The Harrisburg University of Science and Technology (The “University”), and from Wire Transferattherequestofholdersleast$1,000,000Aggregateprincipalamountsuchbonds

THIS IS A PRELIMINARY LIMITED OFFERING STATEMENT AND IS NOT YET FINALLY ADOPTED. The sale of the Bonds is subject to the terms and conditions specified in the Official Notice of Sale. All information contained herein is subject to completion and amendment. Under no circumstances shall this Preliminary Limited Offering Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which such an offer, solicitation or sale would be unlawful. * Preliminary, subjecttochange. Dated: ______, 2017 expected thatBondsindefinitive formwillbedeliveredtoDTCinNew York, New York, onorabout______,2017. LLP,Rothschild Fox by and University; the to Harrisburg,counsel as Pennsylvania, Underwriter.to counsel as Pennsylvania, Philadelphia, is It LLC, Nurick WallaceMcNees & by the Authority; to counsel as Pennsylvania, Linglestown, P.Esquire, Guy Beneventano, by upon passed be will matters legal Certain Counsel. Bond Pennsylvania, Harrisburg, LLC, Nurick Wallace& McNees of opinion approving the to and notice, Offering Statementtoobtaininformationessentialmakinganinformedinvestmentdecision. thereof. The Authority hasnotaxingpower. an obligationofDauphinCounty, the CommonwealthofPennsylvaniaor anypoliticalsubdivision interest ontheBonds,nor shalltheBondsbeor bedeemedageneralobligationofthe Authority or political subdivisionthereof ispledgedfor thepaymentofprincipalor redemption priceofor the credit nor thetaxingpower of DauphinCounty, theCommonwealthofPennsylvaniaor ofany to be made by the University under the Loan Agreement and other sources described herein. Neither “INVESTOR SUITABILITY STANDARDS” HEREIN. “QUALIFIED INSTITUTIONAL BUYERS” AS SUCH TERMS ARE DEFINEDHEREIN.SEE herein andunderothersectionsofthisLimitedOfferingStatement. and expensesofissuingtheBonds. costs the of payment (iii) and accounts or funds reserve necessary other or reserve service debt a funding (ii) herein), (defined Bonds 2007B the which theBondsareissuedandsecured.See“SECURITY AND SOURCESOFPAYMENT FOR THE BONDS”herein. the the Trustee the the TrusteeTrustto between by under and pursuant Indenture held Authority or to pledged moneys other and proceeds Bond Authority under a Loan Agreement between the Authority and The Harrisburg University of Science and Technology (the “University”), and from wire transferattherequestofholdersleast$1,000,000aggregateprincipalamountsuchBonds. by or check, by owners registered the Trusteeto the by case each in 2017, 15, October commencing 15, payable October and be 15 on will April semiannually Bonds the on Interest hereof. cover front inside the on shown of rates office the at trust interest bear corporate will designated Bonds The the Trustee.successor or any Bonds, the for “Trustee”) (the trustee as A., N. Company,Trust YorkMellon New of Bank The of The Depository Trust Company(“DTC”),New York, New York. for nominee and thereof. owner excess registered in the $5,000 as of Co. multiples & Cede of name the in registered be initially will Bonds The integral and $100,000 of denominations in Technologyand “Bonds”) Science (the of Project) University Harrisburg (The 2017 of Series Bonds Dated: DateofDelivery personal incometaxandtheCommonwealthofPennsylvaniacorporatenettax.See“TAX MATTERS” herein. property taxesintheCommonwealthofPennsylvaniaandinterest ontheBondsisexemptfrom theCommonwealthofPennsylvania that underthelawsofCommonwealthPennsylvaniaaspresently enactedandconstrued,theBondsare exemptfrom personal current earningsforpurposesofthefederalalternativeminimumtaximposedoncertaincorporations.BondCounselisalso oftheopinion preference forpurposesofthefederalindividualandcorporatealternativeminimumtaxes;however, suchinterest isincludableinadjusted interest ontheBondsisexcludablefrom gross incomeforpurposesoffederaltax.Interest ontheBondsisnotanitemoftax NEW ISSUE–BOOKENTRY ONLY The Bonds are offered when, as and if issued by the Authority, subject to prior sale, withdrawal or modification of the offer without any without offer the of modification or withdrawal sale, prior to subject Authority, the by issued if and as when, offered are Bonds The This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire Limited The Bondsare limitedobligationsofthe Authority andare payablesolelyfrom paymentsrequired THE BONDSMAY BEPURCHASEDONLY BY “ACCREDITEDINVESTORS” OR “BONDHOLDERS’ under described RISKS” as nature, in speculative is and risk of degree significant a involves Bonds the in Investment The Bondsaresubjecttoredemptionpriormaturityasdescribedherein.See“THEBONDS-RedemptionPriorMaturity” The proceeds of the Bonds will be applied to pay the costs of a project on behalf of the University consisting of: (i) the current refunding of the by received be to revenues other and payments of, pledge a and assignment an by secured are and from, solely payable are Bonds The office agency trust corporate designated the at owner registered the to payable be will Bonds the any,on if premium, and of principal The Revenue University its of amount principal aggregate $56,500,000* issue will “Authority”) (the Authority General County Dauphin The In theopinionofBondCounsel,underexistinglaw, andassumingcontinuingcompliancewiththerequirements offederaltaxlaws, PRELIMINARY LIMITEDOFFERINGSTATEMENT DATED JUNE21,2017 (The HarrisburgUniversityofScienceand Technology Project) DAUPHIN COUNTY GENERAL AUTHORITY University RevenueBonds Series of2017 $56,500,000* Due: October 15,asshownoninsidecover See: “RATING” herein RATING: “BB” $56,500,000* DAUPHIN COUNTY GENERAL AUTHORITY University Revenue Bonds Series 2017 (The Harrisburg University of Science and Technology Project)

MATURITY SCHEDULE

† The CUSIP (Committee on Uniform Securities Identification Procedures) numbers shown above have been assigned by an organization not affiliated with the Authority, the University, the Underwriter or the Trustee, and such parties are not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of holders and no representation is made as to the correctness of the CUSIP numbers printed above. CUSIP numbers assigned to the Bonds may be changed during the term of the Bonds based on a number of factors including but not limited to the refunding or defeasance of such issues or the use of secondary market financial products. None of the Authority, the University, the Underwriter or the Trustee has agreed to, nor is there any duty or obligation to, update this Limited Offering Statement to reflect any change or correction in the CUSIP numbers printed above.

______* Preliminary, subject to change.

i IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT PRIOR NOTICE. ______

No dealer, broker, salesperson or other person has been authorized by the Authority, the University or the Underwriter to give any information or to make any representations with respect to the Bonds other than those in this Limited Offering Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Limited Offering Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be a sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The information set forth herein has been obtained from the Authority, the University, The Depository Trust Company and other sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Authority (except for the information under the caption “THE AUTHORITY” and information pertaining to the Authority under the caption “LITIGATION”) or the Underwriter or, as to information from other sources, by the Authority or the University. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Limited Offering Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the matters described herein since the date hereof.

The Underwriter has reviewed the information in this Limited Offering Statement pursuant to its responsibilities to investors under the federal securities laws, but the Underwriter does not guarantee the accuracy or completeness of such information.

______

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR HAS THE 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 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH THE BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN THE OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE BONDS OR THE ACCURACY OR COMPLETENESS OF THIS LIMITED OFFERING STATEMENT.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS IN THIS LIMITED OFFERING STATEMENT

Certain statements included in this Limited Offering Statement and Appendix A attached hereto constitute “forward- looking statements.” Such statements generally are identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “project,” “budget,” “forecast,” “assumes” or other similar words or expressions. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. The University does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations of the events, conditions or circumstances on which such statements are based change.

THE ORDER AND PLACEMENT OF MATERIALS IN THIS LIMITED OFFERING STATEMENT, INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED TO BE A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS LIMITED OFFERING STATEMENT, INCLUDING THE APPENDICES, MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE LIMITED OFFERING STATEMENT.

ii TABLE OF CONTENTS

Page

LIMITED OFFERING STATEMENT ...... 1 INTRODUCTORY STATEMENT ...... 1 THE AUTHORITY ...... 4 THE BONDS ...... 6 THE PROJECT ...... 10 ESTIMATED SOURCES AND USES OF THE FUNDS ...... 11 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ...... 11 INVESTOR SUITABILITY STANDARDS ...... 14 BONDHOLDERS’ RISKS ...... 15 LIMITED OBLIGATIONS ...... 26 NO PERSONAL RECOURSE ...... 26 LITIGATION ...... 26 CONTINUING DISCLOSURE ...... 26 TAX MATTERS ...... 27 LEGAL MATTERS ...... 29 RATING ...... 29 UNDERWRITING ...... 29 FINANCIAL ADVISOR ...... 30 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ...... 30 OTHER MATTERS ...... 30 APPENDIX A – Information Concerning The Harrisburg University of Science and Technology APPENDIX B – Audited Financial Statements of The Harrisburg University of Science and Technology for the Fiscal Years Ended June 30, 2016 and 2015 APPENDIX C – Form of Indenture APPENDIX D – Form of Loan Agreement APPENDIX E – Form of Mortgage APPENDIX F – Form of Disclosure Dissemination Agent Agreement APPENDIX G – Proposed Form of Opinion of Bond Counsel APPENDIX H – Appraisal of Education Unit in the Condominium

iii LIMITED OFFERING STATEMENT

Relating to

$56,500,000*

DAUPHIN COUNTY GENERAL AUTHORITY University Revenue Bonds Series 2017 (The Harrisburg University of Science and Technology Project)

INTRODUCTORY STATEMENT

This Introductory Statement is provided to furnish information with respect to the $56,500,000* aggregate principal amount of University Revenue Bonds Series of 2017 (The Harrisburg University of Science and Technology Project) (the “Bonds”) being issued by the Dauphin County General Authority (the “Authority”) under a Trust Indenture, dated as of July 1, 2017 (the “Indenture”), between the Authority and The Bank of New York Mellon Trust Company, N. A., as trustee (the “Trustee”). The Bonds will be dated the date of their initial delivery, will mature on the date or dates set forth on the inside front cover hereof, and will be subject to redemption prior to maturity as described herein under “THE BONDS – Redemption Prior to Maturity.”

