Montgomery County Higher Education and Health Authority Thomas Jeffersonuniversityvariableraterevenuebonds

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the Series 2018D Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of such jurisdiction. * Preliminary, subjecttochange. Dated: May__,2018 HAS NOTAXINGPOWER. PRICE OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2018D BONDS. SUBDIVISION THEREOF BE LIABLE THE FOR THE AUTHORITY PAYMENT OF THE PRINCIPAL OR PURCHASE POLITICAL ANY OR PENNSYLVANIA OF COMMONWEALTH THE COUNTY, THE SHALL NOR THEREOF, SUBDIVISION POLITICAL ANY OR PENNSYLVANIA OF COMMONWEALTH THE OR COUNTY TO THE OF DEEMED OBLIGATIONS BE OR AUTHORITY BONDS THE OF 2018D OBLIGATIONS GENERAL SERIES BE THE SHALL NOR BONDS, 2018D SERIES THE ON THE FOR PLEDGED INTEREST OR ANY, IF PREMIUM, IS OF, PRICE PURCHASE OR PRINCIPAL THE OF PAYMENT THEREOF SUBDIVISION POLITICAL ANY COMMONWEALTH OR THE PENNSYLVANIA “COUNTY”), OF (THE THE PENNSYLVANIA OF POWER MONTGOMERY, TAXING OF OR CREDIT COUNTY THE NOR AUTHORITY THE OF CREDIT GENERAL THE NEITHER HEREIN. DESCRIBED AND THEREIN TO REFERRED SOURCES THE FROM SECURED UNDER THE PROVISIONS OF THE 2018D INDENTURE AND ARE PAYABLE SOLELY Dated: DateofDelivery NEW ISSUE ‑ BOOK herein andAPPENDIX Dattachedhereto. the of BONDS” rights 2018D SERIES THE and FOR PAYMENT OF payable SOURCES AND “SECURITY amounts See Trustee. the The to assigned been has Bonds 2018D Indenture. Series the for Master Note Master the the under Authority to pursuant Group, Obligated the of Members the of all of Revenues Gross the by secured Group Obligated the of Members other the and TJU of obligation several and joint a is Note Master The Trustee. Master and Group, Obligated the of behalf on Agent, Group Obligated the by Indenture”), “Master the (collectively, supplemented as 2017, 1, December on effective and 2017 1, February of as dated Agreement) (Security Indenture Trust Master Restated and Amended Authority) at the times and in amounts sufficient to pay the debt service on the Series 2018D Bonds when due, TJU as “Obligated Group Agent” has issued a Master Note under the Obligated GroupandalloftheircontrolledAffiliates.TheSeries2018DBondsarepayablesolelyfromthesourcesidentifiedinIndenture,includingPledged Revenues. and of FINANCE” Members other OF the TJU, “PLAN to collectively See refer to used is Project. “University” term 2018 the Statement, the Official this of of purposes costs For the herein. FUNDS” of OF USES portion AND SOURCES a “ESTIMATED or all fund to herein, described sources other the with together applied, be will and Agreement, Loan herein. Variable RatewithadifferentPeriod,asdescribedherein. a including rate interest new a at interest bear to converted are Bonds 2018D Series the TJU, of option the at until, and unless Rate Weekly Variable the at interest bear to continue purchase. For so long as the Series 2018D Bonds are in the Variable Rate Mode, the Series 2018D Bonds will not be supported by any liquidity facility. The Series 2018D Bonds will for tendered Bonds 2018D Series any of price purchase the pay to obligated are Group Obligated the of Members the nor Authority the Neither Indenture. 2018D the in identified as funds other and Bonds 2018D Series such of remarketing the of proceeds the from only made be will purchase for tendered are which Bonds 2018D Series for Payment Mode. Rate Variable the in while herein described as tender mandatory and optional to subject are Bonds 2018D Series The 2018. 1, June commencing month, each of Day Business first herein. will bedeterminedasdescribedhereinforSeries2018DBondsintheVariableRateMode.See“DESCRIPTIONOFTHESERIESBONDS”herein. ENTRY ONLYSYSTEM”herein. 2018D Bonds by the Trustee in its capacity as Paying Agent and bond registrar, to be subsequently disbursed to the Beneficial Owners, as more fully described herein. See, “BOOK- Series the of owner registered as DTC for nominee as Co., & Cede to directly made be will Bonds 2018D Series the on interest or of Price Redemption or price purchase principal representing their interests in Series 2018D Bonds so purchased. So long as DTC, or its nominee, Cede & Co., is the registered owner of the Series 2018D Bonds, all payments of the (as described herein). So long as Cede & Co. is the registered owner of the Series 2018D Bonds, purchasers of beneficial interests (“Beneficial Owners”) will not receive certificates Mode Rate Variable the in are Bonds 2018D Series the as long so for thereof excess in $5,000 of multiple integral be any or $25,000 will of denominations in only Bonds form book-entry in made 2018D Series the in interests beneficial of Purchases Bonds. 2018D Series the for depository securities as act will which York, New York, New (“DTC”), Company not definedonthiscoverpagearewithinOfficialStatement. terms Capitalized Indenture. 2018D the to pursuant Bonds”) 2018D “Series (the (R-Floats) 2018D Series Bonds, Revenue Rate Variable University Jefferson Thomas its of amount by CozenO’Connor,Philadelphia,Pennsylvania. TheSeries2018DBondsareexpectedtobedeliveredthroughthebook‑entry systemofDTConoraboutMay3,2018. Ballard SpahrLLP,Philadelphia,Pennsylvania, initscapacityascounsel,includingDisclosureCounsel,toTJU.Certain legalmatterswillbepasseduponfortheUnderwriter Authority by Douglas B. Breidenbach, Jr, Esquire, Pottstown, Pennsylvania. Certain legal matters will be passed upon for the University by the without anynotice,andsubjecttotheapproving opinionofBallardSpahrLLP,Philadelphia,Pennsylvania,BondCounsel. Certainlegalmatterswillbepasseduponforthe Office of University Counsel and investment decision. Potential investors must read the entire Official Statement (including the cover page and all appendices attached hereto) to obtain information essential to the making of an informed in Pennsylvania.See“TAXMATTERS”herein. Series 2018D Bonds is exempt from Pennsylvania personal income tax and corporate net income tax, and the Series 2018D Bonds are exempt from personal property taxes circumstances describedunder“TAX MATTERS” herein.BondCounselisalsooftheopinion that,underthelawsofCommonwealthPennsylvania,intereston alternative minimumtax;however,interestpaidtocertaincorporateholdersoftheSeries2018DBondsindirectlymaybesubjecttaxunder continuing compliancewiththerequirementsoffederaltaxlaws.InterestonSeries2018DBondsisnotapreferenceitemforpurposesindividual As security for the payment obligations of TJU under the 2018D Loan Agreement, including the obligation to make loan payments to the applicable Trustee (as assignee of the 2018D the to pursuant (“TJU”), corporation nonprofit Pennsylvania a University, Jefferson Thomas to Authority the by loaned be will Bonds 2018D Series the of proceeds The Provisions” Redemption – BONDS 2018D SERIES THE OF “DESCRIPTION See herein. described as maturity, to prior redemption to subject are Bonds 2018D Series The Interest on the Series 2018D Bonds will accrue from the date of delivery, and while bearing interest at a Variable Weekly Rate in the Variable Rate Mode, will be payable on the Mode” Rate Variable – BONDS 2018D SERIES THE OF “DESCRIPTION See Mode. Rate Variable the in while only Bonds 2018D Series the describes Statement Official This The initial interest rate for the Series 2018D Bonds will be communicated by the Remarketing Agent to the prospective purchasers of such Series 2018D Bonds, and thereafter Trust Depository The for nominee as Co., & Cede of name the in registered be will issued, when and, bonds registered fully as only issued be will Bonds 2018D Series The principal aggregate in $49,950,000* of “Authority”) (the Authority Health and Education Higher County Montgomery the by issuance the to relates Statement Official This The Series 2018D Bonds are offered when, as, and if issued by the Authority and received by the Underwriter, subject to prior sale, withdrawal or modification of the offer Bonds. 2018D Series the to relating matters the of summary a be, to intended not is and not, is It only. reference quick for information limited contains page cover This Investment intheSeries2018DBondsissubjecttocertainrisks.See“CERTAININVESTMENT CONSIDERATIONS”herein. ARE AUTHORITY, THE OF OBLIGATIONS LIMITED ARE BONDS 2018D SERIES THE In theopinionofBallardSpahrLLP,BondCounsel,interestonSeries2018DBondsisexcludablefromgrossincomeforpurposesfederaltax,assuming - ENTRY ONLY

MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY THOMAS JEFFERSONUNIVERSITYVARIABLERATEREVENUEBONDS,

PRELIMINARY OFFICIAL STATEMENT DATED APRIL 25, 2018 SERIES 2018D(R BofA MerrillLynch $49,950,000* - FLOATS) See “RATINGS’’herein Due: September1,2050 RATINGS:

$49,950,000* MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY THOMAS JEFFERSON UNIVERSITY VARIABLE RATE REVENUE BONDS, SERIES 2018D (R-FLOATS)

Price: 100.000

Last Day of Initial Rate Period: May 10, 2018

First Variable Rate Determination Date: Prior to Date of Delivery

First Interest Payment Date: June 1, 2018

Variable Weekly Rate Determination Dates: Generally, Thursday of each week.

Interest Payment Dates: Generally, the first Business Day of each month.

Maturity Date: September 1, 2050

CUSIP No.† _____

* Preliminary, subject to change. † CUSIP numbers have been assigned to the Series 2018D Bonds by an organization not affiliated with the Authority and are included solely for the convenience of the owners of the Series 2018D Bonds. Neither the Authority, the Underwriter nor the Obligated Group is responsible for the selection or use of the CUSIP numbers set forth herein nor is any representation made as to the accuracy of the CUSIP numbers as to the Series 2018D Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2018D Bonds as a result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2018D Bonds. MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY

BOND COUNSEL

Ballard Spahr LLP Philadelphia, Pennsylvania

COUNSEL TO THE AUTHORITY

Douglas B. Breidenbach, Jr., Esquire Pottstown, Pennsylvania

COUNSEL TO THE UNIVERSITY

Office of University Counsel Philadelphia, Pennsylvania

Ballard Spahr LLP Philadelphia, Pennsylvania

FINANCIAL ADVISOR TO THE UNIVERSITY

Echo Financial Products, LLC King of Prussia, Pennsylvania

UNDERWRITER

Merrill Lynch, Pierce, Fenner & Smith Incorporated New York, New York

COUNSEL TO THE UNDERWRITER

Cozen O’Connor Philadelphia, Pennsylvania

No dealer, broker, salesman or any other person has been authorized by the Authority, the University or the Underwriter to give any information or to make any representation, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Authority, the University, the Underwriter or any other person. Except as otherwise indicated, the information contained in this Official Statement, including in the appendices, has been obtained from representatives of the Authority (but only with respect to the information under the captions “INTRODUCTION - The Authority; Authority for Issuance,” “THE AUTHORITY” and “LITIGATION - The Authority”), the University and from public documents, records and other sources considered to be reliable.

This Official Statement does not constitute a contract between the Authority, the Obligated Group, or the Underwriter and any one or more owners of the Series 2018D Bonds, nor does it constitute an offer to sell or the solicitation of an offer to buy the Series 2018D Bonds in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale in such jurisdiction.

The information set forth herein has been obtained from the Authority (but only with respect to the information under the captions “INTRODUCTION - The Authority; Authority for Issuance,” “THE AUTHORITY” and “LITIGATION - The Authority”), the University, and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of, the Underwriter or of the Authority. The Underwriter has provided the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guaranty the accuracy or completeness of such information. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the University since the date hereof or the earliest date as of which such information is given. Any statements in this Official Statement involving estimates, assumptions and matters of opinion, whether or not expressly stated, are intended as such and not as representations of fact.

THE SERIES 2018D BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE 2018D INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 2018D BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES, IF ANY, IN WHICH THE SERIES 2018D BONDS HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN CERTAIN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE SERIES 2018D BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

In making an investment decision, investors must rely on their own examination of the University and the terms of the offering, including the merits and risks involved.

IN CONNECTION WITH THE OFFERING OF THE SERIES 2018D BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2018D BONDS OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE SERIES 2018D BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE OF THIS OFFICIAL STATEMENT, AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

The order and placement of information in this Official Statement, including the appendices, are not an indication of relevance, materiality or relative importance, and this Official Statement, including the appendices, must be read in its entirety. The captions and headings in this Official Statement are for convenience only and in no way define, limit or describe the scope or intent, or affect the meaning or construction, of any provision or section in this Official Statement.

This Official Statement is being provided to prospective purchasers either in bound printed form (“Original Bound Format”) or in electronic format on the following websites: www.munios.com and www.emma.msrb.org. Prospective purchasers may rely on the information contained in this Official Statement in the Original Bound Format or in electronic format; provided, however, that prospective purchasers must read the entire Official Statement (including the cover page and all appendices attached hereto) to obtain all of the information essential to the making of an informed investment decision.

REFERENCES TO WEBSITE ADDRESSES PRESENTED HEREIN ARE FOR INFORMATIONAL PURPOSES ONLY AND MAY BE IN THE FORM OF A HYPERLINK SOLELY FOR THE READER’S CONVENIENCE. UNLESS SPECIFIED OTHERWISE, SUCH WEBSITES AND THE INFORMATION OR LINKS CONTAINED THEREIN ARE NOT INCORPORATED INTO, AND ARE NOT PART OF, THIS OFFICIAL STATEMENT FOR ANY PURPOSE INCLUDING FOR PURPOSES OF RULE 15c2-12 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION.

THIS PRELIMINARY OFFICIAL STATEMENT IS IN A FORM DEEMED FINAL BY THE AUTHORITY AND TJU ON BEHALF OF THE OBLIGATED GROUP FOR PURPOSES OF RULE 15c2-12 ISSUED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT FOR CERTAIN INFORMATION PERMITTED TO BE OMITTED PURSUANT TO RULE 15c2-12(B)(1).

TABLE OF CONTENTS

Page

OFFICIAL STATEMENT ...... 1 INTRODUCTION ...... 1 General ...... 1 The Authority; Authority for Issuance ...... 1 Description of the Series 2018D Bonds ...... 2 Purpose of the Series 2018D Bonds ...... 2 Security and Sources of Payment for the Series 2018D Bonds ...... 3 The University ...... 5 Investment Considerations ...... 6 Continuing Disclosure ...... 6 Other Information ...... 6 PLAN OF FINANCE ...... 7 General ...... 7 New Money Project ...... 7 2018 Refunding Project ...... 7 ESTIMATED SOURCES AND USES OF FUNDS ...... 8 THE OBLIGATED GROUP MEMBERS AND THE UNIVERSITY ...... 9 General ...... 9 Merger Plans ...... 9 THE AUTHORITY ...... 10 General ...... 10 Members of the Authority ...... 10 Financings of the Authority ...... 11 DESCRIPTION OF THE SERIES 2018D BONDS ...... 12 General ...... 12 Variable Rate Mode ...... 13 Optional Tender of Series 2018D Bonds in Variable Rate Mode ...... 17 Mandatory Tender of Series 2018D Bonds in the Variable Rate Mode ...... 17 Variable Rate Non-Remarketed Bonds ...... 18 Conversion of Series 2018D Bonds ...... 19 Redemption Provisions ...... 19 Transfer and Exchange of Series 2018D Bonds; Persons Treated as Owners ...... 21 BOOK-ENTRY ONLY SYSTEM ...... 22 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS ...... 25 General ...... 25 Trust Estate ...... 25 2018D Loan Agreement ...... 26

Master Indenture ...... 26 Certain Covenants of the Obligated Group under the Master Indenture ...... 27 Direct Placement Bonds ...... 30 Interest Rate Swaps ...... 30 Additional Long Term Indebtedness ...... 31 Obligated Group Members and the Master Indenture ...... 32 Addition, Exclusion and Release of Entities with Respect to the Requirements of the Master Indenture ...... 33 New Obligated Group and New Master Indenture ...... 35 Limited Obligations ...... 36 OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP ...... 37 Existing Obligations ...... 37 Swap Agreements ...... 38 Estimated Debt Service Requirements ...... 39 CERTAIN INVESTMENT CONSIDERATIONS ...... 40 General ...... 40 Covenant to Maintain Tax-Exempt Status of the Series 2018D Bonds ...... 40 Unrelated Business Income ...... 41 Decreases in Federal and Commonwealth Research and Other Grants and Contract Funding ...... 41 Local Tax Assessments ...... 41 Enforceability of Obligations of Obligated Group Members ...... 42 Enforceability of Remedies ...... 43 Potential Effects of Bankruptcy ...... 43 Continued Utilization of University Hospital Facilities and Factors That Could Result in Increased Competition ...... 44 Health Care Industry Factors Affecting the University ...... 45 Overview of Medicare and Medicaid Program ...... 48 Medicare Reimbursement ...... 48 Medicaid Reimbursement ...... 57 Third Party Payers ...... 60 The Fraud and Abuse Laws ...... 63 Antitrust ...... 66 Exposure to Liability ...... 67 Medical Professional Liability Insurance Market ...... 67 Charity Care ...... 68 Tax Law Changes that May Impact Charitable Giving (Tax Cuts and Jobs Act) ...... 68 Other Legislative and Regulatory Actions ...... 69 Emergency Medical Treatment and Active Labor Act ...... 69 Health Insurance Portability and Accountability Act ...... 70 Corporate Compliance ...... 71 Cyber-Security Risks ...... 72 Increased Enforcement Affecting Academic Research ...... 72 Fluctuations in Market Value of Investments ...... 72 Other Potential Transactions ...... 73

Other Risk Factors Relating to the Finances and Operations of the University ...... 74 LITIGATION ...... 76 The Authority ...... 76 The University ...... 76 TAX MATTERS ...... 76 Federal Tax Matters Applicable to the Series 2018D Bonds ...... 76 Commonwealth of Pennsylvania Tax Matters ...... 77 LEGAL MATTERS ...... 77 CONTINUING DISCLOSURE ...... 77 RATINGS ...... 78 UNDERWRITING ...... 78 REMARKETING ...... 79 General ...... 79 Certain Considerations Concerning the Remarketing of the Series 2018D Bonds ...... 80 INDEPENDENT ACCOUNTANTS ...... 81 FINANCIAL ADVISOR ...... 81 CERTAIN RELATIONSHIPS ...... 82 FORWARD-LOOKING STATEMENTS ...... 82 MISCELLANEOUS ...... 83 AUTHORIZATION OF AND CERTIFICATION OF OFFICIAL STATEMENT ...... 84

APPENDIX A - DESCRIPTION OF THE UNIVERSITY APPENDIX B-1 - THOMAS JEFFERSON UNIVERSITY CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND 2016 APPENDIX B-2 - UNAUDITED CONSOLIDATING SCHEDULES APPENDIX C - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE APPENDIX E - PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT

iii

OFFICIAL STATEMENT

relating to

$49,950,000* MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY THOMAS JEFFERSON UNIVERSITY VARIABLE RATE REVENUE BONDS, SERIES 2018D (R-FLOATS)

INTRODUCTION

General

This Introduction is not a summary of this Official Statement and is intended only for quick reference. It is only a brief description of and guide to, and is qualified in its entirety by reference to, the more complete and detailed information contained in the entire Official Statement, including the cover page and the appendices attached hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement and of the documents summarized or described herein, if necessary. The offering of the Series 2018D Bonds (as defined below) to potential investors is made only by means of the entire Official Statement, including the appendices attached hereto. No person is authorized to detach this Introduction from this Official Statement or to otherwise use it without the entire Official Statement, including the appendices attached hereto.

The purpose of this Official Statement, including the cover page, inside cover page, and the appendices attached hereto, is to provide certain information in connection with the issuance and sale by the Montgomery County Higher Education and Health Authority (the “Authority”) of $49,950,000* aggregate principal amount of its Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018D (R-Floats) (the “Series 2018D Bonds”). All capitalized terms used and not defined herein shall have the meanings assigned to them in “APPENDIX C - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT,” and “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto.

The Authority; Authority for Issuance

The Authority is a body corporate and politic created by the County of Montgomery, Pennsylvania (the “County”). See “THE AUTHORITY” herein. The Authority is authorized and empowered to issue the Series 2018D Bonds pursuant to the Municipality Authorities Act, 53 Pa. Cons. Stat. § 5601 et seq., as amended (the “Act”), resolutions of the Authority adopted on November 13, 2017 and March 12, 2018 (collectively, the “Resolutions”), and that certain Series 2018D Trust Indenture dated as of May 1, 2018 (the “2018D Indenture”), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “2018D Trustee” or the “Trustee”).

* Preliminary, subject to change.

Description of the Series 2018D Bonds

Interest on the Series 2018D Bonds will accrue from the date of delivery, and while bearing interest at a Variable Weekly Rate in the Variable Rate Mode, will be payable on the first Business Day of each month, commencing June 1, 2018. The Series 2018D Bonds are subject to optional and mandatory tender as described herein while in the Variable Rate Mode. Payment for Series 2018D Bonds which are tendered for purchase will be made only from the proceeds of the remarketing of such Series 2018D Bonds and other funds as identified in the 2018D Indenture. Neither the Authority nor the Members of the Obligated Group are obligated to pay the purchase price of any Series 2018D Bonds tendered for purchase. For so long as the Series 2018D Bonds are in the Variable Rate Mode, the Series 2018D Bonds will not be supported by any liquidity facility. The Series 2018D Bonds will continue to bear interest at the Variable Weekly Rate unless and until, at the option of TJU, the Series 2018D Bonds are converted to bear interest at a new interest rate mode including a Variable Rate with a different Rate Period, as described herein.

This Official Statement describes the Series 2018D Bonds only while in the Variable Rate Mode. See “DESCRIPTION OF THE SERIES 2018D BONDS – Variable Rate Mode” herein.

The Series 2018D Bonds are subject to redemption prior to maturity, as described herein. See “DESCRIPTION OF THE SERIES 2018D BONDS – Redemption Provisions” herein.

Purpose of the Series 2018D Bonds

The proceeds of the Series 2018D Bonds will be loaned by the Authority to Thomas Jefferson University, a Pennsylvania nonprofit corporation (“TJU”), pursuant to that certain Series 2018D Loan Agreement dated as of May 1, 2018 (the “2018D Loan Agreement”), between the Authority and TJU, and will be applied, together with the proceeds of the Series 2018A Bonds, Series 2018B Bonds and the Series 2018C Bonds (each as defined below) to fund all or a portion of the costs of the 2018 Project (as defined and described herein), which includes the New Money Project and the 2018 Refunding Project (each as defined herein). See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

For purposes of this Official Statement, the term “University” is used to refer collectively to TJU, the other Members of the Obligated Group and all of their controlled Affiliates, excluding any Excluded Affiliate (each as defined herein), and the term “Audit Group” is used to refer to TJU and any other Person whose financial results are set forth in the Financial Statements of the University (excluding any Excluded Affiliate unless otherwise provided for by the Master Indenture (as defined herein)). As of the date of this Official Statement, the University has no Excluded Affiliates.

In addition to the issuance of the Series 2018D Bonds, the Authority, at the request of TJU, is proposing to issue $356,285,000 in aggregate principal amount of its Thomas Jefferson University Fixed Rate Revenue Bonds, Series 2018A (the “Series 2018A Bonds”), $35,075,000 in aggregate principal amount of its Thomas Jefferson University Taxable Fixed Rate Revenue Bonds, Series 2018B (the “Series 2018B Bonds”) and $100,000,000 in aggregate principal amount of its Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018C (the “Series 2018C Bonds” and together with the Series 2018A Bonds, the Series 2018B Bonds and the Series

2018D Bonds, the “2018 Bonds”) pursuant to that certain Series 2018A/B Trust Indenture and Series 2018C Trust Indenture, each dated as of May 1, 2018, between the Authority and The Bank of New York Mellon Trust Company, N.A. as trustee, which Series 2018A Bonds, Series 2018B Bonds, and Series 2018C Bonds will be marketed and sold via a separate official statement and are not being offered under this Official Statement. The proceeds of the Series 2018A Bonds and Series 2018B Bonds will be loaned by the Authority to TJU pursuant to that certain Series 2018A/B Loan Agreement dated as of May 1, 2018 (the “2018A/B Loan Agreement”), between the Authority and TJU. The proceeds of the Series 2018C Bonds will be loaned by the Authority to TJU pursuant to that certain Series 2018C Loan Agreement dated as of May 1, 2018 (the “2018C Loan Agreement, ” and together with the 2018A/B Loan Agreement and the 2018D Loan Agreement, the “2018 Loan Agreements”), between the Authority and TJU.

See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Security and Sources of Payment for the Series 2018D Bonds

2018D Indenture and 2018D Loan Agreement. The Series 2018D Bonds are limited obligations of the Authority payable solely from the sources identified in the 2018D Indenture, including Pledged Revenues (as defined herein), which in the case of the 2018D Indenture consist generally of all amounts payable to the Trustee with respect to the principal or purchase price of, premium, if any, and interest on the Series 2018D Bonds under the 2018D Loan Agreement by TJU and investment income with respect to certain funds held by the Trustee under the 2018D Indenture, and amounts payable by the Obligated Group under the Master Note issued with respect to the 2018D Bonds under the Master Indenture.

Pursuant to the 2018D Loan Agreement, TJU agrees to make payments at such times and in such amounts as necessary to provide for the payment of the principal of, premium, if any, and interest on the Series 2018D Bonds. The obligation of TJU under the 2018D Loan Agreement is a general obligation of TJU, the full faith and credit of which is pledged to the payment of all such sums due thereunder.

In order to secure the payment of the principal or purchase price of, premium, if any, and interest on the Series 2018D Bonds, the Authority has assigned to the 2018D Trustee, under the 2018D Indenture, and granted a security interest in: (i) all of its right, title and interest in, to and under the 2018D Loan Agreement, and all payments received or receivable by the Authority from TJU under the 2018D Loan Agreement (excluding the Authority’s rights to payment of its fees and expenses, to indemnification and as otherwise expressly set forth in the 2018D Loan Agreement), (ii) all of the right, title and interest of the Authority in: the Thomas Jefferson University Obligated Group Master Note (MCHEHA-TJU Series 2018D Bonds), Obligation No. 35 (the “2018D Master Note” or the “Master Note”), with respect to the 2018D Indenture and issued by TJU, as Obligated Group Agent on behalf of the Obligated Group, pursuant to the Master Indenture, and all payments, revenues and receipts receivables by the Authority thereunder except as provided therein, and (iii) all of the right, title and interest of the Authority in and to all Funds and Accounts established under the 2018D Indenture (except for the Rebate Fund) and all moneys and investments held therein and all present and future Pledged Revenues within the meaning of the 2018D Indenture.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS” herein for a more detailed discussion of the Trust Estate under the 2018D Indenture, the Trustee’s rights under the 2018D Indenture, and, the Master Trustee’s (as defined herein) rights under the Master Indenture, and the obligations of the Obligated Group under the Master Indenture. See also “APPENDIX C - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT” and “APPENDIX D – DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto for summaries of the 2018D Indenture, the 2018D Loan Agreement, the Master Indenture and certain definitions contained therein.

Master Indenture. TJU and each of the other Members of the Obligated Group (as defined herein) are parties to a certain Amended and Restated Master Trust Indenture (Security Agreement) dated as of February 1, 2017 and effective on December 1, 2017 (the “Amended and Restated Master Trust Indenture”), as supplemented by a Fourth Supplement to the Amended and Restated Master Trust Indenture (Security Agreement), dated as of May 1, 2018 (the "Fourth Supplement,” and together with the Amended and Restated Master Trust Indenture, the “Master Indenture”), executed by the Obligated Group Agent, on behalf of the Obligated Group, and The Bank of New York Mellon Trust Company, N.A. as master trustee (the “Master Trustee”). TJU is the Obligated Group Agent under the Master Indenture. Under and pursuant to the Master Indenture, the Obligated Group Members are jointly and severally liable for the payment of the Obligations (as defined in the Master Indenture) of the Obligated Group, and have agreed to comply with certain financial and operational covenants contained therein. See generally “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS - Master Indenture” herein and “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto. The Obligated Group Agent, on behalf of all of the Obligated Group Members, will issue to the 2018D Trustee the Master Note as an additional Obligation pursuant to the Master Indenture to secure TJU’s payment obligations under the 2018D Loan Agreement.

The Master Indenture contains the covenants and grant of security of the Obligated Group, including the Gross Revenues pledge of all of the Members of the Obligated Group, including TJU, to secure existing and future debt and the payment obligations of the Obligated Group. The Obligated Group’s obligations under the Master Note will be secured on a parity basis equally and ratably with all other outstanding Obligations (other than Subordinated Obligations) and Parity Indebtedness (as such terms are defined in the Master Indenture) heretofore or hereafter issued or incurred in accordance with the Master Indenture.

For a description of the outstanding Obligations and Parity Indebtedness of the Obligated Group, see “OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP” herein, including the information under the sub-section captioned “Existing Obligations” and the table under the sub-section captioned “Estimated Debt Service Requirements” thereunder.

See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS - Certain Covenants of the Obligated Group under the Master Indenture - Gross Revenues Pledge” herein for a further description of the Gross Revenue pledge by the Obligated Group pursuant to the Master Indenture.

THE SERIES 2018D BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, ARE SECURED UNDER THE PROVISIONS OF THE 2018D INDENTURE AND ARE PAYABLE SOLELY FROM THE SOURCES REFERRED TO IN THE 2018D INDENTURE AND DESCRIBED HEREIN. NEITHER THE GENERAL CREDIT OF THE AUTHORITY NOR THE CREDIT OR TAXING POWER OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF, PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2018D BONDS, NOR SHALL THE SERIES 2018D BONDS BE DEEMED TO BE GENERAL OBLIGATIONS OF THE AUTHORITY OR OBLIGATIONS OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF, NOR SHALL THE COUNTY OF MONTGOMERY, PENNSYLVANIA, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF, PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2018D BONDS. THE AUTHORITY HAS NO TAXING POWER.

The University

As of the date of the delivery of the Series 2018D Bonds, each of TJU, TJUH System, Thomas Jefferson University Hospitals, Inc. (“TJUH”), Jefferson University Physicians (“JUP”), Abington Health, Abington Memorial Hospital (“AMH”), Abington Health Foundation (“AHF”), Lansdale Hospital (“LH”), Aria Health System, Aria Health (“Aria Health”), Philadelphia University, Kennedy Health System, Inc. (“Kennedy Health”), Kennedy Health Facilities, Inc. (“KHF”), Kennedy University Hospital, Inc. (“KUH”), Kennedy Medical Group Practice, P.C. (“Kennedy Medical Group”) and The Magee Memorial Hospital for Convalescents (“Magee”) (collectively, the “Obligated Group,” the “Obligated Group Members,” or “Members of the Obligated Group,” and, individually, a “Member”) are the entities obligated to make payments on the Series 2018D Bonds. TJU currently has approximately 64 controlled Affiliates. TJU is the borrower under each of the 2018 Loan Agreements and pursuant thereto has promised to make loan repayments which correspond to amounts and due dates for the debt service on the 2018 Bonds. The other Members of the Obligated Group are the largest (by revenues, assets and/or visibility) of TJU’s controlled Affiliates (the Obligated Group’s revenues constitute approximately 93% of the consolidated University revenues and the Obligated Group’s assets constitute approximately 95% of the consolidated University assets) and as such have, or, as of the time of issuance of the Series 2018D Bonds, will have, become Members of the Obligated Group. TJU and each other Member of the Obligated Group expressly commits to be jointly and severally liable to repay the Obligations issued thereunder, including the Master Note and separate master notes constituting Obligations under the Master Indenture related to the Series 2018A Bonds, Series 2018B Bonds, and Series 2018C Bonds, respectively, and pledges its Gross Revenues pursuant to the Master Indenture to secure such repayment. None of TJU’s controlled Affiliates is currently designated as an Excluded Affiliate and therefore the credit currently available to repay the 2018 Bonds is that of TJU, the other Members of the Obligated Group and their controlled Affiliates.

For purposes of this Official Statement, the term “University” is used to refer collectively to the affiliated group of Persons comprised of all of the Members of the Obligated Group and their Affiliates, but excluding Excluded Affiliates if any in the future, and the term “Audit Group”

is used to refer to TJU and any other Person whose financial results are set forth in the Financial Statements of the University. As of the date of this Official Statement, the University has no Excluded Affiliates. For information concerning the terms by which a controlled Affiliate of TJU could become an Excluded Affiliate in the future, see “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS - Addition, Exclusion and Release of Entities with Respect to the Requirements of the Master Indenture” herein. See also “APPENDIX A - DESCRIPTION OF THE UNIVERSITY,” “APPENDIX B-1 - THOMAS JEFFERSON UNIVERSITY CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND 2016,” and “APPENDIX B-2 - UNAUDITED CONSOLIDATING SCHEDULES” attached hereto for additional information regarding the Members of the Obligated Group and other entities comprising the University.

Investment Considerations

Investment in the Series 2018D Bonds is subject to certain risks. See “CERTAIN INVESTMENT CONSIDERATIONS” herein.

Continuing Disclosure

The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold, or sell the Series 2018D Bonds, and the Authority will not provide any such information. TJU has undertaken all responsibility for any continuing disclosure to Beneficial Owners of the Series 2018D Bonds, as described below, and the Authority will have no liability to such Beneficial Owners of the Series 2018D Bonds or any other person with respect to such disclosures.

In order to assist the Underwriter (as defined herein) in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission (the “SEC”) promulgated pursuant to the Securities Exchange Act of 1934, as in effect on the date hereof (the “Rule”), simultaneously with the issuance of the Series 2018D Bonds, TJU, on behalf of itself and the other Members of the Obligated Group, will enter into a Continuing Disclosure Agreement, to be dated as of the date of the issuance of the 2018D Bonds, with the 2018D Trustee (the “Disclosure Agreement”) for the benefit of the Beneficial Owners, under which TJU, on behalf of the Obligated Group, will provide continuing disclosure with respect to the Series 2018D Bonds. TJU also has, by separate agreement, retained Digital Assurance Certification, L.L.C. (“DAC”) as dissemination agent to assist TJU in connection with certain of its obligations under the Disclosure Agreement. See “CONTINUING DISCLOSURE” herein and “APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT” attached hereto.

Other Information

This Official Statement speaks only as of its date, and the information contained herein is subject to change. This Official Statement and the appendices attached hereto contain brief descriptions of, among other matters, the Authority, the University and the Obligated Group, the Series 2018D Bonds, and the sources of payment for the Series 2018D Bonds, the 2018D Indenture, the 2018D Loan Agreement, the Master Indenture, the Master Note and the Disclosure Agreement. Such descriptions and information do not purport to be comprehensive or definitive.

The summaries of various, statutes, regulatory provisions, the 2018D Indenture, the 2018D Loan Agreement, the Master Indenture and the Disclosure Agreement and other documents are intended as summaries only and are qualified in their entirety by reference to such laws or documents, and references herein to the Series 2018D Bonds are qualified in their entirety by reference to the form thereof included in the 2018D Indenture. Copies of the 2018D Indenture, the 2018D Loan Agreement, the Master Indenture and the Disclosure Agreement and other relevant documents may be viewed at the office of The Bank of New York Mellon Trust Company, N.A., in Philadelphia, Pennsylvania, and will be provided to any prospective purchaser requesting the same upon payment by such prospective purchaser of the cost of complying with such request.

PLAN OF FINANCE

General

Proceeds of the 2018 Bonds will be loaned by the Authority to TJU pursuant to the 2018 Loan Agreements to be applied by the applicable trustee to fund: (i) all or a portion of the costs of the 2018 Project, which is described below, and (ii) the costs of issuance of the 2018 Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” herein. The 2018 Project consists of two main components: the “New Money Project” and the “2018 Refunding Project.”

New Money Project

The “New Money Project” consists of the payment of (or the reimbursement to TJU and the other Obligated Group Members for) the costs of the acquisition, construction and development of various capital assets and the making of other capital improvements in various academic health care, research, education and clinical care facilities of TJU and the other Obligated Group Members, including, but not limited to the (i) the construction, renovation, expansion, development and equipping of a new health science center building, associated site work, storm water management and related improvements at the East Falls campus of TJU (ii) the construction, renovation, expansion, development and equipping of a patient care tower, including, but not limited to, an intensive care unit, multiple medical/surgical nursing units and surgical suites, diagnostic testing space and rooftop helipad, and related support areas at the Cherry Hill, New Jersey campus of TJU, and (iii) the construction, development, renovation, improvement and equipping of approximately 92,000 gross square feet of patient rooms, therapy gyms and relocation of an existing pharmacy at the hospital facility of Magee located in Center City Philadelphia.

2018 Refunding Project

The “2018 Refunding Project” consists of (a) the current refunding of the Authority’s Thomas Jefferson University Revenue Bonds, Series 2017E (the “Series 2017E Bonds”) outstanding in the principal amount of $247,825,000 (the “Refunded 2017E Bonds”); and (b) the payment or defeasance of (i) certain commercial loans issued in the maximum principal amount of $71,000,000 for the benefit of KUH (the “Kennedy Commercial Loans”), (ii) certain commercial mortgage loans incurred for the benefit of KUH in the aggregate original principal amount of $1,659,000 which are guaranteed by Kennedy Health (the “Kennedy Mortgage Loans”), and (iii) certain commercial loans incurred for the benefit of Aria Health System and its affiliates, in the aggregate original principal amount of approximately $17,370,000 (the “Aria Commercial

Loans,” and collectively with the Kennedy Commercial Loans and the Kennedy Mortgage Loans, the “Commercial Loans”). The Refunded 2017E Bonds and the Commercial Loans are collectively, referred to herein as the “Refunded Obligations.”

A portion of the proceeds of the 2018 Bonds will be applied on the date of issuance of the 2018 Bonds to retire, or reimburse TJU in connection with the retirement of, the Refunded Obligations.

ESTIMATED SOURCES AND USES OF FUNDS

The proceeds of the 2018 Bonds are expected to be applied as follows:

Series 2018A Series 2018B Series 2018C Series 2018D (1) (1) (1) Source of Funds Bonds Bonds Bonds Bonds Total Par Amount $356,285,000 $35,075,000 $100,000,000 $49,950,000 $541,310,000 Net Original Issue Premium 33,195,006 ------33,195,006 TOTAL SOURCES $389,480,006 $35,075,000 $100,000,000 $49,950,000 $574,505,006

Uses of Funds Refunding/Redemption of Refunded 2017E Bonds $247,866,000 $ -- $ -- $ -- $247,866,000 Pay-off of Kennedy Commercial Loans -- 20,547,787 1,113,936 49,506,064 71,167,787 Pay-off of Kennedy Mortgage Loans -- 1,018,000 -- -- 1,018,000 Pay-off of Aria Commercial Loans -- 13,211,656 -- -- 13,211,656 Deposit to Project Account 138,509,889 -- 98,000,000 -- 236,509,889 Deposit to Costs of Issuance Account(2) 3,104,117 297,557 886,064 443,936 4,731,674 TOTAL USES $389,480,006 $35,075,000 $100,000,000 $49,950,000 $574,505,006 ______(1) While part of a common plan of finance with the Series 2018D Bonds, the Series 2018A/B/C Bonds are not being offered pursuant to this Official Statement. (2) Includes Underwriter’s discount, legal and accounting fees, consultant fees, fees of the Authority and the Trustee, rating agency fees, printing costs, and other miscellaneous fees and costs.

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THE OBLIGATED GROUP MEMBERS AND THE UNIVERSITY

General

The University is a large academic medical center, located in the greater Philadelphia region, with a tripartite mission of education, research and patient care. The University has approximately 30,000 employees. As of the date of the delivery of the Series 2018D Bonds, the Members of the Obligated Group consist of TJU and TJU’s controlled Affiliates: TJUH System, TJUH, JUP, Abington Health, AMH, AHF, LH, Aria Health System, Aria Health, Philadelphia University, Kennedy Health, KHF, KUH, Kennedy Medical Group and Magee. For purposes of this Official Statement, the term “University” is used to refer to the Members of the Obligated Group together with their Affiliates, but excluding any Excluded Affiliate, of which there are currently none.

For the twelve-month period ended June 30, 2017 on an unaudited pro forma basis, the University had total operating revenues, gains and other support of approximately $4.7 billion. At February 28, 2018 on an unaudited consolidated basis the University had total assets of approximately $7.2 billion, total liabilities of approximately $3.4 billion, and total net assets of approximately $3.9 billion. The Obligated Group’s revenues constitute approximately 93% of the consolidated University revenues and the Obligated Group’s assets constitute approximately 95% of the consolidated University assets. For more detailed information concerning the University, see “APPENDIX A - DESCRIPTION OF THE UNIVERSITY,” “APPENDIX B-1 - THOMAS JEFFERSON UNIVERSITY CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND 2016,” and “APPENDIX B-2 – UNAUDITED CONSOLIDATING SCHEDULES” attached hereto.

Merger Plans

TJU has entered into a letter of intent with Albert Einstein Healthcare Network (“EHN”) dated March 28, 2018 (the “Letter of Intent”), which sets forth certain binding and non-binding obligations relating to a potential transaction (the “Transaction”) whereby TJU and EHN would combine assets and operations. For a further discussion with respect to the Letter of Intent, the Transaction and related matters, see “MANAGEMENT DISCUSSION AND ANALYSIS – Einstein Health Letter of Intent” and “Other Potential Transactions” within Appendix A to this Official Statement.

As part of its ongoing strategic planning process, from time to time, the University considers and will consider potential joint ventures, affiliations, acquisitions, divestitures and similar transactions. Such transactions may result in additional entities becoming part of the Obligated Group in the future; in addition, in certain cases, existing Affiliates of TJU may no longer be part of the Obligated Group. There can be no assurance as to the impact that any such transaction would have on the operations, properties and financial results of the Obligated Group. See “APPENDIX A - DESCRIPTION OF THE UNIVERSITY.”

THE AUTHORITY

General

The Authority is a body corporate and politic organized under the Act by a resolution adopted by the Board of County Commissioners of the County of Montgomery, Pennsylvania (the "County"). On October 1, 1968, the Secretary of the Commonwealth of Pennsylvania (the “Commonwealth”) issued a Certificate of Incorporation to the Authority under the name of "Montgomery County Hospital Authority." The Authority originally was formed for the purpose of acquiring, holding, constructing, equipping, furnishing, improving, maintaining, owning, leasing, either in the capacity of lessor or lessee, and operating hospital facilities or parts thereof in the County. On July 2, 1984, the Secretary of the Commonwealth issued a Certificate of Amendment to the Authority under which the name of the Authority was changed to "Montgomery County Higher Education and Health Authority" and the purposes of the Authority were amended to enable the Authority to participate in additional projects authorized by the Act. On October 24, 1985, the Secretary of the Commonwealth issued a Certificate of Amendment to the Authority under which the purposes of the Authority were amended to enable the Authority to participate in such buildings, projects, facilities, and parts thereof in such locations as the Board of County Commissioners of the County may direct, and as authorized by the Act, and to grant to the Authority all of the powers granted by the Act.

Members of the Authority

The governing body of the Authority is a board consisting of seven members appointed by the Board of County Commissioners of the County. Members of the Authority are appointed for staggered five-year terms and may be reappointed to an unlimited number of successive terms. Board members serve until the dates indicated below and thereafter until replaced or reappointed. Current members of the Authority are as follows:

Members Office Term Expires James A. Konnick Chairman 12/31/2017* Jeffrey Bevington Vice Chairman 09/13/2016* James H. Shacklett, III Assistant Secretary 12/31/2015* Robert L. Williams, Jr. Assistant Secretary 09/13/2016* J. Mark Lankford Assistant Secretary 12/31/2015* Harriet Weiss Assistant Secretary 12/31/2017* ______* Serves until a successor is appointed.

The address of the Authority is 1200 East High Street, Suite 301, Pottstown, Pennsylvania 19464.

Financings of the Authority

The Authority has financed transactions for health care and higher education projects. Each such issue is payable solely from revenues derived from the project being financed or from special funds established therefor, is separately secured, and is separate and independent, as to sources of payment and security, from the Series 2018D Bonds.

Certain of these series of revenue bonds issued by the Authority currently are, and in the past have been, in default. None of these defaulted bonds were issued for any member of the Obligated Group, nor are they otherwise secured by or payable from the applicable security or sources of payment herein described with respect to the Series 2018D Bonds, and thus the Obligated Group, does not believe that disclosure with respect to such defaulted issues is appropriate or material to a reasonable investor.

The Authority may, from time to time, enter into further financing transactions for other hospital, health care and higher education projects, which transactions will provide for the issuance of bonds or notes that will be limited obligations of the Authority, payable from and secured by revenues derived from such projects. The Authority may also, from time to time, enter into refinancing transactions for obligations previously issued.

THE SERIES 2018D BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY, ARE SECURED UNDER THE PROVISIONS OF THE 2018D INDENTURE AND ARE PAYABLE SOLELY FROM THE SOURCES REFERRED TO IN THE 2018D INDENTURE AND DESCRIBED HEREIN. NEITHER THE GENERAL CREDIT OF THE AUTHORITY NOR THE CREDIT OR TAXING POWER OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF, PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2018D BONDS, NOR SHALL THE SERIES 2018D BONDS BE DEEMED TO BE GENERAL OBLIGATIONS OF THE AUTHORITY OR OBLIGATIONS OF THE COUNTY OF MONTGOMERY, PENNSYLVANIA OR OF THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF, NOR SHALL THE COUNTY OF MONTGOMERY, PENNSYLVANIA, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF BE LIABLE FOR THE PAYMENT OF THE PRINCIPAL OR PURCHASE PRICE OF, PREMIUM, IF ANY, OR THE INTEREST ON THE SERIES 2018D BONDS. THE AUTHORITY HAS NO TAXING POWER.

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ALTHOUGH THE AUTHORITY HAS EXECUTED THIS OFFICIAL STATEMENT AND AUTHORIZED ITS DISTRIBUTION, THE AUTHORITY IS NOT RESPONSIBLE FOR AND DOES NOT REPRESENT OR WARRANT IN ANY WAY THE ACCURACY OR COMPLETENESS OF ANY INFORMATION OR ANY STATEMENTS MADE HEREIN, EXCEPT THE INFORMATION AND STATEMENTS SET FORTH UNDER THE HEADINGS “INTRODUCTION - THE AUTHORITY; AUTHORITY FOR ISSUANCE,” “THE AUTHORITY” AND “LITIGATION - THE AUTHORITY.” ACCORDINGLY, EXCEPT AS AFORESAID, THE AUTHORITY DISCLAIMS RESPONSIBILITY FOR THE DISCLOSURE SET FORTH HEREIN MADE IN CONNECTION WITH THE SALE AND DISTRIBUTION OF THE SERIES 2018D BONDS OR OTHERWISE.

The Authority is not responsible for providing any purchaser of the Series 2018D Bonds with any information relating to the Series 2018D Bonds or any of the parties or transactions referred to in this Official Statement.

DESCRIPTION OF THE SERIES 2018D BONDS

General

The Series 2018D Bonds will be dated the date of their delivery and will mature on September 1, 2050 and the interest thereon will be subject to change as set forth on the inside front cover page of this Official Statement and under “DESCRIPTION OF THE SERIES 2018D BONDS - Variable Rate Mode” herein. The Series 2018D Bonds will be issuable only as fully registered Series 2018D Bonds in denominations of $25,000 or any integral multiple of $5,000 in excess thereof. Interest on the Series 2018D Bonds is payable as described below. The Series 2018D Bonds are subject to redemption and optional and mandatory tender for purchase prior to maturity as described under “DESCRIPTION OF THE SERIES 2018D BONDS - Optional Tender of Series 2018D Bonds in Variable Rate Mode” and “ - Mandatory Tender of Series 2018D Bonds in the Variable Rate Mode” herein.

The Series 2018D Bonds are issuable in the form of fully registered bonds without coupons, and, when issued, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Series 2018D Bonds. Purchases of the Series 2018D Bonds will be made in book-entry form. Beneficial Owners (as defined herein) will not receive certificates representing their interest in the Series 2018D Bonds purchased. So long as Cede & Co. is the registered owner, as nominee of DTC, references herein to the registered owners shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Series 2018D Bonds. See “BOOK- ENTRY ONLY SYSTEM” herein.

Payments of principal, premium, if any, and interest on the Series 2018D Bonds will be paid through The Bank of New York Mellon Trust Company, N.A., as Trustee and Paying Agent. So long as DTC or its nominee, Cede & Co., is the registered owner, such payments will be made directly to Cede & Co. Disbursements of such payments to DTC’s participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of the DTC Participants and the Indirect Participants, as more fully described herein. Transfers of beneficial ownership in the Series 2018D Bonds will be accomplished by book entries made by

DTC and, in turn, by the Direct Participants, as appropriate. See “BOOK-ENTRY ONLY SYSTEM” herein.

The record date for any regular interest payment date for Series 2018D Bonds (as described herein under “DESCRIPTION OF THE SERIES 2018D BONDS - Variable Rate Mode - Interest Payment Dates for Series 2018D Bonds”) while bearing interest at a Variable Weekly Rate or Variable Monthly Rate is the close of business on the last Business Day of the related Interest Period. With respect to any Interest Period for Series 2018D Bonds with a Variable Term Rate Period of 180 days or less, the regular record date is the 15lh day (whether or not a Business Day) prior to the Interest Payment Date for such Interest Period. With respect to any Interest Period for Series 2018D Bonds with a Variable Term Rate Period of more than 180 days, the regular record date is the 15th day of the month immediately preceding the Interest Payment Date and the 15Ih day (whether or not a Business Day) prior to the end of such Variable Term Rate Period. If sufficient funds for the payment of interest becoming due on any regular interest payment date for Series 2018D Bonds are not on deposit with the Trustee on such date, the interest so becoming due shall forthwith cease to be payable to the registered owner otherwise entitled thereto as of such date. If sufficient funds thereafter become available for the payment of such overdue interest, the Trustee shall establish a special interest payment date (any such date being herein referred to as a “Special 2018D Interest Payment Date”) on which such overdue interest shall be paid and a Special Record Date relating thereto (any such date being herein referred to as a “Special 2018D Record Date”), and shall mail a notice of each such date to the registered owner thereof at least 10 days prior to the Special 2018D Record Date, but not more than 30 days prior to the Special 2018D Interest Payment Date.

Variable Rate Mode

Under the terms of the 2018D Indenture, the Series 2018D Bonds can be issued in various interest rate modes (“Interest Rate Modes”), including a Variable Rate Mode. All Series 2018D Bonds will be issued initially in the Variable Rate Mode in a Variable Weekly Rate Period.

This Official Statement does not describe the terms of the Series 2018D Bonds in any Interest Rate Mode other than the Variable Rate Mode. If Series 2018D Bonds are converted to another Interest Rate Mode, the affected Series 2018D Bonds must be purchased from the Holders pursuant to the mandatory tender provisions of the 2018D Indenture and simultaneously remarketed to investors in the new Interest Rate Mode. See “APPENDIX C - DEFINITIONS OF TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT.”

While the Series 2018D Bonds are in the Variable Rate Mode, there shall be no liquidity facility supporting the payment of the purchase price. Moreover, the Obligated Group is not obligated to purchase Series 2018D Bonds that are tendered but not remarketed.

Series 2018D Bonds in the Variable Rate Mode may be in a Variable Daily Rate Period, Variable Weekly Rate Period, a Variable Monthly Rate Period, or a Variable Term Rate Period. All Series 2018D Bonds in the Variable Rate Mode shall be in the same Variable Rate Period, and

all Series 2018D Bonds in a Variable Term Rate Period shall have the same Variable Term Rate Period.

During the Variable Rate Mode, TJU may elect to establish the applicable Variable Rate Period. All Series 2018D Bonds initially will be issued in a Variable Rate Mode with a Variable Weekly Rate. The TJU may from time to time elect to change the Variable Rate Period for any Series 2018D Bonds in the Variable Rate Mode. Any change in the Variable Rate Period may be effective only on a Variable Rate Reset Date.

TJU’s election to change the Variable Rate Period to a Variable Daily Rate Period, Variable Weekly Rate Period or to a Variable Monthly Rate Period must be given in writing to the Trustee and the Remarketing Agent (as defined herein) not less than five Business Days prior to the Variable Rate Reset Date when the change is to be effective (unless a shorter period is acceptable to the Trustee and Remarketing Agent). TJU’s election to establish a Variable Term Rate Period must be given to the Trustee and the Remarketing Agent not less than 20 days prior to the first day of the proposed Variable Term Rate Period (unless a shorter period is acceptable to the Trustee and the Remarketing Agent). Series 2018D Bonds in a Variable Daily Rate Period, a Variable Weekly Rate Period or a Variable Monthly Rate Period shall remain in such period unless TJU elects to change the period.

The Trustee will notify holders of the Series 2018D Bonds of each change to a Variable Daily Rate Period, Variable Weekly Rate Period or a Variable Monthly Rate Period at least five Business Days, but not more than 60 days prior to the effective date of such change. Bondholders shall be notified of each change to a Variable Term Rate Period as part of the mandatory tender notification process set forth in the 2018D Indenture.

Variable Daily Rate. If the Interest Rate Mode for the Series 2018D Bonds is the Variable Daily Rate, the interest rate on the Series 2018D Bonds for a particular Variable Daily Rate Period shall be the rate established by the Remarketing Agent no later than 5:00 p.m. (New York City time) on each Business Day for applicability on the following day during the Variable Daily Rate Period (or the Business Day preceding the Conversion of the Interest Rate Mode to the Variable Daily Rate). The Variable Daily Rate shall be the minimum rate of interest necessary, in the reasonable judgment of the Remarketing Agent, to enable the Remarketing Agent to sell the Series 2018D Bonds on such Business Day at a price equal to the principal amount thereof, plus accrued Stated Interest, if any, thereon. The Variable Daily Rate for any day that is not a Business Day shall be the same as the Variable Daily Rate for the immediately preceding Business Day. In the event that the Remarketing Agent fails to establish a Variable Daily Rate for any day, then the Variable Daily Rate for such day shall be the same as the Variable Daily Rate for the immediately preceding Business Day and such rate shall continue until the earlier of (A) the date on which the Remarketing Agent determines a new Variable Daily Rate or (B) the fifth consecutive Business Day succeeding the first such Business Day on which such Variable Daily Rate is not determined by the Remarketing Agent. In the event that the Remarketing Agent fails to determine a new Variable Daily Rate for a period of five consecutive Business Days as described in clause (B) of the immediately preceding sentence, the Variable Daily Rate shall be equal to the Maximum Rate until a new Variable Daily Rate is established by the Remarketing Agent.

Variable Weekly Rate. The Variable Weekly Rate shall be set initially on a date prior to the initial delivery date of the Series 2018D Bonds to be effective the date of initial delivery of the Series 2018D Bonds. After the date of delivery of the Series 2018D Bonds, the Variable Weekly Rate shall be set on each Thursday (each Thursday being a “Variable Rate Reset Date” with respect to Series 2018D Bonds in a Variable Weekly Rate Period) while the Series 2018D Bonds are in a Variable Weekly Rate Period, beginning May 10, 2018, and the interest rate on the Series 2018D Bonds for a particular Variable Weekly Rate Period shall be the rate established by the Remarketing Agent no later than 5:00 p.m. (New York City time) on each Thursday, or, if such day is not a Business Day, on the last Business Day prior to such Thursday (each such date being a “Rate Determination Date” with respect to Series 2018D Bonds in a Variable Weekly Rate Period), as the minimum rate of interest necessary, in the reasonable judgment of the Remarketing Agent, to enable the Remarketing Agent to sell the Series 2018D Bonds on such Business Day at a price equal to the principal amount thereof, plus accrued Stated Interest, if any, thereon. The Variable Weekly Rate so determined shall be effective on the Variable Rate Reset Date and shall remain in effect until (and including) the following Wednesday; provided that the initial Variable Weekly Rate shall apply from the initial delivery date of the Series 2018D Bonds until and including May 9, 2018.

Variable Monthly Rate. If the Interest Rate Mode for the Series 2018D Bonds is the Variable Monthly Rate, the interest rate on the Series 2018D Bonds for a particular Variable Monthly Rate Period shall be the rate established by the Remarketing Agent no later than 5:00 p.m. (New York City time) on the last Business Day of each month during the Variable Monthly Rate Period (each such date being a “Rate Determination Date” with respect to Series 2018D Bonds in a Variable Monthly Rate Period), as the minimum rate of interest necessary, in the reasonable judgment of the Remarketing Agent, to enable the Remarketing Agent to sell the Series 2018D Bonds on such Business Day at a price equal to the principal amount thereof, plus accrued Stated Interest, if any, thereon. The Variable Monthly Rate so determined shall be effective on the first day of the Variable Monthly Rate Period or the first Business Day following such Rate Determination Date (each such date being a “Variable Rate Reset Date” with respect to Series 2018D Bonds in a Variable Monthly Rate Period), as the case may be, and shall remain in effect until (and including) the day immediately prior to the first Business Day of the following month.

Variable Term Rate Periods and Variable Term Rate. TJU may elect a Variable Term Rate Period, which must be more than 35 days and must end on the last day of a calendar month prior to the Maturity Date for the Series 2018D Bonds. If TJU elects a Variable Term Rate Period that ends on a day that is not in fact immediately prior to a Business Day, then such Variable Term Rate Period shall automatically extend to the next day that is immediately prior to a Business Day. An election by TJU to establish a Variable Term Rate Period may provide that successive Variable Term Rate Periods of specified length shall be established with respect to Series 2018D Bonds in the Variable Rate Mode, and if such notice is delivered no additional notice shall be required from TJU with respect to the subsequent Variable Term Rate Periods so specified.

If the Interest Rate Mode for the Series 2018D Bonds is the Variable Term Rate, the interest rate on the Series 2018D Bonds for a particular Variable Term Rate Period shall be the rate established by the Remarketing Agent no later than 5:00 p.m. (New York City time) on the last Business Day immediately prior to the first day of the Variable Term Rate Period (or the Business Day preceding the Conversion of the Interest Rate Mode to the Variable Term Rate) (each such

date being a “Rate Determination Date” with respect to Series 2018D Bonds in a Variable Term Rate Period) as the minimum rate of interest necessary, in the reasonable judgment of the Remarketing Agent, to enable the Remarketing Agent to sell the Series 2018D Bonds on such Business Day at a price equal to the principal amount thereof, plus accrued Stated Interest, if any, thereon. The Variable Term Rate so determined shall be effective on the first day of the Variable Term Rate Period (each such date being a “Variable Rate Reset Date” with respect to Series 2018D Bonds in a Variable Term Rate Period) and shall remain in effect until (and including) the last day of such Variable Term Rate Period.

Upon the expiration of any Variable Term Rate Period, the Variable Rate Period shall automatically revert to a Variable Weekly Rate Period unless TJU makes a timely election to change the Variable Rate Period to the Variable Monthly Rate Period or another Variable Term Rate Period.

Remarketing Agent Sets Variable Rates. Variable Rates shall be set by the Remarketing Agent as described above taking into account relevant market conditions and credit rating factors as they exist on such date. If the Remarketing Agent fails to determine the Variable Rate on any Rate Determination Date, the Variable Rate on the following Variable Rate Reset Date shall be the lesser of 12% per annum and the maximum rate permitted by law (the “Maximum Rate”).

Interest on Non-Remarketed Bonds. A Series 2018D Bond that is not successfully remarketed on a Variable Rate Tender Date is referred to in the 2018D Indenture as a “Variable Rate Non-Remarketed Bond.” During the period from when a Series 2018D Bond is not purchased from a Holder after such Holder tenders such Series 2018D Bond for purchase pursuant to a Variable Rate Tender and ending on the date that all Variable Rate Non-Remarketed Bonds are successfully remarketed (defined in the 2018D Indenture as a “Variable Rate Special Non- Remarketing Period”), if the Series 2018D Bonds are not already in a Variable Weekly Rate Period, the Variable Rate Period for the Series 2018D Bonds shall automatically change to a Variable Weekly Rate Period, and all Series 2018D Bonds in the Variable Rate Mode (including any Series 2018D Bonds in the Variable Rate Mode that are not Variable Rate Non-Remarketed Bonds) shall bear interest at the Maximum Rate.

Calculation of Interest Payments for Series 2018D Bonds. Interest on Series 2018D Bonds at the Variable Daily Rate, the Variable Weekly Rate or Variable Monthly Rate shall be computed on the basis of a 365- or 366-day year, as the case may be, for the actual number of days elapsed. Interest on Series 2018D Bonds at the Variable Term Rate shall be computed upon the basis of a 360-day year, consisting of twelve 30-day months.

Interest Payment Dates for Series 2018D Bonds. Interest on Series 2018D Bonds in the Variable Rate Mode with a Variable Daily Rate Period, a Variable Weekly Rate Period or a Variable Monthly Rate Period shall be payable in arrears (i) on the first Business Day of each month, beginning June 1, 2018, (ii) on the Conversion Date if the Series 2018D Bonds are converted to another Interest Rate Mode, and (iii) on the Maturity Date.

Interest on Series 2018D Bonds in the Variable Rate Mode with a Variable Term Rate Period of 180 days or less shall be payable on the day immediately following the end of the Variable Term Rate Period (which must be a Business Day).

Interest on Series 2018D Bonds in the Variable Rate Mode with a Variable Term Rate Period of more than 180 days shall be payable on (i) each March 1 and September 1 during such Variable Term Rate Period, and (ii) the day immediately following the end of the Variable Term Rate Period (which must be a Business Day).

Optional Tender of Series 2018D Bonds in Variable Rate Mode

The holder of any Series 2018D Bond in the Variable Rate Mode at the Variable Daily Rate, the Variable Weekly Rate or the Variable Monthly Rate shall have the right to tender such Series 2018D Bond to the Trustee for purchase on the following dates (each, a “Variable Rate Optional Tender Date”), in whole or in part, at a purchase price equal to the principal amount thereof plus accrued Stated Interest, if any, to the Variable Rate Optional Tender Date:

(a) if such Series 2018D Bond is in a Variable Daily Rate Period or Variable Weekly Rate Period, any Business Day may be a Variable Rate Optional Tender Date; and

(b) if such Series 2018D Bond is in a Variable Monthly Rate Period, any Interest Payment Date may be a Variable Rate Optional Tender Date.

In order to exercise such option with respect to a Series 2018D Bond in a Variable Daily Rate Period, a Variable Weekly Rate Period or a Variable Monthly Rate Period, the holder must deliver notice to the Remarketing Agent, the Tender Agent and the Trustee on or before 5:00 p.m. (New York City time) on a Business Day not later than the seventh day prior to the related Variable Rate Optional Tender Date. Notices of optional tender for Series 2018D Bonds in a Variable Daily Rate Period, a Variable Weekly Rate Period or a Variable Monthly Rate Period shall state the principal amount (or portion thereof) of the Series 2018D Bond to be purchased, the Variable Rate Optional Tender Date on which such Series 2018D Bond is to be purchased and shall irrevocably request such purchase and indicate the agreement to deliver such Series 2018D Bond.

Holders of Series 2018D Bonds in the Variable Rate Mode with a Variable Term Rate Period shall not have the right to tender such Series 2018D Bonds for purchase during such Variable Term Rate Period, but shall be required to tender such Series 2018D Bonds for purchase on the day immediately following the end of the Variable Term Rate Period.

Mandatory Tender of Series 2018D Bonds in the Variable Rate Mode

The holder of any Series 2018D Bond in the Variable Rate Mode shall be required to tender such Series 2018D Bond to the Trustee for purchase on (i) the first day of each new Variable Rate Period with respect to such Series 2018D Bond other than a Conversion to the Variable Daily Rate or the Variable Weekly Rate from the Variable Daily Rate or the Variable Weekly Rate and (ii) the date of conversion of such Series 2018D Bond to another Interest Rate Mode (each, a “Variable Rate Mandatory Tender Date”), at a purchase price equal to the principal amount thereof, plus accrued Stated Interest, if any, thereon to the Variable Rate Mandatory Tender Date. If any Variable Rate Mandatory Tender Date is not a Business Day, the Variable Rate Mandatory Tender Date shall be the next succeeding Business Day. See also “DESCRIPTION OF THE SERIES 2018D BONDS - Conversion of Series 2018D Bonds” herein.

Variable Rate Non-Remarketed Bonds

Funds for the purchase of Series 2018D Bonds pursuant to a Variable Rate Tender shall be derived solely from (i) Remarketing Proceeds or (ii) funds that TJU elects to provide for such purchase, if any; provided, however, that TJU shall not be required to provide funds for the purchase of Series 2018D Bonds tendered pursuant to a Variable Rate Tender. If the Remarketing Agent cannot successfully remarket all or any portion of the Series 2018D Bonds which are the subject of an optional tender or mandatory tender for purchase, such Series 2018D Bonds shall constitute Variable Rate Non-Remarketed Bonds under the 2018D Indenture and a Bondholder shall not have the right to have such Variable Rate Non-Remarketed Bond purchased upon tender from any source other than Remarketing Proceeds. THE SERIES 2018D BONDS WILL NOT INITIALLY BE SUPPORTED BY ANY LIQUIDITY FACILITY. See “DESCRIPTION OF THE SERIES 2018D BONDS - Variable Rate Mode - Interest on Non-Remarketed Bonds” herein.

If adequate funds are not available in the Bond Purchase Fund on any Variable Rate Tender Date to pay the Purchase Price of all Series 2018D Bonds tendered for purchase pursuant to the Variable Rate Tender provisions of the 2018D Indenture, no Series 2018D Bonds in the Variable Rate Mode shall be purchased on such Variable Rate Tender Date pursuant to the Variable Rate Tender provisions of the 2018D Indenture. The Trustee shall return all Variable Rate Non-Remarketed Bonds to the Holders thereof, and the Trustee shall return any Remarketing Proceeds deposited in the Bond Purchase Fund with respect to such Variable Rate Non-Remarketed Bonds to the Remarketing Agent for return to the Persons providing such Remarketing Proceeds.

The date on which a Series 2018D Bond in the Variable Rate Mode is returned to the Holder shall be the first day of a Variable Rate Special Non-Remarketing Period with respect to such Series 2018D Bond. During the Variable Rate Special Non-Remarketing Period, if such Series 2018D Bonds are not already in a Variable Weekly Rate Period, the Variable Rate Period for the Series 2018D Bonds shall automatically change to a Variable Weekly Rate Period. During any Variable Rate Special Non-Remarketing Period, all Series 2018D Bonds in the Variable Rate Mode (including Series 2018D Bonds in the Variable Rate Mode that are not Variable Rate Non- Remarketed Bonds) shall bear interest at the Maximum Rate. During any Variable Rate Special Non-Remarketing Period, the Remarketing Agent shall continue to use its best efforts to remarket Variable Rate Non-Remarketed Bonds. If the Variable Rate Special Non-Remarketing Period with respect to any Variable Rate Non-Remarketed Bond lasts more than 180 consecutive days (a “Variable Rate Term-Out Event”), all Series 2018D Bonds in the Variable Rate Mode are subject to mandatory redemption as described herein under “DESCRIPTION OF THE SERIES 2018D BONDS - Redemption Provisions - Special Mandatory Redemption of Variable Rate Non- Remarketed Bonds” (the “Variable Rate Mandatory Redemption Provisions”). If all Variable Rate Non-Remarketed Bonds are successfully remarketed or are successfully converted to another Interest Rate Mode before a Variable Rate Term-Out Event redemption occurs, redemption of Series 2018D Bonds in the Variable Rate Mode shall not be required under the 2018D Indenture.

Conversion of Series 2018D Bonds

The Interest Rate Mode for the Series 2018D Bonds is subject to Conversion to a different Interest Rate Mode from time to time in whole or in part by TJU. Any Conversion of the Interest Rate Mode for the Series 2018D Bonds must occur on a Business Day and in the case of a Conversion from a Variable Term Rate Period or a Variable Monthly Rate Period, must be on an Interest Payment Date. Any Conversion by TJU of the Interest Rate Mode to the Long Term Rate or the Variable Term Rate may be made conditional on the initial interest rate determined for such Interest Rate Mode being within certain limits established by TJU. The Trustee shall notify the Bondholders of each Conversion at least 15 days (30 days in the case of Conversion from a Variable Term Rate) but not more than 60 days before the Conversion Date. In the case of Series 2018D Bonds bearing interest in the Variable Rate Mode, the Trustee shall notify Bondholders of a Conversion to a Variable Daily Rate, a Variable Weekly Rate or a Variable Monthly Rate at least three Business Days, but not more than 60 days before the effective date of such Conversion. The notice must state, among other things: (i) the proposed Conversion Date; (ii) that the Series 2018D Bonds will be subject to mandatory purchase on the Conversion Date (other than upon a Conversion between the Daily Rate and the Weekly Rate, or a Conversion between the Variable Daily Rate and the Variable Weekly Rate); (iii) if the Conversion is conditional, the interest rate limitations; and (iv) if the Remarketing Agent fails to determine the initial interest rate for a new Interest Rate Mode, there shall be no Conversion. See “DESCRIPTION OF THE SERIES 2018D BONDS - Mandatory Tender of Series 2018D Bonds in the Variable Rate Mode” and “DESCRIPTION OF THE SERIES 2018D BONDS - Variable Rate Non-Remarketed Bonds” herein and “APPENDIX C - DEFINITIONS OF TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT.”

Redemption Provisions

Optional Redemption. Series 2018D Bonds in the Variable Rate Mode are subject to optional redemption, in whole or in part, at the option of the Authority, upon the written direction of TJU, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued interest thereon to the date of redemption on the following dates:

(a) Series 2018D Bonds in a Variable Daily Rate Period, a Variable Weekly Rate Period or a Variable Monthly Rate Period are subject to optional redemption on the first Business Day of each month.

(b) Series 2018D Bonds in a Variable Term Rate Period are subject to optional redemption on the day following the end of such Variable Term Rate Period (which must be a Business Day).

(c) During any Variable Rate Special Non-Remarketing Period, all Series 2018D Bonds in the Variable Rate Mode are subject to optional redemption on any Business Day.

Special Mandatory Redemption of Variable Rate Non-Remarketed Bonds. If a Variable Rate Term-Out Event occurs while any Variable Rate Non-Remarketed Bond is in a Variable Rate Special Non-Remarketing Period, all Series 2018D Bonds in the Variable Rate Mode (including Series 2018D Bonds in the Variable Rate Mode that are not Variable Rate Non-Remarketed

Bonds) shall be redeemed, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued interest thereon to the redemption date on the first March 1 or September 1 that is at least 24 months after the Variable Rate Term-Out Event occurs; provided that, if the Series 2018D Bonds are successfully remarketed, prior to the scheduled redemption date, then the Series 2018D Bonds shall not be redeemed pursuant to this section.

Mandatory Sinking Fund Redemption. The Series 2018D Bonds are subject to mandatory sinking fund redemption prior to maturity in part by lot, on September 1 in the years and in the principal amounts set forth in the table below, at a redemption price equal to 100% of the principal amount thereof, without premium, plus accrued interest to the redemption date.

Year Principal (September 1)* Amount* 2049 $24,790,000 2050** 25,160,000

______*Preliminary, subject to change. **Final maturity.

In the event of any partial redemption of Series 2018D Bonds (other than mandatory sinking fund redemption) within a maturity or any purchase and surrender thereof to the Trustee for cancellation prior to maturity, the principal amount so redeemed or purchased shall be credited against a principal amount of Series 2018D Bonds of the same maturity thereafter coming due upon mandatory redemption in such amounts and on such dates as shall be designated by TJU; provided, however, that if no such designation is made at or prior to the time of the required notice of any such redemption or at or prior to the purchase in question, such credit shall be applied against such redemption amounts in their inverse order of due dates.

Purchase In Lieu of Redemption of Series 2018D Bonds. In lieu of redemption under the 2018D Indenture, the Trustee may, at the request of the Authority upon written direction from TJU, use funds otherwise available under the 2018D Indenture to purchase Series 2018D Bonds identified by TJU in the open market for cancellation at a price specified by TJU not exceeding the applicable redemption price.

Selection of Series 2018D Bonds for Redemption. In the case of any partial optional redemption of Series 2018D Bonds, the particular Series 2018D Bonds of such maturity to be called for redemption shall be selected by the Trustee from maturities selected by the Authority (at the written direction of TJU), and within a maturity by lot.

Notice of Redemption. Notice of any redemption of Series 2018D Bonds shall be made as provided in the 2018D Indenture upon at least 20 days’ but not more than 45 days’ notice by mailing a copy of the redemption notice by first class mail to the registered holder of the Series 2018D Bonds to be redeemed at the address shown on the bond registration books maintained by the Trustee. However, failure to mail any notice or any defect therein or in the mailing thereof, as it affects any particular Series 2018D Bond, shall not affect the validity of the proceedings for redemption of any other Series 2018D Bonds for which notice was properly given.

The notice of the call for redemption of Series 2018D Bonds shall identify the Series 2018D Bonds to be redeemed (and, in the case of partial redemption of any Series 2018D Bonds, the respective principal amounts thereof to be redeemed), shall specify the redemption date and the redemption price and when any Stated Interest accrued to the redemption date will be payable, and shall state that on the redemption date the redemption price of the Series 2018D Bonds called for redemption will be payable at the corporate trust office or corporate trust agency office of the Trustee and/or of one or more Paying Agents identified in such notice and from that date interest will cease to accrue. The Trustee may use “CUSIP” numbers in notices of redemption as a convenience to Bondholders, provided that any such notice shall state that no representation is made as to the correctness of such numbers either as printed on the Series 2018D Bonds or as contained in any notice of redemption and that reliance may be placed only on the identification numbers containing the prefix established under the 2018D Indenture.

If, at the time of mailing of any notice of optional redemption, the Authority shall not have deposited with the Trustee moneys sufficient to redeem all the Series 2018D Bonds called for optional redemption, such notice shall state that it is subject to the deposit of the redemption moneys with the Trustee not later than the redemption date and shall be of no effect unless such moneys are so deposited and available.

For so long as DTC is effecting book-entry transfers of the Series 2018D Bonds, the Trustee will provide the redemption notices described above to DTC. It is expected that DTC will, in turn, notify the Direct Participants, and that the Direct Participants, in turn, will notify or cause to be notified the Beneficial Owners of the Series 2018D Bonds to be redeemed. The Authority, the Trustee and TJU will have no responsibility or liability in connection with any failure on the part of DTC or a Participant, or failure on the part of a nominee of a Beneficial Owner of a Bond, to notify the Beneficial Owner of the Series 2018D Bond so affected, and such failure shall not affect the validity of the redemption of such Series 2018D Bond. See “BOOK-ENTRY ONLY SYSTEM” herein.

Transfer and Exchange of Series 2018D Bonds; Persons Treated as Owners

Any action to be taken by Bondholders may be evidenced by one or more concurrent written instruments of similar tenor signed or executed by such Bondholders in person or by agent appointed in writing. The fact and date of the execution by any person of any such instrument may be proved by acknowledgement before a notary public or other officer empowered to take acknowledgements or by an affidavit of a witness to such execution. Any action by the holder of any Series 2018D Bond will bind all future holders of the same Series2018D Bond in respect of anything done or suffered by the Authority or the Trustee in pursuance thereof. The ownership of Series 2018D Bonds will be proved by the Bond Register.

The Trustee is not required to transfer or exchange any Series 2018D Bond during the 15 days immediately preceding the date of mailing of notice of redemption or at any time following the mailing of any such notice, if the Series 2018D Bond to be transferred or exchanged has been called for such redemption in whole or in part.

The Authority, the Trustee, the bond registrar and any authenticating agent may deem and treat the Person in whose name any Series 2018D Bond is registered as the absolute owner thereof

(whether or not such Series 2018D Bond is overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of (and premium, if any, on), and (subject to certain provisions of the 2018D Indenture) interest on, such Series 2018D Bonds, and for all other purposes, and neither the Authority, the Trustee, the bond registrar nor the authenticating agent will be affected by any notice to the contrary.

So long as the Series 2018D Bonds are held in book-entry form, transfers of the Series 2018D Bonds by Beneficial Owners may only be made as described under “BOOK-ENTRY ONLY SYSTEM” herein. At any other time, any Series 2018D Bond may be transferred or exchanged only upon the books kept for the registration and transfer of Series 2018D Bonds as provided in the 2018D Indenture.

BOOK-ENTRY ONLY SYSTEM

The information in this section concerning DTC and DTC’s book-entry system has been obtained from DTC and neither the Authority, the Obligated Group nor the Underwriter makes any representation or warranty or take any responsibility for the accuracy or completeness of such information.

DTC will act as securities depository for the Series 2018D Bonds. The Series 2018D Bonds will be issued as fully-registered securities, registered in the name of Cede &Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered bond certificate will be issued for each maturity of the Series 2018D Bonds as set forth on the inside front cover of this Official Statement, each in the aggregate principal amount of such maturity and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the SEC. More information about DTC can be found at www.dtcc.com.

Purchases of Series 2018D Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2018D Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2018D Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2018D Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2018D Bonds, except in the event that use of the book-entry system for the Series 2018D Bonds is discontinued.

To facilitate subsequent transfers, all Series 2018D Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Series 2018D Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2018D Bonds, DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2018D Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2018D Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2018D Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2018D Indenture. For example, Beneficial Owners of Series 2018D Bonds may wish to ascertain that the nominee holding the Series 2018D Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the bond registrar and request that copies of the notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2018D Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2018D Bonds unless authorized by a Direct Participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2018D Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, purchase price, premium, if any, and interest payments on the Series 2018D Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Paying Agent on the payment date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, purchase price, premium, if any, and interest on the Series 2018D Bonds, as applicable, to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

A Beneficial Owner shall give notice to elect to have its Series 2018D Bonds purchased or tendered, through its Participant to the Remarketing Agent, and shall effect delivery of such Series 2018D Bonds by causing the Direct Participant to transfer the Participant’s interest in the Series 2018D Bonds, on DTC’s records, to the Remarketing Agent. The requirement for physical delivery of Series 2018D Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Series 2018D Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Series 2018D Bonds to the Remarketing Agent’s DTC account.

DTC may discontinue providing its services as depository with respect to the Series 2018D Bonds of a series at any time by giving reasonable notice to the Authority or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Series 2018D Bond certificates are required to be printed and delivered.

The Authority may, at the direction of TJU, decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Series 2018D Bonds certificates will be printed and delivered to DTC.

SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE SERIES 2018D BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE HOLDER OF THE SERIES 2018D BONDS OR REGISTERED OWNERS OF THE SERIES 2018D BONDS SHALL MEAN DTC AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE APPLICABLE SERIES 2018D BONDS.

The Authority, the Obligated Group, and the Paying Agent do not have any responsibility or obligation to the Direct Participants, Indirect Participants or the Beneficial Owners with respect to (a) the accuracy of any records maintained by DTC or any Direct Participant or Indirect Participant; (b) the payment by DTC or any Direct Participant or Indirect Participant of any amount due to any Beneficial Owner in respect of the principal, purchase price and redemption price of and interest on the Series 2018D Bonds; (c) the delivery or timeliness of delivery by DTC or any Direct Participant or Indirect Participant of any notice to any Beneficial Owner, which is required

or permitted under the terms of the 2018D Indenture to be given to Holders; or (d) any consent given or other action taken by DTC, or its nominee, Cede & Co., as Holders.

NONE OF THE AUTHORITY, THE OBLIGATED GROUP OR THE TRUSTEE SHALL HAVE ANY OBLIGATION WITH RESPECT TO ANY DEPOSITORY PARTICIPANT OR BENEFICIAL OWNER OF THE SERIES 2018D BONDS DURING SUCH TIME AS THE SERIES 2018D BONDS ARE REGISTERED IN THE NAME OF A SECURITIES DEPOSITORY PURSUANT TO A BOOK-ENTRY ONLY SYSTEM OF REGISTRATION.

SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS

General

The Series 2018D Bonds are being issued by the Authority under and pursuant to the 2018D Indenture. The Series 2018D Bonds are limited obligations of the Authority payable solely from the sources identified in the 2018D Indenture including Pledged Revenues (as defined in the 2018D Indenture) and amounts payable under the Master Note as described below.

Pursuant to the 2018D Loan Agreement, the Authority will lend the proceeds of the Series 2018D Bonds to TJU for the purpose of undertaking the 2018 Project and TJU will agree to make payments at such times and in such amounts as to provide for payment of the principal, purchase price and redemption price of, and interest on, the Series 2018D Bonds.

As further described below, TJU, as the Obligated Group Agent, will deliver the Master Note to the 2018D Trustee to evidence and secure TJU’s obligations under the 2018D Loan Agreement. The Master Note is secured by a pledge of the Gross Revenues of each Member of the Obligated Group on a joint and several basis, and equally and ratably with existing Obligations (other than Subordinated Obligations), any Parity Indebtedness, and any additional Obligations (other than Subordinated Obligations) secured from time to time under the Master Indenture.

The Authority has assigned its rights under the 2018D Loan Agreement (other than rights to be reimbursed for certain expenses and indemnification) and the Master Note to the 2018D Trustee as security for its obligations with respect to the Series 2018D Bonds.

See also “OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP” herein for a description of the indebtedness and swaps secured under the Master Indenture.

Trust Estate

Pursuant to the 2018D Indenture, the Trust Estate includes: (a) all right, title and interest (but not the obligations) of the Authority under and pursuant to the terms of the 2018D Loan Agreement in and to all Loan Payments and all other payments, revenues and receipts receivable by the Authority under the 2018D Loan Agreement except as provided therein, (b) all of the right, title and interest of the Authority in and to the Master Note, and all payments, revenues and receipts receivable by the Authority thereunder except as provided therein, and (c) all of the right, title and interest of the Authority in and to all Funds and Accounts established under the 2018D Indenture (except for the Rebate Fund) and all moneys and investments now or hereafter held therein and all present and future Pledged Revenues (as defined in the 2018D Indenture). See “APPENDIX

C - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT.”

The 2018D Indenture defines “Pledged Revenues” as (a) all amounts payable to the Trustee with respect to the principal, purchase price or redemption price of, or interest on the Series 2018D Bonds (i) upon deposit in the Debt Service Fund under the 2018D Indenture from the proceeds of the Series 2018D Bonds or of obligations issued by the Authority to refund the Series 2018D Bonds; and (ii) by TJU under the 2018D Loan Agreement; (b) any proceeds of Series 2018D Bonds originally deposited with the Trustee for the payment of accrued interest on the Series 2018D Bonds or otherwise, and (c) investment income with respect to any moneys held by the Trustee in the Debt Service Fund and the Construction Fund under the 2018D Indenture.

The Series 2018D Bonds are not secured by any debt service reserve fund under the 2018D Indenture.

2018D Loan Agreement

TJU is required to make loan payments in amounts sufficient to pay when due the principal or purchase price of, premium, if any, and interest on the Series 2018D Bonds. The obligation of TJU to make loan payments constitutes a general obligation of TJU, the full faith and credit of which is pledged to the payment thereof. TJU is required to pay all loan payments and additional payments without notice or demand, and without abatement, diminution or deduction and regardless of any cause or circumstance whatever including, without limitation, any set-off, counterclaim, recoupment or defense.

The Obligated Group Agent has issued the Master Note under the Master Indenture as security for TJU’s obligations under the 2018D Loan Agreement. The Master Note is a joint and several obligation of TJU and the other Members of the Obligated Group. Each of TJU and the other Members of the Obligated Group has granted a lien on, and security interest in, its respective Gross Revenues to secure its obligations under the Master Indenture and the Master Note, as described under “Master Indenture.” The Authority has assigned its rights under the Master Note to the 2018D Trustee pursuant to the 2018D Indenture, and the 2018D Trustee will be a “Related Bond Trustee” for the benefit of holders of the 2018D Bonds under the Master Indenture. The 2018D Loan Agreement contains the agreements of TJU that it will not grant or permit another Member of the Obligated Group to grant a Lien on any of its Property or its Gross Revenues to secure its obligations with respect to any Obligation except as permitted by the Master Indenture.

In the 2018D Loan Agreement, TJU agrees to comply with the covenants contained in the Master Indenture for the benefit of holders of the Series 2018D Bonds.

Master Indenture

Pursuant to the Master Indenture, TJU and each other Member of the Obligated Group have agreed to comply with certain financial and operational covenants contained in the Master Indenture. The Master Indenture described herein governs the exercise of remedies by holders of Obligations (including Obligations with respect to Related Bonds (as defined in the Master Indenture) such as the Master Note for the 2018D Bonds), upon an event of default, and limits the ability of the holder of any Obligation to exercise remedies unilaterally. See

“APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto.

Pursuant to the Master Indenture, TJU and each other Member of the Obligated Group has unconditionally and irrevocably (subject to the rights of Members to leave the Obligated Group) jointly and severally covenanted that it will promptly pay all amounts due under every Obligation issued under the Master Indenture and be liable therefor at the times and in the amounts (including principal, purchase price, interest and premium, if any, and all other amounts due thereunder) equal to the amounts to be paid upon any Related Bonds and upon any other financial obligations evidenced or secured by Obligations. In addition, to secure its obligations under the Master Indenture, each Obligated Group Member has granted to The Bank of New York Mellon Trust Company, N.A., as the Master Trustee, a lien on and security interest in its Gross Revenues.

See “Certain Covenants of the Obligated Group under the Master Indenture - Gross Revenues Pledge” below for a further description of the Gross Revenue pledge of the Members of the Obligated Group pursuant to the Master Indenture.

Affiliates of TJU and other Persons may become subject to the provisions of the Master Indenture or excluded or released from the provisions thereunder, subject to meeting certain conditions and/or tests as described herein. See “Addition, Exclusion and Release of Entities with Respect to the Requirements of the Master Indenture” below.

See “APPENDIX C - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT” and “APPENDIX D – DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto for summaries of the 2018D Indenture, the 2018D Loan Agreement, the Master Indenture and certain definitions contained therein.

Certain Covenants of the Obligated Group under the Master Indenture

Joint and Several Obligations of the Members of the Obligated Group. The obligations, agreements, covenants and restrictions of the Master Indenture are joint and several obligations, agreements and covenants of and restrictions relating to the Members of the Obligated Group.

Gross Revenues Pledge. In order to secure the prompt payment of amounts due on all Obligations (including the Master Note) issued under the Master Indenture, the Members of the Obligated Group have granted a lien on, and security interest in, their Gross Revenues.

“Gross Revenues” as defined under the Master Indenture consist of all receipts, revenues, income and other moneys received by or on behalf of each Member of the Obligated Group, and all rights to receive the same, whether in the form of accounts, accounts receivable, deposit accounts, contract rights, chattel paper, instruments, documents, general intangibles, letter of credit rights, investment property or other rights, and the proceeds thereof, and insurance thereon (all terms which are used in such definition which are defined in Uniform Commercial Code of the Commonwealth (the “UCC”) have the same meanings in such definition as defined in the UCC, unless the Master Indenture provides otherwise), whether now existing or hereafter coming into existence and whether now owned or held or hereafter acquired by a Member of the Obligated

Group, and including all Swap Receipts and Swap Termination Payments (as such terms are defined in the Master Indenture) payable to a Member of the Obligated Group; provided, however, that there shall be excluded from Gross Revenues any Excluded Property.

“Excluded Property” is defined under the Master Indenture to mean (i) any assets of “employee pension benefit plans,” including “multi-employer plans,” as defined in the Employee Retirement Income Security Act of 1974, as amended, or any similar funds established for provision of pension or other post-retirement benefits, (ii) any assets of a self-insurance trust which prohibits any application of such assets for purposes which are not related to claims as defined in the governing trust document, and (iii) all endowment funds and property derived from gifts, grants, research contracts, bequests, donations and contributions heretofore or hereafter made to or with any Member of the Obligated Group that are specifically restricted by the donor, testator or grantor to a particular purpose inconsistent with the payment of Debt Service Requirements on Obligations, and the income and gains derived therefrom, if so restricted.

The pledge by the Members of the Obligated Group of their Gross Revenues will secure the payments under the Master Note with respect to the Series 2018D Bonds on a parity basis with all other outstanding Obligations (other than Subordinated Obligations) and Parity Indebtedness heretofore issued or incurred in accordance with the Master Indenture. See “OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP” herein for a description of the Indebtedness secured by Obligations issued pursuant to the Master Indenture and other outstanding Indebtedness of the Obligated Group.

Such pledge by the Members of the Obligated Group of their Gross Revenues also secures any additional Obligations and Parity Indebtedness secured from time to time under the Master Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS – Additional Obligations - Long Term Indebtedness” herein for a description of the Master Indenture provisions governing the incurrence of additional Long Term Indebtedness and “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS - Direct Placement Bonds” herein for a description of certain provisions governing the Direct Placement Bonds. See also “The Obligations” and “Additional Obligations” under “CERTAIN PROVISIONS OF THE MASTER INDENTURE” in “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto for a summary of the provisions of the Master Indenture relating to the issuance of Obligations and the incurrence of Indebtedness by the Members of the Obligated Group.

