Attachments 03-09-2021north carolina
UJIDUNN
city of clunn
POST OFFICE BOX 1065 • DUNN, NORTH CAROLINA 28335
(910) 230-3500 . FAX (910) 230-3590
wwwAtinn-nc.org Attachment #1
03-09-2021
PUBLIC NOTICE related to Regular Council Meeting
Mayor
William P. Elmore Jr.
Mayor Pro Tem
Chuck Tumage
Council Members
J. Wesley Sills
April Gaulden
Frank McLean
Billy Tart
Dr. David L. Bradham
City Manager
Steven Neuschafer
The public is hereby notified that the City Council of the City of Dunn will hold their regular
meeting on Tuesday, March 9, 2021 at 7:00 p.m. in the Council Chambers of the Dunn Municipal
Building, 401 E. Broad Street, Dunn, NC. Some members of the Council may participate
electronically.
SPECIAL NOTICE REGARDING MEETING ACCESS DUE TO STATE OF EMERGENCY
In an effort to reduce the spread of Covid-19, in -person access to the Council meeting is limited
to a total of25 people to include Council and needed staff.
Face Coverings are required by all members of the public entering the Municipal Building.
The Council Meeting will be available for live public viewing on
Facebook - The City of Dunn, NC page.
Public Comment Period - Comments, not in -person, can be called in, delivered or emailed to the
City Clerk by Monday, March 8, 2021, 1:00 p.m. to be read at the meeting. The person must
abide by all rules related to the Public Comment Period, provide name and address and abide by
the 3-minute time limit. The person may also call into the meeting to give their comments but
they must call the City Clerk to sign up and receive instructions by the above stated time.
Public Hearing - Comments, not in -person, can be called in, delivered or entailed to the City Clerk
by Monday, March 8, 2020, 1:00 p.m. and they will be read at the meeting during the Public
Hearing. The call and email should include name, address of the person filing the comments and
the Public Hearing that the comments are in reference to. The person may also call into the
meeting to give their comments but they must call the City Clerk to sign up and receive
instructions by the above stated time.
Tammy Williams, CMC
City Clerk
401 E Broad St
PO Box 1065, Dunn NC 28335
910-230-3501
twilliams@dunn-nc.org
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RESOLUTION OF the City of Dunn
ACCEPTING THE CONDITIONS IN THE MARCH 9, 2021
LETTER OF CONDITIONS FROM USDA, RURAL DEVELOPMENT
BE IT RESOLVED
R2021-08(Attach #3)
03-09-2021
That the Dunn City Council accepts the conditions set forth in a Letter of Conditions dated
March 9, 2021 and RUS BULLETIN 1780-27, Loan Resolution (Public Body):
That the Mayor Pro Tem and City Clerk were given the authority on March 9, 2021, to execute
all forms necessary to obtain a loan from Rural Development, including, but not limited to the
following forms:
Form RD 1940-1
Request for Obligation of Funds
Form RD 1942-46
Letter of Intent to Meet Conditions
RUS Bulletin 1780-27
Loan Resolution (Public Body)
RUS Bulletin 1780-12
Water & Waste System Grant Agreement
This resolution is to become a part of the official minutes of the Dunn City Council Meeting held
on March 9, 2021 authorizing the Mayor Pro Tem and City Clerk to sign the required documents
on March 9, 2021.
MOTION MADE BY: Lt-oUVI 'Vti t'' 1(k.r and
SECONDED BY: ZtQ LYE THAT THE RESOLUTION
BE APPROVED.
MOTION PASSED S7 FOR AND
AMV
Dr. David L. Bradham, Mayor Pro Tem
ATTEST:
Tamrriy William , yity Clerk
%C' F
�: GORPO/�yT�?2
.�'• SEAL
March' 1.....•'��.�
Date +''�',+mARO o'
USDA
Form RD 1940.1 REQUEST FOR OBLIGATION OF FUNDS
(Rev. 06-10)
FORM APPROVED
OMB No. 0570-0062
INSTRUCTIONS -TYPE IN CAPITALIZED ELITE TYPE IN SPACES MARKED ( )
Complete Items 1 through 29 and applicable Items 30 through 34. See FMI.
1. CASE NUMBER
LOAN NUMBER
FISCAL YEAR
ST CO BORROWER ID
38-043-*****1214
21
2. BORROWER NAME
3. NUMBER NAME FIELDS
Dunn, City of
1 (1,2.or3fiomlmn,2)
4. STATE NAME
North Carolina
S. COUNTY NAME
Harnett
GENERAL BORROWER/LOAN INFORMATION
6. RACE/ETHNIC
7. TYPE OF APPLICANT
8. COLLATERAL CODE
9. EMPLOYEE
CLASSIFICATION
6-ORG. OF FARMERS
I -PARTNER )- NONPROFlTSECUInR
I-REALESTATE 4-MACHINERYONLY
RELATIONSHIP CODE
1-WHITE A
2-PARTNERSHIP
3-CORPORATION FAITH BASED
SECURED 5-LIVESTOCKONLY
p.REAL ESTATE 8-CROPS ONLY
EMPLOYEE
-HISPANIC
2-BIACK 5-AIPI
A-NDIANTRIB
4-ASSOC BOGY 9-INDIAN TRIBE
10-PUBLICCOLLEGENNIVERSitt
AND 1-BECUREO BY
2-MEMBEROFFAMILY
2
3-ASSOC. ELATIVE
a-NIAN
5-ASSO RD
4 FARMERS 11OTHER
3-NOTEONLYOR BONDS
% CHATTEL ONLY 0-RLFACCT
4-ASSOC.
10. SEX CODE YUNIT
11. MARITAL STATUS
12. VETERAN CODE
13. CREDIT REPORT
4-ORI-FAGAN 6ALEOWNEO
1-MPLE 5-ORGAN F@MLE OWNED
I -MARRIED 3-0NMARRIED(INCLUDES
1-YES
i-YES
6 2-FEMALE S-PUBLIC BODY
2-SEPAPATED WIDOWEOIDIVORCED)
2-NO
2 2-NO
14. DIRECT PAYMENT
15. TYPE OF PAYMENT
16. FEE INSPECTION
(See FMQ
1-MONTHLY 3-SEMI-ANNUALLY
1-YES
'
3
2 2-ANNUALLY 4-QUARTERLY
2 2-NO
l ,
r s_cJ
17. COMMUNITY SIZE
18.
USE OF FUNDS CODE
I-t0000 OR LESG (FOR SIR AND
See FMI
2-OVER10,000 HPGONLY)
COMPLETE FOR OBLIGATION OF FUNDS
19. TYPE OF
20. PURPOSE CODE
21. SOURCE OF FUNDS
22. TYPE OF ACTION
ASSISTANCE
I -OBLIGATION ONLY
(See FMI)
3
REQUEST
2-CORRECTION
068
NECK
]. 3-CORRECTION OF OBLIGATION
23. TYPE OF SUBMISSION
24. AMOUNT OF LOAN
25. AMOUNT OF GRANT
i-INNIAI.
2-SUBSEQUENT
1
$1, 436, 000. 00
$1, 200, 000.00
26. AMOUNT OF
27. DATE OF
211. INTEREST RATE
29. REPAYMENT TERMS
IMMEDIATE ADVANCE
APPROVAL
MO DAY YR
1.2500 %
40
COMPLETE FOR COMMUNITY PROGRAM AND CERTAIN MULTIPLE -FAMILY HOUSING LOANS
30. PROFIT TYPE
2-LIMITED PROFIT
i-FULLPROFIT 3-NONPROFIT
__ p•.^ t i _ c.
COMPLETE FOR EM LOANS ONLY
COMPLETE FOR CREDIT SALE -ASSUMPTION
31. DISASTER DESIGNATION NUMBER
32. TYPE OF SALE
(See FMI)
2-ASSUMPTION ONLY 4-ASSUMPTIONWiTH
I-CREOITSALEONLY 3-CREDITSALEWITH SUBSEQUENT LOAN SUBSEQUENTLOAN
FINANCE OFFICE USE ONLY
COMPLETE FOR FP LOANS ONLY
33. OBLIGATION DATE
34. BEGINNING FARMERIRANCHER
MO DA YR
(See FMO
I/I(rc decision co vninednbme m thafom e,SIO indernd,reduclianorcmr..11.1 ona(UMA eaNM,,re, 5rou rnaynpyenl Ibis d d,1,S mrdhn.nhearing orywnnny r,WSrevimv in lieu ofn Gennng.