The Authority will loan the proceeds of the Bonds to The Harrisburg University of Science and Technology, a Pennsylvania nonprofit corporation (the “University”), pursuant to a Loan Agreement dated as of July 1, 2017, between the Authority and the University (the “Loan Agreement”). Certain information regarding the University is set forth in Appendix A to this Limited Offering Statement and certain financial statements of the University are set forth in Appendix B to this Limited Offering Statement.

Forms of the Indenture, the Loan Agreement and the Mortgage are included in Appendices C –E hereto, the form of the Disclosure Dissemination Disclosure Agreement is set forth in Appendix F hereto and the form of opinion of Bond Counsel is set forth in Appendix G hereto. A copy of the Appraisal (defined herein) is included as Appendix H.

The Authority

The Authority is a municipal authority organized under the Pennsylvania Municipality Authorities Act (the “Act”). The Authority was incorporated on March 7, 1984. Pursuant to a Certificate of Amendment dated January 8, 1998, the term of the Authority’s existence was extended for 50 years to January 8, 2048. The principal office of the Authority is located at 530 South Harrisburg Street, Harrisburg, Pennsylvania 17113. The Bonds are being issued pursuant to the Act and a resolution adopted by the Authority. See “THE AUTHORITY” herein.

The University

The University is a private institution of higher education located in Harrisburg, Pennsylvania, which is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. The University’s main campus is located in Harrisburg, Pennsylvania. For more information regarding the University, see Appendices A and B hereto.

* Preliminary, subject to change.

The Project

The proceeds of the sale of the Bonds will be used, together with any other available funds, to currently refund the 2007B Bonds (defined herein), currently outstanding in the amount of $57,650,000, to fund a Debt Service Reserve or other required reserve funds and accounts and to pay certain costs of issuing the Bonds. (See “THE PROJECT” herein).

Capital Region Water, formerly The Harrisburg Authority, issued its University Revenue Bonds, Series of 2007 (The Harrisburg University of Science and Technology Project) in the aggregate principal amount of $87,915,000 (the “Series 2007 Bonds”), comprised of its University Revenue Bonds, Series A of 2007 in the aggregate principal amount of $27,690,000 (the “2007A Bonds”) and its University Revenue Bonds, Series B of 2007 in the aggregate principal amount of $60,225,000 (the “2007B Bonds”), the proceeds of which financed, inter alia, the construction, development, equipping and improvement of the University Facility. The 2007A Bonds have been paid and are no longer outstanding.

The University Facility

The University Facility constructed with the proceeds of the Series 2007 Bonds was initially comprised of a sixteen-story building (the “Building”) on a site located on approximately 0.82 acres of land (the “Land”) in the City of Harrisburg (the “City”), consisting of nine floors of primarily academic and University office space, and further consisting of a seven floors of primarily parking facilities to allow parking on the site to accommodate approximately 380 vehicles. Pursuant to that Agreement of Sale and Purchase executed in January, 2007 between the University and the Harrisburg Parking Authority (the “Parking Authority”), (i) the University agreed to submit the Land and the Building and the other improvements located on the Land to a condominium form of ownership (discussed below) and (ii) the University agreed to sell certain portions of the Building comprising parking facilities and related appurtenances the (“Parking Garage”) to the Parking Authority for a purchase price of $14,000,600. The University retained a license to use 300 parking spaces in the Parking Garage, and obtained various purchase options for the Parking Garage pursuant to that Parking License and Option to Purchase executed in January, 2007 between the Parking Authority and the University, which lease and option agreement was subsequently terminated in connection with settlement of litigation between the University and the Parking Authority referred to in the following paragraph.

The sale of the Parking Garage to Parking Authority was consummated in December, 2013 following resolution of litigation between the Parking Authority and University involving a dispute regarding certain terms of the sale and transfer and the inability of the University to obtain a release of the Parking Garage from the lien of the mortgage securing the Series 2007 Bonds due to the existence at the time of defaults by the University under the trust indenture and loan agreement relating to the Series 2007 Bonds. See “BONDHOLDERS’ RISKS – University History Regarding 2007B Bonds and Prior Defaults” herein for a discussion of such prior defaults. As part of the settlement with the Parking Authority, the University executed a promissory note in the stated principal amount of $500,000 in favor of the Parking Authority, which Note will be paid in full with University funds contemporaneously with the issuance of the Bonds.

In December, 2013, the Land and the Building (including the Parking Garage) and the other improvements located on the Land then comprising the University Facility were converted to a condominium form of ownership (the “Condominium”) pursuant to the Pennsylvania Uniform Condominium Act, 68 Pa. C.S. §3101 et seq., as amended (the “Condominium Act”) by the filing of a Declaration of Condominium of Fourth Street Condominium, dated December 16, 2013 and recorded in the Office of the Recorder of Deeds of Dauphin County, Pennsylvania as Instrument No. 20130038835 (the “Declaration”). The Declaration initially created two units in the Condominium, Unit 1, being designated

2 in the Declaration as an “Education Unit,” and Unit 2 as a “Parking Unit.” The University Facility is now comprised of (i) Unit 1 of the Condominium, as described in the Declaration and depicted on the Condominium plats and plans attached to the Declaration, (ii) any Limited Common Elements appurtenant to Unit 1 of the Condominium and (iii) a 70% undivided percentage interest in the Common Elements appurtenant to Unit 1 of the Condominium. The Parking Garage is now comprised of (i) Unit 2 of the Condominium, as described in the Declaration and depicted on the Condominium plats and plans attached to the Declaration, (ii) any Limited Common Elements appurtenant to Unit 2 and (iii) a 30% undivided percentage interest in the Common Elements appurtenant to Unit 2. The terms “Limited Common Elements” and “Common Elements” shall have the meanings ascribed to them in the Declaration.

Authorized Denominations; Book-Entry Only

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds, and the Bonds will be registered in the name of Cede & Co., as registered owner and nominee for DTC. Individual purchases of Bonds will be made in book-entry form, in the authorized denomination of $100,000 and integral multiples of $5,000 in excess thereof. So long as Cede & Co. or any successor nominee of DTC is the registered owner of the Bonds, references herein to the Bondholders, Holders, holders, owners or registered owners shall mean Cede & Co., or such successor nominee, and shall not mean the Beneficial Owners (hereinafter defined) of the Bonds. Principal and interest on the Bonds are payable by the Trustee to Cede & Co., as nominee for DTC, which will, in turn, remit such principal and interest to the DTC Participants for subsequent disbursement to the Beneficial Owners. (See “THE BONDS -- Book Entry Only System” herein).

Security for Bonds

The Bonds are limited obligations of the Authority payable solely from pledged revenues and other moneys assigned and pledged under the Indenture to secure such payment, including (i) the loan payments required to be made by the University under the Loan Agreement, and (ii) moneys and obligations held by the Trustee in certain funds established under the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR BONDS” herein.

The Loan Agreement is the general obligation of the University and the full faith and credit of the University is pledged to secure the payments required thereunder. The University’s obligations under the Loan Agreement are secured by a pledge of the Unrestricted University Revenues (defined herein) and by a lien on the Condominium unit comprising the University Facility pursuant to the Open-End Mortgage dated as of July 1, 2017 by the University, as mortgagor, and the Trustee, as mortgagee (the “Mortgage”). The Bonds will also be secured by a Debt Service Reserve Fund. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein.

The Bonds are not subject to a guaranty or other obligation of Dauphin County, Pennsylvania, or any other governmental unit, agency or authority, or any other entity. See “LIMITED OBLIGATIONS” herein.

Additional Indebtedness

Upon compliance with the terms and conditions of the Loan Agreement, the University may incur additional debt on a parity with the Bonds with respect to the lien on the Unrestricted University Revenues and the lien of the Mortgage. See “SOURCES OF AND SECURITY FOR PAYMENT OF THE BONDS – Additional Indebtedness” herein.

Bondholders’ Risks

Certain risks associated with the purchase of the Bonds are set forth in the section entitled “BONDHOLDERS’ RISKS” herein. Careful evaluation should be made of the risks set forth in such section and elsewhere in the Limited Offering Statement concerning the factors which may affect the payment of principal and interest on the Bonds when due.

