) year terms, with the terms of the initial
Trustees to be staggered."
D. Article 8 of the Articles is hereby amended by deleting the present text thereof
in its entirety and substituting in its place the following:
"8. No part of the net earnings of the corporation shall inure to the benefit of, or be
distributable to its officers, Trustees or other private individuals, except that the corporation
shall be authorized and empowered to pay reasonable compensation for services rendered, to
make payments and distributions in furtherance of the purposes set forth in Article 3 above
and to reimburse reasonable expenses properly incurred on behalf of the corporation. No
20502.3 - 568392 v8 A -2
substantial part of the activities of the corporation shall be the carrying on of propaganda, or
otherwise attempting to influence legislation, and the corporation shall not participate in, or
otherwise attempt to intervene in (including the publishing or distribution of statements) any
political campaign on behalf of any candidate for public office. Notwithstanding any other
provision of these articles of incorporation, the corporation shall not carry on any activities
not permitted to be carried on (a) by a corporation exempt from Federal Income Tax under
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (or the corresponding
provision of any future United States Internal Revenue Law) or (b) by a nonprofit corporation
formed under Chapter 55A of the General Statutes of North Carolina."
E. Article 9 of the Articles is hereby amended by deleting the present text thereof
in its entirety and substituting in its place the following:
119. Upon the dissolution of the Corporation, the Board of Trustees shall, after paying or
making provision for the payment of all liabilities of the corporation, dispose of all of the
assets of the corporation according to a plan of distribution, to be used for public, charitable,
educational, religious or scientific purposes, to one or more of the following: the United
States, a state, a political subdivision of a state, a charitable or religious corporation or a
person that is exempt under Section 501 (c)(3) of the Internal Revenue Code of 1986 or any
successor section. Any such assets not so disposed of shall be disposed of by the Superior
Court of the county in which the principal office of the corporation is then located,
exclusively for such purposes."
F. The Articles are hereby further amended by adding the following new Article 10
at the end thereof:
"10. To the fullest extent permitted by the North Carolina Nonprofit Corporation Act, and
the North Carolina Business Corporation Act to the extent that it is applicable, and as it exists
or may hereafter be amended, no person who is serving or who has served as a Trustee of the
corporation shall be personally liable to the corporation for monetary damages for breach of
duty as a Trustee. No amendment or repeal of this article, nor the adoption of any provision
to these articles of incorporation inconsistent with this article, shall eliminate or reduce the
protection granted herein with respect to any matter that occurred prior to such amendment,
repeal or adoption."
20502.3- 568392 A A -3
EXHIBIT B
Amended and Restated Bylaws
of Harnett Health System, Inc.
See attached.
20502.3- 566392 v8 B -1
HARNETT HEALTH SYSTEM, INC.
800 Tilghman Drive
Dunn, North Carolina 28334
AMENDED AND RESTATED BYLAWS
Approved:
Amended:
Amended:
Amended:
Approved:
Approved:
Revised:
Amended:
Amended:
Amended:
Amended:
Amended:
Amended:
Amended and Restated:
February, 1983
February, 1984
February 1986
May, 1988
June, 1988
July, 1991
September, 1991
February, 1995
January, 1998
September, 2000
August 25, 2003
November 24, 2003
November 27, 2006
,2011
20502.3 - 568393 v9 1
HARNETT HEALTH SYSTEM, INC.
800 Tilghman Drive
Dunn, North Carolina
AMENDED AND RESTATED BYLAWS
PREAMBLE
Harnett Health System, Inc. (the "Corporation ") is a North Carolina nonprofit corporation
organized and existing under the North Carolina Nonprofit Corporation Act. The Corporation
operates Betsy Johnson Regional Hospital, a community hospital located in Dunn, Harnett
County, North Carolina (the "Hospital ") and may, in the future, operate new hospitals including
one in Lillington, North Carolina (the "New Hospital "). The Corporation's primary purpose is to
provide comprehensive, quality patient care, to facilitate the educational process in medicine and
allied health, and to provide equitable health care services to the total community served. The
Corporation is governed by a Board of Trustees.
20502.3 - 568393 v9 2
DEFINITIONS
The following words and terms shall have the following meanings, unless some other meaning is
plainly intended or unless otherwise required by the context:
1. BOARD OF TRUSTEES or BOARD means the governing body of Harnett Health
System, Inc.
2. CORPORATION means Harnett Health System, Inc.
3. EXECUTIVE COMMITTEE means the Executive Committee of the Board of Trustees.
4. EX OFFICIO means service as a member of a committee or board by virtue of an office
or position held and, unless otherwise expressly provided, means with voting rights.
5. HOSPITAL means Betsy Johnson Regional Hospital.
6. MEDICAL REVIEW COMMITTEE means a committee created by the Medical Staff, by
the Board, or a committee operating under the Hospital's Performance Improvement
Plan, that is formed for the purpose of evaluating the quality, cost of, or necessity for
hospitalization or health care, including Medical Staff credentialing.
7. MEDICAL STAFF means the formal organization of all licensed physicians and dentists
who are privileged to admit or attend patients in the Hospital.