Please use S?Qfo,.Sv bnve echrdedforhh,,,rpnse.
Position 2
ORIGINAL - Borrower's Case Folder COPY 1 -Finance Office COPY 2 - Applicant/Lender COPY 3 - State Office
Accordbrg la Poe P penvo k,R eh.I)on Amaf(995, nn ageneyrnaynal omrdncl or furor, onda person it nolre9nircd m,erpmrd ro a col(ecd®r B(hilbn ml(nn SW,. it dlrp/alrza vnbd OMII control mnnber. 7be mild
OMR con°ni numberfor O,ir injommtion rollemion it 0510-0061. the drne n,,wed A, cm,kM fhir hrfonnmion cWh,,Hon it e,,I mfed w.,,Rge IS nrimrferperrerpmrse, incbrding BIN finrefarrevlervinginnnm0onr,
nmobing AxQlhg d,,0 ronrces, gnpmNngnmp,mhmhprg Om dnln needed, mrd comp(eling m,d rO,1OWng lbe ea!(euial ofirf nnnnan.
CERTIFICATION APPROVAL
For All Farmers Programs
EM, OL, FO, and SW Loans
This loan is approved subject to the availability of funds. If this loan does not close for any reason within 90 days from the
date of approval on this document, the approval official will request updated eligibility information. The undersigned loan
applicant agrees that the approval official will have 14 working days to review any updated information prior to submitting
this document for obligation of funds. If there have been significant changes that may affect eligibility, a decision as to
eligibility and feasibility will be made within 30 days from the time the applicant provides the necessary information.
If this is a loan approval for which a lien and/or title search is necessary, the undersigned applicant agrees that the
15-working-day loan closing requirement may be exceeded for the purposes of the applicant's legal representative
completing title work and completing loan closing.
35. COMMENTS AND REQUIREMENTS OF CERTIFYING OFFICIAL
Loan and grant approval subject to the requirements of the Letter of Conditions
dated March 9, 2021, RUS Instructions and Loan Closing Instructions issued by the
Office of General Counsel.
36, I BEREBY CERTIFY that I am unable to obtain sufficient credit elsewhere to finance my actual needs at reasonable rates
and terms, taking into consideration prevailing private and cooperative rates and terms in or near my community for loans
for similar purposes and periods of time. I agree to use the sum specified herein, subject to and in accordance with
regulations applicable to the type of assistance indicated above, and request payment of such sum. I agree to report to
USDA any material adverse changes, financial or otherwise, that occur prior to loan closing. I certify that no part of the sum
specified herein has been received. I have reviewed the loan approval requirements and comments associated with this loan
request and agree to comply with these provisions.
(For FP loans at eligible terms only) If this loan is approved, I elect the interest rate to be charged on my loan to be the lower of the
interest rate in effect at the time of loan approval or loan closing. If I check "NO", the interest rate cbarged on my
loan will be the rate specified in Item 28 of this form. YES NO
WARNING:
Date March
ATTEST:
March 9
Whoever, in any matter within the jurisdiction of any department or agency of the United States
knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material
fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses
any false writing or document knowing the same to contain any false, fictitious or fraudulent
statement or entry, shall be fined under this title or imprisoned not more than five years, or both:'
Dr. David L. Bradham, Mayor,Pro. '•,Q'e
019,
20 21
ty Clerk
37 I HEREBY CERTIFY that all of the committee and administrative determinations and certifications re441ired (V regulations
prerequisite to providing assistance of the type indicated above have been made and that evidence thereof is in the docket, and
that all requirements of pertinent regulations have been complied with. I hereby approve the above -described assistance in the
amount set forth above, and by this document, subject to the availability of funds, the Government agrees to advance such
amount to the applicant for the purpose of and subject to the availability prescribed by regulations applicable to this Type of
assistance.
Date Approved:
Typed or Printed Name:
Title:
(Signature ofApproving Official)
38. TO TBE APPLICANT: As of this date , this is notice that your application for financial assistance
from the USDA has been approved, as indicated above, subject to the availability of funds and other conditions required by
the USDA. If you have any questions contact the appropriate USDA Servicing Office.
Position 3
Form RD 1942-46 UNITED STATES DEPARTMENT OF AGRICULTURE
(Rev. 6-10) RURAL DEVELOPMENT
LETTER OF INTENT TO MEET CONDITIONS
Date 03-09-2021
TO: United States Department of Agriculture
USDA - Rural Development
(Name of USDA Agency)
P O Box 7426
Lumberton, NC 28358
(USDA Agency Office Address)
FORM APPROVED
OMB NO. 0575-0015
OMB NO. 0570-0062
We have reviewed and understand the conditions set forth in your letter dated 03-09-2 021 , it is our intent to meet all of
them not later than 11-09-2022
``NlnluUrr
�G\TY UFO.
,I
GORPORq
2Q,r.� SEAL
CARD .
111j1111111%01 t
City of Dunn
BY s g (Name Asso
Dr. David L. Bradham, Mayor Pro Tom
(Title)
S.
I 3—
According to the Paperwork Reduction Act of 1995, an agency stay not conduct or sponsor, and a persons is not required to respond to a collection of informration
unless it displays a valid OMB control number. The valid OMB controi mm�berfor this informration collection is 0575-0015 and 0570-0062. The time required to
complete this information collection is estimated to average I hourper response, including the time for revierving inshvctions, searching existing data sources,
gathering and maintaining the data. needed, and completing and revienving tits collection ofirfornration.
Form RD 1942-46 (Rev. 6-10)
PO Box 1065
NC 28335
RURAL DEVELOPMENT, USDA
Lumberton, NC 28358
This is to certify that the City of Dunn
is in compliance with Federal, State, and Local requirements include the following:
a. Compliance with special laws and regulations.
b. Compliance with State Pollution Control or Environmental
Protection Agency standards.
c. Consistency with other development plans of the area.
d, Compliance with State agency regulating water rights.
e. Compliance with Civil Rights Act of 1964.
f. Compliance with Title IX of the Education Amendments of 1972.
g. Compliance with Section 504 of the Rehabilitation Act of 1973.
h. Compliance with Age Discrimination Act of 1975.
i. Compliance with A-133 audit requirements.
BY:
Dr. David L. Bradham, Mayor Pro Tern
3/9/2021
Date
Position 5
BUS BULLETIN 1780-27 APPROVED
OMB. No. 0572-0121
LOAN RESOLUTION
(Public Bodies)
A RESOLUTION OF THE City Council
OF THE City of Dunn
AUTHORIZING AND PROVIDING FOR THE INCURRENCE OF INDEBTEDNESS FOR THE PURPOSE OF PROVIDING A
PORTION OF THE COST OF ACQUIRING, CONSTRUCTING, ENLARGING, IMPROVING, AND/OR EXTENDING ITS
Public body - providing sewer service
FACILITY TO SERVE AN AREA LAWFULLY WITHIN ITS JURISDICTION TO SERVE.
WHEREAS, it is necessary for the City of Dunn
(Public Body)
(herein after called Association) to raise a portion of the cost of such undertaking by issuance of its bonds in the principal amount of
One Million Four Hundred Thirty Six Thousand & 00/100 ($1,436
pursuant to the provisions of NC General State Statute ;and
WHEREAS, the Association intends to obtain assistance from the United States Department of Agriculture,
(herein called the Government) acting under the provisions of the Consolidated Farm and Rural Development Act (7 U.S.C. 1921
or seq.) in the planning. Financing, and supervision of such undertaking and the purchasing of bonds lawfully issued, in the event
that no other acceptable purchaser for such bonds is found by the Association:
NOW THEREFORE, in consideration of the premises the Association hereby resolves:
1. To have prepared on its behalf and to adopt an ordinance or resolution for the issuance of its bonds containing such
items and in such forms as are required by State statutes and as are agreeable and acceptable to the Government.
