2011-10-13T16:04:08-05:00 2010-12-31 DELOITTE TAX LLP 201 E KENNEDY BLVD SUITE 1200 TAMPA FL 33602 990 2010-01-01 592317607 SANTAFE HEALTHCARE INC SANT 3523728400 POBOX 749 GAINESVILLE FL 326270749 RANDALL L STUART 3523378730 2011-10-11 1 STEVEN E ROVNER 8132738300 2010 2016-03-07 17:11:31Z X MICHAEL P GALLAGHER POBOX 749 GAINESVILLE FL 326270749 16084457 0 X WWW.SANTAFEHEALTHCAREFL.ORG X 1982 FL TO IMPROVE THE HEALTH AND WELL-BEING OF PEOPLE IN THE COMMUNITIES WE SERVE. 12 11 7 0 0 0 19500000 4300000 4093127 4518575 143084 36103 6533730 3917936 30269941 12772614 19675842 12574861 0 0 8213283 9904783 0 0 0 3049522 1847733 30938647 24327377 -668706 -11554763 78019081 61373360 39364764 23065842 38654317 38307518 X THE MISSION OF SANTAFE HEALTHCARE, INC. IS TO SERVE AS THE NOT-FOR-PROFIT SYSTEM PARENT FOR ITS FAMILY OF NOT-FOR-PROFIT, MISSION-DRIVEN AFFILIATE ORGANIZATIONS. SEE SCHEDULE O FOR CONTINUATION OF THE ORGANIZATION'S MISSION.(CONTINUED FROM PAGE 2, PART III) SANTAFE HEALTHCARE DELIVERS ITS MISSION BY PROVIDING FINANCIAL MANAGEMENT AND OVERSIGHT, AND STRATEGIC MANAGEMENT AND EXPERTISE TO ITS AFFILIATES, WHILE PROMOTING THE EFFECTIVE PROVISION OF HEALTHCARE, HOSPICE AND PALLIATIVE CARE, AND SENIOR HOUSING AND RELATED SERVICES THROUGH ITS AFFILATES. THIS MISSION IS GOVERNED THROUGH A LOCAL, COMMUNITY-BASED BOARD WHICH PROVIDES STRATEGIC DIRECTION AND VALUES-BASED OVERSIGHT AND SUPPORT. 0 0 14084484 12574861 4518575 SANTAFE HEALTHCARE PROVIDED GOVERNANCE AND OVERSIGHT TO THE FOLLOWING AFFILIATED CHARITABLE, TAX-EXEMPT AND NOT-FOR-PROFIT ORGANIZATIONS: NORTH CENTRAL FLORIDA HOSPICE, INC.; SANTAFE SENIOR LIVING, INC.; NORTH FLORIDA RETIREMENT VILLAGE, INC.; BVG ACQUISITION, INC.; BONITA SPRINGS RETIREMENT VILLAGE, INC.; EAST RIDGE RETIREMENT VILLAGE, INC.; SANTAFE SENIOR LIVING FOUNDATION, INC.; AVMED, INC.; AND SF HOLDING CORP., INC. TOTAL PROGRAM SERVICES EXPENSES FOR THESE AFFILIATED ORGANIZATIONS REPRESENTED APPROXIMATELY $1.3 BILLION IN 2010. 14084484 1 1 0 0 0 0 0 0 0 1 0 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 60 0 1 7 1 0 0 0 0 0 0 0 0 0 0 0 X 12 11 0 0 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X RANDALL L STUART SR VP & CFO 3523378730 4300 NW 89TH BLVD GAINESVILLE FL 326065688 X SCOTTIE J BUTLER 4.00 X X 66800 0 0 JOE G DUNLAP 1.00 X X 16600 52300 0 ALBERT E DOTSON PHD 1.00 X X 40800 0 0 BEN I DOERR JR 1.00 X 39400 0 0 RICHARD M ANDERSON MD 1.00 X 37800 0 0 GEORGE E FLETCHER 1.00 X 38100 0 0 M T MUSTIAN 1.00 X 35500 0 0 THOMAS A NATIELLO PHD 1.00 X 36800 0 0 JACKSON N SASSER PHD 1.00 X 38700 0 0 JAMES L STRINGFELLOW SR 1.00 X 40500 0 0 GLENDA E HOOD 1.00 X 38000 0 0 MICHAEL P GALLAGHER 6.00 X X 2382570 0 245651 STEPHEN J DEMONTMOLLIN 2.00 X 0 574723 63105 RANDALL L STUART 3.00 X 546816 0 127608 TROY R HART 0.40 X 361015 0 76044 TIMOTHY J BOWEN 0.40 X 347858 0 75804 