8. NEW HOSPITAL means a new hospital to be developed in Lillington, North Carolina
and operated by the Corporation.
9. PRESIDENT means the President and CEO of the Corporation.
10. TRUSTEE or TRUSTEES means one or more members of the Board of Trustees.
20502.3.568393 v9
ARTICLE I
BOARD OF TRUSTEES
1.1 POWERS AND RESPONSIBILITIES
The corporate powers of the Corporation are vested in and are exercised by or under the
authority of the Board of Trustees, and the business and affairs of the Corporation are
managed under the direction of the Board of Trustees.
1.2 GENERAL PROVISIONS REGARDING THE BOARD OF TRUSTEES.
1.2 -1 Number and Qualifications.
The Board of Trustees consists of thirteen (13) Trustees, each of whom must be at least
twenty -one (21) years of age. The Trustees are selected for membership based on (i)
their willingness to accept responsibility for governing the Corporation, (ii) their
availability to participate actively in Board activities, (iii) their experience in nonprofit
organizations and community activities, and (iv) whether their respective areas of
interest, experience and knowledge meet the needs of the Board. Members of the
Medical Staff are eligible to serve as Trustees. It is the intention of the Corporation that
the Board membership should include at least one physician who is a member of the
Medical Staff. The President of the Corporation and the Chief of the Medical Staff shall
serve as advisors to the Board, but shall not have the right to vote on matters presented to
the Board.
1.2 -2 Appointed Trustees; Elected Trustees; Term; Term Limits.
The thirteen (13) members of the Board of Trustees shall include seven (7) Appointed
Trustees (defined below) and six (6) Elected Trustees (defined below).
(a) Appointed Trustees
(1) Number; Residency Requirements. Seven (7) Trustees (the "Appointed
Trustees ") shall be appointed by the Board of Commissioners of Harnett County
(the "County Board ") from a list of nominees provided by the Board of Trustees,
as provided in this Section 1.2 -2(a). The Appointed Trustees serving on the
Board of Trustees shall at all times include (i) at least one (1) resident of each of
the five (5) County Commissioner Districts of Harnett County and (ii) two (2)
other persons who are residents of Harnett County.
(2) List of Nominees; Appointment Process. At least ninety (90) days prior to
the annual meeting of the Board of Trustees, the Board of Trustees shall submit to
the County Board a list of nominees to fill seats of those Appointed Trustees
whose terms will expire at such upcoming annual meeting ( "Outgoing Appointed
Trustees "). Such list of nominees will include individuals meeting the residency
requirements set forth in Section 1.2 -2(a) and the other eligibility requirements on
Section 1.2 -1. The County Board may reject some or all of the nominees
submitted and require the Board of Trustees to submit additional nominees by
20502.3 - 668393 A 4
providing written notice to the Board of Trustees within thirty (30) days of the
County Board's receipt of the initial nominee list. The Board of Trustees shall
submit additional nominees to the County Board within thirty (30) days from the
date of the written notice from the County Board and the County Board shall
respond to the Board of Trustees within thirty (30) days each time nominees are
submitted and/or rejected. From the list of nominees, the County Board shall
select Appointed Trustees to fill seats of the Outgoing Appointed Trustees. The
County Board shall provide written notice of the selection of such Appointed
Trustees to the Board of Trustees on or before the date of the annual meeting of
the Board of Trustees.
(3) Staggered Terms; First Slate After Adoption. The Appointed Trustees
shall serve three (3) year terms, except as set forth in this Section 1.2- 2(a)(3).
Among the first slate of Appointed Trustees after adoption of these Amended and
Restated Bylaws (the "First Slate of Appointed Trustees "), three (3) such
Appointed Trustees shall serve a three (3) year term, two (2) such Appointed
Trustees shall serve a two (2) year term and two (2) such Appointed Trustees shall
serve a one (1) year term. The Board of Trustees shall designate the classification
and the respective terms of the First Slate of Appointed Trustees.
(b) Elected Trustees
(1) Number. Six (6) Trustees (the "Elected Trustees ") shall be elected by the
Board of Trustees at the annual meeting except the First Slate of Elected Trustees
shall be appointed pursuant to Section 1.2 -2(c) and subject to change per the terms
and conditions of the Memorandum of Understanding Relating to a Nonprofit Health
Care System for Harnett County, dated August 10, 2005 by and between Hamett
County, North Carolina, the City of Dunn, North Carolina, the Corporation, Betsy
Johnson Hospital Authority and WakeMed.
(2) List of Nominees. Prior to the annual meeting of the Board of Trustees,
the Executive Committee of the Board of Trustees, shall submit to the Board of
Trustees one or more nominees to fill seats of those Elected Trustees whose terms
will expire at such upcoming annual meeting ( "Outgoing Elected Trustees ").
Such nominees must meet the eligibility requirements set forth in Section 1.2 -1.
From the list of nominees, the Board of Trustees shall elect Elected Trustees to
fill seats of the Outgoing Elected Trustees.