Underlying Documents

The descriptions and summaries of various documents set forth in this Limited Offering Statement do not purport to be comprehensive or definitive, and reference is made to each document for complete details of all terms and conditions thereof. All statements herein are qualified in their entirety by the terms of each such document. Copies of the Indenture, the Loan Agreement and the Mortgage, each as described herein, are available for inspection at the corporate trust office of the Trustee located in Philadelphia, Pennsylvania.

THE AUTHORITY

General

The Authority is a municipal authority organized under the Act. The Authority was incorporated on March 7, 1984. Pursuant to a Certificate of Amendment dated January 8, 1998, the term of the Authority’s existence was extended for 50 years to January 8, 2048. The principal office of the Authority is located at 530 South Harrisburg Street, Harrisburg, Pennsylvania 17113.

Organization

The governing body of the Authority is a Board consisting of five members appointed by the County Commissioners of Dauphin County, Pennsylvania (the “County”). Members of the Board are either residents of the County or work within the boundaries of the County. Members are appointed for five-year terms and may be reappointed. Their terms are staggered so that the term of at least one member expires every year. No member of the Board is also a Commissioner of the County. Under its By-laws, the Board must meet at least quarterly, but may meet more frequently from time to time. The members of the Board, their offices, the dates of expiration of their terms as members and their principal occupations are as follows:

Name Office Term Principal Occupation Expires

Barbara A. Zemlock Chair 2019 Principal – Perry Shore Wiesenberger & Zemlock – and counsel to County Commissioners Association of Pennsylvania

David W. Shannon Vice Chair 2017 Certified Public Accountant – Shannon & Myers

Todd K. Pagliarulo Secretary 2020 Consultant

William D. Kohl Treasurer 2018 Principal – Greenwood Hospitality Group

Douglas Gelder Assistant Secretary/ 2021 Land Developer Assistant Treasurer

Staff and Advisors

The Act authorizes the Authority to appoint officers, agents and employees; and the Authority has employed a full-time executive director and a part time accountant. The Authority also retains a solicitor, an independent certified public accountant and a financial advisor.

Other Obligations and Financing Programs of the Authority

The Authority has outstanding various issues of bonds, all of which are special and limited obligations of the Authority secured by various indentures and payable only out of the revenues derives from the respective projects for which such bonds were issued. The Authority intends from time to time to enter into additional financing transactions for other projects permitted by the Act and, in connection therewith, may issue bonds or notes which will be limited obligations of the Authority, payable from and secured by revenues derived from such projects. The Authority also from time to time enters into refinancing transactions for obligations previously issued. Moneys available for the payment of such other issues will not be available for the payment of the Bonds, nor will the moneys available for the payment of the Bonds be available for the payment of such other issues or any future bond or note issues, except to the extent that the Bonds are refunded thereby or such other bonds are issued under the Bond Indenture.

Certain outstanding bond issues of the Authority, unrelated to the University have experienced payment and/or technical defaults, one of which resulted in the appointment of a receiver. In 2004, as a result of certain misleading statements made in connection with the issuance of certain bonds, the Securities and Exchange Commission entered a cease and desist order against the Authority, to which the Authority consented, imposing remedial sanctions under the Securities Act of 1993, as amended, and ordering the Authority to cease and desist causing any future violations under Section 17(a) of the Securities Act of 1993, as amended. These bonds are no longer outstanding. All of the above described defaults, determinations or sanctions are unrelated to the University, the Bonds or the projects financed and/or refinanced with the proceeds of the Bonds. The Authority’s sole function in connection with the issuance of the Bonds is that of a conduit authority, and the Authority has no role in management of the University.

The Authority has not prepared or assisted in the preparation of this Limited Offering Statement, except the statements with respect to the Authority contained in this section, under

“INTRODUCTION-The Authority” and under “LITIGATION” as it relates to the Authority and, except aforesaid, the Authority is not responsible for any statements made in this Limited Offering Statement. Except for the execution and delivery of documents required to effect the issuance of the Bonds, the Authority has not otherwise assisted in the public offer, sale or distribution of the Bonds. Accordingly, except aforesaid, the Authority disclaims responsibility for the disclosures set forth in this Limited Offering Statement or otherwise made in connection with the offer, sale and distribution of the Bonds.

THE BONDS

General

The Bonds will be dated, and will bear interest from, the date of their initial delivery. The Bonds will mature, unless previously called for redemption, on the dates and in the amounts set forth on the inside cover hereof, and will bear interest at the rates set forth on the inside cover hereof. Interest will be payable on April 15 and October 15 of each year (each, an “Interest Payment Date”), commencing October 15, 2017. The Bonds will be issued as fully registered Bonds without coupons and will be in the denomination of $100,000 and integral multiples of $5,000 in excess thereof.

The principal or redemption price of the Bonds will be payable upon presentation and surrender of the Bonds at the designated corporate trust agency office of the initial Trustee or any successor Trustee and interest on the Bonds will be paid on the applicable Interest Payment Date by check mailed to the owners of Bonds shown as the registered owners on the registration books maintained by the Trustee as registrar at the close of business on the first (1st) day of the calendar month next preceding such Interest Payment Date. The interest and the principal or redemption price becoming due on the Bonds shall, at the written request of the registered owner of at least $1,000,000 aggregate principal amount of the Bonds received by the Trustee at least two Business Days before the corresponding Regular Record Date or maturity or redemption date, be paid by wire transfer within the continental United States in immediately available funds to the bank account number of the registered owner specified in such request and entered by the Trustee on the register, but, in the case of principal or redemption price, only upon presentation and surrender of the Bonds at a designated corporate trust office of the Trustee. (See “THE BONDS -- Book Entry Only System” below.)

The Trustee shall act as registrar, paying agent and transfer agent for the Bonds.

As used herein, “Business Day” means any day other than a Saturday or Sunday or a day on which banks located in Philadelphia, Pennsylvania, New York, New York, or any other city in which the Payment Office of the Trustee is located are authorized or required by law or executive order to close or a day on which DTC is closed.

Book Entry Only System

The Bonds will be available initially only in book-entry form. Purchasers of the Bonds will not receive certificates representing their interest in the Bonds.

The following information concerning DTC and DTC’s book-entry only system has been obtained from DTC. The University, the Authority and the Underwriter take no responsibility for the accuracy of the information set forth in this section, and neither the Participants (as defined below) nor the Beneficial Owners (as defined below) should rely on the following information with respect to such matters but should instead confirm the same with DTC or the Participants, as the case may be.

DTC, the world’s largest depository, 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, as amended. 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 (from over 100 countries) 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”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for such Bonds on DTC’s records. The ownership interest of each actual purchaser of each 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 purchases. 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 Participants through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in 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 Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by 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 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 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 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the 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 registrar and request that copies of the notices be provided directly to them.

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

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

Payments of principal, redemption price and interest on the 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 Authority or Trustee, on each payable 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 Participants and not of DTC, the Trustee, the Authority or the University, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest to Cede & Co. (or to such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants.

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

The Authority may determine to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered as described in the Indenture.

For every transfer and exchange of ownership interests in Bonds, the Beneficial Owners may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto.

IT IS THE DUTY OF EACH BENEFICIAL OWNER TO MAKE ARRANGEMENTS WITH THE APPLICABLE DIRECT PARTICIPANT OR INDIRECT PARTICIPANT TO RECEIVE FROM SUCH PARTICIPANT NOTICES OF PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY) AND INTEREST, AND ALL OTHER PAYMENTS AND COMMUNICATIONS WHICH THE DIRECT PARTICIPANT RECEIVES FROM DTC. NONE OF THE AUTHORITY, THE UNIVERSITY OR THE TRUSTEE HAS ANY DIRECT OBLIGATION OR RESPONSIBILITY TO DIRECT PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS.

THE AUTHORITY, THE TRUSTEE AND THE UNIVERSITY CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (1) PAYMENTS OF PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR INTEREST ON THE BONDS, (2) CONFIRMATION OF BENEFICIAL OWNERSHIP INTEREST IN THE BONDS, OR (3)

REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS LIMITED OFFERING STATEMENT. THE CURRENT “RULES” APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE CURRENT “PROCEDURES” OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICIPANTS ARE ON FILE WITH DTC.

NONE OF THE AUTHORITY, THE TRUSTEE, OR THE UNIVERSITY SHALL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A BONDHOLDER WITH RESPECT TO (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE 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 INDENTURE TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS REGISTERED OWNER OF THE BONDS.

So long as Cede & Co. is the registered owner of the Bonds as nominee of DTC, references herein to the Holders, holders, owners or registered owners of such Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Bonds.

Redemption Prior to Maturity

The Bonds will be subject to redemption prior to maturity as follows:

Optional Redemption.

The Bonds maturing on October 15, are subject to redemption prior to maturity by the Authority, at the written direction of the University, on or after in whole at any time or in part from time to time in such order of maturity as specified by the Authority at the written direction of the University, and within a maturity by lot, at the redemption price of 100% of the principal amount thereof, plus accrued interest to the redemption date.

Extraordinary Optional Redemption,

The Bonds are subject to redemption prior to maturity, at the option of the University, in whole or in part and if in part, at any time, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date, upon the occurrence of any of the following events:

from carrying on its normal operations, or (C) the cost of restoration or replacement thereof would exceed the net proceeds of any casualty insurance, title insurance, condemnation awards or sale under threat of condemnation with respect thereto, or (D) the University has otherwise determined not to effect repair, restoration or replacement of the facilities with condemnation awards or insurance proceeds pursuant to Section 5.6 of the Loan Agreement; or

(ii) As a result of any changes in the Constitution of the Commonwealth or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or by final direction, judgment or order of any court or administrative body (whether state or federal) entered after the contest thereof by the University in good faith, this Indenture or Loan Agreement becomes void or unenforceable or impossible of performance.