KENNIE M STILL 4.00 X 0 504220 50474 DOUGLAS G CUENY 0.00 X 0 175155 0 CATHERINE E AYERS 10.00 X 0 576433 131218 4067259 1882831 769904 6 1 1 0 AVMED INC PO BOX 749 GAINESVILLE FL 326270749 MANAGEMENT & INSURANCE 886729 DELOITTE & TOUCHE LLP 4152 COLLECTION CENTER DR CHICAGO IL 60693 AUDIT SERVICES 500934 HEWITT ASSOCIATES LLC 100 HALF DAY RD LINCOLNSHIRE IL 60069 CONSULTING 126583 3 4300000 4300000 MANAGEMENT FEES 561000 4518575 4518575 4518575 30667 30667 3317279 3311843 5436 5436 5436 PENSION CONTRIBUTION R 900099 3541332 3541332 REBATE 900099 376604 376604 3917936 12772614 4518575 0 3954039 12574861 12574861 3343454 3343454 1096163 487863 608300 5313510 27463 5286047 58101 25544 32557 93555 26617 66938 858964 858964 125328 125328 47633 47633 48350 48350 472000 65646 406354 56526 56526 40972 40972 98320 98320 27794 27794 39567 39567 COMMUNITY SPONSORSHIPS 16326 16326 0 DUES AND FEES 14753 14753 CONTRIBUTIONS 1200 1200 24327377 14084484 10242893 0 608190 734275 38560837 18198968 17000 17000 738448 738448 738448 268245 46058 15342130 15342130 22484231 26296481 78019081 61373360 1209191 1599920 38155573 21465922 39364764 23065842 X 38654317 38307518 38654317 38307518 78019081 61373360 X -11554763 11207964 X X 0 1 1 X 0 X X X 0 0 0 NORTH CENTRAL FLORIDA HOSPICE 592490893 9 1 1 0 NORTH FLORIDA RETIREMENT VILLAGE 591912330 9 1 1 0 SANTAFE SENIOR LIVING FOUNDATION INC 264464727 7 0 1 0 BVG ACQUISITION INC 203701186 9 0 1 12574861 EAST RIDGE RETIREMENT VILLAGE INC 590903331 9 0 1 0 BONITA SPRINGS RETIREMENT VILLAGE INC 262386152 9 0 1 0 6 12574861 SCHEDULE A, PART IV, SUPPLEMENTAL INFORMATION: SANTAFE HEALTHCARE, INC. (SFHC) IS A TYPE II SUPPORTING ORGANIZATION THAT IS UNDER THE COMMON CONTROL OF ITS SUPPORTED ORGANIZATIONS, WHICH IT IDENTIFIES BY CLASS OR PURPOSE IN ITS ARTICLES OF INCORPORATION IN ACCORDANCE WITH TREASURY REGULATION SECTION 1.509(A)4(D)(2)(B). SCHEDULE A, PART IV, SUPPLEMENTAL INFORMATION: DURING 2010, SFHC PROVIDED $12,574,861 SUPPORT FOR THE BENEFIT OF BVG ACQUISITION, INC. (BVG). THE SUPPORT WAS CONTRIBUTED AS A GRANT FROM SFHC TO SANTAFE SENIOR LIVING, INC. (SFSL), THE PARENT ENTITY OF BVG. SFSL IS NOT A SUPPORTED ORGANIZATION OF SFHC AND THEREFORE IS NOT LISTED ON SCHEDULE A, PART I, LINE 11H. THUS, THE SUPPORT IS REPORTED AS PROVIDED TO BVG. RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 738448 738448 738448 DUE FROM AFFILIATES 23810605 OTHER ASSETS 1264299 ACCRUED INTEREST RECEIVABLE 207 DEFERRED COMPENSATION ASSETS 1221370 26296481 ACCRUED PENSION LIABILITY 19251987 OTHER LIABILITIES 220603 BENEFITS PAYABLE 1993332 21465922 12772614 24327377 -11554763 -4743 11212707 11207964 -346799 4931282 0 4931282 7841332 7841332 12772614 8211184 0 8211184 16116193 16116193 24327377 DESCRIPTION OF UNCERTAIN TAX POSITIONS UNDER FIN 48: PART X: EXPLANATION FOR UNCERTAIN TAX POSITIONS UNDER FIN 