(3) Staggered Terms; First Slate After Adoption. The Elected Trustees shall
serve three (3) year terms, except as set forth in this Section 1.2- 2(b)(3). Among
the First Slate of Elected Trustees after adoption of these Amended and Restated
Bylaws (the "First Slate of Elected Trustees "), two (2) such Elected Trustees shall
serve a three (3) year term, two (2) such Elected Trustees shall serve a two (2)
year term and two (2) such Elected Trustees shall serve a one (1) year term. The
Board of Trustees shall designate the classification and the respective terms of the
First Slate of Elected Trustees.
20502.3 - 568393 v9 5
(c) Initial Board of Trustees. Notwithstanding the foregoing provisions of
Section 1.2 -2, the County Board shall appoint the initial Board of Trustees. The
County Board shall provide written notice of the selection of the initial Board of
Trustees to the Board of Trustees serving immediately prior to adoption of these
Amended and Restated Bylaws. Any vacancies arising in the initial Board of
Trustees prior to adoption of these Amended and Restated Bylaws shall be filled
pursuant to Section 1.2 -4 hereinbelow.
(d) Term Limits. No Trustee shall serve more than two (2) consecutive three (3) year
terms; provided, however, that (i) a Trustee appointed to fill an unexpired term
shall serve the balance of the unexpired term and shall, at the conclusion of the
unexpired term, be eligible to serve two (2) consecutive three (3) year terms and
(ii) a Trustee serving as part of the initial Board Trustees with a designated term
of less than three (3) years shall, at the conclusion of such term, be eligible to
serve two (2) consecutive three (3) year terms. Provided, however, all outgoing
Trustees shall continue to serve until such time as their replacement has been
appointed or elected, as the case may be. Notwithstanding the foregoing
sentence, a Trustee who is ineligible for reappointment to the Board because he or
she has served two (2) consecutive three (3) year terms shall be eligible for
appointment to the Board upon the expiration of a period of not less than one (1)
year after the end of his or her last term on the Board. Service by a Trustee as a
member of the Board of Trustees prior to adoption of these Amended and
Restated Bylaws shall not be considered in the determination of the term limit for
service on the Board of Trustees after adoption of these Amended and Restated
Bylaws. Excepting Trustees who have been appointed to fill a vacancy at at date
other than the date of the annual meeting of the Board of Trustees, all Trustees'
terms begin on the date of the annual meeting of the Board of Trustees of the year
of appointment and end on the date of the annual meeting of the Board of
Trustees of the year of termination. Notwithstanding the foregoing, those
Trustees appointed to the initial Board of Trustees shall commence their service
effective as of the date of adoption of these Amended and Restated Bylaws but for
purposes of determining the expiration of their respective terms, their terms shall
be deemed to have begun on the date of the first annual meeting of the Board of
Trustees following the adoption of these Amended and Restated Bylaws.
1.2 -3 Resignation and Removal.
A member of the Board of Trustees may resign at any time by giving written notice of
such resignation to the Chair of the Board of Trustees. Any Board member may be
removed by a two- thirds (2/3) majority vote of the remaining Trustees then in office at a
regular meeting or at a meeting called for that purpose.
1.2 -4 Vacancies.
All vacancies in the Board of Trustees, caused by whatever reason, shall be filled in the
same manner as herein provided for nomination and appointment of Trustees. Provided,
20502.3-568393 v9 6
however, any vacancy in the initial Board of Trustees shall be filled by nomination and
election by the Board of Trustees.
1.2 -5 Annual Evaluation of Board of Trustees.
The Board of Trustees shall annually evaluate its own accomplishments and performance
in relation to its vision, mission, and goals.
1.2 -6 Continuing Education.
Each Trustee is required to obtain, during each calendar year, continuing education
related to governance matters by attending meetings and seminars approved by the Chair
of the Board. The nature and extent of such continuing education shall be determined
from time to time by the Board of Trustees.
1.2 -7 Confidentiality.
Every member of the Board of Trustees and every member of any Board committee has a
duty to maintain the security and confidentiality of Board actions as well as all other
information regarding the Corporation's activities until they are disclosed to the public by
the Board, by the Corporation or are otherwise in the public domain. The Board shall
adopt a policy providing for the security and confidentiality of Board and Corporation
information.
1.3 MEETINGS OF THE BOARD OF TRUSTEES
1.3 -1 Location of Meetings.
All meetings of the Board of Trustees shall be held at the offices of the Corporation
unless reasonable notice of a change in location is given to the Board members and
otherwise is given in accordance with the applicable law.
1.3 -2 Annual Meeting.
The annual meeting of the Board of Trustees shall be held in April of each year.
1.3 -3 Regular Meetings.
Regular meetings of the Board of Trustees shall be held not less than nine (9) times each
calendar year. A schedule of regular meetings shall be adopted annually by the Board on
or before the date of the first meeting each year. Notice of each regular meeting shall be
mailed nine (9) days in advance of the date of the meeting. The date of the regular
meeting shall be the second Tuesday of each month, at a time determined from time to
time by the Board of Trustees
20502.3- 568393 v9
1.3 -4 Special Meetings.