Negative Pledge. Each Member of the Obligated Group agrees that it will not create, assume or suffer to exist any Lien upon the Gross Revenues or the Property of the Obligated Group, except for Permitted Encumbrances. Notwithstanding any other provision of the Master Indenture or any other agreement executed in connection with the issuance of any Obligations, TJU may not grant, or permit to be granted, a Lien on its Gross Revenues to secure any Obligations consisting of or arising under a Swap Agreement until the $60,420,000 Pennsylvania Higher Educational Facilities Authority Revenue Bonds (Thomas Jefferson University) Series 2006B (the “Series 2006B Bonds”) and the $42,195,000 Pennsylvania Higher Educational Facilities Authority Revenue Bonds (Thomas Jefferson University), Series 2012 (“Series 2012 Bonds”) have been paid in full, or provision for their payment in full has been made in accordance with the agreements

pursuant to which they were issued. See “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE – Negative Pledge; Permitted Encumbrances.”

The payments due under the Master Note related to the Series 2018D Bonds and the other Indebtedness evidenced or secured by other Obligations issued under the Master Indenture, including the Existing Swaps (as defined herein), are not secured by a mortgage on any real property of the Obligated Group. See “OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP - Interest Rate Swaps” herein for a description of the Existing Swaps.

Debt Service Coverage Ratio. Pursuant to the Master Indenture, within 180 days after the end of each Fiscal Year, commencing with the Fiscal Year ended June 30, 2017, TJU, as the Obligated Group Agent, shall compute the Debt Service Coverage Ratio for such Fiscal Year and furnish a Certificate of the Obligated Group Agent setting forth such computations to the Master Trustee.

The Obligated Group covenants that, if at the end of any Fiscal Year the Debt Service Coverage Ratio shall have been less than 1.10 to 1.0, it will use its best efforts to adopt a budget for the current Fiscal Year that will result in the Debt Service Coverage Ratio for such Fiscal Year to be at least 1.10 to 1.0. If the Debt Service Coverage Ratio is less than 1.0 for any Fiscal Year, the Obligated Group Agent will engage an Independent Consultant to advise the Obligated Group on possible steps to take to enhance future revenues and/or reduce future expenses in order to achieve a Debt Service Coverage Ratio not less than 1.10 to 1.0 in the future. Failure to maintain a Debt Service Coverage Ratio equal to 1.10 to 1.0 (or 1.0 to 1.0) shall not constitute an event of default so long as: (a) the Obligated Group Agent engages an Independent Consultant as/when required and considers such Independent Consultant’s recommendations, and (b) Liquid Unrestricted Net Assets is greater than 25% of the Obligated Group’s Outstanding Long Term Indebtedness. Copies of the recommendations of the Independent Consultant are required to be filed with the Master Trustee. Notwithstanding the foregoing, the failure of the Obligated Group to satisfy the minimum Debt Service Coverage Ratio covenant together with any nonpayment of debt service on the Series 2018D Bonds will result in an event of default under the 2018D Loan Agreement, the 2018D Indenture and the Master Indenture, and afford holders of the Series 2018D Bonds and the holders of Obligations and Related Bonds under the Master Indenture the ability to exercise remedies in accordance with such documents.

Notwithstanding the foregoing, any Person that is part of the University may permit the rendering of services or the use of its Property without charge or at reduced charges, at the discretion of the governing body of the Obligated Group Agent or an Audit Group member to the extent necessary for maintaining its tax-exempt status and its eligibility for grants, loans, subsidies or payments from governmental entities, or in compliance with any recommendation for free services that may be made by an Independent Consultant or as a result of Industry Restrictions. “Industry Restrictions” means federal, state or other applicable governmental laws or regulations or general industry standards or general industry conditions placing restrictions and limitations on the rates, fees and charges to be fixed, charged and collected by any member of the Audit Group.

Other Covenants. The Master Indenture also sets forth various covenants and other provisions applicable to the finances and operations of the Obligated Group. Such provisions

address, among other things, the (a) the incurrence of additional Indebtedness secured by Gross Revenues of the Obligated Group on a parity basis with, or subordinated basis to, obligations with respect to the Series 2018D Bonds, the existing Obligations and any additional Obligations issued from time to time under the Master Indenture, (b) the incurrence and securing of Swaps, including, subject to certain conditions, the securing of Swap Payments on a parity basis with Obligations issued from time to time under the Master Indenture, (c) the incurrence of Short Term Indebtedness, (d) requirements related to the consolidation, merger or transfer of all or substantially all of the assets of entities subject to the Master Indenture, (e) limitations on certain dispositions of real and personal property (including cash), (f) Permitted Encumbrances, and (g) the addition of persons as Members for purposes of the Master Indenture, the release of any Member from its obligations under the Master Indenture (other than the Obligated Group Agent (currently, TJU)), and the designation of entities as “Excluded Affiliates”. For a more extensive discussion of the provisions of the Master Indenture, see “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE.”

Direct Placement Bonds

The (i) $50,000,000 Montgomery County Higher Education and Health Authority Hospital Revenue Bonds, Series B of 2012 (Abington Memorial Hospital Obligated Group) (“Abington Series B of 2012 Bonds”), (ii) $35,125,000 Pennsylvania Higher Educational Facilities Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2015C (“Series 2015C Bonds”), (iii) $34,875,000 Pennsylvania Higher Educational Facilities Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2015D (“Series 2015D Bonds”), (iv) $35,125,000 Pennsylvania Higher Educational Facilities Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2015E (“Series 2015E Bonds”), (v) $34,875,000 Pennsylvania Higher Educational Facilities Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2015F (“Series 2015F Bonds”), (vi) $20,950,000 Pennsylvania Higher Educational Facilities Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2015G (“Series 2015G Bonds”), (vii) $29,050,000 Pennsylvania Higher Educational Facilities Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2015H (Taxable) (“Series 2015H Bonds”), (viii) $50,000,000 Philadelphia Authority for Industrial Development Thomas Jefferson University Variable Rate Revenue Bonds, Series 2017C (“Series 2017C Bonds”), and (ix) the Series 2017E Bonds (collectively, the “Direct Placement Bonds”) were purchased by various commercial banks (collectively, the “Direct Purchasers”). The Direct Placement Bonds are secured under the Master Indenture; and the Direct Purchasers are secured by Obligations issued under the Master Indenture and have the benefit of the same covenants pursuant to the Master Indenture. For certain additional information regarding the outstanding Direct Placement Bonds, see “OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP” herein.

Interest Rate Swaps

TJU currently has four fixed-payor swaps and two constant maturity swaps (collectively, the “Existing Swaps”). For a further description of the Existing Swaps see “INDEBTEDNESS – Interest Rate Derivatives” in APPENDIX A hereto.

Under certain circumstances, the Existing Swaps may be terminated early, in which case TJU may become obligated to make a substantial payment to one or more swap counterparties. In certain circumstances TJU may have an obligation under the swaps to post collateral with the swap counterparties depending, among other things, on the then-current bond ratings and the then- current mark-to-market value of the swaps and subject to compliance with the Master Indenture. For information about the fair values of the Existing Swaps as of June 30, 2017 see “Note 11. Derivative Financial Instruments” in “APPENDIX B-1 - THOMAS JEFFERSON UNIVERSITY CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND 2016” attached hereto.

The Master Indenture provides that Swap Termination Payments only may be secured as Subordinated Obligations under the Master Indenture, but may come due without resulting in an acceleration of the maturity of the other then outstanding Obligations. For a further description of the provisions of the Master Indenture relating to the incurrence and securing of Swaps, including, subject to certain conditions, the posting of collateral to secure Swaps, see “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Additional Obligations – Swaps” and “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Limitations of Certain Dispositions –Swaps” in “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” and “Note 11. Derivative Financial Instruments” in “APPENDIX B-1 - THOMAS JEFFERSON UNIVERSITY CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND 2016” attached hereto.

Additional Long Term Indebtedness

Pursuant to the Master Indenture, the Obligated Group may not incur additional Long Term Indebtedness (whether through the creation of new Indebtedness, the assumption of existing Indebtedness or the guaranteeing of any new or existing Indebtedness) unless the Master Trustee receives, among other items, the following.

(a) a Certificate of TJU (as the Obligated Group Agent) stating that, (i) the proceeds of the Indebtedness, together with other available moneys, is expected to be sufficient for completion of the applicable project, and (ii) immediately following the incurrence of the Long Term Indebtedness and the application of the proceeds thereof, the Obligated Group will not be in default in the performance or observance of any covenant or condition to be performed by it under the Master Indenture and no Event of Default under the Master Indenture shall exist;

(b) a Certificate of TJU (as the Obligated Group Agent) demonstrating that either: (i) immediately following the incurrence of the Long Term Indebtedness and the application of the proceeds thereof, the Liquid Unrestricted Net Assets will be at least equal to 50% of the principal amount of Long Term Indebtedness of the Audit Group to be Outstanding; or (ii) the Net Revenues for each of the two preceding Fiscal Years (assuming that the Long Term Indebtedness in question was incurred on the last day of such Fiscal Year in question and the proceeds of such Long Term Indebtedness were applied on the last day of such Fiscal Year in question), will be equal to at least 110% of the Maximum Annual Debt Service on all Outstanding Long Term Indebtedness of the Obligated Group for such testing period; and

(c) a Certificate of TJU (as the Obligated Group Agent) demonstrating that immediately following the incurrence of the Long Term Indebtedness and the application of the proceeds thereof, the Maximum Annual Debt Service Requirements on all outstanding Long Term Indebtedness of the Obligated Group will not exceed an amount equal to 10% of the Total Unrestricted Expenses of the Audit Group.

In connection with a Person’s becoming a Member of the Obligated Group, the Obligated Group may secure any Indebtedness of such Person as Parity Indebtedness or as Subordinated Obligations under the Master Indenture so long as the Indebtedness in question could be incurred and secured in accordance with the other provisions of the Master Indenture.

See “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Additional Obligations – Other Indebtedness Permitted” in “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto for a further description of provisions of the Master Indenture permitting the incurrence of additional types of Long Term Indebtedness without complying with, the requirements described in subparagraphs (b) and (c) above including: (a) Indebtedness for the completion of the construction, renovation or equipment of Operating Assets; (b) refunding Indebtedness that is certified to be in the best interest of the Obligated Group or University in a Certificate of the Obligated Group Agent delivered to the Master Trustee; and (c) Indebtedness incurred and outstanding in an amount not in excess of five percent of the Net Assets of the Audit Group for the preceding Fiscal Year end.

Obligated Group Members and the Master Indenture

The Master Indenture provides that TJU must cause existing or new Affiliates who become Material Affiliates (as such terms are defined below) to become Members of the Obligated Group requiring them to comply with all terms of the Master Indenture, unless the Affiliate in question is qualified as an Excluded Affiliate (as further described below). See “Existing Affiliates that Become Material Affiliates” and “Non-Affiliates that Become Affiliates in the Future (e.g. Mergers, Affiliations)” under “Addition, Exclusion and Release of Entities with Respect to the Requirements of the Master Indenture” below for a discussion of TJU’s obligation to monitor whether an Affiliate has become or would constitute a Material Affiliate and TJU’s ability to designate such an Affiliate as an “Excluded Affiliate.” As of the date of issuance of the Series 2018D Bonds, TJU has not designated any Person as an Excluded Affiliate. No assurance can be given regarding any future designation of Persons as Excluded Affiliates. Affiliates who have not become Members of the Obligated Group have not pledged their Gross Revenues for the benefit of the Master Trustee and Holders of Obligations and have not agreed to comply with the covenants of the Master Indenture.

The Master Indenture defines Affiliate, Material Affiliate and Excluded Affiliate to the following effect.

“Affiliate” means any Person that, directly or indirectly, controls or is controlled by or is under common control with TJU and the term “control” (and correlative terms) as used with respect to any Person means the power, directly or indirectly either to (a) vote 50% or more of securities having ordinary voting power for the election of directors, trustees or the similar

governing body of such Person or (b) direct or cause the direction of the management and policies of such person, whether by contract or otherwise.

“Material Affiliate” means an Affiliate (other than an Excluded Affiliate) whose Total Unrestricted Revenues are equal to at least five percent of the consolidated Total Unrestricted Revenues of the Audit Group or whose Net Assets are equal to at least five percent of the consolidated Net Assets of the Audit Group.

“Excluded Affiliate” means a Material Affiliate or any other Person that (a) is designated by the Obligated Group Agent as an “Excluded Affiliate” on or before the date by which such Person otherwise would be required to become a Member of the Obligated Group pursuant to the Master Indenture but is exempted from doing so by TJU in accordance with the Master Indenture or (b) has previously become a Material Affiliate but TJU demonstrates that the conditions of the Master Indenture for the release of a Member from the obligations of the Master Indenture would be satisfied were such Material Affiliate not to become a Member. An Excluded Affiliate, for purposes of the Master Indenture, is treated like any unrelated third party and is not subject to the provisions of the Master Indenture. In particular, the financial results of each Excluded Affiliate shall be excluded from any calculations measured by the financial results of the Obligated Group or the Audit Group. For a discussion of the particular provisions of the Master Indenture relating to the designation of a Person as an “Excluded Affiliate” under different circumstances, see “Addition, Exclusion and Release of Entities with Respect to the Requirements of the Master Indenture” below.

Addition, Exclusion and Release of Entities with Respect to the Requirements of the Master Indenture

The following describes generally the requirements of the Master Indenture governing the addition, exclusion and release of entities as Members of the Obligated Group. For a further description of such provisions, see “Entrance into the Obligated Group,” “Obligated Group Members; Excluded Affiliates,” and “Release of a Member” under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants” in “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto.

The Master Indenture, depending on particular circumstances, will either require or allow a new or existing Affiliate or other Person to become bound by the provisions of the Master Indenture. The Master Indenture also allows for existing or new Affiliates, which would otherwise be required to become bound by the Master Indenture, to be designated instead by TJU as Excluded Affiliates and thereby not be bound by the Master Indenture. In connection with any actions relating to joining, excluding or releasing a Person from the requirements of the Master Indenture, TJU must demonstrate that after giving effect to the action in question, the Financial Addition Test or Financial Release Test described below, as applicable, has been met.

TJU may not be released from any of the requirements under the Master Indenture. See “New Obligated Group and New Master Indenture” below regarding provisions allowing for the replacement of the Master Indenture with a substitute master trust indenture.

Financial Addition Test. With respect to the addition of a person as a Member of the Obligated Group, TJU, as the Obligated Group Agent, is required to deliver to the Master Trustee a Certificate demonstrating that either:

(a) the Debt Service Coverage Ratio of the Audit Group (calculated as if such Person were Member) for the Fiscal Year immediately preceding the Fiscal Year in which such Person is proposed to be added as a Member was at least 1.50, or

(b) the Debt Service Coverage Ratio of the Audit Group (calculated as if such Person were a Member) for the two most recent Fiscal Years immediately preceding the Fiscal Year in which such Person is proposed to be added as a Member was in each such preceding Fiscal Year at least 1.10, and the Debt Service Coverage Ratio of the Audit Group (calculated as if such Person were a Member) is forecasted in a report prepared by a Consultant to be at least 1.40 for each of the two complete Fiscal Years succeeding the Fiscal Year in which such Person is proposed to be added as a Member (the foregoing requirements, the “Financial Addition Test”).

Financial Release Test. With respect to the release of a person (other than the Obligated Group Agent) as a Member of the Obligated Group, TJU, as the Obligated Group Agent, is required to deliver to the Master Trustee a Certificate demonstrating that:

(a) either the Debt Service Coverage Ratio (calculated assuming such Person was not a Member) for the two most recent Fiscal Years immediately preceding the Fiscal Year in which such Person is proposed to be removed as a Member is, in each such preceding Fiscal Year, greater than 1.10; or (B) the Debt Service Coverage Ratio (calculated assuming that such Person is not a Member) for the next two succeeding Fiscal Years immediately subsequent to the Fiscal Year in which such Person is proposed to be removed as a Member is forecasted by TJU, as the Obligated Group Agent, in a Certificate to be at least equal to 1.25; and

(b) for the Fiscal Year immediately preceding the Fiscal Year in which such Person is proposed to be removed as a Member (calculated assuming that such person was not a Member) the Days Cash on Hand Ratio was not less than 75 days (the foregoing requirements, the “Financial Release Test”).

If the Member to be released from the Obligated Group is a party to any Related Loan Documents with respect to Related Bonds (e.g., the Series 2018D Bonds) which remain outstanding, another Member of the Obligated Group is required to issue an Obligation under the Master Indenture to evidence or assume the obligation of the Obligated Group in respect of such Related Bonds.

Existing Affiliates that Become Material Affiliates. Existing Affiliates of the Obligated Group Agent (i.e., TJU) who are not Material Affiliates and have not previously been designated as Excluded Affiliates but become Material Affiliates over time as determined upon TJU’s review of the annual audited Financial Statements of the University, must within 180 days of the date on which such Financial Statements of the University are completed by TJU either (a) become a Member of the Obligated Group (by delivering the items required by the Master Indenture for the addition of a Person as a Member of the Obligated Group), or (b) be designated as an Excluded

Affiliate subject to meeting the requirements described below under “Release - General Provisions” which include the satisfaction of the Financial Release Test.

Non-Affiliates that Become Affiliates in the Future (e.g. Mergers, Affiliations). If an entity which is not an Affiliate of TJU subsequently meets the requirements to become such an Affiliate (e.g. as a result of a merger, consolidation or affiliation agreement), then, if such new Affiliate would constitute a Material Affiliate as determined by TJU based upon TJU’s review of Financial Statements of the University on the date of consummation of such merger, consolidation or affiliation (which may be unaudited so long as prepared substantially in accordance with Generally Accepted Accounting Principles), then the new Affiliate must within 180 days of the date on which such Financial Statements are delivered to TJU either (a) become a Member of the Obligated Group (by delivering the items required by the Master Indenture for the addition of a Person as a Member of the Obligated Group), or (b) be deemed by TJU as an Excluded Affiliate without the need to satisfy any other condition of the Master Indenture.

Addition - General Provisions. Any Person may become a Member under the Master Indenture upon compliance with certain conditions including, among others: that the Master Trustee receives any agreements evidencing the pledge to the Master Trustee of such Person’s Gross Revenues, and that TJU deliver to the Master Trustee a Certificate of TJU which demonstrates that, after giving effect to the new Person becoming a Member, the Financial Addition Test would be met.

Release - General Provisions. Generally, any Member other than TJU may be released from its obligations and liabilities under the Master Indenture, and upon such release shall cease to be a Member thereunder, upon compliance with certain conditions including: that TJU deliver to the Master Trustee a Certificate of TJU which demonstrates that, after giving effect to the release of such person as a Member, the Financial Release Test would be met.

For a further description of the provisions relating to the addition, exclusion and release of Persons as Members with respect to the requirements of the Master Indenture generally described under this caption, see “Entrance into the Obligated Group,” “Obligated Group Members; Excluded Affiliates,” and “Release of a Member” under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants” in “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto.

New Obligated Group and New Master Indenture

The Master Indenture provides for effecting the affiliation of the Obligated Group with another entity or entities and the inclusion of the Members of the Obligated Group in another obligated group (the “New Obligated Group”) under a new master trust indenture (the “New Master Indenture”) executed by the members of the New Obligated Group and an independent corporate trustee (the “New Master Trustee”) (such transaction is referred to collectively in the Master Indenture as the “Obligated Group Transaction”) subject to certain conditions. Such conditions include, among others: (1) the New Obligated Group satisfying certain minimum ratings requirements for (i) new or replacement obligations issued by the New Obligated Group under the New Master Indenture to secure Indebtedness or Related Bonds (“Replacement

Obligations”) and (ii) Related Bonds of the New Obligated Group, (2) the Obligated Group Agent delivering a certificate demonstrating that after giving effect to the issuance of Replacement Obligations, and assuming the New Obligated Group constituted the Obligated Group under the Master Indenture, the New Obligated Group could meet certain tests for the incurrence of additional Long-Term Indebtedness, and (3) the New Master Indenture containing a pledge of Gross Revenues substantially similar to the pledge of Gross Revenues in the Master Indenture as of the date thereof. See also “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Supplemental Master Indentures – Note and Document Substitution” in “APPENDIX D - DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE” attached hereto.

Limited Obligations

Neither the Commonwealth nor any political subdivision thereof shall be liable for the payment of the principal, purchase price or redemption price of and the interest on any of the Series 2018D Bonds, or for the performance of any pledge, mortgage, obligation or agreement or indebtedness of the Authority, and the Series 2018D Bonds shall not be construed to constitute any indebtedness of the County, the Commonwealth or any political subdivision thereof within the meaning of any constitutional or statutory provision whatsoever. The 2018D Indenture does not pledge the general credit of the Authority nor the general credit nor the taxing power of the County, the Commonwealth or any political subdivision thereof within the meaning of any constitutional or statutory provision whatsoever.

Notwithstanding anything to the contrary in the 2018D Indenture, the Authority’s liability under the 2018D Indenture and the Series 2018D Bonds shall be enforceable only out of the Trust Estate and other property covered by the 2018D Indenture, and the lien of any judgment against the Authority shall be limited thereto. Nothing in the 2018D Indenture, however, shall limit the applicable Trustee’s rights against any Person (including without limitation TJU) other than the Authority. No recourse shall be had for any claim based on the 2018D Indenture or the Series 2018D Bonds, including but not limited to, the payment of the principal or Redemption Price of or interest on the Series 2018D Bonds, against the Authority or any member, officer, agent or employee, past, present or future, of the Authority or any successor body, as such, either directly or indirectly through the Authority or any such successor body, under the 2018D Indenture, the 2018D Loan Agreement, the Series 2018D Bonds or any constitutional provision, statute or rule of law or by the enforcement of any assessment or penalty or by any legal or equitable proceeding or otherwise. The lien of any judgment entered against the Authority shall similarly be expressly limited to the security as aforesaid.

The Authority is not liable for the debt or any portion of the debt evidenced by the Series 2018D Bonds or interest thereon, the 2018D Indenture or the 2018D Loan Agreement, neither is the Authority nor are the members of the Authority, or their respective heirs, personal representatives or successors generally or personally liable in connection with any matter, cause or things pertaining to the Series 2018D Bonds or the issuance thereof, the 2018D Indenture or any instruments and documents executed and delivered by the Authority in connection with the Series 2018D Bonds.

OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP

Existing Obligations

As of February 28, 2018, the Obligated Group had $1,412,809,852 of outstanding long- term bond indebtedness (including the Series 2017E Bonds to be refunded), which consisted of $694,794,852 of fixed-rate debt and $718,015,000 of variable rate debt, before factoring in the impact of interest rate swaps. $486,450,000 of the Obligated Group’s long-term bond indebtedness outstanding at February 28, 2018 consisted of the Direct Placement Bonds including the $247,825,000 of the Series 2017E Bonds to be refunded. Of the Direct Placement Bonds, excluding the Series 2017E Bonds: (i) $50,000,000 is subject to mandatory tender on February 13, 2020, (ii) $82,970,000 is subject to mandatory tender on March 1, 2023, (iii) $84,790,000 is subject to mandatory tender on March 1, 2025, and (iv) $50,000,000 is subject to mandatory tender on February 1, 2027.

The Master Indenture also secures a revolving line of credit in a maximum amount of $25,000,000 and a revolving line of credit in a maximum amount of $20,000,000, each in favor of TJU, neither of which had an outstanding balance as of February 28, 2018.

In connection with the issuance of the 2018 Bonds, certain additional debt, which is not secured under the Master Indenture, will be refunded. These obligations consist of: (i) the Kennedy Commercial Loans (consisting of a $51,000,000 commercial loan and a $20,000,000 commercial loan, each in favor of KUH), (ii) the Kennedy Mortgage Loans (consisting of $1,009,000 of outstanding commercial mortgage loans, in favor of Kennedy-related entities), and (iii) the Aria Commercial Loans (consisting of $13,922,140 of outstanding mortgage loans in favor of Aria-related entities).

Swap Agreements

TJU has entered into derivative transactions for the purpose of reducing the impact of fluctuations in interest rates under the terms of various debt obligations. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS - Interest Rate Swaps” herein for more information regarding Swaps, including Existing Swaps. See also “INDEBTEDNESS – Interest Rate Derivatives” in APPENDIX A hereto.

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Estimated Debt Service Requirements

The following table presents the estimated annual debt service for all outstanding Obligations and Parity Indebtedness upon the issuance of the 2018 Bonds and the refunding of the Refunded Obligations. See “PLAN OF FINANCE” herein. Currently, there are no annual debt service requirements related to any Subordinated Obligations. Fiscal Year Outstanding Series 2018A Series 2018B Series 2018C Series 2018D Ending Obligations and Parity Bonds Debt Bonds Debt Bonds Debt Bonds Debt Total Debt June 30 Indebtedness(1)(2)(3)(4) Service Service Service(5) Service(5) Service (1) 2018 $63,542,173 $ - $ - $ - $ - $63,542,173 2019 59,363,184 13,897,437 1,074,949 2,466,778 1,232,156 78,034,504 2020 55,278,241 19,630,975 2,219,665 2,980,000 1,488,510 81,597,391 2021 59,473,817 16,643,100 1,270,734 2,980,000 1,488,510 81,856,161 2022 56,865,640 18,139,725 2,121,548 2,980,000 1,488,510 81,595,423 2023 47,451,417 26,662,475 3,016,767 2,980,000 1,488,510 81,599,169 2024 47,435,727 26,676,100 3,018,541 2,980,000 1,488,510 81,598,878 2025 47,433,078 26,677,100 4,420,507 2,980,000 1,488,510 82,999,196 2026 63,784,822 14,930,600 995,106 2,980,000 1,488,510 84,179,038 2027 51,173,207 23,291,225 7,064,755 2,980,000 1,488,510 85,997,697 2028 53,648,915 21,048,975 8,829,047 2,980,000 1,488,510 87,995,447 2029 53,157,839 21,493,225 10,880,125 2,980,000 1,488,510 89,999,698 2030 53,038,585 33,265,975 1,223,280 2,980,000 1,488,510 91,996,350 2031 52,946,451 34,460,975 - 2,980,000 1,488,510 91,875,936 2032 68,007,025 19,402,350 - 2,980,000 1,488,510 91,877,885 2033 64,820,052 22,589,475 - 2,980,000 1,488,510 91,878,037 2034 67,906,930 19,503,975 - 2,980,000 1,488,510 91,879,415 2035 65,118,740 22,289,725 - 2,980,000 1,488,510 91,876,975 2036 66,994,106 20,414,725 - 2,980,000 1,488,510 91,877,341 2037 67,576,349 19,833,950 - 2,980,000 1,488,510 91,878,809 2038 67,984,127 19,423,175 - 2,980,000 1,488,510 91,875,812 2039 67,977,624 19,430,400 - 2,980,000 1,488,510 91,876,534 2040 67,982,551 19,424,800 - 2,980,000 1,488,510 91,875,861 2041 69,020,349 18,389,300 - 2,980,000 1,488,510 91,878,159 2042 69,002,035 18,408,650 - 2,980,000 1,488,510 91,879,195 2043 68,914,791 18,494,275 - 2,980,000 1,488,510 91,877,576 2044 71,163,748 16,242,875 - 2,980,000 1,488,510 91,875,133 2045 71,168,090 16,239,450 - 2,980,000 1,488,510 91,876,050 2046 71,222,736 16,188,525 - 2,980,000 1,488,510 91,879,771 2047 71,215,381 16,196,900 - 2,980,000 1,488,510 91,880,791 2048 54,036,967 33,373,950 - 2,980,000 1,488,510 91,879,427 2049 54,034,052 33,375,075 - 2,980,000 1,488,510 91,877,637 2050 54,032,163 8,960,700 - 2,980,000 25,909,139 91,882,002 2051 54,032,391 - - 12,313,823 25,534,884 91,881,097 2052 - - - 91,873,823 - 91,873,823 Total(1): $2,076,803,303 $675,000,162 $46,135,022 $199,034,423 $97,331,479 $3,094,304,389

______(1) Includes all outstanding debt service giving effect to the refunding by the 2018 Bonds. See “PLAN OF FINANCE” herein. (2) Interest rate assumed at 2.98% for tax-exempt unhedged variable rate bonds and 3.285% for taxable unhedged variable rate bonds. (3) $91.2 million of Series 2015C-H Bonds is subject to mandatory tender in 2023 and $98.8 million thereof is subject to mandatory tender in 2025; amortization reflected here is based on expected final maturity of September 1, 2041. (4) The Abington Series B of 2012 Bonds are subject to mandatory tender on February 13, 2020 with a nominal maturity date of June 1, 2035. (5) Interest rate assumed at 2.98%.

CERTAIN INVESTMENT CONSIDERATIONS

The following are certain investment considerations that have been identified by the University and should be carefully considered by prospective purchasers of the Series 2018D Bonds. Such discussion is not, and is not intended to be, exhaustive and should be read in conjunction with all other parts of this Official Statement and the appendices attached hereto and should not be considered as a complete description of all risks or other factors that could affect payment or the value of the Series 2018D Bonds. Prospective purchasers of the Series 2018D Bonds should analyze carefully the information contained in this Official Statement, including the Appendices attached hereto.

General

The Series 2018D Bonds are special limited obligations of the Authority and are payable solely from the respective sources identified in the 2018D Indenture including Pledged Revenues (as defined within the 2018D Indenture), which consist generally of all amounts payable to the Trustee with respect to the principal, purchase price or redemption price of and interest on the Series 2018D Bonds under the 2018D Loan Agreement by TJU and investment income with respect to certain funds held by the Trustee under the 2018D Indenture. The Trust Estate under the 2018D Indenture also includes certain funds held by the Trustee pursuant to the 2018D Indenture and payments made by the Obligated Group pursuant to the Master Note. No representation or assurance can be given to the effect that the Obligated Group will generate sufficient revenues to meet the payment obligations for its Indebtedness. Future legislation; regulatory actions; economic conditions; legal matters; competition from other health care providers; the capability of the University’s management; third-party reimbursement from payors, including government payors; pressures from third-party payors to limit and control healthcare costs; the availability and affordability of professional liability insurance; increases in the amount of bad debt; rising numbers of uninsured and underinsured individuals; the reduced benefit liability from commercial and governmental health insurance plans, health plans and thirty-party payor insolvencies; scientific and technological advances, new procedures, drugs and appliances; or other factors could adversely affect the University’s ability to generate such revenues. Neither the Underwriter nor the Authority have made any independent investigation of the extent to which any such factors could have an adverse impact on the revenues of the University or the University’s higher education and healthcare operations.

Covenant to Maintain Tax-Exempt Status of the Series 2018D Bonds

The tax-exempt status of the Series 2018D Bonds is based on the continued compliance by the Authority and the University with certain covenants contained in the 2018D Indenture, the 2018D Loan Agreement, and certain other documents executed by the Authority and TJU, on behalf of the Obligated Group in connection with the Series 2018D Bonds, the Series 2018A Bonds and the Series 2018C Bonds. These covenants are aimed at satisfying applicable requirements of the Internal Revenue Code of 1986, as amended (the “Code”) and relate generally to use of the proceeds of such series of 2018 Bonds, if applicable, maintenance of the status of the Members of the Obligated Group as organizations meeting the requirements of Section 501(c)(3) of the Code, arbitrage limitations, rebate of certain excess investment earnings to the federal government and restrictions on the amount of issuance costs financed with the proceeds of the Series 2018D Bonds,

the Series 2018A Bonds and the Series 2018C Bonds, if applicable. Failure to comply with such covenants could cause interest on the Series 2018D Bonds to become subject to federal income taxation retroactive to the date of issuance of the Series 2018D Bonds.

Unrelated Business Income

The IRS from time to time may undertake audits and reviews of the operations of tax-exempt hospitals with respect to their exempt activities and the generation of unrelated business taxable income (“UBTI”). The University participates in activities which generate UBTI. The University believes it has properly accounted for and reported UBTI; nevertheless, an investigation or audit could lead to a challenge which could result in taxes, interest, and penalties with respect to unreported UBTI, and may negatively affect the tax exempt status of the University and/or its entities.

Decreases in Federal and Commonwealth Research and Other Grants and Contract Funding

The University’s ability to retain research staff and meet budgetary forecasts depends, in part, on receiving research funding from federal and state agencies, as well as other sponsors. The continual reduction of the dollar amount and numbers of grants issued by the National Institutes of Health resulting from federal budget constraints has created an increasingly competitive environment for attracting grants.

Moreover, generally over the prior several fiscal years, the Governor of Pennsylvania proposed budgets that called for decreases in payments made to physicians under the Commonwealth’s programs known as “Physician Payment Initiative” and for the elimination of research grant dollars under the “Commonwealth Universal Research Enhancement Program.” No assurances can be given that future Commonwealth budgets, or with respect to certain educational programs at the University, State of Delaware budgets, will not reduce or eliminate, in total, dollars supporting these or other programs providing funds to the University. Any such reduction or elimination can have an adverse impact on the University’s financial performance and operations. See “RESEARCH ACTIVITIES” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto for a discussion of funding of research at the University and the amount of operating revenues from grants and contracts for certain recent fiscal years.

Local Tax Assessments

In recent years, a number of local taxing authorities in the Commonwealth have sought to subject the facilities of non-profit healthcare, higher educational and other traditionally exempt organizations to local real estate and business privilege taxes, primarily by challenging their status as “institutions of purely public charity” as described in the Pennsylvania Constitution, notwithstanding the fact that Pennsylvania nonprofit facilities historically have been viewed as exempt from such taxes. The Pennsylvania constitutional test is very subjective and frequently difficult to satisfy. Pennsylvania court decisions have been highly fact-specific and do not provide clear overall guidance on the question. In addition, the Pennsylvania law sets forth additional standards that must be satisfied for tax exemption. A Commonwealth Court decision within recent years which found that a nonprofit group home met the standards of the Pennsylvania law but not

the Constitutional requirements to qualify for property tax exemption, coupled with a special report of the Pennsylvania Auditor General that examined the additional tax revenues that might be available from tax-exempt organizations and the financial pressures on municipal and state governments, may increase the pressure on tax-exempt entities to enter into agreements with local counties to make payments in lieu of taxes (PILOT or SILOT agreements) or face lengthy and expensive litigation as to their status under the Constitution and the law. Therefore, there is no assurance that under current Pennsylvania law that the University will remain exempt from Commonwealth sales and use tax and county real estate and other local taxes.

Similar challenges have also occurred within the State and the New Jersey based Members of the Obligated Group recently entered into PILOT agreements with the municipalities in which they are located. There is no assurance that under New Jersey law that the applicable Members of the Obligated Group will remain exempt from real property and other New Jersey state and local taxes.

Enforceability of Obligations of Obligated Group Members

Limitation of Security Interest in Gross Revenues. The security interest in the Gross Revenues of a Member of the Obligated Group may not extend to any revenues generated from the use and operation of such Member’s property after any person other than such Member obtains possession of such property, whether by voluntary transfer, foreclosure under a mortgage or other security agreement or enforcement of a statutory or judicially created lien. The rights of the Master Trustee with respect to Gross Revenues may be subject to a preference claim under the Bankruptcy Code (as hereinafter defined) and to the exercise of discretion by a court of equity which, under certain circumstances, may have power to direct the use of such receipts to meet expenses of the University before paying debt service.

Joint and Several Obligations. All Members of the Obligated Group will be jointly and severally liable for all amounts due under the Master Note with respect to the 2018D Loan Agreement and 2018D Bonds, other Obligations (including Subordinated Obligations) and Parity Indebtedness. The state of insolvency, fraudulent conveyance and bankruptcy laws relating to the enforceability of guarantees or obligations issued by a corporation in favor of the creditors of another, or the obligation of one Member of the Obligated Group to make debt service payments on behalf of another Member is unsettled. The ability to enforce the provisions of the 2018D Loan Agreement, the Master Indenture or any Obligation, including the Master Note, against any Member of the Obligated Group, including future Members, which would be rendered insolvent thereby, may be subject to challenge.

Other Limitations. The effectiveness of the Master Indenture and the security interests created thereunder to secure loan payments related to the Series 2018D Bonds may be limited by a number of factors, including: present or future prohibitions against assignment contained in any federal statutes or regulations, commingling of Gross Revenues with other moneys of an Obligated Group Member or other Affiliate not so pledged; statutory liens; rights arising in favor of the United States of America or any agency thereof and the rights of third parties in Gross Revenues converted to cash and not in the possession of the Master Trustee.

Fraudulent Conveyance; Lack of Fair Consideration. Under the United States Bankruptcy Code and state fraudulent conveyance statutes, an obligation may be declared void and a transfer may be avoidable if (i) the obligation has been incurred or transfer effectuated (within two years of the filing of a petition under the Bankruptcy Code, or such longer look-back period as specified in applicable state fraudulent conveyance statutes) without receipt of fair consideration or of reasonably equivalent value of the obligor or transferor; and (ii) the obligor or transferor was insolvent at the time the obligation was incurred or transfer was effectuated, or the incurrence of such obligation, or effectuation of such transfer renders the obligor or transferor insolvent, as defined in the Bankruptcy Code or in the applicable state fraudulent conveyance statue.

Enforceability of Remedies

The remedies available to the Master Trustee, Trustee or Bondholders upon an Event of Default occurring under the Master Indenture, 2018D Indenture or the 2018D Loan Agreement, as applicable, are in many respects dependent upon judicial action which is subject to discretion or delay. Under existing law and judicial decisions, including specifically Title 11 of the United States Code (the “Bankruptcy Code”), the remedies (including, without limitation, specific performance) specified in the Master Indenture, the 2018D Indenture and the 2018D Loan Agreement may not be readily available to the Master Trustee, Trustee or Bondholders, as applicable, or may be limited.

The various legal opinions to be delivered concurrently with the original delivery of the Series 2018D Bonds will be qualified as to enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws or equitable principles affecting creditors’ rights.

Potential Effects of Bankruptcy

Under existing law, if any Obligated Group Member were to file a petition for relief under the Bankruptcy Code, the filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the applicable Member and its property. If the bankruptcy court so ordered, the Member’s property, including its revenues, could be used for the benefit of the Member despite the claims of its creditors (including the Master Trustee or Trustee).

In a bankruptcy proceeding, a Member of the Obligated Group could file a plan for the adjustment of its debts which modifies the rights of creditors generally or the rights of any class of creditors, secured or unsecured. The plan, when confirmed by the court, would bind all creditors who had notice or knowledge of the plan and discharge all claims against the debtor provided for in the plan. No plan may be confirmed unless, among other conditions, the plan is in the best interest of creditors, is feasible and has been accepted by each class of claims impaired thereunder.

Each class of claims has accepted the plan if at least two-thirds in dollar amount and more than one-half in number of the allowed claims of the class that are voted with respect to the plan are cast in its favor. Even if the plan is not so accepted, it may be confirmed if the court finds that

the plan is fair and equitable with respect to each class of non-accepting creditors impaired thereunder and does not discriminate unfairly.

In case of financial difficulties, Members of the Obligated Group may be able to commence state court receivership proceedings.

There can be no assurance that Bondholders or Beneficial Owners will receive all or any amount as payment with respect to the Series 2018D Bonds under any plan or court order resulting from the bankruptcy, receivership or other similar court action.

Continued Utilization of University Hospital Facilities and Factors That Could Result in Increased Competition

A significant portion of the University’s revenues are derived from the inpatient and outpatient treatment of patients at the Thomas Jefferson University Hospitals, Abington Memorial Hospital, Lansdale Hospital, Aria Health facilities, Kennedy Health facilities, and Magee facilities (collectively, the “University Hospitals”) by members of JUP and other medical staff members. Physicians on the University Hospitals’ medical staff who have clinical privileges at other hospitals or health care facilities may admit or treat patients at other hospitals or health care facilities that are not affiliated with the University Hospitals, which could result in the decrease of the University’s revenues.

If a significant number of the University Hospital-affiliated physicians leave the practice of medicine due to lower reimbursement rates and high costs of obtaining adequate malpractice insurance, the revenues of the University could decrease if the patients previously treated by these physicians receive services at another health care facility or if they otherwise do not receive services at the University Hospitals.

The University Hospitals currently face and will likely continue to face increased competition from other acute care hospitals, specialty hospitals, rehabilitation and therapy centers, freestanding diagnostic imaging centers, physician group practices, and health care facilities that offer comparable health care services to the population which the University presently serves. The University Hospitals could also face additional competition in the future due to the construction of new, or the renovation of existing, hospitals and health care facilities in the areas served by it. No assurance can be given that occupancy of the University Hospitals’ facilities will not be adversely affected by the availability of other hospital and healthcare facilities in their service area and elsewhere.

Expanded preventive medicine and outpatient treatment could also affect the University’s ability to maintain its market share at current levels. Additionally, competition to the University could come from health care providers that offer lower priced services to the same population as the University. For example, proliferation in minute clinics, eye care centers, and urgent care centers nationwide and in the Philadelphia region has resulted in increased competition for hospital systems. The allure of consumers to these clinics and centers may be due to lower out-of-pocket expenses because the limited services available at these facilities are less costly. Further, unlike hospitals, these facilities do not have the level of overhead costs that hospitals do. The convenience of obtaining prescription medications subsequent to receiving care at urgent care centers or minute

clinics located in retail pharmacies also contributes to their appeal. Indeed, services provided at these clinics and centers could be substituted for some of the revenue generating services offered by the University Hospitals.

Managed care companies and insurers are becoming increasingly selective in contracting with health care providers. The University also faces potential competition from alternative health care delivery arrangements, such as health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”), ambulatory surgical centers (“ASCs”), freestanding diagnostic imaging centers, accountable care organizations (“ACOs”) and unaffiliated physician group practices, many of which are designed to offer comparable services at lower prices. The federal government and private third-party payors, such as the Blue Cross programs, may increase their efforts to encourage the development and use of such arrangements. The revenues of the University could decrease significantly with the loss of certain third party payor contracts or if the mix of payor sources should change in materially adverse ways. The development of HMOs and other alternative health delivery programs could also result in decreased usage of inpatient hospital facilities and other facilities operated by the University.

Overall, the effects of such increased competition on the University’s revenue, including pressures for increased discounts in contracts with alternative delivery systems, cannot be predicted.

Health Care Industry Factors Affecting the University

The health care industry is subject to various factors that may limit the University’s ability to meet its obligations to make loan payments for debt service on the Series 2018D Bonds, a number of which are beyond the control of the University. Among other things, the University is subject to significant regulatory requirements of federal, state and local governmental agencies, independent professional organizations and accrediting bodies; technological advances and changes in treatment modes; various competitive factors; changes in third party reimbursement programs; and health care reform initiatives that serve to alter the financing of, payment for and delivery of hospital services.

Healthcare Reform. Since the enactment of the Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010, collectively referred to as the “Affordable Care Act,” Federal and state governmental authorities, health care providers, health care insurers, employer group health plans and others in the health care industry have been engaged in implementing the far reaching changes to various aspects of the healthcare system introduced by the Affordable Care Act, including, among many others, substantial adjustments to Medicare reimbursement, establishment of individual mandates for healthcare coverage, extension of coverage to certain populations primarily through the expansion of Medicaid and private insurance, provision of incentives for employer-provided healthcare insurance and increased oversight provisions. While the Affordable Care Act is still the law of the land, since the inauguration of President Donald Trump in January 2017, the President, Congress and the administrative agencies responsible for its implementation (the Departments of Treasury, Health and Human Services, and Labor) have been systemically unwinding as much of the law and its implementing regulations as is within their legal authority. The need for continuing reform of the issues confronting the country's health care delivery and reimbursement system – including access

to coverage, quality care and improved outcomes, and high costs – is not disputed. There is no consensus on how to tackle these issues effectively.

The Affordable Care Act reforms the sources and methods by which consumers will pay for healthcare for themselves and their families. One of the primary goals of the Affordable Care Act is to make health care coverage accessible by making available, or subsidizing the premium costs of, healthcare insurance for consumers who are currently uninsured (or underinsured) and who fall below certain income levels. To the extent all or any of those provisions produce the intended result, an increase in utilization of healthcare services by those who are currently avoiding or rationing their healthcare can be expected and bad debt expenses may be reduced.

The Affordable Care Act also includes programs that link Medicare payments for hospitals and physicians with quality outcomes and the development of new patient care models that stress primary care and community-based care. The objective of these programs is to manage chronic diseases better and to reduce inpatient admissions and other high cost care provided by hospitals.

As noted above, beginning in 2017, President Donald Trump and the leadership of the Republican-controlled Congress commenced actions to repeal the entire Affordable Care Act but their efforts were not successful. In the wake of the failure to repeal the Affordable Care Act in its entirety, Congress and President Trump have turned to an incremental repeal approach. On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act, which repeals the individual mandate requiring individuals to have health care coverage. Beginning in 2019, individuals will no longer face a tax penalty if they do not maintain health insurance coverage throughout the year. The Congressional Budget Office estimates that the elimination of the individual mandate will lead to 13 million individuals dropping health care coverage. This reduction in anticipated coverage after 2018 may increase the amount of uncompensated care provided by the University.

Frustrated with the progress of the legislature, President Trump, by Executive Order, directed the Department of Treasury, the Department of Labor, Department of Health and Human Services (“HHS”) and its Center for Medicare & Medicaid Services (“CMS”) to identify, review and amend or rescind Affordable Care Act regulations with the intent of reversing the Affordable Care Act’s reforms wherever possible. In response, the agencies shortened the 2018 enrollment period for the Marketplace Exchange plans, reduced the funding for the communication and outreach programs related to the enrollment period and published a number of proposed regulations that will allow individual insurance coverage to be sold on the private market without meeting the Affordable Care Act minimum essential benefits and subject only to state insurance regulation. More recently, President Trump issued another Executive Order calling for the government to stop making cost-sharing reduction payments to insurance companies under the Affordable Care Act. According to the Trump Administration, there is no appropriation for such payments. As the issuers of the exchange plans will still be obligated to bear the costs of the cost- sharing reductions, premiums for exchange plans that remain in the market would be expected to rise dramatically. Many plans have termination provisions which allow them to terminate their 2018 contracts if the cost-sharing subsidies are not paid. On October 13, 2017, eighteen states and the District of Columbia sued the administration to restore the funding. If funding is restored to issuers of the exchange plans, it could preclude such issuers from increasing premiums for exchange plans that remain in the market.

President Trump also issued an Executive Order requiring the relevant agencies to consider regulations or guidance allowing more employers to form association health plans (“AHPs”), and expanding the availability of short-term, limited-duration insurance (“STLDI”). In an HHS February 21, 2018 proposed rule stemming from this Executive Order, HHS proposed to allow STLDI to be sold for 12-month coverage periods, instead of the current three-month coverage period, and acknowledged that such STLDI policies would not be subject to Affordable Care Act rules, including requirements to cover 10 essential health benefits and pre-existing conditions without annual or lifetime limits. If the changes under the proposed rule come to fruition, younger and healthier people are expected to be siphoned from exchange products and into cheaper AHPs and STLDI plans—that will likely offer less adequate coverage—creating adverse selection. Premiums will rise for those left in the exchanges, making the cost of health care burdensome. These potential changes may in turn result in an increase in the amount of uncompensated care provided by the University.

HHS has also taken steps to reduce the federal government's Medicaid expenditures by, among other steps, streamlining the process for States to obtain waivers of the Medicaid coverage mandates. For example, CMS recently approved Kentucky’s plan to introduce employment requirements for Medicaid eligibility. While the Affordable Care Act cannot be repealed in its entirety through regulatory actions, the implementation of the law may be curtailed significantly by these regulatory actions and the changes may lead to further withdrawals by health insurance carriers from the Marketplace Exchanges, higher premiums or less comprehensive benefits coverage and an increase in the number of uninsured individuals in the future.

More recently, on February 26, 2018, a group of 20 states attorneys general filed a lawsuit in Texas federal court against the Affordable Care Act. With the elimination of the individual mandate under the Tax Cuts and Jobs Act, the coalition claims that the Affordable Care Act “must fall.” It is impossible to predict the effect of the lawsuit since it was just filed.

Under the Trump Administration there can be no guarantee that federal and state health insurance programs will continue to be funded at their current rate. Budgetary and financial constraints in states, as well as severe limitations on the method of acquiring increased federal financial participation payments through the use of provider taxes and donations, have called into question the ability of public agencies such HHS or the Department of Human Services in Pennsylvania (“DHS”) (formerly the Department of Public Welfare) to make adequate and timely payments to providers. Further, while expanded Medicaid coverage will likely result in fewer uninsured patients, rates paid for Medicaid patients have historically not covered the full costs of their care and there is no guarantee that the rates will ever cover the cost of such care. The interim or long term effects of the Affordable Care Act, or any legislation amending, repealing or replacing it on the University cannot be predicted with any degree of certainty. The impact of the changes to the Affordable Care Act and the rules regarding its implementation discussed above as well as other changes which Congress and the President may pass in the future cannot be currently ascertained, but they could have a material negative impact on the University’s operations. In addition, the factors described herein could have a material negative impact on the University’s operations.

Overview of Medicare and Medicaid Program

Medicare and Medicaid are the commonly used names for health care reimbursement or payment programs governed by certain provisions of the federal Social Security Act Amendments of 1965. The federal government, the largest health care purchaser in the country, uses reimbursement as a key tool to implement health care policies, to allocate health care resources and to control utilization, facility and provider development and expansion, and promote the use and development of health technology. These programs reflect the national policy that persons who are aged and persons who are poor should be entitled to receive medical care regardless of ability to pay. Medicare Part A covers inpatient hospital, home health, nursing home care and certain other services, and Medicare Part B covers certain physicians’ services and the services of other health care professionals, medical supplies and durable medical equipment. Medicare Part C, the Medicare Advantage program, enables Medicare beneficiaries to choose to obtain their benefits through a variety of private, managed care, risk-based plans. Medicare Part D makes outpatient prescription drug benefits available to Medicare beneficiaries. Some Medicare beneficiaries, however, enroll in Medicare Advantage plans, which reimburse providers on a contractually determined basis. Health care providers that participate in the Medicare program must agree to be bound by the terms and conditions of the program such as meeting the quality standards for rendering covered services and adopting and enforcing policies to protect patients from certain discriminatory practices.

Medicaid is designed to pay providers for care given to the indigent and other persons who qualify based on certain conditions. Medicaid is funded by federal and state appropriations and is administered by DHS.

Conditions of Participation. Hospitals must comply with standards called “Conditions of Participation” to be eligible for Medicare and Medicaid reimbursement. CMS is responsible for ensuring that hospitals meet these regulatory Conditions of Participation. Under applicable Medicare rules, hospitals accredited by The Joint Commission are deemed to meet the Conditions of Participation. Failure to maintain such accreditation or to otherwise comply with the Conditions of Participation or other applicable state licensing requirements could have a material adverse effect on the revenues of the University. In June 2014, The Joint Commission reaffirmed TJU’s accreditation for 10 years. Each of the University Hospitals has a current accreditation from The Joint Commission. There are no assurances that the University Hospitals will continue to receive such accreditation in the future.

Medicare Reimbursement

A substantial portion of the University’s revenues is derived from the Medicare program. Medicare is a federal health benefits program administered by CMS and Medicare Administrative Contractors. Available to individuals age 65 or over, and certain other classes of individuals, the Medicare program provides health care benefits that cover, within prescribed limits, the major costs of most medically necessary care for such individuals, subject to certain deductibles and co- payments, or in the case of the Medicare Advantage program, premiums.

Diverse and complex statutory and regulatory mechanisms, the effect of which is to limit the amount of money paid to health care providers under the Medicare program, have been enacted

and approved in recent years. It is impossible to predict what effect, if any, current and future legislative or regulatory initiatives will ultimately have on the operations of the University. Since revenues from Medicare account for a substantial portion of the University’s revenues, adverse developments or changes in Medicare reimbursement could have a material adverse effect on the financial condition and operations of the University Hospitals.

Under Medicare, the costs attributable to the deductible and coinsurance amounts that remain unpaid by the Medicare beneficiary can be added to the Medicare share allowable costs as cost reports are filed. The University and its entities generally receive interim pass-through payments during the cost report filing. Bad debts must meet specific criteria to be allowable.

The amounts uncollectible from specific beneficiaries are to be charged off as bad debts in the accounting period in which the accounts are deemed uncollectable. In determining reasonable costs for hospitals, the amount of bad debts otherwise treated as allowable costs is reduced by 35%. Amounts incurred by a hospital as reimbursement for bad debts are subject to audit and recoupment by the Medicare Administrative Contractor (“MAC”). Bad debt reimbursement has been a focus of MAC audit and recoupment efforts in the past.

Inpatient Operating Costs. Medicare payments for operating costs incurred in the delivery of inpatient hospital services are based on a prospective payment system (“PPS”) which pays acute care hospitals a fixed amount for each Medicare inpatient discharge based upon the diagnosis and certain other factors used to classify each patient into a diagnosis related group (“DRG”). DRG rates are adjusted annually by the use of an “update factor” based on the projected increase in a market basket inflation index which measures changes in the costs of goods and services purchased by hospitals, but the adjustments historically have not kept pace with inflation. Separate PPS payments are made for inpatient operating costs and inpatient capital-related costs. Some costs are also paid on the basis of “reasonable cost.”

As a general matter, payments are not adjusted for actual costs, variations in intensity of illness, or length of stay. If a hospital treats a patient and incurs less cost than the applicable DRG- based payment, the hospital is entitled to retain the difference. Conversely, if a hospital’s cost for treating the patient exceeds the DRG-based payment, the hospital generally will not be entitled to any additional payment. If, however, a case is unusually complex or expensive, it may qualify for an “outlier” payment, which is added to the DRG-adjusted base rate payment.

Medicare and Medicaid currently make additional payments to hospitals that serve a disproportionate share (“DSH”) of low-income patients. Beginning in 2014, the Affordable Care Act began incrementally decreasing the Medicare DSH payments by $22 billion from 2014 through 2019 and Medicaid DSH payments by $36 billion over a ten year period, based on an assumption that the Affordable Care Act’s new coverage and access provisions will substantially reduce uncompensated care provided by hospitals. Congress has repeatedly delayed the reductions to Medicaid DSH payments. In February 2018, Congress further delayed such payments through 2018 and 2019 in the Bipartisan Budget Act of 2018. Among other measures, the Bipartisan Budget Act of 2018 eliminates the fiscal year 2018 and fiscal year 2019 Medicaid DSH reductions, maintains the $4 billion in reductions for fiscal year 2020, and sets the amount of Medicaid DSH reductions for fiscal year 2021 through fiscal year 2025 at $8 billion per fiscal year.

The PPS amount and adjustments described above are calculated using formulae established by CMS that are revised periodically pursuant to federal budgetary policy. There can be no assurance that payments received by the University Hospitals will be sufficient to cover all actual costs of providing inpatient hospital services to Medicare patients.

Hospitals report certain quality measures under the Hospital Inpatient Quality Initiative. Hospitals that report these measures receive the full DRG inflation update - known as the “hospital market basket,” while non-participating hospitals suffer a reduction equal to one-quarter of the applicable annual payment rate update. The market basket update for federal fiscal year 2018 is 2.7%. Some or all of the University Hospitals may participate in CMS’s Hospital Quality Initiative. There is no assurance that future updates in DRG payments will keep pace with the increased costs in providing inpatient hospital services.

Joint Ventures. The University Hospitals participate in a number of joint ventures with tax-exempt or for-profit entities. Participation in joint ventures, particularly joint ventures with for-profit entities, that do not meet requirements of the Code, potentially may (a) result in a finding of inurement or undue private benefit which could result in loss of tax-exempt status, (b) result in a finding of an excess benefit transaction which could result in the imposition of an excise tax on the insider involved in the transaction or on the University Hospitals or their management that knowingly approved the transaction, or both, or (c) result in a finding that the activity is unrelated to the exempt purpose of the University Hospitals and a determination that certain income received by the tax-exempt organization from the joint-venture with the for-profit entity is taxable. See “TAX MATTERS” herein. Management of the University Hospitals does not believe that participation in any such presently existing joint venture will have a material adverse effect on the University Hospitals’ tax-exempt status or financial condition.

Quality-Based Initiatives. CMS periodically promulgates regulations to implement various quality improvement and patient safety programs. Two programs that focus on and reward value of care as opposed to volume of care provided are the Medicare Hospital Value-Based Purchasing (“VBP”) Program and the Hospital Readmissions Reduction (“HRR”) Program.

Under the VBP program, CMS withholds a certain percentage of all qualifying hospitals’ DRG payments and puts the withheld amounts into a fund. The withheld percentage varied until fiscal year 2017. Beginning with fiscal year 2017, the withheld percentage is two percent. CMS then redistributes the amounts withheld based on how well a particular hospital scores in comparison to its peers based on certain healthcare quality and cost measures during a performance period, and how much they improved the quality of care provider to hospital patients over time. There can be no assurance that the University Hospitals’ future scores will be enough to recoup the full percentage payment withholding or to qualify for a bonus under the VBP program.

Under the HRR Program, CMS requires a reduction to a hospital’s base operating DRG payment to account for excess hospital readmissions for certain applicable conditions. For fiscal year 2018 and subsequent fiscal years, CMS bases the HRR Program reduction on a hospital’s risk-adjusted readmission rate during a three year period for the following conditions: acute myocardial infarction, heart failure, pneumonia, chronic, obstructive pulmonary disease, total hip arthroplasty/total knee, arthroplasty, and coronary artery bypass graft. For fiscal year 2018, the applicable three year period is from July 1, 2013 through June 30, 2016. There can be no guarantee

that the University Hospitals will be able to avoid penalties under the HRR program for excess readmissions.

Serious, Preventable Events. Since 2008, Medicare has not reimbursed hospitals for the increased costs associated with treating a Medicare beneficiary who acquires certain hospital- acquired conditions (“HAC”) during an inpatient stay. Hospitals are further prohibited from billing Medicare beneficiaries for any charges associated with an HAC. The list of HACs has expanded to 14 categories. Under the HAC Reduction Program, HHS adjusts payments to hospitals that rank in the worst performing 25% with respect to HAC quality measures. In the fiscal year 2018 HAC Reduction Program, hospitals with a total HAC score of greater than 0.3687 may be subject to a payment reduction. While the University Hospitals currently have programs in place to monitor and prevent HACs, it is likely that University Hospitals, like almost all hospitals, will face reduced reimbursement at some point for costs associated with treating HACs.

Outpatient Services. Medicare payments for hospital outpatient services, including hospital operating and capital costs, also are established through a PPS methodology (“OPPS”). Under OPPS, procedures, evaluations, management services, drugs and devices in outpatient departments are classified into ambulatory payment classification (“APC”) groups. Services provided within an APC are similar clinically and in terms of the resources they require. Using hospital outpatient claims data from the most recently available hospital cost reports, CMS determines the median costs for the services and procedures in each APC group. For calendar year 2018, CMS has increased the payment rates under OPPS by an Outpatient Department fee schedule increase factor of 1.35%.

OPPS includes additional adjustments for transitional pass-through payments and outlier payments. Transitional pass-through payments are costs associated with new technology items (drugs, biologicals and medical devices) that were not reflected in the data that CMS used to calculate OPPS payment rates, and are intended to allow for adequate payment of new and innovative technology until there is enough data to incorporate the costs for these items into the base APC group.

Under OPPS, a hospital with costs exceeding the applicable payment rate would incur losses on such services provided to Medicare beneficiaries. There can be no assurance that the hospital OPPS rate, which bases payment on APC groups rather than individual services, will be sufficient to cover all of the University Hospitals’ actual costs of providing hospital outpatient services to Medicare patients.

Physician Payments. Payment for physician services is provided by Medicare Part B. Under Part B, physician services were reimbursed in an amount equal to the lesser of actual charges or the amount determined under a national fee schedule known as the resource-based relative value scale, which sets a relative value for each physician service that is then multiplied by a geographic adjustment factor and a nationally-uniform conversion factor, calculated utilizing the sustainable growth rate (“SGR”) system, to determine the amount Medicare will pay for each service. On April 16, 2015, President Barack Obama signed the Medicare Access and CHIP Reauthorization Act of 2015, which ended use of the SGR. The measure went into effect in July 2015.

The SGR formula was repealed and replaced with the following statutorily prescribed updates:

• Effective January 1, 2018, and carrying through 2019, Medicare physician payments will be updated 0.5 percent.

• Beginning January 1, 2020, and carrying through 2025, physician payments will not be updated.

• Beginning January 1, 2026, and effective January 1 of each subsequent calendar year, physician payments will be updated 0.75 percent for physicians who adequately participate in qualified alternative payment models, but only 0.25 percent for those who do not.

In addition to the annual updates described above, physician payments are being transitioned to pay-for-performance models beginning in 2019, where payment rates for physicians will depend on whether the physician chooses to participate in an Alternative Payment Model (“APM”) or Merit-based Incentive Payment System (“MIPS”). Physicians who participate in an APM program will receive a 5% lump sum incentive payment for each year beginning in 2019 and ending in 2024. Physicians who opt to participate in MIPS will receive payments subject to positive or negative performance adjustments equal to +/- 4% in 2019 and increasing gradually to +/- 9% for 2022 and subsequent years. There can be no assurances that reimbursement levels will remain at the present level after that date, potentially negatively impacting the reimbursement amounts received by the University for the cost of providing physician services.

Capital Costs. Hospitals are reimbursed on a fully prospective basis for capital costs (including depreciation and interest) related to the provision of inpatient services to Medicare beneficiaries. Payment for capital related costs for all hospitals are determined based on a multiplying the standardized amount (referred to as the federal rate), by the DRG weight for each discharge and by a geographical adjustment factor. The payments are subject to further adjustment by a DSH factor that contemplates the increased capital costs associated with providing care to low-income patients, and an indirect medical education (“IME”) factor that contemplates the increased capital costs associated with medical education programs. As noted above, the Affordable Care Act includes reductions over time to the DSH payments, though such reductions have been delayed through 2019.

There can be no assurance that the prospective payments for capital costs will be sufficient to cover the actual capital-related costs of the University Hospitals allocable to Medicare patient stays or to provide adequate flexibility in meeting the University Hospitals’ future capital needs.

Medical Education Costs. Under PPS, teaching hospitals receive additional payments from Medicare for certain direct and indirect costs related to their graduate medical education (“GME”) programs. Direct GME payments compensate teaching hospitals for the cost directly related to educating residents such as the residents’ stipends and benefits, the salaries and benefits of supervising faculty, and allocated overhead costs. IME payments compensate teaching hospitals for the higher patient care costs they incur relative to nonteaching hospitals. Those IME payments are issued as a percentage adjustment to the PPS payments.

The calculation for both the direct part and the indirect part of Medicare payments for GME include certain limitations on the number and classification of full-time equivalent residents reimbursed by Medicare. PPS hospitals with residents in an approved GME program receive an additional payment for each Medicare discharge to reflect the higher patient care costs incurred by teaching hospitals relative to non-teaching hospitals.

The formulae used to determine payments for medical education do not necessarily reflect the actual costs of such education, and the federal government will continue to evaluate its policy on graduate medical education and teaching hospital payments. There can be no assurance that payments to the University Hospitals under the Medicare program will be adequate to cover their direct and indirect costs of providing medical education to interns, residents, fellows and allied health professionals.

Inpatient Psychiatric Unit Reimbursement. Inpatient psychiatric units such as the unit at JUH are paid according to the inpatient psychiatric facility prospective payment system (“IPF PPS”). Patients who are treated for psychiatric conditions in specialty facilities are covered for 90 days of care per illness with a 60-day lifetime reserve and for 190 days of care in freestanding psychiatric hospitals.

Under the IPF PPS, federal per diem rates include inpatient operating and capital-related costs (including routine and ancillary services) and are determined based on geographic factors, patient characteristics, and facility characteristics. For fiscal year 2018, there is an estimated IPF payment rate of 1.25%. Under the Affordable Care Act, IPFs must report quality data and will be subject to a two percent reduction to the applicable rate for failure to do so. There is no guarantee that the Medicare per diem, as they may change from time to time, will be adequate to cover the actual cost of providing psychiatric services to Medicare patients.

Audits and Withholds. Medicare-participating hospitals are subject to audits and retroactive audit adjustments with respect to reimbursement claimed under the Medicare, Medicaid and commercial programs on an on-going basis. Such adjustments could be substantial and could exceed any reserves maintained for such purposes by the University Hospitals. Medicare regulations also provide for withholding Medicare payment in certain circumstances, and such withholds could have a material adverse effect on the financial condition of the University. See “CERTAIN INVESTMENT CONSIDERATIONS - The Fraud and Abuse Laws” for exposure to audits and withholds.

CMS is reviewing health care providers that are receiving large proportions of their Medicare revenues from outlier payments. Health care providers found to have obtained inappropriately high outlier payments will be subject to further investigations by the CMS Program Integrity Unit and potentially the Office of the Inspector General. Medicare-participating hospitals are also subject to Recovery Audit Contractor (“RAC”) audits. RAC auditors are authorized, in most cases, to look back three years from the date the claim was paid, and to review the appropriateness of each claim by applying the same standards and guidance as would a Medicare contractor. The Affordable Care Act expanded the scope of the RAC program to include Medicare Parts C and D and Medicaid. Medicaid RAC audit programs are overseen by states in accordance with federal guidelines. Medicare RAC recovery amounts have increased substantially over the last couple years. Although RACs are required to identify overpayments and underpayments,

RACs have in practice collected significantly more in overpayments from providers than paid out underpayments to providers. Furthermore, the federal and state governments have developed numerous other audit and fraud enforcement programs over the past decade increasing the likelihood that health care entities, like the University Hospitals, participating in Medicare and Medicaid may be subject to audits, retroactive audit adjustments and repayments with respect to reimbursement. Federal and state efforts to take monies back from providers as well as related investigations and, in some cases, criminal prosecutions for overbilling are expected to be prevalent for years to come. It is impossible to predict the effect of such efforts as any resulting future payment adjustments and/or re-payments could be material. Under certain circumstances, payments made may be determined to have been made as a consequence of improper claims subject to the federal False Claims Act or other federal statutes, subjecting the provider to civil or criminal sanctions. The University Hospitals received and responded to thousands of requests for charts in connection with past RAC audits. The RAC audits have been subject to criticism by the provider industry and CMS is making changes in response. In October, 2017, CMS expanded an alternative audit process, known as Targeted Probe and Educate (“TPE”) examinations to the RAC program. The University Hospitals expect to continue to receive TPE and other routine billing audits or examinations of some form from CMS in the future. There is no guarantee that the University Hospitals will not be subject to a RAC recovery in the future. Increased RAC recoupment efforts and other audit programs may have a material impact upon the revenue of the University.

Provider-Based Standards. Certain outpatient services of the University Hospitals are categorized as “provider-based” for reimbursement purposes. The Medicare program reimburses certain facilities and services (including, for example, physician offices and clinics) differently, depending upon whether they are “provider-based” or “freestanding.” A “provider-based” facility or service is an integral part of another provider, such as a hospital. Certain administrative costs and overhead of the provider organization must be allocated in part to the provider-based organization. “Freestanding” providers are not considered part of another provider for purposes of the Medicare program and stand on their own for reimbursement purposes. For any given facility or service, it is probable that one classification or the other will result in a higher aggregate reimbursement for the system as a whole. However, Section 603 of Bipartisan Budget Act of 2015 changed how CMS reimburses for such provider-based outpatient services that are established on or after November 2, 2015, by excluding new off-campus provider-based outpatient departments from the OPPS as of January 1, 2017. These sites are instead reimbursed under the applicable non-hospital payment system: the physician fee schedule. This may deter the University from establishing any new off-campus provider-based outpatient departments.

If CMS learns that a provider has treated a facility or organization as “provider-based” and the provider had not obtained a determination of that status from CMS, under strict provider-based regulations, the provider may be required to repay overpayments made by CMS due to such erroneous treatment by the provider. CMS may also review a past determination of “provider- based” status if it believes that the past determination was in error, in which case CMS will cease to treat the facility or organization as “provider-based.” In the event that the University Hospitals’ outpatient services billed on a provider-based basis are found to be out of compliance with the current provider-based regulations, the University could be liable for Medicare overpayments.

Exclusions from Medicare and Medicaid Participation. The Office of Inspector General for HHS (“OIG”) is required to exclude from federally funded governmental program participation, including Medicaid, for not less than five years, any individual or entity who has been convicted of a criminal offense relating to the delivery of any item or service reimbursed under Medicare and/or Medicaid; any criminal offense relating to patient neglect or abuse in connection with the delivery of health care; felony fraud against any federal, state or locally financed health care program; or an offense relating to the illegal manufacture, distribution, prescription or dispensing of a controlled substance. The OIG has the authority to exclude individuals and entities from participation in federal health care programs who are deemed “untrustworthy.” Additionally, there is a prohibition against employing providers and contracting with providers and vendors, including entities and individuals, who are on the OIG exclusion list. HHS also may exclude individuals or entities under certain other circumstances, such as for a conviction of fraud, theft, embezzlement, breach of fiduciary duty or other financial misconduct relating either to the delivery of health care in general or to participation in a federal, state or local government program. Exclusion means that no Medicare and/or Medicaid program payments may be made for any services rendered by an excluded party. On January 12, 2017, the OIG issued a final rule to expand and strengthen its authority to exclude individuals and entities from participation in federal health care programs, among other changes. Under the final rule, the OIG built on existing authority to impose penalties for a broader array of conduct by expanding the grounds for exclusion. The final rule’s effective date was temporarily postponed until March 21, 2017 due to a January 20, 2017 memorandum issued by President Trump, which delayed the implementation of pending regulations to allow for review by his administration.

Any action to exclude the University Hospitals from Medicare and/or Medicaid could have a significant adverse impact on the University because no program payments can be made to any provider who is excluded. Additionally, the University Hospitals regularly check the OIG exclusion list to ensure it is not contracting with or employing providers or vendors excluded from federally funded governmental program participation, including Medicaid. The University believes its efforts are in compliance with the requirement that it ensure it does not employ or contract with any individual or vendor who is excluded from federal funded program participation, but there can be no assurance that these efforts will not fail to detect an individual provider or vendor employed or contracted by the University who is excluded from federally funded governmental program participation. Such failure could have an adverse impact on the University.

Models for Care Under the Affordable Care Act. Among various other programs, the Affordable Care Act directed HHS to establish and implement various ACO programs, including the Medicare shared savings program (“MSSP”), which promotes accountability for the care of Medicare beneficiaries and encourages coordination of care and other efficiencies through ACOs. If an ACO realizes savings in Medicare expenditures above an expenditure benchmark established by CMS for the group, and meets or exceeds quality performance standards established by HHS, it will be paid a share of Medicare’s savings. Going forward, CMS has made it clear that ACOs will be expected to share in both the savings and losses generated. In 2015, HHS issued a final rule which included allowing eligible ACOs to continue participation for a second agreement period under a one-sided shared savings model where the ACO is not responsible for any portion of losses in the first three years, the addition of a new performance-based risk option that includes prospective beneficiary assignment and a higher sharing rate and a streamlined process for ACOs to access Medicare beneficiary claims data. In 2016, HHS issued a final rule which included an

option for ACOs to continue MSSP participation for a second agreement period under a two-sided shared savings model. In late 2016, CMS announced an additional ACO model designed to incorporate more limited downside risk than is present in certain other models under the MSSP.

In addition, although final rules for the MSSP published jointly by the OIG and CMS on October 29, 2015 provide for waivers of certain federal fraud and abuse laws, there may remain regulatory risks for participating hospitals, as well as financial and operational risks. The applicable regulating bodies have published guidance for MSSP ACOs to follow in order to comply with the law, but the published guidance is complex. In particular, since the federal MSSP ACO regulation does not preempt state law, Pennsylvania providers participating as a federal ACO must be organized and operated in compliance with any existing Pennsylvania statutes and regulations. Numerous organizations have formed ACOs and been selected by CMS to participate in the MSSP. In addition, private insurers are establishing similar incentives for providers, while requiring less infrastructural and organizational change. The potential long-term impacts of these initiatives and the regulation of ACOs are unknown, but introduce greater risk and complexity to health care finance and operations. There are currently 39 ACOs in Pennsylvania. Certain of the University Hospitals are a member of the Accountable Care Organization of Pennsylvania, LLC d/b/a Delaware Valley ACO (“ACO-PA”), which was formed in January 2011. See “HEALTHCARE ACTIVITIES - Delaware Valley ACO” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto.

The Affordable Care Act provides a number of programs designed to improve the quality of care while at the same time lowering costs. The “Bundled Payments for Care Improvement Initiative” (“BPCI”) program is one such program comprised of four models. Under the BPCI program, providers receive one payment for all services provided to a Medicare patient during an episode of care. The BPCI Model 2, for example, involves a retrospective bundled payment arrangement under which actual expenditures are reconciled against a target price for an episode of care. The bundled payment combines payment for physicians, hospitals and other services provided during the single episode of care. The entity receiving the payment is then responsible for distributing the payment to each provider. If the providers work together to provide higher quality care at a low cost, they will realize a profit. However, if providers are unsuccessful in reducing costs, they will lose money on the BPCI program. As of January 1, 2018, the Bundled Payments for Care Improvement Initiative Model 2 has 472 participants in Phase 2. AMH is currently the only University Hospital participating in the BPCI program. If other University Hospitals choose to participate in the future, along with AMH, there can be no guarantee that the bundled payments will be sufficient to cover all of AMH’s or the other participating University Hospitals’ actual costs of providing services to Medicare patients.

On January 9, 2018, CMS announced its plan to add a voluntary bundled payment model to the mix of pay for value and performance options available to providers in the Medicare fee- for-service program: Bundled Payments for Care Improvement Advanced (BPCI Advanced). Under BPCI Advanced, participants (providers and practitioners) will have the opportunity to earn additional payment for one or more of 32 different clinical episodes of care (e.g., inpatient, major joint replacement of the lower extremity), if Medicare fee-for-service expenditures during the applicable episodes of care (typically the admission date until 90 days post-discharge) remain under a spending target. A single retrospective bundled payment will be tied to performance on seven quality measures (e.g., all-cause hospital readmission measure). In addition to bearing

“down-side” financial risk, participants will be required to use certified electronic health records. The BPCI Advanced performance period will be from October 1, 2018 through December 31, 2023, and during this time, participants must commit to be held accountable for one or more of the 32 enumerated clinical episodes until January 1, 2020. After this first performance period, CMS will provide the opportunity for additional participation in January 2020. This model will have voluntary participation, unlike the mandatory hip fracture and cardiac bundled payment models, which CMS cancelled late last year. Following the recent announcement of this model addition, it is impossible to know the effect on the future operation of the University.

Medicare Advantage. Most individuals who are entitled to Medicare Part A benefits and enrolled in Medicare Part B may elect coverage under either the traditional Medicare fee-for- service program (Parts A and B) or a Medicare Advantage (“MA”) Plan. A MA plan may be offered by a coordinated care plan (such as an HMO or a PPO), a provider sponsored organization (“PSO”) (a network operated by health care providers rather than an insurance company), a private fee-for-service plan, or a combination of a medical saving account (“MSA”) and contributions to an MA plan. Each MA plan, except an MSA plan, is required to provide benefits approved by the Secretary of HHS. An MA plan will receive a monthly capitated payment from HHS for each Medicare beneficiary who has elected coverage under the plan. Health care providers, such as the University Hospitals, must contract with MA plans to treat MA enrollees at agreed upon rates or they may form a PSO to contract directly with HHS as a MA plan. Some or all of the University Hospitals may contract with various MA plans.

The shift of Medicare eligible beneficiaries from traditional fee-for-service to MA programs was intended to increase competitive pressure to improve benefits, reduce premiums and generate cost reductions. However, because the cost of the MA programs was on average 114% higher than traditional fee-for-service, the Affordable Care Act amended some of the MA payment methodologies.

Rate reductions and increased recoupment efforts in the MA program may have an impact on reimbursement from these insurance plans, which in turn may have a material negative impact upon the revenue of the University.

Medicaid Reimbursement

Medicaid is a partially-funded state program of medical care for the poor. States obtain federal matching funds for their Medicaid programs by obtaining the approval of CMS of a “state plan” which conforms to Title XIX of the Social Security Act and its implementing regulations. Under broad federal guidelines, each state establishes and administers its own Medicaid program, which includes determining its own eligibility standards, determining the types, amount, duration, and scope of services, and setting the rate of payment for services. After a state plan is approved, the federal government provides federal matching funds for Medicaid expenditures.

While the Affordable Care Act required each state to expand Medicaid coverage to include individuals with household income up to 138% of the FPL, beginning in January 2014, the United States Supreme Court rejected that mandate. As a result, each state has the option to expand Medicaid eligibility. The federal government funds a substantial portion of the coverage expansion costs. Under Governor Corbett, Pennsylvania adopted a modified form of Medicaid

expansion approved by CMS, the “Healthy Pennsylvania” plan, beginning in January 2015 that expanded coverage to include adults earning below 133% of the FPL subject to numerous eligibility and program requirements. Shortly after taking office in 2015, Pennsylvania Governor Wolf ended Healthy Pennsylvania in favor of a traditional expanded Medicaid program. In addition to individuals who qualified previously, Pennsylvanians ages 19 to 64 with incomes up to 138% of the Federal Poverty Level are eligible for coverage under Governor Wolf’s Medicaid expansion plan.

There can be no guarantee that Medicaid will continue to be funded at its current rate, especially given recent attempts by Congress to change the federal government's funding from a fee participation to a block grant methodology, shifting more of the financial risk to the states. Budgetary and financial constraints in Pennsylvania, as well as severe limitations on the method of acquiring increased federal financial participation through the use of provider taxes and donations have called into question the ability of DHS to make adequate and timely payments to providers. Further, there is no guarantee that rates paid for Medicaid patients will cover the costs of their care.

Medicaid Managed Care. In Pennsylvania, most Medicaid beneficiaries, including those in the University’s service area, are required to enroll in managed care plans known as “Health Choices,” that provide services on a prepaid basis. Medicaid recipients will receive physical health services through one managed care organization and behavioral health services through another managed care organization. The Community HealthChoices program addresses long-term care and nursing home costs for the elderly and physically disabled. The HealthChoices program has generally resulted in stricter utilization review of Medicaid-reimbursed hospital services and reduced lengths of stay and/or reimbursement compared with the previous fee-for-service system. The program also attempts to negotiate lower fee schedules with health care providers. There can be no assurance that the University Hospitals will be successful in contracting with the assigned managed care organizations or that the reimbursements from these managed care organizations will be sufficient to cover the costs of delivering care to Medicaid recipients.

CMS, under the administration of President Trump, has outlined its vision to reset the Medicaid federal-state partnership and give the states more control to design innovative programs through a new and expedited approach to Section 1115 demonstration programs, state plan amendments and 1915 waivers of the federal benefits requirements, CMS also intends to develop Scorecards to track and publish state and federal Medicaid improved health outcomes. These programs will take time to filter down to the hospital and outpatient provider level and their impact will also depend on whether Pennsylvania modifies its HealthChoices program in response. As a result, management cannot assess the impact that these new federal programs will have on the University.

Inpatient Services. Payment for inpatient services is made to hospitals in an amount determined in accordance with procedures and standards established by state law under federal guidelines. In addition to direct payments, the University Hospitals also receive reimbursement for services to Medicaid patients from certain HMOs that have contractual arrangements with DHS to provide coverage for such patients. Providers participating in Medicaid must accept Medicaid payment rates as payment in full.

Since 1984, Medicaid payment for operating and capital-related costs of acute care services has been based on a PPS similar to the federal Medicare DRG-based PPS. In 2010, when the State Plan was amended, Medicaid payment for inpatient hospital services was modernized by establishing a uniform base rate for all hospitals using the most current cost information, and making adjustments for differences in regional labor costs, teaching programs, and Medical Assistance volume. At the same time, hospital payments through the state’s Medicaid managed care program were enhanced, and additional matching Medicaid funds were obtained through the establishment of the Quality Care Assessment, a tax on hospital net inpatient revenues that allows the state to access additional federal dollars.

Through Pennsylvania’s Act 49 of 2010, DHS was authorized to impose a statewide hospital assessment on the net inpatient revenue of all Pennsylvania licensed acute care hospitals, with some exclusions, from July 1, 2010 through June 30, 2013. Act 49 itself modernized Pennsylvania’s inpatient hospital fee-for-service payment system, introduced enhanced hospital payments through Pennsylvania’s Medicaid managed care program, and secured additional matching Medicaid funds through the establishment of the Quality Care Assessment (“QCA”). Act 49 replaced the former clinical classification system with a new clinical classification system (“APR-DRG”) in which payments more accurately reflect the levels of service and patient needs unique to Medical Assistance patients. Next, Pennsylvania’s Act 55 of 2013 reauthorized the statewide hospital QCA for an additional three years: July 1, 2013 through June 30, 2016. More recently, Pennsylvania’s Act 92 of 2015 reauthorized the statewide hospital QCA through June 30, 2018. The Assessment is currently 3.71% of net inpatient revenues of the covered hospital. Through the significant amount of revenue that the assessment raises, Pennsylvania has been able to: maintain an updated inpatient payment system; to make changes to existing DSH payments and supplemental payments; and generate new payments where applicable. There can be no assurance that under Pennsylvania’s Hospital Assessment Initiative the enhanced payments received by the University Hospitals will equal or exceed the assessment amounts.

Disproportionate Share Payments (“DSH”), Medical Education Payments and Other Supplemental Payments. In addition, states must make DSH payments to qualified hospitals that provide services to a disproportionately large number of Medicaid, low income and/or uninsured patients. The Affordable Care Act provided for a gradual reduction in the federal funding for Medicaid DSH based on the assumption that the subsidized exchange premiums and expanded Medicaid eligibility would reduce the levels of uninsured care provided by hospitals. The effective date of those reductions, initially scheduled to begin in fiscal year 2014, has been delayed several times and had been scheduled for fiscal years 2018 through 2025. The Bipartisan Budget Act of 2018 removed the $5 billion DSH payment cuts scheduled for 2018 and 2019, but added additional DSH payment cuts of $4 billion in 2020 followed by incremental increases averaging $8 billion per year from 2021 through 2025.

Often DSH payments are insufficient to cover a hospital’s costs in providing care to such patients, and in light of the DSH payment reduction, there can be no assurance that any future DSH payments will cover University Hospitals’ costs. There can be no assurance that future Medicaid inpatient reimbursement rates will remain at current levels, or that such rates will cover University Hospitals’ costs of providing inpatient care to Medicaid patients.

Serious, Preventable Events. The Affordable Care Act required CMS to incorporate nonpayment policies for certain HACs into the Medicaid regulations, including non-payment polices for provider preventable conditions. States have discretion to add additional HACs and provider preventable conditions to their non-payment policies. The University Hospitals currently have a program in place to monitor and prevent HACs, PPCs and OPPCs. Even with these programs in place, it is likely that the University Hospitals, like almost all hospitals, will face reduced reimbursement at some point for costs associated with treating HACs and provider preventable conditions.

The Pennsylvania Preventable Serious Adverse Events Act. Enacted in June 2009, this Act prohibits heath care providers from knowingly seeking payment for a “preventable serious adverse event” (“PSAE”) A PSAE is an event that occurs in a health care facility that is within the health care provider’s control to avoid, but that occurs because of an error or other system failure and results in a patient’s death, loss of body part, disfigurement, disability, or loss of bodily function lasting more than seven days or still present at the time of discharge from the health care facility. If a PSAE is discovered after payment has been made or a claim has been filed, the payment must be refunded within 30 days of the discovery or receipt of payment, whichever is later.

Outpatient Services. Fee-for-service Medicaid provides payment for hospital outpatient services rendered based on the lower of the usual charge to the general public for the same service or the Medicaid maximum allowable fee, or the upper limit established by Medicare or Medicaid. Pennsylvania's HealthChoices physical health managed care plans, the mandated coverage for all Medicaid recipients, reimburses for care provided to their enrollees based on the contract rates negotiated between the provider and the plan.

Inpatient Mental Health and Rehabilitation Services. Fee-for-service Medicaid provides payment for inpatient mental health and rehabilitation services rendered to eligible recipients by psychiatric hospitals and rehabilitation distinct part units at a per diem rate. Pennsylvania's HealthChoices behavioral health managed care plans, the mandated coverage for all Medicaid recipients, reimburses for care provided to their enrollees based on the contract rates negotiated between the provider and the plan.

Physician Payments. Under the Affordable Care Act, Medicaid reimbursement rates for primary care physicians were increased to Medicare levels in 2013 and 2014. However, that increase expired beginning January 2015. Thus, it appears that since January 2015, the University Hospitals faced reduced reimbursement for their Medicaid population. There is no guarantee that the reimbursement to physicians for treating the expanded Medicaid population will cover the costs of treating these patients.

Third Party Payers

In addition to government payors, the University Hospitals also receive reimbursement for services from commercial insurance companies and Blue Cross organizations under group and individual insured plans as well as self-funded employer group plans administered by the insurance companies.

Commercial Insurance (Indemnity). Most commercial insurance companies contract with hospitals on an “exclusive” or a “preferred” provider basis and pay for covered services based on prospectively established charges or negotiated rates, subject to various limitations, coinsurance provisions and deductibles depending on the coverage or plan involved. Certain agreements contain retrospective audit clauses allowing the payor to review and adjust claims subsequent to initial payment.

No assurance can be given as to whether commercial insurance revenues received by the University Hospitals under existing or future contractual arrangements, in addition to their other revenue sources, will be sufficient to cover the University Hospitals’ patient care costs in the future. Similarly, no assurance can be made that retrospective audits conducted by commercial insurers will not result in the recoupment of payments already made.

Managed Care Plans: HMO, PPO, EPO and High Deductible Plans. Most private insurers have introduced managed care plans, including HMOs, PPOs, exclusive provider organizations (EPOs), limited network plans and high deductible plans (HDP) for employees and individuals enrolling for coverage through their employer or from an exchange established under the Affordable Care Act. Under these plans, there may be financial incentives for subscribers to use hospitals that contract with those insurers (“network” providers). Commercial insurers, including but not limited to those insurers who contract with the federal government to cover Medicare Advantage beneficiaries are increasingly offering limited and tiered network plans and HDPs. HDPs reimburse for preventive care without cost-sharing but all other medical expenses are the responsibility of the subscriber until a high dollar threshold is reached. As HDPs proliferate, the University Hospitals will be responsible to collect a larger portion of their reimbursement from the individual patients and their families resulting in higher costs of collection and likely resulting in an increase of bad debt for the University.

Under an EPO, the payors limit coverage to those services provided by network hospitals and physicians, other than for emergency care. These types of plans may direct patients away from non-network hospitals by denying coverage for services provided by them. If the University Hospitals are excluded from EPOs, limited networks or top tiers of tiered networks they may experience reduced reimbursement from commercial insurers.

Exchange Plan Coverage. The Affordable Care Act requires states to either establish and operate a health insurance exchange or participate in a multi-state or federal exchange. Pennsylvania and New Jersey opted not to establish their own exchanges; federally facilitated exchanges are available for individuals in each state to buy coverage through the exchange. The health care plans offered on the federal exchange are operated by commercial payors and include various levels of coverage and provider access. The plans include traditional indemnity and managed care plans such as PPOs, EPOs, and high deductibles.

Under the Affordable Care Act, insurers offering exchange plans must make subsidies available to assist with paying the premiums and copayment of exchange plans for individuals living in households with earned income of less than 400% of the FPL. The availability of the subsidized coverage on the exchanges has resulted in a reduction in uninsured patients in the Commonwealth. However, in 2017 the Trump Administration announced that the federal government would no longer make cost-sharing reduction payments to reimburse such insurers for

reducing deductibles and copays for lower-income individuals. As a result, states, including Pennsylvania, instituted higher rate increases for plans sold on the Affordable Care Act exchanges, which could drive healthy individuals out of the exchanges.

Additionally, the Affordable Care Act exchanges are experiencing defections by private insurers due to the losses they have experienced in offering plans on such exchanges. For example, Aetna and UnitedHealthcare withdrew completely from the 2017 individual market under the Affordable Care Act exchanges in Pennsylvania. Exchanges may have originally contributed to the reduction in charity care for hospitals, but if defections by private insurers continue, hospitals nationwide, including the University Hospitals, may have to render more charity care. As a result, the University Hospitals may be required to provide services for which they receive payment below cost, or for which they may receive no payment at all, from the patient or third party payors.

Commercial Coverage Reimbursement. Most insurers and HMOs currently negotiate contracts that provide for reimbursement to hospitals on a discounted fee-for-service basis or on a discounted fixed rate per day of care. Some services are reimbursed on an “episode of care” or “capitation” payment methodology under which a hospital is paid a predetermined rate for a particular episode of care for a patient or a periodic rate for each enrollee who is “assigned” to, or otherwise directed to receive care at, a particular hospital. In a capitation payment system, the hospital assumes an insurance risk for the cost and scope of care given to such enrollees. These contracts generally are enforceable for a stated term regardless of provider losses. The Affordable Care Act reforms in the Medicare and Medicaid programs described above, including VBP, ACOs and population health management, are also beginning to be incorporated into the reimbursement methodologies of some commercial payors.

Blue Cross. The dominant third party payors in the University Hospitals’ markets are the Blue Cross entities, which pay for patient care pursuant to contractual arrangements and various formulas. The University Hospitals are currently reimbursed by Independence Blue Cross based on a per diem and per case arrangement for inpatient services and a fee schedule and percentage of charges for outpatient services (depending on the service). The current contract also includes a performance incentive plan. There can be no assurance that the payment rates and methodology employed under the contract(s) will reimburse the University Hospitals at adequate levels.

Failure to maintain contracts with Independence Blue Cross and other substantial insurance carriers could have the effect of reducing the University Hospitals’ patient base and/or revenues. Conversely, participation may maintain or increase the patient base, but may result in reduced payment and lower net income from operations.