2. To refinance the unpaid balance, in whole or in part, of its bonds upon the request of the Government if at any time
it shall appear to the Government that the Association is able to refinance its bonds by obtaining a loan for such purposes
from responsible cooperative or private sources at reasonable rates and terms for loans for similar purposes and periods
of time as required by section 333(c) of said Consolidated Farm and Rural Development Act (7 U.S.C. 1983(c)),
3. To provide for, execute, and comply with Form RD 400-4, "Assmunce Agreement," and Form RD 400-1, "Equal
Opportunity Agreement," including an "Equal Opportunity Clause," which clause is to be incorporated in, or attached
as a rider to, each construction contract and subcontract involving in excess of $10,000.
4. To indemnify the Government for any payments made or losses suffered by the Government on behalf of the Association.
Such indemnification shall be payable from the same source of funds pledged to pay the bonds or any other legal ly per-
missible source.
5. That upon default in the payments of any principal and seemed interest on the bonds or in the performance of any
covenant or agreement contained herein or in the instruments incident to making or insuring the loan, the Government at
its option may (a) declare the entire principal amount then outstanding and accrued interest immediately due and
payable, (b) for the account of the Association (payable from the source of funds pledged to pay the bonds or any other
legally permissible source), incur and pay reasonable expenses for repair, maintenance, and operation of the facility
and such other reasonable expenses as may be necessary to cure the cause of default, and/or (c) take possession of the
facility, repair, maintain, and operate or rent it. Default under the provisions of this resolution or any instrument incident to
the making or insuring of the loan may be construed by the Government to constitute default under any other instrument
held by the Government and executed or assumed by the Association, and default under any such instrument may be
construed by the Government to constitute default hereunder.
6. Not to sell, transfer, lease, or otherwise encumber the facility or any portion thereof, or interest therein, or permit others
to do so, without the prior written consent of the Government.
7. Not to defense the bonds, or to borrow money, enter into any contractor agreement, or otherwise incur any liabilities
for any purpose in connection with the facility (exclusive of normal maintenance) without the prior written consent of the
Government if such undertaking would involve the source of funds pledged to pay the bonds.
8. To place the proceeds of the bonds on deposit in an account and in a manner approved by the Government. Funds may be
deposited in institutions insured by the State or Federal Government or invested in readily marketable securities backed
by the full faith and credit of the United States. Any income from these accounts will be considered as revenues of the system.
9. To comply with all applicable State and Federal laws and regulations and to continually operate and maintain the facility
in good condition.
10. To provide for the receipt of adequate revenues to meet the requirements of debt service, operation and maintenance, and
the establishment of adequate reserves. Revenue accumulated over and above that needed to pay operating and mainte-
nance, debt service and reserves may only be retained or used to make prepayments on the loan. Revenue cannot be used
to pay any expenses which are not directly incurred for the facility financed by USDA. No free service or use of the
facility will be permitted.
According to the Paperwork Rednetion Ace of 1995, on agency may not conduce m sponsor, and a person !s not required to respond to, a collection ofir formatlan unless
it displays a c sd OMB control number. The va!ld OMB control nnnnber for 4iis infornnaflon co(/ect/mr is 0572-0121. Tile time required to complete this information
collection is estimated to average 1 Hour per response, including the lime for reviewing ouniections, seaenhing existing data sources, gathering and maintaining the
data needed, and eompletDng and reviewing (lie collection ofir fonneation.
-2-
11. To acquire and maintain such insurance and fidelity bond coverage as may be required by the Government.
12. To establish and maintain such books and records relating to the operation of the facility and its financial affairs and to
provide for required audit thereof as required by the Government, to provide the Government a copy of each such audit
without its request, and to forward to the Government such additional information and reports as it may from time to
time require.
13. To provide the Government at all reasonable times access to all books and records relating to the facility and access to
the property of the system so that the Government may ascertain that the Association is complying with the provisions
hereof and of the instruments incident to the making or insuring of the loan.
14. That if the Government requires that a reserve account be established, disbursements from that account(s) may be used
when necessary for payments due on the bond if sufficient funds are not otherwise available and prior approval of the
Government is obtained. Also, with the prior written approval of the Government, funds may be withdrawn and
used for such things as emergency maintenance, extensions to facilities and replacement of short lived assets.
15. To provide adequate service to all persons within the service area who can feasibly and legally be served and to obtain
USDA's concurrence prior to refusing new or adequate services to such persons. Upon failure to provide services which
are feasible and legal, such person shall have a direct right of action against the Association or public body.
16. To comply with the measures identified in the Government's environmental impact analysis for this facility for the pur-
pose of avoiding or reducing the adverse environmental impacts of the facility's construction or operation.
17. To accept a grant in an amount not to exceed $ 1,200,000.00
under the terms offered by the Government; that the Mayor Pro Tem
and City Clerk of the Association are hereby authorized and empowered to take all action necessary
or appropriate in the execution of all written instruments as may be required in regard to or as evidence of such grant; and
to operate the facility under the terms offered in said grant agreement(s).
'the provisions hereof and the provisions of all instruments incident to the making or the insuring of the loan, unless otherwise
specifically provided by the terms of such instrument, shall be binding upon the Association as long as the bonds are held or
insured by the Government or assignee. The provisions of sections 6 through 17 hereof may be provided for in more specific
detail in the bond resolution or ordinance; to the extent that the provisions contained in such bond resolution or ordinance
should be found to be inconsistent with the provisions hereof, these provisions shall be construed as controlling between the
Association and the Government or assignee.
The vote was:
IN WITNESS WHEREOF, the
of Dunn
Yeas J
Council
Nays Absent `---�`
has duly adopted this resolution and caused it
to be executed bm & officers below in duplicate on this 2nd Tuesday 91h day of March, 2021
r1rr rr!
OF
��5:• �Q,PBRA%C••.
4,AL} V ,
Afl�st: , SEP\- e�Qm
°i I/ o
Tam lhiatmo,
Title City Clerk
Dr. David L. Bradham
Title Mayor Pro Tem
-3-
CERTIFICATION TO BE EXECUTED AT LOAN CLOSING
I, the undersigned, as City Clerk
of the City of Dunn
hereby certify that th Clty Council of such Association is composed of
members, of whom
held on the day of
constituting a quorum, were present at a meeting thereof duly called and
; and that the foregoing resolution was adopted at such meeting
by the vote shown above, I further certify that as of
the date of closing of the loan fiom the United States Department of Agriculture, said resolution remains in effect and has not been
rescinded or amended in any way.
Dated, this day of
Tammy Williams
Title Citv Clerk
RUS-Bulletin 1780-12
Water and Waste System Grant Agreement
United States Department of Agriculture
Rural Utilities Service
THIS AGREEMENT dated 3/9/2021 , between
of Dunn
a public corporation organized and operating under
NC General State Statute
(Authorizing Statute)
herein called "Grantee," and the United States of America acting through the Rural Utilities Service, Department
of Agriculture, herein called "Grantor," WITNESSETH:
WHEREAS
Grantee has determined to undertake a project of acquisition, construction, enlargement, or capital improvement
of a (water) (waste) system to serve the area under its jurisdiction at an estimated cost of $ 2,636,000.00
and has duly authorized the undertaking of such project.
Grantee is able to finance not more than $ 1,436,000.00 of the development costs through
revenues, charges, taxes or assessments, or funds otherwise available to Grantee resulting in a reasonable
user charge.
Said sum of $ 1,436,000.00 has been committed to and by Grantee for such project
development costs.
Grantor has agreed to grant the Grantee a sum not to exceed $ 1,200,000.00 or 45.55
percent of said project development costs, whichever is the lesser, subject to the terms and conditions
established by the Grantor. Provided, however, that the proportionate share of any grant funds actually
advanced and not needed for grant purposes shall be returned immediately to the Grantor. The Grantor may
terminate the grant in whole, or in part, at any time before the date of completion, whenever it is determined that
the Grantee has failed to comply with the Conditions of the grant.
As a condition of this grant agreement, the Grantee assures and certifies that it is in compliance with and will
comply in the course of the agreement with all applicable laws, regulations, Executive orders and other generally
applicable requirements, including those set out in 7 CFR 3015.205(b), which hereby are incorporated into this
agreement by reference, and such other statutory provisions as are specifically set forth herein.