Special meetings of the Board of Trustees may be called by the Chair or, in the absence
or inability to act of the Chair, by the Vice Chair of the Board of Trustees. Notice of
such special meetings shall be given by personal notice or by mailing notice at least five
(5) days prior to the date of such special meetings and otherwise shall be given in
accordance with applicable law.
1.3 -5 Ouorum.
A majority of the Trustees in office immediately before a meeting begins shall constitute
a quorum for the transaction of business at any regular or special meeting. If a quorum is
not present at any meeting, those present shall adjourn the meeting until such date and
hour as a quorum may be present.
1.3 -6 Manner of Acting.
(a) Except as otherwise provided in this paragraph, the act of a majority of the
trustees then in office shall be the act of the Board of Trustees, unless a greater
number is required by law, the Articles of Incorporation, as amended, or a Bylaw
adopted by the Board of Trustees.
(b) A Trustee who is present at a meeting of the Board of Trustees at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless his contrary vote is recorded or his dissent is otherwise entered in the
minutes of the meeting or unless he shall file his written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right of
dissent shall not apply to a Trustee who voted in favor of such action. A Trustee
may abstain from voting only on a matter with respect to which the Trustee has a
conflict of interest.
1.3 -7 Attendance at Meetings.
Any member absent for three (3) consecutive Board meetings without good cause shall
be considered to have resigned. Good cause shall be any reason for which absence is
excused by the Chair of the Board. A Trustee or a committee member may participate in
a meeting of the Board or a committee of the Board by means of a conference telephone
or similar communications device which allows all persons participating in the meeting to
hear each other simultaneously, and such participation in the meeting shall be deemed
presence in person at such meeting.
1.4 COMPENSATION
Trustees shall serve without compensation, provided that Trustees may be reimbursed for
expenses incurred on behalf of the Corporation.
20502.3 - 566393 v9 8
ARTICLE II
OFFICERS OF THE CORPORATION
2.1 NUMBER AND APPOINTMENT
The officers of the Corporation shall consist of a Chair, a Vice Chair, a President, a
Secretary, a Treasurer and such Vice Presidents, Assistant Secretaries, Assistant
Treasurers and other officers as the Board of Trustees may authorize. All officers shall
be elected by the Board of Trustees.
2.2 TERMS OF OFFICE
The Chair, the Vice Chair, the Secretary and the Treasurer shall hold office for a period
of one (1) year and until their successors have been duly elected and qualified.
Notwithstanding the foregoing, the officers elected as of the date of adoption of these
Amended and Restated Bylaws shall serve for the period beginning on the date of
adoption of these Amended and Restated Bylaws and their one (1) year term shall be
deemed to have commenced on the date of the first annual meeting of the Board of
Trustees and shall expire on the following annual meeting of the Board of Trustees. The
President and each Vice President, Assistant Secretary and Assistant Treasurer shall be
an employee of the Corporation and shall hold office until his or her death, resignation,
removal or the termination of his or her employment.
2.3 RESIGNATION AND REMOVAL
Any officer may resign at any time by giving written notice to the Chair or to the
Secretary. Such resignation shall take effect on the date of receipt or at any later time
specified in said notice. Any elected or appointed officer may be removed at any time by
the Board of Trustees, with or without cause, by a majority vote of the Trustees then in
office; provided, however, that such removal shall be without prejudice to the contract
rights, if any of the person so removed.
2.4 CHAIR
The Chair shall preside at all meetings of the Board and of the Executive Committee.
Unless otherwise specified, the Chair shall be an ex officio member, with full voting
rights, of all Board committees. The Chair shall perform all duties incident to the office
of Chair and such other duties as may be prescribed by the Board from time to time.
2.5 VICE CHAIR
The Vice Chair shall perform such duties as may be assigned to him by the Board of
Trustees or the Chair. In the absence of the Chair or in the event of his disability,
inability, or refusal to act, the Vice Chair shall perform the Duties of the Chair with the
full powers of, and subject to the restrictions of the office of Chair.
20502.3- 568393 v9 9
2.6 PRESIDENT
The President is the chief executive officer of the Corporation and, subject to the control
of the Board, shall supervise and control the business and affairs of the Corporation. The
President shall perform all duties incident to the office of President and such other duties
as may be prescribed by the Board from time to time. The President shall be an ex
officio, non - voting member of all committees created by or pursuant to these Bylaws,
except as may otherwise be determined by the Board. The President may from time to
time designate in writing other officers of the Corporation to attend meetings of
committees of the Corporation Board.
In the absence of the President or in the event of the death, or inability to act, of the
President, the Vice Presidents, in the order designated by the President, shall perform the
duties of the President, and shall perform such other duties as from time to time may be
assigned to such Vice - President by the President or by the Board.
2.8 SECRETARY
The Secretary shall provide for the keeping of minutes of all meetings of the Board and
Board Committees and shall assure that such minutes are filed with the records of the
Corporation. He shall give or cause to be given appropriate notices in accordance with
these Bylaws or as required by law, and shall act as custodian of all corporate records and
reports and of the corporate seal, assuring that it is affixed, when required by law, to
documents executed on behalf of the Corporation. The Secretary shall also keep or cause
to be kept a roster showing the names of the current members of the Board of Trustees
and their addresses, and their attendance at special, regular or annual meetings of the
Board of Trustees. He shall perform all duties incident to the office and such other duties
as may be assigned, from time to time, by the President or by the Board.