Management of the University Hospitals expects these managed care plans to continue to account for a significant percentage of their patients under contracts requiring discounted charges. The high proportion of revenues from a single payer presents a significant risk in the event that services provided under the contract fail to yield the revenue anticipated at the time the contract was negotiated. No assurance can be given as to whether commercial insurance or other third party revenues received by the University Hospitals under existing or future contractual arrangements will be sufficient to cover patient care costs in the future. Similarly, no assurance can be made that retrospective audits conducted by commercial insurers or other third party payers will not result in the recoupment of payments already made.

Health Plan Financial Pressure and Insolvency. In cases where a managed care organization is a major purchaser of services from a particular hospital, contract rate reduction, contract cancellation, inability to pay, business failure or bankruptcy of the HMO may have a substantial negative effect on that hospital’s financial condition. It is not possible at this time to predict the future financial viability of the managed care industry in general or to predict what impact the insolvency and general financial state of such organizations might have on hospitals, including the University Hospitals.

Physician Contracting and Relations. The University Hospitals contract with physician organizations (“POs”) (e.g., independent physician practices or associations, physician-hospital organizations, faculty practice plans, etc.) to arrange for the provision of physician and ancillary services. POs are separate legal entities with their own goals, obligations to shareholders, financial status, and personnel, so there are risks involved in contracting with the POs.

The success of the University Hospitals will partially depend upon their ability to contract with POs to participate in the network, and upon the POs, including their employed physicians’, abilities to perform their obligations and deliver high quality patient care in a cost-effective manner. There can be no assurance that the University Hospitals will be able to contract with and retain the requisite number of POs, or that such POs will deliver high quality health care services. Without contracting with a sufficient number and type of POs, they could fail to be competitive, fail to keep or attract payor contracts, or be prohibited from operating until they has arranged for physician services necessary to provide adequate access for patients. Such occurrences could have a material adverse effect on the business or operations of the University Hospitals.

The Fraud and Abuse Laws

The Federal Anti-Kickback Act. The federal Anti-Kickback Law (“AKS”) is a criminal statute that prohibits the knowing and willful offer, payment or receipt of remuneration in exchange for or as an inducement to make or influence a referral of a patient for the provision of goods or services that may be reimbursed under any federal health care program. The scope of the AKS is very broad, and it potentially implicates many practices and arrangements common in the health care industry. Violation of the AKS is a felony, subject to a maximum fine of $100,000 for each criminal act, imprisonment for up to ten years, both a fine and imprisonment, civil monetary penalties of up to $100,000 per violation (adjusted for inflation annually) or damages equal to three times the amount of the prohibited remuneration, as well as exclusion from the federal health care programs. The Affordable Care Act clarified the intent requirement to provide that a person need not have actual knowledge of the AKS or specific intent to commit a kickback violation to violate the statute. The result of this change is that the government will have less of a burden to prove a violation under the AKS. In addition, a claim that includes items or services resulting from a violation of the AKS is a false claim for purposes of the federal civil False Claims Act (discussed below).

HHS has issued regulations from time to time setting forth safe harbors that protect limited types of arrangements from prosecution under the statute. Arrangements that do not comply with the strict requirements of the safe harbors, while not necessarily illegal, face an ongoing risk of investigation or prosecution due to the broad language of the statute. The safe harbors described in the regulations are narrow and do not cover many common economic relationships between and

among hospitals, including the University Hospitals, physicians and other health care providers. Some or all of the University Hospitals may have entered into arrangements with other health care providers that may not meet all of the requirements of the “safe harbor” regulations. Given the narrowness of the safe harbor regulations and the scarcity of the case law interpreting the AKS, there can be no assurances that the University Hospitals will not be found to have violated the AKS, and if such a violation were found, that any sanctions imposed would not have a material adverse effect upon the operations and financial conditions of the University.

Pennsylvania Anti-Kickback Law. Pennsylvania regulations contain provisions that prohibit a provider enrolled in the Medicaid program from directly or indirectly doing any of the following acts: solicitation or receipt or offer of a kickback, payment, gift, bribe or rebate for purchasing, leasing, ordering or arranging for, or recommending purchasing, leasing, ordering, or arranging for, a good, facility, service or item for which payment is made using Medicaid.

The University Hospitals make every effort to comply with the provisions of these regulations. Violations of Pennsylvania’s Anti-Kickback Law may lead to civil and criminal penalties, as well as exclusion from the Commonwealth’s Medicaid program.

Physician Payment Sunshine Act. To increase transparency regarding the financial relationships between hospitals, doctors, and healthcare manufacturing companies, the Physician Payment Sunshine Act requires that manufacturers of drugs, medical devices and biologicals that participate in federal health care programs must report certain payments and items of value given to physicians and teaching hospitals, such as the University Hospitals. This information is publicly available on the CMS website. It is impossible to predict the future impact of this reporting on the University Hospitals, whether companies will reduce payments to University Hospitals, or whether the federal government will pursue investigations as a result of such reporting.

Federal False Claims Act. The federal criminal False Claims Act (“criminal FCA”) makes it illegal to submit or present a false, fictitious or fraudulent claim to the federal government. Violation of the criminal FCA can result in imprisonment, fines and/or forfeiture of any property derived from proceeds traceable to the offense. The federal civil False Claims Act (“civil FCA”), one of the government’s primary weapons against health care fraud, allows the United States government to recover significant damages from persons or entities that submit false or fraudulent claims for payment to any federal agency through actions taken by the U.S. Attorney’s Office or the Department of Justice. The civil FCA also permits individuals to initiate actions on behalf of the government in lawsuits called qui tam actions. These qui tam plaintiffs, or “whistleblowers,” can share in the damages recovered by the government.

Under the civil FCA, health care providers may be liable if they take steps to obtain improper payments from the government by submitting false claims or failing to refund known overpayments. Civil FCA violations have been alleged solely on the existence of alleged kickback or self-referral arrangements. Even in the absence of evidence that false claims have been submitted, these cases argue that the improper business relationship tainted the subsequently submitted claims, thereby rendering the claims false under the civil FCA. In 2009, the scope of the civil FCA was expanded to include so-called “reverse false claims,” where a provider that knowingly retains a government overpayment is subject to FCA liability. The Affordable Care Act further requires that any overpayment be reported and repaid within 60 days after the date on

which overpayment was identified. Failure to do so will be considered a per se false claim under the civil FCA. The Affordable Care Act also modified the FCA by extending the FCA to AKS violations.

Violations of the civil FCA can result in penalties up to triple the actual damages incurred by the government and also monetary penalties ranging from $11,181 to $22,363 per claim (adjusted for inflation annually). Private individuals may also bring suit under the qui tam provisions of the civil FCA and may be eligible to share in the government’s recovery for providing information that leads to recoveries or sanctions that arise in a variety of contexts in which health care providers operate. The Affordable Care Act also eased the requirements for private individuals to bring suit under the civil FCA. In recent years there has been a significant increase in the number of whistleblower allegations filed under the civil FCA.

These statutes pose significant risks to all health care organizations. There can be no assurances that the University Hospitals will not be charged with, or found to have violated, the criminal FCA or civil FCA and, if so, that any fines or other penalties would not have a material adverse effect on its operations.

Civil Monetary Penalties Law. The Civil Monetary Penalties Law under the Social Security Act (“CMP Law”) provides for the imposition of civil monetary penalties against any person who submits a claim to Medicare, Medicaid or any other federal health care program that the person knows or should know is for items or services not provided as claimed; is false or fraudulent; is for services provided by an unlicensed or uncertified physician or by an excluded person; represents a pattern of claims that are based on a billing code higher than the level of service provided; or is for services that are not medically necessary. The CMP Law, among other things, also prohibits hospitals from paying physicians to limit medically necessary care. Penalties under the CMP Law include up to $100,000 for each item or service claimed (per a recent increase included in the Bipartisan Budget Act of 2018), and damages of up to three times the amount claimed for each item or service, and exclusion from participation in the federal health care programs.

Health care providers may be found liable under the CMP Law even when they did not have actual knowledge of the impropriety of their action. Knowingly undertaking the action is sufficient. The imposition of civil monetary penalties could have a material adverse impact on the University’s financial condition.

Self-Disclosures. Both CMS and DHS have protocols for providers to self-disclose possible overpayments and the University Hospitals have utilized and will continue to utilize those protocols to disclose overpayments identified by the University Hospitals.

Stark Self-Referral and Payment Prohibitions. The federal Ethics in Patient Referrals Act (known as the “Stark Law”) prohibits the referral of patients for certain “designated health services” (which include inpatient and outpatient hospital services) payable by Medicare to entities with which the referring physician (or an immediate family member of such physician) has a financial relationship, unless an exception applies. The statute also prohibits the entity furnishing the “designated health services” from billing the Medicare or Medicaid program for designated health services furnished pursuant to a prohibited referral. The law requires reporting of financial

relationships to CMS. The Stark Law is a strict liability statute. CMS has made several changes to existing Stark regulations in the final 2016 Physician Fee Schedule, affecting hospital-physician recruitment arrangements, timeshare arrangements, Stark’s writing and signature requirements, requirements concerning term of agreements and holdover leases, as well as changes in the regulatory definitions of “remuneration” and “stand in the shoes.” The Bipartisan Act of 2018 codified changes CMS made in the 2016 Physician Fee Schedule regarding the writing requirement, signature requirement, and indefinite holdover provisions for leases and personal services arrangements.

Violations of the Stark Law can result in refunds of the amounts collected for services rendered pursuant to a prohibited referral, 2017 civil monetary penalties of up to $24,253 (adjusted for inflation annually) for each claim arising out of such referral and exclusion from the Medicare and Medicaid programs. The Stark Law also provides for a 2017 civil penalty of up to $161,692 (adjusted for inflation annually) for entering into an arrangement with the intent of circumventing its provisions. In certain circumstances, knowing violations may also create liability under the FCA.

Due to the complexity of the Stark Law and similar laws at the state level, as well as related federal and state regulatory guidance, there can be no assurance that the University Hospitals will not be found to have violated the Stark Law or similar state-specific laws and if so, whether any sanction imposed would have a material adverse effect on the operations and/or financial condition of the University.

Pennsylvania Anti-Referral Law. While Pennsylvania does not have a state law similar to the Stark Law that prohibits self-referrals in all circumstances, it has laws and regulations prohibiting kickbacks in governmental programs. Additionally, Pennsylvania’s Workers’ Compensation Act and its Medicaid regulations have self-referral restrictions similar to the federal Stark Law. For example, under current Pennsylvania law, physicians are required to disclose to patients any referral to a facility where the physician has a financial interest, and must advise the patient that he or she retains the ability to choose any other recommended facility. Physicians are prohibited from establishing an automatic referral system or agreement with other providers or facilities. Providers participating in the Medicaid program may not refer a Medicaid recipient to an independent laboratory, pharmacy, radiology or other ancillary medical service in which the practitioner or professional corporation has an ownership interest.

Antitrust

Antitrust liability may arise in a variety of circumstances, including medical staff privilege disputes, payor contracting, joint ventures, merger, affiliation and acquisition activities, certain pricing or salary setting activities and anticompetitive business conduct or practices. The application of federal and state antitrust laws to heath care entities is constantly evolving, therefore the University cannot make assurances that federal or state enforcement authorities or private parties will not assert that the University is in violation of antitrust laws.

Violation of antitrust laws may result in criminal and/or civil enforcement proceedings by federal and state agencies, as well as give rise to private actions. In certain actions, private litigants may be entitled to treble damages, and the government may be able to assess substantial monetary

fines. Additionally, successful private or governmental litigants may be able to obtain injunctive relief which may impact the University’s ability to conduct or continue certain business practices or activities.

Exposure to Liability

Due to the nature of their business, the University Hospitals from time to time become involved as defendants in medical malpractice lawsuits, and are subject to the attendant risk of substantial damage awards. The most significant source of potential liability in this regard is the negligence of physicians employed or contracted by the University Hospitals. To the extent such physicians are employed by the University Hospitals or regarded as agents of the University Hospitals in the practice of medicine, the University Hospitals could be held liable for their negligence. In addition, the University Hospitals could be found in certain instances to have been negligent in performing their management services under contractual arrangements even if no agency relationship with the physicians were found to exist. The University Hospitals’ contracts with third party payors generally require the University Hospitals to indemnify such other parties for losses resulting from the negligence of physicians who were employed or managed by or affiliated with University Hospitals. See “INSURANCE” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” for a description of the professional liability insurance maintained by the University.

There can be no assurance, however, that any insurer will remain solvent and able to meet its obligations to provide coverage for any such claim or claims, or that such coverage will continue to be available or available with sufficient limits and at a reasonable cost to adequately and economically insure the University Hospitals’ operations in the future. A judgment against the University Hospitals in excess of such coverage could have a material adverse effect on the University.

Medical Professional Liability Insurance Market

Professional liability costs for Pennsylvania’s physicians and other health care providers have been among the highest in the nation. Rapidly deteriorating underwriting results have in recent years generated substantial premium increases and coverage reductions in the medical professional liability insurance marketplace. A dramatic and sustained rise in claim severity nationwide coupled with lower investment returns available to insurers due to the economic slowdown have caused substantial reductions in medical professional liability insurance capacity. Health care entities that have self-funded programs are also experiencing similar difficulties with respect to reinsurance on their captive insurance companies and/or with respect to insurance placements in excess of the primary coverage layers.

The Pennsylvania General Assembly has enacted laws to address these issues, including the Medical Care Availability and Reduction of Error (“MCARE”) and the Fair Share Act. MCARE brought reform to the area of professional liability and created the MCARE fund which, in exchange for premiums from physicians, serves as a source of recovery for claims in excess of the provider’s base insurance limits. The Fair Share Act provides that, with some exceptions, a defendant will only be responsible to pay a portion of any judgment equal to the percentage of

liability found against that defendant. See “CERTAIN INVESTMENT CONSIDERATIONS - Other Legislative and Regulatory Actions” herein.

The effect of these developments has been to increase the operating costs of hospitals, including those of the University Hospitals. In addition, the increase in the cost of professional liability insurance may cause established physicians to leave the most heavily affected geographical regions, including Pennsylvania, and prevent new physicians from establishing their practices in the University Hospitals’ region. See “INSURANCE” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto. There can be no assurance that the unpredictability of jury awards and claims payouts, the reduction of coverage availability, and/or the rising cost of professional liability insurance coverage will not ultimately adversely affect the operations or financial condition of the University.

Charity Care

Hospitals are permitted to have tax-exempt status under the Code because the provision of health care historically has been treated as a “charitable” enterprise. This treatment arose before most Americans had health insurance, and when charitable donations were required to fund the health care provided to the sick and disabled. Some have posited that, with the onset of employer- sponsored health insurance and government reimbursement programs, there is no longer any justification for special tax treatment for the not-for-profit health care sector, and the availability of tax-exempt status should be eliminated. Management of the University Hospitals cannot predict the likelihood for such a dramatic change in the law, and the cost of charity care provided by the University Hospitals over the past several years has been significant. Federal and state tax authorities are beginning to demand that tax-exempt hospitals justify their tax-exempt status by documenting their charitable care and other community benefits. The Affordable Care Act requires hospitals to conduct a community needs assessment every three years in order to maintain its tax-exempt status.

The Affordable Care Act is designed to reduce uncompensated care by expanding health care coverage to a larger portion of the population, but one component of this expanded coverage, the health care exchanges, is experiencing defections by private insurers due to the losses they have experienced in offering plans on such exchanges. Exchanges may have originally contributed to the reduction in charity care for hospitals, but if defections by private insurers continue, hospitals nationwide, including the University Hospitals, may have to render more charity care. As a result, the University Hospitals may be required to continue to provide services for which they receive payment below cost, or for which they may receive no payment, from the patients or third party payors. While the University Hospitals attempt to provide care to the poor and indigent in a prudent manner, the continuation or expansion of such policy, or the inability to properly document their indigent care, could have an adverse financial effect on the University.

Tax Law Changes that May Impact Charitable Giving (Tax Cuts and Jobs Act)

Tax law changes not directly related to the deductibility of charitable contributions (including certain changes enacted in late 2017 as part of the federal Tax Cuts and Jobs Act) may lead to reduced incentives for charitable giving. Limitations on the deductibility of state and local income and property taxes in higher-tax states will lead to residents in such states having less

income available for charitable donations. Increases to the estate tax exemption which lower the tax burden on heirs may reduce incentives to leave charitable bequests.

Other Legislative and Regulatory Actions

The University and its operations are subject to regulation, certification and accreditation by various federal, state and local government agencies and by certain non-governmental agencies such as The Joint Commission, the Liaison Committee on Medical Education and the Middle States Commission on Higher Education. Various health and safety laws and regulations enforced by state and local agencies apply to the University. Violations of certain of these standards could result in closure of the University Hospitals or portions thereof, or requirements that compliance with such standards be immediately achieved. Such standards are subject to change, and there can be no assurances that in the future, their facilities will meet any changed standards or that the University Hospitals will not be required to expend significant sums to comply with changed standards. No assurance can be given as to the effect on the University Hospitals’ future operations or on the University’s educational or other activities in the future of existing laws, regulations and standards for certification or accreditation or of any future changes in such laws, regulations and standards.

Other possible federal or state legislation which could have an adverse effect on the University would include: (i) limitations on the amount of charitable contributions which are deductible for income tax purposes; (ii) limitations on the amount or availability of tax-exempt financing for Section 501(c)(3) corporations; (iii) amendments to tax law provisions that could adversely affect the marketability or market value of the Series 2018D Bonds or otherwise prevent holders of the Series 2018D Bonds from realizing the full benefit of the tax exemption of interest on the Series 2018D Bonds; and (iv) regulatory limitations affecting the University’s ability to undertake capital projects or develop new services.

Other regulatory programs which may significantly affect the University Hospitals are changes in governmental requirements regarding patient treatment. These regulations are embodied in patients’ bills of rights and similar programs being promulgated with greater frequency and changes in licensure requirements. All of these could increase the cost of doing business and consequently adversely affect the financial condition of the University.

Environmental Laws and Regulations. The University’s health care operations generate medical waste that must be disposed of in compliance with federal, state and local environmental laws, rules and regulations. The operation of and the purchase or sale of facilities, are also subject to compliance with various environmental laws, rules and regulations. Any violations may subject the University and its entities to sanctions, fines, forfeiture of collateral bonds, suspension and or revocation of the University’s medical waste license.

Emergency Medical Treatment and Active Labor Act

In response to concerns regarding inappropriate hospital transfers of emergency room patients due to a patient’s inability to pay for services, Congress enacted the Emergency Medical Treatment and Active Labor Act (“EMTALA”) or the federal “anti-dumping” statute. This law imposes certain requirements on hospitals prior to discharging an emergency patient or transferring

such a patient to another facility. Failure to comply with the law can result in exclusion from the Medicare and/or Medicaid programs as well as civil penalties. The failure of the University Hospitals to meet their responsibilities under EMTALA could adversely affect the financial condition of the University. EMTALA and its implementing regulations are complex, and the University Hospitals’ compliance is dependent, in part, upon the compliance of independent medical staff members. Accordingly, there can be no assurance that no violation of EMTALA will be found or, if found, that any sanction imposed would not have a material adverse effect on the operations or financial conditions of the University.

Health Insurance Portability and Accountability Act

Providers of health care, such as the University Hospitals, have been impacted by certain health information requirements contained in the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations (“HIPAA”), as amended in 2009 by the Health Information Technology for Economic and Clinical Health Act (“HITECH”). HIPAA mandates the adoption of detailed standards for maintaining the privacy and security of protected health information (“PHI”). HITECH made significant modifications to HIPAA including subjecting business associates to direct regulation and enforcement by the Office of Civil Rights of HHS (“OCR”), instituting a breach notification requirement for breaches of unsecured PHI, including a breach of PHI held by a business associate, and strengthening the enforcement tools available to OCR. Additionally, under HIPAA covered entities or business associates must perform risk assessments.

The financial costs of continuing compliance with HIPAA regulations are substantial and will increase as a result of increased enforcement, and well-publicized breaches. Enforcement of HIPAA compliance has heightened in recent years and this trend is expected to continue. This includes, but is not limited to, a steady increase in the number of substantial settlements with governmental authorities as a result of breaches. The Obligated Group Members and their Affiliates are actively engaged in continuing compliance efforts with HIPAA and HITECH. Enforcement of HIPAA compliance has heightened in recent years and this trend is expected to continue. This includes, but is not limited to, a steady increase in the number of substantial settlements with governmental authorities as a result of data breaches. If OCR conducts an investigation (whether as a result of an audit or reporting of such a breach), OCR could impose certain fines and penalties and could also require University Hospitals to enter into corrective action plans. The University Hospitals are actively engaged in continuing compliance efforts with HIPAA and HITECH. There are also costs and risks associated with vendors and contractors as it is possible that the University Hospitals could be responsible for HIPAA violations or breaches of its vendors and contractors. To date, the University Hospitals have reported a number of breaches to HHS, including misdirects, missing/disappearing records and unauthorized access. No guarantee can be made that the various Obligated Group Members and their Affiliates will remain HIPAA/HITECH Act compliant in the future, or that OCR will not conduct an audit or investigation in connection with a reported breach. If OCR conducts an investigation (whether as a result of an audit or reporting of such a breach), OCR could impose significant fines and penalties and could also require the Obligated Group Members and their Affiliates to enter into a corrective action plan.

In addition, as data breaches continue to have greater exposure both inside and outside of the health care industry, and awareness of such breaches continues, private litigation is expected to increase. As a result, no assurances can be given that the Obligated Group Members and their Affiliates will not be faced with potential private litigation in the event of a data breach.

Breach of Personal Information Notification Act. The Breach of Personal Information Notification Act (the “Notification Act”) was enacted in 2006. Under the Notification Act any state agency, political subdivision, individual or business that operates in Pennsylvania and maintains, stores, or manages computerized data that includes personal consumer information must provide notice of any security system breach to state residents whose personal information was or may have been compromised by the breach.

A violation of the Notification Act is deemed an unfair or deceptive act or practice violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. Pennsylvania’s Attorney General has authority to bring an action for a violation of the Notification Act under the Unfair Trade Practices and Consumer Protection Law. Civil penalties may be imposed.

Electronic Health Record Incentive Program. HITECH provided funding for various activities intended to promote the adoption and meaningful use of certified electronic health record (“EHR”) technology. Eligible Medicare and Medicaid providers, including acute care hospitals and other health care professionals may be eligible to receive EHR payment incentives if they demonstrate the meaningful use of certified EHR technology and meet other program requirements. University Hospitals participated in the EHR Incentive Programs for Medicare and Medicaid as a “meaningful user,” and it received incentive payments from CMS in 2012-2014. The University did not seek reimbursement in 2015-2017. CMS has begun an audit program to assure the veracity of certifications.

Under the new Medicare physician reimbursement provisions described in the Physician Payments section above, the incentive to use EHR effectively is now integrated into the physician reimbursement formula. There can be no guarantee that the University Hospitals will continue to be able to recover reimbursement for their EHR and may be subject to reduced Medicare and/or Medicaid reimbursement.

Corporate Compliance

The University has implemented internal policies and procedures along with a compliance program that the University believes reduces exposure due to violation of state and federal laws. However, because the Government’s enforcement efforts are widespread throughout the industry, and may vary from region to region, the University cannot assure that the compliance program will reduce or eliminate its exposure to civil or criminal sanctions or any adverse administrative determinations.

The sentencing of organizations for federal health care crimes is governed by the U.S. Sentencing Guidelines (the “Guidelines”), which permit the imposition of extremely large fines in many instances. The Guidelines permit the fine to be reduced significantly if the provider had in place at the time of the crime an effective corporate compliance program and/or accepts responsibility for its actions. As a result of the current environment of increased enforcement

against health care fraud and abuse, the University Hospitals have established compliance programs to prevent or detect violations of federal law.

The University maintains a comprehensive compliance program, including oversight of the University Hospitals’ and physician billing activities and reporting to the Audit Committee of TJU. The University believes that its compliance program is in overall compliance with the OIG Compliance Guidance for Hospitals, but there is no guarantee that the University’s comprehensive compliance program will always remain in compliance with the Guidelines or OIG’s Compliance Guidance for Hospitals in the future.

Cyber-Security Risks

Despite the implementation of network security measures by the University Hospitals, its information technology may be vulnerable to breaches, attacks by hackers, computer viruses, ransomware, physical or electronic break-ins and other similar events or issues. Health care systems may be a target for cyber-attacks due to the mandatory transition from paper records to EHRs. Such events or issues could lead to the inadvertent disclosure of protected health information or other confidential information or could have an adverse effect on the ability of the University Hospitals to provide health care services.

Increased Enforcement Affecting Academic Research

The conduct of research at the University Hospitals and its clinical affiliates is subject to increasing federal regulation. The Department of Health and Human Services Office of Human Research Protection, the Food and Drug Administration and National Institutes of Health have increased their enforcement efforts in relation to their oversight of federally funded research, including research on human subjects. These laws regulate both the methods and requirements for submitting transfers for reimbursements of costs associated with performing the research and claims for services rendered to human subjects. These agencies’ enforcement powers range from substantial fines and penalties to exclusion of researchers and suspension or termination of entire research programs, and repayment for errors in billing of the Medicare Program for care provided to patients enrolled in clinical trials that is not eligible for Medicare reimbursement. These enforcement activities could subject the University Hospitals to sanctions as well as repayment obligations, which could have a material and adverse effect on the financial condition and operations of the University.

Fluctuations in Market Value of Investments

General. Earnings on investments have historically provided the University an important source of cash flow and capital appreciation to support their programs and services, to finance capital expenditure investments and to build cash reserves. Historically the value of both debt and equity securities has fluctuated and, in some instances, the fluctuations have been quite significant. Diversification of securities holdings may diminish the impact of these fluctuations. However, no assurances can be given that the market value of the investments of TJU or other Members of the Obligated Group will grow, or even remain at current levels and there is no assurance that such market value will not decline. Further, no assurances can be given that there will not be a significant decrease in the value of the University’s investments caused by market or other external

factors. See “CASH AND INVESTMENTS” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto for a discussion of the University’s investments.

Pension Funding Impact. Changes in market interest rates and debt and equity market fluctuations also have an impact on the pension fund liabilities of the Members of the Obligated Group who have defined benefit pension liabilities and the requirements for funding their related pension expenses. Like other entities with pension fund liabilities, certain of the Members of the Obligated Group find that increases or decreases in interest rates have an impact on the assumed earnings rates on pension assets needed to match pension fund liabilities, which accordingly affects the levels of actuarial pension investment assets required to meet future pension obligations. Consequently, any substantial and sustained decline in long-term interest rates could have the effect of increasing the current pension funding requirements of the applicable Members of the Obligated Group. No assurance can be given that such Members will not be required to make increased pension funding payments in this or other circumstances. See “BENEFITS” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto.

Interest Rate Swaps. There are a number of risks associated with interest rate swaps that could affect the value of the University’s swaps, the ability of the University to accomplish its objectives in entering into the swaps and the ability of the University to meet its obligations under the swaps. These risks include, among others, the following: counterparty risk - the failure of the counterparty to make required payments; credit risk - the occurrence of an event modifying the credit rating of the University or its counterparty; termination risk - the need to terminate the transaction in a market that dictates a termination payment by the University; tax risk - the risk created by potential tax events that could affect swap payments; and basis risk - the mismatch between actual variable rate debt service and variable rate indices used to determine swap payments. The University actively monitors the degree of risk and exposure associated with the swaps to which it is a party but can offer no assurances that it will not suffer adverse financial consequences as a result of these transactions.

Other Potential Transactions

TJU has entered into the Letter of Intent with EHN with respect to the Transaction, whereby TJU and EHN would combine assets and operations. For a further discussion with respect to the Letter of Intent, the Transaction and related matters, see “MANAGEMENT DISCUSSION AND ANALYSIS – Einstein Health Letter of Intent” and “Other Potential Transactions” within Appendix A to this Official Statement.

As part of its ongoing strategic planning process, from time to time the University considers potential joint ventures, affiliations, acquisitions, divestitures and similar transactions. Such transactions and the Transaction may result in additional entities becoming part of the Obligated Group or affiliates of Members of the Obligated Group in the future, or in certain entities no longer being part of the Obligated Group. There can be no assurance as to the impact that any such transaction or the Transaction would have on the financial results of the University.

Given the general complexity of these types of transactions, including the Transaction, the ongoing negotiations concerning their terms and conditions and the necessity for requisite government approvals in certain instances, there is no assurance that any particular transaction,

including the Transaction, will close, that the terms of the Transaction or any other particular transaction will not change materially from those which may be initially proposed, or that the University will not incur additional operating or capital costs in connection with any such transactions, including the Transaction. There also are no assurances that the failure to close the Transaction or any particular proposed transaction in the future will not have an adverse impact on the ability of the University to achieve its strategic goals.

Other Risk Factors Relating to the Finances and Operations of the University

In the future, the following factors, among others, may adversely affect the operations of the University to an extent that cannot be determined at this time.

A. Increases in the costs and decreases in the availability of public liability insurance. See “INSURANCE” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto.

B. Changes in the demand for higher education in general or for programs offered by the University in particular.

C. Reduced demand for higher education in Pennsylvania due to demographic factors including the current decline in the population of high school graduating seniors within Pennsylvania which may particularly impact the undergraduate programs of the University.

D. Cost and availability of energy.

E. Future interest rates, which could strain cash flow given the University’s variable rate debt or prevent borrowing for needed capital expenditures.

F. A decrease in student loan funds or other aid that provides many students with the opportunity to pursue higher education. See “EDUCATIONAL ACTIVITIES - Financial Aid” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto.

G. The continued ability and willingness of current and future undergraduate and graduate students of the University, and their families, to be able to afford the tuition and costs of attending the University.

H. Increased competition from for-profit universities and on-line programs offered by such universities or traditional universities.

I. An increase in the costs of health care benefits, retirement plan, or other benefit packages offered by the University to its employees and retirees. See “BENEFITS” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto for a discussion of the costs of the pension plans of certain Members of the Obligated Group.

J. Changes in reimbursement procedures or in contracts under public or private insurance programs.

K. Suspension or revocation of or a failure to renew any certificate of authority or license to operate one or more healthcare facilities, or any portion thereof, or any restriction on new admissions to licensed beds, or a failure to obtain a renewal of any applicable regulatory approval.

L. Unknown litigation, regulatory actions or other similar claims regarding the University or any of its affiliates. See “LITIGATION - The University” herein.

M. A reduction in charitable pledges and other fundraising support of the University. See “FUNDRAISING AND CONTRIBUTIONS” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto for a description of fundraising activities at the University.

N. The failure of the Pennsylvania General Assembly to meet the annual enactment deadline for the fiscal year’s state budget.

O. Strikes and other related work actions, contract disputes, discrimination claims, personal tort actions, work-related injuries, exposure to hazardous materials, interpersonal torts and other risks that may flow from various relationships involving students, faculty, employees, physicians and/or patients.

P. Increase in capital expenditures needed to maintain or upgrade University academic, research and healthcare facilities to remain competitive with other academic medical and research institutions, colleges and universities, and healthcare systems, which expenditures may limit debt capacity or reduce unrestricted net assets.

Q. The ability of the University to offer certain sophisticated and costly equipment for diagnosis and treatment.

R. Reduced demand for the health care services of the University that might result from decreases in population in its service area.

S. Increased unemployment or other adverse economic conditions in the service areas of the University which would increase the proportion of patients who are unable to pay fully for the cost of their care or reduce the proportion of patients who have insurance coverage for health care services.

T. Limitations on availability of, and increased compensation necessary to secure and retain, faculty, physicians, nursing, technical, executive and other professional personnel.

U. Any increase in the quantity or cost of indigent care provided which is mandated by law or required due to increased needs of the community in order to maintain the charitable status of the applicable entities comprising the University.

V. Data breaches which may adversely affect the University’s financial results, operations and reputation.

W. Epidemics or other public health issues that may strain the University’s resources or disrupt its normal operations.

X. Extreme weather or climate events that may damage the University’s facilities or disrupt its normal operations.

Y. Terrorism.

LITIGATION

The Authority

There is no litigation of any nature pending or, to the Authority’s knowledge, threatened against the Authority at the date of this Official Statement to restrain or enjoin the issuance, sale, execution or delivery of the Series 2018D Bonds, or in any way contesting or affecting the validity of the Series 2018D Bonds or any proceedings of the Authority taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or the security provided for the payment of the Series 2018D Bonds or the existence or powers of the Authority.

The University

There are various claims, legal actions and audits pending against the University, which have arisen in the ordinary course of the University’s business, some of which include demands for punitive damages as well as other types of damages, which are outside the scope of insurance coverage or for which the University would itself be responsible, if its liability would be established. In the opinion of management of the University, none of such pending claims, legal actions or audits would materially adversely affect the business, financial condition or properties of the University.

TAX MATTERS

Federal Tax Matters Applicable to the Series 2018D Bonds

In the opinion of Ballard Spahr LLP, Bond Counsel, interest on the Series 2018D Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Series 2018D Bonds, assuming the accuracy of the certifications of the Authority and the University and continuing compliance by the Authority and the University with the requirements of the Code. Interest on the Series 2018D Bonds is not an item of tax preference for purposes of the individual federal alternative minimum tax. The corporate alternative minimum tax was repealed by legislation enacted on December 22, 2017 (known as the "Tax Cuts and Jobs Act"), effective for tax years beginning after December 31, 2017. For tax years beginning on or before December 31, 2017 interest on the Series 2018D Bonds is not an item of tax preference for purposes of the corporate alternate minimum tax in effect prior to enactment of the Tax Cuts and Jobs Act; however, interest on the Series 2018D Bonds held by a corporation (other than an S Corporation, regulated investment company, or real estate

investment trust) indirectly may be subject to federal alternative minimum tax because of its inclusion in the adjusted current earnings of a corporate holder. Bond Counsel expresses no opinion regarding other federal tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the Series 2018D Bonds.

Commonwealth of Pennsylvania Tax Matters

Bond Counsel is also of the opinion that, under the laws of the Commonwealth of Pennsylvania as presently enacted and construed, the Series 2018D Bonds are exempt from personal property taxes in Pennsylvania, and interest on the Series 2018D Bonds is exempt from Pennsylvania personal income tax and Pennsylvania corporate net income tax.

LEGAL MATTERS

Certain legal matters incident to the authorization, issuance, validity, sale and delivery of the Series 2018D Bonds are subject to the unqualified approving legal opinion of Ballard Spahr LLP, Philadelphia, Pennsylvania, in its capacity as Bond Counsel. The legal opinion of Bond Counsel will speak only as of its date and subsequent distribution of it by recirculation of this Official Statement or otherwise shall not create any implication that subsequent to the date of the legal opinion bond counsel has affirmed its opinion. The proposed text of the legal opinion of Bond Counsel is attached hereto as “APPENDIX E - PROPOSED FORM OF OPINION OF BOND COUNSEL.”

Certain legal matters will be passed upon for the Authority by Douglas B. Breidenbach, Jr., Esquire, Pottstown, Pennsylvania, and for the University by the Office of University Counsel and Ballard Spahr LLP, Philadelphia, Pennsylvania, in its capacity as counsel to the University, including Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel Cozen O’Connor, Philadelphia, Pennsylvania.

CONTINUING DISCLOSURE

To assist the Underwriter in complying with the Rule, simultaneously with the issuance of the Series 2018D Bonds, TJU will execute the Disclosure Agreement substantially in the form attached hereto as “APPENDIX F - FORM OF CONTINUING DISCLOSURE AGREEMENT.” TJU, as an “obligated person” under the Rule, has covenanted in the Disclosure Agreement to provide certain financial information and operating data relating to the Obligated Group and the Series 2018D Bonds in each year (the “Annual Report”), and to provide notices of the occurrence of certain events described in the Disclosure Agreement. The annual financial information and notices of certain events (as described in the Disclosure Agreement) will be filed by the dissemination agent, on behalf of the Obligated Group, with the repository designated by the SEC, presently the Municipal Securities Rulemaking Board (the “MSRB”) through the Electronic Municipal Market Access (“EMMA”) system in an electronic format prescribed by the MSRB. The specific nature of the financial information, operating data, the type of events which trigger a disclosure obligation, the timing of the Annual Report and event filings and other details of the University’s undertakings are more fully described in “APPENDIX F- FORM OF CONTINUING DISCLOSURE AGREEMENT” attached hereto. TJU also has, by separate agreement, retained

DAC as dissemination agent to assist TJU in connection with certain of its obligations under the Disclosure Agreement.

During the previous five years, in connection with TJU’s continuing disclosure undertakings executed in connection with certain prior bond issues, TJU filed an event notice with EMMA on July 28, 2014 regarding TJU becoming the sole corporate member of TJUH System on June 30, 2014, which filing date was more than the required 10 business days after the underlying event.

TJU has established and implemented policies and procedures for purposes of complying with its continuing disclosure undertakings.

RATINGS

S&P Global Ratings (“S&P”), and Moody’s Investors Service, Inc. (“Moody’s” and together with S&P, the “Rating Agencies”) have assigned ratings of “A+” (stable outlook) and “A2” (negative outlook), respectively, to the Series 2018D Bonds.

Such ratings reflect only the respective views of the Rating Agencies, and an explanation of the significance of such ratings may only be obtained from the Rating Agencies furnishing the ratings. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance that such ratings will remain unchanged for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agency furnishing the same, if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such ratings or other actions by the Rating Agencies, or either of them, may have an adverse effect on the liquidity and/or market price of the affected Series 2018D Bonds. Neither the Authority, TJU, nor the Underwriter has undertaken any responsibility to oppose any such revision, suspension or withdrawal.

UNDERWRITING

The Series 2018D Bonds are being purchased by Merrill Lynch, Pierce, Fenner & Smith Incorporated (the “Underwriter”). The Underwriter has agreed to purchase from the Authority the Series 2018D Bonds at a purchase price of $______(representing the aggregate principal amount of the Series 2018D Bonds, less an underwriter’s discount of $______). The Underwriter will be obligated to purchase all Series 2018D Bonds if any are purchased. The initial public offering prices of the Series 2018D Bonds set forth on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter without any requirement of prior notice. The Underwriter reserves the right to join with other dealers in offering the Series 2018D Bonds to the public. The Series 2018D Bonds may be offered and sold to other dealers (including Series 2018D Bonds for deposit into investment trusts, certain of which may be sponsored or managed by the Underwriter) at prices other than the public offering prices stated on the inside front cover page of this Official Statement. The Series 2018D Bonds are being sold simultaneously with the Series 2018A Bonds, Series 2018B Bonds, and Series 2018C Bonds (which are being offered under a separate official statement), all as part of a common plan of finance to accomplish the 2018 Project.

The Underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and/or brokerage services. The Underwriter and its affiliates may, from time to time, perform various investment banking services for the Authority or the University, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority.

The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

TJU intends to use a portion of the proceeds from the offering of the Series 2018D Bonds to refund the Refunded Obligations. To the extent the Underwriter or any affiliate thereof is an owner or holder of any of the Refunded Obligations, the Underwriter, or its affiliate, as applicable, would receive a portion of the proceeds from the issuance of the Series 2018D Bonds contemplated herein in connection with such transactions.

REMARKETING

General

The initial Remarketing Agent (as defined under the 2018D Indenture) for the Series 2018D Bonds will be Merrill Lynch, Pierce, Fenner & Smith Incorporated. The Remarketing Agent has agreed to remarket the Series 2018D Bonds on a best efforts basis, subject to the provisions of a remarketing agreement by and between TJU and the Remarketing Agent (the “Remarketing Agreement”). TJU has agreed to indemnify the Remarketing Agent against certain liabilities, including certain liabilities arising under federal and state securities laws.

The Remarketing Agent will set the interest rates on the Series 2018D Bonds during the Variable Rate Mode or for other interest rate modes and perform the other duties and remarket the Series 2018D Bonds as provided for in the 2018D Indenture, subject to the provisions of the Remarketing Agreement. The Remarketing Agent may deal in Series 2018D Bonds for its own account or as broker or agent for others and may do anything any other Bondholder may do to the same extent as if the Remarketing Agent were not serving as such.

The Remarketing Agent and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Remarketing Agent and its affiliates have, from time to time, performed

and may in the future perform, various investment banking services for the University, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Remarketing Agent and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the University.

Certain Considerations Concerning the Remarketing of the Series 2018D Bonds

The Remarketing Agent is Paid by TJU. The Remarketing Agent’s responsibilities include determining the interest rate from time to time and remarketing Series 2018D Bonds that are optionally or mandatorily tendered by the owners thereof (subject, in each ease, to the terms of the Remarketing Agreement), all as further described in this Official Statement. The Remarketing Agent is appointed by TJU and is paid by TJU for its services. As a result, the interests of the Remarketing Agent may differ from those of existing holders and potential purchasers of Series 2018D Bonds.

The Remarketing Agent May Purchase Series 2018D Bonds for its Own Account. The Remarketing Agent is permitted, but not obligated, to purchase tendered Series 2018D Bonds for its own account. The Remarketing Agent, in its sole discretion, routinely acquires tendered bonds for its own inventory in order to achieve a successful remarketing of such bonds (i.e., because there are otherwise not enough buyers to purchase the bonds) or for other reasons. However, the Remarketing Agent is not obligated to purchase tendered Series 2018D Bonds and may cease doing so at any time without notice. The Remarketing Agent also may make a market in the Series 2018D Bonds by routinely purchasing and selling Series 2018D Bonds other than in connection with an optional or mandatory tender and remarketing. Such purchases and sales may be at or below par. However, the Remarketing Agent is not required to make a market in the Series 2018D Bonds. The Remarketing Agent also may sell any Series 2018D Bonds it has purchased to one or more affiliated investment vehicles for collective ownership or enter into derivative arrangements with affiliates or others in order to reduce its exposure to the Series 2018D Bonds. The purchase of Series 2018D Bonds by the Remarketing Agent may create the appearance that there is greater third party demand for the Series 2018D Bonds in the market than is actually the case. The practices described above also may reduce the supply of Series 2018D Bonds that may be tendered in a remarketing.

Series 2018D Bonds May be Offered at Different Prices on Any Date Including a Rate Determination Date. Pursuant to the 2018D Indenture, the Remarketing Agent is required to determine the applicable rate of interest that, in its judgment, is the lowest rate that would permit the sale of the Series 2018D Bonds at par plus accrued interest, if any, on and as of the applicable Rate Determination Date. The interest rate will reflect, among other factors, the level of market demand for the Series 2018D Bonds (including whether the Remarketing Agent is willing to purchase Series 2018D Bonds for its own account). There may or may not be Series 2018D Bonds tendered and remarketed on a Rate Determination Date, the Remarketing Agent may or may not be able to remarket any Series 2018D Bonds tendered for purchase on such date at par and the

Remarketing Agent may sell Series 2018D Bonds at varying prices to different investors on such date or any other date.

The Remarketing Agent is not obligated to advise purchasers in a remarketing if it does not have third party buyers for all of the Series 2018D Bonds at the remarketing price. In the event the Remarketing Agent owns any Series 2018D Bonds for its own account, it may, in its sole discretion in a secondary market transaction outside the tender process, offer such Series 2018D Bonds on any date, including the Rate Determination Date, at a discount to par to some investors.

The Ability to Sell the Series 2018D Bonds May Be Limited. While the Remarketing Agent may buy and sell Series 2018D Bonds, it is not obligated to do so and may cease doing so at any time without notice. Thus, investors who purchase the Series 2018D Bonds, whether in a remarketing or otherwise, should not assume that they will be able to sell their Series 2018D Bonds.

Under Certain Circumstances, the Remarketing Agent May Be Removed, Resign or Cease Remarketing the Series 2018D Bonds. Under certain circumstances the Remarketing Agent may be removed or have the ability to resign or cease its remarketing efforts, subject to the terms of the Remarketing Agreement and the 2018D Indenture.

The 2018D Indenture provides that in the event that TJU shall fail to appoint a successor Remarketing Agent within the notice periods provided therein, the resigning party may petition any court of competent jurisdiction to appoint a successor or the Trustee may either appoint a Remarketing Agent or itself act as Remarketing Agent until the appointment of a successor Remarketing Agent in accordance with the 2018D Indenture. The Trustee, in its capacity as Remarketing Agent, is not required to sell Series 2018D Bonds or establish interest rates (unless it is appointed Calculation Agent) and is only required to purchase Series 2018D Bonds with funds held by it as Trustee. The resignation or removal of the Remarketing Agent shall not be effective until a successor Remarketing Agent shall have been appointed and such Remarketing Agent shall have accepted such appointment.

INDEPENDENT ACCOUNTANTS

The financial statements as of June 30, 2017 and 2016, and for each of the two years in the period ended June 30, 2017, included in this Official Statement, have been audited by PricewaterhouseCoopers LLP, independent accountants, as stated in their report appearing therein.

FINANCIAL ADVISOR

In connection with the authorization, sale and issuance of the Series 2018D Bonds, TJU has retained Echo Financial Products, LLC, King of Prussia, Pennsylvania, as its financial advisor (for purposes of this paragraph only, the “Financial Advisor”). The Financial Advisor is not obligated to undertake, and has not undertaken, either to make an independent verification of or to assume responsibility for the accuracy, completeness, or fairness, of the information contained in this Official Statement and the Appendices hereto. The Financial Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities.

CERTAIN RELATIONSHIPS

Five attorneys or officers of Cozen O’Connor, which is acting as Underwriter’s counsel in connection with the Series 2018D Bonds, serve on the Board of Trustees of TJU or certain of its affiliates. See “GOVERNANCE AND MANAGEMENT - Board of Trustees” in “APPENDIX A - DESCRIPTION OF THE UNIVERSITY” attached hereto. Ballard Spahr LLP and Cozen O’Connor also represent TJU and various affiliates, from time to time, in certain matters unrelated to this transaction.

Bank of America, National Association, an affiliate of the Underwriter, is the holder of all the Refunded 2017E Bonds which are being redeemed from a portion of the proceeds of the 2018 Bonds.

FORWARD-LOOKING STATEMENTS

Any statements made in this Official Statement, including in the appendices attached hereto, involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized.

This Official Statement, including the appendices attached hereto, contains certain “forward-looking statements” concerning the University’s operations, performance and financial condition, including its future economic performance, plans and objectives and the likelihood of success in developing and expanding. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions, future events or performance (often, but not always, through the “may,” “would,” “could,” “will,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “estimate,” “will result,” “expects to,” “will continue” and similar expressions are meant to identify these forward-looking statements), are not historical and may be forward-looking. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, including, but not limited to, the risks described under the heading “CERTAIN INVESTMENT CONSIDERATIONS” which may cause actual results to be materially different from those expressed or implied by such forward-looking statements. Although the University believes that the expectations reflected in the forward-looking statements are reasonable, the University cannot guarantee future resolutions, levels of activity, performance or achievements. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included or incorporated by reference in this Official Statement are based on information available on the date hereof and the University assumes no obligation to update any such forward-looking statements.

The forward looking statements herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market

conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the University. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement, including in the appendices attached hereto, will prove to be accurate.

MISCELLANEOUS

All of the summaries of the provisions of the Act, the 2018D Indenture, the 2018D Loan Agreement, the Master Indenture, the Master Note, the Series 2018D Bonds, the Disclosure Agreement and other documents set forth herein are only brief outlines of certain provisions thereof, are made subject to all of the detailed provisions thereof, and do not purport to be complete statements of the provisions of such documents. Reference is directed to all such documents for full and complete statements of all matters of fact relating to the Series 2018D Bonds, the source for repayment for the Series 2018D Bonds and the rights and obligations of the Holders. Copies of such documents may be obtained as specified under the caption “INTRODUCTION - Other Information” herein.

Information concerning the University, the Obligated Group and the anticipated use of the proceeds of the Series 2018D Bonds has been provided by TJU. The information contained in this Official Statement, including in the appendices, has been obtained from official and other sources deemed by TJU to be reliable, and, while not guaranteed as to completeness or accuracy, is believed by the University to be correct as of the date of this Official Statement.

Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Series 2018D Bonds.

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AUTHORIZATION OF AND CERTIFICATION OF OFFICIAL STATEMENT

This Official Statement and its distribution and use by the Underwriter have been duly authorized by the Authority and the Obligated Group and the execution and delivery thereof have been duly authorized and approved by the Authority and the Obligated Group.

MONTGOMERY COUNTY HIGHER EDUCATION AND HEALTH AUTHORITY

By: James A. Konnick, Chairman Approved:

THOMAS JEFFERSON UNIVERSITY, as Obligated Group Agent

By: Alfred C. Salvato, Senior Vice President, Corporate Finance & Chief Investment Officer

APPENDIX A

DESCRIPTION OF THE UNIVERSITY

Table of Contents Page

INTRODUCTION ...... A-1 General ...... A-1 Education and Research ...... A-1 Clinical ...... A-2 History of the University ...... A-2 University Organizational Structure/Obligated Group Members ...... A-5

FACULTY, STAFF AND EMPLOYEES ...... A-9 Faculty ...... A-9 Staff and Employees ...... A-9

GOVERNANCE AND MANAGEMENT ...... A-9 Board of Trustees ...... A-9 Senior Administrative Officers ...... A-12

EDUCATIONAL ACTIVITIES ...... A-15 Sidney Kimmel Medical College ...... A-15 Jefferson College of Biomedical Sciences ...... A-16 Jefferson College of Nursing ...... A-16 Jefferson College of Health Professions ...... A-16 Jefferson College of Pharmacy ...... A-17 Jefferson College of Population Health ...... A-17 College of Architecture and the Built Environment ...... A-17 College of Sciences, Health and the Liberal Arts ...... A-17 Kanbar College of Design, Engineering and Commerce ...... A-18 Other Educational Activities ...... A-18 Locations ...... A-19 Enrollment ...... A-19 Tuition and Fees ...... A-22 Financial Aid ...... A-23 Accreditation ...... A-24 Future University Educational Plans ...... A-25

RESEARCH ACTIVITIES ...... A-25

HEALTHCARE ACTIVITIES ...... A-26 TJUH System ...... A-27 Jefferson/Abington ...... A-27 Jefferson/Aria ...... A-28 Jefferson/New Jersey ...... A-29 Jefferson/Magee ...... A-29 Jefferson Health Physicians ...... A-30 Utilization and Operating Statistics ...... A-30 Sources of Patient Revenue ...... A-31 Delaware Valley ACO ...... A-31

HEALTHCARE SERVICE AREA, DEMOGRAPHICS AND COMPETITION ...... A-32

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Healthcare Service Area ...... A-32 Jefferson Health Clinical Assets ...... A-34 Current and Projected Population ...... A-34 Patient Origin ...... A-35 Other Healthcare Facilities ...... A-35 Future Jefferson Health Healthcare Plans ...... A-38

FINANCIAL INFORMATION AND DISCUSSION ...... A-38 Unaudited Consolidated Balance Sheet ...... A-38 Unaudited Pro Forma Consolidated Statement of Operations ...... A-40

MANAGEMENT DISCUSSION AND ANALYSIS ...... A-41 Unaudited Operating Results as of February 28, 2018 and 2017 ...... A-41 Organizational Structure ...... A-43 Integrated Strategic Financial Planning Process ...... A-43 Notable Activities ...... A-44 Einstein Health Letter of Intent ...... A-45 Other Potential Transactions ...... A-46

INDEBTEDNESS ...... A-46 Outstanding Debt ...... A-46 Interest Rate Derivatives ...... A-46

CASH AND INVESTMENTS ...... A-47 Asset Allocation ...... A-47 Liquidity ...... A-48 Investment Policy, Management and Oversight ...... A-48 Endowment Spending ...... A-49

BENEFITS ...... A-49 Defined Contribution Plans ...... A-49 Defined Benefit Plans ...... A-49 Participation in Multiemployer Defined Benefit Pension Plan ...... A-50

FUNDRAISING AND CONTRIBUTIONS ...... A-50

CAPITAL PROGRAM AND PLANNING ...... A-50

INSURANCE ...... A-51

LITIGATION ...... A-51

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In addition to the information provided in the Official Statement, including each of the appendices attached thereto, with respect to the Montgomery County Higher Education and Health Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018D (R-Floats) (the “Series 2018D Bonds”), Thomas Jefferson University, a Pennsylvania nonprofit corporation (“TJU”) has provided the following description of TJU and its various affiliates and subsidiaries. A complete review of this Appendix A, together with the body of the Official Statement and all other appendices attached thereto, is essential to the making of an informed investment decision by any purchaser of the Series 2018D Bonds. In the making of an informed investment decision relating to the Series 2018D Bonds, a potential purchaser should not conclude that the presentation of information in this Appendix A, versus presentation of information in the body of the Official Statement, denotes that the information so provided in this Appendix A is of less relevance or importance than the information set forth in the body of the Official Statement.

TJU has not authorized anyone to give any information or to make any representations not contained herein or supplemental hereto, and if given or made, such other information or representations must not be relied upon as having been authorized. The delivery by TJU of the information contained herein shall not, under any circumstances, create any implication that there has been no material change in the affairs of TJU since the date of the Official Statement. All capitalized terms used herein and not otherwise expressly defined herein shall have the respective meanings set forth in the Official Statement.

Information included in this Appendix A includes forward-looking statements about the future that are necessarily subject to various risks and uncertainties (the “Forward-Looking Statements”). These Forward-Looking Statements are (i) based on the beliefs and assumptions of management of the University and on information currently available to such management; and (ii) often identifiable by words such as “estimates,” “expects,” “expected,” “plans,” “believes” and similar expressions.

Events that could cause future results to differ materially from those expressed in or implied by Forward-Looking Statements or historical experience include the impact or outcome of many factors that are described throughout this Appendix A and the rest of the Official Statement. Although the ultimate impact of such factors is uncertain, they may cause future performance to differ materially from results or outcomes that are currently sought or expected by TJU. See also, “CERTAIN INVESTMENT CONSIDERATIONS” in the front part of the Official Statement.

Unless otherwise noted, all information provided in this Appendix A, including the information in the tables, has been provided by the University.

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INTRODUCTION

General

Thomas Jefferson University (“TJU”) is a nonprofit corporation formed exclusively for charitable, scientific and educational purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). TJU’s mission is “reimagining health, education and discovery to create unparalleled value.” Clinically, TJU is committed to improving lives and providing for, facilitating and enabling patient access to high quality health care in an evolving healthcare delivery system; and integrating care delivery and payment systems to provide comprehensive solutions to patients and the communities served by TJU and its affiliates and subsidiaries, which together are referred to in this Appendix A as the “University.”

AS FURTHER DESCRIBED HEREIN, TJU, TJUH SYSTEM (“TJUH SYSTEM”), THOMAS JEFFERSON UNIVERSITY HOSPITALS, INC. (“TJU HOSPITALS”), JEFFERSON UNIVERSITY PHYSICIANS (“JUP”), ABINGTON HEALTH (“ABINGTON HEALTH”), ABINGTON MEMORIAL HOSPITAL (“AMH”), ABINGTON HEALTH FOUNDATION (“AHF”), LANSDALE HOSPITAL (“LH”), ARIA HEALTH SYSTEM (“ARIA HEALTH SYSTEM”), ARIA HEALTH (“ARIA HEALTH”), PHILADELPHIA UNIVERSITY (“PHILADELPHIA UNIVERSITY”), KENNEDY HEALTH SYSTEM, INC. (“KENNEDY HEALTH SYSTEM”), KENNEDY HEALTH FACILITIES, INC. (“KHF”), KENNEDY UNIVERSITY HOSPITAL, INC. (“KUH”), KENNEDY MEDICAL GROUP PRACTICE, P.C. (“KMGP”) AND THE MAGEE MEMORIAL HOSPITAL FOR CONVALESCENTS (“MAGEE”), AT THE TIME OF ISSUANCE OF THE SERIES 2018D BONDS, WILL BE THE MEMBERS OF THE OBLIGATED GROUP (THE “OBLIGATED GROUP”), WHICH WAS CREATED UNDER THE MASTER INDENTURE REFERRED TO IN THE FOREPART OF THIS OFFICIAL STATEMENT. THESE ENTITIES, AND ONLY THESE ENTITIES, ARE JOINTLY AND SEVERALLY LIABLE FOR ALL OBLIGATIONS ISSUED OR TO BE ISSUED UNDER THE MASTER INDENTURE.

Education and Research

TJU includes nine colleges, two schools and one institute divided primarily among two campuses in Philadelphia (individually, the “Center City Campus” and the “East Falls Campus.” The East Falls Campus was formerly Philadelphia University). The University’s nine colleges are: the Sidney Kimmel Medical College (“Sidney Kimmel Medical College”), one of the oldest and largest private medical colleges in the United States; Jefferson College of Biomedical Sciences (“JCBS” or the “College of Biomedical Sciences”); Jefferson College of Health Professions (“JCHP” or the “College of Health Professions”); Jefferson College of Nursing (“JCN” or the “College of Nursing”); Jefferson College of Pharmacy (“JCP” or the “College of Pharmacy”); Jefferson College of Population Health (“JCPH” or the “College of Population Health”); Kanbar College of Design Engineering and Commerce (“Kanbar College”); College of Architecture and the Built Environment (“CABE”); and the College of Science, Health and the Liberal Arts (“CSHLA”). The nine colleges had a total enrollment of approximately 7,800 (headcount) students for the 2017-2018 academic year, including 1,074 students enrolled in Sidney Kimmel Medical College.

The University’s academic activities are supported by endowments, tuition and fee revenues, gifts, and other sources. As a major scientific and medical research center, the University also receives revenues from research and other grants and contracts with federal, state and local governments, and private industry.

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See “EDUCATIONAL ACTIVITIES” and “RESEARCH ACTIVITIES” herein for a more detailed discussion of the University’s educational and research activities.

Clinical

TJU is the sole corporate member of TJUH System, Abington Health, Aria Health System, Kennedy Health System and Magee, each of which is a non-profit corporation and an organization described in Section 501(c)(3) of the Code. TJUH System, Abington Health, Aria Health System, Kennedy Health System and Magee and each of their operating subsidiaries, and other companies and ventures operated by such corporate entities, are collectively referred to herein as “Jefferson Health.” Jefferson Health, the largest provider of health care services in the greater metropolitan area of Philadelphia, in 2017 had a combined 19.2% market share. See the table titled “SELECT OPERATING STATISTICS OF MAJOR HOSPITALS/SYSTEMS IN JEFFERSON HEALTH 9-COUNTY PSA FOR CALENDAR YEAR 2017” set forth herein in “HEALTHCARE SERVICE AREA, DEMOGRAPHICS AND COMPETITIONS - Other Healthcare Facilities.” Jefferson Health’s healthcare activities include the provision of inpatient and outpatient services at 14 hospitals and a comprehensive outpatient network in two states.

See “HEALTHCARE ACTIVITIES” herein for a more detailed discussion of the University’s healthcare activities.

History of the University

TJU was founded as a medical college in 1824 and opened its first free-standing hospital, called Thomas Jefferson University Hospital, in 1887. Between 1887 and 1995, Thomas Jefferson University Hospital was an unincorporated division of TJU and its budgets, staffing, capital plans and other activities were developed and implemented as part of TJU. Likewise, the clinical practices of the full time faculty of the Sidney Kimmel Medical College practiced under numerous departments that were owned and controlled by TJU. In 1995, TJU formed Jefferson Faculty Foundation to consolidate the departmental practices of its employed faculty into a single, separately incorporated, nonprofit, tax-exempt entity. In 1998, Jefferson Faculty Foundation changed its name to Jefferson University Physicians.

In 1995, TJU Hospitals was established as a controlled affiliate of TJU. In March of 1996, through a transfer of the corporate membership interest, TJU Hospitals became a founding member and controlled affiliate of Jefferson Health System (“JHS”). JHS was a regional non-profit healthcare system not corporately affiliated with TJU that included other controlled hospitals and health care affiliates in southeastern Pennsylvania. In connection with the transfer of corporate membership from TJU to JHS, TJU transferred its hospital-related assets to TJU Hospitals for an amount sufficient to enable TJU to pay off all of its debt allocable to the transferred hospital facilities. Thereafter, TJU and TJU Hospitals operated as separate entities: the hospital’s budgeting, finance, staffing and other transactions were undertaken under the auspices of JHS, while TJU continued to own and operate its educational facilities, research facilities and clinical practice activities. Despite not being corporate affiliates, TJU and TJU Hospitals maintained a close working relationship, with common facilities and shared services. TJU provided certain management and other services to TJU Hospitals.

In 2013, TJU, TJU Hospitals and JHS concluded that it would be advantageous to re-examine the nature and scope of their relationships and that TJU and TJU Hospitals should consider working together under a commonly controlled entity. By then, TJU Hospitals owned and operated three separate hospital divisions – Thomas Jefferson University Hospital, Jefferson Hospital for Neuroscience and Methodist Hospital Division – and was a controlled affiliate of TJUH System, a nonprofit corporation controlled by JHS.

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In 2014, in a series of related transactions among TJU, TJUH System, JUP, JHS and the remaining controlled affiliates of JHS, TJU became the sole corporate member of TJUH System, and TJUH System became the sole corporate member of TJU Hospitals and JUP, thereby aggregating all clinical operations of TJUH System under the control of TJU and effectively unwinding JHS.

On June 30, 2015, TJU and Abington Health, entered into an Enterprise Formation Agreement in which, among other things, TJU became the sole corporate member of Abington Health and the TJU Board (as defined below) was reconstituted to include trustees from TJU and trustees from Abington Health. Abington Health, directly and through its controlled affiliates, including AMH, AHF and LH, owns and operates a major teaching hospital, a community hospital and other healthcare facilities in Montgomery County and Bucks County, Pennsylvania.

On January 19, 2016, TJU entered into a System Integration Agreement with Aria Health System in which, among other things, TJU became the sole corporate member of Aria Health System and the TJU Board was reconstituted to include designees from Aria Health System. Aria Health System, directly and through its controlled affiliates, including Aria Health (“Aria Health”), owns and operates a licensed acute care hospital at three locations and a network of outpatient centers and physicians with facilities in Philadelphia and Bucks County, Pennsylvania. The Aria Health System transaction was accounted for as an acquisition.

On July 1, 2017, Philadelphia University became a controlled affiliate of TJU pursuant to the terms of a university combination agreement dated as of September 9, 2016. TJU became the sole corporate member of Philadelphia University and the TJU Board was reconstituted to include designees from Philadelphia University. The combination created a comprehensive university centered on the delivery of professional education that leverages the strengths of both TJU and Philadelphia University to deliver high-impact education and value for students in health, science, architecture, design, fashion, business and engineering.

On September 1, 2017, Kennedy Health System became a controlled affiliate of TJU pursuant to the terms of a system integration agreement dated as of August 9, 2016. TJU became the sole corporate member of Kennedy Health System and the TJU Board was reconstituted to include designees from Kennedy Health System. Kennedy Health System, directly and through its controlled affiliates, including KHF, KUH and KMGP, owns and operates three licensed acute care hospitals, a long-term care facility, and a network of outpatient centers and physicians with facilities in southern New Jersey.

On January 5, 2018, Magee became a controlled affiliate of TJU pursuant to the terms of a definitive agreement dated as of December 18, 2017. TJU became the sole corporate member of Magee and the TJU Board was reconstituted to include designees from Magee. Magee, founded in 1958, is a 96- bed specialty medical rehabilitation hospital providing physical and cognitive rehabilitation services. It is the 13th ranked rehabilitation hospital in the country according to the 2017-2018 rankings of U.S. News & World Report. Magee’s flagship facility is located in Center City Philadelphia.

The transactions with Abington Health, Aria Health System, Kennedy Health System, Philadelphia University and Magee include provisions for the filling by Abington Health, Aria Health System, Kennedy Health System, Philadelphia University and Magee, respectively, of any vacancies occurring with respect to their designees to the TJU Board during transition/integration periods immediately following the closing of each of those transactions. The transition/integration periods are specific to each transaction and range from two to three years in duration. Following such transition/integration periods, such vacancies will be filled by the TJU Board. During such transition/integration periods, TJU is also required to seek the formal advice and input or, in very limited cases that do not include the incurrence of debt, the approval, of the legacy boards of Abington Health,

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Aria Health System, Kennedy Health System, Philadelphia University and Magee, as applicable, to certain actions that specifically relate to the operation or assets of those entities.

As further described in the front part of the Official Statement, each of TJU, TJUH System, TJU Hospitals, JUP, Abington Health, AMH, AHF, LH, Aria Health System, Aria Health, Philadelphia University, Kennedy Health System, KHF, KUH, KMGP and Magee will comprise, at the time of issuance of the Series 2018D Bonds, and are collectively referred to as, the “Obligated Group.”

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University Organizational Structure/Obligated Group Members

Thomas Jefferson University

Jefferson Academic Jefferson Health

Philadelphia Magee Rehabilitation TJUH System Kennedy Health Center City Abington Health Aria Health System University Hospital (Jefferson University System, Inc. Campus (Jefferson/Abington) (Jefferson/Aria) (East Falls Campus) (Jefferson/Magee) Hospitals) (Jefferson/New Jersey)

Kennedy Abington Abington Thomas Jefferson Jefferson Kennedy Kennedy Medical Lansdale Aria Health Memorial Health University University University Group Practice, Hospital Health Facilities, Hospital Foundation Hospitals, Inc. Physicians Hospital, Inc. P.C. Inc.

Note: - Orange boxes denote operating groups or divisions and are not actual legal entities. - Blue boxes denote legal entities that comprise the Obligated Group. As further detailed in the first paragraph on the next page, the Obligated Group Members together constitute approximately 93% of the consolidated University revenues and approximately 95% of the consolidated University assets.

* Thomas Jefferson University is the parent entity and also the corporation in which the “Center City Campus” business entity is actually located.

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The following is a brief description of the activities and operations of the Obligated Group (excluding TJU, which is described above). The members of the Obligated Group are the only entities obligated to make payments on the Series 2018D Bonds. TJU currently has approximately 64 controlled Affiliates that comprise the University, all of which, except Magee, are included in TJU’s unaudited interim financial statements as of December 31, 2017 filed on the Electronic Municipal Market Access (“EMMA”) website of the Municipal Securities Rulemaking Board (the “MSRB”) but such unaudited interim financial statements are not incorporated into this Official Statement by such reference. TJU is the borrower under the Loan Agreement and pursuant thereto has promised to repay the Series 2018D Bonds. The other Obligated Group Members are the largest (by revenues, assets and/or visibility) of TJU’s controlled Affiliates. TJU and the other Obligated Group Members together currently constitute approximately 93% of the consolidated University revenues and approximately 95% of the consolidated University assets. As described in the Master Indenture, all of the Obligated Group Members are jointly and severally liable on the obligations issued and outstanding under the Master Indenture, including the Series 2018D Bonds, together with TJU, and have pledged their Gross Revenues to secure such obligations. None of TJU’s controlled Affiliates is currently designated as an Excluded Affiliate and therefore the credit currently available to repay the Series 2018D Bonds is the University (i.e., TJU, the other Obligated Group Members, and each of their controlled Affiliates). For information on the terms by which a controlled Affiliate of TJU could become an Excluded Affiliate in the future, see “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2018D BONDS – Addition, Exclusion and Release of Entities with Respect to the Requirements of the Master Indenture” in the front part of this Official Statement. Throughout this Appendix A, the term “University” is used to refer collectively to TJU, the other Obligated Group Members and all of their controlled Affiliates.

TJUH System. TJUH System is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is TJU. TJUH System is the sole corporate member of TJU Hospitals and JUP and serves as a holding company for the entities and operations that comprise Jefferson University Hospitals (as defined below).

Thomas Jefferson University Hospitals, Inc. TJU Hospitals is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is TJUH System. TJU Hospitals was founded in 1825 and is the University’s flagship teaching hospital located on the Center City Campus. TJU Hospitals is licensed for 937 acute care beds and is nationally recognized for its programs in Cancer treatment; Cardiology and Heart Surgery; Diabetes and Endocrinology; Ear, Nose and Throat; Gastroenterology and GI Surgery; Geriatrics; Nephrology; Neurology and Neurosurgery; Ophthalmology; Orthopedics; and Urology. TJU Hospitals has a Level I Regional Resource Trauma Center designation and has been designated by the national Institute of Handicapped Research as a Regional Spinal Cord Injury Center. TJU Hospitals operates three acute care hospital locations – Thomas Jefferson University Hospital in Center City, Jefferson Hospital for Neuroscience also in Center City and the Methodist Hospital Division, which is located in South Philadelphia. These facilities are sometimes collectively referred to herein as “Jefferson University Hospitals.”

Jefferson University Physicians. JUP is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is TJUH System. JUP is a multi-specialty physician practice comprised of the University’s salaried faculty members and was formed to consolidate the clinical activities of the full time faculty of the Sidney Kimmel Medical College into a single nonprofit, tax-exempt entity. JUP is comprised of approximately 708 physicians and operates at approximately 70 locations.

Abington Health. Abington Health is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code. Abington Health is the sole corporate member of AMH, LH

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and AHF and serves as a holding company for the entities and operations that comprise Jefferson/Abington (defined below).

Abington Memorial Hospital. AMH is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is Abington Health. Founded in 1913, AMH is a 660-bed acute care hospital located in Abington, Pennsylvania. AMH provides healthcare services primarily to the residents of Abington Township and surrounding communities in Montgomery and Bucks counties, Pennsylvania, as well as other parts of the Philadelphia metropolitan area.

Abington Health Foundation. AHF is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is Abington Health. AHF’s sole corporate purpose is to support the charitable tax-exempt purposes, programs, and services of AMH and LH.

Lansdale Hospital. LH is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is Abington Health. Founded in 1934, LH is a 135-bed acute-care facility located in Lansdale, Pennsylvania. LH provides healthcare services primarily to the residents of Lansdale and surrounding communities in Montgomery and Bucks counties, Pennsylvania, as well as other parts of the Philadelphia metropolitan area. LH, together with AHF and AMH, are collectively referred to as “Jefferson/Abington.”

Aria Health System. Aria Health System is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code. Aria Health System is the sole corporate member of Aria Health, and serves as a holding company for the entities and operations that comprise Jefferson/Aria (defined below).

Aria Health. AH is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is Aria Health System. Founded in 1903, AH is a 480-bed acute care hospital with three locations in the northeast section of Philadelphia and Lower Bucks County. AH provides healthcare services primarily to residents of northeast Philadelphia and Bucks County. AH and Aria Health System are collectively referred to herein as “Jefferson/Aria.”

Kennedy Health System, Inc. Kennedy Health System is a New Jersey nonprofit corporation and an organization described in Section 501(c)(3) of the Code. Kennedy Health System is the sole corporate member of KHF and KUH, and serves as a holding company for the entities and operations that comprise Jefferson/New Jersey (defined below).

Kennedy Health Facilities, Inc. KHF is a New Jersey nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is Kennedy Health System. KHF operates Jefferson Health Care Center, a 190 bed extended care facility in Washington Township, New Jersey, with 60 beds devoted to short-term rehabilitation services (“Jefferson Health Care Center”).

Kennedy University Hospital, Inc. KUH is a New Jersey nonprofit corporation and an organization described in Section 501(c)(3) of the Code whose sole corporate member is Kennedy Health System. Founded in 1962, KUH operates three acute-care hospitals in Cherry Hill, Stratford, and Washington Township, New Jersey. KUH provides healthcare services primarily to residents of Camden, Gloucester, Burlington, Atlantic and Cumberland Counties, New Jersey.

Kennedy Medical Group Practice, P.C. KMGP (also known as Kennedy Health Alliance) is a New Jersey captive professional corporation that employs a network of primary care physicians and

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specialists with offices located throughout southern New Jersey. KMGP employs approximately 210 physicians and provides services at more than 20 locations. Kennedy Health System, KHF, KUH and KMGP are collectively referred to herein as “Jefferson/New Jersey.”

Philadelphia University. Philadelphia University is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code. Philadelphia University was a stand-alone, fully accredited university founded in 1884. Since its combination with TJU in 2017, Philadelphia University’s three main colleges, the Kanbar College, CABE and CSHLA, are now operated as a part of the educational activities of the University principally at the East Falls Campus. See “EDUCATIONAL ACTIVITIES” and “RESEARCH ACTIVITIES” in this Appendix A.

The Magee Memorial Hospital for Convalescents. Magee (doing business as Magee Rehabilitation Hospital) is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code. Founded in 1958, Magee is a 96-bed specialty medical rehabilitation hospital providing physical and cognitive rehabilitation services. Magee has three locations in Philadelphia and one in Langhorne, Pennsylvania and is collectively referred to herein as “Jefferson/Magee.”

The following map illustrates the nature and location of many of the University’s facilities.

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FACULTY, STAFF AND EMPLOYEES

Faculty

The University has approximately 4,400 faculty members, 3,326 University faculty and/or College of Biological Sciences (“JCBS”) faculty, of whom 2,344 are non-salaried appointed faculty. All full-time, salaried members of the Sidney Kimmel Medical College and JCBS faculty who are engaged in clinical activities are members of JUP. The volunteer faculty is primarily in clinical departments and participates in the clinical instruction of medical students and residents at Jefferson Health’s hospitals and at other clinical sites. Medical staff at hospitals participating in student and resident education must meet the same criteria for faculty status as the full-time faculty and must hold an appointment in the Sidney Kimmel Medical College.

There are approximately 1,171 faculty members at the University’s other colleges and schools, of which approximately 291 are full-time and 37 are tenured.

Staff and Employees

The University is one of the largest employers in the Philadelphia metropolitan area. The University has approximately 30,000 employees (including the salaried faculty employees described above).

Approximately 1,056 University employees are represented by unions and are under collectively bargained contracts. The hospital and healthcare service workers are represented by District Council 1199C (National Union of Hospital and Healthcare Employees) (“1199C”). They are currently covered by a 5-year collective bargaining agreement that was signed on July 1, 2013 and is effective through June 30, 2018. Discussions are currently underway with 1199C leadership regarding this contract. Certain security personnel are covered by a collective bargaining agreement with the International Union, Security, Police and Fire Professionals of America, Local Union 511. A 5-year agreement was signed by union membership on July 1, 2014 and is effective through June 30, 2019. The maintenance and plant operations employees are covered by a collective bargaining agreement with the Teamsters Local No. 830 of Philadelphia, Pennsylvania union. A 3-year agreement was signed by union membership on February 1, 2018 and is effective through January 31, 2021.

Management of the University considers its relations with its employees to be good.

GOVERNANCE AND MANAGEMENT

Board of Trustees

The business and affairs of the University are managed or controlled by the Board of Trustees of TJU (the “TJU Board”), which has all of the powers, authority, responsibilities, and obligations given the board of directors of a nonprofit corporation under the laws of the Commonwealth of Pennsylvania. TJU’s bylaws specify that the number of trustees (other than Trustees Emeriti) may be no greater than 45. Trustees Emeriti are not limited in number. As sole member of the Jefferson Health entities and Philadelphia University, TJU has control over all of the entities comprising the University.

The TJU Board has various standing committees. The Executive Committee has general charge of the affairs of the University and broad powers, including the power to carry out any directions or resolutions of the TJU Board, to transact any business that is committed to it by the TJU Board, as well as other business which may require action between meetings of the TJU Board, and to authorize the

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borrowing of money. The Executive Committee includes: (i) the Chair of the TJU Board; (ii) the Chair- elect or Vice-Chair of the TJU Board; (iii) the Secretary of the TJU Board; (iv) the Treasurer of the TJU Board; (v) the chair of each of the following standing committees: Audit, Compliance and Risk, Academic Affairs (currently known as the “Jefferson Academic Board”), Clinical Affairs and Finance; and (vi) the President and Chief Executive Officer (“CEO”), along with additional appointed Trustees representing enterprise pillars and divisions.

The current membership of the TJU Board is as follows:

Robert S. Adelson1, Merion, PA ...... President, Osage Investments, Inc. David Archibald, EdD, Langhorne,PA ...... Former Superintendent, Lower Moreland Township School District, Retired Robert Barsky, DO, Cherry Hill, NJ ...... President & Medical Director, Mid-Atlantic Kidney Stone Center David R. Binswanger, Philadelphia, PA ...... President and CEO, Binswanger Companies Jay W. Blumenthal, Elkins Park, PA...... Treasurer and Tax Collector, Abington Township Ira Brind, Philadelphia, PA...... President, Brind Investments, Inc. Thomas S. Brown, Esq., Strafford, PA ...... Attorney, Butler Pappas Weihmuller Katz Craig, LLP Ronald L. Caputo, Delran, NJ ...... Vice President and Senior Fiduciary Advisor, Wilmington Trust Stephen P. Crane2, 3, Fort Washington, PA ...... Ernst & Young, LLP, Retired Partner Alfred J. D’Angelo, Jr., Esq., Berwyn, PA ...... Attorney, Cozen O’Connor4 Robert DiStanislao, Haddonfield, NJ ...... Owner and President, RDS Enterprises John F. Durante, Sewell, NJ ...... Independent Owner, McDonald’s Bruce K. Entwisle5, Lower Gwynedd, PA ...... President, Harry Miller Corporation William A. Finn, Mt. Pleasant, SC ...... Chairman, Asten Johnson H. Richard Haverstick, Jr.6, 7, Medford, NJ ...... Managing Partner, Ernst & Young LLP, Retired Richard W. Hevner8 Malvern, PA ...... Managing Director, Wells Fargo Advisors Stephen K. Klasko, MD, MBA*, Philadelphia, PA ...... President and CEO, Thomas Jefferson University & Jefferson Health William A. Landman, Haverford, PA ...... Principal and Chief Executive Officer, MainLine Investment Partners Joseph A. Maressa, Jr., Esq., Waterford, NJ ...... President, Title America Agency Corp. Eileen Martinson910, Philadelphia, PA ...... Chief Executive Officer, Sparta Systems Marvin Mashner11, 12, Ambler, PA ...... Former President and CEO of ACTS Retirement-Life Communities, Retired

1 Member, Executive Committee 2 Chair, TJU Board 3 Chair, Executive Committee 4 Alfred J. D’Angelo, Jr., a member of the TJU Board, is an attorney with Cozen O’Connor, which is serving as underwriter’s counsel for the Series 2018D Bonds. 5 Member, Executive Committee 6 Chair, Finance Committee 7 Member, Executive Committee 8 Member, Executive Committee 9 Member, Executive Committee 10 Co-Chair, Jefferson Academic Board (formerly known as the Academic Committee) 11 Chair, Audit, Risk and Compliance Committee 12 Member, Executive Committee

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Edward F. McKenna, III, Glenside, PA ...... Vice President for Operations, Performance Development Group Leslie J. McNamara, Wilmington, DE ...... Managing Director, Citigroup Austin A. Meehan, III, PE, Yardley, PA ...... President, General Asphalt Paving Company Ronald J. Naples, Wynnewood, PA ...... Chairman Emeritus, Quaker Chemical Corporation John S. Oyler, Esq., Huntingdon Valley, PA ...... Senior Advisor, Faulkner Organization Bruce J. Paparone, Haddonfield, NJ ...... President, Bruce Paparone, Inc., New Homes Vivian W. Pinn, MD, Washington, DC ...... Senior Scientist Emerita, Former Director, Office of Research on Women’s Health, National Institute of Health, Retired Duncan B. Pitcairn, Bryn Athyn, PA ...... Principal and Treasurer, Cairnwood Cooperative Corporation Daniel J. Ragone, CPA, Haddonfield, NJ ...... Retired Principal, Daniel J. Ragone & Company Richard T. Riley, West Chester, PA ...... Former Chairman and CEO, LoJack Corp. Caro U. Rock, Gladwyne, PA ...... Publisher, Family Business Magazine Richard H. Rothman, MD, PhD1, Philadelphia, PA ...... Founder, Rothman Institute Benjamin V. Sanchez, Esq., CPA, Jenkintown, PA ...... Independent Accountant, Attorney Philip J. Sasso, MD, Lower Gwynedd, PA ...... Physician, Chair, Department of Anesthesiology, Abington Memorial Hospital John P. Silvestri2, Haddonfield, NJ ...... President, Interstate Commercial Real Estate Albert E. Smith3, Haddonfield, NJ ...... Retired President, Canon Financial Services Joseph A. Smith, CPA, Philadelphia, PA ...... Vice President, Marketing & Corporate Communications, Philadelphia Gas Works Michael Sneed, Newtown, PA ...... Worldwide Vice President, Global Corporate Affairs, Johnson & Johnson Meryle Twersky, Esq., Huntingdon Valley, PA ...... Former Business Associate and Attorney, Retired Trista M. Walker, New Hope, PA ...... President, Baldwin & Obenauf, Inc. John D. Walp, New Britain, PA ...... President, Converje, LLC Patricia D. Wellenbach, Philadelphia, PA ...... Strategy Advisor to the CEO, Please Touch Museum Craig E. White, Philadelphia, PA ...... President and CEO, Philadelphia Gas Works

Emeritus Trustees

Lennox K. Black, Limerick, PA ...... Former CEO, Teleflex Incorporated, Retired Richard C. Gozon, Naples, FL ...... Chairman of the Board, Amerisource- Bergen Brian G. Harrison, Key West, FL ...... President and CEO, Granville Company James E. Ksansnak, Jupiter, FL ...... Former Vice Chairman, ARAMARK Corporation, Retired Douglas J. MacMaster, Jr., Esq., Ambler, PA ...... Former Senior Vice President, Merck & Co., Inc., Retired Thomas B. Morris, Jr., Esq., Philadelphia, PA ...... Director, Berwind Corporation

1 Member, Executive Committee 2 Member, Executive Committee 3 Member, Executive Committee

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Britton H. Murdoch, Newtown Square, PA ...... Managing Director, Strattech Partners R. Richard Williams, Radnor, PA ...... Principal, Seaboard Advisors, Ltd

Senior Administrative Officers

The President/CEO of the University is elected by and serves at the pleasure of the TJU Board. The day-to-day governance of the University is delegated to the President and, through the President, to his assisting officers and the provost, deans and faculty in each of the colleges and to officers in the University’s other controlled affiliates. The President nominates for approval by the TJU Board all executive vice presidents and certain senior vice presidents, along with all faculty members who are recommended for tenure. The following is a summary of selected biographical information pertaining to the executive cabinet members of the University.

Stephen K. Klasko, MD, MBA, serves as President and Chief Executive Officer TJU and Jefferson Health (2013-present). Dr. Klasko was previously: Chief Executive Officer, USF Health (University of South Florida) and Dean, Morsani College of Medicine; Dean, College of Medicine and Chief Executive Officer of Drexel University Physicians; President and Chief Executive Officer of the Lehigh Valley Physician Group. Additionally, Dr. Klasko serves or has served in various roles with the following organizations: Corporate Director, Teleflex, Inc.; Board Co-Chair, Delaware Valley–ACO; Trustee, Friedrich’s Ataxia Research Alliance; Trustee, Lehigh Valley Health Network; Trustee, Resurrection Health System; Trustee, Certification Commission for Healthcare Information Technology; Board Chair, Health Professions Conferencing Corporation; Dean Liaison, AAMC Group On Institutional Affairs; Trustee, Tampa General Hospital; Health Care Consultant, Governance Institute; Principal, Health Visions LLC; Founding President, Spirit of Women Inc.; and Principal, North Group, Inc.

Anne Boland Docimo, MD, MBA, serves as Executive Vice President and Chief Clinical Transformation Officer (2015-present). Dr. Docimo previously served as Chief Medical Officer, University of Pittsburgh Medical Center (“UPMC”) Health Plan and as Senior Medical Director for the Hospital Division of UPMC. Prior to her roles at UPMC, she was Director of Urgent Care and Community Medicine at Johns Hopkins Health System.

Cristina G. Cavalieri, Esq., serves as Executive Vice President and Chief Legal Officer, TJU General Counsel and Assistant Secretary, JUP Secretary (2015-present). Previous University positions include; Senior Vice President, Chief Legal Officer, Secretary TJU; Vice President for Institutional and External Affairs, TJU General Counsel and Assistant Secretary; General Counsel and Secretary, JUP. Ms. Cavalieri was Senior Partner and Chairperson of the Health Care Department in the law firm of Pelino and Lentz (which merged with Archer & Greiner, P.C.).

Elizabeth A. Dale, EdD, serves as Executive Vice President for Institutional Advancement (2014-present). Dr. Dale was previously Senior Vice President for Institutional Advancement, Drexel University. Prior to Drexel, Dr. Dale was the Vice Chancellor for Advancement and founding Executive Director of the University of Massachusetts’ Amherst Foundation.

Peter L. DeAngelis, Jr., CPA, MBA, FHFMA, serves as Executive Vice President for Financial Affairs and Chief Financial Officer (2016-present). Previously, Mr. DeAngelis served as a partner of the Strategic Execution practice of IMA Consulting, a leading national healthcare provider consulting firm. Mr. DeAngelis was the Executive Vice President and Chief Financial Officer, and then Chief Operating Officer, of Catholic Health East (“CHE”), one of the nation’s largest multi-institutional, Catholic healthcare delivery systems. CHE later merged with Trinity Health. Most recently, Mr. DeAngelis held the position of President of the East Group of the CHE Division, and Executive Vice President of Trinity Health.

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Joseph W. Devine, FACHE, serves as Executive Vice President, Hospital and Health Services, Jefferson Health (2017-present) President and Chief Executive Officer, Jefferson Health-New Jersey Division (2013-present). Mr. Devine is a 30-year Kennedy veteran holding the positions of Senior Vice President for Administration, Vice President for Hospital Services, and Vice President for Business Development. He serves on numerous boards including the Southern New Jersey Chamber of Commerce, is the Executive Club Chairman of the Gloucester County Chamber of Commerce; Commissioner of the South Jersey Transportation Authority; and, Treasurer of the New Jersey Hospital Association (NJHA) Board of Trustees.

John C. Ekarius serves as Executive Vice President and Chief of Staff (2013-present). Mr. Ekarius was previously Chief Operating Officer at University of South Florida Health and the Morsani College of Medicine, as well as Associate Dean for External Relations and Strategic Development at Drexel University. He also was Vice President of Public and Government Affairs at the University of Medicine and Dentistry of New Jersey.

Kathleen Gallagher, MSN, BS, serves as Executive Vice President and Chief Operating Officer (2013-present) and was previously Managing Director at Huron Consulting Group, Inc. Prior to her role at Huron, Ms. Gallagher was Vice Dean for Administration at NYU School of Medicine and served as Senior Associate Dean at the Drexel University College of Medicine.

Joseph B. Hill, serves as Senior Vice President and Chief Diversity and Inclusion Officer (2015- present). Previously, he served as Vice President and Chief Diversity Officer for Froedtert and the Medical College of Wisconsin in Milwaukee. He was Managing Director of Diversity and Inclusion for the American Cancer Society’s national home office in Atlanta, Ga. Prior to the American Cancer Society, Mr. Hill served as Senior Diversity Manager of Cingular Wireless, which became AT&T Mobility.

Kathleen Kinslow, CRNA, EdD, MBA, serves as Chief Executive Officer, Aria Health, Executive Vice President & Chief Integration Officer (2016-present). Dr. Kinslow was previously President and Chief Executive Officer of Aria Health and served as CEO and Executive Director of Pennsylvania Hospital, part of the University of Pennsylvania Health System.

Karen E. Knudsen, PhD, serves as Director of the Sidney Kimmel Cancer Center, and the Hilary Koprowski Professor and Chair of Cancer Biology at TJU (2015-present), with joint appointments in the departments of Medical Oncology, Urology, and Radiation Oncology. Notably, Dr. Knudsen served as the first Vice Provost for TJU, overseeing and integrating basic and clinical research across all six colleges at TJU.

Stephen Littleson, FACHE serves as President, Aria-Jefferson Health (2018-present). Mr. Littleson was most recently President of the Hospital Service Division and Chief Operating Officer at Hackensack Meridian Health. His previous positions were that of Executive Vice President and Chief Operating Officer of Meridian Health, as well as President of Jersey Shore University Medical Center.

Charles G. Lewis serves as Executive Vice President, Chief Growth and Marketing Officer (2016-present). Mr. Lewis was most recently Senior Vice President for the Catholic Leadership Institute. He was Senior Vice President of External Affairs for Lehigh Valley Health Network in Allentown, Pennsylvania. Mr. Lewis also directed his own consulting business, Charles G. Lewis & Associates, serving a number of healthcare and non-profit clients throughout the United States. He is also the former Secretary for External Affairs for the Archdiocese of Philadelphia. Mr. Lewis began his professional career as a congressional aide and speechwriter in Washington, D.C.

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Margaret McGoldrick serves as President, Abington-Jefferson Health (2015-present). Ms. McGoldrick previously served as Executive Vice President and Chief Operating Officer at Abington Health since January 1999. Her previous positions were that of President and Chief Executive Officer of Hahnemann University Hospital and Medical College of PA Hospital.

Laurence M. Merlis serves as Executive Vice President and Chief Operating Officer, Jefferson Health (2015-present). Mr. Merlis was previously President and Chief Executive Officer of Abington Health, after having served as Chief Executive Officer for over twenty years at three healthcare organizations: GBMC Healthcare in Maryland, and Riverview Medical Center and East Orange General Hospital in New Jersey, as well as Executive Vice President for the Clinical Enterprise for the Meridian Health System in New Jersey.