48: SFHC AND THE AFFILIATES HAVE NO UNCERTAIN TAX POSITIONS AS OF DECEMBER 31, 2010. SFHC AND AFFILIATES INCURRED NO INTEREST EXPENSE OR PENALTIES RELATED TO UNCERTAIN INCOME TAX PROVISIONS IN 2010 OR 2009. TAX YEARS 2007 THROUGH 2010 ARE SUBJECT TO EXAMINATION BY FEDERAL AND STATE TAXING AUTHORITIES. THERE ARE NO INCOME TAX EXAMINATIONS IN PROCESS AS OF THE DATE OF THIS REPORT. PART XI, LINE 8 - OTHER ADJUSTMENTS: CHANGE IN MINIMUM LIABILITY FOR QUALIFIED PENSION PLAN 11,212,707. PART XII, LINE 4B - OTHER ADJUSTMENTS: PENSION CONTRIBUTIONS FROM AFFILIATES CLASSIFIED AS REVENUE FOR TAX 3,541,332. DISTRIBUTION FROM AVMED, INC. 4,300,000. PART XIII, LINE 4B - OTHER ADJUSTMENTS: PENSION CONTRIBUTIONS FROM AFFILIATES CLASSIFIED AS REVENUE FOR TAX 3,541,332. DISTRIBUTION TO SANTAFE SENIOR LIVING, INC. 12,574,861. 1 SANTAFE SENIOR LIVING INC PO BOX 749 GAINESVILLE FL 326270749 203700526 501(C)(3) 12574861 TO ASSIST SANTAFE SENIOR LIVING, A SUPPORTED ORGANIZATION, FULFILL ITS CHARITABLE MISSION. 1 PROCEDURE FOR MONITORING GRANTS IN THE U.S.: PART I, LINE 2: SCHEDULE I, PART I, LINE 2: SANTAFE HEALTHCARE, INC. AND SANTAFE SENIOR LIVING, INC. SHARE COMMON MANAGEMENT. AS A RESULT, MANAGEMENT ENSURES THE USE OF GRANT FUNDS BY SANTAFE SENIOR LIVING IS CONSISTENT WITH THEIR INTENDED PURPOSE. X X X 1 1 X X X X X 1 1 0 0 0 0 0 0 0 MICHAEL P GALLAGHER 801182 0 697001 0 884387 0 223059 0 22592 0 2628221 0 132300 0 STEPHEN J DEMONTMOLLIN 0 300994 0 159291 0 114438 0 47125 0 15980 0 637828 0 0 RANDALL L STUART 341728 0 160964 0 44124 0 107796 0 19812 0 674424 0 19038 0 TROY R HART 262410 0 70974 0 27631 0 53885 0 22159 0 437059 0 11982 0 TIMOTHY J BOWEN 270321 0 48893 0 28644 0 56060 0 19744 0 423662 0 12488 0 KENNIE M STILL 0 134062 0 61689 0 308469 0 36160 0 14314 0 554694 0 0 DOUGLAS G CUENY 0 0 0 175155 0 0 0 0 0 0 0 175155 0 0 CATHERINE E AYERS 0 293770 0 163480 0 119183 0 103109 0 28109 0 707651 0 55810 PART I, LINE 1A DURING MOST OF 2010, THERE WAS NO COMMERCIAL AIRLINE SERVICE BETWEEN GAINESVILLE, FLORIDA AND MIAMI, FLORIDA, THE LOCATIONS OF THE TWO PRINCIPAL OFFICES OF SANTAFE HEALTHCARE, INC. CHARTER FLIGHTS ARE SCHEDULED AS NEEDED TO COINCIDE WITH BOARD OF DIRECTORS AND OTHER CRITICAL MEETINGS. OPEN SEATS ON SUCH FLIGHTS ARE AVAILABLE TO ANY EMPLOYEE NEEDING TO CONDUCT BUSINESS IN THE MIAMI OR GAINESVILLE OFFICE. CERTAIN DIRECTORS AND THEIR COMPANIONS ATTENDED COMPANY PAID INDUSTRY SEMINARS AND TRADE CONVENTIONS AT THE REQUEST OF SANTAFE HEALTHCARE, INC. ALL BUSINESS COSTS, INCLUDING TRAVEL COSTS, PAID DIRECTLY BY THE ORGANIZATION OR REIMBURSED TO THE LISTED PERSON, WERE ACCOUNTED FOR UNDER AN ACCOUNTABLE PLAN UTILIZED BY THE ORGANIZATION. NO PART OF ANY TRAVEL COST WAS DEEMED A BENEFIT FOR ANY PERSON LISTED IN FORM 990, PART VII. INCIDENTAL EXPENSES ARE NOT REIMBURSED BY THE ORGANIZATION. TAX GROSS-UP PAYMENTS