NOW, THEREFORE, In consideration of said grant by Grantor to Grantee, to be made pursuant to
Section 306(a) of The Consolidated Farm and Rural Development Act for the purpose only of defraying a part
not to exceed 45.55 percent of the project development costs, as defined by applicable Rural Utilities Service
instructions.
Grantee Agrees That Grantee Will:
A. Cause said project to be constructed within the total sums available to it, including said grant, in
accordance with the project plans and specifications and any modifications thereof prepared by Grantee and
approved by Grantor.
Bulletin 1780-12
Page 2
B. Permit periodic inspection of the construction by a representative of Grantor during construction.
C. Manage, operate and maintain the system, including this project if less than the whole of said system,
continuously in an efficient and economical manner.
D. Make the services of said system available within its capacity to all persons in Grantee's service area
without discrimination as to race, color, religion, sex, national origin, age, marital status, or physical or mental
handicap (possess capacity to enter into legal contract for services) at reasonable charges, including
assessments, taxes, or fees in accordance with a schedule of such charges, whether for one or more classes of
service, adopted by resolution dated 3/9/2021 , as may be modified from time to time by
Grantee. The initial rate schedule must be approved by Grantor. Thereafter, Grantee may make such
modifications to the rate system as long as the rate schedule remains reasonable and nondiscriminatory.
E. Adjust its operating costs and service charges from time to time to provide for adequate operation and
maintenance, emergency repair reserves, obsolescence reserves, debt service and debt service reserves.
F. Expand its system from time to time to meet reasonably anticipated growth or service requirements in
the area within its jurisdiction.
G. Provide Grantor with such periodic reports as it may require and permit periodic inspection of its
operations by a representative of the Grantor.
H. To execute any agreements required by Grantor which Grantee is legally authorized to execute. If
any such agreement has been executed by Grantee as a result of a loan being made to Grantee by Grantor
contemporaneously with the making of this grant, another agreement of the same type need not be executed in
connection with this grant.
I. Upon any default under its representations or agreements set forth in this instrument, Grantee, at the
option and demand of Grantor, will repay to Grantor forthwith the original principal amount of the grant stated
herein above with the interest at the rate of 5 percentum per annum from the date of the default. Default by the
Grantee will constitute termination of the grant thereby causing cancellation of Federal assistance under the
grant. The provisions of this Grant Agreement may be enforced by Grantor, at its option and without regard to
prior waivers by it previous defaults of Grantee, by judicial proceedings to require specific performance of the
terms of this Grant Agreement or by such other proceedings in law or equity, in either Federal or State courts, as
may be deemed necessary by Grantor to assure compliance with the provisions of this Grant Agreement and
the laws and regulations under which this grant is made.
J. Return immediately to Grantor, as required by the regulations of Grantor, any grant funds actually
advanced and not needed by Grantee for approved purposes.
K. Use the real property including land, land improvements, structures, and appurtenances thereto, for
authorized purposes of the grant as long as needed.
1. Title to real property shall vest in the recipient subject to the condition that the Grantee shall use the
real property for the authorized purpose of the original grant as long as needed.
2. The Grantee shall obtain approval by the Grantor agency for the use of the real property in other
projects when the Grantee determines that the property is no longer needed for the original grant
purposes. Use in other projects shall be limited to those under other Federal grant programs or programs
that have purposes consistent with those authorized for support by the Grantor.
RUS Bulletin 1780-12
Page 3
3. When the real property is no longer needed as provided in 1 and 2 above, the Grantee shall request
disposition instructions from the Grantor agency or its successor Federal agency. The Grantor agency
shall observe the following rules in the disposition instructions:
(a) The Grantee may be permitted to retain title after it compensates the Federal Government in
an amount computed by applying the Federal percentage of participation in the cost of the
original project to the fair market value of the property.
(b) The Grantee may be directed to sell the property under guidelines provided by the Grantor
agency. When the Grantee is authorized or required to sell the property, proper sales procedures
shall be established that provide for competition to the extent practicable and result in the highest
possible return.
[Revision 1, 0411711998]
(c) The Grantee may be directed to transfer title to the property to the Federal Government
provided that in such cases the Grantee shall be entitled to compensation computed by applying
the Grantee's percentage of participation in the cost of the program or project to the current fair
market value of the property.
This Grant Agreement covers the following described real property (use continuation sheets as
necessary).
All equipment procured with RD loan and grant funds.
L. Abide by the following conditions pertaining to equipment which is furnished by the Grantor or
acquired wholly or in part with grant funds. Equipment means tangible, non -expendable, personal property
having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. A grantee may use
its own definition of equipment provided that such definition would at least include all equipment defined above.
[Revision 1, 0411711998]
1. Use of equipment.
(a) The Grantee shall use the equipment in the project for which it was acquired as long as
needed. When no longer needed for the original project, the Grantee shall use the equipment in
connection with its other Federally sponsored activities, if any, in the following order of priority:
1) Activities sponsored by the Grantor.
(2) Activities sponsored by other Federal agencies.
(b) During the time that equipment is held for use on the property for which it was acquired, the
Grantee shall make it available for use on other projects if such other use will not interfere with
the work on the project for which the equipment was originally acquired. First preference for such
other use shall be given to Grantor sponsored projects. Second preference will be given to other
Federally sponsored projects.
RUS Bulletin 1780-12
Page 4
2. Disposition of equipment. When the Grantee no longer needs the equipment as provided in paragraph
(a) above, the equipment may be used for other activities in accordance with the following standards:
(a) Equipment with a current per unit fair market value of less than $5,000. The Grantee may use
the equipment for other activities without reimbursement to the Federal Government or sell the
equipment and retain the proceeds.
(b) Equipment with a current per unit fair market value of $5,000 or more. The Grantee may retain
the equipment for other uses provided that compensation is made to the original Grantor agency
or its successor. The amount of compensation shall be computed by applying the percentage of
Federal participation in the cost of the original project or program to the current fair market value
or proceeds from sale of the equipment. If the Grantee has no need for the equipment and the
equipment has further use value, the Grantee shall request disposition instructions from the
original Grantor agency.
The Grantor agency shall determine whether the equipment can be used to meet the agency's
requirements. If no requirement exists within that agency, the availability of the equipment shall
be reported, in accordance with the guidelines of the Federal Property Management Regulations
(FPMR), to the General Services Administration by the Grantor agency to determine whether a
requirement for the equipment exists in other Federal agencies. The Grantor agency shall issue
instructions to the Grantee no later than 120 days after the Grantee requests and the following
procedures shall govern:
(1) If so instructed or if disposition instructions are not issued within 120 calendar days
after the Grantee's request, the Grantee shall sell the equipment and reimburse the
Grantor agency an amount computed by applying to the sales proceeds the percentage of
Federal participation in the cost of the original project or program. However, the Grantee
shall be permitted to deduct and retain from the Federal share ten percent of the proceeds
for Grantee's selling and handling expenses.
(2) If the Grantee is instructed to ship the equipment elsewhere the Grantee shall be
reimbursed by the benefiting Federal agency with an amount which is computed by
applying the percentage of the Grantee participation in the cost of the original grant
project or program to the current fair market value of the equipment, plus any reasonable
shipping or interim storage costs incurred.
(3) If the Grantee is instructed to otherwise dispose of the equipment, the Grantee shall be
reimbursed by the Grantor agency for such costs incurred in its disposition.
3. The Grantee's property management standards for equipment shall also include:
(a) Records which accurately provide for: a description of the equipment; manufacturer's serial
number or other identification number; acquisition date and cost; source of the equipment;
percentage (at the end of budget year) of Federal participation in the cost of the project for which
the equipment was acquired; location, use and condition of the equipment and the date the
information was reported; and ultimate disposition data including sales price or the method used
todetermine current fair market value if the Grantee reimburses the Grantor for its share.
(b) A physical inventory of equipment shall be taken and the results reconciled with the
equipment records at least once every two years to verify the existence, current utilization, and
continued need for the equipment.
RUS Bulletin 1780-12
Page 5
(c) A control system shall be in effect to insure adequate safeguards to prevent loss, damage, or
theft of the equipment. Any loss, damage, or theft of equipment shall be investigated and fully
documented.
(d) Adequate maintenance procedures shall be implemented to keep the equipment in good
condition.