2.9 ASSISTANT SECRETARIES
The Assistant Secretaries shall, in the absence or disability of the Secretary and in the
order designated by the President, have the duties and powers of the Secretary and shall
have such other duties as from time to time may be assigned to them by the President or
by the Board.
2.10 TREASURER
The Treasurer shall keep or cause to be kept correct and accurate accounts of the
properties and financial transactions of the Corporation and in general perform all duties
incident to the office and such other duties as may be assigned, from time to time, by the
President or the Board. The Treasurer shall keep or cause to be kept a record of all
financial transactions of the Corporation, which shall always be open to inspection by the
Board, and shall provide periodic reports to the Board on the financial condition of the
Corporation. The Treasurer shall serve as the Chair of the Finance Committee of the
Board.
20502.3- 568393 A 10
2.11 ASSISTANT TREASURERS
The Assistant Treasurers shall, in the absence or disability of the Treasurer and in the
order designated by the President, have the duties and powers of the Treasurer and shall
have such other duties as from time to time may be assigned to each of them by the
President or by the Board.
ARTICLE III
COMMITTEES
3.1 GENERAL PROVISIONS
3.1 -1 Creation and Abolishment.
Committees of the Board may be created pursuant to these Bylaws and may be abolished
by amendment to these Bylaws. Committees may also be created and abolished by
resolution adopted by a majority of the Trustees; provided that committees created
pursuant to these Bylaws, or by amendment hereto, may not be abolished by Board
resolution. Special and Ad Hoc Committees may be created and abolished by the Chair.
The Chair shall promptly inform the Board of any Special or Ad Hoc Committee created
or abolished by the Chair.
3.1 -2 Functions.
Committees shall have and perform the functions set forth in these Bylaws or in any
resolution of the Board. Committees created by the Chair shall have and perform the
functions specified by the Chair.
3.1 -3 Appointments.
Except as otherwise provided in these Bylaws or by Board resolution, committee
members shall be appointed by the Chair, subject to the approval of the Board. Non -
Board members are eligible to serve as full voting members of Board committees, except
the Executive Committee. Unless otherwise provided, the Chair shall designate the chair
and vice -chair of each committee, who shall each be a Trustee. Except as set forth in
Section 3.1 -4, each committee member shall hold office for a period of one year and until
a successor is appointed or elected and qualified.
3.1 -4 Resianation and Removal; Vacancies.
A committee member may resign at any time by giving written notice to the Chair or to
the chair of the committee. Such resignation shall be effective on the date specified in
the resignation or upon receipt, if no date is specified. The Chair, subject to the approval
of the Board, may remove any member of a committee for any reason. A vacancy shall
be filled for the unexpired portion of the term in the same manner as the original
appointment or election.
20502.3 - 568393 A 1 1
3.1 -5 Meetings.
Meetings of a committee may be called by the Chair, the chair of the committee or a
majority of the Trustee members of the committee, pursuant to written or verbal notice
reasonably designed to inform the members of the time and place of the meeting. The
attendance by a committee member at a meeting shall constitute a waiver of notice,
unless the member attends for the express purpose of objecting to the meeting. A
majority of the members of a committee, not counting the Chair, shall constitute a
quorum for the transaction of business. The decision of a majority of the committee
members at a meeting at which a quorum is present shall be the decision of the
committee. Committees shall keep minutes and shall make recommendations and reports
to the Board.
3.1 -6 Meeting Attendance.
Each committee member is expected to attend all meetings of all committees of which he
or she is a voting member. The Board may remove from a committee any committee
member who fails to attend two consecutive regular committee meetings per year and
fails to show good cause when requested by the Chair. A committee member may
participate in a meeting by or through the use of any means of communication by which
all committee members participating in the meeting may simultaneously hear each other
during the meeting. A committee member participating in a meeting by any such means
of communication is deemed to be present in person at the meeting.
3.2 STANDING COMMITTEES
3.2 -1 Designation of Standing Committees.
The Standing Committees of the Board are:
(1) Executive Committee
(2) Finance Committee
(3) Medical Care Review Committee
(4) Human Resources Committee
3.2 -2 Executive Committee.