OCCUR FOR GROUP VARIABLE LIFE INSURANCE PREMIUMS PAID ON BEHALF OF THE LISTED AND OTHER EMPLOYEES. EMPLOYER PAID PREMIUMS ARE DEEMED TO BE TAXABLE COMPENSATION AND ARE GROSSED-UP FOR THE TAX IMPACT PRIOR TO BEING ADDED AS IMPUTED INCOME TO AN EMPLOYEE'S YEAR-END FORM W-2. TAX GROSS-UP PAYMENTS ARE PROVIDED FOR VESTED DISTRIBUTIONS FROM THE DEFINED CONTRIBUTION AND (NOW FROZEN) DEFINED BENEFIT PENSION RESTORATION PLANS. PART I, LINES 4A-B LISTED PERSON RECEIVING A SEVERANCE PAYMENT OR CHANGE OF CONTROL PAYMENT IN THE YEAR: DOUGLAS G. CUENY RECEIVED $175,155 IN COMPENSATION PAYMENTS FROM AVMED, INC., A RELATED TAX-EXEMPT ORGANIZATION, DUE TO HIS RESIGNATION AND RETIREMENT FROM EMPLOYMENT IN ACCORDANCE WITH THE BOARD-APPROVED EMPLOYMENT AND RETENTION AGREEMENTS. SCHEDULE J PART I, LINE 4B: LISTED PERSONS PARTICIPATING IN A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN THE YEAR: SANTAFE HEALTHCARE, INC. (SANTAFE) MAINTAINS TWO ACTIVE NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS FOR A CERTAIN GROUP OF EXECUTIVES TO INCLUDE THOSE LISTED EMPLOYEES OF SANTAFE OR RELATED ORGANIZATIONS. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF THE INTERNAL REVENUE SERVICE CODE SECTION 401(A)(17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN). VESTING FOR THIS PLAN IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MR. GALLAGHER VESTED AND RECEIVED PAYMENTS FROM A FROZEN NONQUALIFIED DEFINED BENEFIT RESTORATION PLAN IN 2010. MR. GALLAGHER ALSO VESTED AND RECEIVED PAYMENTS FROM THE NONQUALIFIED DEFINED CONTRIBUTION RESTORATION AND THE SUPPLEMENTAL RETIREMENT PLANS IN 2010. THE TOTAL AMOUNT OF THESE PAYMENTS WAS $831,870. MR. HART VESTED AND RECEIVED $14,445 FROM THE SUPPLEMENTAL RETIREMENT PLAN IN 2010. MR. STUART VESTED AND RECEIVED $30,024 FROM THE SUPPLEMENTAL RETIREMENT PLAN IN 2010. MR. BOWEN VESTED AND RECEIVED $15,458 FROM THE SUPPLEMENTAL RETIREMENT PLAN IN 2010. STEPHEN J. DEMONTMOLLIN, KENNIE M. STILL, AND CATHERINE E. AYERS ARE EMPLOYEES OF AVMED, INC. (AVMED), A RELATED TAX-EXEMPT ORGANIZATION. THEY PARTICIPATE IN TWO NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS SPONSORED BY AVMED FOR A CERTAIN GROUP OF EXECUTIVES. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF THE INTERNAL REVENUE SERVICE CODE SECTION 401(A)(17) RECOGNIZABLE PAY LIMITS (DEFINED CONTRIBUTION RESTORATION PLAN). VESTING IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MS. AYERS RECEIVED $113,337 FROM THE DEFINED CONTRIBUTION RESTORATION AND SUPPLEMENTAL RETIREMENT INCOME PLANS IN 2010. MR. DEMONTMOLLIN RECEIVED $101,761 FROM THE DEFINED CONTRIBUTION RESTORATION AND SUPPLEMENTAL RETIREMENT INCOME PLANS IN 2010. MR. STILL VESTED AND RECEIVED $272,138 FROM THE DEFINED CONTRIBUTION RESTORATION AND FROZEN DEFINED BENEFIT RESTORATION PLANS IN 2010. SUPPLEMENTAL INFORMATION PART III SCHEDULE J, PART I, LINE 3: MICHAEL P. GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE HEALTHCARE, INC. (SANTAFE). MR. GALLAGHER IS COMPENSATED DIRECTLY BY SANTAFE. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: ANNUALLY, THE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE CONSULTING FIRM. THE CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE CEO'S FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 11 THE ORGANIZATION'S PROCESS FOR ENSURING THE ACCURATE PREPARATION, REVIEW AND APPROVAL OF THE 2010 FORM 990 BEGAN WITH PROFESSIONAL DEVELOPMENT OF STAFF (SEVERAL OF WHICH ARE CPAS) WHICH WERE INVOLVED IN THE PREPARATION OF THE 2010 FORM 990. IN ADDITION TO STAFF DEVELOPMENT, WHICH INCLUDED ATTENDING TAX SEMINARS AND CLASSES, MANAGEMENT ALSO CONSULTED WITH INDEPENDENT ACCOUNTING FIRMS AND TAX LEGAL COUNSEL REGARDING THE IRS FORM 990 CODE AND FILING REQUIREMENTS. THE ORGANIZATION ALSO PREVIOUSLY EDUCATED ITS MANAGEMENT TEAM, OFFICERS AND DIRECTORS, WITH THE ASSISTANCE OF DELOITTE TAX LLP, REGARDING THE FORM 990 AND THEIR INVOLVEMENT IN REVIEWING THE RETURN. FOLLOWING MANAGEMENT'S PREPARATION OF THE 2010 FORM 990, DELOITTE TAX LLP PERFORMED A DETAILED REVIEW OF THE 2010 FORM 990. A COPY OF THE 2010 FORM 990 AND ATTACHMENTS WERE PROVIDED TO THE ORGANIZATION'S CURRENT BOARD OF DIRECTORS FOR THEIR REVIEW AND COMMENT. EXECUTIVE MANAGEMENT ADDRESSED ANY QUESTIONS RAISED BY THE BOARD MEMBERS PRIOR TO FILING THE 2010 FORM 990 AND ATTACHMENTS WITH THE IRS. FORM 990, PART VI, SECTION B, LINE 12C SANTAFE HEALTHCARE HAS A POLICY FOR MONITORING AND ENFORCING COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY. THE POLICY DETAILS THAT THE CORPORATE SECRETARY HAS RESPONSIBILITY FOR DELIVERY AND RECEIPT OF DIRECTOR AND OFFICER CONFLICT OF INTEREST STATEMENTS. THE HUMAN RESOURCES DEPARTMENT OBTAINS AN ACKNOWLEDGMENT OF UNDERSTANDING OF THE CONFLICT OF INTEREST POLICY FROM EVERY NEW EMPLOYEE AT THE DATE OF HIRE AND FROM ALL EMPLOYEES ANNUALLY. ANNUAL CONFLICT OF INTEREST STATEMENTS ARE REVIEWED BY INTERNAL STAFF TO ENSURE RECORDS ARE COMPLETE. AS PART OF THE CORPORATE CONTRACT REVIEW PROCESS, CONSIDERATION IS GIVEN TO ANY POTENTIAL CONFLICTS OF INTEREST INVOLVING OPERATIONAL OR FINANCIAL TRANSACTIONS. ALL EMPLOYEES AND BOARD MEMBERS ARE EXPECTED TO NOTIFY THE CORPORATE COMPLIANCE OFFICER IF A POTENTIAL CONFLICT EXISTS. IF A CASE IS DISCOVERED OR REPORTED, THE CORPORATE COMPLIANCE OFFICER MAKES A REPORT TO THE LEGAL DEPARTMENT AND THE CHAIRMAN OF THE BOARD AS TO THE FACTS AND CIRCUMSTANCES SURROUNDING THE INCIDENT. MEMORANDUMS (OR MINUTES) ARE MADE OF EVERY FINAL DECISION, INCLUDING THE REASONS THEREFORE AND THE ACTION TAKEN, WHETHER THE QUESTION IS DETERMINED TO BE SUBSTANTIAL OR NOT; AND A COPY OF SUCH MEMORANDUM (OR MINUTES) IS FILED WITH THE CORPORATE SECRETARY FOR EXAMINATION BY THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 15 MICHAEL P. GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE HEALTHCARE, INC. (SANTAFE). MR. GALLAGHER IS DIRECTLY COMPENSATED BY SANTAFE. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: THE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE CONSULTING FIRM. THE CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 15B: PROCESS FOR DETERMINING COMPENSATION FOR ALL EMPLOYEE OFFICERS AND KEY EMPLOYEES FOR SANTAFE HEALTHCARE, INC. (SANTAFE) IS AS FOLLOWS: THE SANTAFE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF ALL EXECUTIVES'TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG-TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISONS TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. AFTER COMPLETION OF ITS REVIEW, THE FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE SANTAFE BOARD OF DIRECTORS. THE FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF TOTAL DIRECT COMPENSATION AND EXECUTIVE BENEFITS. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETINGS. THE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY CONSULTANT TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE BOARD OF DIRECTORS' (INCLUDING OFFICER POSITIONS) COMPENSATION EVERY TWO TO THREE YEARS. THE COMPETITIVENESS ANALYSIS INCLUDES COMPARISONS TO BOTH NOT-FOR-PROFIT AND PUBLIC COMPANY (EXCLUDING EQUITY COMPONENT) DATA FOR COMPANIES WITHIN THE SAME OR SIMILAR INDUSTRY. ANY COMPENSATION CHANGES ARE APPROVED BY THE BOARD OF DIRECTORS BASED ON THE MARKET COMPETITIVENESS STUDY. A MARKET COMPETITIVENESS STUDY WAS CONDUCTED IN NOVEMBER 2010 FOR CHANGES MADE EFFECTIVE JANUARY 1, 2011. FORM 990, PART VI, SECTION C, LINE 19 SANTAFE HEALTHCARE'S PROCEDURE FOR MAKING VARIOUS DOCUMENTS AVAILABLE TO THE PUBLIC: SANTAFE HEALTHCARE, INC. MAKES ITS GOVERNING DOCUMENTS AVAILABLE TO THE PUBLIC ON A CASE BY CASE BASIS IF REQUESTED DIRECTLY FROM THE ORGANIZATION. THE ARTICLES OF INCORPORATION CAN BE ACCESSED DIRECTLY THROUGH THE FLORIDA DEPARTMENT OF STATE, DIVISION OF CORPORATIONS WEBSITE AT WWW.SUNBIZ.ORG. THE CORPORATE CONFLICT OF INTEREST POLICY AND AUDITED COMBINED FINANCIAL STATEMENTS, WHICH INCLUDE SANTAFE HEALTHCARE, CAN BE OBTAINED DIRECTLY FROM THE ORGANIZATION UPON WRITTEN REQUEST. COMPENSATION PAID BY RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, LINE 1A: ONE OF SANTAFE HEALTHCARE, INC.'S (SANTAFE) OFFICERS, STEPHEN J. DEMONTMOLLIN, IS EMPLOYED BY AVMED, INC. (AVMED), A RELATED TAX-EXEMPT ORGANIZATION. MR. DEMONTMOLLIN'S COMPENSATION IS PAID DIRECTLY BY AVMED. NONE OF MR. DEMONTMOLLIN'S COMPENSATION IS CHARGED TO SANTAFE. ONE OF SANTAFE'S FORMER OFFICERS, KENNIE M. STILL, WAS EMPLOYED BY AVMED, A RELATED TAX-EXEMPT ORGANIZATION. MR. STILL'S COMPENSATION WAS PAID DIRECTLY BY AVMED. NONE OF MR. STILL'S COMPENSATION IS CHARGED TO SANTAFE. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 5: NET UNREALIZED LOSSES ON INVESTMENTS: -4,743. CHANGE IN MINIMUM LIABILITY FOR QUALIFIED PENSION PLAN 11,212,707. TOTAL TO FORM 990, PART XI, LINE 5: 11,207,964. AUDIT COMMITTEE OVERSIGHT OF THE FINANCIAL STATEMENT AUDIT: FORM 990, PART XII, LINE 2C: THERE HAS BEEN NO CHANGE FROM THE PRIOR YEAR TO THE PROCESS RELATED TO AUDIT OVERSIGHT AND SELECTION OF THE INDEPENDENT ACCOUNTANT FOR THE ORGANIZATION. AVERAGE HOURS PER WEEK DEVOTED TO RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, COLUMN B: MICHAEL P GALLAGHER DEVOTED AN AVERAGE OF 54 HOURS PER WEEK TO RELATED ORGANIZATIONS. STEPHEN J DEMONTMOLLIN DEVOTED AN AVERAGE OF 58 HOURS PER WEEK TO RELATED ORGANIZATIONS. RANDALL L STUART DEVOTED AN AVERAGE OF 67 HOURS PER WEEK TO RELATED ORGANIZATIONS. CATHERINE E AYERS DEVOTED AN AVERAGE OF 50 HOURS PER WEEK TO RELATED ORGANIZATIONS. KENNIE M STILL DEVOTED AN AVERAGE OF 46 HOURS PER WEEK TO RELATED ORGANIZATIONS. TROY R HART DEVOTED AN AVERAGE OF 50 HOURS PER WEEK TO RELATED ORGANIZATIONS. TIMOTHY J BOWEN DEVOTED AN AVERAGE OF 50 HOURS PER WEEK TO RELATED ORGANIZATIONS. JOE G DUNLAP DEVOTED AN AVERAGE OF 3 HOURS PER WEEK TO RELATED ORGANIZATIONS. FORM 990, PART VII, SECTION B, INDEPENDENT CONTRACTORS: COMPENSATION TO INDEPENDENT CONTRACTORS IN THIS SECTION INCLUDE BOTH PAYMENTS MADE BY SFHC FOR ITS SOLE BENEFIT AND ALSO PAYMENTS MADE FOR THE BENEFIT OF RELATED ENTITIES. AVMED INC PO BOX 749 GAINESVILLE FL 326270749 592742907 HEALTH CARE FL 501(C)(4) N/A N/A 0 NORTH FLORIDA RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 591912330 RETIREMENT COMMUNITY FL 501(C)(3) 9 N/A 0 NORTH CENTRAL FLORIDA HOSPICE INC PO BOX 749 GAINESVILLE FL 326270749 592490893 HOSPICE CARE FL 501(C)(3) 9 N/A 0 SANTAFE SENIOR LIVING INC PO BOX 749 GAINESVILLE FL 326270749 203700526 MANAGEMENT AND FINANCIAL SUPPORT FOR NOT-FOR-PROFIT AFFILIATES FL 501(C)(3) 11A TYPE I N/A 0 BVG ACQUISITION INC PO BOX 749 GAINESVILLE FL 326270749 203701186 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE SENIOR LIVING INC 0 EAST RIDGE RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 590903331 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE SENIOR LIVING INC 0 BONITA SPRINGS RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 262386152 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE SENIOR LIVING INC 0 SANTAFE SENIOR LIVING FOUNDATION INC PO BOX 749 GAINESVILLE FL 326270749 264464727 CHARITABLE & EDUCATIONAL PURPOSES FL 501(C)(3) 7 SANTAFE SENIOR LIVING INC 0 SF HOLDING CORPINC & SUBSIDIARY PO BOX 749 GAINESVILLE FL 326270749 592903901 HOLDING COMPANY FL N/A C 0 1 1 1 0 0 0 0 0 0 1 1 0 0 1 1 0 0 AVMED INC C 4300000 ACTUAL CASH CONTRIBUTED AVMED INC K 2432200 FMV OF SERVICES AVMED INC L 886729 FMV OF SERVICES AVMED INC O 114341 ACTUAL INVOICES AVMED INC P 419479 ACTUAL INVOICES