Bruce A. Meyer, MD, MBA, serves as Senior Executive Vice President and Chief Physician Executive (2017-current) for TJU and Jefferson Health. Mr. Meyer previously served as Executive Vice President for Health System Affairs at the University of Texas Southwestern Medical Center (“UTSW”), Chief Executive Officer for its Accountable Care Network and the Senior Executive Officer leading the Population Health Services Company of Southwestern Health Resources. Prior to joining UTSW in 2007, Dr. Meyer served as Chair, Department of Obstetrics and Gynecology at the University of Massachusetts Medical School and President of UMass Memorial Medical Group, a 750-member physician faculty practice.

Rose Ritts, MS, PhD, serves as Executive Vice President and Chief Innovation Officer (2015- present). Dr. Ritts was previously Executive Director for the Office of Licensing and Ventures, Duke University. In addition to her previous role at Duke University, Dr. Ritts managed emerging venture- capital funded NewCos and served as the Director of Biotechnology and Materials at Sarnoff Corporation and Program Manager at the Defense Advanced Research Projects Agency of the United States Department of Defense.

Stephen Spinelli, Jr., PhD, serves as Executive Vice President and Chancellor of TJU (2017- present) and President, Jefferson-East Falls Division (2007-present). He has many years of leadership experience in academia, business and philanthropy. Dr. Spinelli serves on the Board of Advisors for the Berwind Corporation and the Board of Directors for Planet Fitness. Prior to Philadelphia University, Dr. Spinelli held a variety of leadership positions at Babson College in Wellesley, Massachusetts, including vice provost for entrepreneurship and global management, chair of the entrepreneurship division and director of the Arthur M. Blank Center for Entrepreneurship. He was co-founder of Jiffy Lube International and Chairman and CEO of the American Oil Change Corporation.

Alfred C. Salvato serves as Senior Vice President for Corporate Finance & Chief Investment Officer (2011-present). Mr. Salvato was previously Vice President for Finance & Chief Investment Officer and served as Treasurer. He sits on the Client Advisory Boards of BNY Mellon, TIAA/CREF and JP Morgan and participates on the valuation committees of several private capital limited partnerships.

Jeffrey Stevens, serves as Executive Vice President and Chief Human Resources Officer (2016- present). Previously, Mr. Stevens was Chief Human Resources Officer at the University of Rochester Medical Center, a system of three hospitals employing more than 18,000 people. He also held leadership roles at University of Massachusetts Memorial Healthcare and Northern Berkshire Healthcare, also located in Massachusetts.

Mark L. Tykocinski, MD, serves as Executive Vice President for Academic Affairs & Provost, TJU and Dean of Sidney Kimmel Medical College (2008-present). Dr. Tykocinski was professor and Chair of the Department of Pathology and Laboratory Medicine at the University of Pennsylvania School

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Of Medicine. Prior to Penn, Dr. Tykocinski held prominent university and medical school appointments at Case Western Reserve University.

Richard J. Webster, RN, MSN, NEA-BC serves as President, TJU Hospitals (2015-present). Mr. Webster has had a variety of clinical and administrative positions within healthcare, starting as a staff nurse and progressively advancing in management positions to his current role. He has worked in several Philadelphia hospitals, including Pennsylvania Hospital and Penn Presbyterian.

Jack Carroll, Ph.D., M.H.A. serves as President and Chief Executive Officer of Magee (2016- present). Mr. Carroll has served in a variety of clinical and administrative positions during his forty year career. Prior positions in Grand Forks, North Dakota included Chief Executive Officer for the Medical Center Rehabilitation Hospital; Chief Operating Officer for the Rehab, a division of United Hospital; and Administrative Director for Altru Health System (a 3,200 FTE integrated delivery network). Mr. Carroll also previously served as the Vice-Chairman of the Medical Advisory Board for the North Dakota Workers Compensation Board.

EDUCATIONAL ACTIVITIES

The University offers educational degree programs primarily on the Center City Campus and the East Falls Campus through its nine Colleges described below.

Sidney Kimmel Medical College

The Sidney Kimmel Medical College, founded in 1824 as Jefferson Medical College, offers a four-year educational program leading to a degree of doctor of medicine and is also engaged in biomedical, health services and educational research, as well as patient care related to its programs. It is one of the oldest and largest private medical schools in the United States. Sidney Kimmel Medical College, in coordination with Jefferson Health, provides a wide variety of consulting and educational services to healthcare professionals in the Delaware Valley region. Sidney Kimmel Medical College has awarded more than 31,000 medical degrees and has more living graduates than any other private medical school in the nation. Sidney Kimmel Medical College has approximately 13,000 members in its Alumni Association.

The JeffMD curriculum, launched in July 2017, is a patient-centered curriculum that integrates clinical experience, science instruction, and development of a professional persona - how you will interact with clients and peers - throughout the four years of medical school. JeffMD students can customize their studies and declare a specialty interest before the last phase of the curriculum to complete work on the given student’s core competencies in the context of that specialty.

In November 2016, Sidney Kimmel Medical College received approval from its accrediting body, the Liaison Committee for Medical Education, to establish a branch campus at one of its clinical sites, Atlantic Health System in Morristown, New Jersey. Beginning in July 2018, select third- and fourth-year medical students will participate in a longitudinal integrated curriculum, a unique program in which students follow a panel of patients throughout their clinical training – an approach that differs from traditional rotations and reinforces continuity of care and patient-centered treatment. The branch campus is an extension of the affiliation that Sidney Kimmel Medical College and Atlantic Health System have had in place since July 2015.

In addition to the branch campus, the Sidney Kimmel Medical College has established a number of international partnerships with European and Asian educational institutions. One agreement allows up to eight students from Sichuan/West China University to complete two years of clinical training at the

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University, provided they meet certain academic requirements. In addition, a partnership with St. George’s University of London (“SGUL”) offers fourth-year student exchanges, and a pathway for 12 SGUL students to complete their final clinical years at Jefferson Health affiliates. This program also offers an optional Master’s of Public Health from the University’s College of Population Health.

Jefferson College of Biomedical Sciences

Jefferson College of Biomedical Sciences, founded in 1949 as the Board for the Regulation of Graduate Studies, offers PhD programs, Masters of Science programs, and a post-baccalaureate pre- professional program for candidates interested in completing their prerequisite course work for medical and professional schools. In conjunction with Sidney Kimmel Medical College, JCBS also offers a combined MD/PhD program. The PhD degree programs offer leading-edge interdisciplinary education and research training under the mentorship of nationally and internationally recognized faculty. The PhD programs include biochemistry and molecular pharmacology, genetics, cell biology and regenerative medicine, immunology and microbial pathogenesis, and neuroscience. Masters of Science programs are offered in biomedical science, cell and developmental biology, clinical research, forensic toxicology, human genetics and genetic counseling, microbiology and immunology, and pharmacology.

Jefferson College of Nursing

Jefferson College of Nursing, founded in 1891 as the Jefferson Hospital Training School for Nurses, offers a continuum of fully-accredited nursing degree programs, from baccalaureate through doctoral levels and including eight Master of Science in Nursing specialties and an entry-level Doctor of Nursing Practice in nurse anesthesia. The pre-licensure Bachelor of Science in Nursing (“BSN”) program is upper-division, which requires students to have 59 specific undergraduate credits prior to entering the program.

On August 28, 2017, Jefferson College of Nursing opened a satellite campus at AMH in Willow Grove, Pennsylvania. This campus offers three BSN programs: an accelerated program (12 months), upper division pre-licensure BSN program (2 years) and an upper division evening/weekend program (two years including summers).

Jefferson College of Health Professions

The Jefferson College of Health Professions offers undergraduate and graduate degree programs, and is comprised of seven academic departments: Medical Laboratory Sciences and Biotechnology, Couple and Family Therapy, Occupational Therapy - Center City Campus, Physician Assistant Studies - Center City Campus, Physical Therapy, Radiologic Sciences and Professional and Continuing Studies.

Specialty tracks are offered in the Department of Medical Laboratory Sciences and Biotechnology (bachelor’s and master’s programs in biotechnology, cytotechnology, medical laboratory sciences) and the Department of Radiologic Sciences (bachelor’s programs in radiography, general sonography, cardiac sonography, invasive cardiovascular technology, computed tomography, magnetic resonance imaging, medical dosimetry, nuclear medicine, radiation therapy and vascular sonography). A Master of Science in Medical Physics, an executive master’s program in Radiologic and Imaging Sciences, and PET/CT and CT certificate programs are also offered in the Department of Radiologic Sciences. In the Department of Occupational Therapy - Center City Campus, a bachelor’s to master’s program is offered, as well as entry-level masters, entry level doctorate, and post professional doctoral programs. The Department of Physical Therapy offers a clinical doctorate. The Master’s in Family Therapy is offered through the Department of Couple and Family Therapy, as well as a certificate in Medical Family Therapy. The Department of Physician Assistant Studies - Center City Campus, offers a

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Master of Science in Physician Assistant Studies. The Department of Professional and Continuing Studies offers a variety of certificate programs, including medical coding and data quality, medical practice management, and healthcare management information systems, as well as a bachelor’s degree program with majors in health services management, health professions management and health services management information systems.

Jefferson College of Pharmacy

Jefferson College of Pharmacy, founded in 2008, prepares students for careers in the profession of pharmacy. Students earn a Doctor of Pharmacy degree. The PharmD program is structured to provide an understanding of the basic sciences, clinical information, pharmaceutical sciences, administrative and social sciences, and the importance of each component of pharmacy practice. In addition, students have the opportunity to apply the skills learned in the classrooms and labs across a variety of pharmacy practice settings during the experiential portions of the program – working side by side with practicing pharmacists and caring for patients.

Jefferson College of Population Health

Jefferson College of Population Health, founded in 2008, was the first designated School of Population Health in the United States. JCPH offers a certificate and Master of Science programs in health policy, healthcare quality and safety, applied health economics and outcomes research and public health. At the doctoral level, JCPH offers a PhD in population health sciences as well as a certificate program in healthcare operational excellence. JCPH also offers a certificate and Master’s Degree program in Population Health, and Population Health Intelligence. These are two distinct programs, each with a certificate and Master’s Degree.

College of Architecture and the Built Environment

CABE, located at the East Falls Campus, is dedicated to educating future leaders in the architecture, interior design, landscape architecture, construction management, geodesign, sustainable design and real estate development fields. The curricula emphasize specialized knowledge unique to each discipline, paired with inter-professional collaboration that prepares students for practice in the global market. The school’s dynamic approach to education and emphasis on transdisciplinary learning, sustainability, and innovation train the graduates to become successful design professionals and leaders in sustainable practice.

CABE offers the following undergraduate degrees: Architecture, Architectural Studies, Construction Management, Interior Design, Landscape Architecture. CABE offers the following graduate degrees: Architecture, Construction Management, Geospatial Technology for Geodesign, Interior Architecture, Real Estate Development, Sustainable Design.

College of Sciences, Health and the Liberal Arts

CSHLA is located at the East Falls Campus and its students tackle real-world issues through study abroad opportunities, environmental and conservation fieldwork, clinical experiences and mock trial competitions. With attentive advising, and opportunities for community engagement and participation in faculty research, its students are prepared to succeed in the professional realm or to continue their academic studies at a higher level. An interdisciplinary approach to learning is at the heart of CSHLA, where the liberal arts convene with social, health, and behavioral sciences to form a truly innovative curriculum.

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CSHLA offers the following undergraduate degrees in Biochemistry, Biology, Biopsychology, Chemistry, Communication, Health Sciences, Law and Society, Pre-Medical Studies, and Psychology. Graduate students in CSHLA can earn the following degrees: Athletic Training, Disaster Medicine and Management, Midwifery, Occupational Therapy, Physician Assistant Studies, Community and Trauma Counseling, Art Therapy, Community and Trauma Counseling.

Kanbar College of Design, Engineering and Commerce

The Kanbar College, located at the East Falls Campus, is comprised of two schools: the School of Business and the School of Design and Engineering. The two schools offer the following undergraduate degrees: Accounting, Finance, Animation and Digital Media, Engineering, Fashion Design, Fashion Merchandising and Management, Graphic Design Communication, Industrial Design, International Business, Management, Marketing, Mechanical Engineering, Textile Design, Web Design and Development. Graduate degree offerings include: Master of Science Fashion Design Management, Master of Science Global Fashion Enterprise, Master of Science Industrial Engineering, Innovation MBA, Master of Science Surface Imaging, Master of Science Taxation, Master of Science Textile Design, Master of Science Textile Engineering, Ph.D in Textile Engineering and Sciences, Master of Science User Experience and Interaction Design.

Other Educational Activities

Aria Health School of Nursing (“AHSON”) was founded in 1904 as the Frankford Hospital School of Nursing and currently has 243 students enrolled. The program, leading to a diploma in nursing, is 2 years and 10 months in length. Completion of the diploma leads to eligibility to sit for the National Council Licensure Examination-Registered Nurse for licensure as a registered nurse. The program offers a strong theory and clinical foundation for nursing practice. Additionally, graduates may complete the Bachelor of Science in Nursing at Penn State University in as little as one term, or other colleges and universities based on their requirements. AHSON is accredited by the Accreditation Commission for Education in Nursing and approved by the Pennsylvania State Board of Nursing. AHSON enrolled its last new students in January 2017. It is currently anticipated that AHSON will close after the Fall 2019 semester.

The School of Continuing and Professional Studies offers specialized short courses and certificate programs to give up-to-date training, hands-on experience and tools that will keep students at the forefront of their field, or help in the exploration of a new interest. Students in the School of Continuing and Professional Studies can earn an Associate’s Degree in the following disciplines: Occupational Therapy, Health and Human Services: Radiologic Technology. Undergraduate degree offerings include: Accounting, Behavioral and Health Services, Business Management, Health Sciences, Health Services Management, Human Resources Management, Information Technology, Law enforcement Leadership, Leadership in Emergency Services, Leadership in Homeland Security, and Organizational Leadership. The School also offers one graduate degree in Strategic Leadership. In addition, the School offers specialized non-recurring seminars and corporate partnerships to meet the demand for particularized educational services.

The Institute of Emerging Health Professionals (“IEHP”), founded in 2015, has a mission to provide innovative and unique education and training that will be needed to fill future career, training, and certification gaps in healthcare practice and delivery. IEHP is a first-of-its-kind educational think-tank and incubator aimed at providing today the training that workers in healthcare and related disciplines will need tomorrow. IEHP’s programming is organized under six healthcare related areas – Aging, Clinical, Community Engagement, Integrative Medicine, Data Management and Business of Healthcare. IEHP focuses on educating clinicians to be better healthcare providers, anticipating and then practicing on the

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cutting edge of clinical and education horizons, while also educating consumers and other health professionals to be more prepared, more engaged, and more participatory partners in healthcare delivery. While it does not have a degree program of its own, IEHP offers advanced adult education techniques, unique and contemporary distance learning technology, and an engaged multi-disciplinary, international faculty to deliver curricula designed for clinicians, non-clinicians, and combined groups who learn from each other, side by side.

AMH sponsors five residency programs: family medicine; internal medicine; OB/GYN; general surgery; and dental surgery. AMH has fellowships in Geriatric Medicine, Bariatric Surgery and Interventional Neurology. As of August 31, 2017, 118 residents and two fellows, each of which are students at colleges or universities other than the University, were enrolled in these training programs. AMH also has a pharmacy residency training program which trains three PGY1 residents and one PGY2 ID pharmacy resident.

AMH also provides postgraduate physician training: in affiliation with Temple University Hospital for orthopedics, urology, plastic surgery, physical medicine and rehabilitation, and otolaryngology; in affiliation with Hahnemann University Hospital for orthopedic surgery, internal medicine, infectious disease, cardiology, interventional cardiology, anesthesia, rheumatology, psychiatry, vascular surgery, and interventional neurology; and in affiliation with The Philadelphia College of Osteopathic Medicine in neurosurgery and otolaryngology. Students from Drexel University College of Medicine, The Lewis Katz School of Medicine at Temple University and Sidney Kimmel Medical College receive training in various clinical departments at AMH. The Physician Assistant Programs at TJU have clinical training affiliations with AMH. LH provides post-graduate training to hand surgery fellows from the Philadelphia Hand to Shoulder Center.

Locations

Sidney Kimmel Medical College, JCBS, JCN, JCHP, JCP and JCPH currently operate primarily out of the Center City Campus. CABE, CSHLA and Kanbar College currently operate out of the East Falls Campus.

Enrollment

The following table shows fall full-time-equivalent student enrollment at the University’s nine Colleges, one Institute, AHSON and the School of Continuing and Professional Studies, in the current and the previous four academic years on a pro forma basis (assuming the University, as currently constituted, existed during such periods).

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PRO FORMA FALL FULL-TIME-EQUIVALENT ENROLLMENT

Fall 2017 Fall 2016 Fall 2015 Fall 2014 Fall 2013 Sidney Kimmel Medical College1 1,086 1,070 1,056 1,072 1,061 Jefferson College of Biomedical Sciences 271 245 213 200 213 Jefferson College of Health Professions 754 756 726 684 676 Jefferson College of Nursing2 794 792 864 874 829 Jefferson College of Pharmacy 261 275 273 281 290 Jefferson College of Population Health 137 117 104 88 78 College of Architecture and the Built Environment 583 576 607 640 615 Kanbar College of Design, Engineering and Commerce 1,364 1,478 1,522 1,574 1,550 College of Sciences, Health and the Liberal Arts 912 854 812 773 776 School of Continuing & Professional Studies 465 401 360 332 271 Institute of Emerging Health Professions 16 5 n/a n/a n/a Aria Health School of Nursing 165 243 239 217 202 Totals 6,808 6,812 6,776 6,735 6,561

The following tables provide information on applications, acceptances and matriculations for first-year students at the indicated University colleges for the current and the previous four academic years.

SIDNEY KIMMEL MEDICAL COLLEGE

Academic Year 2017-18 2016-17 2015-16 2014-15 2013-14 Total National Applications 51,954 52,735 51,102 49,372 47,855 Applications 10,052 10,726 10,540 10,204 10,118 Applications as % of National Applications 19% 20% 21% 21% 21% Acceptances Offered 459 461 446 423 452 Acceptances as % of Applications 5% 4% 4% 4% 5% First Year Matriculants 274 266 266 259 260 First Year Matriculants as % of Acceptances 60% 58% 60% 62% 58% Total Headcount 1,086 1,070 1,056 1,072 1,061

Source: National application statistics provided by the American Association of Medical Colleges.

1 All Sidney Kimmel Medical College and JCP students are full-time. 2 Includes students formerly enrolled in the Abington Memorial Hospital Dixon School of Nursing which was consolidated into the JCN in October 2017.

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JEFFERSON COLLEGE OF BIOMEDICAL SCIENCES

Academic Year 2017-18 2016-17 2015-16 2014-15 2013-14 Applications 551 416 428 300 619 Acceptances Offered 292 220 212 134 154 Acceptances as % of Applications 53% 53% 50% 45% 25% First Year Matriculants 161 159 122 98 112 First Year Matriculants as % of Acceptances 55% 73% 58% 65% 73% Total Headcount 364 3371 287 277 290

JCHP, JCN, JCP AND JCPH – UNDERGRADUATE

Academic Year 2017-18 2016-17 2015-16 2014-15 2013-14 Applications 1,718 1,667 1,324 1,308 1,381 Acceptances Offered 817 600 616 675 585 Acceptances as % of Applications 45% 36% 47% 52% 42% First Year Matriculants 591 477 533 575 568 First Year Matriculants as % of Acceptances 73% 80% 87% 86% 97% Total Headcount 1,080 1,0522 1,077 1,188 1,232

PRO FORMA EAST FALLS CAMPUS – UNDERGRADUATE3

Academic Year 2017-18 2016-17 2015-16 2014-15 2013-14 Applications 4,987 5,238 5,336 5,883 5,801 Acceptances Offered 2,936 3,161 3,354 3,709 3,692 Acceptances as % of Applications 59% 60% 63% 63% 64% First Year Matriculants 1,068 1,166 1,002 1,118 1,026 First Year Matriculants as % of Acceptances 36% 37% 30% 30% 28% Total Headcount 2,763 2,753 2,814 2,911 2,834

1 Increase in enrollment from Academic Year 2015-16 due to increased marketing efforts, including use of webinars and emphasizing the ability to choose both a part-time or accelerated option for completing coursework. 2 Decrease in enrollment from Academic Year 2015-16 due to Occupational Therapy and Physical Therapy programs shifting to Masters and Doctorate level Graduate programs. 3 Comprises the colleges formerly constituting Philadelphia University.

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JCHP, JCN, JCP AND JCPH – GRADUATE

Academic Year 2017-18 2016-17 2015-16 2014-151 2013-14 Applications 5,697 6,111 5,019 6,333 3,484 Acceptances Offered 1,162 1,244 978 866 691 Acceptances as % of Applications 20% 20% 20% 14% 20% First Year Matriculants 685 740 727 632 589 First Year Matriculants as % of Acceptances 59% 60% 74% 71% 85% Total Headcount 1,7382 1,405 1,272 1,114 1,068

PRO FORMA EAST FALLS CAMPUS – GRADUATE3

Academic Year 2017-18 2016-17 2015-16 2014-15 2013-14 Applications 4,297 3,409 3,526 3,543 3,177 Acceptances Offered 1,259 1,351 1,334 1,140 884 Acceptances as % of Applications 29% 40% 38% 32% 28% First Year Matriculants 584 610 601 490 438 First Year Matriculants as % of Acceptances 46% 45% 45% 43% 50% Total Headcount 803 781 701 620 526

Tuition and Fees

The following table provides average tuition and fee information for the various University academic divisions.

TUITION AND FEES FOR SELECTED FULL-TIME PROGRAMS

Academic Year 2017-18 Sidney Kimmel Medical College $55,464 JCBS 28,261 JCHP 36,796 JCN 42,363 JCP 39,023 JCPH 43,912 East Falls Campus Undergraduate Program 38,160 AHSON 18,585

1 Academic Year 2014-15 was the first year for the Physician Assistant Program which received approximately 1,300 applications for 30 positions. 2 Year-over-year increase in enrollment due to the addition of nursing students from the Abington Campus and a larger enrollment in JCPH’s Master of Public Health program. 3 Comprises the colleges formerly constituting Philadelphia University.

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The following table provides average tuition and fees information for Sidney Kimmel Medical College and selected competitor schools for the current academic year.

COMPARATIVE TUITION AND FEE INFORMATION

Medical School 2017-18 University of Pennsylvania $60,947 Drexel University 56,126 Sidney Kimmel Medical College 55,464 University of Pittsburgh 55,548 Pennsylvania State University 49,800 Temple University 54,000

Source: Compiled by TJU from various publically available records.

The following table provides average tuition and fees information for East Falls Campus Undergraduate Programs and selected competitor schools for the current academic year.

EAST FALLS CAMPUS UNDERGRADUATE COMPARATIVE TUITION AND FEE INFORMATION

Private Institution 2017-18 Villanova University $50,554 Drexel University 49,632 Pratt Institute 47,986 Syracuse University 45,150 St. Joseph’s University 43,700 Widener University 43,296 Arcadia University 41,630 Rochester Institute of Technology 39,506 East Falls Campus Undergraduate 38,160 Marist College 36,120 LaSalle University 28,800

Financial Aid

The University’s admissions and financial aid policies are designed to assist the most qualified students to attend its schools, regardless of their financial circumstances. Approximately 67% of the University’s total student population receive some form of financial aid. Financial aid is received through a combination of grants and loans from governmental, private and institutional sources.

The following table sets forth the amounts of student financial aid provided from governmental, private and institutional sources during the past five academic years, on a pro forma basis (assuming the University, as currently constituted, existed during such periods).

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PRO FORMA STUDENT FINANCIAL AID

Fiscal Year Ended June 30, 2017 2016 2015 2014 2013 Sidney Kimmel Medical College Grants $ 8,700,502 $ 8,625,025 $ 8,654,685 $ 8,585,230 $ 7,952,189 Loans 32,011,829 36,279,843 36,256,121 35,089,028 35,876,378 JCBS Grants 128,137 3,020,135 2,735,770 3,449,900 3,677,151 Loans 2,388,962 1,920,630 1,630,992 1,653,663 1,354,980 Other Center City Campus Colleges Grants 6,273,827 5,841,298 5,370,529 5,639,666 5,402,509 Loans 53,388,719 48,205,532 46,560,635 45,296,906 46,011,911 East Falls Campus Undergraduate Program Grants/Scholarship Aid 47,474,486 46,632,217 45,950,217 42,517,824 41,790,478 Loans 14,712,073 15,262,489 16,629,746 16,286,022 16,434,437

Accreditation

TJU is fully accredited by the Middle States Commission on Higher Education (the “MSCHE”). The MSCHE acted to reaffirm TJU’s accreditation in June 2014 for 10 years and accepted the required process report in June 2016, again reaffirming full accreditation through 2024. Philadelphia University held continuous accreditation from MSCHE since 1955, which was reaffirmed in 2016. MSCHE approved the combination of TJU and Philadelphia University in 2017.

Sidney Kimmel Medical College is fully accredited by all appropriate accrediting bodies. In 2016, the Liaison Committee on Medical Education of the Council on Medical Education of the American Medical Association and the Executive Council of the Association of American Medical Colleges granted the Sidney Kimmel Medical College a full accreditation through Academic Year 2022-23.

Programs for the education of residents are all fully accredited by the various specialty boards under the aegis of the Accreditation Council on Graduate Medical Education.

The University’s professional programs are approved by the following accrediting agencies:

• Commission on Accreditation of Allied Health Education Programs • Cytotechnology Programs Review Committee, American Society of Cytopathology • Joint Review Committee on Education in Diagnostic Medical Sonography • National Accrediting Agency for Clinical Laboratory Sciences • Joint Review Committee on Education in Radiologic Technology • Commission on Collegiate Nursing Education • Council on Accreditation of Nurse Anesthesia Educational Programs • Accreditation Council for Occupational Therapy Education (American Occupational Therapy Association) • Commission on Accreditation of Physical Therapy Education (American Physical Therapy Association)

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• Committee on Education of the American Association of Marital and Family Therapy • Accreditation Review Commission on Education for the Physician Assistant • Joint Review Committee on Cardiovascular Technology • Joint Review Committee on Education in Radiologic Technology • Accreditation Council for Pharmacy Education • Accreditation Commission for Midwifery Education (ACME) • National Association of Schools of Art and Design, Commission on Accreditation • National Architectural Accrediting Board • Council for Interior Design Accreditation • Accreditation Board for Engineering and Technology • Landscape Architecture Accreditation Board • American Chemical Society • Accreditation Council for Business Schools and Programs

The Master’s Program in Public Health is accredited by the Council for Education in Public Health.

Future University Educational Plans

The University’s strategic vision is to expand from the current nine colleges to 11 colleges as of July 1, 2018 and 14 colleges by 2024. The University’s current enrollment goal is to grow to 10,000 students by 2024, while during the same period increasing overall student selectivity. Any expansion of the University’s current academic framework and enrollment is subject to a variety of factors and no assurances can be given as to the occurrence and the timing of such expansion.

RESEARCH ACTIVITIES

The University’s research efforts are focused on investment in areas of science and programmatic initiatives, such as Mitochondrial Pathogenesis, Fibrotic Diseases, Nuerodegeneration/ALS, and Airway Disease. The University’s management believes that investment in the recruitment of strategically funded faculty members, as well as promising junior faculty members, has enhanced the University’s ability to stabilize and promote growth of research within those targeted areas.

The University receives revenues from grants and contracts awarded to support costs of sponsored research and certain other efforts. Revenues are provided by both federal and non-federal sponsors and generally consist of two components: direct costs (including salary and benefits of faculty members and other employees, supplies and expenses related to research efforts); and indirect costs (representing the allocation of overhead costs such as physical plant maintenance, utilities, administrative expenses and depreciation and interest on equipment and facilities related to research efforts). Indirect cost recovery is based on a negotiated indirect cost recovery rate for sponsored research which is applied to direct costs. For federal purposes, the University generally negotiates an indirect cost recovery rate that is applied to all of its federal awards. Recovery rates for non-federal awards vary by award.

Applied research at the East Falls Campus is funded through a variety of external sponsors ranging from federal research agencies, mission-driven agencies, a host of industry sponsors and other for-profit and not-for-profit entities. The work is typically performed by faculty teams, and by undergraduate and graduate students (under the supervision of faculty) and often involves external partnerships with for-profit and not-for-profit clients, independent contractors, and other academic institutions. There will be opportunities to capture the value of new knowledge developed during applied

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research projects through the execution and licensing of patents and copyrights. Applied research, incorporated into East Falls curricula, introduces active, collaborative, real-world experiences through client-driven problem-solving in a transdisciplinary team-based environment.

The following table sets forth the University’s operating revenues from grants and contracts for the past two fiscal years on a pro forma basis (assuming the University, as currently constituted, existed during such periods):

PRO FORMA GRANTS AND CONTRACTS REVENUE ($000s)

Fiscal Year Ended June 30, 2017 2016 Organized Research: Federal Direct $40,941 $37,658 Federal Indirect 19,579 18,525 Non-Federal Direct 19,369 15,733 Non-Federal Indirect 4,049 4,730 Total Organized Research $83,938 $76,646

Teaching, Training, Multipurpose 17,560 16,618 Meaningful Use/EH 0 Subtotal $99,763 $93,264

Less: Amounts Reflected as Tuition Revenue (525) (2,079) Totals $99,238 $91,185

The University’s management expects that level of grants and contracts revenue will continue to be under pressure due to the competitive environment created by reduced funding levels from the National Institute of Health. The University’s management expects to continue to diligently monitor faculty funded status and will identify opportunities that will maintain and grow the University’s grant portfolio via linkages to existing clinical programs, recruitment of well-funded faculty, and increased collaborations with regional and multi-disciplinary institutes and centers.

HEALTHCARE ACTIVITIES

Jefferson Health is a nationally ranked academic medical system. Jefferson Health has experienced significant growth in recent years. Jefferson Health’s healthcare activities include the provision of primary, secondary and tertiary care, inpatient and outpatient services in five separately licensed acute care hospitals operating at eleven acute care hospital locations, two specialty hospitals, one rehabilitation hospital, one long-term care facility, multiple physician practice groups with approximately 1,680 physicians, sub-acute care facilities, and other related endeavors.

Jefferson Health is committed to caring for its patients and their families, educating healthcare professionals for the future, pursuing discovery research and clinical innovation, and serving its community. Jefferson Health’s strategic vision is to be recognized as a leading academic healthcare system differentiated by its ability to deploy new models for physician recruitment and engagement,

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embrace a shared governance structure to build strategic combinations, and use technology to transform how healthcare is delivered to patients in meaningful, convenient and cost-effective ways. Jefferson Health’s commitment to discovery, innovation, and compassionate, patient-focused care is core to its mission.

TJUH System

TJUH System currently includes Thomas Jefferson University Hospital and Jefferson Hospital for Neuroscience on the University’s main campus in Center City, Philadelphia; and Methodist Hospital Division in South Philadelphia; Jefferson at the Philadelphia Navy Yard, in South Philadelphia; JUP, ROSH (as defined below) in Bensalem, Bucks County, Pennsylvania; and Jefferson at Voorhees, in southern New Jersey. Jefferson at the Philadelphia Navy Yard and Jefferson at Voorhees provide multi- specialty outpatient and community-based services. Outpatient and community-based services are also delivered through an extensive network of owned and affiliated physician practices, satellite medical and surgical centers, outpatient laboratories and radiology centers, and retail pharmacies.

According to the 2017-2018 rankings of U.S. News & World Report, Thomas Jefferson University Hospital ranks among the top hospital facilities in the Philadelphia metro area (2nd), in Pennsylvania (3rd), and nationally (16th). Thomas Jefferson University Hospital had three specialties in the top 10 in the country (ophthalmology, ear nose and throat, and orthopedic surgery) and eleven specialties in the top 50 nationally, including the Sidney Kimmel Cancer Center, ranked 20th nationally.

Jefferson University Hospitals have 937 licensed acute care beds and provides the full range of clinical care delivery – from primary through complex quaternary – both in inpatient and ambulatory settings and in all specialties and subspecialties.

JUP is a multi-specialty physician practice group of approximately 838 physicians comprised of the full-time salaried faculty physicians of the Sidney Kimmel Medical College and is the entity through which those physicians provide their clinical services to patients. JUP operates at approximately 70 locations throughout the region and JUP physicians are the attending physicians for most of the patients admitted to TJUH System.

Rothman Orthopaedic Specialty Hospital, LLC (“ROSH”), a Pennsylvania limited liability company, owns and operates a licensed specialty acute care hospital located in Bensalem, Bucks County, Pennsylvania. ROSH focuses on patients with orthopaedic medical issues and offers services for joint replacement, spinal surgery, and sports medicine management, among others. The hospital, which opened in 2010, has 24 beds and six operating rooms and is accredited by The Joint Commission. In 2016, TJUH System obtained a controlling interest in ROSH. The remaining ownership interests are held by Rothman Specialty Hospital Investment, LLC, Nueterra Holdings, LLC and Holy Redeemer Health System.

Jefferson/Abington

Jefferson/Abington provides a wide range of inpatient and outpatient acute care services for medical, surgical, pediatric and obstetrical/gynecological patients, as well as tertiary care services in the areas of cardiology, orthopedics, neurology, neurosurgery, neonatology and oncology primarily to residents of Bucks, Montgomery and Philadelphia counties. Jefferson/Abington has one of only two trauma centers in Montgomery County and has a Level III Neonatal Intensive Care Unit (NICU). According to the 2017-2018 rankings of U.S. News & World Report, AMH is rated as high performing regionally in heart bypass surgery, chronic obstructive pulmonary disease and colon cancer surgery.

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Founded in 1913, Jefferson/Abington’s main campus contains 660 licensed acute care beds and is located on approximately 18 acres in Abington Township, Pennsylvania. Jefferson/Abington also includes a 50-acre ambulatory care complex five miles north of AMH’s main campus in Willow Grove, Pennsylvania. The Willow Grove complex provides a full range of outpatient and physician services and houses the Abington branch of the JCN and the Asplundh Cancer Pavilion. The Asplundh Cancer Pavilion is a new 86,000 square foot ambulatory location that will provide high-quality and comprehensive cancer care in a single location. Asplundh is scheduled to open in the summer of 2018. AMH also owns the former Warminster Hospital, located approximately five miles north from AMH and now known as Abington Health Center-Warminster. The Warminster campus provides ambulatory care services with physician offices, a sleep center, a Bariatric Surgery program, inpatient hospice and outpatient services in laboratory, radiology, neuroscience and rehabilitation.

Jefferson/Abington also includes LH a 135 licensed bed acute care facility located about 12 miles north of AMH’s main campus. LH provides a full range of medical and surgical services, employing 630 people and maintaining a medical staff of 300.

Jefferson/Aria

Jefferson/Aria is a leading healthcare provider serving Northeast Philadelphia and Bucks County. Jefferson/Aria has three inpatient facilities with 485 licensed beds and a network of outpatient sites and physician practices. Jefferson/Aria employs approximately 4,000 workers with a medical staff membership exceeding 850.

Jefferson/Aria’s Torresdale campus has served the residents of Northeast Philadelphia and surrounding suburban communities since 1977. The 258-bed licensed facility offers an array of inpatient and outpatient medical, emergent and surgical services. The Torresdale campus is a state-accredited Level II Trauma Center, one of the original nine trauma sites designated by the Commonwealth of Pennsylvania. This campus delivers a wide range of primary, specialty and emergency care services.

Jefferson/Aria’s Frankford campus has served the residents of Lower Northeast Philadelphia and the surrounding community since 1903. The 115-bed licensed facility offers an array of emergency, inpatient, outpatient, medical and surgical services.

Jefferson/Aria’s Bucks County campus, a 112-bed licensed facility, has served the residents of Lower Bucks County and the surrounding community since 1999. The Bucks County campus offers an array of in-patient and outpatient medical, surgical and emergency services.

In 2004, AHSON, under its former name The Frankford Hospital School of Nursing, celebrated its 100-year anniversary. The School continues to carry on the long tradition of educating caring and responsible nurses who will become a vital part of the healthcare community and the community in which they live. AHSON currently has 243 students.

Health Partners of Philadelphia, Inc., is a hospital-owned, non-profit Health Maintenance Organization providing access to healthcare services on a prepaid basis. Health Partners is licensed to operate in Philadelphia and the surrounding counties with both Medicare and Medicaid lines of business, serving more than 190,000 members in Philadelphia, Chester, Delaware, Bucks and Montgomery counties. Jefferson/Aria is one of six hospitals in the Philadelphia market with an ownership interest in Health Partners.

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Jefferson/New Jersey

Jefferson/New Jersey (formerly Kennedy Health System) delivers a broad range of inpatient and outpatient services at its three acute care hospital locations in southern New Jersey with 607 licensed beds and a network of outpatient sites and physician practices. Jefferson/New Jersey employs approximately 4,700 workers with a medical staff membership exceeding 1,000.

Jefferson/New Jersey’s Cherry Hill campus includes a 196 licensed bed facility on a sixteen acre campus providing primary and secondary care clinical services and limited tertiary care services. This campus includes a 51 bed psychiatric services unit, including acute child and adolescent care services, and outpatient psychiatric and drug rehabilitation services. The Cherry Hill campus is designated as a Children’s Crisis intervention service by the New Jersey Division of Children’s Behavioral Health Services and as a Short-Term Care Facility by the New Jersey Division of Mental Health & Addiction Services. In June 2017, the Jefferson/New Jersey opened a new 100,000 square foot medical office building at the Cherry Hill campus connected to the hospital, that includes various outpatient services, a 22,000 square foot ambulatory surgical center in partnership with ROSH and physician office space. The former medical office building will be replaced by the new patient care tower being financed as a part of the New Money Project described in the forepart of this Official Statement.

Jefferson/New Jersey’s Stratford facility is a 181 licensed bed facility on a ten acre site, providing primary, secondary, tertiary care and clinical services, and serves as the main facility for KUH’s graduate medical education programs. This facility focuses on general medical/surgical services and also has an ACE (Acute Care for Elders) unit, a distinct medical/surgical unit designed to meet the unique needs of hospitalized older adults and a Bariatric Surgery Program accredited as a Level 1 facility by the Bariatric Surgery Center Network of the American College of Surgeons.

Jefferson/New Jersey’s Washington Township campus includes a 230 licensed bed facility on a fourteen acre campus providing services to the citizens of the greater Gloucester County, New Jersey area. This campus has recently initiated a significant breast cancer surgery program with the employment of three surgeons and the engagement of an oncological radiologist. Adjoining the Washington Township campus is a hospital-owned outpatient surgical center and a select surgical center.

Jefferson/New Jersey also operates Jefferson Health Care Center, a 190 bed extended care facility in Washington Township, New Jersey. The facility includes a 130-bed skilled nursing facility with private and semi-private rooms for residents as well as a 60-beds sub-acute rehabilitation center for patients who have experienced an acute medical event (e.g., stroke, head trauma, etc.) and need a bridge between a hospital stay and a return to home, usually lasting less than a month.

Jefferson/Magee

Jefferson/Magee is a 96-bed licensed acute rehabilitation specialty hospital located in Philadelphia and sees more than 940 inpatients and 32,000 outpatients annually. As further described in the forepart of this Official Statement a portion of the New Money Project includes the construction, development, renovation, improvement and equipping of approximately 92,000 gross square feet of patient rooms, therapy gyms and the relocation of an existing pharmacy at Jefferson/Magee’s Center City location.

Jefferson/Magee is accredited by The Joint Commission and has had a long tradition of excellence by being the first acute inpatient rehab hospital in Philadelphia and the first CARF-accredited (Commission on Accreditation of Rehabilitation Facilities) brain injury program in the United States. Jefferson/Magee is also the co-founder of the Christopher & Dana Reeve Foundation NeuroRecovery

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network and the preeminent provider of complex physical and cognitive rehabilitation in the region. According to U.S. News & World Report, Magee ranks 13th among the top rehabilitation hospitals in the nation.

Jefferson Health Physicians

Jefferson Health has approximately 1,680 employed physicians (including JUP physicians). Jefferson Health follows a “pluralistic” physician alignment model that includes employed physicians, affiliated physicians and aligned physicians depending on the specific strategic circumstances of Jefferson Health and the physician.

JeffCare Alliance (the “Alliance”) is Jefferson Health’s Clinically Integrated Network, a vehicle coordinating care across affiliated providers including independent and employed primary care physicians, specialist, hospitals and ambulatory sites. The Alliance’s mission is to achieve efficiencies in the delivery of care, to implement evidence-based clinical protocols to enhance patient outcomes and to partner with payers to develop contracts that drive definable clinical improvement and add value to patients and participating physicians.

JeffCare PHO is Jefferson Health's Physician Hospital Organization, a vehicle enabling Jefferson Health and independent physician partners to work cooperatively to improve payer negotiations. JeffCare PHO currently supports more than 1,100 member practices, offering convenient, single-source, messenger model managed care services.

Utilization and Operating Statistics

The following tables provide a historical summary of pro forma utilization and other operating statistics for Jefferson Health for the past five fiscal years (assuming Jefferson Health, as currently constituted, existed during such periods).

JEFFERSON HEALTH SELECTED PRO FORMA UTILIZATION STATISTICS

Fiscal Year Ended June 30, 2017 2016 2015 2014 2013 Bed Capacity: Licensed Beds 2,904 2,911 2,925 2,918 2,936 Available Beds 2,605 2,561 2,567 2,618 2,705 Total Patient Days 641,417 643,135 636,249 643,934 659,562 Occupancy Rate 67.5% 68.6% 67.9% 67.4% 66.8% Total Admissions 128,800 129,835 128,587 128,347 133,788 Avg. Length of Stay (Days) 4.98 4.95 4.95 5.02 4.93 OR Procedures 89,450 88,304 86,789 86,579 84,795 ER Visits 517,321 520,417 511,508 501,805 509,319 Total Outpatient Visits 1,564,339 1,612,059 1,592,005 1,583,167 1,572,421

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JEFFERSON HEALTH PHYSICIANS SELECTED PRO FORMA OPERATING DATA1

Fiscal Year Ended June 30, 2017 2016 2015 2014 2013 Physician Headcount 1,378 1,289 1,150 1,091 1,052 Gross Charges ($000s)2 $1,466,137 $1,368,791 $1,204,627 $1,144,999 $1,080,136 Collections ($000s) $546,837 $529,210 $471,167 $460,538 $440,472 New Patients3 243,165 248,619 219,179 203,328 192,669 Outpatient Office Visits 1,913,087 1,753,491 1,592,641 1,546,751 1,553,736 O/P Office Procedures 224,020 214,282 199,654 190,904 191,452

Sources of Patient Revenue

Patient revenues are received by Jefferson Health from patients, various insuring organizations (including self-insured employers) and federal and state governments under Medicare, Medicaid and other programs. Jefferson Health’s total net patient revenues for Fiscal Years 2017 and 2016 were approximately $3.91 billion and $3.76 billion, respectively (pro forma). The approximate percentages of net patient revenues derived from various payment sources for Fiscal Years 2014-2017 were as set forth below on a pro forma basis (assuming Jefferson Health, as currently constituted, existed during those periods):

JEFFERSON HEALTH PRO FORMA PAYER MIX (NET PATIENT REVENUES)

Fiscal Year Ended June 30, 2017 2016 2015 2014 Medicare 24.3% 25.6% 25.6% 24.9% Medicare Managed Care 13.6 11.0 10.4 10.2 Blue Cross (Indemnity) 3.8 3.4 3.7 3.6 Medicaid 2.6 2.3 2.7 3.0 M/A Managed Care 7.9 7.3 6.8 6.3 Managed Care 42.3 42.5 42.9 43.8 Self-Pay and Other 5.5 7.9 7.9 8.2 Totals 100.0% 100.0% 100.0% 100.0%

Delaware Valley ACO

TJU holds a 50% interest in Accountable Care Organization of Pennsylvania, LLC d/b/a Delaware Valley ACO (“DVACO”), a Pennsylvania limited liability company that operates a Medicare Accountable Care Organization. The remaining ownership interest of DVACO is held by Main Line Health (“MLH”) (50%). DVACO was formed on December 22, 2010. DVACO’s programs are coordinated and aligned closely with its members’ local programs, both hospital and clinically integrated

1 Includes JUP and other Jefferson Health-owned physician practices, except for Fiscal Year 2013, which does not include Jefferson/TJUH’s Jefferson Medical Care physician practice (approximately 20 physicians). Includes Urgent Care centers. 2 Represents gross charges unadjusted for any payer discounts. 3 Represents initial visits by patients during Fiscal Year. Fiscal Years 2013 through 2016 were adjusted.

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network-based. The DVACO seeks to be a convener and accelerator of capabilities needed to move into value-based payment models, and offer a differentiated care model to the regional market.

The Centers for Medicare & Medicaid Services (“CMS”) defines accountable care organizations as groups of doctors, hospitals and other health care providers who come together voluntarily to give coordinated high quality care to their Medicare patients. On January 1, 2013, DVACO commenced participation in an “upside-only” accountable care organization in the Medicare Shared Savings Program (“MSSP”) offered by CMS. DVACO’s initial term in MSSP concluded on December 31, 2016, and DVACO plans to continue participation in the upside-only model of the MSSP for a second three-year term which commenced on January 1, 2017.

In addition to participating in MSSP, DVACO contracts with several commercial payers on behalf of its participating providers for certain shared shavings agreements, including Aetna, United, and Humana. The University and MLH also include health insurance options for their respective employees based on the providers that participate in the DVACO network.

Across all of its value-based programs, DVACO has in excess of approximately 250,000 attributed beneficiaries.

HEALTHCARE SERVICE AREA, DEMOGRAPHICS AND COMPETITION

Healthcare Service Area

The Jefferson Health Primary Service Area (“PSA”) consists of the five southeastern Pennsylvania counties (Bucks, Chester, Delaware, Montgomery, and Philadelphia) as well as four southern New Jersey counties on the border of Pennsylvania (Burlington, Camden, Gloucester and Salem).

Jefferson Health’s PSA was developed by establishing traditional PSAs for Jefferson University Hospitals, Jefferson/Abington, Jefferson/Aria, Jefferson/Magee and Jefferson/New Jersey separately. Contiguous zip codes were identified from which each entity drew 80% of its inpatient discharges in the most recent year. The combined service areas encompass the nine counties surrounding Philadelphia.

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JEFFERSON HEALTH PRIMARY SERVICE AREA

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Jefferson Health Clinical Assets

Current and Projected Population

Jefferson Health’s PSA, straddling the Delaware River between Pennsylvania and New Jersey, is home to approximately 4.2 million adults. The adult population of Jefferson Health’s service area is expected to continue growing over the next five years, albeit at a slower rate than that of the U.S. as a whole. By 2022, the PSA is expected to be home to more than 4.3 million residents over age 18.

The following table depicts the projected adult population data for Jefferson Health’s PSA, as well as for the states of Pennsylvania and New Jersey and the United States.

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PROJECTED ADULT POPULATION

Jefferson Health PSA PA NJ US

2017 (18+) 4,229,668 10,154,866 7,013,717 251,100,493 2022 (18+ Projected) 4,320,143 10,304,321 7,208,716 262,507,417 % Projected Growth (18+ 2017-2022) +2.1% +1.5% +2.8% +4.5%

Source: Truven Health Analytics, Demographics Expert.

Patient Origin

The following table depicts the proportion of Jefferson Health’s total adult discharges by county in calendar year 2016 on a pro forma basis (assuming Jefferson Health, as currently constituted, existed during such time period).

PRO FORMA PATIENT ORIGIN

% Total Discharges Calendar Year 2016 Philadelphia (PA) 36.8% Montgomery (PA) 18.6 Camden (NJ) 12.7 Bucks (PA) 10.9 Gloucester (NJ) 8.1 Burlington (NJ) 3.0 Delaware (PA) 2.0 Chester (PA) 1.1 Salem (NJ) 0.2 Other 6.6 Total 100.0%

Source: Truven Health Analytics, all ages, excludes normal newborns.

Other Healthcare Facilities

There are numerous healthcare providers in the Jefferson Health service area offering both routine and specialized medical services. The following graphics and table highlight major health systems and selected comparative operating statistics.

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o 0 System III Jefferson Health • CHS Community Health Systems o 0 Cooper Health System 0 Crozer-Keystone Health System • Einstein Healthcare Network Independent 15mi • 0 0 Inspira Health Network 0 Main Line Health System 0 Paladin Healthcare 0 Penn Med ici ne o 0 Prime Healthcare Services • Temple University Health System 0 Trinity/CHE 0 Virtua Health

III

System • 0 • 0 • l:::l Jefferson Health 00.. 6' 0 0 • Atlantic Health System • • • 0 0 • • Bayhealth • 0 0 • 0 • CHS Community Health Systems • 0 • • Capital Health o Care Point Health • '" • Christiana Care Health System • • • a Cooper Health System 0 • • a Crozer-Keystone Health System 160mi • 0 III o Department of Veterans Affairs • 'b a • • Einstein Healthcare Network III o III • • • Geisinger Health System 0 •• Ill . a • Hackensack Meridian Health III 0 a • • • • • Independent 0 0 • [I o Inspira Health Network 0 :0 0 • 0 15mil 0 a OQl!W 0 • o Lehigh Va lley Networ1< 0 o 0 III o Ma in Li ne Health System 0 00 0 • 0 III a Nemours Childrens Health System 0 • Paladin Healthcare 0 "" • o Penn Medicine • • Penn Slate a Pr im e Healthcare Services 0 • • Princeton HealthCare System a RWJ Barnabas Health

0 • a Reading Health System • St Luke's University Health Network • o St Peler's Healthcare System • • Temple University Health System • TrinitylCHE o Virtua Health • • We tlSpan Health •

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The following table illustrates on a pro forma basis (assuming Jefferson Health, as currently constituted, existing during such period) that in 2017, Jefferson Health had a combined 19.2% share of the nine county market’s inpatient discharges (18+) and ranked first in the market.

SELECT OPERATING STATISTICS OF MAJOR HOSPITALS/SYSTEMS IN JEFFERSON HEALTH 9-COUNTY PSA FOR CALENDAR YEAR 2017

Hospital/System % Share Discharges Total Licensed % (# of Hospitals) within 9-County PSA Discharges Beds Occupancy1 Jefferson Health Pro Forma (10) 19.2% 134,338 2,924 62.3% Penn Medicine (5) 12.1 134,789 2,975 65.9 Main Line Health (4) 8.3 61,180 1,240 61.8 Virtua (3) 7.5 57,978 983 68.3 Einstein Health Network (4) 5.4 35,449 965 59.7 Temple Health (3) 5.7 40,456 978 68.8 Mercy Health System (3) 3.8 24,322 564 53.1 Crozer-Keystone Health System (4) 3.7 23,246 617 53.9

Source: Truven Health Analytics, Market Expert, Calendar Year 2017; Licensed Bed counts from Philadelphia Business Journal, Nov 2017.

The following table sets forth admission and other indicators for Fiscal Year 2017 for selected healthcare systems located in the Philadelphia area. The Jefferson Health information is presented on a pro forma basis (assuming Jefferson Health, as currently constituted, existed during such period).

SELECTED PRO FORMA OPERATING STATISTICS FOR JEFFERSON HEALTH AND SELECTED PHILADELPHIA AREA COMPETITORS FOR FISCAL YEAR 2017

Available (Staffed) % Avg. Length ER Beds Occupancy Admissions of Stay (Days) Visits Births Jefferson Health2 2,099 68.4% 103,529 5.1 376,201 6,440 Penn Medicine3 1,739 79.4% 85,149 5.9 188,156 12,100 Main Line Health4 1,195 61.6% 56,780 4.7 177,463 7,572 Temple Health5 799 79.1% 32,445 7.1 135,400 2,650

Source: Delaware Valley Healthcare Council for Fiscal Year 2017 (July 2016 – June 2017).

1 Includes licensed beds, all ages, excluding newborns. 2 Does not include Jefferson/New Jersey. 3 Does not include Lancaster General Hospital and University of Princeton Medical Center for Penn Medicine, which do not report DVHC data. 4 The University has an academic affiliation agreement with MLH. 5 Temple Health includes Temple University Hospital and Fox Chase Cancer Center. Jeanes Hospital excluded due to non- reporting of data to DVHC.

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Future Jefferson Health Healthcare Plans

Jefferson Health has expanded significantly over the last three years and is currently actively engaged in the process of integration of its newly combined healthcare assets. As part of this integration process, Jefferson Health has developed a service line and geographic prioritization strategic framework for Jefferson Health hospitals that is being used to inform network configuration and service distribution. As part of this integration effort, Jefferson Health plans to support a single academic medical center (TJUH and JHN); two regional referral centers (AMH and Jefferson/New Jersey – Washington Township); two community hospital centers, four “connected” community hospitals, three specialty hospitals and micro hospitals. Healthcare services and location of services will be aligned with the planned network configuration to achieve Jefferson Health’s goals of a “world class, integrated, essential patient, staff, student and clinician centric, entrepreneurial, academic medical, consumer-driven, health network.” As part of the plan, Jefferson Health, as currently constituted, anticipates that the number of its available staffed beds will decrease from the current total of 2,509 to less than 2,100 over the next two to four years. Jefferson Health also has a goal over the next several years of having a Jefferson Health facility located within 10 minutes of every person who lives in Jefferson Health’s PSA.

FINANCIAL INFORMATION AND DISCUSSION

Due to the timing of various mergers (as described in “INTRODUCTION - History of TJU”), TJU’s audited consolidated financial statements for Fiscal Year 2017 included as Appendix B-1 to this Official Statement do not include the results of Philadelphia University, Kennedy Health System and Magee (and the Fiscal Year 2016 comparative information included in TJU’s audited consolidated financial statements for Fiscal Year 2017 do not include the results of Aria Health). Unaudited consolidated schedules of selected balance sheet information and the results of operation for TJU for Fiscal Years 2017 and 2016 on a pro forma basis (assuming TJU, as currently constituted, existed during such periods) are included below and certain consolidating schedules are included in Appendix B-2. In addition, audited financial statements for such entities for such periods, and Aria Health for Fiscal Year 2016, may be found at the MSRB’S EMMA website but such audited financial statements are not incorporated into this Official Statement by such reference.

The following summaries should be read in conjunction with data included under the subheading “MANAGEMENT DISCUSSION AND ANALYSIS – Unaudited Operating Results as of February 28, 2018 and 2017,” as well as TJU’S audited consolidated financial statements, related notes and supplementary information for fiscal years ended June 30, 2017 and 2016 provided in Appendix B-1 to this Official Statement.

Unaudited Consolidated Balance Sheet

The following table sets forth the unaudited consolidated balance sheet of the University as of February 28, 2018.

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UNAUDITED CONSOLIDATED BALANCE SHEET ($000s)

Assets: February 28, 2018 Current Assets: Cash and Cash Equivalents $ 500,728 Short-Term Investments 1,339,996 Accounts Receivable, less Allowance for Doubtful Accounts 652,922 Insurance Recoverable 31,340 Pledges Receivable 24,810 Inventory 67,046 Assets whose Use is Limited, Current 18,872 Other Current Assets 74,964 Total Current Assets 2,710,678 Assets whose Use is Limited 473,444 Insurance Recoverable 181,521 Assets held by an Affiliated Foundation 97,794 Pledges Receivable 109,749 Loans Receivable from Students, Net 27,458 Land, Buildings and Equipment, Net 2,265,676 Long-term Investments 1,150,033 Other Noncurrent Assets 207,099 Total Assets $7,223,451

Liabilities and Net Assets: Current Liabilities: Current Portion of: Deferred Revenues $ 92,789 Long-Term Obligations 32,449 Accrued Professional Liability Claims 49,758 Accrued Workers’ Compensation Claims 14,175 Accrued Payroll and Related Costs 276,457 Accounts Payable and Accrued Expenses 408,489 Grant and Contract Advances 23,684 Total Current Liabilities 897,801 Long-Term Obligations 1,435,951 Accrued Pension Liability 502,050 Accrued Professional Liability Claims 427,087 Federal Student Loan Advances 11,100 Deferred Revenues 11,215 Accrued Workers’ Compensation Claims 24,041 Other Noncurrent Liabilities 53,228 Total Liabilities 3,362,474

Net Assets: Unrestricted 2,999,204 Noncontrolling Interest in Joint Ventures 75,704 Temporarily Restricted 429,053 Permanently Restricted 357,016 Total Net Assets 3,860,977 Total Liabilities and Net Assets $7,223,451

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Unaudited Pro Forma Consolidated Statement of Operations

The following table sets forth the unaudited pro forma consolidated statement of operations for the University for the fiscal years ending June 30, 2017 and 2016 (assuming the University, as currently constituted, existed during such periods).

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS ($000s)

Fiscal Year Ended June 30, 2017 2016 Operating Revenues, Gains and Other Support: Net Patient Service Revenue $4,233,057 $4,030,976 Provision for Bad Debts (157,338) (160,661) Net Patient Service Revenue Less Bad Debt 4,075,719 3,870,315 Grants and Contracts 101,546 92,529 Tuition and Fees, Net 209,783 198,642 Investment Income 50,804 25,811 Contributions 5,835 4,501 Other Revenues 250,891 265,025 Net Assets Released from Restriction 42,404 38,870 Total Operating Revenues, Gains and Other Support 4,736,982 4,495,693

Operating Expenses: Salaries, Wages and Employee Benefits 2,675,244 2,493,748 Supplies and Other 1,624,492 1,524,123 Depreciation and Amortization 236,341 228,049 Interest 43,777 43,305 Insurance 90,350 81,011 Total Operating Expenses 4,670,204 4,370,236

Income from Operations $ 66,778 $ 125,457

The following table shows the calculation of pro forma operating income available for debt service and pro forma debt service coverage for the fiscal years ending June 30, 2017 and 2016 for the University (assuming the University, as currently constituted, existed during such periods and assuming the University’s estimated Fiscal Year 2019 debt service after the issuance of the Series 2018 Bonds (as defined herein) as the applicable debt service for the pro forma calculation).

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UNAUDITED PRO FORMA DEBT SERVICE COVERAGE ($000s)

Fiscal Year Ended June 30, 2017 2016 Income from Operations $66,778 $125,457 Add back: Interest Expense 43,777 43,305 Depreciation and Amortization Expense 236,341 228,049 Operating Income Available for Debt Service 346,896 396,811

Pro Forma Fiscal Year 2019 Debt Service1 $78,035 $78,035 Pro Forma Debt Service Coverage 4.4x 5.1x

MANAGEMENT DISCUSSION AND ANALYSIS

Management developed a consolidated Fiscal Year 2018 operating budget that fully integrates the budgets of the Academic and Clinical Divisions of the University. The development of a consolidated budget promoted the ability to identify various business practice efficiency opportunities, cost reductions and revenue improvement opportunities (via integration initiatives), that were incorporated into the Fiscal Year 2018 budget.

Unaudited Operating Results as of February 28, 2018 and 2017

Provided below is a summary of the Unaudited Pro Forma Consolidated Statement of Operations for the eight-month periods ended February 28, 2018 and 2017 for the University (assuming the University, as currently constituted, existed during such periods). See Appendix B-2 for the unaudited pro forma consolidating statements of operations for the same eight-month periods. The University’s full-year Fiscal Year 2018 budget provides for approximately $4.8 billion of operating revenue, approximately $4.8 billion of operating expenses, and approximately $296 million of earnings before interest, depreciation and amortization (“EBIDA”), along with a baseline breakeven income from operations. (The University’s full-year Fiscal Year 2018 budget information was not prepared with a view toward compliance with published guidelines of the Securities and Exchange Commission or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The University’s full-year Fiscal Year 2018 budget information included in this document has been prepared by, and is the responsibility of, the University’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the University’s full-year Fiscal Year 2018 budget information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report included in this document relates to the University’s previously issued financial statements. It does not extend to the University’s full-year Fiscal Year 2018 budget information and should not be read to do so.)

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1 See “OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP – Estimated Debt Service Requirements” in the front part of the Official Statement, including with respect to certain interest rate assumptions related to estimated annual debt service. A-41

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS ($000s)

Eight Months Ended February 28, 2018 2017 Operating Revenues, Gains and Other Support: Net Patient Service Revenue $2,852,501 $2,793,669 Provision for Bad Debts (96,313) (94,620) Net Patient Service Revenue less provision for Bad Debts 2,756,187 2,699,049 Grants and Contracts 69,804 65,757 Tuition and Fees, net 141,849 134,715 Investment Income 20,374 19,158 Contributions 3,747 3,872 Other Revenue 180,384 168,350 Net Assets Released from Restrictions 26,728 27,093 Total Operating Revenues, Gains and Other Support 3,199,074 3,117,992

Operating Expenses: Salaries, Wages and Employee Benefits 1,812,262 1,757,038 Supplies and Other 1,144,307 1,058,307 Depreciation and Amortization 164,690 155,933 Interest 31,358 28,675 Insurance 56,842 66,919 Total Operating Expenses 3,209,458 3,066,872

(Loss) Income from Operations ($ 10,385) $ 51,120

For the eight-month period ending February 28, 2018, University operations incurred a $10.4 million loss (-0.3% margin) compared to a $51.2 million gain (1.6% margin) for the comparable period in the prior year. Total operating revenue grew by 2.6% or $81.1 million over the prior year, but was outstripped by the 4.6% growth in total operating expenses of $142.6 million. Total University operating revenue was $37.9 million (1.2%) below budget. The shortfall was primarily due to unfavorable net patient service revenue from fewer hospital admissions and outpatient visits than projected. Total University operating expenses were $50.0 million or 1.6% less than budget. This favorable variance is driven by compensation ($20.0 million or 1.1%), supplies ($13.0 million or 2.6%) and insurance ($15.7 million or 22.2%).

The full fiscal year 2018 operating budget is set at a breakeven level of operating income. For full Fiscal Year 2018, TJU’s management projects achieving the operating budget target. TJU management, in consultation with its strategic partner, GE Healthcare (“GEHC”), has identified a series of operating performance enhancement initiatives aimed at Fiscal Year 2018 operating income improvements. The initiatives encompass a variety of growth opportunity strategies and targeted improvement in the management of revenue cycle, workforce and supply chain operations, including those related to integrating the operations of the recently combined members of the Jefferson clinical and academic enterprise. See “Notable Activities - One Jefferson GE Healthcare Strategic Relationship” below for a more detailed description of TJU’s relationship with GEHC.

The University’s balance sheet has been further strengthened through strategic acquisitions. From June 30, 2014 to February 28, 2018, Total Assets increased from $2.9 billion to $7.2 billion and Net Assets increased from $1.4 billion to $3.9 billion. For the eight-month period ending February 28, 2018, Total Net Assets increased $829.5 million. Net Assets at February 28, 2018 include the accounts of Philadelphia University, Kennedy Health System and Magee. Of the total increase in Net Assets of $829.5 million, $699.3 million is due to these acquisitions. Of the increase in Total Assets of $1,395.3

A-42 million from June 30, 2017 to February 28, 2018, $1,099.4 million is due to the Philadelphia University, Kennedy Health System and Magee acquisitions.

Organizational Structure

TJU has organized the combined business enterprise around four “pillars” – Academic, Clinical, Innovation and Philanthropy. These pillars are designed to establish clear leadership roles, responsibilities and accountability for results. Each pillar is supported by enterprise or corporate services (Information Services & Technology, Finance, Legal, Integration, Human Resources and Marketing) to fulfill the pillar missions.

Integrated Strategic Financial Planning Process

In order to support enterprise growth and integration, TJU has implemented a disciplined strategy development and execution process titled the Integrated Strategic and Financial Planning Process (the “ISFP,” as depicted on the following page). The ISFP has been launched enterprise wide and provides a structured planning approach that is being used by the University including all clinical, academic, and corporate services. Input from the ISFP process will be incorporated into the Fiscal Year 2019 Operating and Capital Plans and the Five Year Strategic Financial Plan.

Key ISFP outputs used to develop the Five Year Strategic Financial Plan include:

• Projected baseline operating performance and EBIDA targets • One Jefferson Strategic initiatives (Capital/ROI expectations) . Service line (Clinical) . Divisions (Clinical and Academic) . Corporate (includes Philanthropy & Innovation) . Operational Improvement Initiatives (supply cost reductions, workforce management, etc.) • One Jefferson Integration and Operational Improvement Plan • Enterprise Master Facilities Plan A-43

• Capital Plan development using the Capital Management Policy and Allocation Policy established in Fiscal Year 2018. The Policy provides for a process that establishes capital spending constraints, provides for the equitable allocation of baseline capital requirements (projects < $1 million) and provides a disciplined quantitative/qualitative process for analysis and selection of projects valued at > $1 million.

The ISFP generated inputs/outputs are then used to update Jefferson’s Five-Year Strategic Financial Plan (Financial Plan). Using the Fiscal Year 2019 Operating and Capital Budget Plans as the baseline year, the forecast will incorporate ISFP’s inputs/outputs to develop a Five-Year Strategic Financial Plan. The guiding principle of the Financial Plan’s financial outcome is to achieve, by the end of the Financial Plan’s fifth year, an EBIDA performance and liquidity profile that is generally consistent with the Moody’s and S&P A1/A+ medians.

Development of the Fiscal Year 2019 Strategic Financial Plan will take into account management’s view that Fiscal Year 2018 has been a transition year that follows numerous large acquisitions over the previous three years. Using the process discussed above, TJU management will appropriately incorporate ISFP inputs into the Fiscal Year 2019 Financial Plan update in satisfaction of the performance commitments made by management to the TJU Board. During intra-cycle measurement periods, when future considerations of large and small initiatives become known, management will take such action to incorporate such initiative(s) into the Financial Plan in order to analyze their impact on TJU’s ability to produce a sufficient cash flow and operating margin, and liquidity necessary to meet the established performance targets.

Notable Activities

One Jefferson GE Healthcare Strategic Relationship

TJU entered into an eight year strategic relationship with GEHC, in order to accelerate the pace of integration activity across the enterprise. The primary goals of the One Jefferson initiative are to:

• Enable clinical and operational interoperability; • Standardize and gain efficiencies and cost; and • Deliver outcomes through seamless coordination.

In order to ensure the success of the One Jefferson initiative, TJU’s agreement with GEHC places a meaningful portion of GEHC’s annual compensation at risk for the delivery of projected outcomes. GEHC is fully embedded with TJU teams and is coordinating the identification of improvement opportunities that align with the strategies and outcomes identified in TJU’s strategic and financial plan.

Financial Management Integration Initiatives

In line with the broader integration theme, TJU’s financial management team has been active with regard to Financial Management Integration initiatives. These initiatives include the following:

• Debt Consolidation. Since the merger of TJU and TJUH System, management has sought where appropriate, to restructure acquired debt to ensure that it best positions TJU’s debt from a security document, rate/debt service profile, variable/fixed rate and product diversification perspective. As described in the forepart of the Official Statement, effective December 1, 2017, TJU obtained the requisite 51% bondholder consent and all legacy master trust indenture and security document regimes were terminated. The Series 2018D Bonds and the Series 2018A/B/C Bonds (as defined in the forepart of the Official Statement and collectively referred to as the “Series 2018 Bonds”) and future obligations issued by or on behalf of TJU (and the other Members of the

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Obligated Group) will be issued and/or secured, as applicable, in accordance with the Master Indenture.

• Enterprise Integrated Risk Financial Framework (“IRFF”). TJU completed an analysis that cataloged the material enterprise risks and anticipated responses to define a resource deployment approach that brings balance to the risk pursuits of TJU:

. Identify potential claims on liquidity sourcing from operations, spending, debt, and investments; . Assess TJU’s ability to carry risk given its available risk resources, including unrestricted cash and investments; and . Merge these concepts to allow TJU to assess the implications of a risk-adjusted resource deployment strategy

The IRFF initiative has resulted in the following activities, each of which has generated significant fee savings and increased return potentials:

. As of January 1, 2018, four legacy entity Defined Benefit Plan assets were consolidated into a new Jefferson Defined Benefit Plan. The consolidation did not change the underlying legacy plan’s pension benefit structures. . The consolidation of 11 disparate legacy investment programs down to three programs based on the risk profiles identified through the IRFF process (working capital, Intermediate Fund, Long-term Pool).

Labor Analytics Implementation

TJU implemented an enterprise wide Labor Analytics tool that allows clinical and corporate departments to measure productivity against the productivity benchmarks set to achieve organizational productivity index of between 98% and 110% relative to the benchmarks. When a department is under the 98% productivity index there is an opportunity for FTE reductions. When a department is over the 110% productivity index there is opportunity to add FTEs.

Installation of Epic Electronic Health Record System

TJU has installed the Epic Electronic Health Record (“Epic”) ambulatory and inpatient software system at the Center City Campus. TJU’s goal is to provide a unified, consistent and complete Jefferson Health chart for every patient which will ensure a seamless flow of information where and when needed. The first phase of the Epic installation (Ambulatory model) was completed on November 26, 2016 and the second phase (Inpatient model) was completed on April 1, 2017. Within six months after going live, Epic awarded TJU level 8 in its Gold Star program. The recognition places TJU in the top 6% of organizations that are live with Epic. TJU was also successful in achieving Healthcare Information and Management Systems Society EMRAM (Electronic Medical Record Adoption Model) Stage 6 for both ambulatory and inpatient settings, reflecting TJU’s implementation of best practices for the use of healthcare technology. TJU is extending its successful implementation of Epic to the three hospitals that make up Jefferson/New Jersey with a planned go-live in the Fall of 2019.

Einstein Health Letter of Intent

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EHN, through its controlled affiliates, operates a comprehensive healthcare network in southeastern Pennsylvania, southern New Jersey and Delaware. EHN’s network includes four inpatient hospital facilities with a total of 965 licensed beds and an independent academic medical center with over 400 residents and fellows throughout its facilities. A more detailed description of EHN and its operations may be found at the MSRB’s EMMA website but such information has not been verified by TJU and is not incorporated into this Official Statement by such reference.

The fundamental rationale for the Transaction include: (i) preserving and enhancing TJU’s teaching and research mission by expanding its current footprint at EHN’s facilities; (ii) enhancing TJU’s and EHN’s ability to care for the populations in the greater Philadelphia region, including the underserved and those on Medicaid; and (iii) integrating operations to provide high quality care at a lower cost than would otherwise be possible.

If consummated as currently contemplated, TJU would become the sole member of EHN through amendments to the corporate governance documents of EHN and its controlled affiliates in a similar fashion to the other recent TJU acquisition transactions described herein, including the appointment of EHN representatives to the TJU Board. Otherwise, EHN’s corporate structure would remain the same.

Pursuant to the Letter of Intent, the parties will begin conducting their respective due diligence and the preparation of a definitive agreement (the “Definitive Agreement”) setting forth the detailed terms of the Transaction and containing customary representations, warranties and conditions to closing.

At this point, it is not possible to determine whether the parties will enter into a Definitive Agreement and, if so, what the terms will be. It is currently anticipated that it could take one to two years to consummate the Definitive Agreement, in part, because such agreement will be subject to numerous conditions to closing, including receipt of all necessary regulatory approvals. Accordingly, there can be no assurance that the Transaction will ultimately be consummated. At this point, the parties cannot determine whether TJU and EHN will become liable for or guarantee one another’s debt.

Other Potential Transactions

In addition to the foregoing, as part of its ongoing strategic planning process, from time to time, the University considers and will consider potential mergers, joint ventures, affiliations, acquisitions, divestitures and similar transactions. Such transactions may result in additional entities becoming part of the University or its subsidiaries/affiliates in the future; in addition, in certain cases, existing entities may no longer be part of the University in the future. There can be no assurance as to the impact that any such transaction would have on the operations, properties and financial results of the University.

INDEBTEDNESS

Outstanding Debt

The total outstanding long term bonds and notes of the University as reported in the University’s consolidated unaudited balance sheet as of February 28, 2018, was approximately $1.5 billion. The Series 2018 Bonds are expected to refund the Refunded Obligations (as defined in the front part of the Official Statement) in addition to providing approximately $236.5 million for new capital projects. See “OUTSTANDING INDEBTEDNESS OF THE OBLIGATED GROUP – Estimated Debt Service Requirements” in the front part of the Official Statement for a table setting forth the expected fiscal year debt service requirements for the University’s outstanding bond indebtedness prior to the issuance of the Series 2018 Bonds and the refunding of the Refunded Obligations.

Interest Rate Derivatives

The University entered into derivative transactions for the purpose of reducing the impact of fluctuations in interest rates under the terms of various interest rate swap contracts. See Note 11 to the A-46 financial statements attached as Appendix B-1 for a list of such transactions and the primary terms thereof. To the extent permitted by the Master Indenture, regularly scheduled swap payments for such existing swaps are secured on a parity basis by a pledge of the gross revenues of certain Members of the Obligated Group, but not TJU itself; provided however, swap termination payments are secured under the Master Indenture as Subordinated Obligations. Under certain circumstances, the University’s swaps may be terminated early, in which case it may become obligated to make a substantial payment to one or more swap counterparties. In certain circumstances, TJU may have an obligation under the swaps to post collateral with the swap counterparties depending, among other things, on TJU’s then-current bond ratings and the then-current mark-to-market value of the swaps and subject to compliance with the Master Indenture.

CASH AND INVESTMENTS

The market value of the University’s cash and investment assets as reported in the University’s consolidated unaudited balance sheet as of February 28, 2018 was approximately $2.86 billion. The table below illustrates the consolidated unaudited cash and investments of the University under the indicated classifications.

CONSOLIDATED CASH AND INVESTMENTS ($000s)

As of February 28, 2018 Temporarily & Permanently Unrestricted Restricted Total Cash and Cash Equivalents $ 500,728 - $ 500,728 Short-Term Investments 1,279,322 $ 60,675 1,339,996 Long-Term Investments 621,712 528,321 1,150,033 Assets whose Use is Limited 466,972 25,343 492,315 Totals $2,868,734 $614,339 $3,483,073 Unrestricted Days Cash1 230.1 days

Asset Allocation

A summary of the pro forma asset allocation (assuming the University, as currently constituted, existed during such period) as of December 31, 2017 is set forth below.

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1 Calculated as unrestricted cash and investments divided by ((annual operating expenses less depreciation, amortization and other non-cash charges for restructuring and other nonrecurring expenses) divided by 365 or 366, as applicable). A-47

PRO FORMA CONSOLIDATED ASSET ALLOCATION ($000s)

December 31, 2017 % of Total Equity Securities Domestic $852,401 26.3% International 403,715 12.5 Fixed Income Securities 974,137 30.0 Hedge Funds 158,177 4.9 Private Markets 159,660 4.9 Other Strategies 86,559 2.7 External Trusts 133,273 4.1 Cash and Cash Equivalents 474,068 14.6 Totals $3,241,989 100.0%

Liquidity

Private equity investments have limited liquidity or redemption options. Liquidity for private investments can be accomplished via a secondary sale transaction. When available, distributions typically take place on a quarterly basis. TJU has made commitments to various private equity and real asset limited partnerships. The total amount of unfunded commitments is $78.1 million at December 31, 2017. TJU expects these commitments to be called over the next three to five years.

Hedge funds provide quarterly liquidity with 60 to 90 days’ notice prior to the quarter’s end limiting TJU’s ability to respond quickly to changes in market conditions. Liquidity of individual hedge funds vary based on various factors and may include “gates”, “holdbacks” and “side pockets” imposed by the manager of the hedge fund, as well as redemption fees which may also apply.

Investment Policy, Management and Oversight

University management developed an Integrated Risk Financial Framework process to support the risk-related decision making process for the organization. This work effort produces a point-in-time risk analysis based on an examination of the difference between how the University’s unrestricted investment assets were currently invested versus how they might be deployed within an active risk- management framework. The philosophy behind the framework recognizes that the University is comprised of operating companies first and that (i) balance sheet resources should be integrated with, and focused on, supporting the University’s operating core, and (ii) unrestricted invested assets should be allocated first, to hedging liquidity risk not covered by dedicated offsets/strategies, and second, to the pursuit of risk-appropriate return.

The University’s investments are overseen by the Investment Committee of TJU, which is composed of seven members from the TJU Board and senior staff of TJU. The Committee has oversight over asset allocation, manager selection and review of University investment management. The University primarily uses Russell Consulting, a division of Russell Investments, and Concord Advisors as its primary investment consultants. In this capacity, Russell Consulting provides investment consulting (policy construction, manager searches, strategy shift, and education) and risk management services concerning the University’s long-term portfolios. Investment categories include domestic equities, international equities, fixed income assets, and alternative assets.

All investment programs must conform to investment restrictions established by the University’s Investment Committee. The portfolio is structured to conform to the allocation targets established by the Investment Committee. These restrictions concern asset class, asset allocation liquidity, duration, average maturity, diversification, and credit risk. If necessary, there is a monthly rebalancing of assets to ensure that the portfolio remains within its target bands. In assessing potential alternative asset investments, management, supported by the consultants, identify potential alternative asset investment opportunities. Significant due diligence is conducted on these potential investments, including manager interviews, on- A-48 site visits and reference checks. No commitments to investment are permitted without the approval of the Investment Committee.

Endowment Spending

The Commonwealth of Pennsylvania has not adopted the Uniform Management of Institutional Funds Act or the Uniform Prudent Management of Institutional Funds Act. As a result, the University’s endowment spending is governed by Act 141 of 1998. In accordance with the Pennsylvania Act, the objective of the University’s investment policy is to provide a level of spendable income that is sufficient to meet the current and future budgetary requirements of the University consistent with the goal of protecting the purchasing power of the investments. The University’s calculation of spendable income is based on 75% of the prior year spendable income and 25% of the calculated two-year moving average of the portfolio’s market value multiplied by 4.75%; the sum of which is adjusted by an inflation factor.

BENEFITS

The University provides retirement benefits to eligible employees through defined contribution and defined benefit plans. The defined benefit plans are frozen to new entrants. The plans are employee benefit plans intended to comply with all applicable federal laws and regulations, including the Code, and the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

Defined Contribution Plans

The University’s primary retirement programs are offered through various defined contribution plans. Retirement benefits are provided for employees through direct employer contributions to multiple externally administered, multi-asset class investment platforms. Fund selection and oversight is conducted by the Chief Investment Officer, an external consultant and the Investment Committee of the TJU Board.

Defined Benefit Plans

On January 1, 2018, TJU consolidated all of its non-contributory defined benefit pension plans for certain full-time employees into a new plan named “Jefferson Defined Benefit Plan” (the “Plan”). The Plan represents the consolidation of TJU, TJUH System, Jefferson/Abington, Jefferson/Aria and Jefferson/New Jersey’s’ defined benefit plans. Magee, which integrated with TJU after January 1, 2018, maintains the Magee Rehabilitation Hospital Defined Benefit Pension Plan. That plan has been amended to close participation for new employees hired (or rehired) on and after January 1, 2015 (in light of Magee’s adoption of a new 403(b) plan structure for new employees). Philadelphia University does not have a defined benefit plan. While each of the legacy plans has been frozen to new participants, some are still in a contributory status for a group of active legacy employees that meet certain age and years of service thresholds. Though all of the legacy plans have been combined under the Plan, an employee’s benefits under the Plan will still be based on their legacy organization’s benefit structure and the employee’s years of service and compensation during their years preceding retirement at the legacy organization. Contributions to the plan are designed to meet the minimum funding requirements of ERISA. During Fiscal Year 2018, TJU expects to contribute $37.8 million, Aria expects to contribute $6.0 million and Magee expects to contribute $1.5 million. Kennedy Health System, which currently has a fiscal year ending on December 31, expects to contribute $9.0 million during its fiscal year 2018. See “Employee Benefit Plans” footnotes in audited financial statements in Appendix B-1 for additional information regarding the University’s defined benefit pension plans, its accumulated projected benefit obligations, the asset allocation of the plans, the funded status of the plans and related assumptions.

In addition to the formality of the Plan’s consolidation documentation, the Investment and Finance Committees of the TJU Board authorized management to consolidate the investable assets of the four legacy plans under a single trustee. Consolidation of assets was completed on January 26, 2018. Management and the Plan’s actuary are currently conducting an asset/liability study for the Plan, which A-49

will inform a new allocation profile for the Plan. It is anticipated that a new asset allocation will be in place by June 30, 2018.

Participation in Multiemployer Defined Benefit Pension Plan

TJU is a participating employer in The Pension Fund for Hospital and Health Care Employees – Philadelphia and Vicinity (the “Pension Fund”), a jointly-trusted multiemployer defined benefit pension plan. The Pension Fund is operated for the benefit of Chapter 1199C of the American Federation of State, County and Municipal Employees. For a discussion of the Pension Fund, see “Participation in Multiemployer Defined Benefit Pension Plan” in Note 13 to the financial statements attached as Appendix B-1.

FUNDRAISING AND CONTRIBUTIONS

Philanthropy is a key pillar of the University’s strategic plan. In the last several years, the University has significantly increased its fundraising efforts and results. In Fiscal Year 2017, the University received eleven pledges from multiple donors that totaled just over $21 million dollars. The pledges were given to support efforts in the lung center, alumni center, education, research, professorships and medicine. In Fiscal Year 2014, the University received a $110.0 million pledge from the Sidney Kimmel Foundation to endow and fund activities within the Sidney Kimmel Medical College. Of that pledge total, $80.1 million was recognized as contribution revenue in Fiscal Year 2014. This was the fifth largest gift to an American medical school.

The total revenue from contributions for the University for the past five fiscal years is summarized in the table below on a pro forma basis (assuming the University, as currently constituted, existed during such periods).

PRO FORMA CONSOLIDATED CONTRIBUTION REVENUES ($000s)

Fiscal Year Ended June 30, 2017 2016 2015 2014 2013 Unrestricted $15,594 $ 4,619 $ 6,840 $ 3,797 $ 5,109 Restricted for Operations or Capital 47,644 68,985 38,608 78,747 32,462 Permanently Restricted 11,392 12,334 6,327 36,301 7,669 Totals $74,630 $85,938 $51,775 $118,845 $45,240

CAPITAL PROGRAM AND PLANNING

On a pro forma basis over the last three years (assuming, the University, as currently constituted, existed during such period), the University has spent an annual average of approximately $246 million on “regular” capital expenditures and the University expects to continue regular capital expenditures at roughly this level in the future. In addition, the ISFP process is expected to generate strategic capital opportunities in the future in addition to regular capital expenditures.

Except with respect to the New Money Project described in the front part of the Official Statement, no additional strategic capital projects have been identified and submitted to the TJU Board for approval. Future regular and strategic capital will be funded from available cash and, in some cases, may, be funded through future debt issuances.

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INSURANCE

The University maintains professional liability insurance coverage using a combination of self- insurance and commercial insurance/reinsurance. The Pennsylvania hospitals, residents and employed physicians (healthcare providers) maintain professional liability insurance coverage with limits required by the Commonwealth of Pennsylvania Medical Care Availability and Reduction of Error Act 13 of 2002. In addition, an individual $1,000,000 per medical incident and $3,000,000 annual aggregate limit is provided for each scheduled dentist, as well as physicians and residents practicing in other states including but not limited to Delaware and New Jersey. Non-healthcare provider entities are provided with a shared $1,000,000 per incident and $3,000,000 annual aggregate professional limit of liability. The University and/or the individual member health system entity has ongoing claims and risk management/patient safety programs in accordance with the requirements of Act 13.

Jefferson/New Jersey maintains professional liability coverage using commercial insurance with limits of $1,000,000 per claim and $3,000,000 annual aggregate. In addition, using commercial insurance coverage, the scheduled Jefferson/New Jersey employed physicians, hospitalists, allied health professionals and KMGP are provided with individual limits of $1,000,000 each claim and $3,000,000 annual aggregate.

The University and/or individual entities also maintain other types of insurance, including coverage for general liability, property, directors’ and officers’ liability, workers compensation/employer’s liability, cyber/privacy and security liability, excess/umbrella liability with limits/retentions/terms and conditions that are deemed reasonable and customary for universities and health systems of comparable size and scope of services. See Notes 14 and 15, respectively, to the audited consolidated financial statements included in Appendix B-1 to this Official Statement for additional information. For a more detailed discussion of medical professional liability insurance, see “CERTAIN INVESTMENT CONSIDERATIONS – Medical Professional Liability Insurance Market” in the forepart of the Official Statement.

LITIGATION

Lawsuits and claims are filed against the University in the ordinary course of business. While the outcome of many of these actions is not presently determinable, it is the opinion of management that any resulting liability from these actions or, to its knowledge, any threatened actions, will not have a material adverse effect on the consolidated results of operations or the consolidated financial position of the University. Moreover, the University has a comprehensive program for primary and excess insurance, summarized above. If, however, a final judgment were entered in any action in excess of its insurance coverage, the University would be liable for the excess. Management of the University believes that any currently pending or, to its knowledge, threatened, lawsuits subjecting the University to liability not covered by insurance would not have a materially adverse effect on the University’s consolidated operations, finances or properties.

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APPENDIX B-1

THOMAS JEFFERSON UNIVERSITY CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2017 AND 2016

[THIS PAGE INTENTIONALLY LEFT BLANK] Thomas Jefferson University

Consolidated Financial Statements June 30, 2017 and 2016 Thomas Jefferson University Table of Contents June 30, 2017 and 2016

Pages

Report of Independent Auditors 1 - 2

Consolidated Balance Sheets 3

Consolidated Statements of Operations and Changes in Unrestricted Net Assets 4

Consolidated Statements of Changes in Net Assets 5

Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements 7 - 43

Supplemental Information:

Unaudited Pro Forma Information 44

Unaudited Consolidating Balance Sheets 45

Unaudited Consolidating Statements of Operations and Changes in Unrestricted Net Assets 46 Report of Independent Auditors

To the Board of Trustees Thomas Jefferson University:

We have audited the accompanying consolidated financial statements of Thomas Jefferson University and its subsidiaries (the “University”), which comprise the consolidated balance sheets as of June 30, 2017 and 2016, and the related consolidated statements of operations and changes in unrestricted net assets, of changes in net assets and of cash flows for the years then ended.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the University’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Thomas Jefferson University and its subsidiaries as of June 30, 2017 and 2016, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matter

Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The consolidating information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The consolidating information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting

PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, PA 19013-7045 T: (267) 330 - 3000, F: (267) 330 - 3300, www.pwc.com/us

and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the consolidating information is fairly stated, in all material respects, in relation to the consolidated financial statements taken as a whole. The consolidating information is presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position, changes in net assets and cash flows of the individual entities and is not a required part of the consolidated financial statements. Accordingly, we do not express an opinion on the financial position, changes in net assets and cash flows of the individual entities.

Philadelphia, Pennsylvania September , 2017

Thomas Jefferson University Consolidated Balance Sheets June 30, 2017 and 2016 (In Thousands)

Assets 2017 2016 Current assets: Cash and cash equivalents $259,798 $301,743 Short-term investments 1,121,850 1,055,436 Accounts receivable, less allowance for doubtful accounts of $88,633 in 2017 and $63,825 in 2016 497,519 380,961 Inventory 54,391 38,750 Pledges receivable, current 24,713 29,720 Insurance recoverable 31,340 27,869 Assets whose use is limited, current 18,885 19,952 Other current assets 46,259 27,575 Total current assets 2,054,755 1,882,006

Long-term investments 1,161,384 895,851 Assets whose use is limited, noncurrent 190,693 152,810 Assets held by affiliated foundations 61,828 8,624 Pledges receivable, noncurrent 103,663 98,923 Goodwill 161,153 160,311 Insurance recoverable 175,481 144,464 Loans receivable from students, net 26,581 26,810 Land, buildings and equipment, net 1,861,622 1,468,987 Other noncurrent assets 30,962 28,671 Total assets $5,828,122 $4,867,457

Liabilities and Net Assets

Current liabilities: Current portion of: Long-term obligations $29,932 $23,595 Accrued professional liability claims 49,758 42,674 Accrued workers' compensation claims 10,301 8,766 Deferred revenues 13,881 15,710 Accounts payable and accrued expenses 291,454 243,206 Accrued payroll and related costs 229,022 198,126 Grant and contract advances 19,663 16,412 Total current liabilities 644,011 548,489

Long-term obligations 1,172,071 1,060,925 Accrued pension liability 449,401 481,101 Federal student loan advances 10,114 15,651 Deferred revenues 10,095 7,339 Accrued professional liability claims 437,812 339,962 Accrued workers' compensation claims 21,252 19,821 Interest rate swap contracts 30,576 43,609 Other noncurrent liabilities 21,332 19,218 Total liabilities 2,796,664 2,536,115

Net assets: Unrestricted 2,306,866 1,663,397 Noncontrolling interest in joint ventures 75,496 74,569 Temporarily restricted 341,617 302,327 Permanently restricted 307,479 291,049 Total net assets 3,031,458 2,331,342

Total liabilities and net assets $5,828,122 $4,867,457

The accompanying notes are an integral part of the consolidated financial statements.