The Executive Committee shall consist of the Chair, the Vice Chair, the Secretary and the
Treasurer. The Executive Committee shall meet not less often than four (4) times each
calendar year. The Executive Committee shall have power to transact all regular business
of the Hospital and, if applicable, the New Hospital, during the period between meetings
of the Board of Trustees, subject to any prior limitation imposed by the Board of
Trustees, and with the understanding that all matters of major importance will be reported
to the Board of Trustees. The Executive Committee shall perform such other functions as
are from time -to -time assigned by the Board. In addition to the foregoing functions, the
Executive Committee shall have the following functions:
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(1) The Executive Committee shall function as the Audit Committee and shall
recommend to the Board the engagement of independent accountants to perform
an annual audit of the books and records of the Corporation and to prepare annual
financial statements. The Executive Committee, as the Audit Committee, shall
have the responsibility of reviewing the audited financial statements with the
independent accountants prior to recommending final approval to the Board of
Trustees. The purpose of such a review is to determine that the independent
accountants are satisfied with the disclosure and content of the audited financial
statements and to obtain sufficient information from the independent accountants
to facilitate analysis of the audited financial statements submitted to the entire
Board of Trustees. The Executive Committee shall also appraise the effectiveness
of the audit effort and focus on those areas where either the Committee or the
independent accountant believes special emphasis is desirable. The Committee
shall determine through discussions with the independent accountants that no
restrictions were placed by management on the scope of the examination or its
implementation. The Committee shall inquire into the effectiveness of the
Corporation's management of financial and accounting functions, through
discussions with the independent accountants and appropriate officers of the
Corporation. The Committee shall review reports prepared by the independent
accountants discussing weaknesses in internal control, organizational structure
and operating and containing recommendations to improve such weaknesses; and
(2) The Executive Committee shall function as the Nomination and Governance
Committee. The functions of the Nominating and Governance Committee are to
(i) identify and recommend to the Board individuals qualified to become Trustees;
(ii) assist the Board in conducting periodic evaluations of the performance of the
Board of Trustees and Board committees; (iii) conduct periodic reviews of the
Articles of Incorporation and Bylaws of the Corporation and make
recommendations to the Board regarding any changes identified as a result of
such reviews; and (iv) perform such other functions as are from time -to -time
assigned by the Board.
3.2 -3 Finance Committee.
The Finance Committee shall consist of the Chair, three other members of the Board of
Trustees and such others as are appointed by the Chair. The Finance Committee shall
meet at least monthly. At least one member of the Finance Committee shall be a person
recognized as an expert in financial matters. The Vice President of Finance shall be an
ex officio, non - voting member of the Finance Committee. The Finance Committee shall
be responsible for supervising the management of all funds of the Hospital and, if
applicable, the New Hospital. It shall arrange for all funds to be properly deposited and
invested. The Finance Committee shall cause to be prepared, and shall submit to the
Board of Trustees for approval, an annual operating budget and capital budgets showing
expected receipts, income and expenses for the ensuing fiscal year. The Finance
Committee shall also examine periodic financial reports, including audited and unaudited
financial statements, and shall perform such other functions as are from time -to -time
assigned by the Board.
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3.2 -4 Medical Care Review Committee.
The membership of the Medical Care Review Committee shall be established pursuant to
the provisions of the Hospital's Performance Improvement Plan, and any amendments
thereto, as shall be, from time -to -time, approved by the Board. The Medical Care
Review Committee is a Medical Review Committee, as defined by North Carolina Law
and by these Bylaws.
The functions of the Medical Care Review Committee are (i) to review Hospital safety,
quality improvement, risk management activities and Medical Staff performance
improvement activities and to make reports and recommendations to the Board regarding
such activities, (ii) to receive and consider reports and recommendations from the
Medical Staff, (iii) to make recommendations to the Board concerning Medical Staff
membership, credentialing, privilege delineation and corrective action matters, and to
perform such other functions as are from time -to -time assigned by the Board.
3.2 -5 Human Resources Committee
The Human Resources Committee shall consist of the Chair, two other members of the
Board of Trustees and such others as are appointed by the Chair. The Human Resources
Committee shall meet at least quarterly. The functions of the Human Resources
Committee are to develop and establish board compensation philosophies for
management and staff, provide oversight to executive compensation and bonuses, review
and monitor employee satisfaction programs and outcomes, become educated about
trends in board oversight for Human Resources, and establish and recommend to the
board strategic human resources initiatives. Annually, the Human Resource Committee
shall make recommendations to the board pertaining to methodologies assuring safety,
adequacy and competency of staffing.
ARTICLE IV
MEDICAL STAFF
4.1 ORGANIZATION
The Board of Trustees, recognizing its responsibilities with respect to the competency of
professionals practicing within the Hospital, has caused the physicians and dentists
granted privileges to practice in the Hospital to organize their activities into a Medical
Staff in conformity with Medical Staff Bylaws approved by the Board of Trustees.
4.2 BYLAWS, RULES AND REGULATIONS OF THE MEDICAL STAFF
(a) The Medical Staff has developed and submitted to the Board of Trustees for
approval Bylaws, Rules and Regulations. These Bylaws, Rules and Regulations
shall be reviewed and updated as necessary and all revisions shall be forwarded to
the Board of Trustees for ultimate approval. The Medical Staff Bylaws, Rules
and Regulations and any amendments thereto or revisions thereof shall be
effective upon Board approval.
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(b) The purpose of the Medical Staff is to provide a structure within which the
Medical Staff may account to the Board for the quality of all professional services
rendered within the Hospital by individuals privileged to render such services.
The Medical Staff Bylaws additionally provide a structure for communication
between the Medical Staff, Administration and the Board.
(c) Each member of the Medical Staff shall have appropriate authority and
responsibility for the care of his patients subject to limitations contained in these
Bylaws and in the Medical Staff Bylaws, Rules and Regulations as approved by
the Board of Trustees.