(a) Proper sales procedures shall be established for unneeded equipment which would provide
for competition to the extent practicable and result in the highest possible return.
This Grant Agreement covers the following described equipment(use continuation sheets as necessary)
All equipment procured with RD loan and grant funds.
M. Provide Financial Management Systems which will include
1. Accurate, current, and complete disclosure of the financial results of each grant. Financial reporting
will be on an accrual basis.
2. Records which identify adequately the source and application of funds for grant -supported activities.
Those records shall contain information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
3. Effective control over and accountability for all funds, property and other assets. Grantees shall
adequately safeguard all such assets and shall assure that they are used solely for authorized purposes.
4. Accounting records supported by source documentation
N. Retain financial records, supporting documents, statistical records, and all other records pertinent to
the grant for a period of at least three years after grant closing except that the records shall be retained beyond
the three-year period if audit findings have not been resolved. Microfilm or photo copies or similar methods may
be substituted in lieu of original records. The Grantor and the Comptroller General of the United States, or any
of their duly authorized representatives, shall have access to any books, documents, papers, and records of the
Grantee's government which are pertinent to the specific grant program for the purpose of making audits,
examinations, excerpts and transcripts.
O. Provide information as requested by the Grantor to determine the need for and complete any
necessary Environmental Impact Statements.
P. Provide an audit report prepared in accordance with Grantor regulations to allow the Grantor to
determine that funds have been used in compliance with the proposal, any applicable laws and regulations and
this Agreement.
Q. Agree to account for and to return to Grantor interest earned on grant funds pending their
disbursement for program purposes when the Grantee is a unit of local government. States and agencies or
instrumentality's of states shall not be held accountable for interest earned on grant funds pending their
disbursement.
RUS Bulletin 1780-12
Page 6
R. Not encumber, transfer or dispose of the property or any part thereof, furnished by the Grantor or
acquired wholly or in part with Grantor funds without the written consent of the Grantor except as provided in
item K above.
S. To include in all contracts for construction or repair a provision for compliance with the Copeland
"Anti -Kick Back" Act (18 U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR, Part 3).
The Grantee shall report all suspected or reported violations to the Grantor.
T. To include in all contracts in excess of $100,000 a provision that the contractor agrees to comply with
all the requirements of the Clean Air Act (42 U.S.C. §7414 ) and Section 308 of the Water Pollution Control Act
(33 U.S.C. §1318) relating to inspection, monitoring, entry, reports, and information, as well as all other
requirements specified in Section 114 of the Clean Air Act and Section 308 of the Water Pollution Control Act
and all regulations and guidelines issued thereunder after the award of the contract. In so doing the Contractor
further agrees:
[Revision 1, 1112011997]
1. As a condition for the award of contract, to notify the Owner of the receipt of any communication from
the Environmental Protection Agency (EPA) indicating that a facility to be utilized in the performance of
the contract is under consideration to be listed on the EPA list of Violating Facilities. Prompt notification is
required prior to contract award.
2. To certify that any facility to be utilized in the performance of any nonexempt contractor subcontract is
not listed on the EPA list of Violating Facilities pursuant to 40 CFR Part 32 as of the date of contract
award.
[Revision 1, 1112011997]
3. To include or cause to be included the above criteria and the requirements in every nonexempt
subcontract and that the Contractor will take such action as the Government may direct as a means of
enforcing such provisions.
As used in these paragraphs the term "facility" means any building, plan, installation, structure, mine, vessel or
other floating craft, location, or site of operations, owned, leased, or supervised by a Grantee, cooperator,
contractor, or subcontractor, to be utilized in the performance of a grant, agreement, contract, subgrant, or
subcontract. Where a location or site of operation contains or includes more than one building, plant, installation,
or structure, the entire location shall be deemed to be a facility except where the Director, Office of Federal
Activities, Environmental Protection Agency, determines that independent facilities are co -located in one
geographical area.
Grantor Agrees That It
A. Will make available to Grantee for the purpose of this Agreement not to exceed
$ 1,200,000.00 which it will advance to Grantee to meet not to exceed 45.55 percent of the project
development costs of the project in accordance with the actual needs of Grantee as determined by Grantor.
B. Will assist Grantee, within available appropriations, with such technical assistance as Grantor deems
appropriate in planning the project and coordinating the plan with local official comprehensive plans for sewer
and water and with any State or area plans for the area in which the project is located.
C. At its sole discretion and at any time may give any consent, deferment, subordination, release,
satisfaction, or termination of any or all of Grantee's grant obligations, with or without valuable consideration,
upon such terms and conditions as Grantor may determine to be (1) advisable to further the purpose of the grant
or to protect Grantor's financial interest therein and (2) consistent with both the statutory purposes of the grant
and the limitations of the statutory authority under which it is made.
RUS Bulletin 1780-12
Page 7
Termination of This Agreement
This Agreement may be terminated for cause in the event of default on the part of the Grantee as
provided in paragraph I above or for convenience of the Grantor and Grantee prior to the date of completion of
the grant purpose. Termination for convenience will occur when both the Grantee and Grantor agree that the
continuation of the project will not produce beneficial results commensurate with the further expenditure of
funds.
In witness whereof Grantee on the date first above written has caused these presence to be executed by
its duly authorized
Pro Tem
attested and its corporate seal affixed by its duly authorized
Q0 w-rX OF"n
-AS ORgT�•,
(Title) Mayor Pro Tern
UNITED STATES OF AMERICA
RURAL UTILITIES SERVICE
By
Area Specialist
R2021-09 (Attach #4)
03-09-2021
RESOLUTIONS OF THE
CITY COUNCIL OF DUNN, NORTH CAROLINA
The undersigned hereby certifies that the following resolutions were adopted by the City
Council of Dunn, North Carolina (the "Council") in a meeting duly convened and with a quorum
present on March 9, 2021.
WHEREAS, Harnett Health System, Inc. ("HHS") and Cumberland County Hospital
System, Inc. d/b/a Cape Fear Valley Health System, a North Carolina nonprofit corporation
("CFVHS") entered into a Management Services Agreement dated November 3, 2014 ("MSA"),
pursuant to which CFVHS manages the Health System (as defined in the MSA). The MSA granted
CFVHS an option to implement a series of transactions that would culminate in CFVHS owning
100% of the operations of HHS;
WHEREAS, in consultation with HHS's and CFVHS's regulatory and legal advisors,
HHS and CFVHS determined that the structure of the transactions contemplated in the MSA could
impede the uninterrupted operation of the Health System and its delivery of health care services to
the people of Harnett County. As a result, HHS and CFVHS entered into a Memorandum of
Understanding, dated January 25, 2021, setting forth a proposed transaction, in lieu of the
transaction contemplated by the MSA, whereby (i) HHS would amend and restate its Articles of
Incorporation to permit HHS to have members, in substantially the form attached hereto as
Exhibit A (the "Amended Articles"), (ii) CFVHS would be substituted as the sole member of HHS
pursuant to a Member Substitution Agreement (such member substitution and related transactions,
the "Member Substitution Transaction"), and (iii) HHS would amend and restate its Bylaws, in
substantially the form attached hereto as Exhibit B (the "Amended Bylaws"), to set forth, among
other things, certain governance provisions, including the right of CFVHS to appoint the members
of the board of trustees of HHS (the "HHS Board");
WHEREAS, the City of Dunn, North Carolina ("City") and Harnett County, North
Carolina ("Count ") each have an interest in the structure of the HHS Board and an interest in the
operations of HHS;
WHEREAS, the Member Substitution Transaction provides, among other things, that
HHS shall continue to comply with, and CFVHS shall cause HHS to continue to comply with,
HHS's obligations under that certain Declaration of Covenants, Restrictions and Conditions -
Second Restated and Amended, dated April 29, 2011 (the "Declaration"), and includes an
aclmowledgment by HHS and CFVHS that the City reserved a right of termination of all right,
title, estate and interest of the owner in the property subject to the Declaration, together with a
right of reentry if at any time the owner of the property fails substantially to perform any one or
more of the covenants and conditions imposed by the Declaration, and fails to cure such default
within one year after receipt of notice thereof by City;
WHEREAS, the Amended Articles and Amended Bylaws provide that the County will no
longer enjoy the right to appoint members of the HHS Board, and instead CFVHS will appoint the
members of the HHS Board;
0205 02.313 -27,18 85 1 v3 1
309257470.5
WHEREAS, as a result of the amendments included in the Amended Bylaws and
Amended Articles, the Coimty will no longer have voting or approval rights in respect of HHS;
WHEREAS, the County and the City entered into that certain Memorandurn of
Understanding, dated August 10, 2005, among the County, the City, HHS (formerly Betsy Johnson
Health Care Systems, Incorporated), Betsy Johnson Hospital Authority, and WakeMed (the "2005
MOU");
WHEREAS, HHS desires to terminate the 2005 MOU, and termination of the 2005 MOU
is a condition to the closing of the Member Substitution Transaction;
WHEREAS, the adoption by the County of resolutions similar to the Resolutions set forth
herein is a condition of the effectiveness of the Resolutions set forth herein;
WHEREAS, the Amended Articles will be filed with the North Carolina Secretary of State
following approval by the City and the County and simultaneously with the closing of the Member
Substitution Transaction;
WHEREAS, the terms of the Amended Articles and the Amended Bylaws are deemed by
the Council to be in the best interest of the City; and
WHEREAS, termination of the 2005 MOU is deemed by the Council to be in the best
interest of the City, and the 2005 MOU is hereby terminated.