Mandatory Redemption of Bonds.

The Bonds maturing on October 15, ______are subject to scheduled mandatory redemption by the Authority on October 15 in the years and the amounts set forth at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date:

Year Principal

*Final Maturity

Partial Redemption.

If fewer than all of the Bonds of any maturity are to be redeemed, the selection of Bonds of such maturity to be redeemed, or portions thereof in amounts of $5,000 and any integral multiple of $1,000 in excess thereof, shall be made by lot by the Trustee; provided, however, no Bond shall be outstanding in a denomination of less than $100,000 after any redemption and provided, however, if DTC or its nominee is the Registered Owner of the Bonds, such selection shall be made by lot by DTC, the DTC Participants and indirect Participants in such manner as they may determine.

Notice of Redemption.

When required to redeem Bonds under any provision of this Indenture, or when directed to do so by the Authority or the University pursuant to the provisions of this Indenture, the Trustee shall cause notice of the redemption to be given not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption by mailing copies of such notice of redemption by first class mail, postage prepaid, to all Registered Owners of Bonds to be redeemed at their registered addresses, but failure to mail any such notice or defect in the mailing thereof in respect of any Bond shall not affect the validity of the redemption of any other Bond with respect to which notice was properly given.

The provisions in this subsection captioned “Redemption” are subject to the provisions discussed in the subsection entitled “Book-Entry-Only System.”

THE PROJECT

The proceeds from the sale of the Bonds, together with any other available funds, will be used to finance a project for the benefit of the University consisting of (i) current refunding of the 2007B Bonds,

10 the funding of the Debt Service Reserve Fund or other required reserve funds and accounts and (iii) the payment of certain costs and expenses of issuing the Bonds.

ESTIMATED SOURCES AND USES OF FUNDS

The following table sets forth the estimated sources and uses of funds in connection with the Bonds:

Sources of Funds

Par Amount of Bonds 2007B Bonds Debt Service Reserve Fund 2007B Debt Service Fund Net Original Issue [Discount/Premium] TOTAL SOURCES OF FUNDS......

Uses of Funds

Deposit to Redemption Fund...... 2017 Bonds Debt Service Reserve Fund Costs of Issuance (1) ...... TOTAL USES OF FUNDS......

(1) Includes amounts to be paid for Authority related fees, Trustee fees, rating agency fees, legal counsel fees, real estate related fees, printing costs and other fees and expenses, including the Underwriter’s discount.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

The Bonds are limited obligations of the Authority and are payable solely from the sources referred to herein. Neither the credit nor the taxing power of Dauphin County, the Commonwealth of Pennsylvania or of any political subdivision thereof is pledged for the payment of the principal or redemption price of or interest on the Bonds, nor shall the Bonds be or be deemed a general obligation of the Authority or an obligation of Dauphin County, the Commonwealth of Pennsylvania or any political subdivision thereof. The Authority has no taxing power.

The Bonds will be payable solely from, and secured by, the revenues and other moneys pledged and assigned pursuant to the Indenture to secure that payment. Those revenues and other moneys include the payments required to be made by the University under the Loan Agreement (other than certain fees and indemnification payments required to be made to the Authority); all other moneys receivable by the Authority, or by the Trustee for the account of the Authority, in respect of repayment of the loan of the proceeds of the Bonds; and certain monies and securities in the funds and accounts held by the Trustee under the Indenture (collectively, the “Revenues”).

Set forth below is a brief discussion of certain provisions of the Loan Agreement, the Indenture and the Mortgage, which relate to the security for the Bonds. Reference should be made to Appendix C, D and E hereto for the form of the Indenture, Loan Agreement and Mortgage.

The Indenture

The Bonds will be issued under and secured by the Indenture. The Indenture provides that all Bonds issued thereunder will be limited obligations of the Authority, payable solely from the sources identified therein, which include: (i) payments required to be made by the University under the Loan Agreement (other than certain fees and indemnification payments required to be paid to the Authority or to the Trustee), and (ii) certain moneys and securities held by the Trustee under the Indenture and investment earnings thereon (but excluding the Rebate Fund). See Appendix C hereto for the form of the Indenture.

The Loan Agreement

Under the Loan Agreement, the University will be obligated to make loan payments in amounts necessary to provide for the payment as and when due of the principal or redemption price of, and interest on, the Bonds, any amounts that may be required to make up any deficiency that may occur in any funds and accounts established under the Indenture, and to provide for certain other payments required by the Indenture. The Authority will assign the Loan Agreement, including its right to receive loan payments thereunder (other than certain fees, expenses and indemnification payments required to be paid to the Authority or to the Trustee) to the Trustee as security for the Bonds.

The Loan Agreement is the general obligation of the University and the full faith and credit of the University is pledged to secure the payments required thereunder. The University’s obligations under the Loan Agreement are secured by a pledge of the Unrestricted University Revenues (as further described under “Unrestricted University Revenues” below) and the Mortgage (as further described under “The Mortgage” below). See Appendix D hereto for the form of Loan Agreement.

Unrestricted University Revenues

To secure its obligations under the Loan Agreement, the University will grant to the Trustee (as the assignee of the Authority) a lien on and security interest in its Unrestricted University Revenues, on a parity with any lien on and security interest in its revenues hereafter granted by the University to secure the University’s obligations with respect to any Parity Indebtedness hereafter incurred by or for the benefit of the University (see “Additional Indebtedness” below). The term “Unrestricted University Revenues” is defined in Appendix D hereto. The existence of such lien and security interest in the Unrestricted University Revenues will not prevent the University from expending, depositing or commingling such funds so long as the University is not in default under the Loan Agreement and any Parity Debt Agreements.

To the extent that a security interest can be perfected in the Unrestricted University Revenues by filing of financing statements, such action will be taken. The security interest in the Unrestricted University Revenues may not be enforceable against third parties unless such Unrestricted University Revenues are actually transferred to the Trustee or are subject to exceptions under the Uniform Commercial Code (the “UCC”) as enacted in the Commonwealth. Under current law, such security interest may be further limited by the following: (1) statutory liens; (2) rights arising in favor of the United States of America or any agency thereof; (3) present or future prohibitions against assignment contained in any Commonwealth or Federal statutes or regulations; (4) constructive trusts, equitable liens or other rights impressed or conferred by any Commonwealth or Federal court in the exercise of its equitable jurisdiction; (5) Federal bankruptcy laws; (6) the filing of appropriate continuation statements pursuant to UCC provisions as from time to time in effect; and (7) other statutory exclusions, limitations, rules and defined rights of creditors, debtors, holders, secured parties and other persons set forth in the UCC.

The Mortgage

Pursuant to the Mortgage, the University will grant to the Trustee, as assignee of the Authority’s rights under the Loan Agreement, a first mortgage lien on the University Facility now comprised of (i) Unit 1 of the Condominium, (ii) any Limited Common Elements appurtenant to Unit 1 of the Condominium and (iii) the 70% undivided percentage interest in the Common Elements appurtenant to Unit 1 of the Condominium, to secure the University’s obligations under the Loan Agreement. See Appendix E for the form of Mortgage.

The Debt Service Reserve Fund

On the date of issuance of the Bonds, the amount of $_____, which amount equals the Debt Service Reserve Fund Requirement for the Bonds, shall be deposited into the Debt Service Reserve Fund created under the Indenture. Any deficiency in the Debt Service Reserve Fund, caused by a withdrawal or diminution in value, must be replenished by the University as set forth in the Loan Agreement.

Additional Indebtedness

The University may incur, guaranty or assume additional indebtedness upon compliance with specified requirements and limitations contained in the Loan Agreement. To the extent permitted under the Loan Agreement, such additional indebtedness may be secured by liens on and security interest in property of the University, including a lien on and security interest in the Unrestricted University Revenues on a parity with the lien on and security interest in the Unrestricted University Revenues granted to secure the Bonds, a lien on the University Facility on a parity with the lien granted under the Mortgage, or a mortgage or other lien on, or security interest in, any other property or assets of the University; provided, however, that if any additional indebtedness is secured by both a parity lien of the Unrestricted University Revenues and a lien on, or security interest in other property or assets of the University, the University will grant to the Trustee a parity lien on such other property or assets. See Appendix D for the requirements and limitations relating to the incurrence of and security for additional indebtedness which may be incurred by the University.

Certain Financial Covenants

Days Cash On Hand

The University covenants in the Loan Agreement to maintain at least 75 Days Cash on Hand as of June 30 of each fiscal year commencing June 30, 2018.

If the Cash on Hand for any testing date is less than the number of days as noted above, the University covenants to promptly retain, at its expense, an independent consultant to submit a written report and make recommendations (a copy of such report and recommendations shall be filed with the Authority and the Trustee and posted to EMMA) with respect to revenues or other financial matters of the University which are relevant to increasing Cash on Hand. The University shall adopt and follow the recommendations of the independent consultant except where (i) the report of the independent consultant indicates that the University has achieved the highest level of Days Cash on Hand reasonably attainable in light of the University’s current operations and circumstances or (ii) the University makes a good faith determination in a statement to the Authority and the Trustee that the independent consultant’s recommendations would violate state or federal law or the University’s Charter or written policies.