3 Thomas Jefferson University Consolidated Statements of Operations and Changes in Unrestricted Net Assets For the Years Ended June 30, 2017 and 2016 (In Thousands)

2017 2016 Operating revenues, gains and other support: Net patient service revenue $3,526,920 $2,773,060 Provision for bad debts (124,804) (102,714) Net patient service revenue less provision for bad debts 3,402,116 2,670,346 Grants and contracts 99,763 91,589 Tuition and fees, net 133,663 122,689 Investment income 49,359 24,133 Contributions 4,469 3,862 Other revenue 221,690 188,464 Net assets released from restrictions 40,934 37,576 Total operating revenues, gains and other support 3,951,994 3,138,659

Operating expenses: Salaries and wages 1,795,840 1,380,462 Employee benefits 423,866 361,808 Supplies 650,989 536,418 Purchased services 336,003 204,223 Depreciation and amortization 199,678 158,972 Interest 38,087 35,914 Insurance 79,207 52,696 Utilities 47,542 38,356 Rent 53,202 45,696 Other 278,769 229,799 Total operating expenses 3,903,183 3,044,344

Income from operations 48,811 94,315

Nonoperating items and other changes in unrestricted net assets, net: Gain (Loss) on investments, net 127,529 (4,071) Investment income net of amounts classified as operating revenue 7,603 2,249 Gain on investment in ROSH acquisition - 21,906 Interest rate swap contracts 9,875 (17,546) Reclassification of net assets (2,399) (173) Contributions and government grants for capital projects 6,518 4,088 Value of noncontrolling interest - ROSH acquistion - 70,856 Net assets released from restrictions used for purchase of property and equipment 5,136 11,469 Donated capital received - 799 Decrease (Increase) in pension liability 117,178 (192,989) Distributions to noncontrolling interest (8,715) (3,195) Loss on defeasance of debt (15,565) - Contribution received in business combination 348,425 - Increase (decrease) in unrestricted net assets from nonoperating items and 595,585 (106,607) other changes in net assets

Increase (decrease) in unrestricted net assets $644,396 ($12,292)

The accompanying notes are an integral part of the consolidated financial statements.

4 Thomas Jefferson University Consolidated Statements of Changes in Net Assets For the Years Ended June 30, 2017 and 2016 (In Thousands)

2017 2016 Unrestricted net assets: Revenues, gains and other support $3,951,994 $3,138,659 Expenses (3,903,183) (3,044,344) Nonoperating items and other changes in unrestricted net assets, net 595,585 (106,607)

Increase (Decrease) in unrestricted net assets 644,396 (12,292)

Temporarily restricted net assets: Contributions 45,061 65,447 Gain on investments, net 27,336 527 Investment income 7,111 5,683 Net assets released from restrictions (46,070) (49,045) Changes in net assets held by affiliated foundations 499 (157) Change in value of split interest agreements/annuities 753 (716) Reclassification of net assets 2,407 142 Contribution received in business combination 2,193 -

Increase in temporarily restricted net assets 39,290 21,881

Permanently restricted net assets: Contributions 11,043 11,750 Net gain (loss) on externally held trusts 5,395 (4,443) Reclassification of net assets (8) 31

Increase in permanently restricted net assets 16,430 7,338

Increase in net assets 700,116 16,927

Net assets, beginning of year 2,331,342 2,314,415

Net assets, end of year $3,031,458 $2,331,342

The accompanying notes are an integral part of the consolidated financial statements.

5 Thomas Jefferson University Consolidated Statements of Cash Flows For the Years Ended June 30, 2017 and 2016 (In Thousands)

2017 2016 Cash flows from operating activities: Increase in net assets $700,116 $16,927 Adjustments to reconcile changes in net assets to net cash provided by operating activities: Contribution received in the acquisition of Aria (350,619) - (Decrease) Increase in pension liability (117,178) 192,989 Depreciation and amortization 200,054 158,972 Bond premium amortization (3,245) (2,941) Provision for bad debts 124,804 102,714 Assets held by affiliated foundation (5,479) 157 Gain on investments, net (203,556) (24,750) Loss (gain) on sale of assets 19 (3) Recognition of vesting in Premier stock (4,008) (3,897) Donated capital received - (799) Net (gain) loss on interest rate swap contracts (13,310) 13,783 ROSH noncontrolling interest - (70,856) Distribution to noncontrolling interest 8,715 3,195 Loss on defeasance of debt 15,565 - Contributions and government grants designated for acquisition of long-term assets (25,454) (17,974) Net change due to: Accounts receivable (173,253) (77,508) Pledges receivable 267 (27,731) Inventory (9,522) 305 Other current and noncurrent assets (11,677) (5,823) Accounts payable and accrued expenses (6,793) (28,022) Accrued payroll and related costs (9,941) (17,285) Grant and contract advances 3,251 (1,432) Deferred revenues 919 253 Accrued pension liability 313 (1,271) Insurance recoverable (4,862) (5,373) Accrued professional liability claims 26,787 19,918 Accrued workers' compensation claims (7,215) (1,669) Dividend received from Five Pointe Professional Liability Insurance Company 15,219 19,761 Other current and noncurrent liabilities 1,005 (2,608) Net cash provided by operating activities 150,922 239,032

Cash flows from investing activities: Assets whose use is limited increase (59,461) (115,953) Assets whose use is limited decrease 39,211 107,711 Acquisitions, net of cash acquired 34,784 (62,686) Purchase of land, buildings and equipment (284,431) (214,757) Purchases of investments (1,638,346) (1,467,100) Sales of investments 1,674,841 1,461,453 Student loans issued (4,679) (5,151) Student loans repaid 4,908 4,758 Net cash used in investing activities (233,173) (291,725)

Cash flows from financing activities: Distribution to noncontrolling interest (8,715) (3,195) Proceeds from donated capital - 799 Contributions and government grants designated for acquisition of long-term assets 25,454 17,974 Federal student loan advances (5,537) (2,596) Deferred financing fees (3,811) - Proceeds from long-term obligations 332,226 119,580 Repayment of long-term obligations (299,311) (22,490) Net cash provided by financing activities 40,306 110,072

Net (decrease) increase in cash and cash equivalents (41,945) 57,379

Cash and cash equivalents at beginning of period 301,743 244,364

Cash and cash equivalents at end of period $259,798 $301,743

Supplemental disclosures: Interest paid (net of amount capitalized) $44,548 $42,264 Accounts payable related to buildings and equipment $15,027 $17,950 The accompanying notes are an integral part of the consolidated financial statements.

6 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements represent the consolidated financial position, changes in net assets and cash flows of Thomas Jefferson University, TJUH System (“TJUHS”), Abington Health (“Abington”) and Aria Health System (“Aria”), collectively referred to as TJU.

Thomas Jefferson University is an independent, non-profit corporation organized under the laws of the Commonwealth of Pennsylvania and recognized as a tax-exempt organization pursuant to Section 501(c)(3) of the Internal Revenue Code. Thomas Jefferson University has a tripartite mission of education, research and patient care. Thomas Jefferson University conducts research and offers undergraduate and graduate instruction through the Sidney Kimmel Medical College and the Jefferson Colleges of Nursing, Pharmacy, Health Professions, Population Health, and Biomedical Sciences. Thomas Jefferson University has approximately 3,200 students and is located in Philadelphia, Pennsylvania.

TJUHS, Abington and Aria are integrated healthcare organizations that provide inpatient, outpatient and emergency care services through acute care, ambulatory care, physician and other primary care services for residents of the Greater Philadelphia Region. TJU is the sole corporate member of TJUHS, Abington and Aria.

TJU includes the accounts of subsidiaries of Thomas Jefferson University including 1100 Walnut Associates; 925 Walnut Corporation; and the accounts of subsidiaries of TJUHS, including Thomas Jefferson University Hospitals, Inc. (TJUH); Jefferson University Physicians (“JUP”); Jefferson Physician Services; the Atrium Corporation; Jeffex, Inc.; Methodist Associates in Healthcare, Inc.; JeffCare, Inc.; Jeffcare Alliance, LLC; Jefferson University Radiology Associates (“JURA”, an 80% owned joint venture); Jefferson Comprehensive Concussion Center (“JCCC”, a 66% owned joint venture); the Riverview Surgery Center at the Navy Yard, LP (“Riverview”, a 51% owned joint venture); Rothman Orthopaedic Specialty Hospital, LLC (“ROSH”, a 54% owned joint venture); and the accounts of subsidiaries of Abington including Abington Memorial Hospital; Lansdale Hospital Corporation; and Abington Health Foundation; and the accounts of subsidiaries of Aria including Aria Health; Aria Physician Services; Aria Health Orthopaedics; System Service Corporation; Aria IPE, LLC; Medical Imaging Associates (an 83% owned joint venture); T.F. Development, Inc.; Health Care, Inc.; and TMB Enterprises.

Subsequent Events TJU has performed an evaluation of subsequent events through September 6, 2017, which is the date the financial statements were issued.

Principles of Consolidation The accompanying consolidated financial statements include the accounts of TJU. All significant intercompany accounts and transactions have been eliminated.

7 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Financial Statement Presentation The accompanying consolidated financial statements have been prepared on an accrual basis.

TJU classifies net assets as follows:

Unrestricted Net Assets are those assets that are available for the support of operations and whose use is not externally restricted, although their use may be limited by other factors such as by board designation.

Temporarily Restricted Net Assets are subject to legal or donor imposed restrictions that will be met by actions of TJU and/or the passage of time. These net assets include gifts donated for specific purposes and capital appreciation on permanent endowment, which is restricted by Pennsylvania law on the amounts that may be expended in a given year.

Permanently Restricted Net Assets are subject to donor-imposed restrictions that require the original contribution be maintained in perpetuity by TJU, but permits the use of the investment earnings for general or specific purposes.

TJU’s measure of operations in the consolidated statements of operations and changes in net assets includes revenues from patient services, grants and contracts, tuition and fees, unrestricted contributions, net assets released from restriction, distribution of investment returns based on TJU’s spending policy and other sources.

Non-operating activities presented in the consolidated statements of operations and changes in net assets includes investment returns net of amounts classified as operating revenue in accordance with TJU’s spending policy, gains and losses on derivative financial instruments, contributions and governmental grants for capital projects, net assets released from restriction for capital purposes, gain (loss) on investments, the value of the noncontrolling interest in the ROSH acquisition, distributions to noncontrolling interests, the net actuarial gain (loss) of the defined benefit plan, loss on defeasance of debt and contribution recognized in a business combination.

Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. Management considers critical accounting policies to be those that require more significant judgments and estimates in the preparation of the financial statements including, but not limited to, recognition of net patient service revenue, which includes contractual allowances and provisions for bad debt; recognition of estimates for healthcare professional and general liabilities; determination of fair values of certain financial instruments; and assumptions for measurement of pension obligations. Management relies on historical experience and other assumptions believed to be reasonable relative to the circumstances in making judgments and estimates. Actual results could differ from those estimates. 8 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Cash and Cash Equivalents Cash and cash equivalents consist of cash and investments in highly liquid debt instruments with maturity of three months or less when purchased and are carried at cost, which approximates fair value, except that any such investments purchased with funds on deposit with bond trustees are classified as assets whose use is limited or by investment managers of TJU’s short-term or long-term investment funds are classified as investments.

Short-term investments Investments classified as short-term investments are available to fund current operations as needed and exclude quasi-endowment funds, donor restricted endowment funds (including beneficial interests in perpetual trusts administered by third parties), investments held under split-interest agreements and investments subject to the equity method.

Charitable Medical Care Provided TJU provides medically necessary services to all patients regardless of their ability to pay. Some patients qualify for charity care based on policies established by TJU and are therefore not responsible for payment for all or a part of their healthcare services. These policies allow for the provision of free or discounted care in circumstances where requiring payment would impose financial hardship on the patient. Charges for services rendered to patients who meet TJU’s guidelines for charity care are not separately recorded in the accompanying consolidated financial statements.

TJU maintains records to identify and monitor the level of charity care provided. These records include the amount of charges foregone for services and supplies furnished. Such amounts have been excluded from net patient service revenue. Management estimates that the cost of charity care provided by TJU was $28.6 million and $21.8 million for the years ended June 30, 2017 and 2016, respectively. These amounts are not included in the provision for bad debts of $124.8 million and $102.7 million in 2017 and 2016, respectively, which are reflected as deductions in net patient service revenue. The estimated costs of providing charity services are based on a calculation which applies a ratio of costs to charges to the gross uncompensated charges associated with providing care to charity patients. The ratio of cost to charges is calculated based on the TJU total expenses divided by gross patient service revenue.

Net Patient Service Revenue Net patient service revenue is reported at the estimated net realizable amounts from patients, third-party payers and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payers. Retroactive adjustments are considered in the recognition of revenue on an estimated basis in the period the related services are rendered and are adjusted in future periods as final settlements are determined.

Revenue from the Medicare and Medicaid fee-for-service programs accounted for approximately 23.5% and 3.0%, respectively, and 24.1% and 3.3%, respectively of net patient service revenue in 2017 and 2016, respectively. Most payments to TJU from the Medicare 9 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016 and Pennsylvania Medicaid programs for inpatient hospital services are made on a prospective basis. Under these programs, payments are made at a pre-determined specific rate for each discharge based on a patient’s diagnosis. Additional payments are made to TJU as a teaching and disproportionate share hospitals, as well as for cases that have an extremely long length-of-stay or unusually high costs. Laws governing the Medicare and Medicaid programs are complex and subject to interpretation. Services billed to the Medicare program are subject to external review for both medical necessity and billing compliance. Medicare cost reports for all years, except 2011, 2015, 2016 and 2017 have been audited and final settled as of June 30, 2017. No significant adjustments are expected. In addition, TJU received funds from the Philadelphia Hospital Assessment program and the Medical Assistance Modernization Act- Quality Care Assessment program in the amount of $125.3 million and $93.5 million in 2017 and 2016, respectively, and are recorded in net patient service revenue. TJU paid taxes in respect to these programs amounting to $95.29 million and $78.9 million in 2017 and 2016, respectively, and are recorded in other operating expenses. Both programs were designed to provide supplemental funding for licensed acute care hospitals with the Philadelphia Hospital Assessment program specifically designated for hospital emergency services.

TJU has also entered into agreements with certain commercial insurance carriers, health maintenance organizations and preferred provider organizations. The basis for payment to TJU under these agreements includes prospectively determined rates per discharge, discounts from established charges, prospectively determined daily rates and capitated rates. Revenue from Blue Cross and Aetna USHC amounted to 30.0% and 9.1%, respectively, and 30.9% and 9.4%, respectively, of TJU’s net patient service revenue in 2017 and 2016, respectively.

Accounts Receivable, Allowance for Doubtful Accounts, Provision for Bad Debt TJU records an allowance for doubtful accounts and bad debt expense for estimated losses resulting from non-payment for accounts receivable for services from patients. TJU accounts for uncollectible accounts receivable balances from third-party commercial insurers as reductions to net patient service revenue rather than bad debt expense. Management routinely evaluates account collection history, economic conditions, and trends in health care coverage in determining the sufficiency of the allowance for doubtful accounts and provision for bad debts. Accounts receivable are written off against the allowance for doubtful accounts when management determines that recovery is unlikely and collection efforts cease. The allowance for doubtful accounts increased by the bad debt expense and other adjustments of $161.8 million and $114.1 million in 2017 and 2016, respectively, and decreased due to write-offs of $137.0 million and $102.5 million in 2017 and 2016, respectively.

10 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Grants and Contracts Grants and contracts revenue primarily represents research activity sponsored by governmental and private sources. TJU recognized operating revenues based on direct expenditures and related facilities and administrative cost rate (F&A) as follows for the years ended June 30, 2017 and 2016 (in thousands): Direct F&A 2017 2016 Expenditures Cost Total Total Federal agencies $47,514 $19,899 $67,413 $62,760 Non-federal agencies 27,744 4,606 32,350 28,829 Total $75,258 $24,506 $99,763 $91,589

TJU’s primary source of federal sponsored support is the Department of Health and Human Services. Facilities and administrative costs recovered on federally sponsored programs are generally based on predetermined rates negotiated with the Federal Government while recovery on all other sponsored projects is based on rates negotiated with the respective sponsor. Funds received for sponsored research activity are subject to audit. Based upon information currently available, management believes that any liability resulting from such audits will not materially affect the financial position or operations of TJU.

Tuition and Fees TJU provides financial aid to eligible students in the form of direct grants, loans and employment during the academic year. Tuition and fees have been reduced by certain grants and scholarships in the amount of $9.7 million and $9.4 million in 2017 and 2016, respectively.

Contributions Contributions, including unconditional promises to donate cash and other assets, are recognized at fair value on the date of receipt, recognized as revenue in the period received and are reported as increases in the appropriate net asset category based on donor restrictions. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Pledges received which are to be paid in future periods, and contributions restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When a donor restriction expires, that is, when a time restriction ends or stipulated purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets.

Collections TJU capitalizes works of art, historical treasures, or similar assets (collectively, Collections). Collections are recorded at fair value at the date of the contribution. Collections of approximately $5.7 million are included in other noncurrent assets on the consolidated balance sheets at June 30, 2017 and 2016.

11 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Investments Investments are stated at fair value. The fair value of all debt and equity securities with a readily determinable fair value are based on quotations obtained from national securities exchanges. The alternative investments, which are not readily marketable, are carried at estimated fair values as provided by the investment managers. As a practical expedient, TJU is permitted under the Fair Value Measurement standard to estimate the fair value of an investment in an investment company at the measurement date using the reported net asset value (NAV). Adjustment is required if TJU expects to sell the investment at a value other than NAV or if the NAV is not calculated in accordance with US generally accepted accounting principles (US GAAP). TJU’s investments are valued based on the most current NAV adjusted for cash flows when the reported NAV is not at the measurement date. This amount represents fair value of these investments at June 30, 2017 and 2016. TJU performs additional procedures including due diligence reviews on its alternative investments and other procedures with respect to the capital account or NAV provided to ensure conformity and compliance with valuation procedures in place, the ability to redeem at NAV at the TJU measurement date and existence of certain redemption restrictions at the measurement date. TJU reviews the values as provided by the investment managers and believes that the carrying amount of these investments is a reasonable estimate of fair value. Because alternative investments are not readily marketable, their estimated values are subject to uncertainty and therefore may differ from the value that would have been used had a ready market for such investments existed.

The Commonwealth of Pennsylvania has not adopted the Uniform Management of Institutional Funds Act (UMIFA) or the Uniform Prudent Management of Institutional Funds Act (UPMIFA). Rather, the Pennsylvania Act governs the investment, use and management of TJU’s endowment funds. The Pennsylvania Act allows a nonprofit to elect to appropriate for expenditure an investment policy that seeks the long-term preservation of the real value of the investments. In accordance with the Pennsylvania Act, the objectives of TJU’s investment policy is to provide a level of spendable income which is sufficient to meet the current and future budgetary requirements of TJU and which is consistent with the goal of protecting the purchasing power of the investments. The calculation of the spendable income for endowment funds of TJU is based on 75% of the prior year spendable income and 25% of the calculated two year average of the endowment market value multiplied by 4.75% for scholarship funds and 7% for non-scholarship funds; the sum of which is adjusted by an inflation factor. The calculation of the spendable income for endowment funds of Abington is based on 5% of the calculated three year average of the endowment market value.

TJU’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and investments. These funds are held in various high-quality financial institutions managed by TJU personnel and outside advisors. TJU maintains its cash and cash equivalents in financial institutions, which at times exceed federally insured limits.

12 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Assets Held by Affiliated Foundations The Methodist Hospital Foundation (MHF) and Aria Health Foundation (AHF) are separate corporations not under the control of TJU. MHF and AHF accept gifts and bequests and engage in fundraising activities for the benefit of Methodist Hospital and Aria, respectively. The respective Boards of Trustees of MHF and AHF, at their sole discretion, are authorized to contribute funds to Methodist Hospital and Aria, respectively. Underlying investments held by MHF, with restrictions benefiting only Methodist Hospital, and AHF, with restrictions benefiting only Aria, are presented in the consolidated balance sheets as follows (in thousands):

2017 2016 Methodist Hospital Foundation $9,123 $8,624 Aria Health Foundation 52,705 - Total $61,828 $8,624

While the sole purpose of MHF and AHF are to support Methodist Hospital and Aria, respectively, this accounting treatment does not imply that MHF and AHF assets or investment income are those of TJU. The consolidated balance sheets do not reflect or establish the legal relationship, agency or otherwise, between MHF, AHF and TJU, or any right to assets owned by MHF and AHF. The by-laws of MHF and AHF provide that all assets they hold shall not be subject to attachments, execution, or sequestration for any debt, obligation or liability of TJU or any other person or entity. In particular, MHF and AHF are not party to or obligated by any debt instrument of TJU, and assets owned by MHF and AHF, respectively, are not subject to the lien of any such debt instrument.

Split Interest Agreements TJU’s split-interest agreements consist of charitable gift annuities, pooled income funds, charitable remainder trusts and a charitable lead trust. Contribution revenue for charitable gift annuities and charitable remainder trusts is recognized at the date the agreement is established, net of the liability recorded for the present value of the estimated future payments. Contribution revenue for pooled income funds is recognized upon establishment of the agreement at the fair value of the estimated future receipts discounted for the estimated time period to complete the agreement.

Loans Receivable from Students Many students receive financial aid that consists of scholarship grants, work-study opportunities and student loans. TJU participates in various federal revolving loan programs, in addition to administering institutional loan programs. Student loan programs are funded by donor contributions, other institutional sources, and governmental programs, primarily the Federal Perkins Loan Program. The amounts received from the federal government’s portion of federal loan programs are ultimately refundable to the federal government and are reported as a liability on TJU’s consolidated balance sheets as federal student loan advances. Determination of the fair value of student loans receivable is not practicable.

13 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Student loans receivable, net of allowance for doubtful accounts, consists of the following at June 30, 2017 and 2016 (in thousands): 2017 2016

Direct student loans $21,141 $20,663 Allowance for doubtful accounts (3,954) (3,896) Net 17,187 16,767 Federally-sponsored student loans 9,394 10,043 Total $26,581 $26,810

TJU assesses the adequacy of the allowance for doubtful accounts related to direct student loans receivable by performing evaluations of the student loan portfolio, including a review of the aging of the student loan receivable balances and of the default rate by loan program in comparison to prior years. The level of allowance is adjusted based on the results of this analysis. The federally-sponsored student loans receivable represents amounts due from current and former students under various Federal Government loan programs. For direct student loans it is TJU’s policy to reserve 100% of a loan when the loan is delinquent 2 years or more; a reserve of 85% is recorded for loans delinquent more than 270 days and less than 2 years. TJU considers the allowance recorded at June 30, 2017 and 2016 to be reasonable and adequate to absorb potential credit losses inherent in the student loan portfolio.

Land, Buildings, and Equipment, net Land, buildings, and equipment are carried at cost on the date of acquisition or fair value on the date of donation in the case of gifts. Depreciation expense is computed on a straight-line basis over the estimated useful lives of the assets, excluding land. All gifts of land, buildings, and equipment are recorded as unrestricted nonoperating activities unless explicit donor stipulations specify how the donated assets must be used. Interest expense on borrowed funds used for construction, net of interest income earned on unexpended amounts, is capitalized during the construction period.

14 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Goodwill Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Any excess of the purchase price over the estimated fair value of the identifiable net assets acquired is recorded as goodwill. The determination of the estimated fair value of net assets acquired requires management’s judgment and often involves the use of significant estimates and assumptions. When necessary, TJU consults with external advisors to assist in the determination of fair value. The change in the carrying amount of goodwill for the year ended June 30, 2017 and 2016 is as follows:

2017 2016 Beginning balance: Goodwill $160,756 $26,244 Accumulated impairment losses (445) (280) 160,311 160,311 25,964

Goodwill acquired 981 134,512 Impairment losses (139) (165)

Ending balance: Goodwill 161,737 160,756 Accumulated impairment losses (584) (445) $161,153 $160,311

Conditional Asset Retirement Obligation A conditional asset retirement obligation is a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. TJU has asset retirement obligations arising from regulatory requirements to perform certain asset retirement activities at the time that certain buildings and equipment are disposed of or renovated. A conditional asset retirement obligation of $5.1 million and $5.2 million as of June 30, 2017 and 2016, respectively, is included within other noncurrent liabilities in the consolidated balance sheets.

Reclassifications Certain amounts in the prior year have been reclassified to conform to the current year presentation.

New Accounting Standards The Financial Accounting Standards Board ("FASB") issued an accounting standard update in May 2014 regarding the accounting for and disclosure of revenue recognition. Specifically, the update outlined a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance was effective for annual periods

15 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016 beginning after December 15, 2016, which allowed for full retrospective adoption of prior period data or a modified retrospective adoption. Early adoption was not permitted. In July 2015, the FASB issued an update to delay the effective date of the new revenue standard by one year, or, in other words, to be effective for annual and interim periods beginning after December 15, 2017. Entities will be permitted to adopt the new revenue standard early, but not before the original public organization effective date. TJU is currently evaluating the effects of this guidance.

The FASB issued an accounting standard update in February 2016 regarding the accounting for leases. The update requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting guidance. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. TJU is currently evaluating the effects of this guidance.

The FASB issued an accounting standard update in August 2016 regarding the presentation of net asset classifications and information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows. The main provisions of this update include reducing the presentation of net asset classes from three to two, without donor restrictions and with donor restrictions, enhanced disclosures on net assets, qualitative information on the management of liquid resources and quantitative information on financial assets to meet cash needs. The amendments in this update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. TJU is currently evaluating the effects of this guidance.

2. BUSINESS COMBINATIONS

On September 1, 2017, pursuant to the terms of an integration agreement, TJU became the sole corporate member of Kennedy Health System (Kennedy). Kennedy is a not for profit healthcare organization located in New Jersey. TJU acquired all of the assets and liabilities of Kennedy and transfered no consideration. The TJU board was reconstituted to include 10 members designated by Kennedy. This business combination will be accounted for as an acquisition. The acquisition of Kennedy is intended to enhance access to high quality, cost effective care to the communities served by both organizations and to enhance the educational and research mission of TJU.

On July 1, 2017, pursuant to the terms of a combination agreement, TJU became the sole corporate member of Philadelphia University. Philadelphia University is a not for profit university located in Philadelphia, Pennsylvania. TJU transferred no consideration and acquired all of the assets and liabilities of Philadelphia University. The TJU board was reconstituted to include 2 members designated by Philadelphia University. This business combination will be accounted for as an acquisition. The acquisition of Philadelphia University is intended to enhance the educational and research mission of both organizations.

16 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

On July 1, 2016, pursuant to the terms of an integration agreement, TJU became the sole corporate member of Aria. TJU acquired all of the assets and liabilities of Aria and the TJU board was reconstituted to include 10 members designated by Aria. No consideration was transferred for the net assets of Aria. This business combination was accounted for as an acquisition. The acquisition of Aria is intended to enhance access to high quality, cost effective care to the communities served by both organizations and to enhance the educational and research mission of TJU. The following table summarizes the fair value of assets, liabilities and net assets contributed by Aria at the acquisition date (in thousands):

Cash and cash equivalents $34,784 Accounts receivable 68,109 Investments 176,212 Land, buildings and equipment 305,162 Assets held by affiliated foundation 47,725 Other assets 63,421 Total assets acquired $695,413

Accounts payable and accrued expenses $58,189 Accrued payroll and related costs 37,538 Accrued professional liability and workers' compensation claims 88,328 Long-term obligations 70,780 Accrued pension obligation 88,466 Other liabilities 1,494 Total liabilities assumed 344,795 Unrestricted assets 348,425 Temporarily restricted assets 2,193 Total net assets contributed 350,618 Total net assets and liabilities $695,413

2017 2016 Acquisition related costs included in consolidated statements of operations $30 $1,069

17 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

On June 30, 2016 TJUH acquired a controlling interest in ROSH, a surgical specialty hospital located in Bensalem, Pennsylvania. At June 30, 2015, TJUH held a 15% noncontrolling interest. On June 30, 2016 TJUH acquired an additional 39% ownership interest for $66.7 million. The purchase included cash acquired of $4.1 million and assumed debt of $1.2 million. The acquisition of ROSH is an effort by the various healthcare organizations of TJU to increase access to high quality care to patients in the most cost effective, clinically appropriate setting. TJU allocated $9.0 million of the purchase price to a tradename, which was assigned an indefinite life. The goodwill of $132.6 million arising from the acquisition consists of the excess of the estimated aggregate value of ROSH over the estimated fair value of the identifiable net assets, noncontrolling interest and existing TJUH equity interest. The enterprise value of ROSH was estimated using the income approach under a controlling premise of value. The valuation of the acquisition date fair value of TJUH’s previously held 15% noncontrolling interest and other noncontrolling interests is based upon their proportionate share of the value of the aggregate equity less a discount for lack of control and marketability. The determination of the applicable discounts related to noncontrolling interests considered premiums paid to acquire control of comparable public companies. The following table summarizes the consideration paid for ROSH and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date of the noncontrolling interest in ROSH (in thousands):

Consideration: Cash $66,749 Fair value of the equity interest in ROSH held before acquisition 23,106 $89,855

Recognized amounts of identifiable assets acquired and liabilities assumed: Cash and cash equivalents $4,062 Accounts receivable 6,774 Inventory 1,134 Other assets 1,131 Equipment and leasehold improvements 11,369 Tradename 9,000 Liabilities (5,391) 28,079 28,079 Noncontrolling interest (70,856) Goodwill 132,632 $89,855

2017 2016 Acquisition related costs included in consolidated statements of operations $37 $410

18 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

3. NET ASSETS

Restricted net assets as of June 30, 2017 and 2016 are categorized as follows (in thousands):

2017 2016 Temporarily restricted Pledges $91,683 $92,957 Gifts restricted for operating or capital purposes and loan funds 140,830 114,724 Undistributed net gains on permanently restricted assets 109,104 94,646 Total - Temporarily restricted 341,617 302,327 Permanently restricted 307,479 291,049 Total restricted net assets $649,096 $593,376

Temporarily restricted net assets are available for the following purposes at June 30, 2017 and 2016 (in thousands): 2017 2016

University operations $23,967 $14,218 Clinical operations 109,963 90,183 Education and research 207,687 197,926 Total temporarily restricted net assets $341,617 $302,327

Permanently restricted net assets are restricted to investment in perpetuity, the income from which is expendable to support the following at June 30, 2017 and 2016 (in thousands):

2017 2016

University operations $9,060 $9,053 Clinical operations 92,067 88,658 Education and research 206,352 193,338 Total permanently restricted net assets $307,479 $291,049

19 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

4. ASSETS WHOSE USE IS LIMITED

Assets whose use is limited are presented in the consolidated balance sheets at June 30, 2017 and 2016 consist of the following (in thousands):

2017 2016

Board designated funds for plant replacement and expansion $129,728 $128,153 Board designated funds for self-insurance arrangements 32,197 19,617 Debt service funds 22,423 113 Women's Board and Medical Staff funds 662 517 Restricted for capital purposes 17,665 12,274 Deferred compensation fund 6,491 1,454 Escrow for acquisitions and other 414 600 Escrow account - Inspira Health Network collaboration - 10,034 Total $209,578 $172,762 Less current portion (18,885) (19,952) Noncurrent portion $190,693 $152,810

5. INVESTMENTS

Investments are presented in the consolidated balance sheets under the following classifications (in thousands): 2017 2016

Short-term investments $1,121,850 $1,055,436 Assets whose use is limited, current 18,885 19,952 Long-term investments 1,161,384 895,851 Assets whose use is limited, noncurrent 190,693 152,810 $2,492,812 $2,124,049

20 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

A summary of investments at June 30, 2017 and 2016 is as follows (in thousands):

2017 2016

Cash and cash equivalents $53,139 $36,740 Equity securities 103,895 5,876 Fixed income securities 205,610 719,467 Funds: Global equity 434,035 225,216 Fixed income 496,781 236,746 Real estate 11,914 11,118 Other mutual funds 662,794 434,059 Private equity 128,545 111,053 Real estate 20,007 23,143 Hedge funds 135,951 162,915 External trusts 105,319 97,530 Investments subject to equity method and other 134,823 60,186 $2,492,812 $2,124,049

Most private investment funds (private equity, real asset funds) are structured as closed-end, commitment-based investment funds where TJU commits a specified amount of capital upon inception of the fund (i.e., committed capital) which is then drawn down over a specified period of the fund's life. Such funds generally do not provide redemption options for investors and, subsequent to final closing, do not permit subscriptions by new or existing investors. Accordingly, TJU generally holds interests in such funds for which there is no active market, although in some situations, a transaction may occur in the "secondary market" where an investor purchases a limited partner’s existing interest and remaining commitment. The fund managers may value the underlying private investment based on an appraised value, discounted cash flow, industry comparable or some other method. TJU values these limited partnerships at NAV.

Unlike private investment funds, hedge funds are generally open-end funds as they typically offer subscription and redemption options to investors. The frequency of such subscriptions or redemptions is dictated by such fund's governing documents. The amount of liquidity provided to investors in a particular fund is generally consistent with the liquidity and risk associated with the underlying portfolio (i.e., the more liquid the investments in the portfolio, the greater the liquidity provided to the investors). The fund managers invest in a variety of securities which may not be quoted in an active market. Illiquid investments may be valued based on appraised value, discounted cash flow, industry comparable or some other method.

The methods described above may produce a fair value calculation that may not be indicative of a net realized value or reflective of future fair values. Furthermore, while TJU believes its 21 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016 valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

TJU’s direct investments in equity and fixed income securities are considered liquid assets because they are traded on established markets with enough participants to absorb sale transactions without materially impacting the current price of the asset. The underlying assets in TJU’s investments in equity and fixed income funds are traded on established markets with enough participants to absorb sale transactions without materially impacting the current price. The funds are priced daily and provide next day availability on all transaction requests. TJU’s investment in real asset funds provide for monthly liquidity on transaction requests.

Private equity investments have limited liquidity or redemption options. Liquidity for private investments can be accomplished via a secondary sale transaction. When available, distributions typically take place on a quarterly basis. TJU has made commitments to various private equity and real asset limited partnerships. The total amount of unfunded commitments is $113.5 million and $113.1 million at June 30, 2017 and 2016, respectively. TJU expects these funds to be called over the next 3 to 5 years.

2017 2016

Private equity $112,983 $110,858 Real estate 557 2,283 $113,540 $113,141

Hedge funds provide quarterly liquidity with 60 to 90 days notice prior to the quarter’s end limiting TJU’s ability to respond quickly to changes in market conditions. Liquidity of individual hedge funds vary based on various factors and may include "gates", "holdbacks" and "side pockets" imposed by the manager of the hedge fund, as well as redemption fees which may also apply. Depending on the redemption options available, it may be possible that the reported NAV represents fair value based on observable data such as ongoing redemption and/or subscription activity. In the cases of a holdback, TJU considers the significance of the holdback, its impact on the overall valuation and the associated risk that the holdback amount will not be fully realized based on a prior history of adjustments to the initially reported NAV.

For those private equity, real estate limited partnerships, or hedge-fund of fund transactions where valuations dated on the last business day of the calendar year are available, the valuations will be based on the most recent capital account statement (monthly/quarterly), adjusted for interim cash flow activity (contributions, distributions, fees).

Beneficial interests in perpetual trusts, which are administered by independent trustees, are mainly comprised of domestic and international equity securities and domestic fixed income securities.

22 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

TJU accounts for investments in the following entities under the equity method: Five Pointe Professional Liability Insurance Company (“Five Pointe”) and Mountain Laurel Risk Retention Group, Inc. (“MLRRG”) (49% owned joint venture insurance entities); Cassatt Insurance Company, Ltd. (“Cassatt”) (50% voting joint venture insurance entity); Accountable Care Organization (49% owned joint venture); MLJH, LLC (50% owned joint venture) and Health Partners Plans (12% owned joint venture). A summary of investments subject to the equity method and other investments is as follows at June 30, 2017 and 2016 (in thousands):

2017 2016

Equity method: Five Pointe $51,094 $43,780 MLRRG 3,530 4,578 Health Partners Plans 33,180 - ACO 3,015 87 MLJH, LLC 30,346 - Other equity method investments 2,138 2,383 Other 11,520 9,357 $134,823 $60,185 A summary of investments held under split-interest agreements is as follows at June 30, 2017 and 2016 (in thousands): 2017 2016

Charitable gift annuities $14,375 $13,380 Pooled income funds 974 10 Charitable lead trust 1,558 1,091 Charitable remainder trusts 9,851 9,982 $26,758 $24,463

23 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Investment income, realized gains and unrealized gains included in the consolidated statements of operations and changes in net assets are comprised of the following in 2017 and 2016 (in thousands):

2017 2016 Investment income included in operating income: Interest and dividends $7,979 $9,218 Endowment payout 20,322 13,632 Net realized gains on sales of investments 8,771 1,913 Bucks County Specialty Hospital, LLC - 1,823 Delaware Valley Accountable Care Organization (996) (2,453) Health Partners Plans 12,937 - MLJH, LLC 346 - 49,359 49,359 24,133 Investment income included in nonoperating income: Net realized and unrealized gains (losses) 127,529 (4,071) Interest and dividends 27,925 15,881 Endowment payout (20,322) (13,632) Gain on ROSH acquisition - 21,906 135,132 135,132 20,084 Total $184,491 $44,217

6. ENDOWMENT FUNDS

TJU’s endowments consist of 874 individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments. Net assets associated with each of these groups of funds are classified and reported based upon the existence or absence of donor-imposed restrictions.

At June 30, 2017, the endowment net asset composition by type of fund consisted of the following (in thousands):

Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted funds ($1,499) $156,420 $304,079 $459,000 Quasi-endowment funds 382,741 - - 382,741 Total funds $381,242 $156,420 $304,079 $841,741

24 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Changes in endowment net assets for the fiscal year ended June 30, 2017, consisted of the following (in thousands):

Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $355,595 $145,550 $287,281 $788,426 Investment return: Investment income 662 2,264 - 2,926 Gains (losses), realized and unrealized 36,416 24,492 5,416 66,324 Total investment gain (loss) 37,078 26,756 5,416 69,250 Contributions 62 3,058 11,041 14,161 Appropriation of assets for expenditure (20,322) (13,595) - (33,917) Transfers of University resources and other 8,829 (5,349) 341 3,821 Endowment net assets, end of year $381,242 $156,420 $304,079 $841,741

At June 30, 2016, the endowment net asset composition by type of fund consisted of the following (in thousands): Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted funds ($2,444) $145,550 $287,281 $430,387 Quasi-endowment funds 358,039 - - 358,039 Total funds $355,595 $145,550 $287,281 $788,426

Changes in endowment net assets for the fiscal year ended June 30, 2016, consisted of the following (in thousands): Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $271,151 $156,519 $280,363 $708,033 Investment return: Investment income 392 1,139 - 1,531 Gains (losses), realized and unrealized 1,614 3,313 (4,455) 472 Total investment gain (loss) 2,006 4,452 (4,455) 2,003 Contributions 588 1,625 11,380 13,593 Appropriation of assets for expenditure (13,633) (12,876) - (26,509) Transfers of University resources and other 95,483 (4,170) (7) 91,306 Endowment net assets, end of year $355,595 $145,550 $287,281 $788,426

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires TJU to retain as a fund of perpetual duration. Shortfalls of this nature, which are reported in unrestricted net assets, were $1.5 million and $2.4 million as of June 30, 2017 and 2016, respectively. These shortfalls resulted from unfavorable market fluctuations that occurred shortly after the investment of new permanently restricted contributions and continued appropriation for certain programs that was deemed prudent by TJU.

25 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

7. FAIR VALUE MEASUREMENT

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1 Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that TJU has the ability to access at the measurement date;

Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active;

Level 3 Inputs that are not currently observable.

Inputs are used in applying the various valuations techniques and broadly refer to the assumption that market participants use to make valuation decisions. An investments level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to TJU’s perceived risk of that instrument.

Level 1 - Investments, whose values are based on quoted market prices in active markets, are therefore classified within Level 1. Typically, securities traded on the NYSE, AMEX, NASDAQ and other major exchanges will be classified as Level 1. These assets include active listed equities, certain U.S. government obligations, mutual funds and certain money market securities. For investments regularly traded on any recognized securities or commodities exchange, the closing price on such exchange (or, if applicable, as reported on the consolidated transactions reporting system) on the last trading date at the end of the fiscal year is used. In the case of securities regularly traded in the over-the-counter market, the closing bid quotations for long positions and the closing asked quotation for short positions on the trading date ending on or preceding the end of the fiscal year is used.

Level 1 Liquidity – Daily based on quoted market value at time of transaction or at daily NAV.

Level 2 - Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. They include investments in common trust equity and fixed income funds, corporate grade bonds, high yield bonds and certain mortgage products. These assets are valued based on quoted market prices in active markets or dealer

26 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016 quotations and are categorized as Level 2. There were no transfers between Levels 1 and 2 during 2017 and 2016.

Level 2 Liquidity – Daily based on quoted market value at time of transaction or at daily NAV.

Level 3- Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 instruments include externally held trust funds.

Level 3 Liquidity – No liquidity available as the assets are mainly comprised of donor restricted externally held trust funds of which TJU has a perpetual interest in the annual income stream.

The following table presents the short term and long term investments, and assets whose use is limited carried on the consolidated balance sheets by level within the valuation hierarchy or NAV as of June 30, 2017 and 2016 (in thousands):

Level 1 Level 2 Level 3 NAV 2017 Cash and cash equivalents $53,139 $0 $0 $0 $53,139 Equity securities 101,395 - - 2,500 103,895 Fixed income securities 42,140 163,470 - - 205,610 Funds: Global equity 3,584 1,225 - 429,226 434,035 Fixed income 10,626 8,892 - 477,263 496,781 Real asset - 11,914 - - 11,914 Other mutual funds 397,046 134,197 - 131,551 662,794 Private equity - - - 128,545 128,545 Real estate - - - 20,007 20,007 Hedge funds - - - 135,951 135,951 External trusts - - 105,319 - 105,319 Total $607,930 $319,698 $105,319 $1,325,043 $2,357,989

Level 1 Level 2 Level 3 NAV 2016 Cash and cash equivalents $36,740 $0 $0 $0 $36,740 Equity securities 3,376 - - 2,500 5,876 Fixed income securities 156,511 562,956 - - 719,467 Funds: - - - - Global equity 17 - - 225,199 225,216 Fixed income - - - 236,746 236,746 Real asset - 11,118 - - 11,118 Other mutual funds 341,318 1,454 - 91,287 434,059 Private equity - - - 111,053 111,053 Real estate - - - 23,143 23,143 Hedge funds - - - 162,915 162,915 External trusts - - 97,530 - 97,530 Total $537,962 $575,528 $97,530 $852,843 $2,063,863

27 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Investments not subject to fair value leveling or fair value at NAV at June 30, 2017 and 2016 totaled $134.8 million and $60.2 million, respectively.

The fair value of TJU’s interest rate swaps related to its debt obligations are based on third- party valuations independent of the counterparties. As the fair values of interest rate swaps are determined based on inputs that are readily available or can be derived from information available in public markets, TJU has categorized interest rate swaps as Level 2.

The following table presents the other liabilities carried on the consolidated balance sheets by level within the valuation hierarchy as of June 30, 2017 and 2016 (in thousands):

Level 1 Level 2 Level 3 NAV 2017 Interest rate swaps $0 $30,576 $0 $0 $30,576

Level 1 Level 2 Level 3 NAV 2016 Interest rate swaps $0 $43,609 $0 $0 $43,609

The following tables include a roll-forward of the amounts for the year ended June 30, 2017 and 2016 (in thousands) for investments classified within Level 3.

External Trusts Balance at July 1, 2016 $97,530 Acquisitions - Dispositions - Realized gain/(loss), net - Unrealized gain/(loss), net 5,482 Transfers in 2,307 Balance at June 30, 2017 $105,319

External Trusts Balance at July 1, 2015 $100,225 Acquisitions - Dispositions - Realized gain/(loss), net - Unrealized gain/(loss), net (4,982) Transfers in 2,287 Balance at June 30, 2016 $97,530

28 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

8. PLEDGES RECEIVABLE

A summary of pledges receivable is as follows at June 30, 2017 and 2016, respectively (in thousands): 2017 2016 Unconditional promises expected to be collected in : Less than one year $28,713 $29,720 One year to five years 71,725 67,249 Over five years 65,930 71,600 166,368 166,368 168,569 Less: unnamortized discount and allowance for doubtful accounts (37,992) (39,926) $128,376 $128,643

The discount rate ranges from 0.4% to 5.5%. TJU’s largest pledge comprises 54% and 55% of the pledge receivable at June 30, 2017 and 2016, respectively.

9. LAND, BUILDINGS AND EQUIPMENT

2017 2016

Land and land improvements $148,353 $116,724 Buildings and building improvements 2,025,550 1,779,815 Equipment 1,689,092 1,378,811 Leasehold improvements 116,661 98,997 Construction in progress 68,809 92,674 Less: accumulated depreciation (2,186,843) (1,998,034) Total land, buildings and equipment, net $1,861,622 $1,468,987

TJU uses straight-line depreciation over the assets’ estimated lives, which are as follows:

Land improvements 10-20 years Buildings and building improvements 18-40 years Equipment 3-15 years Leasehold improvements 5-20 years

29 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

10. LONG-TERM OBLIGATIONS Interest Rate at Final Maturity June 30, 2017 2017 2016 Revenue bonds: Fixed rate obligations: 1993 Series A Revenue Bonds 2022 6.00% $5,930 $5,930 Unamortized issue costs (95) (114) 2006 Series A Revenue Bonds - 25,500 Unamortized premium and issue costs - 863 2006 Series B Revenue Bonds 2020 5.25% 16,455 35,510 Unamortized premium and issue costs 143 380 2009 Series A Revenue Bonds 2019 5.00% 13,980 110,770 Unamortized issue costs (73) (537) 2010 Series Revenue Bonds - 75,000 Unamortized issue costs - (256) 2012 Series Revenue Bonds 2042 3.00%-5.00% 40,620 40,950 Unamortized premium and issue costs 2,125 2,281 2012 Series A Revenue Bonds 2031 3.25%-5.00% 138,415 138,415 Unamortized premium and issue costs 8,631 9,976 2015 Series A Revenue Bonds 2051 3.00%-5.25% 301,805 301,805 Unamortized premium and issue costs 22,122 23,025 2017 Series A Revenue Bonds 2049 2.875%-5.50% 259,385 - Unamortized premium and issue costs 16,879 - Total fixed rate obligations 826,322 769,498 Variable rate obligations: 2012 Series B Revenue Bonds 2035 0.69% 50,000 50,000 2015 Series B Revenue Bonds 2046 1.30% 60,000 60,000 Unamortized issue costs (542) (563) 2015 Series C Revenue Bonds 2042 1.44% 34,865 35,125 Unamortized issue costs (135) (144) 2015 Series D Revenue Bonds 2042 1.51% 34,625 34,875 Unamortized issue costs (134) (143) 2015 Series E Revenue Bonds 2042 1.44% 34,870 35,125 Unamortized issue costs (135) (144) 2015 Series F Revenue Bonds 2042 1.50% 34,625 34,875 Unamortized issue costs (134) (143) 2015 Series G Revenue Bonds 2042 1.40% 20,800 20,950 Unamortized issue costs (80) (86) 2015 Series H Revenue Bonds 2042 2.20% 28,840 29,050 Unamortized issue costs (115) (123) 2017 Series B Revenue Bonds 2050 1.26% 50,565 - Unamortized issue costs (554) - 2017 Series C Revenue Bonds 2050 1.35% 365 - Unamortized issue costs (310) - Total variable rate obligations 347,416 298,654 Total Revenue Bonds 1,173,738 1,068,152

Capital lease obligations 2022 13,502 14,947 Mortgage notes 2037 13,420 - Other 2037 1,343 1,421 Total long-term obligations $1,202,003 $1,084,520

30 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

All TJU Revenue bonds were issued by certain financing authorities as limited obligations of the authorities payable from amounts received under loan agreements with TJU. The bonds are subject to optional redemption prior to maturity on specified dates at a price equal to 100% of the principal amount, plus any accrued interest. The bond agreements contain certain covenants, including financial covenants that require TJU to generate net revenue (as defined) at least equal to 110% of maximum annual debt service requirements. TJU was in compliance with this financial covenant requirement at June 30, 2017.

The 2017 Series A through C Revenue Bonds were issued in February 2017. The proceeds provided funds to refinance the 2006 Series A, a portion of the 2006 Series B, a portion of the 2009 Series A and the 2010 Series Revenue Bonds of TJU, to refinance the 2014 Series Revenue Bonds of Aria and to provide funds for certain capital projects. The 2017 Series C Revenue Bonds were structured as drawdown bonds and purchased by a certain financial institution. The financial institution agreed to advance funds available to be drawn through July 2, 2018 up to the maximum principal amount of $50.0 million. The principal amount of the 2017 Series C Revenue Bonds are increased as available funds are drawn. As of June 30, 2017, the principal balance outstanding is $0.4 million and $49.6 million is available to be drawn.

Maturities for long-term debt for each of the next five years are as follows (in thousands):

2018 $27,366 2019 23,325 2020 18,358 2021 15,135 2022 20,728 Thereafter $1,052,797

TJU had available unsecured lines of credit from various banks of $51.6 million and $45.0 million at June 30, 2017 and 2016, respectively, under which there were no borrowings at June 30, 2017 and 2016, respectively. No compensating balances are required or maintained.

31 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

11. DERIVATIVE FINANCIAL INSTRUMENTS

TJU entered into derivative transactions for the purpose of reducing the impact of fluctuations in interest rates under the terms of various interest rate swap contracts. The fair value of these derivative instruments at June 30, 2017 and 2016 in the consolidated balance sheets is as follows (in thousands):

Notional Notional Expiration Amount at June Amount at June Balance Sheet Fair Value at June Fair Value at Date TJU Receives TJU Pays 30, 2017 30, 2016 Location 30, 2017 June 30, 2016 67% of United Expiration States Dollar Noncurrent 2.98% $67,260 $67,260 $6,509 $10,749 2/1/34 LIBOR (one Liability Month)

67% of United Expiration States Dollar Noncurrent 4.542% $9,875 $15,540 $329 $999 5/1/18 LIBOR (one Liability Month)

67% of United Expiration States Dollar Noncurrent 3.925% $5,103 $5,103 $17,667 $23,726 9/1/45 LIBOR (one Liability Month) 68% of United Expiration States Dollar Noncurrent 3.98% $42,075 $42,200 $6,227 $9,174 5/1/27 LIBOR (one Liability Month)

68% of United 68% of United Expiration States Dollar States Dollar Noncurrent $73,250 $73,475 ($211) ($719) 5/1/27 LIBOR (Five Year LIBOR (one Liability minus 0.293%) Month)

68% of United 68% of United Expiration States Dollar States Dollar Noncurrent $42,075 $42,200 ($43) ($320) 5/1/27 LIBOR (Five Year LIBOR (one Liability minus 0.325%) Month) 68% of United States Dollar Expiration Noncurrent LIBOR (one 6.39% $3,878 - $98 - 4/23/18 Liability Month plus 1.60%)

32 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

The London InterBank Offered Rate (“LIBOR”) with a one month maturity ranged from 0.47% to 1.23% (average rate of 0.75%) in 2017. The LIBOR rate with the five year maturity ranged from 0.93% to 2.24% (average rate of 1.67%) in 2017. A nonoperating gain of $9.9 million for 2017 and a nonoperating loss of $17.6 million for 2016 is included in the consolidated statements of operations and changes in net assets for interest rate swap contracts.

2017 2016

Change in valuation of interest rate swap contracts $13,310 ($13,783) Net settlement payments with counterparties (3,435) (3,763) Nonoperating gain (loss) on interest rate swap contracts $9,875 ($17,546)

Accumulated losses on interest rate swap contracts of $30.6 million and $43.6 million at June 30, 2017 and 2016, respectively, are reflected in the consolidated balance sheets.

12. OPERATING LEASES

TJU has lease obligations for buildings, equipment and ambulatory facilities under various operating leases. Lease expenses charged to operations were $63.1 million and $45.7 million in 2017 and 2016, respectively. At June 30, 2017 the minimum future non-cancelable rental lease commitments are as follows (in thousands):

2018 $41,070 2019 35,891 2020 30,474 2021 25,054 2022 19,627 Thereafter 117,190 $269,306

13. EMPLOYEE BENEFIT PLANS

TJU has non-contributory defined benefit pension plans for certain full-time employees. The TJU and Abington plans are frozen to new entrants. Commensurate with the freeze of each of these plans to new entrants, existing employees that met certain age and years of service thresholds were eligible to remain in the plans and continue to earn benefits. The Aria plan is frozen for all participants. Benefits under the non-contributory defined benefit plans are based on the employee’s years of service and compensation during the years preceding retirement. Contributions to the plan are designed to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974.

33 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

The accounting guidance for defined benefit pension plans requires employers to recognize the overfunded or underfunded projected benefit obligation (“PBO”) of a defined benefit pension plan as an asset or liability in the balance sheet. The PBO represents the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future salary increases. The accounting guidance also requires employers to recognize annual changes in gains or losses, prior service costs, or other credits that have not been recognized as a component of net periodic pension cost through unrestricted net assets. Effective beginning with the fiscal year ending June 30, 2017, TJU changed the method used to calculate service cost and interest cost. The calculation of service cost and PBO will utilize a split discount rate approach, where separate discount rates are calculated for determining each based on their respective expected cash flows. Additionally, the calculation of the interest cost will begin to utilize an approach that applies the individual spot rates from the full yield curve against the expected benefit payments for each year rather than using the single equivalent discount rate applied to all future years. This change will be accounted for as a change in accounting estimate that is reflected prospectively. These changes do not impact the calculation of the PBO or the discount rate.

The components of the net pension plan financial position on the consolidated balance sheets are as follows (in thousands):

2017 2016 Change in projected benefit obligation: Benefit obligation, beginning of year $1,470,466 $1,271,828 Transfer in - Acquisition of Aria 244,335 - Service cost 38,578 35,428 Interest cost 55,745 57,945 Net experience loss (40,369) 157,495 Benefits paid (42,475) (52,230) Projected benefit obligation, end of year 1,726,280 1,470,466

Change in plan assets: Fair value of plan assets, beginning of year 989,365 982,445 Transfer in - Acquisition of Aria 159,234 - Actual return of plan assets 130,955 20,087 Employer contributions 39,800 39,063 Benefit payments (42,475) (52,230) Fair value of plan assets, end of year 1,276,879 989,365

Plan funded status ($449,401) ($481,101)

34 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Amounts recognized in unrestricted net assets consist of:

2017 2016

Net actuarial loss $404,187 $522,608

The accumulated benefit obligation at June 30, 2017 and 2016 was as follows:

2017 2016

Accumulated benefit obligation $1,579,677 $1,307,075

The components of net periodic benefit cost for the plans for the years ended June 30, 2017 and 2016 were as follows (in thousands): 2017 2016

Service cost $38,578 $35,428 Interest cost 55,745 57,945 Expected return on plan assets (84,474) (73,501) Amortization of actuarial loss 30,330 17,920 Net periodic benefit cost 40,179 37,792

Other changes in plan assets and benefit obligations recognized in unrestricted net assets: Net actuarial loss (86,848) 210,909 Actuarial loss (30,330) (17,920) Total recognized in unrestricted net assets (117,178) 192,989 Total recognized in net periodic benefit cost and unrestricted net assets ($76,999) $230,781

The estimated actuarial loss that will be amortized from unrestricted net assets during the upcoming fiscal year is $28.8 million.

35 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

The weighted average assumptions used to estimate the June 30 pension obligation were as follows:

2017 2016

Discount rate 3.99% 3.86% Rate of compensation increase 3.77% 3.71% Expected return on plan assets 7.43% 7.43%

The weighted average assumptions used to determine net periodic benefit costs were as follows: 2017 2016

Discount rate - service cost 3.98% 4.63% Discount rate - interest cost 3.27% 4.63% Rate of compensation increase 3.77% 3.78% Expected return on plan assets 7.43% 7.43%

A summary of the plans’ targeted and actual asset allocations are as follows:

Percentage of Percentage of Targeted Plan Assets Plan Assets Range June 30, 2017 June 30, 2016 Cash 0-5% 1% 2% Bonds 25-45% 28% 31% Global equity 45-65% 58% 62% Real estate and other 5-10% 12% 5% 100% 100%

The portfolios utilize a long-term asset allocation strategy that allows management to rebalance the asset allocation back to target levels on a monthly basis. Short-term compliance with the target ranges can be impacted by the severity of market conditions. The expected long-term rate of return for the plan’s assets are based on the historical return of each of the above categories, weighted based on the target allocations for each class. The assets of the defined benefit pension plan are invested in a manner that is intended to preserve the purchasing power of the plan’s assets and provide payments to beneficiaries. Thus, a rate of return objective of inflation plus 5% is targeted.

TJU expects to contribute $37.8 million during fiscal year 2018. 36 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Projected benefit payments for the next five years are as follows (in thousands):

2018 $49,798 2019 54,810 2020 60,255 2021 65,708 2022 71,183 2023 - 2027 438,095 $739,849

The following table presents the fair value of plan assets by level within the valuation hierarchy, as discussed in Note 6, as of June 30, 2017 and 2016 (in thousands):

Level 1 Level 2 Level 3 NAV 2017 Cash and cash equivalents $3,620 $15,383 $0 $0 $19,003 Equity securities 392,450 - - 90,663 483,113 Fixed income securities 2,512 72,934 - 157,827 233,273 Funds: Global equity - - - 255,142 255,142 Fixed income 11,121 32,475 - 86,465 130,061 Other mutual funds 107,355 - - - 107,355 Private equity 1,191 - - 1,627 2,818 Real estate - - - 589 589 Hedge funds - - - 45,525 45,525 Total $518,249 $120,792 $0 $637,838 $1,276,879

Level 1 Level 2 Level 3 NAV 2016 Cash and cash equivalents $9,275 $6,415 $0 $0 $15,690 Equity securities 310,117 - - 75,511 385,628 Fixed income securities 1,268 69,177 - 151,125 221,570 Funds: Global equity - - - 224,730 224,730 Fixed income - - - 89,242 89,242 Private equity 651 51 - 2,184 2,886 Real estate - - - 1,069 1,069 Hedge funds - - - 48,550 48,550 Total $321,311 $75,643 $0 $592,411 $989,365

37 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

Retirement benefits are also provided to certain employees through direct payments to various funds. Employees not subject to TJU’s defined benefit plans may be eligible to participate in one of the following defined contribution arrangements. TJU’s share of the cost of these benefits for the year ended June 30, 2017 and 2016 was as follows (in thousands):

Plan Description 2017 2016

TJU faculty and senior 9% to 13% of eligible compensation based administrators upon age $21,084 $20,104 TJU non-faculty and non- 4.5% of eligible compensation, plus union matching contribution of 25% of the first 6% of employee contributions 21,460 18,068 JUP 10% of eligible compensation for physicians and 3.5% to 5.5% of eligible compensation for non-physicians based upon years of service 15,667 14,873 Abington 2% to 5% of eligible compensation based upon years of service, plus matching contribution of 50% of the first $2,000 of employee contributions 4,114 2,918 Aria Matching contribution of 50% of the first 4% of employee contributions 2,988 - $65,313 $55,963

Participation in Multiemployer Defined Benefit Pension Plan

TJU is a participating employer in The Pension Fund for Hospital and Health Care Employees – Philadelphia and Vicinity (the Pension Fund), a jointly-trusted multiemployer defined benefit pension plan. The Pension Fund is operated for the benefit of Chapter 1199C of the American Federation of State, County and Municipal Employees (the Union). Information about the Pension Fund and the TJU’s participation is summarized as follows.

The employer identification number for the Pension Fund is 23-2627428. At the date the financial statements were issued Form 5500 was not available for the plan year ending in 2016. TJU’s contribution to the Pension Fund was $7.6 million and $6.2 million for the years ended June 30, 2017 and 2016, respectively. The contributions represent approximately 27% and 28% of the contributions to the Pension Fund, respectively. A six year collective- bargaining agreement was approved by the Union effective July 1, 2012. TJU contributions as

38 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016 a percentage of covered payroll to the Pension Fund for the year ending June 30, 2018 will be 22.25%.

The Pension Fund was determined to be in critical status (also referred to as red zone status) and endangered status (also referred to as yellow zone status) under the Pension Protection Act of 2006 for the plan years beginning January 1, 2016 and 2015, respectively. Accordingly, the Pension Fund is subject to a funding improvement plan. The zone status is based on information that TJU received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone status and yellow zone are generally less than 65% and 80% funded, respectively.

At January 1, 2016, the most recent date for which such information is available, the projected benefit obligation of the Pension Fund exceeded the plan assets by $253.7 million.

14. PROFESSIONAL LIABILITY CLAIMS

TJU maintains professional liability insurance under both self-insured and alternative risk financing insurance programs to fund for their potential professional and general liability claims. For all self-insured programs TJU accrues for estimated retained risk liability arising from both asserted and unasserted claims. The estimate of liability is based upon an analysis of historical claims data as prepared by independent actuaries.

For TJUHS (including JUP), Abington and Aria the primary layer of professional liability coverage is claims made coverage with limits of $500,000 per medical incident and $2.5 million annual aggregate per hospital and $500,000 per medical incident and $1.5 million annual aggregate per scheduled physician/resident. This primary layer of coverage is statutorily prescribed in Pennsylvania.

In addition for TJUHS, Abington and Aria non-healthcare provider entities are provided with shared limits of $1.0 million per medical incident and $3.0 million annual aggregate. Also provided on the TJUHS policy are individual limits of $1.0 million per medical incident and $3.0 million annual aggregate for dentists, as well as physicians/residents practicing in other states including Delaware, New Jersey and Maryland. For TJU a primary professional liability layer of coverage of $1.0 million per claim and $3.0 million in the aggregate is provided.

This primary layer of professional liability coverage is provided by MLRRG for TJU and TJUHS. MLRRG is a licensed captive insurance company qualified as a risk retention group domiciled in Vermont. TJU is a 49% owner of MLRRG. The remaining ownership interest is held by other regional non-profit hospitals and/or health systems.

MLRRG is reinsured by a non-profit 501(c)(3) protected cell insurance company, Five Pointe, domiciled in Delaware. Five Pointe reinsures 100% of the professional liability risks of TJU and TJUHS insured by MLRRG pursuant to a reinsurance agreement between Five Pointe and

39 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

MLRRG that limits MLRRG’s recourse for payment of any reinsured claims against TJU and/or TJUHS to the assets in the TJUH protected cell.

For Abington and Aria this primary layer of professional liability coverage is provided by Cassatt RRG (“CRRG”). CRRG is a licensed captive insurance company qualified as a risk retention group domiciled in Vermont. CRRG is owned and governed by various regional non-profit hospitals including a 25% voting interest by Abington and a 25% voting interest by Aria. CRRG is reinsured by Cassatt. Cassatt is owned by the same various regional nonprofit hospitals and is incorporated as an insurance company under the laws of Bermuda.

Pennsylvania’s Medical Care Availability and Reduction of Error Fund (the “MCARE Fund”) provides limits of $500,000 per claim and $1.5 million annual aggregate for TJUHS, Abington and Aria hospitals and per scheduled TJUHS, Abington and Aria physicians/residents excess of the primary layer of coverage described above. The annual assessments for MCARE Fund coverage are based on the schedule of occurrence rates approved by the Insurance Commissioner of Pennsylvania for the Pennsylvania Professional Liability Joint Underwriting Association multiplied by an annual assessment percentage. This assessment is recognized as an expense in the period incurred. No provision has been made for future MCARE Fund assessments as the unfunded portion of the MCARE Fund liability cannot be reasonably estimated.

For losses in excess of the primary and MCARE layers of coverage TJUHS retains and accrues for potential liabilities up to primary and $5.0 million each medical incident and $5.0 million aggregate excess of a $7.0 million each and every medical incident retention (inclusive of defense costs, and primary and MCARE payments). Accruals for the retained amounts are based on actuarially-determined estimates, which reflect a 65% confidence level and a 3% discount rate for 2017 and 2016. These estimates are based on historical information along with certain assumptions about future events. Changes in assumptions for such considerations as medical costs and actual experience could cause these estimates to change.

TJUHS maintains claims-made excess catastrophic professional liability insurance coverage through Five Pointe in the amount of $95.0 million per medical incident and $95.0 million annual aggregate which attaches excess of the primary, MCARE and retained limits of coverage described above. For TJU’s miscellaneous professional liability exposure the excess professional liability insurance coverage attaches excess of $1.0 million per claim and $3.0 million annual aggregate. Five Pointe reinsures 100% of this risk to seven reinsurers (ACE, XL, Lloyd’s Syndicates, Berkley, Zurich, Endurance and Swiss Re) currently rated at least A- by A.M. Best. A separate limit of $95.0 million per occurrence and $95.0 million aggregate is also maintained to provide liability insurance coverage excess of the general, auto, employers and aviation liability coverages.

For Abington and Aria, liabilities for potential professional liability losses in excess of the primary and MCARE layers, Cassatt provides coverage up to a $4.0 million per claim limit and through commercial reinsurance carriers currently rated at least A by A.M. Best provides 40 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016 layered excess professional liability coverage of $15.0 million per claim with a $48.0 million annual aggregate. In addition, CRRG provides an umbrella liability policy with limits of $49.0 million per occurrence and $49.0 million annual aggregate for the general, auto, employers and aviation liability exposures. The excess professional and umbrella policies coverage limits are shared with the various regional non-profit hospital owners of CRRG and Cassatt.

MLRRG provides a $2.0 million per occurrence and $4.0 million annual aggregate general liability coverage limit for TJU and TJUHS. The MLRRG retains 100% of the general liability coverage exposure.

CRRG provides a $1.0 million per occurrence and $2.0 million annual aggregate general liability coverage limit for Abington and Aria.

For MLRRG the premiums charged for the primary professional and general liability layers of coverage are determined by an independent actuary, based on loss and loss adjustment expense experience and other factors, at a 65% confidence level and a 3% discount rate for 2017 and 2016 and include a charge for premium tax and operating expenses.

For CRRG the premiums charged for the primary professional and general liability layers of coverage are determined by an independent actuary, based on loss and loss adjustment expense experience and other factors, at a 65% confidence level and a 3% discount rate for 2017 and 2016.

TJU has accrued professional liability claims of $487.6 million and $382.6 million at June 30, 2017 and 2016, respectively, of which $49.8 million and $42.7 million were current. Anticipated insurance recoveries associated with these liabilities for June 30, 2017 and 2016 is $201.7 and $169.4 million, respectively.

15. WORKERS’ COMPENSATION CLAIMS

TJU is self-insured for its workers’ compensation exposures. TJU accrues for its workers’ compensation liability based upon actuarial estimates using a discount rate of 3%. Accrued workers’ compensation liabilities were $31.6 million and $28.6 million at June 30, 2017 and 2016, respectively. These amounts are presented in the accompanying consolidated balance sheets.

41 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

16. COMMITMENTS AND CONTINGENCIES

Letters of Credit TJU had open letters of credit aggregating $34.1 million and $28.6 million at June 30, 2017 and 2016, respectively, primarily related to self-insurance arrangements for workers’ compensation. The letters of credit expire between August 30, 2017 and June 30, 2018.

Litigation TJU is involved in litigation and regulatory investigations arising in the ordinary course of business. In the opinion of management, all such matters are adequately covered by commercial insurance or by accruals, and if not so covered, are without merit or are of such kind, or involve such amounts, as would not have a material adverse effect on the financial position or results of operations of TJU.

17. FUNCTIONAL CLASSIFICATION

Expenses for the years ended June 30, 2017 and 2016 are categorized on a functional basis as follows (in thousands):

Clinical Sponsored Auxilliary Academic Student Institutional Operations Instruction Programs Activities Support Services Support Total

Salaries and wages $1,522,811 $69,463 $73,559 $7,785 $3,173 $3,774 $115,275 $1,795,840 Employee benefits 356,103 18,062 16,955 391 562 1,215 30,578 423,866 Supplies 623,873 3,234 15,590 213 369 299 7,411 650,989 Purchased services 282,655 5,088 2,972 2,032 326 304 42,626 336,003 Depreciation and amortization 170,475 10,516 12,545 6,056 - 86 - 199,678 Interest 27,707 3,582 3,272 3,518 - 3 5 38,087 Insurance 77,283 896 91 - - - 937 79,207 Utilities 35,731 4,222 4,057 1,226 24 345 1,937 47,542 Rent 39,731 2,042 1,694 344 1 117 9,273 53,202 Other expenses 184,734 20,167 19,261 21,587 2,254 455 30,311 278,769 Total, June 30, 2017 $3,321,103 $137,272 $149,996 $43,152 $6,709 $6,598 $238,353 $3,903,183

Total, June 30, 2016 $2,538,204 $124,711 $138,468 $40,288 $5,911 $5,885 $190,877 $3,044,344

42 Thomas Jefferson University Notes to Consolidated Financial Statements June 30, 2017 and 2016

18. NONCONTROLLING INTEREST

TJU has a controlling interest in certain joint ventures in healthcare related organizations; the Riverview Surgery Center at the Navy Yard, LP (“Riverview”, a 51% owned joint venture); Jefferson University Radiology Associates (“JURA”, an 80% owned joint venture); Jefferson Comprehensive Concussion Center (“JCCC”, a 66% owned joint venture); Rothman Orthopaedic Specialty Hospital, LLC (“ROSH”, a 54% owned joint venture). The amount not owned by TJU is shown as a noncontrolling interest. The following table presents the changes in consolidated unrestricted net assets attributable to the controlling financial interest of TJU and the noncontrolling interest (in thousands):

Noncontrolling Interests Controlling Consolidated Interest Riverview JURA JCCC ROSH Total Total

Balance, June 30, 2015 $1,745,968 $3,372 $459 $459 $0 $4,290 $1,750,258 Income from Operations 91,697 2,195 403 20 - 2,618 94,315 Distributions to NCI - (2,695) (500) - - (3,195) (3,195) ROSH acquisition - - - - 70,856 70,856 70,856 Other changes, net (174,268) - - - - - (174,268) Balance, June 30, 2016 1,663,397 2,872 362 479 70,856 74,569 1,737,966 Income from Operations 39,169 2,159 465 20 6,998 9,642 48,811 Distributions to NCI - (2,940) (393) - (5,382) (8,715) (8,715) Other changes, net 604,300 - - - - - 604,300 Balance, June 30, 2017 $2,306,866 $2,091 $434 $499 $72,472 $75,496 $2,382,362

43 Supplemental Information Thomas Jefferson University Unaudited Pro Forma Information (in thousands)

TJU's operating revenues, gains and other support, changes in unrestricted net assets, temporarily restricted net assets and permanently restricted net assets for the year ended June 30, 2016, as if the acquisition of the controlling interest in Rothman Orthopaedic Specialty Hospital, LLC by Thomas Jefferson University Hospital and Aria Health System by Thomas Jefferson University had occurred at July 1, 2015, are:

Change in Change in Operating Change in Temporarily Permanently Revenues, Gains Unrestricted Net Restricted Net Restricted Net & Other Support Assets Assets Assets

Supplemental pro forma information for 7/1/2015 to 6/30/2016 $3,789,979 ($57,392) $22,346 $7,338

44 Thomas Jefferson University Unaudited Consolidating Balance Sheets June 30, 2017 and 2016 (In Thousands)

2017 2016

TJU Abington Aria Eliminations Consolidated TJU Abington Eliminations Consolidated Assets Current assets: Cash and cash equivalents $139,647 $80,580 $39,571 - $259,798 $119,747 $181,996 - $301,743 Short-term investments 261,372 844,199 16,279 - 1,121,850 413,933 641,503 - 1,055,436 Accounts receivable, less allowance for doubtful accounts of $88,633 in 2017 and $63,825 in 2016 770,149 93,034 56,752 (422,416) 497,519 291,077 90,423 (539) 380,961 Inventory 44,316 4,070 6,005 - 54,391 34,854 3,896 - 38,750 Pledges receivable 18,611 6,102 - - 24,713 21,554 8,166 - 29,720 Insurance recoverable 13,607 13,144 4,589 - 31,340 15,376 12,493 - 27,869 Assets whose use is limited, current 18,885 - - - 18,885 19,952 0 - 19,952 Other current assets 30,033 7,384 8,842 - 46,259 19,163 8,412 - 27,575 Total current assets 1,296,620 1,048,513 132,038 (422,416) 2,054,755 935,656 946,889 (539) 1,882,006

Long-term investments 861,518 136,069 163,797 - 1,161,384 763,819 132,032 - 895,851 Assets whose use is limited, noncurrent 125,959 46,670 18,064 - 190,693 140,423 12,387 - 152,810 Assets held by affiliated foundations 9,123 - 52,705 - 61,828 8,624 - - 8,624 Pledges receivable 97,285 6,378 0 - 103,663 92,961 5,962 - 98,923 Goodwill, net 147,101 14,052 0 - 161,153 146,483 13,828 - 160,311 Insurance recoverable 108,014 32,910 34,557 - 175,481 111,538 32,926 - 144,464 Loans receivable from students, net 26,581 - - - 26,581 26,810 - - 26,810 Land, buildings and equipment, net 1,072,277 497,877 291,468 - 1,861,622 999,156 469,831 - 1,468,987 Other noncurrent assets 23,023 6,179 1,760 - 30,962 23,331 5,340 - 28,671 Total assets $3,767,501 $1,788,648 $694,389 ($422,416) $5,828,122 $3,248,801 $1,619,195 ($539) $4,867,457

Liabilities and Net Assets

Current liabilities: Current portion of: Long-term obligations 25,548 43 4,341 - 29,932 12,517 11,078 - 23,595 Accrued professional liability claims 27,644 12,778 9,336 - 49,758 30,566 12,108 - 42,674 Accrued workers' compensation claims 7,834 366 2,101 - 10,301 8,381 385 - 8,766 Deferred revenues 13,881 - - - 13,881 15,710 - - 15,710 Accounts payable and accrued expenses 178,565 57,857 55,290 (258) 291,454 174,759 68,986 (539) 243,206 Accrued payroll and related costs 142,567 53,020 33,435 - 229,022 135,300 62,826 - 198,126 Grant and contract advances 19,663 - - - 19,663 16,412 - - 16,412 Total current liabilities 415,702 124,064 104,503 (258) 644,011 393,645 155,383 (539) 548,489

Long-term obligations 1,162,824 364,846 66,559 (422,158) 1,172,071 757,338 303,587 - 1,060,925 Accrued pension liability 170,303 218,292 60,806 - 449,401 191,685 289,416 - 481,101 Federal student loan advances 10,114 - - - 10,114 15,651 - - 15,651 Deferred revenues 10,095 - - - 10,095 7,339 - - 7,339 Accrued professional liability claims 317,378 45,535 74,899 - 437,812 294,690 45,272 - 339,962 Accrued workers' compensation claims 8,218 6,544 6,490 - 21,252 12,823 6,998 - 19,821 Interest rate swap contracts 30,478 - 98 - 30,576 43,609 - - 43,609 Other noncurrent liabilities 5,373 13,093 2,866 - 21,332 5,863 13,355 - 19,218 Total liabilities 2,130,485 772,374 316,221 (422,416) 2,796,664 1,722,643 814,011 (539) 2,536,115

Net assets: Unrestricted 1,072,894 858,098 375,874 - 2,306,866 1,001,972 661,425 - 1,663,397 Noncontrolling interest in joint ventures 75,496 - - - 75,496 74,569 - - 74,569 Temporarily restricted 259,482 79,841 2,294 - 341,617 234,000 68,327 - 302,327 Permanently restricted 229,144 78,335 0 - 307,479 215,617 75,432 - 291,049 Total net assets 1,637,016 1,016,274 378,168 - 3,031,458 1,526,158 805,184 - 2,331,342

Total liabilities and net assets $3,767,501 $1,788,648 $694,389 ($422,416) $5,828,122 $3,248,801 $1,619,195 ($539) $4,867,457

45 Thomas Jefferson University Unaudited Consolidating Statements of Operations and Changes in Unrestricted Net Assets For the Years Ended June 30, 2017 and 2016 (In Thousands)

2017 2016 TJU Abington Aria Eliminations Consolidated TJU Abington Eliminations Consolidated Operating revenues, gains and other support: Net patient service revenue $2,057,989 $887,671 $581,260 $0 $3,526,920 $1,928,441 $844,619 $0 $2,773,060 Provision for bad debts (75,822) (20,962) (28,020) - (124,804) (77,596) (25,118) - (102,714) Net patient service revenue less provision for bad debts 1,982,167 866,709 553,240 - 3,402,116 1,850,845 819,501 - 2,670,346 Grants and contracts 99,068 295 400 - 99,763 91,186 403 - 91,589 Tuition and fees, net 128,378 1,214 4,071 - 133,663 119,871 2,818 - 122,689 Investment income 29,893 1,083 18,383 - 49,359 23,975 158 - 24,133 Contributions 3,490 979 - - 4,469 3,862 - - 3,862 Other revenue 170,918 24,439 28,825 (2,492) 221,690 163,345 25,399 (280) 188,464 Net assets released from restrictions 30,541 10,393 - - 40,934 24,485 13,091 - 37,576 Total operating revenues, gains and other support 2,444,455 905,112 604,919 (2,492) 3,951,994 2,277,569 861,370 (280) 3,138,659

Operating expenses: Salaries and wages 1,105,820 407,695 281,600 725 1,795,840 998,773 381,488 201 1,380,462 Employee benefits 259,693 118,047 46,126 - 423,866 261,311 100,497 - 361,808 Supplies 426,818 137,365 86,806 - 650,989 404,285 132,133 - 536,418 Purchased services 143,246 92,021 100,736 - 336,003 108,338 95,885 - 204,223 Depreciation and amortization 117,611 49,152 32,915 - 199,678 110,654 48,318 - 158,972 Interest 24,419 11,398 2,270 - 38,087 23,454 12,460 - 35,914 Insurance 50,293 8,324 20,590 - 79,207 45,567 7,129 - 52,696 Utilities 32,942 7,682 6,918 - 47,542 30,370 7,986 - 38,356 Rent 44,628 8,574 - - 53,202 37,512 8,184 - 45,696 Other 219,361 27,557 35,068 (3,217) 278,769 202,817 27,463 (481) 229,799 Total operating expenses 2,424,831 867,815 613,029 (2,492) 3,903,183 2,223,081 821,543 (280) 3,044,344

Income from operations 19,624 37,297 (8,110) - 48,811 54,488 39,827 - 94,315

Nonoperating items and other changes in unrestricted net assets, net: Gain (loss) on investments, net 55,784 63,043 8,702 - 127,529 2,778 (6,849) - (4,071) Investment income (loss) net of amounts classified as operating revenue (19,599) 20,211 6,991 - 7,603 (13,083) 15,332 - 2,249 Gain on investment in ROSH acquisition - - - - - 21,906 - - 21,906 Interest rate swap contracts 9,696 - 179 - 9,875 (17,546) - - (17,546) Reclassification of net assets (2,399) - - - (2,399) (173) - - (173) Contributions and government grants for capital projects 818 - 5,700 - 6,518 4,088 - - 4,088 Value of noncontrolling interest - ROSH acquisition - - - - - 70,856 - - 70,856 Net assets released from restrictions used for purchase of property and equipment 2,341 2,795 - - 5,136 8,494 2,975 - 11,469 Donated capital received - - - - - 799 - - 799 Decrease (Increase) in pension liability 21,365 81,147 14,666 - 117,178 (44,617) (148,372) - (192,989) Distributions to noncontrolling interest (8,715) - - - (8,715) (3,195) - - (3,195) Loss on defeasance of debt (7,066) (7,820) (679) - (15,565) - - - - Contribution received in business combination - - 348,425 - 348,425 - - - - Increase (decrease) in unrestricted net assets from nonoperating items and other changes in net assets 52,225 159,376 383,984 - 595,585 30,307 (136,914) - (106,607)

Increase (decrease) in unrestricted net assets $71,849 $196,673 $375,874 $0 $644,396 $84,795 ($97,087) $0 ($12,292)

APPENDIX B-2

UNAUDITED CONSOLIDATING SCHEDULES

[THIS PAGE INTENTIONALLY LEFT BLANK] ThomasJeffersonUniversity UnauditedProFormaConsolidatingStatementofOperations FortheEightMonthPeriodEndedFebruary28,2018 (InThousands)

Unaudited ProForma TJU(1) Kennedy(2) Magee(3) Total Operatingrevenues,gainsandothersupport: Netpatientservicerevenue $2,712,829 $108,289 $31,383 $2,852,501 Provisionforbaddebts (88,387) (6,301) (1,625) (96,313) Netpatientservicerevenuelessprovisionforbaddebts 2,624,441 101,988 29,758 2,756,187 Grantsandcontracts 69,804 69,804 Tuitionandfees,net 141,849 141,849 Investmentincome 20,374 20,374 Contributions 3,747 3,747 Otherrevenue 177,388 922 2,074 180,384 Netassetsreleasedfromrestrictions 26,693 35 26,728 Totaloperatingrevenues,gainsandothersupport 3,064,297 102,945 31,832 3,199,074

Operatingexpenses: Salaries,wagesandemployeebenefits 1,731,052 57,935 23,275 1,812,262 Suppliesandother 1,095,515 40,992 7,800 1,144,307 Depreciationandamortization 158,146 4,927 1,617 164,690 Interest 30,606 752 31,358 Insurance 54,916 1,565 361 56,842 Totaloperatingexpenses 3,070,234 106,171 33,053 3,209,458

Lossfromoperations ($5,938) ($3,226) ($1,221) ($10,385)

(1) TJU activity incudes amounts related to Kennedy Health from 9/1/17 (the date of acquisition) thought 2/28/18 and Magee from 1/1/18 (the date of acquisition) to 2/28/17 (2) Kennedy activity includes amounts from 7/1/17 to 8/31/17 (pre-TJU acquisition) (3) Magee activity includes amounts from 7/1/17 to 12/31/17 (pre-TJU acquisition)

B-2-1 ThomasJeffersonUniversity UnauditedProFormaConsolidatingStatementofOperations FortheEightMonthPeriodEndedFebruary28,2017 (InThousands)

Unaudited ProForma TJU PhilaUniv KennedyMagee Total Operatingrevenues,gainsandothersupport: Netpatientservicerevenue $2,325,519 $0 $428,082 $40,068 $2,793,669 Provisionforbaddebts (70,735) (22,163) (1,722) (94,620) Netpatientservicerevenuelessprovisionforbaddebts 2,254,784 405,919 38,346 2,699,049 Grantsandcontracts 64,568 1,189 65,757 Tuitionandfees,net 83,968 50,747 134,715 Investmentincome 18,734 924 (500) 19,158 Contributions 3,006 630 236 3,872 Otherrevenue 147,695 10,280 5,723 4,652 168,350 Netassetsreleasedfromrestrictions 26,162 731 200 27,093 Totaloperatingrevenues,gainsandothersupport 2,598,915 64,501 411,578 42,998 3,117,992

Operatingexpenses: Salaries,wagesandemployeebenefits 1,476,478 32,091 217,729 30,740 1,757,038 Suppliesandother 873,511 22,501 151,468 10,827 1,058,307 Depreciationandamortization 131,429 3,723 18,645 2,136 155,933 Interest 24,796 1,775 2,104 28,675 Insurance 60,385 503 6,031 66,919 Totaloperatingexpenses 2,566,599 60,593 395,977 43,703 3,066,872

Incomefromoperations $32,316 $3,908 $15,601 ($705) $51,120

B-2-2 ThomasJeffersonUniversity UnauditedProFormaConsolidatingStatementofOperationsandChangesinUnrestrictedNetAssets FortheYearEndedJune30,2017 (InThousands)

Acquisition Unaudited Accounting ProForma TJU PhilaUniv Kennedy Magee Adjustments Total Operatingrevenues,gainsandothersupport: Netpatientservicerevenue $3,526,920 $0 $644,767 $61,370 $0 $4,233,057 Provisionforbaddebts (124,804) (29,677) (2,857) (157,338) Netpatientservicerevenuelessprovisionforbaddebts 3,402,116 615,090 58,513 4,075,719 Grantsandcontracts 99,763 1,783 101,546 Tuitionandfees,net 133,663 76,120 209,783 Investmentincome 49,359 1,385 60 50,804 Contributions 4,469 1,366 5,835 Otherrevenue 221,690 15,421 9,798 3,982 250,891 Netassetsreleasedfromrestrictions 40,934 1,096 374 42,404 Totaloperatingrevenues,gainsandothersupport 3,951,994 97,171 625,262 62,555 4,736,982

Operatingexpenses: Salaries,wagesandemployeebenefits 2,219,706 48,264 362,192 45,082 2,675,244 Suppliesandother 1,366,505 33,588 209,119 15,280 1,624,492 Depreciationandamortization 199,678 5,621 27,925 3,117 236,341 Interest 38,087 2,662 3,028 43,777 Insurance 79,207 754 9,109 1,280 90,350 Totaloperatingexpenses 3,903,183 90,889 611,373 64,759 4,670,204

Income(loss)fromoperations 48,811 6,282 13,889 (2,204) 66,778

Nonoperatingitemsandotherchangesinunrestrictednetassets,net: Gainoninvestmentsandinvestmentincome,net 135,132 1,358 9,101 7,461 153,052 Interestrateswapcontracts 9,875 9,875 Reclassificationofnetassets (2,399) (2,399) Contributionsandgovernmentgrantsforcapitalprojects 6,518 3,240 9,758 Netassetsreleasedfromrestrictionsusedforpurchaseof propertyandequipment 5,136 5,136 Other (25) (176) (201) Changeinpensionliability 117,178 (5,754) 7,783 119,207 Distributiontononcontrollinginterest (8,715) (8,715) Lossondefeasanceofdebt (15,565) (15,565) Contributionreceivedinbusinesscombination 348,425 (348,425) Changeinunrestrictednetassetsfromnonoperatingitemsandotherchangesinnetassets 595,585 1,333 3,347 18,308 (348,425) 270,148

Increaseinunrestrictednetassets $644,396 $7,615 $17,236 $16,104 ($348,425) $336,926

B-2-3 ThomasJeffersonUniversity UnauditedProFormaConsolidatingStatementofOperationsandChangesinUnrestrictedNetAssets FortheYearEndedJune30,2016 (InThousands)

Unaudited ProForma TJU Aria PhilaUniv KennedyMagee Total Operatingrevenues,gainsandothersupport: Netpatientservicerevenue $2,773,060 $585,619 $0 $612,065 $60,232 $4,030,976 Provisionforbaddebts (102,714) (27,454) (29,822) (671) (160,661) Netpatientservicerevenuelessprovisionforbaddebts 2,670,346 558,165 582,243 59,561 3,870,315 Grantsandcontracts 91,589 940 92,529 Tuitionandfees,net 122,689 75,953 198,642 Investmentincome 24,133 390 1,276 12 25,811 Contributions 3,862 639 4,501 Otherrevenue 188,464 43,520 16,538 12,393 4,110 265,025 Netassetsreleasedfromrestrictions 37,576 1,064 230 38,870 Totaloperatingrevenues,gainsandothersupport 3,138,659 602,075 96,410 594,866 63,683 4,495,693

Operatingexpenses: Salaries,wagesandemployeebenefits 1,742,270 322,646 47,529 337,799 43,504 2,493,748 Supplies 1,054,492 230,110 32,051 189,880 17,590 1,524,123 Depreciationandamortization 158,972 33,259 5,322 27,462 3,034 228,049 Interest 35,914 1,063 3,111 3,217 43,305 Insurance 52,696 19,344 729 7,727 515 81,011 Totaloperatingexpenses 3,044,344 606,422 88,742 566,085 64,643 4,370,236

Income(loss)fromoperations 94,315 (4,347) 7,668 28,781 (960) 125,457

Nonoperatingitemsandotherchangesinunrestrictednetassets,net: Gain(loss)oninvestmentsandinvestmentincome,net (1,822) (1,488) (448) 327 (840) (4,271) GainoninvestmentinROSHacquisition 21,906 21,906 Interestrateswapcontracts (17,546) (17,546) Reclassificationofnetassets (173) (173) Contributionsandgovernmentgrantsforcapitalprojects 4,088 118 4,206 ValueofnoncontrollinginterestROSHacquisition 70,856 70,856 Netassetsreleasedfromrestrictionsusedforpurchaseof propertyandequipment 11,469 11,469 Other 799 (929) (177) (106) (413) Changeinpensionliability (192,989) (49,697) 468 (4,282) (246,500) Distributiontononcontrollinginterest (3,195) (3,195) Changeinunrestrictednetassetsfromnonoperatingitemsandotherchangesinnetassets (106,607) (52,114) (625) 795 (5,110) (163,661)

Increase(decrease)inunrestrictednetassets ($12,292) ($56,461) $7,043 $29,576 ($6,070) ($38,204)

B-2-4

APPENDIX C

DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT

APPENDIX C

Table of Contents

Page

DEFINITIONS OF CERTAIN TERMS IN THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT ...... C-1 SUMMARY OF THE 2018D INDENTURE ...... C-15 Trust Estate ...... C-15 Determination of Interest Rates ...... C-15 Funds and Accounts ...... C-16 Moneys to Be Held for All Bondholders, With Certain Exceptions ...... C-18 Investment or Deposit of Funds ...... C-19 Liquidity Facilities ...... C-20 Tax Covenants ...... C-22 Events of Default ...... C-22 Remedies ...... C-23 Amendments and Supplements ...... C-26 Defeasance ...... C-27 Resignation and Removal of Trustee ...... C-28 Limitations on Recourse ...... C-29 SUMMARY OF THE 2018D LOAN AGREEMENT ...... C-31 Loan of Proceeds ...... C-31 Disbursements from the Costs of Issuance Fund ...... C-31 Payments by TJU ...... C-31 Loan Payments ...... C-31 Rebate Fund ...... C-31 No Set-Off ...... C-31 Prepayments ...... C-31 Other Payments by TJU ...... C-31 Assignment of 2018D Loan Agreement to Trustee ...... C-32 Security for Indebtedness ...... C-32 Additional Indebtedness ...... C-32 TJU Covenants ...... C-32 Events of Default ...... C-34 Remedies ...... C-35 Amendments ...... C-35

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DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT

The following are summaries of certain provisions of the 2018D Indenture and the 2018D Loan Agreement. The summaries should not be regarded as full statements of the documents themselves or of the portions summarized. For complete statements of the provisions thereof, reference is made to the documents in their entireties, copies of which will be available for inspection at the designated corporate trust office of the Trustee.