NOW, THEREFORE, BE IT RESOLVED, the Council hereby authorizes, approves and
consents to the Amended Articles and the Amended Bylaws, and the filing of Amended Articles
with the North Carolina Secretary of State, and CFVHS being named as the sole member of HHS
pursuant to the Amended Articles.
RESOLVED FURTHER, the Council hereby authorizes, approves and consents to the
termination of the 2005 MOU.
RESOLVED FURTHER, that either one of the Mayor of the City or the City Manager
be, and hereby is, authorized and empowered, for and on behalf of the City, to execute and
deliver all such additional documents and to take all such additional actions as either one
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 or the taking of such actions; and
either one of the Mayor of the City or the City Manager be, and hereby is, authorized and
directed to execute on behalf of the City, 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 City by the City Clerk.
020502.313-27488510
309257470.5
The undersigned hereby certifies the foregoing to be a true, correct and complete copy of the
Resolutions adopted by the City Council on March 9, 2021.
Tbis,the9 day of March, 2021.
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[Signature Page to Resolutions of City Council of Dunn, North Carolina]
309257470.5
Exhibit A
Amended Articles
020502,313-2748851V3 Exhibit A-1
309257470.5
Exhibit B
Amended Bylaws
020502.313-274885(v3 Exhibit B-1
309257470.5
State of North Carolina
Department of the Secretary of State
ARTICLES OF RESTATEMENT
OF
HARNETT HEALTH SYSTEM, INC.
Pursuant to Section 55A-10-06 of the General Statutes of North Carolina, the undersigned
Harnett Health System, Inc., a North Carolina nonprofit corporation (the "Corporation'), hereby
submits the following for the purposes of amending and restating its Articles of Incorporation in
their entirety.
The name of the Corporation is Harnett Health System, Inc.
2. The text of the Restated Articles of Incorporation of the Corporation is set forth in
its entirety on Exhibit A attached hereto. Such Restated Articles of Incorporation supersede and
replace the prior Articles of Incorporation of the Corporation, as amended, in their entirety.
3. The Restated Articles of Incorporation were adopted by the Board of Trustees of
the Corporation.
4. The Corporation does not have members. Accordingly, amendments contained in
the Restated Articles of Incorporation do not require member approval.
5. The Restated Articles of Incorporation will be effective upon filing.
This the day of , 2021.
Harnett Health System, Inc.
By:_
Name:
Title:
309215137.2
020502.313-2746290v3
Exhibit A
RESTATED ARTICLES OF INCORPORATION
OF
HARNETT HEALTH SYSTEM, INC.
Harnett Health System, Inc., a North Carolina nonprofit corporation (the "Corporation")
hereby submits these restated Articles of Incorporation as authorized by Section 55A-10-06 of the
General Statutes of North Carolina for the purpose of amending and restating its Articles of
Incorporation in their entirety.
The name of the Corporation is Harnett Health System, Inc.
2. 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, and to add and expand facilities and services so as to optimize access
to health care for the residents of the 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 operate one or more institutions as branches of a single hospital which
shall together be operated and maintained as a community general hospital, as such term is
defined in Section 131E-6 of the General Statutes of North Carolina, providing the same
or similar services as are provided by like community general hospitals in the State of
North Carolina;
e. To appoint a single medical staff operating under a single medical provider
number and which 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;
f. To act exclusively for religious, charitable, educational and scientific
proposes as set forth in Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended (the "Code") (or the corresponding provision of any future United States federal
tax code) and to provide care to all persons, without regard to ability to pay;
A-1
309215137.2
020502.313-2746290v3
g. 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 fall 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
h. 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.
3. 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 restated Articles of Incorporation, the purposes for which the Corporation
is organized are exclusively religious, charitable, educational and scientific within the meaning of
Section 501(c)(3) of the Code (or the corresponding provision of any future United States federal
tax code).
4. The Corporation shall have one member. The initial member of the Corporation is
Cumberland County Hospital System, Inc., a North Carolina non-profit corporation doing business
as Cape Fear Valley Health System.
5. The period of existence of the Corporation shall be unlimited.
6. 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.
7. 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 2 above and to
reimburse reasonable expenses properly incurred on behalf of the Corporation. No 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 restated
Articles of Incorporation, the Corporation shall not carry on any activities not permitted to be
carried on (a) by a corporation exempt from United States federal income tax under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended (or the corresponding provision of
A-2
309215137.2
020502.313-2746290v3
any future United States Internal Revenue Law) or (b) by a nonprofit corporation formed under
Chapter 55A of the General Statutes of North Carolina.
8. 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 exclusively for the purposes of the Corporation, or to such organization or
organizations organized and operated exclusively for charitable, educational, religious or scientific
purposes as shall at the time qualify as an exempt organization or organizations under Section
501(c)(3) of the Code (or the corresponding provision of any future United States federal tax code),
or shall be distributed to the federal government, or to a state or local government for a public
purpose. Any such assets not so disposed of shall be disposed of by a court of competent
jurisdiction of the county in which the principal office of the Corporation is then located,
exclusively for such purposes or to such organization or organizations, as said court shall
determine, which are organized and operated exclusively for such purposes. Notwithstanding the
foregoing, in accordance with the terms of the Second Amended and Restated Declaration of
Covenants, Restrictions and Conditions, dated April 29, 2011, among the City of Dunn, North
Carolina, allorth Carolina municipal corporation, the Corporation and the Betsy Johnson Hospital
Authority (the "Declaration"), the Corporation shall not dissolve or otherwise discontinue its
operations covered by the Declaration without a successor tax-exempt entity to carry out the terms
and conditions of the Declaration.
9. The address of the registered office of the Corporation in the State of North
Carolina is 800 Tilghman Drive, Dunn, Harnett County, North Carolina 28334 and the name of its
registered agent is Benjamin N. Thompson.
10. The street and mailing address of the principal office of the Corporation in the State
of North Carolina is 800 Tilghman Drive, Dumi, Harnett County, North Carolina 28334.
11. 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 either
such Act 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 restated 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.
A-3
309215137.2
020502,313-27462900
HARNETT HEALTH SYSTEM, INC.
800 Tilghman Drive
Dunn, North Carolina 28334
FOURTH AMENDED AND RESTATED BYLAWS
Approved:
Amended:
Amended:
Amended:
Approved:
Approved:
Revised:
Amended:
Amended:
Amended:
Amended:
Amended:
Amended:
Amended and
Restated:
Amended and
Restated:
Amended and
Restated:
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
May 5, 2011
April 10, 2012
October 30, 2014
, 2021
020502.313-2745674v2
309214958.5
HARNETT HEALTH SYSTEM, INC.
800 Tilghman Drive
Dunn, North Carolina
FOURTH AMENDED AND RESTATED BYLAWS
PREAMBLE
Harnett Health System, Inc. (the "Corporation') is allorth Carolina nonprofit corporation
organized and existing under the North Carolina Nonprofit Corporation Act. The Corporation
operates a licensed and certified multi -campus hospital, consisting of Betsy Johnson Hospital,
which is located at 800 Tilgham Drive in Dunn, North Carolina and is the main campus, and
Central Harnett Hospital, located at 215 Brightwater Drive in Lillington, North Carolina, which is
a remote location, and other on -campus and off -campus hospital outpatient departments
(collectively, the "Hos ital"). 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.