So long as the University retains such independent consultant and is following, to the fullest extent practicable, the recommendations of the independent consultant, if any are made, it shall not constitute an Event of Default if the Cash on Hand as of any June 30 is less than set forth above.

Coverage Ratio

The University covenants in the Loan Agreement to maintain a Coverage Ratio of at least 1.10 to 1 each year, commencing with the Fiscal Year ending June 30, 2018. Commencing with the Coverage Ratio first determined based upon the University’s June 30, 2018 audit, if such Coverage Ratio certified to the Trustee is below 1.10 to 1, the University covenants to promptly retain, at its expense, an independent consultant to submit a written report and make recommendations (a copy of such report and recommendations shall be filed with the Authority and the Trustee and posted to EMMA) with respect to revenues or other financial matters of the University which are relevant to increasing the Coverage Ratio to at least 1.10 to 1. The University shall adopt and follow the recommendations of the independent consultant except where (i) the report of the independent consultant indicates that the University has achieved the highest level of Coverage Ratio reasonably attainable in light of the University’s current operations and circumstances or (ii) the University makes a good faith determination in a statement to the Authority and the Trustee that the independent consultant’s recommendations would violate state or federal law or the University’s Charter or written policies.

So long as the University has retained an independent consultant and is following, to the fullest extent practicable, the recommendations of the independent consultant, if any are made, it shall not constitute an Event of Default if the Coverage Ratio for any Fiscal Year ending on or after June 30, 2018, is less than 1.10 to 1 for such Fiscal Year (as evidenced by University’s audited financial statements for such Fiscal Year).

Notwithstanding the immediately preceding paragraph, it shall constitute an Event of Default hereunder if the Coverage Ratio for any Fiscal Year ending on or after June 30, 2018, is less than 1.00 to 1 (as evidenced by the University’s audited financial statements for such Fiscal Years).

INVESTOR SUITABILITY STANDARDS

The Bonds are being offered only to “accredited investors” within the meaning of Rule 501 of Regulation D of the rules governing the limited offer and sale of securities without registration under the Securities Act and “qualified institutional buyers” within the meaning of Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”).

Each purchaser of the Bonds should be sufficiently knowledgeable and experienced in financial and business matters, including the purchase and ownership of municipal and other tax-exempt obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the Bonds, and should be capable of and made its own investigation of the University in connection with its decision to purchase the Bonds.

BONDHOLDERS’ RISKS

The Bonds are limited obligations of the Authority and are payable solely from payments made pursuant to the Loan Agreement and the other sources of payment described under the heading “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein. No representation or assurance can be given to the effect that the University will generate sufficient revenues to meet the University’s payment obligations under the Loan Agreement. The Bonds are not subject to a guaranty or other obligation of Dauphin County, Pennsylvania, or any other governmental unit, agency or authority, or any other entity. See “LIMITED OBLIGATIONS” herein.

Future legislation, regulatory actions, economic conditions, changes in private philanthropy, changes in the number of students in attendance at the University, competition or other factors could adversely affect the University’s ability to generate revenues. Neither the Underwriter nor the Authority has made any independent investigation of the extent to which any of these factors could have an adverse impact on the revenues of the University.

The following is intended only as a summary of certain risk factors attendant to an investment in the Bonds and is not intended to be exhaustive. In order to identify risk factors and make informed investment decisions, potential investors should be thoroughly familiar with the entire Limited Offering Statement (including each Appendix) in order to make a judgment as to whether the Bonds are an appropriate investment. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States of America), property or casualty insurance companies, banks or other financial institutions or certain recipients of Social Security benefits, are advised to consult their tax advisors as to the tax consequences of purchasing or holding the 2017 Bonds. See “TAX MATTERS” herein.

University History Regarding 2007B Bonds and Prior Defaults

At the time of issuance of the 2007B Bonds, the University was a start-up institution of higher education. As such, it experienced operational and growth challenges and issues not dissimilar to many new operations. As a result of these challenges, from time to time, the University has had difficulties generating sufficient revenues to timely pay the debt service on the 2007B Bonds. These difficulties have resulted, on numerous occasions, in draws to pay principal of, and interest on the 2007B Bonds, when due, or other amounts due and owing with regard to the 2007B Bonds, under (i) a standby letter of credit issued by a local financial institution to support the 2007B Bonds, (ii) a guaranty of debt service payments in an annual amount not exceeding $1,500,000 for the period January 1, 2010 through December 31, 2019 up to an aggregate maximum of $15,000,000 (the “Guaranty”) given by the County to the trustee for the 2007B Bonds (the “2007B Trustee”) to support the 2007B Bonds and (iii) the debt service reserve fund for the 2007B Bonds. In addition, to assist in paying operating costs, the County extended two separate operating loans to the University totaling $2,200,000 in April, 2010 and in June, 2011.

The standby letter of credit expired on September 1, 2011 and all amounts due to the letter of credit bank arising thereunder have been paid in full as of January 1, 2017. Draws under the Guaranty since fiscal year 2010 total $6,994,755, the most recent draw occurring on February 26, 2016 in connection with the debt service payment due on the 2007B Bonds on March 1, 2016. Of the draws under the Guaranty, $5,494,755 has been reported as grants from the County to the University, leaving a balance due of $1,500,000 on the University’s repayment obligations with respect to the Guaranty, which has been paid. The University has repaid the operating loans to the County and the 2007B debt service reserve fund has been fully restored to its required level by the University as of December 13, 2016.

Under the loan agreement governing the obligations of the University to make debt service payments on the 2007B Bonds (the “2007B Loan Agreement”), the University is required to make payments into the Bond Fund under the 2007B Trust Indenture (the “2007B Indenture”) not less than 75 days prior to the scheduled debt service payment date. The University failed to make these required advance payments on numerous occasions, resulting in the occurrence of events of default under the 2007B Loan Agreement and the 2007B Indenture with respect to interest payment dates occurring on March 1, 2012, September 1, 2012, March 1, 2013, September 1, 2013, March 1, 2014, September 1, 2014, March 1, 2015 and March 1, 2016. These failures of the University ultimately resulted in actual payment events of default on the interest payment dates for the 2007B Bonds on March 1, 2013, September 1, 2013 and September 1, 2014, with those interest payments not being made to bondholders when due. These missed interest payments were subsequently made from funds provided by the University on special payment dates established by the 2007B Trustee, including pursuant to a Forbearance Agreement dated December 6, 2013 among the 2007B Trustee, the holders of the 2007B Bonds and the University. All payments of principal and interest on the 2007B Bonds, including the mandatory sinking fund redemptions on September 1, 2015 and September 1, 2016, are current as of the date hereof.

In addition, as of June 30, 2016, the University is out of compliance with the minimum Expendable Funds covenant ($4,288,679 actual vs. $5,000,000 required) and the minimum Expendable Funds to Long Term Debt Outstanding covenant (25% required vs. 7% actual) set forth in the 2007B Loan Agreement. The University has also been out of compliance with these financial covenants during the prior five (5) years. Further, under agreements in place between the County and the University regarding the Guaranty, the University failed to meet certain liquidity covenants for the years ended June 30, 2015 and 2016. The result of such failure were certain restrictions on using funds for capital expenditures, which restrictions remain in effect through the 2016-2017 fiscal year or until the 2007B Bonds are refunded and the Guaranty is released.

On May 15, 2012, the initial 2007B Trustee was replaced as trustee for the 2007B Bonds by UMB Bank, N.A. Further, the holders of the 2007B Bonds have retained separate counsel to represent their interests in negotiating a workout of the payment defaults and to otherwise deal with the University on an on-going basis. The University has been holding periodic calls with the bondholders and their appointed counsel to discuss matters of mutual concern regarding the 2007B Bonds and the University’s operations and financial condition. The University believes that its relationship with holders of the 2007B Bonds is currently good.

The University has posted numerous material event notices regarding the foregoing matters on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (EMMA®) under the 2007B Bonds (CUSIP 41473XAB5) at the following website: http://emma.msrb.org/. Please refer to these disclosures for a more complete description of the matters summarized in the foregoing paragraphs.

The Bonds are not subject to a guaranty or other obligation of Dauphin County, Pennsylvania. See “LIMITED OBLIGATIONS” herein.

Foreign Students Enrollment Developments; International Student Concentration and Retention Risks

Over the last several years, the University has experienced a significant growth in the number of international students enrolled in its graduate programs, primarily in science, technology, engineering and math (STEM) curricula. The foreign student enrollment has increased 2,000% from 2014 to 2016, with international students comprising 82% of the total student enrollment for the 2017-18 academic year. All of the international students attending the University reside in the United States on an F-1 student visa.

In January 2017, the University experienced a 30% decrease in applications from international students currently residing outside the U.S., and who wanted to enter the U.S. in order to attend HU, when compared to the previous year. It should be noted that only 4% of any graduate student cohort start is made up of students entering the U.S. for the first time to attend HU. As discussed in Appendix A under the caption “RISK ASSESSMENT OF INTERNATIONAL PROGRAMS,” the vast majority of new HU international graduate students transfer to the University from another U.S. based institution and therefore already possess an F-1 visa. A decrease in applications, even for a small segment of HU students, could lead to decreased future student enrollments at the University.