DEFINITIONS OF CERTAIN TERMS IN THE 2018D INDENTURE AND THE 2018D LOAN AGREEMENT

The following definitions apply to the summaries of the 2018D Indenture and the 2018D Loan Agreement, and to terms not otherwise defined in the Official Statement. Terms used but not defined in this Appendix C may be found in the 2018D Indenture and the 2018D Loan Agreement.

“2018D Indenture” means the Series 2018D Trust Indenture dated as of May 1, 2018, by and between the Authority and the Trustee.

“2018D Loan Agreement” means the Series 2018D Loan Agreement dated as of May 1, 2018, by and between the Authority and TJU.

“2018D Master Note” means the Thomas Jefferson University Obligated Group Master Note (MCHEHA - TJU Series 2018D Bonds), Obligation No. 35, issued by the Obligated Group under the Master Indenture.

“Act” means the Municipality Authorities Act, 53 Pa. Cons. Stat. §5601 et seq., as amended.

“Administrative Expenses” means all expenses of the Authority which are properly chargeable as administrative expenses under Generally Accepted Accounting Principles, including, without limitation, (a) fees and expenses of the Trustee, including annual fees and the fees and expenses of its counsel; (b) fees and expenses of the Authority (including any initial Authority fee) reasonably necessary and fairly attributable directly or indirectly to the Bonds, the Project and the administration thereof, including, without limiting the generality of the foregoing, fees and expenses of the Authority’s employees, consultants, Certified Public Accountant, Counsel and other professional advisors; and (c) reasonable fees and expenses of counsel to the Authority and the Trustee.

“Affiliate” means, each Person that, directly or indirectly, controls or is controlled by or is under common control with TJU. For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the power, directly or indirectly, either to (i) vote 50% or more of the securities having ordinary voting power for the election of directors, trustees or similar governing body of such Person, or (ii) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Alternate Liquidity Facility” means any bond purchase agreement, letter of credit or other liquidity enhancement or support facility including self-liquidity entered into with respect to the Series 2018D Bonds pursuant to the 2018D Indenture; provided, however, that an extension of an existing Liquidity Facility shall not constitute an Alternate Liquidity Facility for purposes of the 2018D Indenture.

C-1

“Authority” means the Montgomery County Higher Education and Health Authority.

“Authority Representative” means the Chairman, the Vice-Chairman, or the Executive Director thereof, any other officer of the Authority or other person designated by Certified Resolution of the governing body of the Authority to act for any of the foregoing, either generally or with respect to the execution of any particular document or other specific matter.

“Bank Bond” means a Series 2018D Bond which is registered in the name of the Liquidity Facility Issuer pursuant to a purchase under the Liquidity Facility except during any period in which such Bond is deemed not to be a Bank Bond pursuant to the Liquidity Facility.

“Bank Bond Rate” means the rate at which interest accrues on Bank Bonds, which rate is set forth in the Liquidity Facility.

“Bond Counsel” means an attorney-at-law or a firm of attorneys of nationally recognized standing in matters pertaining to the exclusion from gross income for federal income tax purposes of interest on bonds issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States of America, and, except as otherwise provided in the Indenture, selected by TJU and not unsatisfactory to the Trustee and the Authority.

“Bondholder” or “holder” or “Owner” or “Holder” (when used with respect to Bonds) means the Person in whose name any Bond is registered pursuant to the 2018D Indenture

“Bond Year” means the period beginning on the date of delivery of and payment for the Series 2018D Bonds and ending on August 31, 2018 and each one-year period thereafter commencing on September 1 of each year.

“Business Day” means any day other than a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city or cities in which the Principal Offices of the Trustee, the Tender Agent or the Remarketing Agent are located or the city in which demands for the purchase of Series 2018D Bonds under the Liquidity Facility are required to be made are authorized or required by law or executive order to close, provided that for the purposes of determining One Month LIBOR or Three Month LIBOR, Business Day shall mean a day on which banks in New York, New York and London, England are open for the transaction of international business or any day that the payment system of the U.S. Federal Reserve is not operational.

“Calculation Agent” means with respect to any Conversion of the 2018D Bonds to an Index Floating Rate Period, a Calculation Agent appointed by TJU, its successors or assigns.

“Certified Public Accountant” means an independent accounting firm which is appointed by TJU for the purpose of examining and reporting on or passing on questions relating to its financial statements, has all certifications necessary for the performance of such services and, in the Authority’s reasonable judgment, is not unsatisfactory to the Authority.

“Certified Resolution” means, as the context requires: (i) one or more resolutions of the governing body of the Authority, certified by the Secretary, Assistant Secretary, Executive Director or Assistant Executive Director of the Authority to have been duly adopted or enacted and to be in full force and effect as of the date of certification; (ii) one or more resolutions of the governing body of TJU or a duly authorized committee thereof, certified by the Secretary or Assistant Secretary of TJU or other officer serving in a similar capacity, to have been duly adopted and to be in full force and effect as of the date of certification; or (iii) one or more resolutions of the governing body of any other Person or a duly

C-2

authorized committee thereof, certified by the Secretary or Assistant Secretary of such Person or other Person serving in a similar capacity to have been duly adopted and to be in full force and effect as of the date of certification.

“Code” or “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and, when appropriate, any statutory predecessor or successor thereto, and all applicable regulations (whether proposed, temporary or final) thereunder and any applicable official rulings, announcements, notices, procedures and judicial determinations relating to the foregoing.

“Commercial Paper Rate” means the Interest Rate Mode for the Series 2018D Bonds in which the interest rate for each Series 2018D Bond is determined with respect to any Series 2018D Bond as provided in the 2018D Indenture.

“Commercial Paper Rate Period” means with respect to any Series 2018D Bond, each period determined for such Series 2018D Bond as provided in the 2018D Indenture.

“Conversion” means any conversion from time to time in accordance with the terms of the 2018D Indenture of the Series 2018D Bonds (i) from one Interest Rate Mode to another Interest Rate Mode or (ii) from one Index Floating Rate Period to another Index Floating Rate Period.

“Conversion Date” means the first date any Conversion becomes effective.

“Costs of Issuance Fund” means the fund of such name established pursuant to the 2018D Indenture.

“Counsel” means an attorney-at-law or law firm (which may be internal counsel for TJU or for the Authority) not unsatisfactory to the Trustee.

“Daily Rate” means the Interest Rate Mode for the Series 2018D Bonds in which the interest rate on the Series 2018D Bonds is determined on each Business Day in accordance with the 2018D Indenture.

“Daily Rate Period” means any Business Day on which the Interest Rate Mode is the Daily Rate through the day preceding the next Business Day.

“DTC” means The Depository Trust Company, New York, New York and its successors and assigns.

“Debt Service” means, for any period or payable at any time, the principal of, premium, if any, and interest on the Bonds for that period or payable at the time whether due on a scheduled interest payment date, at maturity or upon acceleration, scheduled mandatory redemption or mandatory prepayment of principal.

“Event of Default” means any of the events described in “Events of Default” under the 2018D Indenture or the 2018D Loan Agreement.

“Excluded Affiliate” has the meaning given to such term in the Master Indenture.

“Excluded Property” has the meaning given to such term in the Master Indenture.

C-3

“Extraordinary Services” and “Extraordinary Expenses” means all services rendered and all reasonable expenses (including attorney’s fees, costs and expenses) properly incurred by the Trustee or any of its agents under the 2018D Indenture, other than Ordinary Services and Ordinary Expenses.

“Financial Consultant” means a firm of investment bankers, a financial consulting firm, a nationally recognized arbitrage calculation firm, or a firm of certified public accountants, which is experienced in the calculation of amounts required to be rebated to the United States under Section 148(f) of the Code.

“Fiscal Year” means the period of twelve months beginning July 1 of each year, or such other period of twelve months hereafter established by TJU as its fiscal year.

“Fixed Rate” means the rate to be borne by a Series 2018D Bond from and after its Conversion, if any, to its final maturity, which shall be the rate that, in the judgment of the Remarketing Agent, is necessary to enable such Series 2018D Bond to be remarketed at the principal amount thereof, plus accrued interest, if any on the Conversion Date and results in the lowest net interest cost to maturity.

“Fixed Rate Bonds” means any Series 2018D Bonds that bear interest at a Fixed Rate.

“Generally Accepted Accounting Principles” means and includes definitions of concepts and principles as well as industry specific rules applicable in the preparation of financial statements in the United States, as contained within the Financial Accounting Standards Board Accounting Standards Codification or any successor authoritative guidance of generally accepted accounting principles.

“Government Obligations” means (a) cash, and (b) obligations of, or obligations guaranteed as to principal and interest by, the United States or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States including: United States Treasury Obligations; all direct or fully guaranteed obligations; Rural Economic Community Development Administration; General Services Administration; Guaranteed Title XI financing; Government National Mortgage Association (GNMA); and United States Treasury Obligations, State and Local Government Series. Any Government Obligation used for defeasance must provide for the timely payment of principal and interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date).

“Gross Revenues” has the meaning given to such term in the Master Indenture.

“Immaterial Affiliate” has the meaning given to such term in the Master Indenture.

“Index” means any of (a) One Month LIBOR, (b) Three Month LIBOR, (c) the SIFMA Index, or (d) any other index chosen by TJU.

“Index Floating Rate” means an interest rate on the Series 2018D Bonds established in accordance with the 2018D Indenture.

“Index Floating Rate Conversion Date” means the date on which the Series 2018D Bonds are converted to bear interest at an Index Floating Rate.

“Index Floating Rate Percentage” means with respect to any Conversion of the Series 2018D Bonds to an Index Floating Rate Period, the percentage determined by the Remarketing Agent on or prior to the Conversion Date pursuant to 2018D Indenture.

C-4

“Index Floating Rate Period” means each period during which an Index Floating Rate is in effect for all or any portion of the Series 2018D Bonds.

“Index Floating Rate Spread” means with respect to any Conversion of the Series 2018D Bonds to an Index Floating Rate Period, the spread determined by the Remarketing Agent on or prior to the Conversion Date pursuant to the 2018D Indenture.

“Interest Payment Date” means, for the Series 2018D Bonds, (i) if the Interest Rate Mode is the Daily Rate, the Weekly Rate or Variable Rate other than a Variable Term Rate, the first Business Day of each month; (ii) if the Interest Rate Mode is the Commercial Paper Rate, the first Business Day following the last day of each Commercial Paper Rate Period for any Series 2018D Bond; (iii) if the Interest Rate Mode is the Long Term Rate, each March 1 and September 1 and the effective date of a change to a new Long Term Rate Period; (iv) if the Interest Rate Mode is the Fixed Rate, each March 1 and September 1 commencing the March 1 or September 1 that is first to occur following the Conversion Date of Series 2018D Bonds to the Fixed Rate; (v) if the Interest Rate Mode is the Variable Term Rate with a Variable Term Rate Period of 180 days or less, the day immediately following the end of such Variable Term Rate Period (which must be a Business Day); (vi) if the Interest Rate Mode is the Variable Term Rate with a Variable Term Rate Period of more than 180 days, each March 1 and September 1 during such Variable Term Rate Period and the day immediately following the end of such Variable Term Rate Period (which must be a Business Day); (vii) if the Interest Rate Mode is the Index Floating Rate and (A) the Index is the SIFMA Index, each March 1 and September 1, (B) the Index is One Month LIBOR, the first Business Day of each month, (C) the Index is Three Month LIBOR, each March 1, June 1, September 1 and December 1, and (D) without duplication, the day immediately following the final day of each Index Floating Rate Period; and (viii) in each Interest Rate Mode, the Conversion Date. Notwithstanding the foregoing, the Interest Payment Date for each Bank Bond while the Interest Rate Mode is the Commercial Paper Rate shall be the first Business Day of each month and the day such Series 2018D Bond ceases to be a Bank Bond, and the Interest Payment Date for each Bank Bond while the Interest Rate Mode is the Long Term Rate shall be the first Business Day of each month and the day such Series 2018D Bond ceases to be a Bank Bond. In any case, the final Interest Payment Date for any Series 2018D Bond shall be the maturity date.

“Interest Period” means, for all Series 2018D Bonds, the period from and including each Interest Payment Date to and including the day next preceding the next Interest Payment Date. The first Interest Period for the Series 2018D Bonds shall begin on (and include) the date of the initial delivery of the Series 2018D Bonds. The final Interest Period for any Series 2018D Bond shall end on (and include) the day preceding its maturity.

“Interest Rate Mode” means the Daily Rate, the Weekly Rate, the Commercial Paper Rate, the Long Term Rate, the Variable Rate, the Index Floating Rate and the Fixed Rate. The Bank Bond Rate is not an Interest Rate Mode.

“Investment Securities” means the following (to the extent that the same are legal investments for funds held under the 2018D Indenture):

(a) Government Obligations;

(b) obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including:

i. Export-Import Bank

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ii. Rural Economic Community Development Administration (formerly the Farmers Home Administration) iii. Federal Financing Bank iv. Federal Housing Administration v. Small Business Administration vi. U.S. Maritime Administration vii. U.S. Department of Housing & Urban Development (PHAs);

(c) direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America:

i. Senior debt obligations issued by Fannie Mae or the Federal Home Loan Mortgage Corporation (FHLMC) ii. Obligations of the Resolution Funding Corporation (REFCORP) iii. Senior debt obligations of the Federal Home Loan Bank System iv. Senior debt obligations of other Government Sponsored Agencies;

(d) U.S. dollar denominated trust deposit and demand accounts, federal funds, time deposits, trust funds, interest-bearing deposits and bankers’ acceptances with domestic commercial banks, including the Trustee and any of its affiliates, which have a rating on their short term certificates of deposit on the date of purchase of P-1 by Moody’s and A-1 or A-1+ by S&P and maturing not more than 360 calendar days after the date of purchase (ratings on holding companies are not considered as the rating of the bank);

(e) commercial paper, which is rated at the time of purchase in the single highest classification, P-1 by Moody’s and A-1 by S&P and which matures not more than 270 calendar days after the date of purchase;

(f) money market mutual funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G or AAA-m and if rated by Moody’s rated Aaa or Aa1; including, without limitation, any mutual fund for which the Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding, that (i) the Trustee or an affiliate of the Trustee receives and retains fees for services provided to such funds, (ii) the Trustee charges and collects fees for services rendered pursuant to the 2018D Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to the 2018D Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates;

(g) Pre-refunded Municipal Obligations, which are any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s or S&P or any successors thereto; or (ii) (A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in United States Treasury obligations, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a Financial Consultant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described

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in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;

(h) demand deposits, including interest bearing money market accounts, time deposits, trust funds, trust accounts, overnight bank deposits, interest-bearing deposits, other deposit products, certificates of deposit, including those placed by a third party pursuant to an agreement between the Trustee and TJU, or bankers acceptances of depository institutions, including the Trustee or any of its affiliates; and

(i) bonds or notes issued by any state or municipality which are rated Aaa/AAA by Moody’s and S&P, respectively, in the highest rating category assigned by such rating agencies or general obligations of a state of the United States with a rating of A2/A or higher by both Moody’s and S&P;

(j) bonds, notes, debentures, investment agreements or other evidences of indebtedness issued or guaranteed by a corporation or other financial institution which are, or the obligor on which is, at the time of purchase, rated by a Rating Agency and, as to any such Rating Agency, in any of its four (4) highest rating categories without regard to qualifiers within each category; and

(k) repurchase agreements with respect to and secured by Government Obligations, which agreements may be entered into with any Qualified Financial Institution or with primary government securities dealers which report to, trade with and are recognized as primary dealers by a Federal Reserve Bank and are members of the Securities Investors Protection Corporation, provided the Trustee has a perfected first security interest in the collateral, that the Trustee has possession of the collateral, or an agent of the Trustee has possession of the collateral in an account for the Trustee, and that the collateral is, to the knowledge of the Trustee, free and clear of third party claims.

“Lien” has the meaning given to such term in the Master Indenture.

“Liquidity Facility” means a standby bond purchase agreement or liquidity agreement, as applicable and any Alternate Liquidity Facility, entered into with respect to the Series 2018D Bonds pursuant to the 2018D Indenture.

“Liquidity Facility Issuer” means the provider of any Liquidity Facility or Alternate Liquidity Facility.

“Loan Payments,” means the payments made to repay each loan made to TJU pursuant to the 2018D Loan Agreement.

“London Banking Day” means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London.

“Long Term Rate” means the Interest Rate Mode for the Series 2018D Bonds in which the interest rate on the Series 2018D Bonds is determined in accordance with the 2018D Indenture.

“Long Term Rate Period” means any period beginning on, and including, the Conversion Date to the Long Term Rate and ending on, and including, the day preceding the Interest Payment Date selected by TJU and each period of the same duration (or as close as possible) ending on an Interest Payment Date thereafter until the earliest of the day preceding the change to a different Long Term Rate Period, the Conversion to a different Interest Rate Mode or the maturity of the Series 2018D Bonds.

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“Mandatory Redemption” means any mandatory sinking fund redemption as set forth in the form of the applicable Series 2018D Bond.

“Master Indenture” means that certain Amended and Restated Master Trust Indenture (Security Agreement) dated as of February 1, 2017, and effective on December 1, 2017, as amended and supplemented, by and between TJU, on behalf of itself and as the Obligated Group Member Representative, and the Master Trustee.

“Master Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association.

“Moody’s” means, as long as the Bonds are rated by Moody’s, Moody’s Investors Service, Inc., a Delaware corporation, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated in writing by TJU.

“Obligated Group” means TJU, TJUH System, Thomas Jefferson University Hospitals, Inc., Jefferson University Physicians, Abington Health, Abington Memorial Hospital, Lansdale Hospital, Abington Health Foundation, Aria Health System, Aria Health, Philadelphia University, Kennedy Health System, Inc., Kennedy Health Facilities, Inc., Kennedy University Hospital, Inc., Kennedy Medical Group Practice, P.C. and The Magee Memorial Hospital For Convalescents, the current members of the Obligated Group.

“Obligated Group Member” means any individual member of the Obligated Group.

“Obligated Group Member Representative” means the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Executive Director, any Assistant Executive Director, or the Controller or any Assistant Controller, any other officer of an Obligated Group Member or other person designated by Certified Resolution of the governing body of such Obligated Group Member to act for any of the foregoing, either generally or with respect to the execution of any particular document or other specific matter.

“Obligations” has the meaning given to such term in the Master Indenture.

“One Month LIBOR” means the rate for deposits in U.S. dollars with a one month maturity as published by Reuters (or such other service as may be nominated by the ICE Benchmark Administration, for the purpose of publishing London interbank offered rates for U.S. dollar deposits) as of 11:00 A.M., London time, on the Rate Determination Date, except that, if such rate is not available on the Rate Determination Date, One Month LIBOR for the ensuing interest period will mean One Month LIBOR then in effect in the immediately preceding Index Floating Rate Period. If such rate is not available at such time for any reason, is illegal to offer by the Remarketing Agent or does not adequately represent the Remarketing Agent’s cost of funds, then the rate for that day will be determined based on such alternate, industry accepted index or, if such an index is unavailable, by such alternate method as mutually agreed upon by the Remarketing Agent and TJU.

“Operating Assets” has the meaning given to such term in the Master Indenture.

“Opinion of Bond Counsel” means an Opinion of Bond Counsel to the effect that an action proposed to be taken would not adversely affect the validity of the Bonds or, if applicable, the exclusion from gross income for federal income tax purposes to which interest on the Series 2018D Bonds would otherwise be entitled.

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“Opinion of Counsel” means an opinion in writing signed by legal counsel acceptable to TJU and the Trustee and, to the extent the Authority is asked to take action in reliance thereon, the Authority, who may be an employee of or counsel to TJU.

“Optional Redemption” means any optional redemption as set forth in the applicable form of the Bonds.

“Ordinary Services” and “Ordinary Expenses” means those services normally rendered and those expenses (including attorney’s fees, costs and expenses) normally incurred, by a trustee under instruments similar to the 2018D Indenture, but not those services rendered and those expenses incurred in anticipation of and following the occurrence and during the continuation of an Event of Default under the 2018D Indenture.

“Outstanding” means all Bonds authenticated and delivered under the 2018D Indenture as of the time in question, except:

(a) All Bonds theretofore cancelled or required to be cancelled under the 2018D Indenture;

(b) Bonds for which provision for payment or redemption has been made in accordance with the 2018D Indenture; provided that, if such Bonds are being redeemed, the required notice of redemption shall have been given or provision satisfactory to the Trustee shall have been made therefor, and that if such Bonds are being purchased, there shall be a firm commitment for the purchase and sale thereof; and

(c) Series 2018D Bonds in substitution for which other Series 2018D Bonds have been authenticated and delivered pursuant to the 2018D Indenture.

In determining whether the Owners of a requisite aggregate principal amount of Bonds Outstanding have concurred in any request, demand, authorization, direction, notice, consent or waiver under the provisions hereof, Bonds which a Responsible Officer of the Trustee actually knows are held by or on behalf of TJU (unless all of the Outstanding Bonds are then owned by TJU) shall be disregarded for the purpose of any such determination.

“Paying Agent” means the Trustee and any other commercial bank or trust company organized under the laws of any state of the United States of America or any national banking association designated by the 2018D Indenture or any Supplemental Indenture as paying agent for the Bonds at which the principal of and redemption premium, if any, and interest on such Bonds shall be payable.

“Person” means an individual, a corporation, a partnership, an association, a limited liability company, a joint stock company, a joint venture, a trust, any unincorporated organization, a governmental unit or agency, a political subdivision or instrumentality thereof, a municipality or a municipal authority, or any other group or organization of individuals.

“Pledged Revenues” means (a) all amounts payable to the Trustee with respect to the principal or Redemption Price or purchase price of, or interest on the Bonds (i) upon deposit in the Debt Service Fund from the proceeds of the Bonds or of obligations issued by the Authority to refund the Bonds; and (ii) by TJU under the 2018D Loan Agreement; (b) any proceeds of Bonds originally deposited with the Trustee for the payment of interest accrued on the Bonds or otherwise, and (c) investment income with respect to any moneys held by the Trustee in the Debt Service Fund and the Costs of Issuance Fund. The term “Pledged Revenues” does not include any money in the Rebate Fund.

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“Project” means (a) the payment of (or the reimbursement to TJU and the other Obligated Group Members for) the costs of the acquisition, construction and development of various capital assets and the making of other capital improvements in various academic health care, research, education and clinical care programs and related missions of TJU and the other Obligated Group Members, including, but not limited to (i) the construction, renovation, expansion, development and equipping of a new health science center building, associated site work, storm water management and related improvements at the East Falls campus of TJU, (ii) the construction, renovation, expansion, development and equipping of a patient care tower, including, but not limited to, an intensive care unit, multiple medical/surgical nursing units and surgical suites, diagnostic testing space and rooftop helipad, and related support areas at the Cherry Hill, New Jersey campus of TJU, and (iii) the construction, development, renovation, improvement and equipping of approximately 92,000 gross square feet of patient rooms, therapy gyms and relocation of an existing pharmacy at the hospital facility of The Magee Memorial Hospital for Convalescents located in Center City Philadelphia; (b) the current refunding of the Authority’s Thomas Jefferson University Revenue Bonds, Series 2017E outstanding in the principal amount of $247,825,000; (c) the payment or defeasance in whole or in part of (i) certain commercial loans issued in the maximum principal amount of $71,000,000 incurred for the benefit of Kennedy Health System, Inc. (“KHS”) and its affiliates, (ii) certain commercial loans incurred for the benefit of Kennedy and its affiliates in the aggregate original principal amount of $1,659,000, (iii) certain commercial loans incurred for the benefit of Aria Health System and its affiliates, in the aggregate original principal amount of approximately $17,370,000; and (d) the payment of certain costs and expenses incident to the issuance of the Bonds.

“Project Facilities” means those facilities described in Exhibit A to the 2018D Loan Agreement.

“Property” means, when used in connection with any Person, any and all rights, title and interests of such Person in and to any and all property (including cash) whether real, personal or mixed, or tangible or intangible, and wherever situated.

“Purchase Date” means (i) if the Interest Rate Mode is the Daily Rate, the Weekly Rate, or any Variable Rate other than a Variable Term Rate, any Business Day as set forth in the 2018D Indenture, (ii) if the Interest Rate Mode is the Long Term Rate, the final Interest Payment Date for the Long Term Rate Period, (iii) if the Interest Rate Mode is the Variable Term Rate, Variable Rate Tender Date; and (iv) each day that Series 2018D Bonds are subject to mandatory purchase pursuant to the 2018D Indenture.

“Qualified Financial Institution” means a bank, trust company, national banking association, insurance company or other financial services company whose unsecured long term debt obligations or insurance claims paying abilities (as applicable) are rated by a Rating Agency and, as to any such Rating Agency, in any of its four (4) highest rating categories without regard to qualifiers within each category.

“Rate Determination Date” means any date after the Date of Issuance on which the interest rate on Series 2018D Bonds shall be determined, which, (i) in the case of the Daily Rate or the Variable Daily Rate, shall be each Business Day commencing with the first day (which must be a Business Day) the Series 2018D Bonds become subject to the Daily Rate or the Variable Daily Rate, as applicable; (ii) in the case of the Weekly Rate or the Variable Weekly Rate, shall be each Thursday or, if Thursday is not a Business Day, then the Business Day next preceding such Thursday; (iii) in the case of the Variable Monthly Rate, shall be the last Business Day immediately prior to the first day of a Variable Monthly Rate Period and the last Business Day of each month during which the Series 2018D Bonds are subject to the Variable Monthly Rate; (iv) in the case of the Variable Term Rate, shall be the first day of a Variable Term Rate Period; (v) in the case of the Commercial Paper Rate, shall be the first day of a Commercial Paper Rate Period; (vi) in the case of the Long Term Rate, shall be the 15th day preceding the first day of a Long Term Rate Period; (vii) in the case of the Index Floating Rate, shall be each Reset Date; and (viii)

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in the case of the Fixed Rate, shall be a date determined by the Remarketing Agent which shall be at least one Business Day prior to the Conversion Date.

“Rate Period” means any period during which a single interest rate is in effect for a Series 2018D Bond.

“Rating Agency” means each nationally recognized securities rating agency then maintaining a rating on the Bonds at the request of TJU, and initially means Moody’s and S&P.

“Redemption Price” means the principal amount of any Bond to be redeemed pursuant to the 2018D Indenture, plus the applicable premium, if any, payable upon redemption.

“Regulatory Body” means any federal, state or local government, department, agency, authority or instrumentality (other than the Authority acting in its capacity as lender pursuant to the 2018D Loan Agreement) and any other public or private body, including accrediting organizations, having regulatory jurisdiction and authority over TJU, the Project or the operations of TJU.

“Remarketing Agent” means each Person qualified under the 2018D Indenture to act as Remarketing Agent for the Series 2018D Bonds and appointed by TJU from time to time. “Principal Office” of the Remarketing Agent means the office designated in writing to the Authority, the Trustee, the Tender Agent and TJU.

“Reset Date” means, for Series 2018D Bonds in an Index Floating Rate, (i) the Date of Issuance or Conversion, and thereafter, (ii) (A) if the Index is the SIFMA Index or One Month LIBOR, every Thursday or if any Thursday is not a U.S. Government Securities Business Day, the next succeeding U.S. Government Securities Business Day, subject to being changed to a different day of the week as provided in the 2018D Indenture or (B) if the Index is Three Month LIBOR, each March 1, June 1, September 1 and December 1; provided, however, if March 1, June 1, September 1 or December 1 is not a U.S. Government Securities Business Day, the next succeeding U.S. Government Securities Business Day. The Reset Date for Series 2018D Bonds in any Variable Rate Mode means the Variable Rate Reset Date. The initial Reset Date after the Date of Issuance is [_____], 2018.

“Series 2018D Bonds” or “Bonds” means the Authority’s Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018D (R-Floats) issued in the original aggregate principal amount of $______.

“S&P” means S&P Global Ratings, a Standard and Poor’s Financial Services business, and its successors and assigns, or, if such firm shall be dissolved or liquidated or shall no longer perform the functions of a securities rating service, S&P shall mean any other nationally recognized securities rating service designated by TJU, with written notice to the Authority and the Trustee.

“SIFMA Index” means the Municipal Swap Index compiled from weekly interest rate resets of tax-exempt variable rate issues reported to Municipal Market Data that meet specific criteria established from time to time by the Securities Industry and Financial Markets Association (“SIFMA”). The SIFMA Index is generally determined on Wednesday of each week, or if any Wednesday is not a Business Day, the next preceding Business Day, and published by SIFMA on the Thursday next following its determination. If the SIFMA Index is no longer published, then “SIFMA Index” shall mean the Standard & Poor's Weekly High Grade Index (“S&P Index”). If the S&P Index is no longer published, then “SIFMA Index” for the ensuing period will mean the SIFMA Index then in effect during the preceding Index Floating Rate Period.

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“Stated Interest” means for any Series 2018D Bonds for any Interest Period the amount of interest that accrued on such Series 2018D Bonds (but not interest on any overdue interest) during such Interest Period at the applicable rate of interest determined under the 2018D Indenture and, for any Series 2018D Bond that was a Bank Bond at any time during such Interest Period (except when Series 2018D Bonds that are not Bank Bonds bear interest at the Commercial Paper Rate), the amount of interest that would have accrued on such Series 2018D Bond during such portion of such Interest Period if such Series 2018D Bond had not been a Bank Bond. While Series 2018D Bonds that are not Bank Bonds bear interest at the Commercial Paper Rate, all interest accrued during any Interest Period on any Bank Bonds at the Bank Bond Rate is Additional Interest.

“Supplemental Indenture” means any indenture amending or supplementing the 2018D Indenture which may be entered into in accordance with the provisions of the 2018D Indenture.

“Tax Certificate,” means the document so titled, executed by the Authority and TJU (and any other Obligated Group Member) in connection with, and dated the date of issuance of the Bonds.

“Three Month LIBOR” means the rate for deposits in U.S. dollars with a three month maturity as published by Reuters (or such other service as may be nominated by the ICE Benchmark Administration, for the purpose of publishing London interbank offered rates for U.S. dollar deposits) as of 11:00 A.M., London time, on the Rate Determination Date, except that, if such rate is not available on the Rate Determination Date, Three Month LIBOR means Three Month LIBOR then in effect in the immediately preceding Index Floating Rate Period. If such rate is not available at such time for any reason, is illegal to offer by the Remarketing Agent or does not adequately represent the Remarketing Agent’s cost of funds, then the rate for that day will be determined based on such alternate, industry accepted index or, if such an index is unavailable, by such alternate method as mutually agreed upon by the Remarketing Agent and TJU.

“TJU” means Thomas Jefferson University, a non-profit corporation organized and existing under the laws of the Commonwealth, and its permitted successors and assigns.

“TJU Representative” means the Chairman, Vice Chairman, President, any Vice President or the Controller of TJU, the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer of TJU or any other person or persons at the time designated to act on behalf of TJU, either generally or with respect to the execution of any particular document or other specific matter, as set forth in the by-laws of TJU or a Certified Resolution of its governing body.

“Trust Estate” means:

(a) All right, title and interest (but not the obligations) of the Authority under and pursuant to the terms of the 2018D Loan Agreement, all Loan Payments and all other payments, revenues and receipts receivable by the Authority thereunder except as provided therein; and

(b) All right, title and interest of the 2018D Master Notes, and all payments, revenues and receipts receivable by the Authority thereunder except as provided therein;

(c) All of the right, title and interest of the Authority in and to all Funds and accounts established under the 2018D Indenture (except for the Rebate Fund) and all moneys and investments now or hereafter held therein and all present and future Pledged Revenues.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association, as trustee under the 2018D Indenture, and its successors as trustee thereunder.

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“U.S. Government Securities Business Day” means any day except for a Saturday, Sunday or a day on which Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.

“Variable Daily Rate” means a variable rate during a Variable Daily Rate Period, determined as provided in the 2018D Indenture.

“Variable Daily Rate Period” means a period during the Variable Rate Mode when a Series 2018D Bond bears interest at a Variable Daily Rate.

“Variable Monthly Rate” means a variable rate during a Variable Monthly Rate Period, determined as provided in the 2018D Indenture hereof.

“Variable Monthly Rate Period” means a period during the Variable Rate Mode when a Series 2018D Bond bears interest at Variable Monthly Rate.

“Variable Rate” when used with respect to any Series 2018D Bond in the Variable Rate Mode, means the Variable Daily Rate, the Variable Weekly Rate, the Variable Monthly Rate, or the Variable Term Rate borne by such Series 2018D Bond during the Variable Rate Mode.

“Variable Rate Mode” means the Rate Mode in which a Series 2018D Bond bears interest at the Variable Rate.

“Variable Rate Period” means a Variable Daily Rate Period, a Variable Weekly Rate Period, a Variable Monthly Rate Period, or a Variable Term Rate Period.

“Variable Rate Reset Date” means the day on which each new Variable Rate is effective, as determined pursuant to the 2018D Indenture.

“Variable Rate Special Non-Remarketing Period” means a period beginning on the date when a Series 2018D Bond is not purchased from the Holder after such Holder tenders such Series 2018D Bond for purchase pursuant to a Variable Rate Tender and ending on the date that all Variable Rate Non- Remarketed Bonds are successfully remarketed.

“Variable Rate Tender” means a Variable Rate Mandatory Tender or a Variable Rate Optional Tender.

“Variable Rate Tender Date” means a date on which Series 2018D Bonds are tendered for purchase pursuant to the Variable Rate Tender provisions of the 2018D Indenture.

“Variable Rate Term-Out Event” means, when used with respect to any Variable Rate Non- Remarketed Bond, when a Variable Rate Special Non-Remarketing Period with respect to such Series 2018D Bond lasts more than 180 consecutive days.

“Variable Term Rate” means a fixed rate during a Variable Term Rate Period, determined as provided in the 2018D Indenture.

“Variable Term Rate Period” means a period during the Variable Rate Mode when a Series 2018D Bond bears interest at Variable Term Rate.

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“Variable Weekly Rate” means a variable rate during a Variable Weekly Rate Period, determined as provided in the 2018D Indenture.

“Variable Weekly Rate Period” means a period during the Variable Rate Mode when a Series 2018D Bond bears interest at a Variable Weekly Rate.

“Weekly Rate” means the Interest Rate Mode for the Series 2018D Bonds in which the interest rate on the Series 2018D Bonds is determined weekly in accordance with the 2018D Indenture.

“Weekly Rate Period” means the period beginning on, and including, the Conversion Date to the Weekly Rate, and ending on, and including, the next Wednesday and thereafter the period beginning on, and including, any Thursday and ending on, and including, the earlier of the next Wednesday or the day preceding the Conversion Date from the Weekly Rate.

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SUMMARY OF THE 2018D INDENTURE

Trust Estate

Pursuant to the 2018D Indenture (a) all right, title and interest (but not the obligations) of the Authority under and pursuant to the terms of the 2018D Loan Agreement, all Loan Payments and all other payments, revenues and receipts receivable by the Authority thereunder except as provided therein, and (b) all right, title and interest of the 2018D Master Note, and all payments, revenues and receipts receivable by the Authority thereunder except as provided therein; and (c) all of the right, title and interest of the Authority in and to all Funds and accounts (except for the Rebate Fund) and all moneys and investments now or hereafter held therein and all present and future Pledged Revenues, and any other revenues, property, contracts or contract rights, accounts receivable, chattel paper, instruments, general intangibles or other rights and the proceeds thereof, which may, by delivery, assignment or otherwise, be subject to the lien and security interest created by the 2018D Indenture and the other right, title and interest assigned, transferred and pledged or agreed or intended so to be to the Trustee and its successors in said trust and to its and their assigns forever, are assigned, transferred and pledged to the Trustee and its successors in trust and its and their assigns, to secure the payment of the principal or purchase price of the Series 2018D Bonds and the interest and premium, if any, due or to become due thereon.

Determination of Interest Rates

Permitted Interest Rate Modes. The permitted Interest Rate Modes under the 2018D Indenture are the Daily Rate, the Weekly Rate, the Commercial Paper Rate, the Long Term Rate, the Variable Rate, the Index Floating Rate and the Fixed Rate, and within the Variable Rate, the Variable Weekly Rate Period, the Variable Monthly Rate Period and the Variable Term Rate Period. The Series 2018D Bonds initially bear interest at the Variable Weekly Rate.

Determination by Remarketing Agent. The interest rate for 2018D Bonds in the Variable Rate mode shall be determined by the Remarketing Agent as the minimum rate of interest necessary, in the reasonable judgment of the Remarketing Agent, to enable the Remarketing Agent to sell the 2018D Bonds at a price equal to the principal amount of such 2018D Bonds, plus accrued Stated Interest, if any, thereon; provided, however, that in no event shall the interest rate borne by the 2018D Bonds exceed the Maximum Rate.

Notice of the interest rate for each 2018D Bond in the Variable Rate Mode shall be communicated by the Remarketing Agent to the Trustee.

Variable Daily Rates. Whenever the 2018D Bonds bear interest a Variable Daily Rate, the interest rate on the 2018D Bonds for a particular Variable Daily Rate Period shall be the rate established by the Remarketing Agent no later than 5:00 p.m. (New York City time) on each Business Day for applicability on the following day during the Variable Daily Rate Period (or the Business Day preceding the Conversion of the Interest Rate Mode to the Variable Daily Rate). The Variable Daily Rate for any day that is not a Business Day shall be the same as the Variable Daily Rate for the immediately preceding Business Day. In the event that the Remarketing Agent fails to establish a Variable Daily Rate for any day, then the Variable Daily Rate for such day shall be the same as the Variable Daily Rate for the immediately preceding Business Day and such rate shall continue until the earlier of (A) the date on which the Remarketing Agent determines a new Variable Daily Rate or (B) the fifth consecutive Business Day succeeding the first such Business Day on which such Variable Daily Rate is not determined by the Remarketing Agent. In the event that Remarketing Agent fails to determine a new Variable Daily Rate for a period of five consecutive Business Days as described in clause (B) of the immediately preceding

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sentence, the Variable Daily Rate shall be equal to the Maximum Rate until a new Variable Daily Rate is established by the Remarketing Agent.

Variable Weekly Rates. While the 2018D Bonds bear interest at the Variable Weekly Rate, Variable Weekly Rate Periods commence on Thursday of each week and end on Wednesday of the following week. The interest rate for each Variable Weekly Rate Period shall be determined by the Remarketing Agent no later than 5:00 p.m. (New York City time) on Thursday of each week (or if such day is not a Business Day, on the last Business Day prior to such Thursday), and shall be effective from and including such Thursday until (and including) the following Wednesday; provided that the initial Variable Weekly Rate shall apply from the Date of Issuance until and including May [__], 2018.

Variable Monthly Rates. Whenever the 2018D Bonds bear interest at a Variable Monthly Rate, Variable Monthly Rate Periods commence on the first Business Day of each calendar month. The interest rate for each Variable Monthly Rate Period shall be determined by the Remarketing Agent no later than 5:00 p.m. (New York City time) on the last Business Day of each month and shall be effective from the first day of the Variable Monthly Rate Period or the first Business Day following such Rate Determination Date, as the case may be, and shall remain in effect until (and including) the day immediately prior to the first Business Day of the following month.

Variable Term Rates. Whenever the 2018D Bonds bear interest at a Variable Term Rate, the interest rate for each Variable Term Rate Period shall be determined by the Remarketing Agent no later than 5:00 p.m. (New York City time) on the last Business Day immediately prior to the first day of the Variable Term Rate Period (or the Business Day preceding the Conversion of the Interest Rate Mode to the Variable Term Rate). Such interest rate shall be effective on the first day of the Variable Term Rate Period and shall remain in effect until (and including) the last day of such Variable Term Rate Period.

Variable Rate Special Non-Remarketing Period. During any Variable Rate Special Non- Remarketing Period, all 2018D Bonds in the Variable Rate Mode (including any Bonds in the Variable Rate Mode that are not Variable Rate Non-Remarketed Bonds) shall bear interest at the Maximum Rate.

Funds and Accounts

Costs of Issuance Fund; Disbursements from and Records of Costs of Issuance Fund. There is created and established with the Trustee a fund known as the Costs of Issuance Fund. The Costs of Issuance Fund is to be used for the payment of costs of issuance. The Costs of Issuance Fund shall consist of the amounts required or permitted to be deposited therein pursuant to the 2018D Indenture or of the Series 2018D Loan Agreement, which amounts shall be held for the security of all Outstanding Bonds. Further accounts and sub accounts within the Costs of Issuance Fund shall be maintained by the Trustee if required under the terms of any governmental grant or applicable regulations relating to any such grant or if the Authority or TJU determines that separate accounts are desirable with respect to the Project or designated portions of Project.

Disbursements from the Costs of Issuance Fund may be made by the Trustee upon delivery to the Trustee of a closing statement signed by an Authority Representative and a TJU Representative. The Trustee shall cause to be kept and maintained adequate records pertaining to the Costs of Issuance Fund and all disbursements therefrom. The Trustee shall make such records available for inspection by, or shall provide copies thereof to, the Authority and TJU at reasonable times during its normal business hours upon prior written request.

Debt Service Fund. The Trustee shall establish and maintain a Debt Service Fund, the moneys on deposit within which shall be applied as follows:

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(a) to the payment of interest, when due, on all Outstanding Series 2018D Bonds, including any accrued interest due in connection with purchases or redemptions of Series 2018D Bonds pursuant to the 2018D Indenture;

(b) to the payment, when due, of the principal or Redemption Price of Series 2018D Bonds then payable at maturity or upon Mandatory Redemption (but only upon surrender of such Series 2018D Bonds), subject to reduction by the principal amount of Series 2018D Bonds of the same maturity purchased by TJU and surrendered to the Trustee for cancellation or purchased for cancellation by the Trustee pursuant to subsection (c) below; and

(c) during the 12-month period preceding each principal maturity or Mandatory Redemption date, the Trustee shall, at the written request of TJU, purchase Series 2018D Bonds of the maturity becoming due on such principal maturity or Mandatory Redemption date from funds on deposit in the Debt Service Fund; provided, however, that no such purchase shall be made unless (i) the purchase price does not exceed 100% of the principal amount of the Series 2018D Bonds so to be purchased, and (ii) in the case of any purchase of Series 2018D Bonds which are subject to Mandatory Redemption, firm commitments for the purchase of such Bonds shall have been accepted prior to the giving of notice of such redemption by the Trustee.

Redemption Fund. The Trustee shall establish a Redemption Fund into which it shall deposit such amounts as are required or permitted to be deposited therein pursuant to the provisions of the 2018D Indenture, including, but not limited to, the section entitled “Funds and Accounts—Costs of Issuance Fund; Disbursements from and Records of Costs of Issuance Fund” above. Moneys in the Redemption Fund shall be applied to the Redemption Price of Series 2018D Bonds upon Optional Redemption pursuant to the 2018D Indenture.

Rebate Fund. A Rebate Fund will be established with the Trustee. Any provision of the 2018D Indenture to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien under the 2018D Indenture.

(a) In accordance with the terms of the Series 2018D Loan Agreement, TJU shall determine, or furnish information to the Authority or a Financial Consultant to determine, as soon as is practical after the end of each Bond Year for the Series 2018D Bonds and as soon as is practical after the payment in full of Series 2018D Bonds, the amount of rebate due (the “Rebatable Amount”) as of the end of that Bond Year or the date of such final payment. A copy of such determination shall be provided to the Trustee. The Trustee shall notify TJU in writing of the amount then on deposit in the Rebate Fund. If the amount then on deposit in the Rebate Fund with respect to the Series 2018D Bonds is in excess of the Rebatable Amount as determined by TJU, the Authority or the Financial Consultant, the Trustee shall forthwith pay that excess amount to TJU. If the amount then on deposit in the Rebate Fund with respect to the Series 2018D Bonds is less than such Rebatable Amount, TJU shall, within five days after receipt of the aforesaid notice from the Trustee, pay to the Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate Fund to contain an amount equal to such Rebatable Amount for the Series 2018D Bonds. Within 60 days after the end of the fifth Bond Year and every fifth Bond Year thereafter, the Trustee, acting on behalf of the Authority and TJU, shall pay to the United States in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund an amount equal to 90% (or such greater percentage not in excess of 100% as TJU may direct in writing the Trustee to pay) of the Rebatable Amount, as determined by TJU, the Authority or the Financial Consultant, earned from the date of the original delivery of such Series 2018D Bonds to the end of such fifth Bond Year (less the amount of Rebatable Amount, if any, previously paid to the United States pursuant to this section). Within 60 days after the payment in full of all Outstanding Series 2018D Bonds, the Trustee shall pay to the United States in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund

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an amount equal to 100% of the Rebatable Amount, as determined by TJU, the Authority or the Financial Consultant, earned from the date of the original delivery the Series 2018D Bonds to the date of such payment (less the amount of Rebatable Amount, if any, previously paid to the United States pursuant to this section) and any moneys remaining in the Rebate Fund following such payment shall be paid to TJU. All computations of Rebatable Amount pursuant to this section and the 2018D Loan Agreement shall treat the amount or amounts, if any, previously paid to the United States pursuant to this section and the 2018D Loan Agreement as amounts on deposit in the Rebate Fund.

(b) If all the gross proceeds of the Series 2018D Bonds, within the meaning of Section 148(f) of the Code, together with the gross proceeds of any other obligations treated as part of the same issue for purposes of Section 148(f) of the Code, are invested solely in tax-exempt obligations or are fully expended for the governmental purpose for which the Series 2018D Bonds were issued within six months of the date of issuance of the Series 2018D Bonds, or if the Series 2018D Bonds qualify for the exemption from rebate by virtue of the 18-month spend-out exception or the two-year construction issue rebate exception under Section 148 of the Code and the regulations promulgated thereunder, then TJU shall not be required to comply with the foregoing provisions of this Section; provided that TJU shall remain responsible to determine the Rebatable Amount, if any, and to cause to be paid to the Trustee for deposit in the Rebate Fund and payment to the United States such amounts, if any, at such times as may be necessary to comply with the requirements of Section 148(f) of the Code with respect to the Series 2018D Bonds. TJU shall provide the Trustee and the Authority with a Certificate of TJU and a Certificate of a Financial Consultant and/or an opinion of Bond Counsel covering the applicability of this section.

(c) The Trustee and the Authority shall keep records of the computations made pursuant to this section that are filed with them until six years after the retirement of the last Series 2018D Bond.

(d) The Trustee shall have no duty or liability for calculating, investing or paying over to the United States any funds in the Rebate Fund, but shall be responsible for such matters only as directed in writing by the Authority or TJU.

(e) The provisions of this section may be amended or deleted from the 2018D Indenture

Bond Purchase Fund. The Trustee shall establish and maintain the Bond Purchase Fund. The Bond Purchase Fund shall be used solely in connection with the tender and remarketing of 2018D Bonds. All Remarketing Proceeds, funds received by the Tender Agent from a Remarketing Agent in accordance with the 2018D Indenture and funds received by TJU in accordance with the 2018D Indenture shall be held in the Bond Purchase Fund, in separate and segregated accounts to be used solely in connection with the tender and remarketing of 2018D Bonds.

Moneys to Be Held for All Bondholders, With Certain Exceptions

Until applied as provided in the 2018D Indenture, moneys and investments held in all Funds and accounts established under the 2018D Indenture shall be held in trust for the benefit of the holders of all Outstanding Series 2018D Bonds, except that:

(a) on and after the date on which the interest on or principal or Redemption Price of any particular Series 2018D Bond or Series 2018D Bonds is due and payable from the Debt Service Fund or Redemption Fund, the unexpended balance of the amount deposited or reserved in either or both of such Funds for the making of such payments shall, to the extent necessary therefor, be held for the benefit of the Bondholder or Bondholders entitled thereto;

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(b) the rights of any Bondholders with respect to principal or interest payments extended beyond their due dates pursuant to the 2018D Indenture shall be subordinate to the rights of Bondholders with respect to payments not so extended;

(c) Series 2018D Bonds for which provision for payment has been made in accordance with the 2018D Indenture, provided that, if such Series 2018D Bonds are to be redeemed, required notice of redemption shall have been given or provision satisfactory to the Trustee shall have been made therefore and that if such Series 2018D Bonds are to be purchased, there shall be a firm commitment for the purchase and sale thereof;

(d) the Rebate Fund shall not be held in trust for the holders of the Outstanding Series 2018D Bonds.

Investment or Deposit of Funds

Moneys on deposit in the Funds established pursuant to the 2018D Indenture (except the Rebate Fund, which moneys shall be invested and reinvested by the Trustee only at the written direction of TJU in obligations described in paragraphs (a), (b), (d), (e), (f), (g), (h) and (i) of the definition of “Investment Securities” maturing not later than the date on which moneys in the Rebate Fund are to be transferred therefrom in accordance with the 2018D Indenture) shall be invested and reinvested by the Trustee at the written direction of TJU as follows:

(a) All investments shall constitute Investment Securities and shall mature, or be subject to repurchase, withdrawal without penalty or redemption at the option of the holder on or before the dates on which the amounts invested are reasonably expected by TJU to be needed for the purposes under the 2018D Indenture.

(b) The interest and income received upon such investments of the Debt Service Fund and any interest paid by the Trustee or any other depository and any profit or loss resulting from the sale of any investment shall be added or charged in the case of any interest income or profit from investments of the Debt Service Fund, to the Debt Service Fund, and to the extent received or paid and available for payment of amounts due on the Series 2018D Bonds, to the payment of the next succeeding payment due on account of the Series 2018D Bonds and to the extent so applied, shall constitute payment under the Series 2018D Loan Agreement (notice of which payment shall be given by the Trustee to TJU), and any realized loss shall be forthwith made up by TJU (the direction of TJU to make investments as aforesaid shall constitute an agreement so to do). Any such investments shall be held by or under the control of the Trustee and shall be deemed at all times a part of the Debt Service Fund.

(c) The interest and income received upon investments of the Costs of Issuance Fund shall be retained therein until disposed of as provided in the 2018D Indenture.

(d) The interest and income received upon investments in the Rebate Fund shall be retained therein until disposed of as provided in 2018D Indenture.

(e) Neither the Authority nor the Trustee shall be accountable for any depreciation in the value of the Investment Securities or any losses incurred upon any authorized disposition thereof.

(f) Although the Authority and TJU recognize that it may obtain brokerage confirmations or written statements containing comparable information at no additional cost, each of the Authority and TJU agrees that brokerage confirmations are not required to be issued by the Trustee for each month in which a monthly statement of investments is provided by the Trustee. No statement needs to be provided,

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however, for any Fund or account for any month in which no investment activity occurred during such month in such Fund or account.

(g) The Trustee shall conclusively rely upon TJU’s written instructions as to both the suitability and legality of all directed investments. Ratings of investments shall be determined at the time of purchase of such investments and without regard to ratings subcategories. The Trustee shall have no responsibility to monitor the ratings of investments after the initial purchase of such investments. The Trustee may make any and all such investments through its own investment department or that of its affiliates or subsidiaries, and may charge its ordinary and customary fees for such investments. In the absence of written investment instructions from TJU, the Trustee shall not be responsible or liable for keeping the moneys held by it under the 2018D Indenture fully invested.

Liquidity Facilities

Expiration. If at any time there shall cease to be any Series 2018D Bonds Outstanding under the 2018D Indenture, the Trustee shall, if the Liquidity Facility is a letter of credit or other instrument then held by the Trustee, promptly surrender such Liquidity Facility to the Liquidity Facility Issuer for cancellation. The Trustee shall comply with the procedures set forth in the Liquidity Facility relating to the termination thereof.

Liquidity Facilities

(a) TJU may, at its option, provide for the delivery to the Trustee of a Liquidity Facility. A Liquidity Facility shall be a standby bond purchase agreement, letter of credit or a similar liquidity enhancement or support facility. Such Liquidity Facility shall have a term of not less than the then current Rate Period and set forth a maximum interest rate on the Series 2018D Bonds with respect to which a purchase commitment or payment obligation will be available. In addition, the issuer of such Liquidity Facility shall be required to purchase all Bank Bonds. At least 20 (35 days if the Interest Rate Mode is the Long Term Rate) days prior to the effective date of a Liquidity Facility with respect to the Series 2018D Bonds, TJU shall give written notice of the delivery of such Liquidity Facility to the Trustee and the Authority, together with an Opinion of Bond Counsel.

(b) Any Liquidity Facility entered into with respect to the Series 2018D Bonds must be accompanied by an opinion of counsel to the provider of such Liquidity Facility addressed to the Trustee and the Authority stating that such Liquidity Facility is a legal, valid, binding and enforceable obligation of such provider in accordance with its terms. In addition, if TJU grants a security interest in any cash, securities or investment property to the provider of such Liquidity Facility, TJU must furnish the Trustee and the Authority with an Opinion of Bond Counsel.

(c) An Alternate Liquidity Facility may be comprised of one or more standby bond purchase agreements which may allow for one or more series or subseries of Series 2018D Bonds; provided however, that TJU and each such Alternate Liquidity Facility shall comply with all of the terms and provisions under “SUMMARY OF THE 2018D INDENTURE—Liquidity Facilities.”

Draws on Existing Liquidity Facility

Subject to the order of priority of sources of funds established in the 2018D Indenture, the Trustee shall draw or shall cause the Tender Agent to draw on the existing Liquidity Facility, if any, in effect on the date of any such delivery of an Alternate Liquidity Facility or termination of the Liquidity Facility then held by the Trustee, and the Tender Agent shall use the proceeds of such drawing to pay the purchase price of the tendered Series 2018D Bonds, if any, on such date. The Trustee shall then accept

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such Alternate Liquidity Facility and surrender the previously held Liquidity Facility, if any, to the previous Liquidity Provider for cancellation promptly on or after the day the Alternate Liquidity Facility becomes effective. The Liquidity Facility should not be surrendered by the Trustee until all outstanding drawings under the Liquidity Facility then due and owing have been honored. Notwithstanding the foregoing, the then current Liquidity Facility may not be replaced with an Alternate Liquidity Facility, if any, if the Series 2018D Bonds are in a Long Term Rate Period and are not then subject to optional redemption without premium.

Notices of Expiration, Replacement or Termination of Liquidity Facility

(a) The Trustee shall notify the Bondholders and the Remarketing Agent of the expiration or termination or replacement of the Liquidity Facility by first class mail at least 15 days (30 days if the Interest Rate Mode for the Series 2018D Bonds is the Long Term Rate) but not more than 60 days before such expiration or replacement regardless whether a mandatory tender will occur. If the Trustee receives written notice from the Liquidity Facility Issuer that the Liquidity Facility is to terminate under the terms of the Liquidity Facility (except in the case of an automatic immediate termination or suspension), the Trustee shall notify the Bondholders of such termination by first class mail at least 10 days before any Purchase Date resulting from such termination. Each notice of expiration, replacement or termination of the Liquidity Facility will state:

(i) that the Liquidity Facility is expiring or being replaced or terminating and that such expiration, replacement or termination may result in a reduction or withdrawal of the ratings on the Series 2018D Bonds;

(ii) that the Series 2018D Bonds will be subject to mandatory purchase on the Purchase Date in accordance with the 2018D Indenture, in the event such expiration, replacement or termination will subject the Series 2018D Bonds to mandatory purchase under the 2018D Indenture; and

(iii) if there will be an Alternate Liquidity Facility, information relating to it, including a confirmation of the ratings on the Series 2018D Bonds or the new ratings on the Series 2018D Bonds.

(b) Copies of any notices required by this Section shall also be sent to the Tender Agent, the Authority, the Remarketing Agent and the Paying Agent.

Rights of Liquidity Facility Issuer with Respect to Events of Defaults and Remedies. Anything in the 2018D Indenture to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default and so long as no default has occurred and is continuing under the Liquidity Facility, the Liquidity Facility Issuer shall be entitled to control and direct the enforcement of all rights and remedies granted to Bondholders or the Trustee for the benefit of the Bondholders under the 2018D Indenture with respect to the Series 2018D Bonds, including, without limitation (i) the right to accelerate the principal of the Series 2018D Bonds as described in the 2018D Indenture, and (ii) the right to annul any declaration of acceleration with respect to the Series 2018D Bonds, and the Liquidity Facility Issuer shall also be entitled to approve all waivers of Events of Default.

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Tax Covenants

The Authority covenants not to take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Series 2018D Bonds under Section 103 and Sections 141 through 150, inclusive, of the Code. The Authority will not directly or indirectly use or permit the use of any proceeds of the Series 2018D Bonds or any other funds of the Authority, or take or omit to take any action that would cause the Series 2018D Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Code. To that end, the Authority will comply with all requirements of Section 148 of the Code to the extent applicable to the Series 2018D Bonds.

Without limiting the generality of the foregoing, the Authority agrees to provide in the Series 2018D Loan Agreement that TJU will agree to pay from time to time all amounts required to be rebated to the United States pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Series 2018D Bonds from time to time. This covenant shall survive payment in full or defeasance of the Series 2018D Bonds. The Authority agrees to provide in the Series 2018D Loan Agreement that TJU will specifically covenant to pay or cause to be paid to the United States at the times and in the amounts determined under “SUMMARY OF THE 2018D INDENTURE—Funds and Accounts—Rebate Fund.”

Notwithstanding any provision of this section and under the section “SUMMARY OF THE 2018D INDENTURE—Funds and Accounts—Rebate Fund,” if TJU shall provide to the Authority and the Trustee an Opinion of Bond Counsel to the effect that any action required under such provisions is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of interest on the Series 2018D Bonds, the Authority, the Trustee and TJU may rely conclusively on such opinion.

Events of Default

Each of the following shall be an Event of Default under the 2018D Indenture:

(a) if payment of the principal or Redemption Price of any Bond is not made when it becomes due and payable, whether at maturity or by call for redemption or otherwise; or

(b) if payment of any interest on any Bond is not made when due and payable; or

(e) if the Authority shall fail or refuse to comply with the provisions of the Act or with any of its covenants under the 2018D Indenture and such failure or refusal shall continue for a period of 60 days after notice thereof has been given to the Authority and TJU by the Trustee.

The Trustee shall, within 30 days of the occurrence of an Event of Default of which it has received notice as provided in the 2018D Indenture or of any event of which the Trustee is required to take notice and which would result in an Event of Default with the passage of time or the giving of notice, notify the Authority and TJU of the occurrence of such Event of Default or such other event.

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Remedies

Acceleration and Annulment Thereof. If any Event of Default has occurred and is continuing the Trustee may and, at the written direction of the holders of 25% (100% in the case of an Event of Default described in clause (d) above in principal amount of the Series 2018D Bonds then Outstanding, shall, by notice in writing to the Authority and TJU, declare the principal of all Bonds then Outstanding to be immediately due and payable, and upon such declaration the said principal, together with interest accrued thereon, shall become due and payable immediately at the place of payment provided therein, anything in the 2018D Indenture or in the Series 2018D Bonds to the contrary notwithstanding; provided, however, that no such declaration shall be made if TJU cures such Event of Default prior to the date of the declaration. Upon the occurrence of any acceleration under the 2018D Indenture, the Trustee shall immediately exercise such rights as it may have under the Series 2018D Loan Agreement to declare all payments thereunder to be due and payable immediately.

If after the principal of the Series 2018D Bonds has been so declared to be due and payable, all arrears of interest upon the Series 2018D Bonds (and interest on overdue installments of interest at the interest rate on the Series 2018D Bonds) are paid by the Authority or TJU, and the Authority or TJU also performs all other things in respect to which the Authority may have been in default under the 2018D Indenture and pays the reasonable charges and expenses of the Trustee and the Bondholders, including reasonable attorney’s fees and expenses, then, and in every such case, the Trustee may annul such declaration and its consequences and such annulment shall be binding upon the Trustee and upon all holders of Bonds issued under the 2018D Indenture; but no such annulment shall extend to or affect any subsequent default or impair any right or remedy consequent thereon.

Immediately after any acceleration under the 2018D Indenture, the Trustee, to the extent it has not already done so, shall notify in writing the Authority and TJU of the occurrence of such acceleration. Within five calendar days of the occurrence of any acceleration under the 2018D Indenture, the bond registrar shall notify by first class mail, postage prepaid, the Owners of all Bonds Outstanding of the occurrence of such acceleration, the date through which interest has accrued and the time and place of payment.

Other Remedies. If any Event of Default occurs and is continuing, the Trustee, before or after the principal of the Series 2018D Bonds becomes immediately due and payable, may enforce each and every right granted to it under the 2018D Indenture and the Series 2018D Loan Agreement, and any supplements or amendments to the 2018D Indenture or the Series 2018D Loan Agreement and any supplements or amendments. In exercising such rights and the rights given the Trustee under the 2018D Indenture, the Trustee shall, subject to receipt of indemnity to its satisfaction, take such action as, in the judgment of the Trustee applying the standards described in the 2018D Indenture, would best serve the interests of the Bondholders, taking into account the security and remedies afforded by the 2018D Loan Agreement and the 2018D Indenture. When the Trustee incurs costs or expenses (including legal fees, costs and expenses) or renders services after the occurrence of an Event of Default, such costs and expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law.

Legal Proceedings by Trustee. If any Event of Default has occurred and is continuing, the Trustee in its discretion may, and upon the written request of the holders of at least 25% in principal amount of the Bonds then Outstanding and receipt of indemnity to its satisfaction shall, in its own name:

(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Bondholders, including the right to require the Authority to enforce any rights under the 2018D Loan

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Agreement and to require the Authority to carry out any other provisions of the 2018D Indenture for the benefit of the Bondholders and to perform its duties under the Act provided that nothing in the provided that nothing in the 2018D Indenture shall be construed to impose on the Authority any duty or obligation to levy any taxes either to meet any obligation contained in the 2018D Indenture or to pay the principal of or interest on the 2018D Indenture shall be construed to impose on the Authority any duty or obligation to levy any taxes either to meet any obligation contained in the 2018D Indenture or to pay the principal of or interest on the Bonds;

(b) bring suit upon the Bonds;

(c) by action or suit in equity require the Authority to account as if it were the trustee of an express trust for the Bondholders;

(d) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders; and

If an Event of Default under clause (c) under the heading “SUMMARY OF THE 2018A/B INDENTURE—Events of Default” occurs and is continuing, the Trustee in its discretion may, and upon the written request of a majority in principal amount of the Holders of all Bonds then Outstanding and receipt of indemnity to its satisfaction shall, enforce each and every right granted to it as assignee of the 2018D Loan Agreement.

Discontinuance of Proceedings by Trustee. If any proceeding taken by the Trustee on account of any Event of Default is discontinued or is determined adversely to the Trustee, the Authority, the Trustee and the Bondholders shall be restored to their former positions and rights under the 2018D Indenture as though no such proceeding had been taken.

Bondholders May Direct Proceedings. The holders of a majority in principal amount of the Bonds then Outstanding under the 2018D Indenture shall have the right to direct the method and place of conducting all remedial proceedings by the Trustee under the 2018D Indenture, provided however that such direction shall not be in conflict with any rule of law or with the Indenture or unduly prejudice the rights of minority Bondholders and, provided further that the Trustee may decline to follow such direction if the Trustee, upon advice of Counsel, determines that the taking of the action specified in such direction would involve it in personal liability against which indemnity would not be satisfactory.

Limitations on Actions by Bondholders. Except as described above in the last paragraph of the section entitled “Legal Proceedings by the Trustee,” no Bondholder shall have any right to pursue any remedy under the 2018D Indenture unless (a) the Trustee shall have been given written notice of an Event of Default, (b) the holders of at least 25% in principal amount of the Bonds then Outstanding shall have requested the Trustee, in writing, to exercise the powers granted under the 2018D Indenture or to pursue such remedy in its or their name or names, (c) the Trustee shall have been offered indemnity satisfactory to it against its fees, costs, expenses and liabilities (including attorney’s fees, costs and expenses), and (d) the Trustee shall have failed to comply with such request within a reasonable time.

Notwithstanding any provision in the 2018D Indenture, the limited obligation of the Authority shall be absolute and unconditional to pay or cause to be paid under the 2018D Indenture, but solely from the Pledged Revenues and other funds pledged under the 2018D Indenture, the principal or Redemption Price of and interest on, the Bonds to the respective Holders thereof on the respective due dates thereof, and nothing under the 2018D Indenture shall affect or impair the right of action, which is absolute and unconditional, of such holders to enforce such payment.

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Trustee May Enforce Rights Without Possession of Bonds. All rights under the 2018D Indenture and the Bonds may be enforced by the Trustee without the possession of any Bonds or the production thereof at the trial or other proceedings relative thereto, and any proceeding instituted by the Trustee shall be brought in its name for the ratable benefit of the holders of the Bonds.

Remedies Not Exclusive. Except as limited under the 2018D Indenture, no remedy in the 2018D Indenture conferred is intended to be exclusive of any other remedy or remedies, and each remedy is in addition to every other remedy given under the 2018D Indenture or now or hereafter existing at law or in equity or by statute.

Delays and Omissions Not To Impair Rights. No delay or omission in respect of exercising any right or power accruing upon any Event of Default shall impair such right or power or be a waiver of such Default, and every remedy given by the 2018D Indenture may be exercised from time to time and as often as may be deemed expedient.

Application of Moneys in Event of Default. Any moneys on deposit in any other Fund or account established under the 2018D Indenture and any moneys received by the Trustee under the 2018D Indenture shall be applied,

First: to the payment of Ordinary Expenses and Extraordinary Expenses of the Trustee, including counsel fees, costs and expenses, any disbursements of the Trustee with interest thereon and its reasonable compensation;

Second: subject to the provisions of the 2018D Indenture, to the payment of all interest then due on Outstanding Bonds or, if the amount available before the payment of interest is insufficient for such purpose, to the payment of interest ratably in accordance with the amount due in respect of each Bond; and

Third: subject to the provisions of the 2018D Indenture, to the payment of the outstanding principal amount of all Bonds or, if the amount available for the payment of principal is insufficient for such purpose, to the payment of principal ratably in accordance with the amount due in respect of each Bond.

Any surplus shall be paid to the Authority or the Person lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

Trustee’s Right to Receiver; Compliance with Act. As provided by the Act, the Trustee shall be entitled as of right to the appointment of a receiver; and the Trustee, the Bondholders and any receiver so appointed shall have such rights and powers and be subject to such limitations and restrictions as are contained in the Act.

Trustee and Bondholders Entitled to All Remedies Under Act. It is the purpose of the 2018D Indenture to provide such remedies to the Trustee and Bondholders as may be lawfully granted under the provisions of the Act; but should any remedy granted under the 2018D Indenture be held unlawful, the Trustee and the Bondholders shall nevertheless be entitled to every other remedy provided by the Act. It is further intended that, insofar as lawfully possible, the provisions of the 2018D Indenture shall apply to and be binding upon the trustee or receiver appointed under the Act.

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Amendments and Supplements

Amendments and Supplements Without Bondholders’ Consent. The 2018D Indenture may be amended or supplemented at any time and from time to time, without notice to or the consent of the Bondholders, by a Supplemental Indenture entered into between the Authority and the Trustee, consented to by TJU and authorized by a Certified Resolution of the Authority filed with the Trustee for one or more of the following purposes:

(a) to add additional covenants of the Authority or to surrender any right or power in the 2018D Indenture conferred upon the Authority;

(b) for any purpose not inconsistent with the terms of the 2018D Indenture or to cure any ambiguity or to correct or supplement any provision contained in the Indenture or in any supplemental indenture which may be defective or inconsistent with any other provision contained in the 2018D Indenture or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under the Indenture which shall not be inconsistent with the provisions of the 2018D Indenture and which shall not materially adversely affect the interests of the holders of the Bonds, including the appointment and duties of a Paying Agent, bond registrar or authenticating agent;

(c) to modify, eliminate or add to the provisions of the 2018D Indenture to such extent as shall be necessary to effect the qualification of the 2018D Indenture under the Trust Indenture Act of 1939, as from time to time amended, or under any similar federal statute hereafter enacted, and to add to the Indenture such other provisions as may be expressly permitted by the Trust Indenture Act of 1939, as from time to time amended;

(d) to modify, eliminate or add to the provisions of the 2018D Indenture to such extent as shall be necessary to obtain, maintain or improve a rating of the Bonds by a Rating Agency;

(e) to grant to or confer or impose upon the Trustee for the benefit of the Owners of the Bonds any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with the 2018D Indenture as theretofore in effect;

(f) to permit the Bonds to be converted to or from certificateless securities or securities represented by a master certificate held in trust, ownership of which, in either case, is evidenced by book entries on the books of any securities depository, for any period of time;

(g) to permit the appointment of a co-trustee under the 2018D Indenture;

(h) to authorize different authorized denominations of the Bonds and to make correlative amendments and modifications to the 2018D Indenture regarding exchangeability of Bonds of different authorized denominations, redemptions of portions of the Bonds of particular authorized denominations and similar amendments and modifications of a technical nature;

(i) to modify, alter, supplement or amend the 2018D Indenture to comply with changes in the Code affecting the status of interest on the Series 2018D Bonds as excluded from gross income for federal income tax purposes or the obligations of the Authority or TJU in respect of Section 148 of the Code;

(j) to make any amendments appropriate or necessary to provide for any insurance policy, irrevocable transferable letter of credit, guaranty, surety bond, line of credit, revolving credit agreement or

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other agreement or security device delivered to the Trustee and providing for payment of the principal, interest and redemption premium on the Bonds or a portion thereof; and

(k) to modify, alter, amend or supplement the 2018D Indenture in any other respect that is not materially adverse to the Bondholders.

Before the Authority and the Trustee shall enter into any Supplemental Indenture pursuant to the 2018D Indenture, there shall have been delivered to the Trustee and the Authority an Opinion of Bond Counsel stating that such Supplemental Indenture is permitted under the 2018D Indenture, and that such Supplemental Indenture will, upon the execution and delivery thereof, be valid and binding upon the Authority in accordance with its terms and will not adversely affect the exclusion from gross income of the interest on the Series 2018D Bonds for federal income tax purposes.

Amendments With Bondholders’ Consent. The 2018D Indenture may be amended from time to time, except with respect to (1) the principal, Redemption Price or interest payable upon any Bonds, (2) the interest payment dates, the dates of maturity or the redemption provisions of any Bonds, and (3) the article in the 2018D Indenture governing amendments, by a Supplemental Indenture consented to by TJU, and approved by the Holders of at least a majority in aggregate principal amount of the Bonds then Outstanding which would be adversely affected by the action proposed to be taken. The 2018D Indenture may be amended with respect to the matters enumerated in clauses (1) through (3) of the preceding sentence with the unanimous consent of all adversely affected Bondholders.

Before the Authority and the Trustee shall enter into any supplemental indenture pursuant to this section, there shall have been delivered to the Trustee an opinion of Bond Counsel stating that such Supplemental Indenture is permitted under the 2018D Indenture, that such Supplemental Indenture will, upon the execution and delivery thereof, be valid and binding upon the Authority in accordance with its terms and will not adversely affect the exclusion from gross income of interest on the Series 2018D Bonds for federal income tax purposes.

Amendment of 2018D Loan Agreement. The Authority and TJU may propose to amend the 2018D Loan Agreement in the manner set forth therein and the Trustee may consent thereto as provided in the 2018D Loan Agreement. Notwithstanding anything in the 2018D Indenture to the contrary, no amendment to the 2018D Loan Agreement which affects the rights, duties, obligations or immunities of the Trustee may be effected without the express written consent of the Trustee.

Defeasance

Discharge of 2018D Indenture. When interest on, and principal or Redemption Price (as the case may be) of, all Bonds issued under the 2018D Indenture have been paid, or there shall have been deposited with the Trustee an amount, evidenced by moneys or “escrowed obligations” (as defined below) the principal of and interest on which, when due, will provide sufficient moneys (without regard to reinvestment and as verified by a Financial Consultant or a nationally recognized independent public accountant) to fully pay the Bonds at the maturity dates or dates fixed for redemption thereof, as well as all other sums payable under the 2018D Indenture, the right, title and interest of the Trustee shall thereupon cease and the Trustee, on demand of the Authority, shall release the 2018D Indenture and shall execute such documents to evidence such release as may be reasonably required by the Authority and shall turn over to the Authority or to such Person, body or authority as may be entitled to receive the same all balances remaining in any funds under the 2018D Indenture. For the purposes of the 2018D Indenture, “escrowed obligations” shall mean (1) cash and (2) obligations described in subparagraphs (a), (b), (c) or (g) of the definition of Investment Securities, which obligations shall not be callable at the option of the issuer thereof and which shall mature or shall have been irrevocably directed to be redeemed on or before

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the dates when payments in respect of the obligation become due, and the principal amount of which and the interest thereon when due will be in an aggregate amount sufficient without reinvestment to make all payment on the Bonds when due. Concurrently with any deposit made pursuant to the preceding sentence, the Trustee may request an Opinion of Bond Counsel to the effect that the conditions precedent to the release of the 2018D Indenture have been satisfied.

Deposit of Funds for Payment of Bonds. (a) If the Authority deposits with the Trustee moneys or “escrowed obligations” (as defined under the preceding heading) sufficient to pay the principal or Redemption Price of any particular Bond or Bonds becoming due, either at maturity or by call for redemption or otherwise, together with all interest accruing thereon to the due date, interest on the Bond or Bonds shall cease to accrue on the due date and all liability of the Authority with respect to such Bond or Bonds shall likewise cease, except as provided in subsection (b) below. Thereafter such Bond or Bonds shall be deemed not to be Outstanding under the Indenture and the holder or holders of such Bond or Bonds shall be restricted exclusively to the funds so deposited for any claim of whatsoever nature with respect to such Bond or Bonds, and the Trustee shall hold such funds, without liability to the Authority, any Bondholder or any other Person for interest thereon, in trust for such holder or holders.

(b) Moneys so deposited with the Trustee which remain unclaimed three years after the date payment thereof becomes due shall, at the written request of the Authority and if the Authority is not at the time to the knowledge of the Trustee in default with respect to any covenant contained in the 2018D Indenture or the Bonds and upon provision of adequate indemnification from the Authority, the Trustee shall pay such moneys to the Authority; and the Holders of the Bonds for which the deposit was made shall thereafter be limited to a claim against the Authority. Upon any such disposition to the Authority, all liability of the Trustee with respect to such funds shall cease. All moneys held by the Trustee and subject to this section shall be held uninvested and without liability for interest thereon.

Maintenance of Tax-Exempt Status of Series 2018D Bonds. No deposit of funds shall be made pursuant to “SUMMARY OF THE 2018D INDENTURE—Defeasance” if, in the Opinion of Bond Counsel, such action shall cause the interest on any Series 2018D Bonds to become includible in gross income for purposes of federal income tax.

Survival of Certain Provisions after Defeasance. Notwithstanding any other provision of the 2018D Indenture, the provisions of the 2018D Indenture relating to maturity of Bonds, interest payments and dates thereof, the redemption of Bonds, exchange, transfer and registration of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, the holding of moneys in trust and the duties of the Trustee in connection with all of the foregoing and the fees, expenses and indemnities of the Trustee shall remain in effect and shall be binding upon the Trustee, the Authority, TJU and the Bondholders notwithstanding the release and discharge of the lien of the 2018D Indenture.

Resignation and Removal of Trustee

(a) The Trustee may resign at any time, after sixty (60) days written notice, by giving written notice thereof to the Authority, TJU and each Owner of Bonds Outstanding as their names and addresses appear in the Bond Register maintained by the Trustee. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may, at the expense of TJU, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(b) If the Trustee has or shall acquire any conflicting interest, it shall, within 90 days after ascertaining that it has a conflicting interest, or within 30 days after receiving written notice from the Authority or TJU (so long as TJU is not in default under the 2018D Indenture or the 2018D Loan

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Agreement and no condition exists that, with the giving of notice or the passage of time, or both, would constitute a default or an Event of Default) that it has a conflicting interest, either eliminate such conflicting interest or resign in the manner and with the effect specified in subsection (a).

(c) The Trustee may be removed at any time, upon thirty (30) days’ notice, by an instrument or concurrent instruments in writing delivered to the Authority and the Trustee signed by the Owners of a majority in principal amount of the Outstanding Bonds. In addition, the Authority, or the Authority at the written direction of TJU (so long as TJU is not in default under the 2018D Indenture or the 2018D Loan Agreement and no condition exists that, with the giving of notice or the passage of time, or both, would constitute a default or an Event of Default), may remove the Trustee at any time for any reason. The Authority, TJU or any Bondholder may at any time petition any court of competent jurisdiction for the removal for cause of the Trustee.

(d) If at any time:

(i) the Trustee shall fail to comply with the provisions described in paragraph (b) above after written request therefor by the Authority or TJU, or

(ii) the Trustee shall cease to be eligible under the 2018D Indenture and shall fail to resign after written request therefor by the Authority, TJU or by any such Bondholder, or

(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (A) the Authority may remove the Trustee, or (B) TJU or any Bondholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) The successor Trustee shall give notice of such resignation or such removal of the Trustee and such appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the registered Owners of Bonds as their names and addresses appear in the Bond Register maintained by the Trustee. Each notice shall include the name of the successor Trustee and the address of its designated corporate trust office.

(f) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to the 2018D Indenture shall become effective until the acceptance of appointment by the successor Trustee.

Limitations on Recourse

No recourse shall be had for any claim based on the 2018D Indenture or the Bonds, including but not limited to the payment of the principal or Redemption Price of, or interest on, the Bonds, against the Authority or any member, officer, agent or employee, past, present or future, of the Authority or of any successor body, as such either directly or through the Authority or any such successor body, under any constitutional provision, statute or rule of law or by the enforcement of any assessment or penalty or by any legal or equitable proceeding or otherwise. The obligations and liabilities of the Authority arising under the 2018D Indenture shall be payable solely from the Trust Estate. The Authority shall be conclusively deemed to have complied with all of its covenants and other obligations under the 2018D Indenture upon requiring TJU in the 2018D Loan Agreement to agree to perform such Authority

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covenants and other obligations (excepting only any approvals or consents permitted or required to be given by the Authority under the 2018D Indenture, and any exceptions to the performance by TJU of the Authority’s covenants and other obligations under the 2018D Indenture, as may be contained in the 2018D Loan Agreement). However, nothing contained in the 2018D Loan Agreement shall prevent the Authority from time to time, in its discretion, from performing any such covenants or other obligations. The Authority shall have no liability for any failure to fulfill, or breach by TJU of, TJU’s obligations under the Bonds, the 2018D Indenture, the 2018D Loan Agreement or otherwise, including without limitation TJU’s obligation to fulfill the Authority’s covenants and other obligations under the 2018D Indenture.

Controlling Law. The laws of the Commonwealth shall govern the construction of the 2018D Indenture, without regard to conflict of law principles.

Credits on 2018D Loan Agreement. TJU shall be entitled to credits against its obligations under the 2018D Loan Agreement as provided therein.

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SUMMARY OF THE 2018D LOAN AGREEMENT

Loan of Proceeds

The Authority agrees to lend to TJU the proceeds received by the Authority from the sale of the Bonds and to deposit such proceeds as provided in the 2018D Indenture. TJU approves the terms and conditions of the 2018D Indenture and the Series 2018D Bonds, and the terms and conditions under which the Series 2018D Bonds are issued, sold and delivered.

Disbursements from the Costs of Issuance Fund

TJU may cause withdrawals to be made from the Costs of Issuance Fund for the payment of costs of issuance, but only if the related conditions of the 2018D Indenture are satisfied, including, as applicable, the delivery by TJU to the Trustee of a closing statement signed by an Authority Representative and a TJU Representative.

Payments by TJU

Loan Payments. In consideration of and in repayment of the loan made to TJU, TJU will make Loan Payments, which correspond, as to amounts and due dates, to the Debt Service on the Series 2018D Bonds.

Rebate Fund. TJU agrees to make such payments to the Trustee as are required of TJU under the provisions of the 2018D Loan Agreement and the 2018D Indenture concerning the Rebate Fund and the provisions of the concerning rebatable arbitrage and to pay the costs and expenses of any Financial Consultant engaged in accordance with such provisions of the 2018D Indenture. The obligation of TJU to make such payments shall remain in effect and be binding upon TJU notwithstanding the release and discharge of the 2018D Indenture.

No Set-Off. The obligation of TJU to make the payments required by the Loan Agreement shall be absolute and unconditional. Such obligation is a general obligation of TJU and the full faith and credit of TJU is pledged to the payment of all sums due under the 2018D Loan Agreement. TJU will pay without abatement, diminution or deduction (whether for taxes, loss of use, in whole or in part, of the Project or otherwise) all such amounts regardless of any cause or circumstance whatsoever, which may now exist or may, hereafter arise, including, without limitation, any defense, set-off, recoupment or counterclaim which TJU may have or assert against the Authority, the Trustee, any Bondholder or any other Person. Except to the extent provided in this paragraph, nothing contained in the 2018D Loan Agreement shall be construed to prevent or restrict TJU from asserting any rights it may have under the 2018D Loan Agreement, or under any provision of law, against the Authority or the Trustee or any other Person in a separate proceeding.

Prepayments. TJU shall be permitted, at any time and from time to time, to prepay all or any part of the Loan Payments together with such other amounts as shall be sufficient to purchase or redeem all or a portion of the Bonds in accordance with the provisions of the 2018D Indenture. All sums prepaid as described in this paragraph shall be applied to the redemption or purchase of the Bonds in the manner and to the extent provided in the 2018D Indenture. At the request of TJU or the Trustee, the Authority shall take all steps required of it under the applicable provisions of the 2018D Indenture or the Bonds to effect the redemption of all or a portion of the Bonds.

Other Payments by TJU. TJU will pay the following additional amounts, when due:

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(a) any costs of issuance in respect of the Bonds in excess of the amount of such costs which may be and are paid from proceeds of the Bonds; and

(c) at any time upon requisition therefor, all other Administrative Expenses and any other expenses of the Authority incurred in connection with the Project or the Bonds.

TJU shall pay when due all additional amounts required to be paid by it under the 2018D Indenture or the 2018D Loan Agreement (together, “Additional Payments”), including without limitation costs and expenses incurred in connection with the arbitrage rebate provisions of the 2018D Indenture.

In addition, TJU shall pay directly to the Trustee, on behalf of the Authority, when due, the Trustee fees, expenses and disbursements as provided in the 2018D Indenture.

The foregoing sums shall be paid directly to the parties entitled thereto.

Assignment of 2018D Loan Agreement to Trustee

The Authority assigns to the Trustee the 2018D Loan Agreement, all amounts payable under the 2018D Loan Agreement (other than the Authority’s right to be reimbursed for Administrative Expenses and its right to indemnification by TJU), in trust, to be held and applied pursuant to the provisions of the 2018D Indenture. TJU: (a) consents to such assignment and accepts notice thereof with the same legal effect as though such acceptance were embodied in a separate instrument, separately executed after execution of such assignment; (b) agrees to pay directly to the Trustee all amounts payable under the 2018D Loan Agreement (except any Administrative Expenses of the Authority and any indemnification payments to the Authority), without any defense, set-off or counterclaim arising out of any default on the part of the Authority under the 2018D Loan Agreement or any transactions between TJU and the Authority; and (c) agrees that the Trustee may exercise all rights granted to the Authority under the 2018D Loan Agreement.

Security for Indebtedness

TJU agrees that it will not grant, or permit another Member of the Obligated to grant, a Lien on any of its Property or its Gross Revenues to secure its obligations with respect to any Obligation except as permitted by the Master Indenture.

Additional Indebtedness

TJU shall not create, incur, assume or suffer to exist any additional Indebtedness, except as permitted by both the Master Indenture (or by any replacement or substitute master trust indenture entered into in accordance with the Master Indenture).

TJU Covenants

Master Indenture Covenants. TJU will perform its covenants under the Master Indenture, as may be amended from time to time, or any successor agreement thereto, while such agreement is in effect.

Inspection of Facilities. TJU will permit, and will cause each Obligated Group Member to permit, the Trustee and the Authority and any duly authorized agent of the Trustee and the Authority at all reasonable times and at such reasonable intervals so as not to interfere with the operation of TJU or the Obligated Group, as applicable, to enter upon, examine and inspect the Property, including the Project Facilities.

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Preservation of Tax-Exempt Status. TJU agrees, and will cause each Obligated Group Member to agree, for the benefit of the Authority, the Trustee and the Holders of the Bonds, that throughout the term of the 2018D Loan Agreement:

(a) Notwithstanding any provision of the 2018D Loan Agreement or of the 2018D Indenture to the contrary, it will not take any action or permit any action to be taken on its behalf or cause or permit any circumstance within its control to arise or continue, and will not carry on or permit to be carried on in Project Facilities any trade or business (including, without limitation, any action or circumstance which would result in the revocation or modification of its status as an organization described in Section 501(c)(3) of the Code), if such action or circumstance or trade or business would adversely affect the validity of the Series 2018D Bonds or cause the interest on the Series 2018D Bonds to be included in the gross income of the Holders thereof for purposes of federal income taxation.

(b) Neither it nor any Person related to it within the meaning of Treas. Reg. §1.150-1 of the Code, pursuant to an arrangement, formal or informal, shall purchase bonds of the Authority in an amount related to the total amount payable under and secured by the 2018D Loan Agreement.

(c) TJU agrees to comply, and agrees to cause each Obligated Group Member to comply, with the provisions of the 2018D Loan Agreement and any certificate and agreement covering tax matters executed in connection with the Series 2018D Bonds; provided however, that TJU and each Obligated Group Member shall not be required to comply with the provisions of the 2018D Loan Agreement or any such tax certificate and agreement if it causes to be delivered to the Authority and the Trustee an Opinion of Bond Counsel that such noncompliance will not adversely affect the exclusion from gross income of the interest on the Series 2018D Bonds for purposes of federal income taxation.

Series 2018D Bonds Not to Become Arbitrage Bonds. As provided in the 2018D Indenture, the Trustee will invest moneys held by the Trustee in the Funds and accounts established thereunder as directed by a TJU the Series 2018D Bonds that, notwithstanding any other provision of the 2018D Loan Agreement or any other instrument to the contrary, they will neither make or instruct the Trustee to make any investment or other use of the proceeds of the 2018D Bonds, nor take or omit to take any other action which would cause the 2018D Bonds to be arbitrage bonds under Section 148(a) of the Code, and that they will comply with the requirements of the Code throughout the term of such 2018D Bonds.

These provisions may be modified or may be deleted from the 2018D Loan Agreement, upon receipt by the Trustee and the Authority of an Opinion of Bond Counsel that such modification or deletion will not adversely affect the exclusion from gross income of interest on the 2018D Bonds for purposes of federal income taxation.

Arbitrage Rebate. Subject to the requirements set forth in the 2018D Indenture:

(a) TJU shall determine or have the Authority determine or retain a Financial Consultant to determine, within 60 days of the end of each Bond Year (as defined in the 2018D Indenture) the amount required to be rebated to the United States pursuant to Section 148(f) of the Code, as calculated from the date of original delivery of the 2018D Bonds. Notwithstanding the foregoing, TJU shall not be required to make such determination, except as required in connection with making the payments to the United States Treasury pursuant to paragraph (b) below, if during the preceding Bond Year there have been no investments made of amounts on deposit in any fund or account established under the 2018D Indenture in “nonpurpose investments” (as defined in Section 148(f)(6) of the Code) having a yield higher than the yield of the Series 2018D Bonds and TJU shall not be required to make such determination with respect to any portion of the Series 2018D Bonds which is exempt from rebate by virtue of the six-month, 18- month, or two-year construction issue rebate exemptions of Section 148 of the Code. TJU shall notify the

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Trustee and the Authority in writing if such determination is not required to be made and the Trustee and the Authority shall be entitled to rely on such written notification.

(b) TJU shall pay, or cause to be paid, to the United States Treasury (1) not less frequently than 60 days after the end of every fifth Bond Year, an amount, as determined by TJU, the Authority or a Financial Consultant, at least equal to 90% of the amount required to be rebated pursuant to Section 148(f) of the Code with respect to the Series 2018D Bonds, giving effect to any prior payments made pursuant to this paragraph, and (2) not later than 60 days after the retirement of the last Series 2018D Bond, 100% of the aggregate amount required to be rebated pursuant to Section 148(f) of the Code.

(c) The provisions of this section may be amended or deleted from the 2018D Loan Agreement upon receipt by the Trustee and the Authority of an Opinion of Bond Counsel that such amendment or deletion will not adversely affect the exclusion from gross income of the interest on the Series 2018D Bonds for purposes of federal income taxation.

(d) As required by provisions of the 2018D Loan Agreement relating to the Rebate Fund, TJU will pay to or for the account of the Authority all amounts needed to comply with the requirements of Section 148 of the Code, concerning arbitrage bonds, including Section 148(f), which requires generally a rebate payment to the United States of arbitrage profit from investment of the proceeds of Series 2018D Bonds in obligations other than tax-exempt obligations. The obligation of TJU to make such payments is unconditional and is not limited to funds representing the proceeds of Series 2018D Bonds or income from the investment thereof or any other particular source.