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:
ADOPTION DATE means 1 1, 2021, the date the Fourth Amended and Restated
Bylaws were approved and became effective.
2. BETSY JOHNSON means Betsy Johnson Hospital, located in Dunn, Harnett County,
North Carolina, and the main campus of the multi -campus hospital operated by the
Corporation.
3. BOARD OF TRUSTEES or BOARD means the governing body of the Corporation.
4. CFVHS means Cumberland County Hospital System, Inc. d/b/a Cape Fear Valley Health
System.
5. CHH means Central Harnett Hospital, a remote location of Betsy Johnston Hospital which
provides inpatient and outpatient services and is located in Lillington, Harnett County,
North Carolina.
CORPORATION means Harnett Health System, Inc.
EXECUTIVE COMMITTEE means the Executive Committee of the Board of Trustees.
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.
020502.313-2745674v2
309214958.5
9. HOSPITAL means, collectively, Betsy Johnson and CHH, and on -campus and off campus
hospital outpatient departments thereof.
10. MEDICAL REVIEW COMMITTEE means a committee created by the Medical Staff, by
the Board, or a committee operating under the Hospital's Performance Improvement Plans,
that is formed for the purpose of evaluating the quality, cost of, or necessity for
hospitalization or health care, including Medical Staff credentialing.
11. MEDICAL STAFF means the formal organization of all licensed physicians and dentists
who are privileged to admit or attend patients in the Hospital.
12. PRESIDENT means the President and CEO of the Corporation.
13. TRUSTEE or TRUSTEES means one or more members of the Board of Trustees.
ARTICLE 1.
BOARD OF TRUSTEES
1.1 POWERS AND RESPONSIBILITIES
1.1-1 Subject to the provisions hereof and the Reserved Powers (as defined below), 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.
1.1-2 Notwithstanding Section 1.1-1, CFVHS, as the sole member of the Corporation, in
addition to all rights and powers accorded to it by law, shall have concomitant
reserved powers over the Corporation attached and incorporated by this reference
as Exhibit A, unless such powers are specifically delegated by CFVHS to the
Corporation (the "Reserved Powers").
11-3 The Board of Trustees shall appoint one of its Trustees as a voting member of the
CFVHS Board of Trustees (the "CFVHS Board"); provided, that such right of
appointment will terminate upon a change of control or ownership of CFVHS.
1.2 GENERAL PROVISIONS REGARDING THE BOARD OF TRUSTEES.
1.2-1 Number and Qualifications.
The Board of Trustees will be comprised of no more than thirteen (13) Trustees, each of
whom must be at least twenty-one (21) years of age. As of the Adoption Date, the Board
of Trustees consists of thirteen (13) Trustees. 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.
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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.
CFVHS, as the sole member of the Corporation, shall appoint the members of the Board
of Trustees.
1.2-3 Residenev Reuirements,
The Board of Trustees shall include at all times at least seven (7) Trustees who are residents
of Harnett County.
1.2-4 Appointment Process.
The CFVHS Board shall determine nominees to appoint to fill the seat of any Trustee
whose term will expire at the upcoming annual meeting. The CFVHS Board shall provide
written notice of the selection of such Trustee to the Board of Trustees on or before the
date of the annual meeting of the Board of Trustees. Such nominee must meet the eligibility
requirements in Section 1.2-1.
1.2-5 Classified Board of Trustees.
The Board shall be and is divided into three classes, Class I, Class II, and Class III, which
will be as nearly equal in number as possible. In case of any decrease, from time to time,
in the number of Trustees, the number of Trustees in each class shall be apportioned as
nearly equal as possible. No decrease in the number of Trustees shall shorten the term of
any incumbent Trustee.
1.2-6 Initial Board of Trustees.
Notwithstanding the foregoing provisions of Section 1.2-2, the initial slate of Trustees (the
"Initial Board of Trustees") as of the Adoption Date shall be as set forth in that certain
Member Substitution Agreement by and between the Corporation and CFVHS, dated
Lam, 2021 (the "Member Substitution Agreement"). The names, classes, and terms of
the Initial Board of Trustees are set forth below.
Name Class Term
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1.2-7 Terms of Office; Term Limits.
(a) Terms of Office. Each Trustee shall serve three (3)-year terms, ending on the date
of the third annual meeting of the Board of Trustees following the annual meeting
of the Board of Trustees at which such Trustee was elected, except that each
Trustee initially appointed to Class I as of the Adoption Date shall serve for an
initial term expiring at the first annual meeting of the Board of Trustees following
December 31, 2021; each Trustee initially appointed to Class II as of the Adoption
Date shall serve for an initial term expiring at the second annual meeting of the
Board of Trustees following December 31, 2021; and each Trustee initially
appointed to Class III as of the Adoption Date shall serve for an initial term expiring
at the third annual meeting of the Board of Trustees following December 31, 2021.
Each Trustee shall serve until the election and qualification of a successor or until
such Trustee's earlier resignation, death, or removal from office. Upon the
expiration of the term of office for each class of Trustees, the Trustees of such class
will be elected for a term of three years, to serve until the election and qualification
of their successors or until their earlier resignation, death, or removal from office.
Excepting Trustees who have been appointed to fill a vacancy at a date other than
the date of the annual meeting of the Board of Trustees and the Trustees appointed
to Class I, Class II, and Class III as of the Adoption Date, 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.
(b) Term Limits. No Trustee shall serve more than two (2) consecutive three (3)-year
terms, except that a Trustee appointed to fill an unexpired term shall serve the
balance of the unexpired term and, at the conclusion of the unexpired term, shall be
eligible to serve two (2) consecutive three (3)-year terms. 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.
1.2-8 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 Trustee 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 or upon determination of CFVHS.
1.2-9 Vacancies.
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All vacancies in the Board of Trustees, caused by whatever reason, shall be filled by
CFVHS in the same mariner as herein provided for nomination and appointment of
Trustees; provided, that such nomination and appointment may occur at any meeting of the
Board of Trustees.
1.2-10 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.
1.2-11 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. Expenses incurred by each Trustee in connection with
such continuing education shall be reimbursable pursuant to Section 1.4.
1.2-12 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.
1.2-13 Amendments.
Notwithstanding any other provision set forth herein, no amendment to these Bylaws may
be made that amends the Board structure in any way that removes CFVHS's right to
appoint or remove Trustees to the Board or otherwise dilutes CFVHS's governance rights,
including the Reserved Powers, without the prior written consent of CFVHS.
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.
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Regular meetings (which shall include the annual meeting) of the Board of Trustees shall
be held not less than six (6) 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 given at least nine (9) days in advance of the date
of the meeting, delivered personally or by any usual means of communication, including,
but not limited to, mail, telex, facsimile, telephone, electronic mail or other form of
electronic communication. 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.
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 at least five (5) days prior to the date of such special
meetings, delivered in any format as provided in Section 1.3-3 above.
1.3-5 Quotam.
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 and subject to the Reserved Powers,
the act of a majority of the Trustees at a meeting at which a quorum is present 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 or her contrary vote is recorded or his or her dissent is otherwise entered
in the minutes of the meeting or unless he or she files his or her 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
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communications device that 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.
1.3-8 Action Without Meeting.
Action required or permitted to be taken at a meeting of the Board of Trustees may be taken
without a meeting if all members of the Board approve the action. The action must be
evidenced by one or more written consents signed by each Trustee before or after such
action, describing the action taken, and included in the minutes or filed with the corporate
records. The consent of any Trustee pursuant hereto may be in writing or in electronic form
and may be delivered to the corporation by hand, certified or registered mail, return receipt
requested, regular mail, nationally recognized courier or delivery service or, if in electronic
form, by electronic mail or other electronic means. Such action will become effective when
the last Trustee signs the consent, unless the consent specifies a different date.
1.4 COMPENSATION
Trustees shall serve without compensation, provided that Trustees may be reimbursed for
expenses incurred on behalf of the Corporation.