The University believes that the decrease is in large part a reaction to the uncertainty over immigration reforms that are expected to be implemented by the new executive administration in Washington D.C. Currently, international students wishing to remain in the United States for employment following graduation must do so under a different form of visa from the F-1 student visa, primarily under the H-1B visa program. Effective April 3, 2017, the Trump Administration has announced that it is temporarily halting expedited processing of H-1B visas in order to sort out the backlog in applications. This temporary halt could adversely affect companies having immediate STEM job hiring needs and could also be the first step toward a tighter visa policy in the U.S.

The University has not yet seen an impact of visa policy uncertainty on its international student enrollments. In fact, new international graduate student enrollments for summer 2017 are 776, a record for summer enrollments. Previously, the University had 627 new enrollments in summer 2016, and 534 new enrollments in summer 2015.

Further, federal regulations currently permit F-1 students to apply for a Change of Status to become a different type of visa holder, primarily an H-1B visa, without leaving the U.S. See the discussion in Appendix A to this Limited Offering Statement under the caption “Retention and Graduation Rates” for a discussion of the potential transfer risks presented by a change in visa status of international students attending the University.

It is not possible at this time to predict what specific immigration or visa reforms may be implemented, or to quantify their potential impact on the University or its ability to attract new or retain existing international students. However, a significant drop in enrollment of international students, particularly at the graduate level, would have a material adverse effect on the revenues, operations and financial condition of the University.

Reliance on Student Tuition, Fees, Loans, Grants and Other Charges

The adequacy of the University's revenues will largely depend on the amount of future tuition and other student derived revenue the University receives. Such revenue in turn will depend primarily on the University's ability to charge sufficient rates for tuition, student fees and student charges and to maintain enrollment levels. Future enrollment levels will depend on the number of students applying to the University and accepting offers of admission. A number of factors, including, without limitation, levels of tuition rates and other fees, availability of federal student loans or grants, competition from other colleges and universities, a change in the number of college age students, the abilities of faculty and administration and changing general economic conditions will influence the number of applicants to the University.

The University is currently operating under the “Provisional Certification Alternative” option of the Financial Responsibility regulations of the United States Department of Education (the “Department”), 34 CFR §668.175(f), for purposes of eligibility to participate in Title IV Federal Student Aid. Student aid under Title IV encompasses a broad range of student aid, including FFEL Loans, Perkins Loans and Pell Grants. To continue such provisional certification, the University has posted a letter of credit to the

Department, with the most recent amendment to the letter of credit on February 22, 2017 increasing the amount of the letter of credit to $392,000. An institution may be provisionally certified for a period of up to three complete award years. Continued participation in Title IV Federal Student Aid is subject to ongoing approval by the Department, and the University was notified in July 2016 that its provisional certification was extended for an additional three-year period ending June 30, 2019. While there is no guaranty that the University will meet its participation requirements in the future, it met such requirements in 2016 and management believes it will continue to meet such requirements in the future.

Further, the University’s revenues are subject to concentration risks with respect to gifts, grants and contributions. The University received approximately 11% and 23% of its revenues in the form of private gifts, grants and contributions, and governmental grants (such as Job Training and Education Grant Program from the Commonwealth) during the fiscal years ended June 30, 2016 and 2015, respectively. Decreases in this funding could have a significant impact on the University.

The University began operations in 2005 and, as such, has relatively limited operating history upon which to base its prediction of future enrollment levels or financial results. The University’s limited operating history also means it has limited reserves and endowment assets to sustain it during any prolonged period of negative operating results.

Accreditation

The University is presently fully accredited by the Middle States Commission on Higher Education (the “Commission”). However, the University was placed on probationary accreditation status by the Commission during the period June 23, 2014 through March 3, 2016 because of insufficient evidence that the University was in compliance with the Commission’s “Institutional Resources” and “Assessment of Student Learning” standards. Failure to maintain accreditation by the Commission in the future would materially adversely affect the operations and financial condition of the University.

Recent Financial Performance

The University’s enrollment and financial performance has improved dramatically over the past several years. See Appendix A – “ENROLLMENT INFORMATION” AND “FINANCIAL PERFORMANCE”. There is no guaranty that the University will be able to maintain such performance or that the University’s projections (See Appendix A – “CERTAIN PROJECTIONS” - Five Year Forecast) will be realized.

Enrollment and Competition

Competition among institutions of higher education is intense nationally and within the region from which the University draws the majority of its students. Universities and colleges compete principally based on location, tuition rates, degree offerings, and academic reputation. To the extent that competitors have or achieve an advantage with respect to any of these factors, the University could be adversely affected. In addition, competitive pressures could result in tuition reductions or the inability to raise tuition, which could adversely affect the change in the University's unrestricted net assets.

The ability of the University to make payments under the Loan Agreement with respect to the Bonds when due depends upon, among other things, the continued ability of the University to attract a sufficient number of students, and no assurance can be given that enrollment can be maintained at current levels throughout the term of the Bonds. The University could face additional competition in the future from both private and public educational institutions that offer comparable services and programs to the population which the University presently serves. This could include the establishment of new programs

18 and the construction, renovation or expansion of competing educational institutions, as well as tuition discounting programs of competing educational institutions. Further, escalating tuition and other charges, together with the failure of family income to keep pace with increased costs of education, may have a negative impact on the University’s enrollment.

If, as a result of competition, escalating costs or otherwise, enrollment levels decline significantly, the University would generate less revenues, and the effect on the financial condition of the University could be material. In particular, unlike the University, the educational costs at public colleges and universities within the Commonwealth are heavily subsidized. The financial condition of the University may be adversely affected by any change that increases the competitive position of other colleges and universities, including but not limited to, the provision of greater financial subsidies to public colleges and universities.

Government Grants

The University has been the recipient of a number of grants from federal, state and local governmental authorities. See Note 7 to the Financial Statement attached as Exhibit B hereto for a description of such grants. There is no guaranty that such grants will continue to be awarded or that the University will be able to comply with the terms of any such grants.

Risks as Employer

The University is a large employer, combining a complex mix of full-time faculty, part-time faculty, administrative, technical and clerical support staff, executive officers and other professional staff and other types of workers in a single operation. As with all large employers, the University bears a wide variety of risks in connection with its employees. These risks include discrimination claims, personal tort actions, work-related injuries, exposure to hazardous materials, interpersonal torts (such as between employees or between employees and students) and other risks that may flow from the relationships between employer and employee or between students and employees. Certain of these risks are not covered by insurance, and certain of them cannot be anticipated or prevented in advance.

Appraisal/Value of the University Facility May Fluctuate

The University received an appraisal of the University Facility (the “Appraisal”), stating that the fair market value of the University Facility was estimated to be $31,700,000 as of the date of such Appraisal. However, the value of the University Facility at any given time will be directly affected by market and financial conditions which are not in the control of the University. These conditions include the risk of adverse changes in general economic and local conditions, including population decreases; uninsured losses; lack of attractiveness of the property to students/parents; cyclical nature of the real estate market; limited alternative use suitability of the property; adverse changes in neighborhood values; and adverse changes in zoning laws, other laws and regulations. There is nothing associated with the University Facility which would suggest that its value would remain stable or would increase if the general values of property in the community were to decline. Upon a default under the Mortgage, no assurances can be given that the Trustee would be able to sell or to lease the University Facility, or that the sale or rental amount that would be payable thereunder would be sufficient to pay the principal of, premium, if any, or interest on the Bonds. There is no requirement that the value of the University Facility be equal to or greater than the amount of the Bonds. A copy of the Appraisal is attached hereto as Appendix H.

Other Risks of Real Estate Collateral

General. Development, ownership and operation of real estate, such as the University Facility, involves certain risks, including the possibility of fire or other casualty or condemnation. If the University Facility, or any portion thereof, were not available during the period of restoration, such unavailability could adversely affect the University’s ability to make payments under the Loan Agreement.

Damage, Destruction or Condemnation. Although the University will be required to obtain certain insurance against damage or destruction as set forth in the Loan Agreement and the Mortgage, there can be no assurance that any portion of the University Facility will not suffer losses for which insurance cannot be or has not been obtained or that the amount of any such loss, or the period during which the University, as a result of damage or destruction to such Facility, cannot generate revenues, will not exceed the coverage of such insurance policies.

If the University Facility, or any portion thereof, is damaged or destroyed, or is taken in a condemnation proceeding, the proceeds of insurance or any such condemnation award for such Facility or any portion thereof, must be applied as provided in the Loan Agreement to restore or rebuild the Facility or to redeem the Bonds. There can be no assurance that the amount of revenues available to restore or rebuild the University Facility, or any portion thereof, or to redeem the Bonds will be sufficient for that purpose, or that any remaining portion of such Facility will generate revenues sufficient to pay the expenses of the University and the debt service on the Bonds remaining outstanding.