Events of Default

Each of the following shall constitute an Event of Default under the 2018D Loan Agreement:

(a) if TJU fails to make any Loan Payment when the same shall become due and payable under the 2018D Loan Agreement; or

(b) if TJU fails to make any other payment or deposit required under the 2018D Loan Agreement within 90 days of the due date thereof; or

(c) if TJU fails to perform any of its other covenants, conditions or provisions under the 2018D Loan Agreement and such failure continues for 60 days after the Authority or the Trustee gives TJU written notice thereof; provided, however, that if such performance requires work to be done, actions to be taken, or conditions to be remedied, which by their nature cannot reasonably be done, taken or remedied, as the case may be, within such 60 day period, no Event of Default shall be deemed to have occurred or to exist if, and so long as, TJU shall commence such performance within such 60 day period and shall diligently and continuously prosecute the same to completion; or

(d) if TJU admits in writing its inability to pay its debts generally as they become due, or proposes or makes an assignment for the benefit of creditors or a composition agreement with all or a material part of its creditors, or a trustee, receiver, executor, conservator, liquidator, sequestrator or other judicial representative, similar or dissimilar, is appointed for TJU or any of its assets or revenues, or there is commenced any proceeding in liquidation, bankruptcy, reorganization, arrangements of debts, debtor rehabilitation, creditor adjustment or insolvency, local, state or federal, by or against TJU and if such is not vacated, dismissed or stayed on appeal within 60 days; or

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(e) if for any reason any of the Bonds (or related Obligated issued pursuant to the Master Indenture) shall be declared due and payable by acceleration in accordance with the terms of the 2018D Indenture or the Master Indenture; or

(f) if an Event of Default shall have occurred and be continuing under the 2018D Indenture or the Master Indenture.

Remedies

If acceleration of the principal amount of the Bonds has been declared pursuant to the 2018D Indenture, the Trustee shall declare all Loan Payments to be immediately due and payable, whereupon the same shall become immediately due and payable. In addition, if an Event of Default under the 2018D Loan Agreement has occurred and is continuing, the Authority (or the Trustee as its assignee) may, at its option, in addition to its other rights and remedies as may be provided in the 2018D Loan Agreement or may exist at the time at law or in equity, exercise any one or more of the following remedies:

(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Authority, and require TJU to carry out any agreements with or for the benefit of the Bondholders and to perform its duties under the Act or the 2018D Loan Agreement; or

(b) by action or suit in equity require TJU to account as if it were the trustee of an express trust for the Authority; or

(c) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Authority; or

(d) upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and the Bondholders, to have appointed a receiver or receivers of the Trust Estate, with such powers as the court making such appointment shall confer; or

(e) upon notice to TJU, to accelerate the due dates of all sums due or to become due hereunder.

In order to entitle the Authority or the Trustee to exercise any remedy reserved to it, it shall not be necessary to give any notice, other than such notice as may be expressly required in the 2018D Loan Agreement. Such rights and remedies as are given the Authority under the 2018D Loan Agreement shall also extend to the Trustee, and the Trustee shall be deemed a third-party beneficiary of all covenants and agreements contained in the 2018D Loan Agreement. For so long as any Bonds remain Outstanding under the 2018D Indenture, and except with respect to TJU’s obligations in respect of the Authority’s rights to notices, payments of fees and expenses and indemnification rights and TJU’s obligations to comply with the Act, the Trustee, as the assignee of the Authority, shall have the sole right to exercise rights and remedies against TJU upon the occurrence of any Event of Default under the 2018D Loan Agreement, and the exercise by the Trustee of such rights and remedies shall be subject to all applicable provisions of the 2018D Indenture, the 2018D Loan Agreement and the Act. To the extent necessary or appropriate and requested by the Trustee, the Authority shall cooperate with the Trustee in connection with the exercise by the Trustee of such rights and remedies against TJU.

Amendments

The parties to the 2018D Loan Agreement, from time to time, may enter into any amendments and supplements to the 2018D Loan Agreement (which thereafter shall form a part of the 2018D Loan

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Agreement) without the consent of Bondholders, but with prior notice to the Trustee, for the following purposes:

(a) to cure any ambiguity, inconsistency, defect or omission in the 2018D Loan Agreement or in any amendment to the 2018D Loan Agreement;

(b) to modify, eliminate or add to the provisions of the 2018D Loan Agreement to such extent as shall be necessary to obtain, maintain or improve a rating of the Series 2018D Bonds by a Rating Agency;

(d) to make such additions, deletions or modifications as may be necessary to assure compliance with Section 148(f) of the Code relating to the required rebate of certain investment earnings to the United States government or otherwise as may be necessary to assure exemption from Federal income taxation of interest on the Series 2018D Bonds; or

In connection with any other change in the 2018D Loan Agreement if (i) in the judgment of the Trustee in conclusive reliance on an Opinion of Counsel (which may be Bond Counsel), the proposed change does not materially adversely affect the rights of the Holders of the Bonds, or (ii) the Trustee receives a Certificate of a financial advisor (as hereinafter defined) upon which the Trustee shall conclusively rely to the effect that the proposed change does not materially adversely affect the rights of the Holders of the Bonds and that such proposed change is consistent with then current industry practice for public offerings of tax-exempt bonds of a type and quality reasonably comparable to the Bonds. For the purposes of this subsection, the term “financial advisor” shall mean either an investment banker or an independent financial advisory firm, appointed by TJU and, in the Authority’s reasonable judgment, not unsatisfactory to the Authority, which is qualified to pass upon questions relating to the financing of university and healthcare projects.

Except for amendments, changes or modifications as provided in clauses (a) through (e) above or otherwise in the 2018D Loan Agreement, neither the Authority nor the Trustee shall consent to any amendment, change or modification of the 2018D Loan Agreement or waive any obligation or duty of TJU under the 2018D Loan Agreement without the written consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Bonds adversely affected thereby; provided, however, that no such waiver, amendment, change or modification shall permit termination or cancellation of the 2018D Loan Agreement or any reduction of the Loan Payments payable under the 2018D Loan Agreement or change the date when such payments are due without the consent of the Holders of all the Bonds then Outstanding who are adversely affected thereby.

[End of Document]

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APPENDIX D

DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE

APPENDIX D

Table of Contents Page

DEFINITIONS OF CERTAIN TERMS ...... 1 Definitions...... 1 Interpretation ...... 17 Accounting Principles and Procedures; Interpretation; References to Financial Statements ...... 18 CERTAIN PROVISIONS OF THE MASTER INDENTURE ...... 20 The Obligations ...... 20 Prepayment or Redemption of Obligations ...... 22 Security; Gross Revenues Pledge; Negative Pledge and Permitted Encumbrances ...... 22 Negative Pledge; Permitted Encumbrances ...... 24 Additional Obligations ...... 24 Additional Provisions Concerning Certain Forms of Obligations ...... 27 Events of Default and Remedies ...... 38 The Master Trustee ...... 46 Supplemental Master Indentures ...... 47 Satisfaction of the Master Indenture ...... 52

DEFINITIONS OF CERTAIN TERMS AND SUMMARIES OF CERTAIN PROVISIONS OF THE MASTER INDENTURE

The following is a summaries of certain provisions of the Master Indenture. The summaries should not be regarded as full statements of the documents themselves or of the portions summarized. For complete statements of the provisions thereof, reference is made to the document in its entirety, a copy of which will be available for inspection at the designated corporate trust office of the Trustee.

DEFINITIONS OF CERTAIN TERMS

Definitions

The following are definitions of certain terms used in the summaries of the Master Indenture.

“2006 Bonds” means the Pennsylvania Higher Educational Facilities Authority Revenue Bonds (Thomas Jefferson University) Series 2006 issued for the benefit of the Obligated Group Agent in the original principal amount of $85,920,000.

“2012 Bonds” means the Pennsylvania Higher Educational Facilities Authority Revenue Bonds (Thomas Jefferson University) Series 2012 issued for the benefit of the Obligated Group Agent in the original principal amount of $42,195,000.

“Adjusted Unrestricted Expenses” with respect to a Person, means for any period of time for which calculated, the Total Unrestricted Expenses during such period by the Members of the Obligated Group, determined in accordance with Generally Accepted Accounting Principles, other than (a) interest expense, (b) depreciation and amortization, (c) unrealized losses on investments or Swap Agreements (including those related to hedging activities), (d) other non-cash expenses, (e) losses resulting from the early extinguishment of debt, termination of Swap Agreements, the sale or other disposition of assets not in the ordinary course of business or any reappraisal, revaluation or write-down of assets, and any other extraordinary losses or expenses, and (f) if the calculation is made with respect to the Obligated Group, any expenses attributable to transactions between any Member of the Obligated Group and any other Member of the Obligated Group; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Adjusted Unrestricted Revenues” with respect to a Person, means for any period of time for which calculated, the Total Unrestricted Revenues during such period of the Members of the Obligated Group, determined in accordance with Generally Accepted Accounting Principles, including (a) in the case of any Member of the Obligated Group providing health care services, gross patient and resident service revenues less contractual allowances, free care and discounted care, plus (b) other operating revenues less applicable allowances such as sale discounts and sale returns, plus (c) non-operating revenues or gains, plus (d) net assets released from restriction; provided that no determination thereof shall take into account (t) unrealized gains on investments above/below the University’s spending policy typically recorded as operating income or unrealized gains or Swap Agreements, (u) other non-cash income, (v) income derived from Defeasance Obligations that are irrevocably deposited in escrow to pay the principal of or interest on Indebtedness or Related Bonds, (w) extraordinary gains resulting from the early extinguishment of debt, termination of Swap Agreements, the sale, exchange or other disposition of Property not in the ordinary course of business, or the reappraisal, reevaluation or write-up of assets, or any other extraordinary gains, (x) gifts, grants, bequests or donations specifically restricted as to use by the donor or grantor for a purpose inconsistent with the payment of debt service on Indebtedness of a Member of the Obligated Group, (y) insurance (other than business interruption) and condemnation

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proceeds, and (z) proceeds of borrowing. Any calculation made will exclude any revenues attributable to transactions between any Member of the Obligated Group and any other Member of the Obligated Group, and for purposes of any calculation made with reference to both Adjusted Unrestricted Revenues and Adjusted Unrestricted Expenses, any deduction or reduction from revenues otherwise required by the preceding provisions of this definition may not be made if and to the extent that the amount of such deduction is included in Adjusted Unrestricted Expenses and its inclusion would have the result of counting such amount more than once; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Affiliate” means, each Person that, directly or indirectly, controls or is controlled by or is under common control with Obligated Group Agent. For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the power, directly or indirectly, either to (i) vote 50% or more of the securities having ordinary voting power for the election of directors, trustees or similar governing body of such Person, or (ii) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Audit Group” means TJU and any other Person whose financial results are set forth in the Financial Statements of the University. For the avoidance of doubt, the financial results of any Person that is an Excluded Affiliate are not to be included in any calculations of the Audit Group unless otherwise provided for in the Master Indenture.

“Authorized Representative” means, with respect to any Member of the Obligated Group, the Chairman, Vice Chairman, President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Executive Director, any Assistant Executive Director, or the Controller or any Assistant Controller thereof or any other officer of a Member of the Obligated Group or other person designated by Certified Resolution of the governing body of such Person to act for any of the foregoing, either generally or with respect to the execution of any particular document or other specific matter.

“Balloon Indebtedness” means any Long Term Indebtedness other than a Demand Obligation, 25% or more of the principal amount of which is payable in the same year (after taking into account all scheduled mandatory redemptions or prepayments payable over the life of such Long Term Indebtedness), such year being in the Master Indenture referred to as a “balloon payment year” and the principal amount payable in such balloon payment year being in the Master Indenture referred to as a “balloon payment.”

“Bondholder,” “holder of Bonds” or “owner of the Bonds” means the registered owner of any Related Bond.

“Book Value” means, when used in connection with Property, the value of such Property, net of accumulated depreciation and amortization.

“Bond Counsel” means a nationally recognized firm of lawyers experienced in matters involving the issuance of tax-exempt debt by states and their political subdivisions.

“Bond Index” means, at the option of the Obligated Group Agent (as set forth in a Certificate) (a) the 30-year Revenue Bond Index published most recently by The Bond Buyer, or a comparable index if such Revenue Bond Index is not so published, (b) the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index, (c) the weighted average coupon of all then-Outstanding Long-Term Indebtedness secured by Obligations, as such average is certified by the Obligated Group

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Agent in the Certificate, or (d) such other interest rate or interest index as may be certified by the Obligated Group Agent in writing to the Master Trustee as appropriate to the situation.

“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday on which banking institutions in the Commonwealth or the state in which the designated corporate trust office of the Master Trustee is located are authorized or required by law to close or (b) a day on which the New York Stock Exchange is closed.

“Certificate” means a certificate or report, in form and substance satisfactory to the Master Trustee, executed: (i) in the case of a Certificate of TJU or the Obligated Group Agent, by an Authorized Representative of TJU or the Obligated Group Agent; and (ii) in the case of a Certificate of any other Person, by such Person, if an individual, and otherwise by an officer, partner or other authorized representative of such Person; provided that in no event shall any individual be permitted to execute any Certificate in more than one capacity. Notwithstanding the foregoing, a Certificate of TJU or the Obligated Group Agent may be executed by any individual designated by the TJU to execute such Certificate, as set forth in a Certified Resolution of the TJU, filed with the Master Trustee.

“Certified Public Accountant” means an independent accounting firm which is appointed by the Obligated Group Agent for the purpose of examining and reporting on or passing on questions relating to the financial statements of the Audit Group, has all certifications necessary for the performance of such services and, in the Master Trustee’s reasonable judgment, is not unsatisfactory to the Master Trustee.

“Certified Resolution” means, as the context requires: (i) one or more resolutions of the governing body of TJU or the Obligated Group Agent or a duly authorized committee thereof, certified by the secretary or assistant secretary of TJU or the Obligated Group Agent or other officer serving in a similar capacity, to have been duly adopted and to be in full force and effect as of the date of certification; or (ii) one or more resolutions of the governing body of any other Person (including an Obligated Group Member) or a duly authorized committee thereof, certified by the secretary or assistant secretary of such Person or other Person serving in a similar capacity to have been duly adopted and to be in full force and effect as of the date of certification.

“Code” means the Internal Revenue Code of 1986, as amended from time to time. Each reference to a Section of the Code in the Master Indenture shall be deemed to include the United States Treasury Regulations, including temporary and proposed regulations, relating to such Section which are applicable to the Related Bonds or the use of the proceeds thereof.

“Commonwealth” means the Commonwealth of Pennsylvania.

“Consultant” means a firm which (i) is Independent and (ii) is a public accounting firm, a nationally recognized investment banker or a nationally recognized professional management consultant, designated by Obligated Group Agent qualified to pass upon questions relating to the financial affairs of facilities of the type or types operated by the Obligated Group and/or members of the Audit Group and having the skill and experience necessary to render the particular opinion or report required by the provision of the Master Indenture in which such requirement appears. Whenever a Certificate or report or opinion is furnished to the Master Trustee by a Consultant, such opinion, report or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning of the Master Indenture.

“Counsel” means an attorney-at-law or law firm (which may be internal counsel for Obligated Group Agent or a Member of the Obligated Group) not unsatisfactory to the Master Trustee.

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“Days Cash on Hand Ratio” means, as of the date of calculation, the ratio of (a) the product of (i) total cash, cash equivalents and marketable securities of the Obligated Group (not restricted as to use) multiplied by (ii) 365 to (b) Adjusted Unrestricted Expenses incurred during the 12-month period ending on such date of calculation. In calculating the Days’ Cash on Hand Ratio, the Obligated Group Agent (A) may include cash, cash equivalents and marketable securities constituting Board-designated funds which are not restricted by the donor, by contract, by court order or by governmental restrictions as to use, and (B) may not include (1) self-insurance funds, (2) trustee-held funds, (3) any portion of cash, cash equivalents or marketable securities which have been derived from proceeds of any short-term borrowings including, without limitation, internal affiliate loans and draws on lines of credit regardless of the maturity date of the line of credit, (4) proceeds of accounts receivable financings or factoring, (5) proceeds of Demand Obligations not supported by a Loan Commitment with term-out features, and (6) funds or investments subject to a lien (other than the Liens permitted in the Master Indenture on the Gross Revenues) or any donor restrictions, permanent or temporary, regardless of whether such funds or investments are considered restricted for purposes of Generally Accepted Accounting Principles; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Debt Service Coverage Ratio” means, for any period of time, the ratio obtained by dividing Net Revenues during such period by the Debt Service Requirements for such period; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Debt Service Requirements” means, for any specified period, (i) the amounts payable as lease rentals in respect of any or all Long-Term Indebtedness in the form of capitalized leases, subject to the treatment of leases in the definition of Indebtedness and certain provisions of the Master Indenture concerning accounting principles and interpretation, (ii) the amounts payable to the Holders of Obligations (or to the trustee for such Holders) in respect of the principal of any or all Obligations issued as Long-Term Indebtedness under the Master Indenture (including scheduled mandatory redemptions of principal) and the interest on such Obligations, and (iii) the amounts payable to any or all holders of Long-Term Indebtedness other than capitalized leases and Obligations under the Master Indenture (or to any trustee or paying agent for such holders) in respect of the principal of such Long-Term Indebtedness (including mandatory redemptions or prepayments of principal) and the interest on such Long-Term Indebtedness; provided, however, that:

(a) the amounts deemed payable in respect of any Long-Term Indebtedness shall not include interest on such Long-Term Indebtedness that is funded from the proceeds thereof;

(b) the amounts deemed payable in respect of any Indebtedness shall not include any amounts payable from funds available (without reinvestment) in a Qualified Escrow (other than amounts so payable solely by reason of Obligated Group’s failure to make payments from other sources);

(c) non-scheduled termination or similar payments on Swap Agreements payments due on optional redemptions, payments due on tenders of Indebtedness for purchase or retirement (other than scheduled mandatory sinking fund payments), payments due as a result of acceleration following default and similar, non-scheduled payments which come due or may become due on any Indebtedness shall not be treated as Debt Service Requirements; and

(d) the foregoing shall be subject to adjustment and recalculation as and to the extent permitted or required as described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional Indebtedness - Additional Provisions Concerning Certain Forms of Obligations” in the Master Indenture.

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“Demand Obligation” means any Long Term Indebtedness that is subject to repurchase or repayment as to principal upon demand by the holder thereof.

“Escrow Securities” means, (i) with respect to any Obligation which secures a series of Related Bonds, the securities permitted to be used to refund or advance refund such series of Related Bonds under the Related Bond Indenture, or (ii) with respect to any other Obligation, those securities identified as such in the Supplemental Master Indenture pursuant to which such Obligations were issued.

“Event of Default” means any one or more of those events set forth under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Events of Default and Remedies - Events of Default” below.

“Excluded Affiliate” means a Material Affiliate or any other Person that is designated by the Obligated Group Agent as an “Excluded Affiliate” as described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - General Covenants - Obligated Group Members; Excluded Affiliates” in the Master Indenture.

“Excluded Property” means (i) any assets of “employee pension benefit plans,” including “multiemployer plans”, as defined in the Employee Retirement Income Security Act of 1974, as amended, or any similar funds established for provision of pension or other post-retirement benefits, (ii) any assets of a self-insurance trust which prohibits any application of such assets for purposes which are not related to claims as defined in the governing trust document, and (iii) all endowment funds and property derived from gifts, grants, research contracts, bequests, donations and contributions heretofore or hereafter made to or with any Member of the Obligated Group that are specifically restricted by the donor, testator or grantor to a particular purpose inconsistent with the payment of Debt Service Requirements on Obligations, and the income and gains derived therefrom, if so restricted.

“Existing Swaps” means interest rate swap transactions of the Obligated Group Agent with: (i) Bank of America, National Association evidenced by the Amended and Restated Master Agreement dated February 26, 2015, the Amended and Restated Schedule dated February 26, 2015, the Amended and Restated Credit Support Annex dated February 26, 2015, and the Amended and Restated Confirmation Internal Tracking Number 13186171 and the Amended and Restated Confirmation Internal Tracking Numbers 59513577 and 59516957, each with an amended trade date of February 24, 2015; (ii) PNC Bank National Association evidenced by the Master Agreement dated February 26, 2015, the Schedule dated February 26, 2015, the Credit Support Annex dated February 26, 2015, along with Transaction Reference Number MX_70810 with a trade date of February 24, 2015; and (iii) Wells Fargo Bank, N.A. evidenced by the Master Agreement dated as of June 30, 2014, the Amended and Restated Schedule dated February 26, 2015, the Amended and Restated Credit Support Annex dated February 26, 2015, and ad the Confirmation # 13545519 dated June 30, 2014 and Confirmation # 13545520 dated June 30, 2014, as such Existing Swaps may be amended and/or restated by the parties thereto.

“Fair Market Value,” when used in connection with Property, shall mean the fair market value of such Property as determined by either:

(a) an appraisal of the portion of such Property which is real property made within five years of the date of determination by a “Member of the Appraisal Institute” (MAI) and by an appraisal of the portion of such Property which is not real property made within five years of the date of determination by any expert, provided that any such appraisal shall be performed by a person or firm which (A) is Independent, (B) does not have any direct financial interest or any material indirect financial interest in the Obligated Group Agent or any other Member of the Obligated Group or an affiliate of such Member of the Obligated Group and (C) is not connected with the Obligated Group Agent or any Member of the

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Obligated Group or an affiliate thereof as an officer, employee, promoter, trustee, partner, director or person performing similar functions; adjusted for the period, not in excess of five years, from the date of the last such appraisal for changes in the implicit price deflator for the gross national product as reported by the United States Department of Commerce or its successor agency, or if such index is no longer published, such other index certified to be comparable and appropriate in a Certificate of the Obligated Group Agent delivered to the Master Trustee; or

(b) a bona fide offer for the purchase of such Property made on an arm’s-length basis.

“Financial Statements of the University” means the consolidated, audited financial statements of TJU or any Person that, hereafter, may control TJU and the other Members (collectively, “Parent Corporation”), and, if applicable (without duplication), the consolidated, audited financial statements of any Affiliate into whose financial statements the results of the University are consolidated and (without duplication) the consolidated, audited financial statements of any Affiliate whose financial results are otherwise not consolidated with the consolidated, audited financial statements of Parent Corporation, adjusted in each case to exclude the results of each Excluded Affiliate; provided that for any purpose in the Master Indenture requiring audited financial statements that exclude an Excluded Affiliate, the consolidating schedules included with the University’s audited financial statements may be utilized to derive the required information.

“Fiscal Year” means any twelve-month period beginning on July 1 of any calendar year and ending on June 30 of the following calendar year or such other consecutive twelve-month period selected by the Obligated Group Agent as the fiscal year for the Obligated Group and designated from time to time in writing by the Obligated Group Agent to the Master Trustee; for purposes of making historical calculations or determinations set forth in the Master Indenture on a Fiscal Year basis, or for purposes of combinations or consolidation of accounting information, with respect to those entities whose actual fiscal year is different from that designated above, the actual fiscal year of such entities which ended within the Fiscal Year of the Obligated Group shall be used; provided, however, that for purposes of making any calculations or determinations as set forth in the Master Indenture, the Obligated Group Agent may designate in writing to the Master Trustee as the “Fiscal Year” any twelve-month period. Whenever the Master Indenture refers to a Fiscal Year of a specific entity, such reference shall be to the actual fiscal year adopted by such entity.

“Gross Revenues” means all receipts, revenues, income and other moneys received by or on behalf of a Member of the Obligated Group, and all rights to receive the same, whether in the form of accounts, accounts receivable, deposit accounts, contract rights, chattel paper, instruments, documents, general intangibles, letter of credit rights, investment property or other rights, and the proceeds thereof, and insurance thereon (all terms which are used this definition which are defined in the UCC shall have the same meanings in the Master Indenture as such terms are defined in the UCC, unless the Master Indenture shall otherwise specifically provide), whether now existing or hereafter coming into existence and whether now owned or held or hereafter acquired by a Member of the Obligated Group and including all Swap Receipts and Swap Termination Payments payable to a Member of the Obligated Group; provided, however, that there shall be excluded from Gross Revenues any Excluded Property.

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“Gross Revenues Account” means the account of that name established as described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Security; Gross Revenues Pledge; Negative Pledge and Permitted Encumbrances” in the Master Indenture.

“Guarantee” means a loan commitment and all obligations of the Obligated Group Agent or another Member of the Obligated Group guaranteeing in any manner whatsoever, whether directly or indirectly, any obligation (including an Obligation of any other Person (including any Excluded Affiliates) which would, if such other Person were the Obligated Group Agent or another Member of the Obligated Group, constitute an Obligation under the Master Indenture.

“Immaterial Affiliate” means any Affiliate which is not a Material Affiliate. For the avoidance of doubt, an Immaterial Affiliate may be designated as a Member of the Obligated Group.

“Indebtedness” means all indebtedness of a Person for borrowed moneys or credit extended, including Guarantees, whether long-term or short-term, parity or subordinate, secured or unsecured, including any leases required to be capitalized in accordance with Generally Accepted Accounting Principles, installment purchase obligations, and any other extension of credit by a third party which are properly treated as liabilities under Generally Accepted Accounting Principles. Indebtedness shall not include:

(a) current obligations payable out of current revenues, including current payments for the funding of pension plans;

(b) obligations under contracts for supplies, services and pensions, allocable to the current operating expenses of future years in which the supplies are to be furnished, the services rendered or the pensions paid;

(d) rentals payable under leases that are not properly capitalized under Generally Accepted Accounting Principles and, additionally, any lease that was not capitalized under Generally Accepted Accounting Principles as of the date of execution thereof, but at a later date is required to be capitalized under Generally Accepted Accounting Principles then in effect may, at the sole discretion of the Obligated Group Agent, be excluded from Indebtedness;

(e) obligations under a Swap Agreement;

(f) Non-Recourse Indebtedness;

(g) obligations payable from funds available (without reinvestment) in a Qualified Escrow; and

(h) any other obligations that do not constitute indebtedness under Generally Accepted Accounting Principles.

Nothing in this definition or otherwise shall be construed to count Indebtedness more than once, and Indebtedness incurred pursuant to a Loan Commitment shall be counted only to the extent the reimbursement obligation on amounts drawn or, in the reasonable judgment of the Obligated Group Agent, likely to be drawn, on the Loan Commitment exceeds the obligation on the Indebtedness for which such Loan Commitment is provided. The examples of items set forth in clauses (a) through (h) above

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excluded from Indebtedness are not intended to create any implication that any other liability shall be included as Indebtedness solely as a result of such liability not being within the plain meaning of (a) through (h).

As set forth in “Accounting Principles and Procedures; Interpretation; References to Financial Statements” below, for the avoidance of doubt, it is the intent of the parties on the date of the signing and delivery of the Master Indenture that any operating lease, as defined by the Financial Accounting Standards Board on the date of signing and delivery of the Master Indenture, and any renewal of such operating lease, shall be governed in accordance with Generally Accepted Accounting Principles in effect on the date of signing and delivery of the Master Indenture and shall not be treated as the incurrence of Indebtedness or the disposition of Property, unless otherwise elected by the Obligated Group Agent.

“Independent” means a Person who is: (i) not a member of the governing body or an officer or employee of the Obligated Group Agent or another Member of the Obligated Group or an Affiliate thereof; (ii) is in fact independent; and (iii) does not have any direct financial interest or any material indirect financial interest in any member of the Audit Group.

“Industry Restrictions” means federal, state or other applicable governmental laws or regulations or general industry standards or general industry conditions placing restrictions and limitations on the rates, fees and charges to be fixed, charged and collected by any member of the Audit Group.

“Lien” means any mortgage or pledge of, or security interest in, or lien or encumbrance on, any Property, excluding Liens applicable to Property in which any Member of the Obligated Group has only a leasehold interest, unless the Lien is with respect to such leasehold interest.

“Liquid Unrestricted Net Assets” means an amount equal to (i) the Unrestricted Net Assets, minus (ii) Net Investment in Plant, all as set forth in the most recent applicable Financial Statements of the University; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Loan Commitment” means an unconditional irrevocable letter of credit, a bond insurance policy, a bond purchase agreement, a guarantee, a line of credit that is revocable only upon the insolvency of the Obligated Group Agent or another Member of the Obligated Group, a binding long term loan commitment or other similar extension of credit which is issued (i) for the purpose of providing a source of funds for the payment of all or any portion of the Obligated Group Agent’s or such Member’s payment obligations under any Indebtedness, including Balloon Indebtedness or Demand Obligation or the purchase thereof, and (ii) by a bank, trust company, savings and loan association, insurance company or other institutional lender.

“Long Term Indebtedness” means any or all Indebtedness of a Person, except Short Term Indebtedness and Subordinated Indebtedness.

“Master Indenture” means the Amended and Restated Master Trust Indenture (Security Agreement), dated as of February 1, 2017 and effective on December 1, 2017, among the Obligated Group Agent, the other Members of the Obligated Group listed on Exhibit A thereto, any other future Members of the Obligated Group, and the Master Trustee, as it may from time to time be further amended, supplemented or substituted in accordance with the terms of the Master Indenture.

“Master Trustee” means The Bank of New York Mellon Trust Company, N.A., or any successor trustee under the Master Indenture.

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“Material Affiliate” means an Affiliate (other than an Excluded Affiliate or an Immaterial Affiliate), whose Total Unrestricted Revenues are equal to at least 5% of the consolidated Total Unrestricted Revenues of the Audit Group or whose Net Assets are equal to at least 5% of the consolidated Net Assets of the Audit Group.

“Maximum Annual Debt Service Requirements” means, as of the date of calculation, the highest annual Debt Service Requirements payable on any Long Term Indebtedness during the then current or any succeeding Fiscal Year over the remaining term of all Obligations.

“Member” or “Member of the Obligated Group” means the Obligated Group Agent and any Person who is listed on Exhibit A hereto after designation as a Member of the Obligated Group pursuant to the terms of the Master Indenture. The Obligated Group Agent shall from time to time promptly deliver a revised Exhibit A to the Master Trustee, indicating additions or deletions of Members of the Obligated Group.

“Net Assets” shall be defined in accordance with Generally Accepted Accounting Principles.

“Net Investment in Plant” shall be defined in accordance with Generally Accepted Accounting Principles.

“Net Revenues” means, for any period, Adjusted Unrestricted Revenues (or the equivalent as permitted) less Adjusted Unrestricted Expenses (or the equivalent as permitted).

“Non-Recourse Indebtedness” means any indebtedness, the holder of which has no claim for any payments in respect thereof against the general credit of the Obligated Group or against any properties (except for Permitted Encumbrances) or the Gross Revenues of the Obligated Group and the other assets on which there are Liens securing any Obligations or Subordinated Obligations under the Master Indenture.

“Obligated Group” means, collectively, the Obligated Group Agent, the other Members listed on Exhibit A of the Master Indenture, and any other Person that has fulfilled the requirements for entry into the Obligated Group set forth under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Entrance into the Obligated Group” below and which has not ceased such status pursuant to the provisions described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Release of a Member” below.

“Obligated Group Agent” means TJU or such other Member as may be designated from time to time pursuant to written notice to the Master Trustee, executed by an authorized officer of Obligated Group Agent or, if TJU is no longer a Member of the Obligated Group, of each Member of the Obligated Group.

“Obligation holder,” “holder of an Obligation” or “owner of an Obligation” means the registered owner of any fully registered or book entry Obligation unless alternative provision is made in the Supplemental Master Indenture pursuant to which such Obligation is issued for establishing ownership of such Obligation, in which case such alternative provision shall control.

“Obligations” means any obligation issued under the Master Indenture as a joint and several obligation of each Member of the Obligated Group, evidencing or securing particular Indebtedness (including a series of Related Bonds, Parity Indebtedness and Subordinated Indebtedness) and any obligations of a Person with respect to Swap Payments and Swap Termination Payments. Any

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calculations under the Master Indenture such as those covering Debt Service Requirements on Obligations shall be made without duplication.

“Operating Assets” means all tangible Property of any Person owned by such Person; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Opinion of Counsel” means an opinion in writing signed by legal counsel acceptable to the Obligated Group Agent and the Master Trustee, who may be an employee of or counsel to Obligated Group Agent or an Affiliate of Obligated Group Agent.

“Outstanding” means, in the case of any Obligations, any Indebtedness, or any Related Bonds, all Obligations, all Indebtedness or all Related Bonds, as the case may be, except:

(a) Obligations, Indebtedness or Related Bonds canceled after purchase in the open market or after payment at or prepayment or redemption prior to maturity;

(b) Obligations, Indebtedness or Related Bonds for the payment or redemption of which cash or non-callable Escrow Securities, or a combination thereof, have been deposited with the Master Trustee, the lender or a trustee or fiduciary for such lender, or the Related Bond Trustee, as applicable (whether upon or prior to their maturity or redemption date thereof) in an amount that is sufficient to pay the amounts due thereon; provided that if such Obligations, Indebtedness or Related Bonds are to be prepaid or redeemed prior to their maturity, notice of prepayment or redemption has been given or irrevocable arrangements satisfactory to the Master Trustee, the lender or a trustee or fiduciary for such lender, or the Related Bond Trustee, as applicable, have been made therefor, or waiver of such notice by the Person entitled to such notice has been provided;

(c) Obligations, Indebtedness or Related Bonds in lieu of which other instruments or securities have been authenticated and delivered; and

(d) For the purpose of all consents, approvals, waivers and notices required to be obtained or given under the Master Indenture, any relevant loan document relating to Indebtedness, or any Related Bond Indenture, as applicable, Obligations, Indebtedness or Related Bonds held or owned by a Member of the Obligated Group, except that in determining whether the Master Trustee shall be protected in relying upon any such approval or consent of Obligation holders, only Obligations that a Responsible Officer of the Master Trustee actually knows to be held or owned by a Member of the Obligated Group shall be disregarded.

Notwithstanding the foregoing, any Obligation or other Indebtedness securing Related Bonds shall be deemed Outstanding only if such Related Bonds are Outstanding.

“Parent Corporation” means TJU or any Person that hereafter may control TJU and the other Members of the Obligated Group.

“Parity Indebtedness” means Indebtedness secured (to the extent and in the manner provided in the Master Indenture) by a Lien on the Gross Revenues equally and ratably with the Obligations.

“Parity Swap Payment” means a Swap Payment (other than a Swap Termination Payment) secured (to the extent and in the manner provided in the Master Indenture) by an Obligation; provided, however, that the Gross Revenues of TJU may not be pledged as security for any Swap Payment for so long as the 2006 Bonds or the 2012 Bonds are outstanding.

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“Permitted Encumbrances” means and includes the following:

(1) Any judgment Lien or notice of pending action against any Member of the Obligated Group so long as (A) such judgment or pending action is being contested and execution thereon is stayed or while the period for responsive pleading has not lapsed, (B) the judgment has been paid, (C) the judgment is covered by insurance or (D) in the absence of such a contest and stay, such judgment Lien, in the judgment of Obligated Group Agent, will have no material adverse effect on the business, operation or general financial condition of Obligated Group or for the University (taken as a whole) and neither the pledge and security interest of the Master Indenture nor any property of Obligated Group or the University (taken as a whole) will be subject to material impairment, loss or forfeiture;

(2) (A) Rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or provision of law affecting any Property to (i) terminate such right, power, franchise, grant, license or permit (provided that the exercise of such a right would not materially and adversely affect the value thereof) or (ii) purchase, condemn, appropriate or recapture, or designate a purchaser of, such Property; (B) any liens on any Property for taxes, assessments, levies, fees, water and sewer charges and other governmental and similar charges, and any liens of mechanics, materialmen, laborers, suppliers or vendors for work or services performed or materials furnished in connection with such Property, which are not due and payable or which are not delinquent, or the amount or validity of which, are being contested and execution thereon is stayed or, with respect to liens of mechanics, materialmen and laborers, have been due for less than 90 days; (C) easements, rights-of-way, servitudes, restrictions and other minor defects, encumbrances and irregularities in the title to any Property which do not materially impair the use of such Property or materially and adversely affect the value thereof; (D) rights reserved to or vested in any municipality or public authority to control or regulate any Property or to use such Property in any manner, which rights do not materially impair the use of such Property in any manner, or materially and adversely affect the value thereof; and (E) to the extent that it affects title to any Property, the Master Indenture;

(3) Liens arising by reason of good faith deposits with any Member of the Obligated Group in connection with leases of real estate, bids or contracts (other than contracts for the payment of money), deposits by any Member of the Obligated Group to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, and deposits as security for the payment of taxes or assessments or other similar charges;

(4) Any Lien arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable any Member of the Obligated Group to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with workers’ compensation, unemployment insurance, pension or profit sharing plans or other similar social security plans, or to share in the privileges or benefits required for companies participating in such arrangements;

(5) Any Lien arising by reason of any irrevocable escrow established to pay debt service with respect to Indebtedness, provided the related Indebtedness is defeased and no longer outstanding;

(6) Any Lien in favor of a trustee, a similar creditor or its agent on the proceeds of Indebtedness prior to the application of such proceeds;

(7) Liens on moneys deposited by patients or others with any Member of the Obligated Group as security for or as prepayment for the cost of patient care, and any rights of residents of life care,

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elderly housing or similar facilities to entrance fees, endowment or similar funds deposited by or on behalf of such residents;

(8) Liens on Property received by any Member of the Obligated Group through gifts, grants or bequests; provided, that no such Lien (or the amount of Indebtedness secured thereby) may be increased or modified so as to apply to any Property of any Member of the Obligated Group not previously subject to such Lien unless such Lien following such increase or modification otherwise qualifies as a Permitted Encumbrance under the Master Indenture;

(9) Statutory rights of the United States of America by reason of federal funds made available under 42 U.S.C. Section 291 et seq. and similar rights under other federal and state statutes;

(10) Liens on funds established pursuant to the terms of any Supplemental Master Indenture or related document in favor of the Master Trustee, or the registered owner of the Indebtedness issued pursuant to such related Supplemental Master Indenture or related document and permitted by the Master Indenture;

(11) Liens constituting reservations contained in patents granted by the United States of America or any state thereof;

(12) Liens constituting rights of third-party payors to recoup excess reimbursement to any Member of the Obligated Group;

(13) Liens granted to insurance companies on the proceeds of insurance policies (provided that such lien shall secure an amount not exceeding the premium owed to any such insurance company by a Member of the Obligated Group);

(14) Liens required by any federal, state or local government as a condition to its making a grant or loan (except loans made solely from the proceeds derived from the sale of a series of Related Bonds) to, or its guaranteeing or insuring part or all of Indebtedness of, a Member of the Obligated Group, but only if such Lien is limited to Property the acquisition of which has not been financed, directly or indirectly, with proceeds of a series of Related Bonds;

(15) Statutory rights of landlords with respect to the personal property of a Member of the Obligated Group that are its tenants;

(16) Liens which are existing on the date of execution of the Master Indenture or existing on the date any Person becomes a Member of the Obligated Group, provided that no such Lien (or the amount of an Obligation secured thereby) may be increased, modified or renewed (which terms shall not apply to the filing of any continuation statements under the UCC) to apply to any Property of any Member of the Obligated Group not subject to such Lien on such date, unless such Lien following such increase, modification or renewal or otherwise qualifies as a Permitted Encumbrance under the Master Indenture;

(17) Liens on Property of a Person at the time such Person engages in a merger, consolidation, sale or conveyance pursuant to the provisions of the Master Indenture described in “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Permitted Reorganizations” below; provided that no such lien (or the amount of an Obligation secured thereby) may be increased, modified or renewed (which terms shall not apply to the filing of any continuation statements under the UCC or applicable laws) to apply to any Property of any Member of the Obligated Group not subject to

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such Lien on such date, unless such Lien following such increase, modification or renewal or otherwise qualifies as a Permitted Encumbrance under the Master Indenture;

(18) Liens granted by a Member of the Obligated Group to another Member of the Obligated Group;

(19) Any lease which, in the judgment of Obligated Group Agent as set forth in a Certificate of Obligated Group Agent, is reasonably necessary or appropriate for or incidental to the proper and economical operation of the business, operations or property of a Member of the Obligated Group, taking into account the nature and terms of the lease and the nature and purpose of the property subject thereto;

(20) Utility, access and other easements, rights-of-way, restrictions and other minor defects, encumbrances, agreements for the joint or common use of property, and irregularities in the title to any property which do not materially impair the use of such property for its intended purpose or materially and adversely affect the value thereof;

(21) Liens on the Gross Revenues of the Obligated Group (excluding, however, for so long as the 2006 Bonds and the 2012 Bonds are Outstanding, the Gross Revenues of TJU) given to secure their obligations with respect to the Existing Swaps;

(22) Any subordinated Lien on the Gross Revenues given as security for obligations with respect to Subordinated Obligations or Subordinated Swap Payments, in each case given in accordance with the provisions of the Master Indenture;

(23) Liens in the nature of purchase money security interests securing Indebtedness or Non- Recourse Indebtedness incurred in accordance with the provisions of the Master Indenture for the purpose of financing the purchase price or the cost of constructing any Operating Assets subject to such Liens and not secured by any other Property of the Obligated Group;

(24) Liens on money or securities owned by a Member of the Obligated Group that are posted as collateral to a Swap Counterparty required under a collateral support agreement or similar agreement executed in connection with a Swap, in accordance with the provisions of the Master Indenture described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Limitation of Certain Dispositions” below;

(25) Liens on the Gross Revenues of TJU granted to secure TJU’s obligations with respect to the 2006 Bonds and the 2012 Bonds as security for TJU’s obligations with respect thereto;

(26) Liens on Excluded Property;

(27) (A) any Lien on Property if such Lien equally and ratably secures all of the Obligations and, if the Obligated Group Agent shall so determine, any other Indebtedness or obligation of any Member of the Obligated Group and (B) the Lien on Gross Revenues pledged as described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Prepayment or Redemption of Obligations” below; and

(28) Rights of setoff granted to banks or other financial institutions with respect to funds on deposit in the ordinary course of business.

“Permitted Investments” means (i) with respect to any Obligation which secures a series of Related Bonds, the obligations in which the Related Bond Trustee may invest funds under the Related

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Bond Indenture, (ii) with respect to any Obligations for which a Supplemental Master Indenture specifies certain permitted investments, the investments so specified and (iii) in all other cases such legal investments as are determined and designated in writing by the Obligated Group Agent.

“Permitted Reorganization” means any consolidation, merger, sale of assets or reorganization of any Members of the Obligated Group permitted by the provisions of the Master Indenture described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Permitted Reorganizations” below.

“Qualified Escrow” means a segregated escrow fund or other similar fund or account which (a) is irrevocably established as security for Long Term Indebtedness previously incurred and then outstanding (herein referred to as “Prior Indebtedness”) or for Long Term Indebtedness, if any, then to be incurred to refund outstanding Prior Indebtedness (herein referred to as “Refunding Indebtedness”), (b) is held in cash or invested in Escrow Securities by the holder of the Prior Indebtedness or Refunding Indebtedness secured thereby or by a trustee or agent acting on behalf of such holder and is subject to a perfected security interest in favor of such holder, trustee or agent, and (c) is required by the documents establishing such fund or account to be applied toward the payment obligations in respect of the Prior Indebtedness, provided that, if the fund or account is funded in whole or in part with the proceeds of Refunding Indebtedness, the documents establishing the same may require specified payments of principal or interest (or both) in respect of the Refunding Indebtedness to be made from the fund or account prior to the date on which the Prior Indebtedness is repaid in full.

“Regulatory Body” means any federal, state or local government, department, agency, authority or instrumentality and any other public or private body, including accrediting organizations, having regulatory jurisdiction and authority over a Member of the Obligated Group, or the operations of such Member.

“Related Bonds” means (a) any revenue bonds or similar obligations issued by any state, commonwealth or territory of the United States or any municipal corporation or other political subdivision formed under the laws thereof or any constituted authority, agency or instrumentality of any of the foregoing empowered to issue obligations on behalf thereof, the proceeds of which are loaned or otherwise made available to any Member in consideration, whether in whole or in part, of the execution, authentication and delivery of an Obligation or Obligations to or upon the order of such governmental issuer and (b) any revenue or general obligation bonds issued by or on behalf of any Member or any other Person in consideration, whether in whole or in part, of the execution, authentication and delivery of an Obligation or Obligations to the holder of such bonds or the Related Bond Trustee.

“Related Bond Indenture” means any indenture, bond resolution or similar instrument pursuant to which any series of Related Bonds is issued.

“Related Bond Issuer” means any issuer of a series of Related Bonds.

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“Related Bond Trustee” means any trustee under any Related Bond Indenture and any successor trustee under the Master Indenture or, if no trustee is appointed under a Related Bond Indenture, the Related Bond Issuer.

“Related Loan Document” means any document or documents (including without limitation any loan agreement, lease, sublease or installment sales contract) pursuant to which any proceeds of any Related Bonds are loaned to, advanced to or made available to or for the benefit of any Member (or any Property financed or refinanced with such proceeds is leased, sublet or sold to a Member).

“Responsible Officer” means, when used with respect to the Master Trustee, any officer of the Master Trustee within the corporate trust office specified in Section 1204 of the Master Indenture (or any successor corporate trust office) having direct responsibility for the administration of the Master Indenture.

“Short Term Indebtedness” means Indebtedness that matures not later than 365 consecutive days after it is incurred or any obligation for the repayment of borrowed moneys which is payable upon demand within such period at the option of the holder; provided that the term Short Term Indebtedness shall not be deemed to include any Long Term Indebtedness, Demand Obligations or which the holder thereof does not have the option to demand payment within 365 days or Subordinated Indebtedness.

“Subordinated Indebtedness” means Indebtedness, including Guarantees if so provided in such Indebtedness, secured by a Lien on the Gross Revenues that is by its terms expressly subordinated to the Lien on the Gross Revenues granted by the Obligated Group to the Master Trustee pursuant to the Master Indenture, and whose terms conform with the provisions in the Master Indenture governing Subordinated Indebtedness.

“Subordinated Obligation” means any Obligation of a Member, including Guarantees if so provided in such Obligation, secured by a Lien on the Gross Revenues that is by its terms expressly subordinated to the Lien on the Gross Revenues granted by the Obligated Group to the Master Trustee pursuant hereto; and whose terms conform with the provisions in the Master Indenture governing Subordinated Obligations. A series of Related Bonds may be designated as a Subordinated Obligation. For the avoidance of doubt, Swap Termination Payments are Subordinated Obligations; provided, however, that the Gross Revenues of TJU may not be pledged as security for any Swap Termination Payment for so long as the 2006 Bonds or the 2012 Bonds are outstanding.

“Subordinated Obligations Agreement” means (i) any agreement evidencing, or providing for the repayment of and security for a Subordinated Obligation and (ii) any agreement executed in connection with a series of Related Bonds designated as a Subordinated Obligation setting forth additional obligations or covenants of an Obligated Group Member such as a continuing covenant agreement entered into in connection with a series of Related Bonds designated as a Subordinated Obligation placed with a commercial bank or other financial institution or an agreement entered into with an insurer of a series of Related Bonds designated as a Subordinated Obligation.

“Supplemental Master Indenture” means an indenture amending or supplementing the Master Indenture entered into pursuant to Article IX of the Master Indenture after the date of the Master Indenture.

“Swap” or “Swap Agreement” means (i) the Existing Swaps, and (ii) another agreement between Obligated Group Agent or another Member of the Obligated Group (or the Master Trustee, at the written direction of Obligated Group Agent or such other Member of the Obligated Group) and a Swap Counterparty providing for an interest rate swap, basis swap, forward rate transaction, bond option,

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interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, corridor transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of these transactions entered into with respect to any Related Bonds or Indebtedness.

“Swap Counterparty” means a member of the International Swap and Derivatives Association, Inc. that is the counterparty on any Swaps entered into in accordance with the provisions of the Master Indenture.

“Swap Payments” means as of each payment date specified in a Swap, the net amount, if any, payable to the Swap Counterparty pursuant to the Swap. Swap Payments do not include any Swap Termination Payments.

“Swap Receipts” means as of each payment date specified in a Swap, the net amount, if any, payable to Obligated Group Agent or such other Member of the Obligated Group (or, if applicable, to the Master Trustee) by the Swap Counterparty pursuant to the Swap. Swap Receipts do not include any Swap Termination Payments.

“Swap Termination Payment” means, with respect to any Swap, any settlement amount payable by the applicable Swap Counterparty or Obligated Group Agent (or another Member of the Obligated Group) by reason or on account of the early termination or modification of such Swap. The term “Swap Termination Payment” does not include net unpaid amounts which would have been payable by the Swap Provider or Obligated Group Agent (or another Member of the Obligated Group) pursuant to the terms of the applicable Swap irrespective of the early termination of such Swap. For the avoidance of doubt, Swap Termination Payments are Subordinated Obligations; provided, however, that the Gross Revenues of TJU may not be pledged as security for any Swap Termination Payment for so long as the 2006 Bonds or the 2012 Bonds are outstanding.

“Tax-Exempt Bonds” means, any Related Bonds, with respect to which Bond Counsel has delivered an opinion that the interest thereon is not includible in gross income of the holders thereof for federal income tax purposes.

“Tax-Exempt Organization” means a Person organized under the laws of the United States of America or any state thereof which is an organization described in Section 501(c)(3) of the Code, which is exempt from federal income taxation under Section 501(a) of the Code, and which is not a “private foundation” within the meaning of Section 509(a) of the Code, or corresponding provisions of federal income tax laws from time to time in effect.

“TJU” means Thomas Jefferson University, a non-profit corporation organized and existing under the laws of the Commonwealth, and its permitted successors and assigns.

“Total Unrestricted Expenses” means the total consolidated unrestricted operating expenses as set forth in the applicable financial statements of the Person in question. For the avoidance of doubt, the financial results of any Excluded Affiliate shall be excluded from any calculations measured by the financial results of the Obligated Group or the Audit Group; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Total Unrestricted Revenues” means total unrestricted revenues as set forth in the applicable financial statements of the Person in question. For the avoidance of doubt, the financial results of any Excluded Affiliate shall be excluded from any calculations measured by the financial results of the

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Obligated Group or the Audit Group; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“UCC” means the Uniform Commercial Code of the Commonwealth as in effect from time to time.

“University” means the affiliated group of Persons comprised of all of the Members of the Obligated Group and their Affiliates, but excluding any Excluded Affiliate.

“Unrestricted Net Assets” shall be defined in accordance with Generally Accepted Accounting Principles; provided, however, the foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

“Variable Rate Indebtedness” means any Long Term Indebtedness, the rate of interest on which is subject to change prior to maturity.

Interpretation

(a) The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. The terms “hereof,” “herein” and similar terms refer to the Master Indenture.

(b) All accounting terms not specifically defined in the Master Indenture shall be construed in accordance with Generally Accepted Accounting Principles consistently applied, except as otherwise stated in the Master Indenture.

(c) If any change in accounting principles from those used in the preparation of the financial statements of Obligated Group Agent or of any Member of the Obligated Group as of June 30, 2016 results from the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, or other authoritative bodies that determine Generally Accepted Accounting Principles (or successors thereto or agencies with similar functions) and such change results in a change in the accounting terms used in the Master Indenture, the accounting terms used in the Master Indenture shall be modified to reflect such change in accounting principles so that the criteria for evaluating Obligated Group Agent’s or such Member of the Obligated Group’s financial condition shall be the same after such change as if such change had not been made. Any such modification shall be described in a Certificate of Obligated Group Agent filed with the Master Trustee, which shall contain a certification to the effect that (i) such modifications are occasioned by such a change in Generally Accepted Accounting Principles and (ii) such modifications will not have a materially adverse effect on the holders or result in materially different criteria for evaluating Obligated Group Agent’s or such Member of the Obligated Group’s financial condition.

(d) In the Master Indenture, all references to any contract or agreement mean references to that contract or agreement, as amended or supplemented at the time in question in accordance with the provisions of the Master Indenture and such agreement. All references to any time of the day shall refer to Eastern standard time or Eastern daylight savings time, as in effect in the City of Philadelphia, Pennsylvania on such day.

(e) If a calculation being made under the Master Indenture is required or permitted to be made after giving effect to a transaction (e.g., a merger or a withdrawal of a Member of the Obligated Group), then, at the option of Obligated Group Agent, the Financial Statements of the University used to

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make such calculation (e.g., the calculation of Liquid Unrestricted Net Assets) may be unaudited and may use estimates based on the pro forma Financial Statements of the University after giving effect to the transaction in question or taking the transaction into account, so long as the Obligated Group Agent delivers a Certificate to the Master Trustee stating that the financial results, although not audited, were prepared substantially in accordance with Generally Accepted Accounting Principles and, in the opinion of Obligated Group Agent, fairly represent the estimated financial conditions after giving effect to the transaction or taking the transaction into account.

(f) If any calculation under the Master Indenture (e.g., Liquid Unrestricted Net Assets) includes the results of the Audit Group, the components of that calculation (e.g. Debt Service Requirements) shall be made in the same manner (e.g., for Guarantees and Subordinated Indebtedness) as would be the case for the calculations made for the Obligated Group.

(g) If any Obligations are issued under the Master Indenture to secure Related Bonds, which Related Bonds are valued, in accordance with the provisions of a Related Bond Indenture, at other than their principal amount for purposes of the provisions of such Related Bond Indenture relating to redemption, acceleration, defeasance, computation of Related Bonds Outstanding, application of moneys in payment of the Related Bonds and actions by holders of such Related Bonds, then, for purposes of the Master Indenture, references in the Master Indenture to the principal amount of the Obligations issued to evidence or secure such Related Bonds contained in the Master Indenture shall be deemed to refer to an amount equal, at any time of calculation, to the valuation of such Related Bonds, at such time of calculation, as set forth in such Related Bond Indenture.

(h) Notwithstanding anything else in the Master Indenture to the contrary, in computing or calculating Adjusted Unrestricted Expenses, Adjusted Unrestricted Revenues, Audit Group, Days Cash On Hand Ratio, Debt Service Coverage Ratio, Liquid Unrestricted Net Assets, Operating Assets, Total Unrestricted Expenses, Total Unrestricted Revenues, Unrestricted Net Assets, and other quantitative financial test or provision, the Obligated Group, at the option of the Obligated Group Agent, may, unless the context specifically requires otherwise, utilize financial and other information either (i) with respect to the Members of the Obligated Group in the aggregate or (ii), so long as the Obligated Group constitutes or is responsible for at least seventy-five percent (75%) of the assets and revenues of the University for the most recent Fiscal Year of the University, with respect to the University, in the aggregate, such percentage to be calculated in a manner that excludes intercompany eliminations from the numerator of such calculation. Except where the context otherwise requires, all references in the Master Indenture to “as the case may be” shall be deemed to require an election by the Obligated Group Agent of one (and only one) of the foregoing clauses (i) or (ii) applied consistently for the applicable definition, provision or covenant.

Accounting Principles and Procedures; Interpretation; References to Financial Statements

If the character or amount of any asset or liability or item of income or expense is required to be determined, or any consolidation, combination or other accounting computation is required to be made for the purposes of the Master Indenture or any agreement, document or certificate executed and delivered in connection with or pursuant to the Master Indenture, that determination or computation shall be made in accordance with Generally Accepted Accounting Principles in effect, as determined at the sole option of the Obligated Group Agent, on (i) the date such determination or computation is made for any purpose of the Master Indenture, or (ii) the date of signing and delivery of the Master Indenture, if in the case of clause (ii) the Obligated Group Agent delivers a Certificate to the Master Trustee that describes why the then-current Generally Accepted Accounting Principles are inconsistent with the intent of the parties on the date of signing and delivery of the Master Indenture. For the purpose of preparing consolidated or combined financial information for two or more entities, transactions between those entities shall be

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eliminated and the specific provisions of the Master Indenture shall prevail over any inconsistent Generally Accepted Accounting Principles. Unless otherwise expressly provided in the Master Indenture, for the purpose of determining the amount of assets, liabilities, equity or capital, or revenues, expenses, income, losses or gains of the Obligated Group or any Obligated Group Member, or other Affiliate of the Obligated Group, the amount of the respective item shall be determined on a consolidated basis, in accordance with Generally Accepted Accounting Principles, consistently applied. For the purpose of determining any consolidated financial information with respect to the Obligated Group or any Obligated Group Member, Excluded Affiliate or other Affiliate of the Obligated Group, reference shall be made, unless that information is otherwise available as audited, consolidating financial information set forth as other financial information within an audit report in which audited financial statements are set forth on a consolidated or combined basis, that reflects financial information of one or more entities that are not to be taken into account under the Master Indenture in the determination of financial information with respect to the Obligated Group or any Obligated Group Member, Excluded Affiliate or other Affiliate of the Obligated Group for the same Fiscal Year, may be utilized in place of audited information. For the avoidance of doubt, it is the intent of the parties on the date of the signing and delivery of the Master Indenture that any operating lease, as defined by the Financial Accounting Standards Board on the date of signing and delivery of the Master Indenture, and any renewal of such operating lease, shall be governed in accordance with Generally Accepted Accounting Principles in effect on the date of signing and delivery of the Master Indenture and shall not be treated as the incurrence of Indebtedness or the disposition of Property, unless otherwise elected by the Obligated Group Agent.

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CERTAIN PROVISIONS OF THE MASTER INDENTURE

The Obligations

Series, Designation and Amount of Obligations. No Obligations may be issued under the provisions of the Master Indenture except in accordance with the Master Indenture. Other than the Obligated Group Agent, no authorization or appointment of any Member of the Obligated Group or the University is required under the Master Indenture for the issuance of Obligations. No Obligations may be issued under the Master Indenture unless (i) such Obligation is executed by the Obligated Group Agent; or (ii) with the written consent of the Obligated Group Agent, such Obligation is executed by any other Member of the Obligated Group. The total amount of Obligations, the number of Obligations and the series of Obligations that may be created under the Master Indenture is not limited and shall be as set forth in the Supplemental Master Indenture providing for the issuance thereof. Each series of Obligations shall be issued pursuant to a Supplemental Master Indenture. Each series of Obligations shall be designated so as to differentiate the Obligations of such series from the Obligations of any other series. Unless provided to the contrary in a Supplemental Master Indenture, Obligations shall be issued as fully registered Obligations.

Payment of Obligations. The principal of, premium, if any, and interest on the Obligations, and any other amounts due under an Obligation, shall be payable in any currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts, and such amounts shall be payable at the designated corporate trust office of the Master Trustee or at the office of any Related Bond Trustee named in any such Obligations or in a Related Bond Indenture or to the registered owner of such Obligation, as may be provided in such Obligation. Unless contrary provision is made in the Supplemental Master Indenture pursuant to which such Obligation is issued or the election referred to in the next sentence is made, payments on the Obligations shall be made to the person appearing on the registration books of the Obligated Group (kept in the designated corporate trust office of the Master Trustee or its agent as Obligation registrar) as the registered owner thereof and shall be paid by check or draft mailed to the registered owner at its address as it appears on such registration books or at such other address as is furnished to the Master Trustee in writing by such holder; provided, however, that any Supplemental Master Indenture creating any Obligation may provide that amounts due under such Obligation may be paid, upon the written request of the holder of such Obligation, by wire transfer or by such other means as are then commercially reasonable and acceptable to the holder thereof and the Master Trustee. The foregoing notwithstanding, if a Member so elects, or if an Obligation so provides, payments on such Obligation shall be made directly by such Member, by check or draft hand delivered to the holder thereof or its designee or shall be made by such Member by wire transfer to such holder, or by such other means as are then commercially reasonable and acceptable to the holder thereof, in any case delivered on or prior to the date on which such payment is due. Upon the written request of the Master Trustee, each Member shall provide information identifying the Obligation or Obligations with respect to which such payment, specifying the amount, was made, by series, designation, number and registered holder. Except with respect to Obligations directly paid to or upon the order of the holder thereof, or as otherwise may be provided in a Supplemental Master Indenture, the Members agree to deposit with the Master Trustee prior to each due date of the principal of, premium, if any, or interest on any of the Obligations a sum sufficient to pay such principal, premium, if any, or interest so becoming due. Any such moneys shall upon written request and direction of the Obligated Group Agent be invested in Permitted Investments. The foregoing notwithstanding, amounts deposited with the Master Trustee to provide for the payment of Obligations pledged to the payment of Related Bonds shall be invested in accordance with the provisions of the Related Bond Indenture and Related Loan Document. The Master Trustee shall not be liable or responsible for any loss resulting from any such investments made in accordance with the terms of the Master Indenture. Supplemental Master

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Indentures may create such security including debt service reserve funds and other funds as are necessary to provide for payment or to hold moneys deposited for payment or as security for a related series of Obligations.

Substitute Obligations Upon Withdrawal of a Member. In the event any Member, pursuant to the provisions of the Master Indenture described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Release of a Member” below, ceases to be a Member of the Obligated Group and, another Member issues an Obligation under the Master Indenture pursuant to a Supplemental Master Indenture evidencing or assuming the Obligated Group’s obligation in respect of Related Bonds or other Obligations, if so provided for in such Obligation originally issued by such withdrawing Member, such Obligation shall be surrendered to the Master Trustee in exchange for a substitute Obligation without notice to or consent of any Related Bondholder and Obligation holder, provided that such substitute Obligation provides for payments of principal, interest, premium and other amounts due under such Obligation identical to the surrendered Obligation and sufficient to provide all payments on any Related Bonds and Obligations.

Appointment of Obligated Group Agent. Each Member, by becoming a Member of the Obligated Group, irrevocably appoints the Obligated Group Agent as its agent and true and lawful attorney in fact and grants to the Obligated Group Agent full and exclusive power to:

(a) authorize, negotiate and determine the terms of, and execute and deliver, Obligations and Supplemental Master Indentures authorizing the issuance of Obligations or series of Obligations;

(b) as applicable, negotiate and determine the terms of, approve, execute, deliver, perform, amend, waive provisions of, grant consents related to, extend and terminate: loan agreements, bond indentures, bond purchase agreements related to liquidity or insurance, disclosures, and all such other agreements and instruments as are reasonably related to entering into and managing the specific transactions represented by such Supplemental Master Indentures;

(c) negotiate and determine the terms of, approve, execute, deliver, perform, amend, waive provisions of, grant consents related to, extend and terminate certificates and other undertakings as are reasonably necessary or appropriate to entering into and managing the specific transactions represented by such Supplemental Master Indentures and/or Obligations; and

(d) manage, oversee, direct, authorize, control, and implement (i) all Outstanding Indebtedness and financial relationships related in any manner to such Indebtedness, including, but not limited to: credit support and liquidity facilities; (ii) Swaps; (iii) related insurance products and policies; (iv) debt management policy setting and determinations such as the mix of fixed and variable debt and similar determinations; (v) allocation, calculations, accounting for, collections from Obligated Group Members, and payment of debt service, discounts, premiums, costs of issuance and other costs and fees related to Indebtedness, including termination, amendment and similar fees; (vi) planning, authorization and implementation of conversions, refunding, defeasances and other debt management or modification activities; (vii) all waivers, consents or amendments to any document or agreement, directly or indirectly, related to one or more of the Obligations, the Master Indenture and any Supplemental Master Indenture, including, but not limited to, any of the types of documents or agreements mentioned in subsections (b) and (c) above and this subsection (d); and (viii) direction of agents and control, direction and management of third party relationships (such as trustees, paying agents, registrars, issuing authorities, underwriters, remarketing agents, swap counterparties, financial and other advisors, and counsel) related to Indebtedness or the issuance of Obligations. The authority granted in this Section shall be and remain irrevocable until and unless any Obligated Group Member is permitted to withdraw from the Obligated Group in accordance with the terms of the Master Indenture. Notwithstanding the foregoing and for the

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avoidance of doubt, the provisions of this Section may be amended in accordance with the terms of Article IX of the Master Indenture.

Prepayment or Redemption of Obligations

Obligations shall be subject to optional and mandatory prepayment or redemption in whole or in part and may be prepaid or redeemed prior to maturity as provided in the Supplemental Master Indenture or the Related Loan Document pertaining to the series of Obligations to be prepaid or redeemed.

Security; Gross Revenues Pledge; Negative Pledge and Permitted Encumbrances

Security for Obligations All Obligations issued and outstanding under the Master Indenture are and shall be joint and several obligations of each Member of the Obligated Group, and are and shall be equally and ratably secured by the Master Indenture except to the extent specifically provided otherwise as permitted hereby. All Obligations issued and outstanding under the Master Indenture are and shall be equally and ratably secured by the pledge described below of Gross Revenues, except to the extent specifically provided otherwise as permitted by the Master Indenture. Any one or more series of Obligations issued under the Master Indenture may be secured by security (including without limitation letters or lines of credit, insurance or Liens on Property, including Property of the Obligated Group, or security interests in a depreciation reserve, debt service reserve or interest reserve or debt service or similar funds), so long as any Liens created in connection therewith or securing such Obligations constitute Permitted Encumbrances. Such security need not extend to any other Indebtedness (including any other Obligations or series of Obligations). Consequently, the Supplemental Master Indenture pursuant to which any one or more series of Obligations is issued may provide for such supplements or amendments to the provisions of the Master Indenture, including without limitation Articles II and VII of the Master Indenture, as are necessary to provide for such security and to permit realization upon such security solely for the benefit of the Obligations entitled thereto.

Pledge of Gross Revenues. In order to secure the prompt payment of all amounts due on all Obligations issued under the Master Indenture and the performance by the Members of the Obligated Group of their obligations under the Master Indenture and the Obligations, the Members of the Obligated Group hereby pledge and assign to the Master Trustee, and grant a security interest in, for the equal and ratable benefit of the holders from time to time of all of the Obligations, all of their Gross Revenues. The existence of such pledge, assignment and security interest shall not prevent the expenditure, deposit or commingling of Gross Revenues by the Members of the Obligated Group or University for any purpose so long as no Event of Default described in clause (a) of “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Events of Defaults and Remedies – Events of Default” below has occurred and is continuing and all required payments with respect to the Obligations are made when due. Without limiting the generality of the foregoing, this security interest shall apply to all rights to receive Gross Revenues whether in the form of accounts, accounts receivable, contract rights or other rights, and to the proceeds of such rights. This security interest shall apply to all of the foregoing, whether now existing or hereafter coming into existence and whether now owned or held or hereafter acquired by the Members of the Obligated Group. The Members of the Obligated Group hereby represent that as of the date of the delivery of the Master Indenture they have not granted any Lien on Gross Revenues prior to the security interest granted by this Section, except for the Liens on Gross Revenues, if any, constituting other Permitted Encumbrances. Notwithstanding the foregoing, the pledge of the Gross Revenues of TJU shall be made hereby and effective in respect of Obligations issued to secure Swap Payments or Swap Termination Payments under any Swap Agreement on (and no sooner than) the date on which none of the 2006 Bonds and the 2012 Bonds remain Outstanding pursuant to the respective terms of such bonds and the Related Indentures under which they were issued.

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Remedies of Secured Party. Notwithstanding anything to the contrary in the Master Indenture, upon and during the continuation of an Event of Default, the Master Trustee will have the remedies of a secured party under the UCC or other applicable law and, at its option, may also pursue the remedies permitted under applicable law as to such Gross Revenues. Without limiting the generality of the foregoing, upon and during the continuation of an Event of Default and upon notice to the Obligated Group Agent, to the extent permitted by law, the Master Trustee may realize upon such lien by any one or more of the following actions: (i) take possession of the financial books and records of any Member of the Obligated Group relating to the Gross Revenues and of all checks or other orders for payment of money and cash in the possession of the Member representing Gross Revenues or proceeds thereof; (ii) notify account debtors obligated on any Gross Revenues to make payment directly to the order of the Master Trustee; (iii) collect, compromise, settle, compound or extend Gross Revenues which are in the form of accounts receivable or contract rights from the Member's account debtors by suit or other means and give a full acquittance therefor and receipt therefor in the name of the Member, whether or not the full amount of any such account receivable or contract right owing shall be paid to the Master Trustee; (iv) require the Member to deposit all cash, money and checks or other orders for the payment of money which represent Gross Revenues within five Business Days after receipt of written notice of such requirement, and thereafter as received, into a fund or account to be established for such purpose by the Master Trustee, provided, however, that the requirement to make such deposits shall cease, and the balance of such fund or account shall be paid to the Member, when all Events of Default of the type described in clause (a) of “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Events of Defaults and Remedies – Events of Default” below have been cured; (v) forbid the Member to extend, compromise, compound or settle any accounts receivable or contract rights which represent Gross Revenues, or release, wholly or partly, any Person liable for the payment thereof (except upon receipt of the full amount due) or allow any credit or discount thereon; and (vi) endorse in the name of the Member any checks or other orders for the payment of money representing Gross Revenues or the proceeds thereof.

Deposit of Gross Revenues. The Members of the Obligated Group hereby further covenant that if an Event of Default of the type described in clause (a) of “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Events of Defaults and Remedies – Events of Default” below shall occur and be continuing, any Gross Revenues then received and any Gross Revenues thereafter received, shall not be commingled or deposited but shall immediately, or upon receipt, be transferred by the Members of the Obligated Group on a daily basis to the Master Trustee and deposited into the Gross Revenues Account as provided below. Such daily deposits shall continue until such Event of Default described in the preceding sentence shall have been cured. Any such proceeds on deposit with the Master Trustee shall be disbursed by the Master Trustee pursuant to the provisions of the Master Indenture described in “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Events of Defaults and Remedies – Application of Moneys” below and as provided below.

The Master Trustee is authorized and directed by the Master Indenture to establish a Gross Revenues Account, or accounts, into which there shall be deposited upon the occurrence and continuation of any Event of Default of the type described in clause (a) of “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Events of Defaults and Remedies – Events of Default” below, upon receipt by the Master Trustee, any and all Gross Revenues of the Obligated Group. Upon the occurrence of an event that requires the funding of the Gross Revenues Account the Obligated Group hereby covenants to take all action necessary to insure that all such Gross Revenues are deposited into the Gross Revenues Account including, but not limited to, depositing directly all payments received and directing all debtors and payors of the Obligated Group to make all payments due to the Obligated Group Members into the Gross Revenues Account. The Gross Revenues Account shall become subject to the lien of the Master Indenture in favor of the holders of all Obligations. Amounts on deposit in such Account shall be transferred first to the payment of current Operating Expenses of the Members of the Obligated Group as may be directed in writing by the Obligated Group Agent and in accordance with budgeted amounts

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proposed by the Obligated Group Agent, and second to the payment of debt service on all Obligations due and past due and thereafter shall otherwise be transferred as may be directed in writing by the Obligated Group Agent to and applied by the Obligated Group for its corporate purposes until the Master Trustee gives written notice to the Obligated Group of the acceleration of the Obligations and the exercise of remedies under the Master Indenture as a secured party and the Master Trustee enforces its rights and interests in and to the Gross Revenues Account and the amounts on deposit therein. Upon the giving of such written notice of acceleration and exercise of remedies, the Master Trustee is hereby authorized to take such self-help and other measures that a secured party is entitled to take under the UCC. Upon a cure or waiver of the Event of Default that requires the funding of the Gross Revenues Account, the Master Trustee shall transfer the amounts on deposit in the Gross Revenues Account to or at the written direction of the Obligated Group Agent.

Negative Pledge; Permitted Encumbrances

Each Member of the Obligated Group agrees that it will not create, assume or suffer to exist any Lien upon the Gross Revenues or the Property of the Obligated Group, except for Permitted Encumbrances. Any Lien in or on the Property and/or the Gross Revenues granted as described under Security; Gross Revenues Pledge; Negative Pledge and Permitted Encumbrances below shall be terminated if (i) the Obligated Group delivers to the Master Trustee a Certificate of Obligated Group Agent to the effect that the Obligation in respect of which the Lien was granted no longer is outstanding and (ii) the Master Trustee or the holder of such Obligation provides written confirmation that such Obligation has been paid in full (or provision thereafter has been made). Upon receipt of such Certificate of the Obligated Group Agent and confirmation from the Master Trustee or such holder, the Master Trustee agrees to execute such documents and take such steps as may be reasonably required in order to evidence the termination of such Lien. Notwithstanding any other provision of the Master Indenture or any other agreement executed in connection with the issuance of any Obligations, TJU may not grant, or permit to be granted, a Lien on its Gross Revenues to secure any Obligations consisting of or arising under a Swap Agreement until the 2006 Bonds and the 2012 Bonds have been paid in full, or provision for their payment in full has been made in accordance with the agreements pursuant to which they were issued.

Additional Obligations

Additional Indebtedness. The Obligated Group may not incur additional Indebtedness (whether through the creation of new Indebtedness, the assumption of existing Indebtedness or the guaranteeing of any new or existing Indebtedness) unless the Master Trustee first receives:

(i) a Certified Resolution of the Obligated Group Agent, and, if applicable, of any other Members, approving the incurrence of the Indebtedness and the purpose thereof; and

(ii) a Certificate of the Obligated Group Agent stating that, (A) the proceeds of the Indebtedness, together with other available moneys, is expected to be sufficient for completion of the project in respect of which the Indebtedness is being incurred, and (B) immediately following the incurrence of the Indebtedness and the application of the proceeds thereof, the Obligated Group will not be in default in the performance or observance of any covenant or condition to be performed by it under the Master Indenture and no Event of Default under the Master Indenture shall exist.

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Long Term Indebtedness. Except as provided in under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - No Duplication for Loan Commitments” below, the Obligated Group may not incur additional Long Term Indebtedness (whether through the creation of new Indebtedness, the assumption of existing Indebtedness or the guaranteeing of any new or existing Indebtedness) unless the Master Trustee first receives:

(i) the items specified under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional Indebtedness” above; and

(ii) a Certificate of the Obligated Group Agent demonstrating that either: (1) immediately following the incurrence of the Long Term Indebtedness and the application of the proceeds thereof, the Liquid Unrestricted Net Assets will be at least equal to 50% of the principal amount of all Long Term Indebtedness of the Obligated Group to be Outstanding; or (2) the Net Revenues for each of the two preceding Fiscal Years (assuming that the Long Term Indebtedness in question was incurred on the last day of such Fiscal Year in question and the proceeds of such Long Term Indebtedness were applied on the last day of such Fiscal Year in question), will be equal to at least 110% of the Maximum Annual Debt Service Requirements on all Outstanding Long Term Indebtedness of the Obligated Group for such testing period; and

(iii) a Certificate of the Obligated Group Agent demonstrating that immediately following the incurrence of the Long Term Indebtedness and the application of the proceeds thereof, the Maximum Annual Debt Service Requirements on all outstanding Long Term Indebtedness of the Obligated Group will not exceed an amount equal to 10% of the Total Unrestricted Expenses of the Audit Group.

Short Term Indebtedness. The Obligated Group may not incur additional Short Term Indebtedness (whether through the creation of new Indebtedness, the assumption of existing Indebtedness or the guaranteeing of any new or existing Indebtedness) unless the Master Trustee first receives:

(i) the items specified under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional Indebtedness” above; and

(ii) a Certificate of the Obligated Group Agent demonstrating that either: (A) immediately following the incurrence of the Short Term Indebtedness and the application of the proceeds thereof, the aggregate outstanding principal amount of all such Short Term Indebtedness of the Obligated Group as of such date, does not exceed 5% of the Net Assets, as set forth in the most recent audited Financial Statements of the University, or (B) such Short Term Indebtedness could be incurred if it were treated as Long Term Indebtedness incurred as described in clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above.

Other Indebtedness Permitted. Notwithstanding the provisions described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Long Term Indebtedness” above, the Obligated Group may incur additional Long Term Indebtedness in accordance with the provisions set forth below.

(i) Completion Indebtedness. Indebtedness may be incurred without satisfying the provisions of clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above for the purpose of financing the completion of constructing, renovating, or equipping Operating Assets for which Long Term Indebtedness has theretofore been incurred in accordance with the provisions of the Master Indenture, if: (A) the items specified under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional

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Indebtedness” above are delivered to the Master Trustee; and (B) a Certificate of the Obligated Group Agent is delivered to the Master Trustee stating that the amount of such Indebtedness does not exceed the amount (including reserve funds and capitalized interest) necessary to provide a completed and equipped facility of the type and scope contemplated at the time that such other Indebtedness was originally incurred and that such other Indebtedness was estimated when incurred to be sufficient to provide such a completed and equipped facility.

(ii) Refunding Debt. Indebtedness (“Refunding Debt”) may be incurred without satisfying the provisions of clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above to refund or defease any Indebtedness if: (A) the items specified under “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional Indebtedness” above are delivered to the Master Trustee; and (B) a Certificate of the Obligated Group Agent is delivered to the Master Trustee certifying that the Refunding Debt is in the best interest of the Obligated Group or University.

(iii) Basket. Indebtedness may be incurred without satisfying the provisions of clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above if: (A) the items described in “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional Indebtedness” above are delivered to the Master Trustee; and (B) a Certificate of the Obligated Group Agent is delivered to the Master Trustee demonstrating that the principal amount of such Indebtedness to be incurred and Outstanding pursuant to this clause (iii), together with the principal amount of all other Indebtedness incurred and Outstanding pursuant to this clause (iii) since the Obligated Group incurred Long Term Indebtedness that satisfied the provisions of clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above does not exceed 5% of the Net Assets of the Audit Group for the preceding Fiscal Year end.

(iv) In Connection with Becoming a Member. For the avoidance of doubt, in connection with a Person becoming a Member of the Obligated Group, of an Obligation in respect thereof any Indebtedness of such Person may be secured by the issuance pursuant to Article II under the Master Indenture by an amendment and restatement of the Outstanding Indebtedness of such Person or the substitution of, or other change to, such Person’s Outstanding Indebtedness or the evidence of and/or security therefor so long as the Indebtedness in question could be incurred in accordance with the other provisions of the Master Indenture.

(v) Subordinated Indebtedness and Non-Recourse Indebtedness. The Obligated Group may incur Subordinated Indebtedness and Non-Recourse Indebtedness without limitation as to principal amount and shall not be required to comply with the requirements described in “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Indebtedness” and “– Long Term Indebtedness” above in connection with such incurrence. Any Subordinated Indebtedness may be secured by Liens, provided that a Lien of superior rank and priority shall be granted in favor of all Parity Indebtedness then or thereafter to be outstanding. Non-Recourse Indebtedness may be secured by Liens on: (i) any real Property, fixtures and tangible personal Property acquired or improved with the proceeds of the Non-Recourse Indebtedness and any improvements to such Property; (ii) revenues derived from the ownership or operation of the Property described in clause (i); and (iii) restricted gifts, grants and other similar contributions, pledges of the foregoing and income derived from the investment thereof.

No Duplication for Loan Commitments. Nothing in this Section or otherwise shall be construed to count Indebtedness more than once and Indebtedness consisting of obligations pursuant to a Loan Commitment shall be counted as Indebtedness only to the extent the reimbursement obligation on

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obligations drawn or, in the reasonable judgment of the Obligated Group Agent, likely to be drawn on the Loan Commitment exceeds the obligation of the Indebtedness for which such Loan Commitment is provided.

Additional Provisions Concerning Certain Forms of Obligations. For the purposes of the Master Indenture, the Debt Service Requirements on, and the principal amount of, any Balloon Indebtedness, Variable Rate Indebtedness, Demand Obligations or any Long Term Indebtedness in the form of a Guarantee shall be determined as follows:

(i) Balloon Indebtedness. There shall be taken into account for the period under consideration in determining the Debt Service Requirements with respect to any Balloon Indebtedness an amount calculated using the following assumptions: the principal and interest payable in any Fiscal Year will be measured as if the Balloon Indebtedness were payable in level annual Debt Service Requirements that would be required to retire such Balloon Indebtedness over a term of 30 years following the date of calculation bearing interest at the Bond Index; provided, however, that if the date of calculation is within 12 months of a balloon payment date for such Balloon Indebtedness, the full amount of principal payable on such balloon payment date shall be included in such calculation, and provided, further, that if a Member has obtained a Loan Commitment under which funds are available for the payment of the balloon payment for any Balloon Indebtedness, the Debt Service Requirements for such Balloon Indebtedness will be calculated by using the Debt Service Requirements payable under such Loan Commitment during the period under consideration.

(ii) Variable Rate Indebtedness. The Debt Service Requirements on Long Term Indebtedness in the form of Variable Rate Indebtedness shall be determined as follows:

(A) For the purpose of determining whether the Variable Rate Indebtedness may be incurred, the Debt Service Requirements thereon shall be deemed to include interest borne at the Bond Index.

(B) For the purpose of any other required calculation of the Debt Service Requirements on any outstanding Variable Rate Indebtedness, such Indebtedness shall be deemed to bear interest at the Bond Index.

(iii) Demand Obligations. Debt Service Requirements on Long Term Indebtedness in the form of Demand Obligations shall be determined in the same manner as provided in subsection (a) above with respect to Balloon Indebtedness.

(iv) Calculating Debt Service Requirements With Swaps. If a Swap is entered into with respect to any Indebtedness, the interest on such Indebtedness shall be calculated as follows:

(A) when calculating interest payable for any Variable Rate Indebtedness for which a Swap is in effect, pursuant to which a Member has agreed to pay a fixed rate of interest and the Swap Counterparty has agreed to pay a variable rate of interest (which rate an Obligated Group Agent Certificate has certified approximates or is intended to approximate the variable rate payable on such Variable Rate Indebtedness), such Variable Rate Indebtedness shall be deemed to bear interest at the fixed rate provided in such Swap; provided that such fixed rate may be utilized for such period as such Swap is contracted to remain in full force and effect.

(B) when calculating interest payable on any Indebtedness which is issued with a fixed interest rate and with respect to which a Swap is in effect

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pursuant to which a Member has agreed to pay a variable rate of interest and the Swap Counterparty has agreed to pay a fixed rate of interest (which rate an Obligated Group Agent Certificate has certified approximates or is intended to approximate the fixed rate payable on such Indebtedness), such Indebtedness shall be deemed to bear interest at a variable rate for such period as such Swap is contracted to remain in full force and effect and shall be calculated in accordance with subsection (b).

(v) Guarantees. The Debt Service Requirements in any Fiscal Year on any Guarantee shall be deemed equal to (i) 0% of the debt service requirements on the guaranteed obligation, if a Member of the Obligated Group has not been called upon to make a payment under the Guarantee within the 12 months immediately preceding the date of the calculation, and the primary obligor’s income available for debt service (calculated in the same manner as Net Revenues) for the period of calculation was or is projected or forecasted to be at least equal to 200% of the maximum annual debt service requirements of the primary obligor (calculated in the same manner as Maximum Annual Debt Service Requirements); or (ii) 20% of the debt service requirements (calculated in the same manner as Debt Service Requirements) on the guaranteed obligation, if a Member of the Obligated Group has not been called upon to make a payment under the Guarantee within the 12 months immediately preceding the date of the calculation, and the primary obligor’s income available for debt service (calculated in the same manner as Net Revenues) for the period of calculation was or is projected or forecasted to be less than 200% of the maximum annual debt service requirements of the primary obligor (calculated in the same manner as Maximum Annual Debt Service Requirements); provided, that if there shall have occurred a payment by any Member of the Obligated Group on such Guarantee, then during the period commencing on the date of such payment and ending on the day that is one year after such other Person resumes making all payments on such guaranteed obligation, 100% of the amount payable for principal and interest on such guaranteed Indebtedness during the period for which the computation is being made shall be taken into account. For purposes of this subsection (v), the principal payments due in respect of any guaranteed obligation in the nature of Balloon Indebtedness or Demand Obligations shall be calculated in the same manner as specified in subsection (i) or (iii) above.

Subordinated Obligations. The Obligated Group may not incur any Subordinated Obligations unless there shall have been delivered to the Master Trustee, with respect to such Subordinated Obligations: (i) the materials that would be required to be delivered to the Master Trustee in connection with the incurrence of Indebtedness pursuant to “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional Indebtedness” above, (ii) a copy of any Subordinated Obligations Agreement for such Subordinated Obligations; and (iii) a schedule setting forth the Debt Service Requirements on the Subordinated Obligations, the dates on which scheduled Debt Service Requirements on the Subordinated Obligations are due, and the amounts due on each such date.

Subordinated Obligations. The documents pursuant to which any Subordinated Obligations are incurred shall provide, among other things, that so long as any Obligations remain unsatisfied:

(i) the maturity of the Subordinated Obligations (other than Swap Termination Payments) may not be accelerated unless the maturity of the Obligations has been accelerated;

(ii) if an acceleration of the Obligations has been rescinded or annulled, then any acceleration of the Subordinated Obligations (other than Swap Termination Payments) automatically shall be rescinded or annulled;

(iii) all payments in respect of any Subordinated Obligations shall be made by the Master Trustee solely from moneys available after all regular payments due or coming due

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through the next regularly scheduled interest payment date in respect of the Related Bonds or any Parity Obligations shall have been made or provided for;

(iv) any amendment to the Master Indenture made by the holders in accordance with the provisions of the Master Indenture shall be automatically binding upon the holders of any Subordinated Obligations (other than an amendment that would extend the fixed maturity of any Subordinated Obligations or reduce the rate of interest thereon or extend the time of payment of interest or reduce the amount of principal thereof or reduce any premium payable on the redemption thereof); and

(vi) upon the occurrence of any event of default with respect to any Subordinated Obligation, the holders of any Subordinated Obligations (or the trustee on their behalf) may not exercise any remedies under the Master Indenture except with the consent of the holders of a majority of the Obligations.

Swaps. The Obligated Group may not enter into any Swaps unless the Obligated Group Agent first delivers the following to the Master Trustee (as necessary):

(i) the items specified in “CERTAIN PROVISIONS OF THE MASTER INDENTURE - Additional Indebtedness” above, treating the entry into the Swap in question as if it were the incurrence of Indebtedness;

(ii) the Swap Agreement related to such Swap, which by its terms (i) shall be limited as described under “- Subordinated Obligations” above and (ii) if the obligations of the Member will be Obligations secured under the Master Indenture, must provide that any Swap Termination Payment due under the Master Indenture will be treated as a Subordinated Obligation incurred as described under “- Subordinated Obligations” above, provided, however, that notwithstanding anything described under “- Subordinated Obligations” above or this Section to the contrary, the provisions as described under “- Subordinated Obligations” above with respect to limits on the ability of holders of Subordinated Obligations to exercise certain remedies shall not apply to Swap Termination Payments;

(iii) a Certificate of the Obligated Group Agent stating whether the Member is required under the terms of the Swap Agreement to post collateral to the Swap Counterparty.

To the extent permitted by law, the Master Trustee is authorized to execute and deliver such other agreements, intercreditor agreements, financing agreements, security agreements, instruments and other materials and take such other actions, in connection with the execution and delivery of Swap Agreements as may be necessary or convenient to evidence that such Swap Agreements are secured by a Lien on the Gross Revenues, but only to the extent permitted under the Master Indenture.

General Covenants

Payment of Principal, Premium, if any, and Interest and Other Amounts. Each Member unconditionally and irrevocably (subject to the right of such Member to cease its status as a Member of the Obligated Group pursuant to the terms and conditions set forth in “- Financial Statements” below), jointly and severally covenants that it will promptly pay the principal of, premium, if any, and interest on, and all other amounts due under, every Obligation issued under the Master Indenture and any other payments, including the purchase price of Related Bonds tendered or deemed tendered for purchase pursuant to the terms of a Related Bond Indenture or Related Loan Document required by the terms of such Obligations, at the place, on the dates and in the manner provided in the Master Indenture and in said

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Obligations according to the true intent and meaning thereof. Notwithstanding any schedule of payments upon the Obligations set forth in the Master Indenture or in the Obligations, each Member unconditionally and irrevocably (subject to the right of such Member to cease its status as a Member of the Obligated Group pursuant to the terms and conditions set forth in “- Financial Statements” below), jointly and severally agrees to make payments upon each Obligation and be liable therefor at the times and in the amounts (including principal, interest and premium, if any, and all other amounts due under the Master Indenture) equal to the amounts to be paid as interest, principal at maturity or by mandatory sinking fund redemption, or premium, if any, upon any Related Bonds from time to time outstanding and upon any other financial obligations evidenced or secured by an Obligation. If any Member does not tender payment of any installment of principal, premium or interest on, or any other amounts due under, any Obligation when due and payable and such payment was to have been made to the Master Trustee, the Master Trustee shall provide prompt written notice of such nonpayment to such Member and the Obligated Group Agent.

The obligations, agreements, covenants and restrictions of the Master Indenture shall constitute joint and several obligations, agreements and covenants of and restrictions relating to all Members of the Obligated Group.

Performance of Covenants. Each Member covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in the Master Indenture and in each and every Obligation executed, authenticated and delivered under the Master Indenture and will perform all covenants and requirements imposed on the Obligated Group Agent or any Member under the terms of any Related Bond Indenture and Related Loan Agreement.

Entrance into the Obligated Group. Any Person may become a “Member of the Obligated Group” under the Master Indenture upon compliance with the following conditions:

(a) The Master Trustee receives a Certificate of the Obligated Group Agent confirming that after the addition of such Person, the Obligated Group would not be in default in the performance or observance of any covenant or condition to be performed by it under the Master Indenture and no Event of Default under the Master Indenture shall exist.

(b) The Master Trustee receives an opinion of Bond Counsel to the effect that under then existing law the addition of such Person shall not adversely affect the validity of any Related Bonds then Outstanding or the exemption from federal income taxation of interest payable on any Tax-Exempt Bonds.

(c) The Master Trustee receives an Opinion of Counsel to the effect that under then existing law the addition of such Person shall not cause any Related Bonds to become subject to registration under the Securities Act of 1933 (or that such registration, if required, has been made).

