Prepared following text for auditors, KPMG Peat Marwick on Feb 5, 1998.

PAYMENT SCHEDULING PROCEDURE - 1998

When a request is received and logged into the database, payment needs and project time-frame is noted in the database for future reference should a grant be awarded. As a recommended proposal is placed on a board meeting agenda, various factors are considered and the payment year(s) is determined by the Program Administrator. This information is used for budgetary and cash flow purposes. After the grant is awarded, the specific payment schedule based on prior payment history and efforts to expand the Foundation's multiple installments program, is determined by the Program Administrator. The grantee is informed of the payment schedule via a letter of award, which encloses the grant contract. Three times per month, the Administrative Assistant produces a list of payments for an approaching payment date, with a supplement of detailed information regarding the grants as permanent record. This list is signed by the President as authorization to produce the checks. The Administrative Assistant prepares checks from database. Checks are signed via an electronic signature cartridge controlled by Executive Assistant and/or Chief Financial Officer. Checks less than $200,000 are signed with a dual electronic signature; checks $200,000 and above require two manual signatures. A cover letter is produced for the check prior to being mailed.