4.3 MEDICAL STAFF MEMBERSHIP AND CLINICAL PRIVILEGES
4.3 -1 Action by the Board
Final action on all matters relating to Medical Staff membership, credentialing,
delineation of clinical privileges and corrective action shall be taken by the Board. The
Board has delegated to the Medical Staff the responsibility and authority to investigate
and evaluate all matters relating to Medical Staff membership, credentialing, delineation
of clinical privileges, peer review and corrective action, and the Medical Staff makes
recommendations thereon to the Board, through the Medical Care Review Committee. In
taking final action, the Board shall consider Medical Staff recommendations submitted
pursuant to Section 4.3.2; provided, that the Board shall act in any event if the Medical
Staff fails to adopt and submit any such recommendation within the time period required
by the Medical Staff Bylaws. Such Board action without a Medical Staff
recommendation shall be based on the same kind of documented investigation and
evaluation of current ability, judgment and character as is required for Medical Staff
membership, credentialing, privileging, peer review and corrective action
recommendations.
4.3 -2 Medical Staff Recommendations
The Medical Staff adopts and submits to the Board, through the Medical Care Review
Committee, specific written recommendations on all matters relating to Medical Staff
membership, credentialing, delineation of clinical privileges, peer review and corrective
action. The Medical Staff supports and documents its recommendations in a manner that
will allow the Medical Care Review Committee and the Board to take informed action.
4.3 -3 Criteria for Board Action
In acting on matters relating to Medical Staff membership, credentialing, delineation of
clinical privileges, peer review and corrective action, the Medical Care Review
Committee and the Board shall consider the Medical Staff recommendations and
supporting information, the needs of the Hospital and the community, and the criteria set
forth in the Medical Staff Bylaws.
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4.3 -4 Terms and Conditions of Membership and Clinical Privileges
The terms and conditions of Medical Staff membership and the exercise of clinical
privileges are specified in the Medical Staff Bylaws. Medical staff membership and
clinical privileges may not be limited or denied on the basis of sex, race, creed, color,
religion or national origin.
4.3 -5 Procedures
The procedures and mechanisms to be followed by the Medical Staff in acting on matters
of Medical Staff membership, credentialing, clinical privileges, peer review and
corrective action, are specified in the Medical Staff Bylaws.
4.4 HEARING PROCEDURE
Any recommendation of the Medical Staff or action taken by the Board which is adverse
to a Practitioner shall entitle the Practitioner to a hearing in accordance with the hearing
procedure set forth in the Medical Staff Bylaws. (The term "adverse" shall have the
meaning assigned to it in the Medical Staff Bylaws).
ARTICLE V
QUALITY OF PATIENT CARE
5.1 BOARD RESPONSIBILITY
The Board, after considering the recommendations of administration (including the
nursing staff), the Medical Care Review Committee, the Medical Staff, and other
professionals providing patient care services, has required administration and the Medical
Staff to perform specific review and evaluation activities to measure, assess, and improve
the overall quality and efficiency of clinical and patient care services. The Board,
through the President, shall provide whatever administrative assistance is reasonably
necessary to support and facilitate the efficient accomplishment of these review and
evaluation activities.
5.2 ACCOUNTABILITY OF ADMINISTRATION, THE MEDICAL STAFF AND OTHER
PROFESSIONALS
The Board shall hold the Medical Staff accountable for the effective performance of the
functions set forth in the Medical Staff Bylaws, including without limitation, the
credentialing, performance improvement, peer review, utilization review and continuing
medical education functions. The Board shall hold administration accountable for
developing, implementing, carrying -out and monitoring a performance improvement
plan. Administration shall develop, implement and monitor a system to periodically
assess the ability of each clinical employee to meet the performance expectations of his
orjob.
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5.3 DOCUMENTATION
The Board shall require administration and the Medical Staff to document and report to
the Board, through the Medical Care Review Committee, a summary of all findings and
recommendations arising out of the activities described in Sections 5.1 and 5.2. All such
findings and recommendations shall be in writing, signed by the persons responsible for
conducting the activities, and supported and accompanied by reliable documentation.
The Medical Care Review Committee and the Board shall receive, consider and act as
each deems appropriate on such findings and recommendations.
ARTICLE VI
GENERAL PROVISIONS
6.1 CONFLICTS OF INTEREST
6.1 -1 Disclosure of Potential Conflicts.
Any Trustee, officer, employee, or member of a committee of the Board having a direct
or indirect interest in, or having a close relative with a direct or indirect interest in, a
contract, transaction or other matter presented to the Board or a committee of the Board
for discussion, authorization, approval or ratification shall give prompt, full and frank
disclosure of such interest to the Board or committee prior to consideration of such
contract or transaction. (For the purposes of this Section 6.1 -1, the term "close relative"
means a person's spouse, child, sibling or parent.)
6.1 -2 Determination if Conflict of Interest Exists.
The body to which such disclosure is made shall thereupon determine, by majority vote,
whether a conflict of interest exists or can reasonably be found to exist.