(d) The Master Trustee receives any agreements evidencing the pledge to the Master Trustee of such Person’s Gross Revenues.

(e) The Master Trustee receives a Certificate of the Obligated Group Agent demonstrating that either: (i) the Debt Service Coverage Ratio of the Audit Group (calculated as if such Person were a Member) for the Fiscal Year immediately preceding the Fiscal Year in which such Person is proposed to be added as a Member was at least 1.50, or (ii) the Debt Service Coverage Ratio of the Audit Group (calculated as if such Person were a Member) for the two most recent Fiscal Years immediately preceding the Fiscal Year in which such Person is proposed to be added as a Member was in each such preceding Fiscal Year at least 1.10, and the Debt Service Coverage Ratio of the Audit Group (calculated as if such

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Person were a Member) is forecasted in a report prepared by a Consultant to be at least 1.40 for each of the two complete Fiscal Years succeeding the Fiscal Year in which such Person is proposed to be added as a Member.

Upon receipt of all documents required by this Section, the Master Trustee shall deliver to such Person and the Obligated Group Agent a Certificate stating that such Person shall become a Member under the Master Indenture, effective upon delivery of such Certificate to such Person and the Obligated Group Agent. Upon such addition, such new Obligated Group Member shall be jointly and severally liable for all obligations of the Members under the Master Indenture.

For the avoidance of doubt, a Person may be designated by a Member even if such Person is not an Affiliate of the Obligated Group Agent; provided that the provisions of this Section are satisfied. The designation of such Person as a Member does not require that any Persons that would be affiliates of such Person become Affiliates of the Obligated Group Agent under the Master Indenture, and the results of any such Person that would be an affiliate of such Person shall not be included in calculations involving the Audit Group.

Obligated Group Members; Excluded Affiliates. The Obligated Group Agent shall review the Financial Statements of the University and the unaudited annual financial statements to determine if any Immaterial Affiliate has become a Material Affiliate. If any Immaterial Affiliate (other than an Excluded Affiliate) becomes a Material Affiliate, then, within 180 days of the date on which such Financial Statements of the University or unaudited annual financial statements are completed, the Obligated Group Agent shall take such actions as may be necessary to cause such Material Affiliate to become a Member of the Obligated Group, including delivering the items required under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Entrance into Obligated Group” above; provided, however that such Material Affiliate may be designated as an Excluded Affiliate if the Obligated Group Agent demonstrates that the conditions set forth in “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Release of a Member” below for the release of a Member of the Obligated Group would be satisfied were such Material Affiliate not to become a Member.

If as a result of a merger, consolidation or similar affiliation between a Member of the Obligated Group and another Person, such Person meets the requirements to become a Material Affiliate on the date of the consummation of such merger, consolidation or affiliation, then the Obligated Group Agent shall either (i) deem such Person an Excluded Affiliate without having to meet the requirements of “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Release of a Member” below for the release of a Member of the Obligated Group or (ii) shall take such actions as may be necessary to cause such Person to become a Member of the Obligated Group, including delivering the items set forth under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – General Covenants – Entrance into Obligated Group” above.

The Obligated Group Agent shall notify the Master Trustee in writing whenever a Person that is a Material Affiliate that becomes a Member of the Obligated Group is designated as an Excluded Affiliate.

For the avoidance of doubt, an Excluded Affiliate is not liable with respect to any payments under the Master Indenture or any other Obligations under the Master Indenture, is not required to comply with any of the covenants in the Master Indenture, and is not required to pledge any of its Gross Revenues to secure any Obligations. The financial results of each Excluded Affiliate shall be excluded from any calculations measured by the financial results of the Obligated Group or the Audit Group. For the avoidance of doubt, the Obligated Group may issue Guarantees in respect of an Excluded Affiliate in accordance with the provisions of Article V of the Master Indenture. The designation of a Person as an

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Excluded Affiliate does not prevent such Person from becoming a Member of the Obligated Group at a subsequent date.

Release of a Member. Any Member other than the Obligated Group Agent may be released from its obligations and liabilities under the Master Indenture, and upon such release shall cease to be a “Member of the Obligated Group” under the Master Indenture, upon compliance with the following conditions:

(a) The Master Trustee receives a Certificate of the Obligated Group Agent confirming that after the release of such Member, the Obligated Group would not be in default in the performance or observance of any covenant or condition to be performed by it under the Master Indenture and no Event of Default under the Master Indenture shall exist.

(b) The Master Trustee receives an opinion of Bond Counsel to the effect that under then existing law the release of such Member shall not adversely affect the validity of any Related Bonds then Outstanding or the exemption from federal income taxation of interest payable on any Tax-Exempt Bonds.

(c) The Master Trustee receives an Opinion of Counsel to the effect that under then existing law the release of such Member shall not cause any of the Related Bonds to become subject to registration under the Securities Act of 1933 (or that such registration, if required, has been made).

(d) The Master Trustee receives a Certificate of the Obligated Group Agent stating that the conditions set forth in this Section have been satisfied, accompanied by evidence of such satisfaction in form and substance satisfactory to the Master Trustee, and stating that such Member is to be released from its obligations and liabilities under the Master Indenture.

(e) The Master Trustee receives a Certificate of the Obligated Group Agent demonstrating that:

(i) either the Debt Service Coverage Ratio (calculated assuming such Person was not a Member) for the two most recent Fiscal Years immediately preceding the Fiscal Year in which such Person is proposed to be removed as a Member is, in each such preceding Fiscal Year, greater than 1.10; or (B) the Debt Service Coverage Ratio (calculated assuming that such Person is not a Member) for the next two succeeding Fiscal Years immediately subsequent to the Fiscal Year in which such Person is proposed to be removed as a Member is forecasted by the Obligated Group Agent in a Certificate of the Obligated Group Agent to be at least equal to 1.25; and

(ii) for the Fiscal Year immediately preceding the Fiscal Year in which such Person is proposed to be removed as a Member (calculated assuming that such person was not a Member) the Days Cash on Hand Ratio was not less than 75 days.

(f) If the Member proposing to be released from the Obligated Group is a party to any Related Loan Documents with respect to Related Bonds which remain outstanding, another Member of the Obligated Group shall issue an Obligation under the Master Indenture evidencing or assuming the obligation of the Obligated Group in respect of such Related Bonds.

Upon written request and assuming compliance with the other provisions of this Section, the Master Trustee shall deliver to such Member any instrument reasonably requested to evidence that such Obligated Group Member is released from its obligations and liabilities under the Master Indenture

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(including any UCC termination statements); provided that, notwithstanding the date of delivery of any such instrument, the release of such Member shall be effective as of the date of compliance with this Section. Upon the release of any Member under this Section, such Member shall no longer be obligated to pay any principal of, premium, if any, or interest on any Obligation and shall not be required to comply with any other provision of the Master Indenture.

Maintaining Debt Service Requirements Coverage. Within 180 days after the end of each Fiscal Year (commencing with the Fiscal Year ending June 30, 2017), the Obligated Group Agent shall compute the Debt Service Coverage Ratio for such Fiscal Year and furnish a Certificate of the Obligated Group Agent setting forth such computations to the Master Trustee.

Right to Consent, Etc. Each Member, with the prior written consent of the Obligated Group Agent, shall have the right to agree in any Related Bond Indenture, Related Loan Document or Supplemental Master Indenture pursuant to which an Obligation is issued that, so long as any Related Bonds remain outstanding under such Related Bond Indenture or such Obligation remains outstanding, any or all provisions of the Master Indenture that provide for approval, consent, direction or appointment by the Master Trustee, provide that anything must be satisfactory or acceptable to the Master Trustee or not unacceptable to the Master Trustee, allow the Master Trustee to request anything or contain similar provisions granting discretion to the Master Trustee, may also require or allow, as the case may be, the approval, consent, appointment, satisfaction, acceptance, request or like exercise of discretion by the Related Bond Issuer, the Related Bond Trustee, the credit or liquidity enhancer of any Related Bonds, or the holders of some specified percentage of such Obligations as provided for in such Obligations, or any one thereof, and that all items required to be delivered or addressed to the Master Trustee under the Master Indenture may also be delivered or addressed to the Related Bond Issuer, such Obligation holders, the credit enhancer of any Related Bonds, and the Related Bond Trustee, or any one thereof, unless waived thereby.

Financial Statements. Each Obligated Group Member, or the Obligated Group Agent on behalf of the Obligated Group and the Audit Group, will at all times keep books of record and account in accordance with Generally Accepted Accounting Principles.

Each Obligated Group Member shall permit its financial statements for each Fiscal Year to be audited by a Certified Public Accountant. Such financial statements shall be prepared on a consolidated basis to include the results of operations of all Persons required to be consolidated into the Financial Statements of the University in accordance with Generally Accepted Accounting Principles. Such financial statements and the Certified Public Accountant’s report or reports thereon shall be furnished to the Master Trustee within 180 days after the end of the Fiscal Year to which they relate. If there are Excluded Affiliates, the Obligated Group Agent shall cause consolidating statements to be prepared,

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including consolidating statements covering the results to be set forth in the Financial Statements of the University.

The financial statements shall be accompanied by a Certificate of the Obligated Group Agent stating that such financial statements have been prepared in accordance with Generally Accepted Accounting Principles (except, where applicable, required consolidations or combinations).

Notwithstanding the foregoing, the audited and unaudited financial statements referred to in this Section may include the results of operation and financial position of Immaterial Affiliates and Excluded Affiliates.

The Master Trustee shall have no duty to review any financial statement delivered to it pursuant to the Master Indenture and does not have a duty to verify the accuracy of such financial statements. In addition, the Master Trustee shall not be considered to have notice of the contents of such financial statements or of a default or Event of Default under the Master Indenture based on such contents.

General Covenants; Right of Contest. Each Member agrees as follows:

(a) Except as otherwise expressly provided in the Master Indenture (i) to preserve its corporate or other separate legal existence, (ii) preserve all its rights and licenses to the extent necessary or desirable in the operation of its business and affairs as then conducted and (iii) be qualified to do business and conduct its affairs in each jurisdiction where its ownership of Property or the conduct of its business or affairs requires such qualification; provided, however, that nothing contained in the Master Indenture shall be construed to obligate such Member to retain, preserve or keep in effect the rights, licenses or qualifications no longer used or useful in the conduct of its business.

(b) In the case of any Person that is a Tax-Exempt Organization at the time it becomes a Member, so long as the Master Indenture shall remain in force and effect and so long as all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or provision for such payment has not been made, to take no action or suffer any action to be taken by others, including any action which would result in the alteration or loss of its status as a Tax-Exempt Organization, which could result in any such Related Bond being declared invalid or result in the interest on any Related Bond, which is otherwise exempt from federal or state income taxation, becoming subject to such taxation.

(c) At its sole cost and expense, promptly comply with all present and future laws, ordinances, orders, decrees, decisions, rules, regulations and requirements of every duly constituted governmental authority, commission and court and the officers thereof which may be applicable to it or any of its affairs, business, operations and Property, any part thereof, any of the streets, alleys, passageways, sidewalks, curbs, gutters, vaults and vault spaces adjoining any of its Property or any part thereof or to the use or manner of use, occupancy or condition of any of its Property or any part thereof, if the failure to so comply would have a materially adverse effect on the operations or financial affairs of the Obligated Group, taken as a whole.

The foregoing notwithstanding, any Member may (i) cease to be a not for profit corporation or (ii) take actions which could result in the alteration or loss of its status as a Tax-Exempt Organization if prior thereto there is delivered to the Master Trustee an opinion of Bond Counsel to the effect that such actions would not adversely affect the validity of any Related Bond, the exemption from federal or state income taxation of interest payable on any Related Bond otherwise entitled to such exemption or adversely affect the enforceability in accordance with its terms of the Master Indenture against any Person.

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No Member shall be required to remove any Lien required to be removed as described under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Security; Gross Revenues Pledge; Negative Pledge and Permitted Encumbrances – Negative Pledge; Permitted Encumbrances”, pay or otherwise satisfy and discharge its obligations, Indebtedness (other than any Obligations), demands and claims against it or to comply with any Lien prohibited by thereby, or with any law, ordinance, rule, order, decree, decision, regulation or requirement referred to therein, so long as such Member shall contest, in good faith and at its cost and expense, in its own name and behalf, the amount or validity thereof, in an appropriate manner or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or other realization upon the obligation, Indebtedness, demand, claim or Lien so contested, and the sale, forfeiture, or loss of its Property or any part thereof, provided, that no such contest shall subject any Related Bond Issuer, any Obligation holder or the Master Trustee to the risk of any liability. While any such matters are pending, such Member shall not be required to pay, remove or cause to be discharged the obligation, Indebtedness, demand, claim or Lien being contested unless such Member agrees to settle such contest. Each such contest shall be promptly prosecuted to final conclusion (subject to the right of such Member engaging in such a contest to settle such contest), and in any event the Member will save any Related Bond Issuer, all Obligation holders and the Master Trustee harmless from and against all losses, judgments, decrees and costs (including attorneys’ fees, costs and expenses in connection therewith) as a result of such contest and will, promptly after the final determination of such contest or settlement thereof, pay and discharge the amounts which shall be determined to be payable therein, together with all penalties, fines, interests, costs and expenses thereon or incurred in connection therewith.

Inspection of Facilities. Upon reasonable prior notice, the Obligated Group will permit the Master Trustee and any duly authorized agent of the Master Trustee at all reasonable times and at such reasonable intervals so as not to interfere with the operation of the Obligated Group to enter upon, examine and inspect the Property.

Compliance With Laws. Except as otherwise provided in “Permitted Contests” below, the Obligated Group Agent shall, and shall cause each Obligated Group Member, throughout the term of the Master Indenture, to promptly comply in all material respects or cause compliance in all material respects with all laws, ordinances, orders, rules, regulations and requirements of any Regulatory Body that may be applicable to the any Obligated Group Member or to the repair and alteration, or to the use or manner of use of the Property of TJU or any other Obligated Group Member.

Permitted Reorganizations. Any Member may merge or consolidate into or transfer all or substantially all of its assets to any other Member without limitation. Each Member covenants that during the term of the Master Indenture it will not consolidate with, transfer all or substantially all of its assets, or merge into any other Person that is not a Member of the Obligated Group, unless the conditions set forth below are satisfied:

(a) In the event that the successor corporation or other legal entity is not the Member, then any successor corporation or other legal entity to such Member (including without limitation any purchaser of all or substantially all the Property of such Member) is a corporation or other legal entity organized and existing under the laws of the United States of America or a state thereof and shall execute and deliver to the Master Trustee an appropriate instrument, satisfactory to the Master Trustee, containing the express written agreement of such successor corporation or other legal entity to assume, jointly and severally, the due and punctual payment of the principal of, premium, if any, and interest on, and any other amounts due under, all Obligations according to their tenor and the due and punctual performance and full and faithful observance of all the covenants and conditions of the Master Indenture to be kept and performed by such Member.

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(b) Immediately after such merger or consolidation, or such sale or conveyance, no Member would be in default in the performance or observance of any duties covenants or conditions of any Related Loan Document or the Master Indenture.

(c) If all amounts due or to become due on all Related Bonds have not been fully paid to the holders thereof or fully provided for, there shall be delivered to the Master Trustee (i) an opinion or opinions of Bond Counsel to the effect that under then existing law, the merger, consolidation or transfer shall not adversely affect the validity of any Related Bonds then Outstanding or any exemption from federal income taxation of interest payable on any Tax-Exempt Bonds; (ii) if the Member which is the subject of the merger or consolidation is not the successor or transferee, an Opinion of Counsel to the effect that under then existing law the merger, consolidation or transfer shall not cause any of the Related Bonds to become subject to registration under the Securities Act of 1933 (or that such registration, if required, has been made).

(d) The Obligated Group Agent shall have consented to such transaction.

(e) The Obligated Group Agent delivers to the Master Trustee a Certificate which demonstrates that, after giving effect to the merger, consolidation or transfer, the successor or transferee and the Obligated Group would meet the conditions described in clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above for the incurrence of one dollar of additional Long Term Indebtedness. The foregoing calculation may take into account the provisions set forth in “Interpretation” herein.

(f) The Master Trustee receives an Opinion of Counsel to the effect that after giving effect to the merger, consolidation or transfer, the Master Indenture is enforceable in accordance with its terms, except to the extent to which enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other laws or equitable principles affecting creditors’ rights generally.

(g) In case of any such consolidation, merger, sale or conveyance such changes in phraseology and form (but not in substance) may be made in Obligations thereafter to be issued as may be appropriate.

(h) The Master Trustee may conclusively rely upon an Opinion of Counsel to the effect that any such consolidation, merger, sale or conveyance, and any such assumption, complies with the provisions of this Section and that it is proper for the Master Trustee to join in the execution of any instrument required to be executed and delivered by this Section.

(i) Except as may be expressly provided in any Supplemental Master Indenture, the ability of any Affiliate that is not a Member of the Obligated Group to merge into, or consolidate with, one or more corporations, or allow one or more corporations to merge into it, or sell or convey all or substantively all of its Property to any Person is not limited by the provisions of the Master Indenture. Notwithstanding anything to the contrary in the Master Indenture, no Affiliate shall engage in any merger or consolidation or disposition of substantially all of its assets if any Outstanding Related Bonds have been issued for the benefit of such Affiliate until there is delivered to the Master Trustee an opinion of Bond Counsel to the effect that, under then existing law, such action will not adversely affect the validity of any Related Bond or any exemption from federal or state income taxation of interest payable thereon to which such Related Bond would otherwise be entitled.

Taxes, Charges and Assessments. Each Member covenants and agrees, subject to the provisions described under “Permitted Contests” below, to pay or cause to be paid (before the same shall become delinquent):

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(a) all taxes and charges on account of the use, occupancy or operation of Property, or the income therefrom, including, but not limited to, all sales, use, occupation, real and personal property taxes, all permit and inspection fees, occupation and license fees and all water, gas, electric light, power or other utility charges assessed or charged on or against the Property of a Member or on account of a Member’s use or occupancy thereof or the activities conducted thereon or therein; and

(b) all taxes, assessments and impositions, general and special, ordinary and extraordinary, of every name and kind, which shall be taxed, levied, imposed or assessed during the term of the Master Indenture upon all or any part of the Property, or the interest of any Member in and to the Property, or upon the interest of any Member or the Master Trustee, in the Master Indenture and the amounts payable under the Master Indenture.

If under applicable law any such tax, charge, fee, rate, imposition or assessment may at the option of the taxpayer be paid in installments, each Member may exercise such option.

As between the parties hereto, the Obligated Group shall have the duty, of making and filing all statements or reports which may be required under applicable law in connection with any such tax, charge, fee, rate, imposition or assessment, and the Master Trustee agrees promptly to forward to the Obligated Group Agent any and all notices of or bills in connection with any such charge, fee, rate, imposition or assessment.

Nothing contained in the Master Indenture shall be deemed to constitute an admission by any of the Members, to any third party that any of the Members is liable for any tax, charge, fee, rate, imposition or assessment.

Permitted Contests. A Member shall not be required to pay any tax, charge, assessment or imposition referred to in “- Taxes, Charges and Assessments” above, nor to comply with any law, ordinance, rule, order, regulation or requirement referred to in “- Compliance with Law” above, so long as the Obligated Group Agent shall contest, in good faith and at its cost and expense, in its own name and behalf or in the name and behalf of the Member, the amount or validity thereof, in an appropriate manner or by appropriate proceedings which shall operate during the pendency thereof to prevent the collection of or other realization upon the tax, assessment, levy, fee, rent or charge so contested; provided that if such contest shall subject the Master Trustee to the risk of any liability, then, unless the Master Trustee receives an Opinion of Counsel to the effect that the applicable Member’s title to or operation of the Operating Assets will not be materially impaired or subject to material loss or forfeiture, the Obligated Group Agent shall deposit with the Master Trustee a surety bond or funds for the benefit of the Master Trustee, to be held in escrow covering the contested amount. Each such contest shall be promptly prosecuted to final conclusion (subject to the right of the Members to settle any such contest), and in any event the Members will indemnify and save harmless the Master Trustee against all losses, judgments, decrees and costs (including attorneys’ fees and expenses) in connection therewith.

Limitation of Certain Dispositions. The Obligated Group may not sell, lease or otherwise dispose of any portion of the Property (other than Excluded Property) except as set forth in the Master Indenture:

(a) The Obligated Group may not sell or otherwise dispose of, including any disposition by lease, any of the Operating Assets except for dispositions or transfers of Operating Assets: (i) that are obsolete or worn out, unprofitable or no longer necessary for the operation of its business; (ii) replaced by Operating Assets of similar type or of substantially equivalent function and value, which replacements shall be deemed to be incorporated immediately into and constitute an integral part of the Property, and be subject to the terms of the Master Indenture; (iii) constituting leases in the ordinary course of business

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that are Permitted Encumbrances; and (iv) leases of real property by any of the Members, as lessor, in effect on February 26, 2015 (or if later, the date on which such Person becomes a Member) with Affiliates of any of the Obligated Group Members, with commercial entities (e.g., a lease with a coffee shop) in insubstantial portions in the aggregate of the Property, and with physicians or providers of medical services.

(b) Notwithstanding the foregoing, any Person that is a part of the University may permit the rendering of services or the use of its Property without charge or at reduced charges, at the discretion of the governing body of the Obligated Group Agent or an Audit Group member to the extent necessary for maintaining its tax-exempt status and its eligibility for grants, loans, subsidies or payments from governmental entities, or in compliance with any recommendation for free services that may be made by an Independent Consultant or as a result of Industry Restrictions.

(i) Fair Market Value: transfer or convey its Property without limit so long as the conveyance or transfer in question is, in the reasonable judgment of the Obligated Group Agent, for Fair Market Value.

(ii) Intercompany: the conveyance or transfer shall be to a Obligated Group Member.

(iii) Other Transfers; Limitation. the Book Value of the Property (which, for the avoidance of doubt, includes all Operating Assets and other assets, but not Excluded Property) being transferred pursuant to this clause (iii) and not otherwise permitted to be transferred pursuant to this Section does not exceed 7% of the Liquid Unrestricted Net Assets for the preceding Fiscal Year.

(d) Swaps. A Member may transfer cash and securities from time to time to be posted as collateral to a Swap Counterparty if required under any collateral support agreement executed in connection with a Swap Agreement; provided, however, that the aggregate amount of such transfers shall be limited to an amount, after giving effect to such transfers, that would meet the conditions described in clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above for the incurrence of one dollar of additional Long Term Indebtedness. For the avoidance of doubt, any amounts included in calculations performed in accordance with clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above shall include any Indebtedness outstanding under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Other Indebtedness Permitted” above. For purposes of this Section, the certificate delivery requirements described in clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above shall be satisfied upon the delivery of an Obligated Group Agent Certificate setting forth the aggregate Long Term Indebtedness incurrence capacity of the Obligated Group; and the conditions of clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above shall be met for so long as TJU or any other Obligated Group Member has not incurred additional Long Term Indebtedness or any other event has occurred to reduce such capacity.

Events of Default and Remedies

Events of Default. Each of the following events is hereby declared an “Event of Default” under the Master Indenture:

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(a) any failure of the Obligated Group to pay any installment of interest or principal, or any premium, or any other amount due, on any Obligation when the same shall become due and payable, whether at maturity, upon any date fixed for prepayment or by acceleration or otherwise (giving effect to any grace period provided in the Supplemental Master Indenture pursuant to which such Obligation was issued); or

(b) if a Member fails to perform any of its other covenants, conditions or provisions under the Master Indenture and such failure continues for 60 days after the Master Trustee gives the Obligated Group Agent written notice thereof; provided, however, that if such performance requires work to be done, actions to be taken, or conditions to be remedied, which by their nature cannot reasonably be done, taken or remedied, as the case may be, within such 60 day period, no Event of Default shall be deemed to have occurred or to exist if, and so long as, the applicable Obligated Group Member shall commence such performance within such 60 day period and shall diligently and continuously prosecute the same to completion; or

(c) any representation or warranty made by a Member in the Master Indenture and any Supplemental Master Indenture proves to be false or misleading in any material respect at the time it was made; or

(d) if the Obligated Group Agent or other issuer of an Obligation (an “Obligated Issuer”) of the Master Indenture shall default in the payment of any Indebtedness (other than Obligations Outstanding under the Master Indenture), and any period of grace shall have expired, or other event of default has occurred that has resulted in the Indebtedness being due and payable prior to the date on which it would otherwise be due and payable; provided, however, that such default shall not constitute an Event of Default if (i) the Members of the Obligated Group in good faith commence proceedings to contest the existence or payment of that Indebtedness and sufficient moneys are escrowed with a bank or trust company for the payment of that Indebtedness, or (ii) the outstanding principal amount of the Indebtedness so in default does not exceed the greater of (A) 5% of the Total Unrestricted Revenues for the immediately preceding Fiscal Year or (B) 10% of the Book Value of the Obligated Group’s net Property, Plant and Equipment GAAP; or

(e) if a decree or order by a court having jurisdiction shall have been entered adjudging an Obligated Issuer as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization or arrangement of any Obligated Issuer under the United States Bankruptcy Code or any other similar applicable federal or state law, and such decree or order of a court having jurisdiction in the premises for the appointment of a receiver or trustee or assignee in bankruptcy or insolvency of the Obligated Issuer or of its Property, or for the winding-up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged and unstayed for a period of 90 days; or

(f) if any Obligated Issuer shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the institution of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or arrangement under the United States Bankruptcy Code or any other similar applicable federal or state law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or trustee or assignee in bankruptcy or insolvency of it or of its Property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or corporate action shall be taken by any Obligated Issuer in furtherance of any of the aforesaid purposes.

Acceleration and Annulment Thereof. If any Event of Default has occurred and is continuing the Master Trustee may and, at the written direction of the holders of 25% in principal amount of the Obligations then Outstanding, shall, by notice in writing to the Obligated Group Agent, declare the

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principal of all Obligations then Outstanding to be immediately due and payable, and upon such declaration the said principal, together with interest accrued thereon, shall become due and payable immediately at the place of payment provided therein, anything in the Master Indenture or in the Obligations to the contrary notwithstanding; provided, however, that no such declaration shall be made if Obligated Group cures such Event of Default prior to the date of the declaration. The Master Trustee shall notify the Obligated Group Agent and all Obligation holders of the acceleration. Upon the occurrence of any acceleration under the Master Indenture, the Master Trustee shall immediately exercise such rights as it may have under the Master Indenture to declare all payments under the Master Indenture to be due and payable immediately.

If after the principal of the Obligations has been so declared to be due and payable, all arrears of interest upon the Obligations and interest on overdue installments of interest at the interest rate on the Obligations are paid by the Obligated Group, and the Obligated Group also performs all other things in respect to which the Related Bond Issuer may have been in default under the Master Indenture and pays the reasonable charges and expenses of the Master Trustee and the Obligation holders, including reasonable attorney’s fees, costs and expenses, then, and in every such case, the Master Trustee may annul such declaration and its consequences and such annulment shall be binding upon the Master Trustee and upon all holders of Obligations issued under the Master Indenture; but no such annulment shall extend to or affect any subsequent default or impair any right or remedy consequent thereon.

Immediately after any acceleration under the Master Indenture, the Master Trustee, to the extent it has not already done so, shall notify in writing the Obligated Group Agent of the occurrence of such acceleration. Within five calendar days of the occurrence of any acceleration under the Master Indenture, the bond registrar shall notify by first class mail, postage prepaid, the Owners of all Obligations Outstanding of the occurrence of such acceleration, the date through which interest has accrued and the time and place of payment.

Remedies, Rights of Obligation Holders. Upon the occurrence of any Event of Default under the Master Indenture, the Master Trustee may pursue any available remedy including a suit, action or proceeding at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Obligations outstanding under the Master Indenture and any other sums due under the Obligations or under the Master Indenture and may collect such sums in the manner provided by law out of the Property of any Member wherever situated.

Such remedies may include, without limitation:

(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Master Trustee, and require the Obligated Group to carry out any agreements with or for the benefit of the Obligation holders and to perform its duties under the Master Indenture; or

(b) by action or suit in equity require the Obligated Group, to account as if it were the trustee of an express trust for the Master Trustee; or

(c) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Master Trustee; or

(d) upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Master Trustee and the Obligation holders, to have appointed a receiver or receivers, with such powers as the court making such appointment shall confer; or

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(e) upon notice to the Obligated Group Agent, to accelerate the due dates of all sums due or to become due under the Master Indenture, in compliance with the provisions of “- Acceleration and Annulment Thereof” above.

If an Event of Default shall have occurred and is continuing, and if it shall have been requested to do so in writing by the holders of 25% or more in aggregate principal amount of Obligations outstanding (and upon the provision of indemnity satisfactory to the Master Trustee in its sole discretion), the Master Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Section as the Master Trustee shall deem most expedient in the interests of the holders of Obligations; provided, however, that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by Counsel (who may be its own Counsel) that the action so requested may not lawfully be taken or the Master Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of Obligations not parties to such request.

No remedy by the terms of the Master Indenture conferred upon or reserved to the Master Trustee (or to the holders of Obligations) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Master Trustee or to the holders of Obligations under the Master Indenture now or hereafter existing at law or in equity or by statute.

No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default, or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient.

No waiver of any default or Event of Default under the Master Indenture, whether by the Master Trustee or by the holders of Obligations, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon.

When the Master Trustee incurs costs or expenses (including legal fees, costs and expenses) or renders services after the occurrence of an Event of Default, such costs and expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law.

Direction of Proceedings by Holders. The holders of a majority in aggregate principal amount of all Obligations then outstanding which have become due and payable in accordance with their terms or have been declared due and payable pursuant to “- Acceleration and Annulment Thereof” above and have not been paid in full in the case of remedies exercised to enforce such payment, or the holders of a majority in aggregate principal amount of the Obligations then outstanding in the case of any other remedy, shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Master Indenture or for the appointment of a receiver or any other proceedings under the Master Indenture; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of the Master Indenture and that the Master Trustee shall have the right to decline to comply with any such request if the Master Trustee shall be advised by Counsel (who may be its own Counsel) that the action so directed may not lawfully be taken or the Master Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of the Obligations not parties to such direction.

The foregoing notwithstanding, the holders of a majority in aggregate principal amount of all Obligations then outstanding which are entitled to the exclusive benefit of certain security in addition to

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that intended to secure all or other Obligations shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Master Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Master Indenture, the Supplemental Master Indentures pursuant to which such Obligations were issued or so secured or any separate security document in order to realize on such security; provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and of the Master Indenture.

Appointment of Receivers. Upon the occurrence of an Event of Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Master Trustee and the holders of Obligations under the Master Indenture, the Master Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the rights and properties pledged under the Master Indenture and of the revenues, issues, payments and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. Each Member of the Obligated Group hereby consents and agrees, and will if requested by the Master Trustee consent and agree at the time of application by the Master Trustee for appointment of a receiver of its Property, to the appointment of such receiver of its Property and that such receiver may be given the right, power and authority, to the extent the same may lawfully be given, to take possession of and operate and deal with such Property and the revenues, profits and proceeds therefrom, with like effect as the Member of the Obligated Group could do so, and to borrow money and issue evidences of indebtedness as such receiver.

Application of Moneys. All moneys received by the Master Trustee pursuant to any right given or action taken under the provisions of this Article VII (except moneys held for the payment of Obligations called for prepayment or redemption which have become due and payable) shall, after payment of the cost and expenses of the proceedings resulting in the collection of such moneys and of the fees of, expenses, liabilities and advances incurred or made by the Master Trustee, any Related Bond Issuers and any Related Bond Trustees, be applied as follows:

(a) Unless all Obligations shall have become or shall have been declared due and payable, all such moneys shall be applied:

First: To the payment to the persons entitled thereto of all installments of interest (and fees, if any) then due on the Obligations, in the order of the maturity of the installments of such interest (including but not limited to the reimbursement of interest paid by a letter of credit provider under any letter of credit securing an issue or series of Related Bonds), and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or privilege; and

Second: To the payment to the persons entitled thereto of the unpaid principal and premium, if any, on the Obligations which shall have become due (other than Obligations called for redemption or payment for payment of which moneys are held pursuant to the provisions of the Master Indenture), in the order of the scheduled dates of their payment, and, if the amount available shall not be sufficient to pay in full Obligations due on any particular date, then to the payment ratably, according to the amount of principal and premium due on such date, to the persons entitled thereto without any discrimination or privilege; and

Third: To the payment to the persons entitled thereto of any other amounts which have become due under any and all Obligations, including but not limited to any payments under Swaps.

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(b) If all Obligations shall have become due or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal, premium, if any, and interest and all other amounts then due and unpaid upon the Obligations without preference or priority of principal, premium, interest or other amounts over the others, or of any installment of interest over any other installment of interest, or of any Obligation over any other Obligation, ratably, according to the amounts due respectively for principal, premium, if any, interest and all other amounts to the persons entitled thereto without any discrimination or privilege; and

(c) If all Obligations shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article VII, then, subject to the provisions of paragraph (b) of this Section in the event that all Obligations shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.

Whenever moneys are to be applied by the Master Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Master Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Master Trustee shall apply such moneys, it shall fix the date upon which such application is to be made and upon such date interest on the amounts to be paid on such date shall cease to accrue. The Master Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the holder of any unpaid Obligation until such Obligation shall be presented to the Master Trustee for appropriate endorsement or for cancellation if fully paid.

Whenever all Obligations and interest thereon have been paid under the provisions of this Section and all expenses and charges of the Master Trustee have been paid, any balance remaining shall be paid to the person entitled to receive the same; if no other person shall be entitled thereto, then the balance shall be paid to the Obligated Group Agent on behalf of the Members. When all Obligations and interest thereon have been paid under the provisions of this Section and all expenses and charges of the Master Trustee have been paid, the Obligated Group Agent shall be authorized to terminate of record any financing statements or other filings or evidence of any Lien granted under the Master Indenture.

Remedies Vested in Master Trustee. All rights of action including the right to file proof of claims under the Master Indenture or under any of the Obligations may be enforced by the Master Trustee without the possession of any of the Obligations or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Master Trustee shall be brought in its name as Master Trustee without the necessity of joining as plaintiffs or defendants any holders of the Obligations, and any recovery of judgment shall be for the equal benefit of the holders of the Outstanding Obligations.

Rights and Remedies of Obligation Holders. No holder of any Obligation shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Master Indenture or for the execution of any trust of the Master Indenture or for the appointment of a receiver or any other remedy under the Master Indenture, unless a default shall have become an Event of Default and the holders of 25% or more in aggregate principal amount (i) of all Obligations then Outstanding which have become due and payable in accordance with their terms or have been declared due and payable pursuant to “- Acceleration and Annulment Thereof” above and have not been paid in full in the case of powers exercised to enforce such payment or (ii) of all Obligations then Outstanding in the case of any other exercise of power, shall have made written request to the Master Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers in the Master Indenture before granted or

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to institute such action, suit or proceeding in its own name, and shall have offered indemnity to the Master Trustee for its fees and expenses (including attorney’s fees, costs and expenses) in an amount satisfactory to the Master Trustee in its sole discretion, and unless the Master Trustee shall thereafter fail or refuse to exercise the powers in the Master Indenture before granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are hereby declared in every case at the option of the Master Trustee to be conditions precedent to the execution of the powers and trusts of the Master Indenture and to any action or cause of action for the enforcement of the Master Indenture, or for the appointment of a receiver or for any other remedy under the Master Indenture; it being understood and intended that no one or more holders of the Obligations shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Master Indenture by its, his or their action or to enforce any right under the Master Indenture except in the manner in the Master Indenture provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner in the Master Indenture provided and for the equal benefit of the holders of all Obligations outstanding. Nothing in the Master Indenture contained shall, however, affect or impair the right of any holder to enforce the payment of the principal of, premium, if any, and interest on, or any other amounts due under, any Obligation at and after the maturity thereof, or the obligation of the Members to pay the principal, premium, if any, and interest on, or any other amounts due under, each of the Obligations issued under the Master Indenture to the respective holders thereof at the time and place, from the source and in the manner expressed in said Obligations.

Termination of Proceedings. In case the Master Trustee shall have proceeded to enforce any right under the Master Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Master Trustee, then and in every case the Members and the Master Trustee shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Master Indenture with respect to the Property pledged and assigned under the Master Indenture, and all rights, remedies and powers of the Master Trustee shall continue as if no such proceedings had been taken.

Waiver of Events of Default. If, at any time after all Obligations shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as in the Master Indenture after provided and before the acceleration of any Related Bond, any Member shall pay or shall deposit with the Master Trustee (in connection with any Event of Default of the type described in clause (a) of “CERTAIN PROVISIONS OF THE AMENDED AND RESTATED MASTER TRUST INDENTURE - Events of Defaults and Remedies – Events of Default”) a sum sufficient to pay all matured installments of interest upon all such Obligations and the principal and premium, if any, of, and any other amounts due under, all such Obligations that shall have become due otherwise than by acceleration (with interest on overdue installments of interest and on such principal and premium, if any, at the rate borne by such Obligations to the date of such payment or deposit, to the extent permitted by law) and the expenses of the Master Trustee, and any and all Events of Default under the Master Indenture, other than the nonpayment of any amounts due under such Obligations that shall have become due by acceleration, shall have been remedied, then, and in every such case, the Master Trustee shall rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or affect any subsequent Event of Default, or shall impair any right consequent thereon.

No delay or omission of the Master Trustee or of any holder to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein. Every power and remedy given by this Article to the Master Trustee and the holders, respectively, may be exercised from time to time and as often as may be deemed expedient by them.

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The Master Trustee may waive any Event of Default which in its opinion being advised by Counsel (which may be its own Counsel) shall have been remedied before the entry of final judgment or decree in any suit, action or proceeding instituted by it under the provisions of the Master Indenture, or before the completion of the enforcement of any other remedy under the Master Indenture.

In case of any waiver by the Master Trustee of an Event of Default under the Master Indenture, the Members of the Obligated Group, the Master Trustee and the holders shall be restored to their former positions and rights under the Master Indenture, respectively, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

Members’ Rights of Possession and Use of Property. So long as no Event of Default shall have occurred and is continuing, each Member shall be suffered and permitted to possess, use and enjoy its Property and appurtenances thereto free of claims of the Master Trustee.

Related Bond Trustee or Bondholders Deemed To Be Obligation Holders. For the purposes of the Master Indenture, unless a Related Bond Trustee elects to the contrary or contrary provision is made in a Related Bond Indenture and written notice thereof is given to the Master Trustee in either such case, each Related Bond Trustee shall be deemed the holder of the Obligation or Obligations pledged to secure the Related Bonds with respect to which such Related Bond Trustee is acting as trustee. If such a Related Bond Trustee so elects or the Related Bond Indenture so provides and written notice thereof is given to the Master Trustee in either such case, the holders of each series of Related Bonds (or, in lieu thereof, the credit enhancer for such Related Bonds) shall be deemed the holders of the Obligations to the extent of the principal amount of the Obligations to which such Related Bonds relate. Notwithstanding the above, but subject to any limitations set forth in any Related Bond Indenture, the holder of any Related Bonds, or if there is a credit enhancer for any Related Bond, the credit enhancer for any Related Bonds (i.e., a bond insurer or other financial institution providing a bond insurance policy or surety bond, or a bank or other financial institution providing a letter of credit, in any case securing, insuring or guaranteeing all principal of and interest on any Related Bonds) shall be deemed to be the holder of the Obligation securing such Related Bonds for all purposes of the Master Indenture, including without limitation, all approvals, consents and directions under the Master Indenture.

Remedies Subject to Provisions of Law. All rights, remedies and powers provided by Article VII of the Master Indenture may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this instrument or the provisions of the Master Indenture invalid or unenforceable under the provisions of any applicable law.

Notice of Default. The Master Trustee shall, within 10 days after a Responsible Officer has actual knowledge of the occurrence of an Event of Default, mail, by first class mail, to all holders as the names and addresses of such holders appear upon the books of the Master Trustee, notice of such Event of Default known to a Responsible Officer of the Master Trustee, unless such Event of Default shall have been cured before the giving of such notice; provided that, except in the case of default in the payment of the principal of or premium, if any, or interest or any other amounts on any of the Obligations, the Master Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or any responsible officers of the Master Trustee being advised by Counsel (which may be its own Counsel) in good faith determines that the withholding of such notice is in the interests of the holders.

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The Master Trustee

Intervention by Master Trustee. In any judicial proceeding to which any Member is a party and which in the opinion of the Master Trustee and its counsel has a substantial bearing on the interests of owners of the Obligations, the Master Trustee may intervene on behalf of Obligation holders and shall do so if requested in writing by the owners of at least 25% in aggregate principal amount of all Obligations then outstanding if indemnification satisfactory to the Master Trustee in its sole discretion is provided to the Master Trustee. The rights and obligations of the Master Trustee under this Section are subject to the approval of a court of competent jurisdiction.

Successor Master Trustee. Any corporation or association into which the Master Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, ipso facto, shall be and become successor Master Trustee under the Master Indenture and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything in the Master Indenture to the contrary notwithstanding.

Corporate Master Trustee Required; Eligibility. There shall at all times be a Master Trustee under the Master Indenture which shall be a bank or trust company organized under the laws of the United States of America or any state thereof, authorized to exercise corporate trust powers, subject to supervision or examination by federal or state authorities, and (except for the Master Trustee initially appointed under the Master Indenture and its successors) having a reported combined capital and surplus of at least $50,000,000. If at any time the Master Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner provided below. No resignation or removal of the Master Trustee and no appointment of a successor Master Trustee shall become effective until the successor Master Trustee has accepted its appointment.

Resignation by the Master Trustee. The Master Trustee and any successor Master Trustee may at any time resign from the trusts hereby created by giving 30 days’ written notice to the Obligated Group Agent and by registered or certified mail to each registered owner of Obligations then outstanding as shown by the list of Obligation holders required by the Master Indenture to be kept at the office of the Master Trustee or its agent. Such resignation shall take effect at the end of such 30 days or when a successor Master Trustee has been appointed and has assumed the trusts created hereby, whichever is later, or upon the earlier appointment of a successor Master Trustee by the Obligation holders or by the Obligated Group. Such notice to the Obligated Group Agent may be served personally or sent by registered or certified mail.

Removal of the Master Trustee. The Master Trustee may be removed at any time upon thirty (30) days’ written notice, by an instrument or concurrent instruments in writing delivered to the Master Trustee and to the Obligated Group Agent, and signed by the owners of a majority in aggregate principal amount of all Obligations then outstanding. So long as no Event of Default or event which with the passage of time or giving of notice or both would become such an Event of Default has occurred and is continuing under the Master Indenture, the Master Trustee may be removed with or without cause at any time upon thirty (30) days’ written notice by an instrument or concurrent instruments in writing signed by the Obligated Group Agent, delivered to the Master Trustee.

Appointment of Successor Master Trustee by the Obligation Holders; Temporary Master Trustee. In case the Master Trustee under the Master Indenture shall resign or be removed, or be

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dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting under the Master Indenture, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the owners of a majority in aggregate principal amount of all Obligations then outstanding, by an instrument or concurrent instruments in writing signed by such owners, or by their attorneys in fact, duly authorized. The foregoing notwithstanding, so long as no Event of Default or event which with the passage of time or giving of notice or both would become such an Event of Default has occurred, the Obligated Group Agent shall have the right to approve any such successor trustee and to appoint any such successor trustee in lieu of the owners of a majority in aggregate principal amount of all Obligations then Outstanding. Every such successor Master Trustee appointed pursuant to the provisions of this Section shall be a trust company or bank in good standing under the law of the jurisdiction in which it was created and by which it exists, having corporate trust powers and subject to examination by federal or state authorities, and having a reported capital and surplus of not less than $50,000,000. If the Master Trustee has provided written notice of its resignation and no successor Master Trustee has been appointed in accordance with the terms of this Article VIII within 30 days after such notice, the Master Trustee may make a request to a court of competent jurisdiction to appoint a successor.

Supplemental Master Indentures

Supplemental Master Indentures Not Requiring Consent of Obligation Holders. Subject to the limitations set forth in “Supplemental Master Indentures Requiring Consent of Obligation Holders” below that are applicable to this Section, the Members (or the Obligated Group Agent on their behalf) and the Master Trustee may, without the consent of, or notice to, any of the Obligation holders, amend or supplement the Master Indenture, for any one or more of the following purposes:

(a) To cure any ambiguity or defective provision in or omission from the Master Indenture in such manner as is not inconsistent with and does not impair the security of the Master Indenture or adversely affect the holder of any Obligation;

(b) To grant to or confer upon the Master Trustee for the benefit of the Obligation holders any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Obligation holders and the Master Trustee, or either of them, to add to the covenants of the Members for the benefit of the Obligation holders or to surrender any right or power conferred under the Master Indenture upon any Member, including, but not limited to, any amendments necessary to establish or maintain any credit ratings applicable to the Obligated Group;

(d) To evidence the succession of another entity to the agreements of a Member or the Master Trustee, or the successor to any thereof under the Master Indenture;

(e) To permit the qualification of the Master Indenture under the Trust Indenture Act of 1939, as then amended, or under any similar federal statute hereafter in effect or to permit the qualification of any Obligations for sale under the securities laws of any state of the United States;

(f) To provide for the refunding or advance refunding of any Obligation;

(g) To provide for the issuance of Obligations as permitted under the Master Indenture;

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(h) To reflect the addition to or withdrawal of a Member from the Obligated Group, including the necessary changes to Exhibit A hereto, or to reflect any release of Property to be released from the Lien on Gross Revenues created under the Master Indenture;

(i) To provide for the issuance of Obligations with original issue discount, provided such issuance would not materially adversely affect the holders of Outstanding Obligations;

(j) To permit an Obligation to be secured by security that is not extended to all Obligation holders to the extent not prohibited under the Master Indenture;

(k) To permit the issuance of Obligations which are not in the form of a promissory note;

(l) To modify or eliminate any of the terms of the Master Indenture; provided, however, that such Supplemental Master Indenture shall expressly provide that any such modifications or eliminations shall become effective only when there is no Obligation outstanding of any series created prior to the execution of such Supplemental Master Indenture;

(m) To modify, eliminate or add to the provisions of the Master Indenture if the Master Trustee shall have received (i) written confirmation from each rating agency that such change will not result in a withdrawal or reduction of its credit rating assigned to any series of Obligations or Related Bonds, as the case may be, or a report, opinion or certification of a Consultant to the effect that such change is consistent with then current industry standards, and (ii) a Certificate of the Obligated Group Agent to the effect that, in the judgment of the Obligated Group Agent, such change is necessary to permit any Member of the Obligated Group to affiliate or merge with, on acceptable terms, one or more corporations that provide health care services and such modification is in the best interests of the holders of the Outstanding Obligations; and

(n) To make any other change that does not materially adversely affect the rights or interests of the holders of any of the Obligations and does not materially adversely affect the rights or interests of the holders of any Related Bonds, including without limitation any modification, amendment or supplement to the Master Indenture or any indenture supplemental hereto in such a manner as to establish or maintain exemption of interest on any Related Bonds under a Related Bond Indenture from federal income taxation under applicable provisions of the Code.

Any Supplemental Master Indenture providing for the issuance of Obligations shall set forth the date thereof, the date or dates upon which principal of, premium, if any, and interest on, and any other amounts due under, such Obligations shall be payable, the other terms and conditions of such Obligations, the form of such Obligations and the conditions precedent to the delivery of such Obligations which shall include, among other things:

(i) delivery to the Master Trustee of an Opinion of Counsel acceptable to the Master Trustee to the effect that all requirements and conditions to the issuance of such Obligations, if any, set forth in the Master Indenture and in the Supplemental Master Indenture have been complied with and satisfied; and

(ii) delivery to the Master Trustee of an Opinion of Counsel acceptable to the Master Trustee to the effect that neither registration of such Obligations under the Securities Act of 1933, as amended, nor qualification of such Supplemental Master Indenture under the Trust Indenture Act of 1939, as amended, is required, or, if such registration or qualification is required, that the Obligated Group has complied with all applicable provisions of said acts.

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Supplemental Master Indentures Requiring Consent of Obligation Holders. In addition to Supplemental Master Indentures covered by “- Supplemental Master Indentures Not Requiring Consent of Obligation Holders” above and subject to the terms and provisions contained in this Section, and not otherwise, the holders of not less than a majority in aggregate principal amount of all Obligations which are outstanding under the Master Indenture at the time of the execution of such Supplemental Master Indenture or, in case less than all of the several series of Obligations are affected thereby, the holders of not less than a majority in aggregate principal amount of all Obligations of each series affected thereby which are outstanding under the Master Indenture at the time of the execution of such Supplemental Master Indenture, shall have the right, from time to time, anything contained in the Master Indenture to the contrary notwithstanding, to consent to and approve the execution by the Members and the Master Trustee of such Supplemental Master Indentures as shall be deemed necessary and desirable by the Members for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Master Indenture or in any Supplemental Master Indenture; provided, however, that nothing contained in this Section or described in “- Supplemental Master Indentures Not Requiring Consent of Obligation Holders” shall permit, or be construed as permitting, (a) an extension of the stated maturity or reduction in the principal or other amount of or reduction in the rate or extension of the time of paying of interest on or reduction of any premium payable on the redemption of, any Obligation, without the consent of the holder of such Obligation, (b) a reduction in the aforesaid aggregate principal or other amount or percentage of Obligations the holders of which are required to consent to any such Supplemental Master Indenture, without the consent of the holders of all the Obligations at the time outstanding that would be affected by the action to be taken, or (c) modification of the rights, duties or immunities of the Master Trustee, without the prior written consent of the Master Trustee.

If at any time the Obligated Group Agent shall request the Master Trustee in writing to enter into any such Supplemental Master Indenture for any of the purposes of this Section, the Master Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such Supplemental Master Indenture to be mailed by first class mail postage prepaid to each holder of an Obligation or, in case less than all of the series of Obligations are affected thereby, of an Obligation of the series affected thereby. Such notice shall briefly set forth the nature of the proposed Supplemental Master Indenture and shall state that copies thereof are on file at the corporate trust office of the Master Trustee identified in such notice for inspection by all Obligation holders. The Master Trustee shall not, however, be subject to any liability to any Obligation holder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such Supplemental Master Indenture when consented to and approved as provided in this Section. If the holders of not less than a majority in aggregate principal amount of all Obligations or the Obligations of each series affected thereby, as the case may be, which are outstanding under the Master Indenture at the time of the execution of any such Supplemental Master Indenture shall have consented to and approved the execution thereof as in the Master Indenture provided, no holder of any Obligation shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Master Trustee or the Members from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such Supplemental Master Indenture as provided and permitted in this Section, the Master Indenture shall be and be deemed to be modified and amended in accordance therewith.

For the purpose of obtaining the foregoing consents, the determination of who is deemed the holder of an Obligation held by a Related Bond Trustee shall be made in the following manner. Unless a Related Bond Trustee elects to the contrary or contrary provision is made in a Related Bond Indenture and written notice thereof is given to the Master Trustee in either such case, each Related Bond Trustee shall be deemed the holder of the Obligation or Obligations pledged to secure the Related Bonds with respect to which such Related Bond Trustee is acting as trustee. If such a Related Bond Trustee so elects

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or the Related Bond Indenture so provides and written notice thereof is given to the Master Trustee in either such case, the holders of each series of Related Bonds (or, in lieu thereof, the credit enhancer for such Related Bonds) shall be deemed the holders of the Obligations to the extent of the principal amount of the Obligations to which such Related Bonds relate. Notwithstanding the above, but subject to any limitations set forth in any Related Bond Indenture, the holder of any Related Bonds, or if there is a credit enhancer for any Related Bond, the credit enhancer for any Related Bonds (i.e., a bond insurer or other financial institution providing a bond insurance policy or surety bond, or a bank or other financial institution providing a letter of credit, in any case securing, insuring or guaranteeing all principal of and interest on any Related Bonds) shall be deemed to be the holder of the Obligation securing such Related Bonds for all purposes of the Master Indenture, including without limitation, all approvals, consents and directions under the Master Indenture.

Note and Document Substitution. The Obligated Group and the Master Trustee may, without the consent of or notice to any of the Holders of Obligations, amend or supplement the Master Indenture to modify, amend, change or remove any covenant, agreement, term or provision of the Master Indenture in order to effect the affiliation of the Obligated Group with another entity or entities and the inclusion of the Members of the Obligated Group in another obligated group (the “New Obligated Group”) under a new master trust indenture (the “New Master Indenture”) executed by the members of the New Obligated Group and an independent corporate trustee (the “New Master Trustee”) (such transaction is referred to collectively in the Master Indenture as the “Obligated Group Transaction”), subject to the following requirements and conditions:

(a) The modifications, amendments, changes and removals permitted by this Section shall include those necessary or appropriate to implement the Obligated Group Transaction and to effect (i) the inclusion of the members in the New Obligated Group, or (ii) the issuance of new or replacement Obligation or Obligations (the “Replacement Obligations”) of the New Obligated Group under the New Master Indenture to evidence or secure any Indebtedness or Related Bonds, which Replacement Obligation or Obligations would constitute joint and several obligations of the members of the New Obligated Group, or (iii) the release or discharge of any collateral securing any Obligation or Related Bonds, including any mortgage, any equipment lien, any pledge of revenues (subject to (b)(i)(A)(III) below) and receivables, or any debt service reserve fund, in consideration for the issuance of a Replacement Obligation or Obligations of the New Obligated Group under the New Master Indenture to secure any Indebtedness or Related Bonds, or (iv) the replacement of all or a portion of the Obligated Group’s financial and operating covenants and related definitions set forth in the Master Indenture with the New Obligated Group’s financial and operating covenants and related definitions set forth in the New Master Indenture.

(b) The Obligated Group may implement the Obligated Group Transaction, and the Master Trustee upon the written request of the Obligated Group Agent shall implement the Obligated Group Transaction, if:

(i) the Obligated Group Agent gives written notice of the substance of such proposed Obligated Group Transaction to each rating agency that has in effect a rating for any Master Notes or Related Bonds then Outstanding prior to the date such Obligated Group Transaction is to take effect, and either:

(A) (I) each such rating agency (or, if no rating agency has in effect a rating for any Master Notes or Related Bonds then Outstanding without taking into account any Credit Facility, at least one rating agency selected by the Obligated Group Agent) shall confirm in writing prior to the implementation of the Obligated Group Transaction that the rating on any such Replacement Obligations or Related Bonds of the New Obligated Group immediately subsequent to

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the Obligated Group Transaction (x) will be not less than “A2” by Moody’s or “A” by S&P, or their equivalent, or (y) if the then current rating of any Related Bonds or Master Notes (without giving effect to any Credit Facility) is less than “A2” by Moody’s or “A” by S&P, then such rating will be not less than the then current rating of the Related Bonds or Obligations, and (II) the Obligated Group Agent delivers a Certificate certifying that after giving effect to such Replacement Obligations and assuming that the New Obligated Group constituted the Obligated Group under the Master Indenture, the New Obligated Group could demonstrate compliance with the provisions clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE AMENDED AND RESTATED MASTER TRUST INDENTURE – Long Term Indebtedness”, assuming the incurrence of $1.00 of additional Long-Term Indebtedness, and (III) the New Master Indenture contains a pledge of Gross Revenues substantially similar to the pledge of Gross Revenues in the Master Indenture as of the date thereof; or

(B) (I) the Obligated Group Agent delivers a Certificate certifying that after giving effect to such Replacement Obligations and assuming that the New Obligated Group constituted the Obligated Group under the Mater Indenture, the New Obligated Group could demonstrate compliance with the provisions of clauses (ii) and (iii) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness”, assuming the incurrence of $1.00 of additional Long-Term Indebtedness, provided, however, that for purposes of the calculations required in clause (ii)(1) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above, Liquid Unrestricted Net Assets shall not be less than 75% of the principal amount of all Long Term Indebtedness of the Obligated Group to be Outstanding or for purposes of the calculations required in clause (ii)(2) under “CERTAIN PROVISIONS OF THE MASTER INDENTURE – Long Term Indebtedness” above the Net Revenues will be equal to at least 125% of the Maximum Annual Debt Service of all Outstanding Long-Term Indebtedness of the Obligated Group, and (II) the New Master Indenture contains a pledge of Gross Revenues substantially similar to the pledge of Gross Revenues in the Master Indenture as of the date thereof; and

(ii) an original executed counterpart of the New Master Indenture is delivered to the New Master Trustee; and

(iii) original Replacement Obligations for all Master Notes Outstanding under the Master Indenture are delivered to the New Master Trustee, which Replacement Obligations are issued by or on behalf of the New Obligated Group under and pursuant to and secured by the New Master Indenture and shall have been duly authenticated by the New Master Trustee under the terms of the New Master Indenture; and

(iv) at or prior to the implementation of the Obligated Group Transaction, there shall also be delivered to the Master Trustee, each Related Bond Issuer and each Related Bond Trustee, (A) an Opinion of Bond Counsel to the effect that under then-existing law the implementation of the Obligated Group transaction and the execution of the amendments or supplements contemplated in this Section, in and of themselves, would not adversely affect the validity of any Outstanding Related Bonds or the exclusion from federal income taxation of interest payable on such Related Bonds, and (B) an Opinion of Counsel to the effect that (I) the Replacement Obligation or Obligations of the New Obligated Group to be delivered to secure any Indebtedness or Related Bonds constitute legal, valid and binding obligations of the members of the New Obligated Group enforceable in accordance with their terms subject to customary exceptions, and (II) the issuance of the Replacement Obligation or Obligations will not cause such Related Bonds or such Replacement Obligation or Notes to become subject to the registration requirements pursuant to the Securities Act of 1933, as amended (or that such Related Bonds or Obligations have been so registered if registration is required) and will not subject the New Master Indenture

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to the qualification provisions of the Trust Indenture Act of 1939, as amended (or that the New Master Indenture has been so qualified if qualification is required).

(c) Not less than 15 days before the implementation of the Obligated Group Transaction, the Obligated Group Agent shall direct each Related Bond Trustee to give written notice thereof, by first- class mail, to each Related Bond Issuer and to all owners of the Related Bonds then Outstanding.

Execution of Supplemental Master Indentures. The Master Trustee shall not be required to execute any proposed Supplemental Master Indenture pursuant to Article IX of the Master Indenture unless it is provided with (i) an Opinion of Counsel satisfactory to the Master Trustee to the effect that such proposed Supplemental Master Indenture and its execution by the Master Trustee are permitted or authorized under Article IX of the Master Indenture; and (ii) an opinion of Bond Counsel to the effect that such Supplemental Master Indenture will not adversely affect the exemption of interest on any Related Bonds from income tax under the Code.

Satisfaction of the Master Indenture

Defeasance. If the Members shall pay or provide for the payment of the entire indebtedness on all Obligations (including, for the purposes of this Section, any Obligations owned by a Member) outstanding in any one or more of the following ways:

(a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on, and any other amounts due under, all Obligations outstanding, as and when the same become due and payable;

(b) by depositing with the Master Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Obligations outstanding (including the payment of premium, if any, and interest payable on, and any other amounts due under, such Obligations to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested at the written direction of the Obligated Group Agent in Escrow Securities, in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Securities may be used at the written direction of the Obligated Group Agent for any other purpose permitted by law;

(d) by depositing with the Master Trustee, in trust, before maturity, non-callable Escrow Securities in such amount as will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the amounts due on all Obligations outstanding at or before their respective maturity or due dates; and if the Obligated Group shall also pay or cause to be paid all other sums payable under the Master Indenture by the Obligated Group and, if any such Obligations are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given in accordance with the requirements of the Master Indenture or provisions satisfactory to the Master Trustee shall have been made for the giving of such notice, then and in that case (but subject to the provisions of the “- Satisfaction of the Related Bonds” below) the Master Indenture and the estate and rights granted under the Master Indenture shall cease, determine, and become null and void, and thereupon the Master Trustee shall, upon written request of the Obligated Group Agent, and upon receipt by the Master Trustee of a Certificate of the Obligated

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Group Agent and an Opinion of Counsel acceptable to the Master Trustee, each stating that in the opinion of the signer all conditions precedent to the satisfaction and discharge of the Master Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging the Master Indenture and the lien of the Master Indenture. The satisfaction and discharge of the Master Indenture shall be without prejudice to the rights of the Master Trustee to charge and be reimbursed by the Obligated Group for any expenditures which it may thereafter incur in connection herewith. Thereafter the holders of the Obligations shall be entitled to payment only out of the moneys or Escrow Securities deposited with the Master Trustee as aforesaid.

Any moneys, funds, securities, or other property remaining on deposit under the Master Indenture (other than said Escrow Securities or other moneys deposited in trust as above provided) shall, upon the full satisfaction of the Master Indenture, forthwith be transferred, paid over and distributed to the Obligated Group Agent.

The Obligated Group may at any time surrender to the Master Trustee for cancellation by it any Obligations previously authenticated and delivered which the Obligated Group may have acquired in any manner whatsoever, and such Obligations, upon such surrender and cancellation, shall be deemed to be paid and retired.

Provision for Payment of a Particular Series of Obligations or Portion Thereof. If the Obligated Group shall pay or provide for the payment of the entire indebtedness on all Obligations of a particular series or a portion of such a series (including, for the purpose of this Section, any such Obligations owned by a Member) in one of the following ways:

(a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on, and any other amounts due under, all Obligations of such series or portion thereof outstanding, as and when the same shall become due and payable;

(b) by depositing with the Master Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Obligations of such series or portion thereof outstanding (including the payment of premium, if any, and interest payable on, and any other amounts due under, such Obligations to the maturity or redemption date), provided that such moneys, if invested, shall be invested at the written direction of the Obligated Group Agent in Escrow Securities in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations of such series or portion thereof outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Securities may be used at the written direction of the Obligated Group Agent for any other purpose permitted by law;

(c) by delivering to the Master Trustee, for cancellation by it, all Obligations of such series or portion thereof outstanding; or

(d) by depositing with the Master Trustee, in trust, non-callable Escrow Securities in such amount as will, together with the income or increment to accrue thereon without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Obligations of such series or portion thereof at or before their respective maturity dates; and if the Obligated Group shall also pay or cause to be paid all other sums payable under the Master Indenture by the Obligated Group with respect to such series of Obligations or portion thereof, and, if any such Obligations of such series or portion thereof are to be redeemed prior to the maturity thereof, notice

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of such redemption shall have been given in accordance with the requirements of the Master Indenture or provisions satisfactory to the Master Trustee shall have been made for the giving of such notice, then in that case (but subject to the provisions of “- Satisfaction of Related Bonds” below) such Obligations shall cease to be entitled to any lien, benefit or security under the Master Indenture except for such Liens solely on amounts held by the Master Trustee for the payment or redemption of such Obligations as may then exist.

Satisfaction of Related Bonds. The provisions of “- Defeasance” and “- Provision for Payment of a Particular Series of Obligations or Portion Thereof” above notwithstanding, any Obligation which secures Related Bonds (i) shall be deemed paid and shall cease to be entitled to the lien, benefit and security under the Master Indenture in the circumstances relating to the satisfaction, repayment or defeasance of such Related Bonds described in the definition of “Outstanding” contained in Article I; and (ii) shall not be deemed paid and shall continue to be entitled to the lien, benefit and security under the Master Indenture unless and until such Related Bond shall cease to be entitled to any lien, benefit or security under the Related Bond Indenture pursuant to the provisions thereof.

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APPENDIX E

PROPOSED FORM OF OPINION OF BOND COUNSEL

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[______], 2018

Montgomery County Higher Education and The Bank of New York Mellon Trust Health Authority Company, N.A., as Trustee One Montgomery Plaza, Suite 1000 1735 Market Street, 9th Floor Norristown, PA 19401 Philadelphia, PA 19103

Merrill Lynch, Pierce, Fenner & Smith Incorporated, 4 Penn Center 1600 JFK Boulevard, Suite 1210 Philadelphia, PA 19103

Re: $______Montgomery County Higher Education and Health Authority Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018D (R- Floats)

Ladies and Gentlemen:

We have acted as bond counsel to the Montgomery County Higher Education and Health Authority (the “Authority”) in connection with the issuance of its $______aggregate principal amount of Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018D (R-Floats) (the “Series 2018D Bonds”). The Series 2018D Bonds are being issued under and pursuant to the provisions of the Municipality Authorities Act, 53 Pa. Cons. Stat. §5601 et seq., as amended (the “Act”) and a Series 2018D Trust Indenture dated as of May 1, 2018 (the “Indenture”), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Indenture.

The Series 2018D Bonds are being issued at the request of Thomas Jefferson University (“TJU”) to provide funds that will be used, together with other monies, to finance a project (the “Project”) consisting generally of (a) the payment of (or the reimbursement to TJU and the other Obligated Group Members for) the costs of the acquisition, construction and development of various capital assets and the making of other capital improvements in various academic health care, research, education and clinical care programs and related missions of TJU and the other Obligated Group Members, including, but not limited to (i) the construction, renovation, expansion, development and equipping of a new health science center building, associated site work, storm water management and related improvements at the East Falls campus of TJU, (ii) the construction, renovation, expansion, development and equipping of a patient care tower, including, but not limited to, an intensive care unit, multiple medical/surgical nursing units and surgical suites, diagnostic testing space and rooftop helipad, and related support areas at the Cherry Hill, New Jersey campus of TJU, and (iii) the construction, development, renovation, improvement and equipping of approximately 92,000 gross square feet of patient rooms, therapy gyms and relocation of an existing pharmacy at the hospital facility of The Magee Memorial Hospital for Convalescents located in Center City Philadelphia (each as further described in Exhibit A to the hereinafter described Loan Agreement, the “Project Facilities”); (b) the current refunding of the Authority’s Thomas Jefferson

E-1 Montgomery County Higher Education and Health Authority Merrill Lynch, Pierce, Fenner & Smith Incorporated The Bank of New York Mellon Trust Company, N.A., as Trustee [______], 2018 Page 2

University Revenue Bonds, Series 2017E outstanding in the principal amount of $247,825,000; (c) the payment or defeasance in whole or in part of (i) certain commercial loans issued in the maximum principal amount of $71,000,000 incurred for the benefit of Kennedy Health System, Inc. (“Kennedy”) and its affiliates, (ii) certain commercial loans incurred for the benefit of Kennedy and its affiliates in the aggregate original principal amount of $1,659,000, (iii) certain commercial loans incurred for the benefit of Aria Health System and its affiliates in the aggregate original principal amount of approximately $17,370,000; and (d) the payment of certain costs and expenses incident to the issuance of the Series 2018D Bonds.

The Series 2018D Bonds are being issued initially as fully registered bonds in denominations of $25,000 or any integral multiple of $5,000 in excess thereof. The Series 2018D Bonds will bear interest at the rates and will mature in the amount and on the date as set forth on the inside front cover of the Official Statement dated [______], 2018 relating to the Series 2018D Bonds.

Concurrently with the issuance of the Series 2018D Bonds, the Authority and TJU are entering into a Series 2018D Loan Agreement dated as of May 1, 2018 (the “Loan Agreement”) providing for the loan of the proceeds of the Series 2018D Bonds to TJU to pay certain costs of the Project. Under the Loan Agreement, TJU is obligated to make loan payments in the amounts and at the times necessary to pay, when due, the principal of, premium, if any, and interest on the Series 2018D Bonds. Under the Indenture, the Authority has assigned certain of its rights and interests under the Loan Agreement, including its right to receive the payments under the Loan Agreement in respect of the Series 2018D Bonds, to the Trustee for the benefit of the holders of the Series 2018D Bonds.

TJU has represented in the Loan Agreement that it has been determined to be and is exempt from federal income taxes under Section 501(a) of the Internal Revenue Code of 1986, as amended (the “Code”) by virtue of being an organization described in Section 501(c)(3) of the Code. TJU is not a “private foundation” as defined in Section 509(a) of the Code and TJU has not taken any action to impair its status as an exempt organization. In the Loan Agreement, TJU has covenanted that, throughout the term of the Loan Agreement, it will not carry on or permit to be carried on, and will cause each Obligated Group Member not to carry on or permit to be carried on, in the Project Facilities or any other property now or hereafter owned by it any trade or business the conduct of which would cause the interest on the Series 2018D Bonds to be included in the gross income of the Holders thereof for purposes of federal income taxation.

Under the Indenture and the Loan Agreement, respectively, the Authority and TJU have covenanted that they will comply with the requirements of Section 148 of the Code pertaining to arbitrage bonds. In addition, an officer of the Authority responsible for issuing the Series 2018D Bonds and an authorized officer of TJU have executed certificates stating the reasonable expectations of the Authority and TJU on the date of issue of the Series 2018D Bonds as to future events that are material for the purposes of such requirements of the Code. The Authority also has delivered to us for filing with the Internal Revenue Service a report of the issuance of the Series 2018D Bonds as required by the Code as a condition of the exclusion from gross income of the interest on the Series 2018D Bonds for federal income tax purposes.

In our capacity as bond counsel we have examined such documents, records of the Authority and other instruments as we deemed necessary to enable us to express the opinions set forth below, including original counterparts or certified copies of the Indenture, the Loan Agreement and the other documents listed in the closing index in respect of the Series 2018D Bonds filed with the Trustee. We also assume

E-2 Montgomery County Higher Education and Health Authority Merrill Lynch, Pierce, Fenner & Smith Incorporated The Bank of New York Mellon Trust Company, N.A., as Trustee [______], 2018 Page 3 that the Indenture and the Loan Agreement have been duly authorized, executed and delivered by, and are valid and binding obligations of, the parties thereto other than the Authority. We also have examined an executed Series 2018D Bond, authenticated by the Trustee, and have assumed that all other Series 2018D Bonds have been similarly executed and authenticated.

Based on the foregoing, it is our opinion that:

1. The Authority is a body corporate and politic validly existing under the laws of the Commonwealth of Pennsylvania, with full power and authority to undertake the financing of the Project, to execute, deliver and perform its obligations under the Loan Agreement and the Indenture, and to issue and sell the Series 2018D Bonds.

2. The Loan Agreement and the Indenture have been duly authorized, executed and delivered by the Authority and constitute legal, valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, except as the rights created thereunder and enforcement thereof may be limited by bankruptcy, insolvency or other laws or equitable principles affecting the enforcement of creditors’ rights generally.

3. All conditions precedent to the issuance of the Series 2018D Bonds pursuant to the Indenture have been satisfied.

4. The issuance and sale of the Series 2018D Bonds have been duly authorized by the Authority. On the assumption as to execution and authentication stated above, the Series 2018D Bonds have been duly executed and delivered by the Authority and are legal, valid and binding limited obligations of the Authority enforceable against the Authority in accordance with their terms and entitled to the benefit and security of the Indenture, except as the rights created thereunder and enforcement thereof may be limited by bankruptcy, insolvency or other laws or equitable principles affecting the enforcement of creditors’ rights generally.

5. Under the laws of the Commonwealth of Pennsylvania as presently enacted and construed, the Series 2018D Bonds are exempt from personal property taxes in Pennsylvania, and interest on the Series 2018D Bonds is exempt from Pennsylvania personal income tax and Pennsylvania corporate net income tax.

6. Interest on the Series 2018D Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Series 2018D Bonds, assuming the accuracy of the certifications of the Authority, TJU and the other Obligated Group Members and continuing compliance by the Authority, TJU and the other Obligated Group Members with the requirements of the Code. Interest on the Series 2018D Bonds is not an item of tax preference for purposes of the individual federal alternative minimum tax. The corporate alternative minimum tax was repealed by legislation enacted on December 22, 2017 (known as the "Tax Cuts and Jobs Act"), effective for tax years beginning after December 31, 2017. For tax years beginning on or before December 31, 2017 interest on the Series 2018D Bonds is not an item of tax preference for purposes of the corporate alternate minimum tax in effect prior to enactment of the Tax Cuts and Jobs Act; however, interest on Series 2018D Bonds held by a corporation (other than an S Corporation, regulated investment company, or real estate investment trust) indirectly may be subject to federal alternative minimum tax because of its inclusion in the adjusted current earnings of a corporate holder.

E-3 Montgomery County Higher Education and Health Authority Merrill Lynch, Pierce, Fenner & Smith Incorporated The Bank of New York Mellon Trust Company, N.A., as Trustee [______], 2018 Page 4

We express no opinion regarding other federal tax consequences relating to ownership or disposition of, or the accrual or receipt of interest on, the Series 2018D Bonds.

We express no opinion herein with respect to the adequacy of the security for the Series 2018D Bonds or the sources of payment for the Series 2018D Bonds or with respect to the accuracy or completeness of any information pertaining to the offering for sale of the Series 2018D Bonds. We are not rendering any opinion with respect to the priority of the lien of the Indenture.

We call your attention to the fact that the Series 2018D Bonds are limited obligations of the Authority payable only out of certain revenues of the Authority including payments to be made by TJU pursuant to the Loan Agreement and certain other moneys available therefor as provided in the Indenture, and that the Series 2018D Bonds do not pledge the credit or taxing power of the Commonwealth of Pennsylvania or any political subdivision thereof. The Authority has no taxing power.

Very truly yours,

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APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT

[THIS PAGE INTENTIONALLY LEFT BLANK] CONTINUING DISCLOSURE AGREEMENT

This CONTINUING DISCLOSURE AGREEMENT is executed and delivered as of May 3, 2018, by and between Thomas Jefferson University (“TJU”), on behalf of itself and the other Members of the Obligated Group (as defined in the Master Indenture (as defined below)) (collectively, the “University”), and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

WITNESSETH:

WHEREAS, pursuant to a Bond Purchase Agreement dated April 17, 2018 (the “Series A/B/C Bond Purchase Agreement”), by and among Montgomery County Higher Education and Health Authority (the “Authority”), TJU, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of itself and the other underwriter specified on Annex I attached thereto (the “Series A/B/C Underwriters”), the Authority is selling to the Series A/B/C Underwriters: (i) $356,285,000 aggregate principal amount of its Thomas Jefferson University Fixed Rate Revenue Bonds, Series 2018A (the “2018A Bonds”); (ii) $35,075,000 aggregate principal amount of its Thomas Jefferson University Taxable Fixed Rate Revenue Bonds, Series 2018B (the “2018B Bonds”) and (iii) $100,000,000 aggregate principal amount of its Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018C (the “2018C Bonds, ” and together with the 2018A Bonds and the 2018B Bonds, the “2018A/B/C Bonds”); and

WHEREAS, pursuant to a Bond Purchase Agreement dated ______, 2018 (the “Series D Bond Purchase Agreement”), by and among the Authority, TJU, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the “Series D Underwriter,” and together with the 2018A/B/C Underwriters, the “Underwriters”), the Authority is selling $______aggregate principal amount of its Thomas Jefferson University Variable Rate Revenue Bonds, Series 2018D (R-Floats) (the “2018D Bonds” and, together with the 2018A/B/C Bonds, the “Bonds”) to the Series D Underwriter; and

WHEREAS, Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”), provides that a Participating Underwriter (as defined in the Rule) shall not purchase or sell municipal securities in connection with an Offering (as defined in the Rule) unless the Participating Underwriter has reasonably determined that an issuer of municipal securities, or an obligated person for whom financial or operating data is presented in the final official statement has undertaken, either individually or in combination with other issuers of such municipal securities or obligated persons, in a written agreement or contract for the benefit of holders of such securities, to provide, either directly or indirectly through an indenture trustee or a designated agent, certain specified financial information and operating data and notices of certain material events; and

WHEREAS, TJU also has, by separate agreement, retained Digital Assurance Certification, L.L.C. (“DAC”) as dissemination agent to assist TJU in connection with certain of its obligations under this Continuing Disclosure Agreement.

F-1 NOW, THEREFORE, in consideration of the mutual covenants, promises and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

Section 1. Definitions. In addition to the terms defined in the above recitals, the following terms shall have the meanings specified below:

“Dissemination Agent” shall mean DAC, as dissemination agent for TJU and the other Members of the Obligated Group, or any successor thereto.

“EMMA” shall mean the MSRB’s Electronic Municipal Market Access system (www.emma.msrb.org) as described in 1934 Act Release No. 59062 and maintained by the MSRB for purposes of the Rule.

“Loan Agreement” shall mean the Series 2018A/B Loan Agreement, the Series 2018C Loan Agreement or the Series 2018D Loan Agreement, as applicable, each dated as of May 1, 2018, between the Authority and TJU relating to the applicable series of the Bonds.

“Master Indenture” means the Amended and Restated Master Trust Indenture (Security Agreement) dated as of February 1, 2017, and effective on December 1, 2017, as supplemented, by and between TJU, on behalf of itself and as Obligated Group Agent, and The Bank of New York Mellon Trust Company, N.A., as master trustee.

“MSRB” shall mean the Municipal Securities Rulemaking Board.

“Trust Indenture” shall mean the Series 2018A/B Trust Indenture, the Series 2018C Trust Indenture or the Series 2018D Trust Indenture, as applicable, each dated as of May 1, 2018, between the Authority and the Trustee relating to the applicable series of the Bonds.

“University” shall mean the Members of the Obligated Group and their controlled Affiliates, but excluding any Excluded Affiliates, as such terms are defined in the Master Indenture.

Terms not otherwise defined herein shall have the same meanings as in the applicable Trust Indenture.

Section 2. Covenants of TJU. TJU covenants as follows:

(a) TJU, or the Dissemination Agent on its behalf, shall deliver to the Trustee and the MSRB, through EMMA, within 180 days after the end of each fiscal year commencing with the fiscal year ending June 30, 2018:

(1) a copy of TJU’s consolidated annual financial statements (and the annual financial statements of each other Member of the Obligated Group to the extent such entity’s results are not consolidated with the results of TJU) prepared in accordance with generally accepted accounting principles and audited by a certified public accountant; and

F-2 (2) to the extent not provided pursuant to clause (1) above, an update of other financial and operating data relating to the University in Appendix A to the Official Statement under the sub-headings and headings specified in Exhibit A hereto.

(b) TJU, or the Dissemination Agent on its behalf, shall deliver to the Trustee and the MSRB, through EMMA, in a timely manner, not in excess of ten Business Days after the occurrence of the event, notice of any of the following events (collectively, “Reportable Events”) with respect to the Bonds:

(1) Principal and interest payment delinquencies;

(2) Non-payment related defaults, if material;

(3) Unscheduled draws on any debt service reserves reflecting financial difficulties;

(4) Unscheduled draws on credit enhancements reflecting financial difficulties;

(5) Substitution of any credit or liquidity providers, or their failure to perform;

(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(7) Modifications to rights of the Bondholders, if material;

(8) Bond calls, if material, and tender offers;

(9) Defeasances;

(10) Release, substitution, or sale of property securing payment of the Bonds, if material;

(11) Rating changes;

(12) Bankruptcy, insolvency, receivership or similar event of a Member of the Obligated Group (which is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for a Member of the Obligated Group in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of a Member of the Obligated Group, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of a Member of the Obligated Group);

F-3 (13) The consummation of a merger, consolidation or acquisition involving a Member of the Obligated Group or the sale of all or substantially all of the assets of a Member of the Obligated Group, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

(c) In a timely manner, TJU, or the Dissemination Agent on its behalf, shall give to the Trustee and the MSRB, through EMMA, notice of any failure by TJU to provide any information required pursuant to subsection (a) above on or before the date specified in subsection (a) above.

(d) TJU, or the Dissemination Agent on its behalf, shall deliver to the Trustee and the MSRB, through EMMA, within 45 days after the end of each fiscal quarter, commencing with the fiscal quarter ended March 31, 2018: (i) those certain utilization statistics of the University of the type currently being filed on EMMA by TJU for the fiscal quarter then ended; (ii) a copy of the University’s unaudited consolidated balance sheet for the fiscal quarter then ended, prepared substantially in accordance with generally accepted accounting principles (which, to the extent practicable and applicable, will include the financial information for any new entity which becomes part of the University) and (iii) a copy of the University’s unaudited consolidated statement of revenues and expenses and changes in unrestricted net assets for the fiscal quarter then ended, prepared substantially in accordance with generally accepted accounting principles (which, to the extent practical and applicable, will include the financial information for any new entity which becomes part of the University), each subject to TJU’s determination that such information continues to be practically available to TJU in a timely manner and customarily made available to bondholders.

(e) TJU shall send to the Trustee concurrently with the delivery of any information required pursuant to subsection (a), (b) or (d) above a certificate signed by an authorized officer of TJU, stating that it has filed such information with the MSRB, through EMMA.

(f) TJU agrees to provide information required in subsection (a) and (b) above for each Member of the Obligated Group.

(g) TJU agrees that the provisions of this Section 2 shall be for the benefit of the registered holders and beneficial owners of the Bonds, and shall be enforceable by any holders or beneficial owners of the Bonds, or by the Trustee on their behalf, in accordance with the provisions of Section 7 herein.

(h) Any information, document, data and/or notice submitted to the MSRB via EMMA hereunder shall be submitted in electronic format and shall be accompanied by identifying information, all as prescribed by the MSRB.

F-4 Section 3. Duties of Trustee.

(a) The Trustee shall retain copies, which may be in electronic or digital format, of all annual information and notices of Reportable Events provided by TJU hereunder until all of the Bonds have been fully paid.

(b) The Trustee shall have no responsibility or liability in connection with TJU’s filing obligations under this Continuing Disclosure Agreement. The Trustee shall have only those duties specifically set forth in this Continuing Disclosure Agreement and no other duties shall be implied. TJU agrees to indemnify and save the Trustee, its officers, directors, employees and agents (collectively, the “Indemnitees”), from and against any and all claims, liabilities, losses, damages, fines, penalties, and expenses, including out-of-pocket expenses, incidental expenses, legal fees and expenses, the allocated costs and expenses of in-house counsel and legal staff and the costs and expenses of defending or preparing to defend against any claim (“Losses”) that may be imposed on, incurred by, or asserted against, the Indemnitees or any of them for following any instruction or other direction upon which the Trustee is authorized to rely pursuant to the terms of this Continuing Disclosure Agreement. In addition to and not in limitation of the immediately preceding sentence, TJU also covenants and agrees to indemnify and save the Indemnitees and each of them harmless from and against any and all Losses that may be imposed on, incurred by, or asserted against the Indemnitees or any of them in connection with or arising out of the Trustee’s performance under this Continuing Disclosure Agreement provided the Trustee has not acted with gross negligence or in violation of this Continuing Disclosure Agreement or engaged in willful misconduct. The provisions of this Section 3(b) shall survive the termination of this Continuing Disclosure Agreement and the resignation or removal of the Trustee for any reason. Anything in this Continuing Disclosure Agreement to the contrary notwithstanding, in no event shall the Trustee be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. The Trustee shall be entitled to the same protections, immunities and indemnities in so acting under this Continuing Disclosure Agreement as it has in acting as Trustee under the Trust Indenture, including its right to compensation thereunder for any services it performs hereunder.

Section 4. Termination of Reporting Obligations. TJU’s obligations under this Continuing Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If TJU’s obligations with respect to the payment of the Bonds are assumed in full by some other entity in accordance with the Loan Agreement, such other entity shall be responsible for compliance with this Continuing Disclosure Agreement in the same manner as if it were TJU, and TJU shall have no further responsibility hereunder. In addition, TJU’s obligation to provide information and notices as specified in Section 2 hereof shall terminate (a) at such other times as such information and notices (or any portion thereof) are no longer required to be provided by the Rule as it applies to the Bonds, (b) in the event of a repeal or rescission of the Rule or (c) upon a determination that the Rule is invalid or unenforceable.

Section 5. [Reserved]

Section 6. Amendment. TJU and the Trustee may amend this Continuing Disclosure Agreement and waive any of the provisions hereof, but no such amendment or waiver shall be

F-5 executed and effective unless (a) the amendment or waiver is made in connection with a change in legal requirements, change in law or change in the identity, nature or status of TJU or other Member of the Obligated Group or the operations conducted by TJU or other Member of the Obligated Group, (b) this Continuing Disclosure Agreement, as modified by the amendment or waiver complies with the requirements of the Rule, and (c) the amendment or waiver does not materially impair the interest of the registered owners of the Bonds. Prior to executing any requested amendment, the Trustee may request TJU to provide an opinion, addressed to Trustee, of counsel knowledgeable in federal securities laws and not unacceptable to the Trustee to the effect that the proposed amendment satisfies the requirements described above, which opinion the Trustee may exclusively rely upon. In the event of any amendment or waiver of a provision of this Continuing Disclosure Agreement, TJU shall describe such amendment in its next annual report delivered pursuant to Section 2(a) hereof, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the financial information or operating data being presented by the University. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i.e., changes other than those prescribed by generally accepted accounting principles), (i) notice of such change shall be given pursuant to the Reportable Event notice requirements as set forth in this Continuing Disclosure Agreement; and (ii) the annual report for the year in which the change is made will present a comparison between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. To the extent that the Rule requires an approving vote of beneficial owners of the Bonds in connection with an amendment, the approving vote of beneficial owners of Bonds constituting more than 50% of the aggregate principal amount of the then outstanding Bonds shall constitute such approval. TJU shall provide notice of any amendment to this Continuing Disclosure Agreement to the MSRB, through EMMA, and to the registered holders of the Bonds.

Section 7. Remedies for Default. In the event of a breach or default by TJU of its covenants to provide, or cause to be provided, annual financial information and notices as provided in Section 2 hereof, the Trustee or any registered holder or beneficial owner of Bonds shall have the right to bring an action in a court of competent jurisdiction to compel specific performance by TJU. A breach or default under this Continuing Disclosure Agreement shall not constitute a default or an event of default under the Bonds, the Trust Indenture, the Loan Agreement, the Master Indenture or any other agreement. The Trustee shall be under no obligation to enforce this Continuing Disclosure Agreement unless (a) directed in writing by the registered holders or beneficial owners of at least 25% of the outstanding principal amount of the Bonds of a series and (b) furnished with indemnity and security for its fees and expenses satisfactory to it in its sole discretion.

Section 8. Miscellaneous.

(a) Binding Nature of Agreement. This Continuing Disclosure Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. In addition, registered owners of the Bonds, which for the purposes of this Section 8 includes the holders of a book-entry credit evidencing an interest in the Bonds, from time to time shall be third party beneficiaries hereof and shall be entitled to enforce the provisions hereof as if they were parties hereto; but no consent of beneficial owners of the Bonds shall be required in

F-6 connection with any amendment of this Continuing Disclosure Agreement, except as required by the Rule.

(b) Notices. All notices and other communications required or permitted under this Continuing Disclosure Agreement shall be in writing and shall be deemed to have been duly given, made and received only when delivered (personally, by recognized national or regional courier service, or by other messenger, for delivery to the intended addressee) or when deposited in the United States mails, registered or certified mail, postage prepaid, return receipt requested, or when sent by facsimile, addressed or sent as set forth below;

(i) To the Trustee at:

The Bank of New York Mellon Trust Company, N.A. 1735 Market Street, 9th Floor, AIM #193-0950 Philadelphia, PA 19103 Facsimile: (215) 553-6915 Attention: Public Finance

(ii) To TJU at: Thomas Jefferson University 601 Walnut Street Suite 925 East Philadelphia, PA 19106 Facsimile: (215) 923-5067 Attention: Treasurer’s Office

With a copy to: Thomas Jefferson University 925 Chestnut Street Suite 110 Philadelphia, PA 19107 Attention: Cristina G. Cavalieri, General Counsel

Any party may alter the address or telecopier number to which communications are to be sent by giving notice of such change of address or telecopier number in conformity with the provisions of this Section.

(c) Execution in Counterparts. This Continuing Disclosure Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Continuing Disclosure Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall be executed by all of the parties hereto.

F-7 (d) Controlling Law. This Continuing Disclosure Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania and the Rule.

(e) Successor and Assigns. The Trustee shall be permitted to assign, and the Dissemination Agent shall be permitted to accept assignment, of this Continuing Disclosure Agreement and the duties and indemnifications of the Trustee hereunder. Notwithstanding anything herein to the contrary, for so long as the Trustee is a party to this Continuing Disclosure Agreement, any successor trustee under the Trust Indenture under which the applicable series of Bonds were issued shall automatically succeed to the rights and obligations of the Trustee under this Continuing Disclosure Agreement.

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F-8 SIGNATURE PAGE TO CONTINUING DISCLOSURE AGREEMENT

IN WITNESS WHEREOF, the parties hereto have executed this Continuing Disclosure Agreement as of the date first above written.

THOMAS JEFFERSON UNIVERSITY, on behalf of itself and the other Members of the Obligated Group

By: Authorized Officer

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

By: Authorized Signatory

F-9

EXHIBIT A

(i) The tables under the sub-heading “Enrollment” under the heading “EDUCATIONAL ACTIVITIES;”

(ii) The table captioned, “TUITION AND FEES FOR SELECTED FULL- TIME PROGRAMS” under the sub-heading “Tuition and Fees” under the heading “EDUCATIONAL ACTIVITIES;”

(iii) The table under the sub-heading “Financial Aid” under the heading “EDUCATIONAL ACTIVITIES;”

(iv) The table captioned, “PRO FORMA GRANTS AND CONTRACT REVENUE” under the heading “RESEARCH ACTIVITIES;”

(v) The tables under the sub-heading “Utilization and Operating Statistics” under the heading “HEALTHCARE ACTIVITIES;”

(vi) The table under the sub-heading “Sources of Patient Revenue” under the heading “HEALTHCARE ACTIVITIES;” and

(vii) The table under the heading “FUNDRAISING AND CONTRIBUTIONS.”

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