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 Chief
Financial Officer, a Secretary, a Treasurer and such Vice Presidents, and other officers as
the Corporation may authorize. CFVHS, as the sole member of the Corporation, shall
appoint the President and Chief Financial Officer. All other officers shall be elected by the
Board of Trustees.
2.2 TERMS OF OFFICE
Each of the Chair, the Vice Chair, the Secretary and the Treasurer shall hold office for a
period of one (1) year and until his or her successor has been duly elected and qualified.
Notwithstanding the foregoing, each of the Board officers appointed as of the date of the
Adoption Date shall serve for the period beginning on the Adoption Date and each of their
one (1) year terms shall be deemed to have commenced on the date of the first annual
meeting of the Board of Trustees following the Adoption Date and shall expire on the
following annual meeting of the Board of Trustees. Each of the President, Chief Financial
Officer, and each Vice President, and each other officer of the Corporation shall be an
employee of the Corporation or of CFVHS, and shall hold office until his or her death,
resignation, removal or the termination of his or her employment.
2.3 RESIGNATION AND REMOVAL
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The Chair, Vice Chair, President and Chief Financial Officer may resign at any time by
giving written notice to the Chair or to the Secretary. Other officers of the Corporation may
resign at any time by giving written notice to the President or Chief Financial Officer. Such
resignation shall take effect on the date of receipt or at any later time specified in said
notice. Any elected or appointed officer other than the President or Chief Financial 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. CFVHS, as the sole
member of the Corporation, may remove the President and Chief Financial Officer.
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 or her 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.
2.6 PRESIDENT
The President is the chief executive officer of the Corporation and, subject to the control
of the Board and CFVHS, 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 offrcio, 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 Board.
2.7 CHIEF FINANCIAL OFFICER
The Chief Financial Officer 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 Chief Financial Officer 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. In the absence of the President or in the event of the death, or
inability to act, of the President, the Chief Financial Officer shall perform the duties of the
President.
2.8 SECRETARY
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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 or she 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 or she 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 TREASURER
The Treasurer shall advise the Board respecting the Corporation's financial condition, shall
provide periodic reports to the Board on the financial condition 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 Board. The Treasurer shall serve as the Chair of the Finance
Committee of the Board.
2.10 VICE PRESIDENTS
In the absence of the President and the Chief Financial Officer or in the event of the death,
or inability to act, of the President and the Chief Financial Officer, 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.
ARTICLE IIl.
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. The provisions in these Bylaws that govern meetings, action without
meetings, notice and quorum and voting requirements of the Board of Trustees apply to
committees established by the Board.
3.1-2 Functions.
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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. 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 Resignation 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.
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 notice delivered personally
or by any usual means of communication, including, but not limited to, mail, telex,
facsimile, telephone, electronic mail or other form of electronic communication 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
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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 six (6) times each
calendar year. The Executive Committee shall have power to transact all regular business
of the 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:
(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
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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
not less often than six (6) times each calendar year. 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. 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.
3.2-4 Medical Care Review Committee.
The membership of the Medical Care Review Cormnittee shall be established pursuant to
the provisions of the Hospital's Performance Improvement Plans, 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 Medical Care Review Committee shall meet not less often than six (6)
times each calendar year.
The functions of the Medical Care Review Committee are (i) to review the Hospital's
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
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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 Medical Staff Bylaws, Rules and Regulations. These Medical Staff
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.
(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 or her 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
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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.
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, Rules and Regulations.
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, the Medical Care
Review Committee, the Medical Staff, and other professionals providing patient care
services (including, when appropriate, the nursing staff), has required administration and
the Medical Staff to perform specific review and evaluation activities to measure, assess,
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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, Rules and Regulations, 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 or her job.
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, or employee of the Corporation, or any 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.
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020502.313-2745674v2
309214958.5
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. §55A-8-31.
6.1-4 Person With Conflict of Interest Shall Not Participate.
The person with the potential conflict of interest shall not be present during or participate
in the discussions or deliberations, or vote on, or use personal influence with respect to, the
determination of whether a conflict of interest exists or, if a conflict of 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 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
17
020502.313-2745674v2
309214958.5
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 applicable Board resolution, these Bylaws or any
agreement, vote of the Board or the Executive Committee, insurance purchased by the
Corporation, North Carolina General Statutes or otherwise.
6.3 OTHER ORGANIZATIONS
The Board previously authorized and approved the formation of the Betsy Johnson
Hospital Auxiliary and the Harnett Health System 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.
6.4 CORPORATE SEAL
The 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 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.
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020502.313-2745674v2
309214968.5
ARTICLE VII.
AMENDMENT TO BYLAWS AND ARTICLES OF INCORPORATION
Subject to such approval as may be required in the Articles of Incorporation of the Corporation,
and these Bylaws (including Exhibit A), and pursuant to applicable law, including the North
Carolina Nonprofit Corporation Act, as amended (including approval by CFVHS and by any
person or persons other than the Board of Trustees), 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 at a meeting at which a quorum is
present to consider such amendment, upon five (5) days' prior notice of the meeting, delivered
personally or by any usual means of communication, including, but not limited to, mail, telex,
facsimile, telephone, electronic mail or other form of electronic communication, 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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020502.313-2945694v2
309214958.5
CERTIFICATION
The undersigned, being the Secretary of Harnett Health System, Inc. (the "Corporation"), hereby
certifies that the foregoing document, consisting of twenty (20) pages (including this page), is a true,
correct and complete copy of the Fourth Amended and Restated Bylaws of the Corporation, which
were initially adopted by the Board of Trustees of the Corporation in February 1983, and were last
amended and restated in their entirety by the Board of Trustees of the Corporation effective on
1 12021.
This the day of 2021.
(SEAL)
309214958.5
Secretary
EXHIBIT A
RESERVED POWERS
CFVHS, as the sole member of the Corporation, shall have the following reserved powers:
(i) Appoint (including to fill a vacancy) and remove, with or without cause, members of the
Board, subject to the number and composition requirements set forth in Article I, Section
1.2;
(ii) Appoint (including to fill a vacancy) and remove, with or without cause, the Chair and Vice
Chair of the Board and the President of the Corporation;
(iii) Approve and/or require the adoption of amendments to the Articles of Incorporation or
Bylaws of the Corporation or any subsidiary or affiliate of the Corporation;
(iv) Approve and/or require the establishment, acquisition, divestiture, dissolution, closure,
merger, consolidation, change in corporate membership, joint venture, partnership,
affiliation or corporate reorganization of the Corporation or any subsidiary or affiliate of
the Corporation;
(v) Approve and adopt the strategic plan and any amendments thereto, including any individual
initiatives or arrangements, such as a new service or contractual arrangement deemed by
the CFVHS to be of strategic importance for the Corporation and any subsidiary or affiliate
of the Corporation;
(vi) Approve and/or require the incurrence of any debt, including the issuance of any bonds,
proposed by the Corporation or any subsidiary or affiliate of the Corporation in excess of
(vii) Approve and/or require the approval of contracts or loans obligating the Corporation to
expend or repay an amount in excess of $
(viii) Approve and/or require the sale, lease, exchange, mortgage, pledge, transfer, encumbrance
or other disposition of property and assets of the Corporation in excess of $ !I;
(ix) Approve and adopt the capital budget, operating budget, financial plans and any
amendments thereto for the Corporation and any subsidiary or affiliate of the Corporation;
(x) Approve and/or require the adoption of a managed care policy for the Corporation and any
subsidiary or affiliate of the Corporation, including network participation, participation in
any managed care agreement and participation in any other health care service
arrangements;
309214958.5
(xi) Appoint and remove auditors, attorneys and other professional advisors for the
Corporation and any subsidiary or affiliate of the Corporation;
(xii) Develop, approve and/or require the adoption of medical staff quality assurance
standards, utilization review standards, criteria, policies and procedures for the
Corporation and any subsidiary or affiliate of the Corporation;
(xiii) Approve and/or require the adoption of any action to change the Corporation from a
general, acute care community hospital or to close service lines or the Corporation's
current locations; and
(xiv) Approve each annual list of proposed donors and amounts of donations or grants not
included in the annual budget, and make proposals to deviate therefrom throughout each
year in excess of $
309214958.5
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