Condominium Declaration

As described under the heading “INTRODUCTORY STATEMENT – The Project” herein, the University Facility consists of a condominium unit and related interests in other portions of the Condominium as noted above, all subject to the Declaration and the Condominium Act. As such, the University Facility is subject to significant controls by and management rights and obligations of the condominium association created pursuant to the Declaration (the “Association”) and to certain provisions of the Declaration and the Act that permit the Association to enforce a lien against the University Facility in favor of the Association for unpaid condominium assessments. Condominium assessments are the costs incurred by the Association in operating the Condominium and performing its obligations under the Declaration and the Act. The Association’s obligations include, among other things, maintaining, repairing, insuring, administering, cleaning or improving the Common Elements of the Condominium, except for those obligations expressly allocated to a unit owner of a particular Unit pursuant to the Declaration. Application of insurance proceeds and condemnation awards related to the Condominium is governed by the Declaration and the Act and controlled in large part by the Association. The Trustee, as the holder of the Mortgage, will be entitled to distribution of insurance proceeds and condemnation awards, and shall have only the other rights with respect to the University Facility, as an “Eligible Mortgagee” as set forth and defined in the Declaration.

Other significant rights vested in the Association under the Declaration, include, without limitation, the right (with consent of unit owners to which at least 80% of the votes in the Association are allocated) to choose not to repair or restore casualty damage to the Condominium, to convey or encumber portions of the Common Elements (with consent of unit owners to which at least 80% of the votes in the Association are allocated), to adopt an operating budget for the Condominium, to accelerate and declare immediately due and payable all assessment payments applicable to a Unit for a pertinent fiscal year after an assessment for that Unit becoming delinquent and a notice and hearing is completed by the Association, and the right to grant easements across Common Elements for the benefit of lands adjacent or in close proximity of the Condominium (with the consent of unit owners to which at least 80% of the votes in the Association are

20 allocated). The Condominium may be terminated, or the Declaration amended, with the consent of unit owners to which 80% of the votes of the Association are allocated.

The University does not alone hold sufficient votes in the Association to unilaterally direct the policies or decisions of the Association or the management of the Condominium by the Association, as it holds only 70% of the allocated voting rights. The owner of Unit 2 holds the remaining 30% of the voting rights, and most material decisions under the Declaration and the Bylaws of the Association require consent of unit owners to which at least 80% of the votes in the Association are allocated. With the exception of the University’s right to add certain additional real estate to the Condominium (as identified in the Declaration) without the consent of any other unit owner, all of the University’s special declarant rights under the Declaration, such as the right to control the Association, have terminated or been waived, and therefore, the University currently is treated in the same general manner as any other unit owner.

The foregoing is intended as a summary of certain primary provisions of the Declaration and does not constitute a comprehensive description of all features of the Declaration or the Condominium or the operation or effect thereof with respect to the University Facility, as a unit in the Condominium. Reference is made to the complete Declaration on record in the Office of the Dauphin County Recorder of Deeds as Instrument No. 20130038835.

Enforceability of Remedies

Introduction. The remedies available to Bondholders upon an event of default under the Indenture, the Loan Agreement and the Mortgage are in many respects dependent upon judicial action which may be subject to discretion or delay. In addition, under existing law and judicial decisions, the remedies specified in the Indenture, the Loan Agreement and the Mortgage may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the original delivery of the Bonds will be qualified as to enforceability of the various legal instruments (including the Indenture, the Loan Agreement and the Mortgage) by a number of limitations, including, without limitation, those imposed by bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights and by the application of equitable principles.

Potential Effects of Bankruptcy. In the event the University files for protection from creditors under the United States Bankruptcy Code, the rights and remedies of the Bondholders would be subject to various provisions of the United States Bankruptcy Code. If the University were to commence a proceeding in bankruptcy, payments made by the University during the 90-day period immediately preceding such commencement (or, under certain circumstances, during the preceding one-year period) may be voided as preferential transfers to the extent such payments allow the recipients thereof to receive more than they would have received in the event of the liquidation of the University. Security interests and other liens granted by the University (including the Mortgage and the security interests in the Unrestricted University Revenues) to the Trustee and perfected during such preference period may also be voided as preferential transfers to the extent such security interest or other lien secures obligations that arose prior to the date of such grant or perfection.

A bankruptcy filing would operate as an automatic stay of the commencement or continuation of any judicial or other proceeding against the University and its property and as an automatic stay of any act or proceeding to enforce a mortgage or other lien upon or to otherwise exercise control over its property as well as various other actions to enforce, maintain or enhance the rights of the Trustee. If the bankruptcy court so ordered, the property of the University, including the University Facility, the Unrestricted University Revenues and the proceeds thereof, could be used for the financial rehabilitation of the University despite any security interest of the Trustee therein or liens thereon. The rights of the Trustee to

21 enforce its interests and other liens, including those under the Mortgage, could be delayed during the pendency of the rehabilitation proceeding.

The University could also file a plan for the adjustment of its debts in any such proceeding which could include provisions modifying or altering the rights of creditors generally, or any class of them, secured or unsecured. The plan, when confirmed by a court, binds all creditors who had notice or knowledge of the plan and, with certain exceptions, discharges all claims against the debtor to the extent provided for in the plan. No plan may be confirmed unless certain conditions are met, among which are conditions that the plan be feasible and that it shall have 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 class cast votes 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. Any such plan could adversely affect the holders of the Bonds.

In the event of bankruptcy of the University, there is no assurance that certain covenants, including tax covenants, contained in the Indenture, the Loan Agreement or the Mortgage and certain other documents would survive. Accordingly, the University, as debtor in possession, or a bankruptcy trustee could take action which might adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes.

Limitations on Security Interest in Unrestricted University Revenues; Enforceability of Bond Documents. The University’s obligations under the Loan Agreement will be secured by a lien on and security interest in the Unrestricted University Revenues of the University on an equal and ratable basis with all Parity Obligations. The effectiveness of the pledge of Unrestricted University Revenues of the University is limited since a security interest in money generally cannot be perfected by the filing of financing statements under the Pennsylvania Uniform Commercial Code (the “UCC”). Rather, such a security interest is perfected by taking possession of the subject funds. The monies constituting Unrestricted University Revenues received by the University from time to time are generally not required to be transferred to or held by the Trustee, and may be spent by the University or commingled with its other funds. Under these circumstances, the pledge of Unrestricted University Revenues might not be perfected under the UCC.

To the extent a security interest can be perfected in the Unrestricted University Revenues by the filing of financing statements, such action will be taken. The security interest in the Unrestricted University Revenues may be unenforceable against third parties unless such Unrestricted University Revenues are actually transferred to or for the benefit of the Trustee and may be subject to other exceptions under the UCC. The perfection and enforcement of the Trustee’s security interest in the Unrestricted University Revenues may also be limited by a number of other factors, including, without limitation, the factors described above in the event of a bankruptcy filing by the University. Under current law, the enforceability of the Trustee’s security interest in the Unrestricted University Revenues also may be limited by (i) federal and state laws giving super-priority to certain types of statutory liens; (ii) rights arising in favor of the United States of America or any agency thereof; (iii) present or future prohibitions against assignments of certain revenues or payments to institutions of higher education contained in any federal or state statutes or regulations; (iv) constructive trusts, equitable liens and other rights impressed or conferred by any federal or state court in the exercise of its equitable jurisdiction; (v) the provisions of the United States Bankruptcy Code affecting assignments of revenue earned after or within 366 days prior to any effectual institution of bankruptcy proceedings by or against the University; (vi) Section 552 of the United States Bankruptcy Code, which limits the extent to which property acquired by a debtor after the commencement of a case under the United States Bankruptcy Code may be subject to a security interest arising from a security agreement entered into by the debtor before the commencement of such case; (vii) rights of third parties, and the debtor in possession, in Unrestricted University Revenues converted to cash and not in the

22 possession of the Trustee; (vii) statutory limitations, exclusions, rules and defined rights of secured creditors under applicable law, including, without limitation, the UCC as from time to time in effect; and (viii) the requirement that appropriate financing or continuation statements be filed in accordance with the UCC as from time to time in effect.

Insolvency. The legal right and practical ability of the Trustee to enforce rights and remedies under the Loan Agreement may be limited by laws relating to bankruptcy, insolvency, reorganization, fraudulent conveyance or moratorium and by other similar laws affecting creditors’ rights. In particular, the pledge by the University to the Trustee of the Unrestricted University Revenues, or the granting of the Mortgage to the Trustee, may be voidable under the United States Bankruptcy Code or applicable state fraudulent conveyance laws if the pledge or grant is made, or the underlying obligation incurred, without “fair” and/or “fairly equivalent” consideration to the University and the incurrence of the obligation or the pledge or granting of the lien or security interest renders the University insolvent. The standards for determining the fairness of consideration and the manner of determining insolvency are not clear and may vary under the United States Bankruptcy Code, state fraudulent conveyance statutes and applicable cases. Consequently, the Trustee’s ability to enforce the rights and remedies under the Loan Agreement and the Mortgage against the University could be subject to challenge if the University would be rendered insolvent by the pledge of the Unrestricted University Revenues or the grant of the Mortgage, and the University was found not have received reasonably equivalent value for such pledge or grant.

In addition, state courts have common law authority and authority under state statutes to terminate the existence of a not-for-profit or nonprofit corporation or undertake supervision of its affairs on various grounds, including a finding that the not-for-profit or nonprofit corporation has insufficient assets to carry out its stated charitable purposes or has taken some action which renders it unable to carry out such purposes. Such action may arise on the court’s own motion or pursuant to a petition of the state attorney general or other persons who have interests different from those of the general public, pursuant to the common law and statutory power to enforce charitable trusts and to see to the application of their funds to their intended charitable uses.