6.1 -3 Consideration of Alternatives.
If a conflict of interest is determined to exist, the Board or the Committee shall attempt to
identify and pursue alternatives to the proposed contract or transaction, including the
consideration of other contractors, which would not involve a conflict of interest. Only if
the Board or the Committee determines that it is unable to obtain a more advantageous
alternative and that, despite the conflict of interest, the originally proposed contract or
transaction is in the Corporation's best interest, may the originally proposed contract or
transaction be approved by the Board or favorably recommended to the Board by the
Committee. Notwithstanding the foregoing sentence, however, the Board may not
approve, and the Corporation may not undertake, a transaction or contract which is in
violation of N.C.G.S. 131E -14.2.
6.1 -4 Person With Conflict on Interest Shall Not Participate.
The person with the potential conflict of interest shall not be present during nor
participate in the discussions or deliberations, nor vote on, or use personal influence with
respect to, the determination of whether a conflict of interest exists or, if a conflict of
20502.3 - 568393 v9 17
interest is found to exist, with respect to the contract or transaction in question or any
alternatives being considered. Such person also may not be counted in determining the
existence of a quorum at any meeting where the contract or transaction or alternatives are
under discussion or being voted upon, and shall not be present, unless requested by the
Chair or a majority of the Board, during any closed session discussions with respect to
the contracts, transactions or alternatives under consideration.
6.1 -5 Minutes.
The minutes of all meetings relating to the determination of a conflict of interest and the
contract or transaction and alternatives under consideration shall reflect the disclosure
made, the vote or votes thereon and, where applicable, any abstention from voting and
participation, and whether a quorum was present.
6.1 -6 Procedures for Identifying Conflicts of Interest.
The Board shall adopt procedures for identifying actual, apparent and potential conflicts
of interest. Such procedures shall include a requirement for filing annual conflict of
interest disclosure statements with the Secretary.
6.2 INDEMNIFICATION
The Corporation shall have the power to indemnify any present or former Trustee,
officer, employee or agent, or any Medical Staff member engaged in Corporation
business through service on committees of the Corporation Board or committees of the
Medical Staff, or otherwise, or any person who may have served at the request of the
Corporation as a Trustee, director or officer of another corporation, partnership, joint
venture, director or other enterprise (hereinafter, the "Official "), against liabilities and
reasonable litigation expenses (including attorneys, fees) incurred by the Official in
connection with any action, suit or proceeding in which the Official is made or threatened
to be made a party by reason of being or having been an Official, except in relation to
matters as to which the Official shall be finally adjudged in such action, suit or
proceeding to have acted in bad faith or to have been liable or guilty by reason of willful
misconduct in the performance of the Official's duties. Such indemnification shall not be
deemed exclusive of any other rights to which the Official may be entitled under the
Resolution, these Bylaws or any agreement, vote of the Corporation Board or the
Executive Committee, insurance purchased by the Corporation, North Carolina General
Statutes or otherwise.
6.3 OTHER ORGANIZATIONS.
The Board has authorized and approved the formation of the Betsy Johnson Regional
Hospital Auxiliary and the Betsy Johnson Regional Hospital Foundation and may
authorize the formation of other organizations to assist in the fulfillment of the purposes
of the Corporation. The Articles of Incorporation, if any, Bylaws, rules and regulations
and amendments thereto of each such organization shall be subject to Board approval and
shall not be inconsistent with these Bylaws or the standing rules of the Board.
20502.3 - 568393 v9 18
6.4 CORPORATE SEAL
The Corporation Board shall provide for a corporate seal in such form and with such
inscription as it shall determine.
6.5 WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of any applicable law,
the Resolution or these Bylaws, a waiver thereof in writing signed by the person entitled
to such notice, whether before or after the time stated therein, shall be deemed equivalent
to the giving of such notice where such waiver is permitted by law. All such waivers
shall be filed with the corporate records, or be made a part of the minutes of the relevant
meeting.
6.6 PROCEDURE
The Board and Committees of the Board may adopt rules of procedure which shall not be
inconsistent with these Bylaws.
6.7 FISCAL YEAR
The fiscal year of the Corporation shall begin on October 1 of each year and end on
September 30 of the following year.
6.8 CONSTRUCTION OF TERMS AND HEADINGS
Words used in these Bylaws shall be read as the singular or plural, as the context
requires. The captions or headings in these Bylaws are for convenience only and are not
intended to limit or define the scope or effect of any provision of these Bylaws.
ARTICLE VII
AMENDMENT TO BYLAWS AND ARTICLES OF INCORPORATION
Subject to such approval as may be required in the Articles of Incorporation, as amended, by any
person or persons other than the Board of Trustees, and to the extent permitted by law, these
Bylaws and the Articles of Incorporation may be amended or repealed and new Bylaws and
amended Articles of Incorporation may be adopted by the affirmative vote of a majority of the
Trustees in office at the time of the meeting to consider such amendment, upon five (5) days'
written notice of the meeting, which notice shall state that the purpose of the meeting is to
consider a proposed amendment and which shall contain, attach a copy of or state the nature of,
the proposed amendment.
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