Covenant to Maintain Tax-Exempt Status of the Bonds

The tax-exempt status of the Bonds, as described under “TAX MATTERS” herein, is based on the continued compliance by the Authority and the University with certain covenants contained in the Indenture, the Loan Agreement and certain other documents entered into by the Authority and the University. These covenants relate generally to restrictions of the use of facilities financed with proceeds of the Bonds, arbitrage limitations, rebate of certain excess investment earnings to the federal government and restrictions on the amount of issuance costs which can be financed with proceeds of the Bonds. Failure by the Authority or the University to comply with such covenants could cause interest on the Bonds to become subject to federal income taxation retroactive to the date of issuance of the Bonds.

Officials of the Internal Revenue Service (the “IRS”) have indicated in recent years that more resources will be invested in audits of tax-exempt bonds in the charitable organization sector. The Bonds may be, from time to time, subject to audits by the IRS. The University believes that the Bonds properly comply with the tax laws. In addition, McNees Wallace & Nurick LLC (“Bond Counsel”) will render an opinion with respect to the tax-exempt status of the Bonds, as described under the caption “TAX MATTERS.” The University has not sought to obtain a private letter ruling from the IRS with respect to the Bonds, and the opinion of Bond Counsel is not binding on the IRS. There is no assurance that an IRS examination of the Bonds will not adversely affect the market value of the Bonds. See “TAX MATTERS” herein.

Risks Associated with the Loss of Tax Exempt Status of the University

The tax-exempt status of the Bonds presently depends upon the University’s maintenance of its status as an organization described in Section 501(c)(3) of the Code.

The University has been determined by the IRS to be a tax-exempt organization described in Section 501(c)(3) of the Code. To maintain such status, the University must conduct its operations in a manner consistent with representations previously made to the IRS and with current and future IRS regulations and rulings governing tax-exempt education facilities.

Failure to comply with current and future regulations and rulings of the IRS required to maintain the University’s status as an organization described in Section 501(c)(3) of the Code, or to operate the facilities financed or refinanced by the Bonds in a manner that is substantially related to the University’s charitable purpose under the Code, could adversely affect the ability of the University to finance or refinance indebtedness on a tax-exempt basis or otherwise generate revenues necessary to provide for payment of the Bonds. Although the University has covenanted to maintain its status as a tax-exempt organization, loss of tax-exempt status would likely have a significant adverse effect on the University and its operations and could result in the includability of interest on the Bonds in gross income for federal income tax purposes retroactive to their date of issue.

In recent years, the activities of tax-exempt organizations have been subjected to increasing scrutiny by federal, state, and local legislative and administrative agencies (including the United States Congress, the IRS, and local taxing authorities). Various proposals either have been considered previously or are presently being considered at the federal, state, and local level which could restrict the definition of tax-exempt status, impose new restrictions on the activities of tax-exempt organizations and/or tax or otherwise burden the activities of such organizations (including proposals to broaden or strengthen federal tax provisions respecting unrelated business income of nonprofit, tax-exempt organizations). Proposals have also been suggested at the federal level to eliminate, or restrict in certain ways, the federal interest rate exemption for tax-exempt municipal or other bonds, including tax-exempt bonds for the benefit of 501(c)(3) corporations. There can be no assurance that future changes in the laws, rules, regulations, interpretations and policies relating to the definition, activities and/or taxation of tax-exempt corporations or any statutory restriction on the availability of an interest rate exemption on tax exempt bonds will not have material adverse effects on the future operations of the University or the exclusion of interest on the Bonds.

Potential for Additional Legislation or Regulation

In recent years, the activities of non-profit tax-exempt corporations have been subjected to increasing scrutiny by federal, state and local legislative and administrative agencies (including the United States Congress, the IRS, the Pennsylvania General Assembly and local taxing authorities). Various proposals either have been considered previously or are presently being considered at the federal, state and local level which would restrict the definition of tax-exempt or non-profit status, impose new restrictions of the activities of tax-exempt non-profit corporations, and/or tax or otherwise burden the activities of such corporations (including proposals to broaden or strengthen federal and local tax law provisions respecting unrelated business income of non-profit corporations.)

Potential Changes in Federal and State Tax Law

Current and future legislative proposals, if enacted into law, clarifications of the Code or state or local tax law or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to state income taxation, or otherwise prevent Owners from realizing the full current benefit of the tax status of such interest. It is noteworthy that each

24 year since 2011, legislative proposals have been released that would limit the extent of the exclusion from gross income of interest on obligations of states and political subdivisions under Section 103 of the Code (including the Bonds) for taxpayers whose income exceeds certain thresholds. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market prices for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation or regulations.

Other Risk Factors

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

(i) Changes in the demand for higher education in general or for programs offered by the University in particular.

(ii) Loss of accreditation for the University or key academic programs.

(iii) Higher interest rates, which could strain cash flow or prevent borrowing for needed capital expenditures or working capital purposes.

(iv) Increasing costs of compliance with governmental regulations, including accommodations for handicapped or special needs students, and costs of compliance with the changes in such regulations.

(v) Increased costs and/or decreased availability of student loan funding.

(vi) Increased costs and decreased availability of public liability insurance.

(vii) Employee strikes and other adverse labor actions that could result in a substantial reduction in revenues without corresponding decreases in costs.

(viii) Cost and availability of energy.

(ix) An increase in the costs of health care benefits, retirement plans, or other benefit packages offered by the University to its employees, including, without limitation, increased costs that may result from the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 or subsequent modifications thereto.

(x) The occurrence of natural disasters, including floods and hurricanes and pandemics and similar events, which might damage the facilities of the University, interrupt service to such facilities or otherwise impair the operation and ability of such facilities to produce revenue.

(xi) Reduced future University net revenues as a result of a need to increase tuition discounting to attract students.

(xii) Reduced ability to attract future annual operating contributions or capital campaign contributions, that may limit future projects or the ability to address deferred maintenance and/or the support of expenses related to faculty salaries, tuition discounting or additional programs.

(xiii) An inability to retain students, resulting in enrollment losses and reduced revenues.

(xiv) Deterioration in the credit or securities markets generally, decreases in market valuations of University endowment or other investments, or adverse performance results in specific investments which the University has made.

(xv) Reduced ability to attract future annual or capital campaign contributions, that may limit future projects and/or the ability to address deferred maintenance.

(xvi) Withdrawal of any current exemptions from local real estate taxes, business privilege taxes and similar impositions.

LIMITED OBLIGATIONS

The Bonds are limited obligations of the Authority and are secured by and payable solely from the funds provided by the University to the Authority under the Loan Agreement and the other sources of payment described under the heading “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein. Neither the general credit of the Authority nor the credit or the taxing power of the Commonwealth or any political subdivision thereof, including the County, is pledged for the payment of the principal, redemption price of, or interest on, the Bonds. The Bonds shall not be deemed to be obligations of the Commonwealth or any political subdivision thereof. The Authority has no taxing power.

NO PERSONAL RECOURSE

No covenant or agreement contained in the Indenture, the Bonds or the Loan Agreement shall be deemed to be the covenant or agreement of any member, director, officer, attorney, agent or employee of the Authority or the University in an individual capacity. No recourse shall be had for the payment of any claim based thereon against any member, director, officer, agent, attorney or employee of the Authority or the University, past, present or future, or their successors or assigns, as such, either directly or through the Authority or the University or any successor corporations, whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise.

LITIGATION

There is no controversy or litigation of any nature now pending or, to the knowledge of the University or the Authority, threatened that seeks to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or in any way contests or affects the validity of the Bonds, any proceedings of the Authority taken with respect to the issuance or sale thereof, any security or the pledge or application of any moneys provided for the payment of the Bonds, the existence or powers of the Authority or the accomplishment of the purposes for which the Bonds are being issued.

There is no controversy or litigation of any nature now pending against the University or, to the knowledge of any of its respective officers, threatened which in the judgment of the University would materially adversely affect the operations or financial condition of the University or the ability of the University to perform its obligations under the Loan Agreement.

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 Bonds and the Authority will not provide any such information. The University has undertaken all responsibilities for any continuing disclosure to holders of the Bonds as described below, and the Authority shall have no responsibility or liability to the holders of the Bonds or any other person with respect to such disclosures.

In order to assist the Underwriter in complying with the requirements of Rule 15c2-12 (the “Rule”), the University has entered into the Disclosure Dissemination Agent Agreement (“Disclosure Dissemination Agreement”) with Digital Assurance Certification, L.L.C. (“DAC”). See Appendix F for the proposed form of Disclosure Dissemination Agent Agreement.

During the past five years, the University failed to comply with its obligations pursuant to the existing continuing disclosure agreement relating to the 2007B Bonds by reason if its failure to file operating data for the fiscal years 2012 through 2015 based upon a misinterpretation of the Rule. It filed all such data on March 8, 2017. The University also filed its audited financial statements 1 day late for the fiscal year 2013 and 138 days late for fiscal year 2013. The University failed to file a notice of the above, which it did on March 8, 2017. The University has since adopted certain proceedings, including retaining a document management service, to assist it in making sure its filings are complete and timely filed in the future.

The University has entered into the Disclosure Dissemination Agreement with DAC as its Disclosure Dissemination Agent for the purpose of ensuring ongoing compliance with its continuing disclosure filing requirements. DAC provides its clients with automated filing of rating events, templates consolidating all outstanding filing requirements that accompany reminder notices of annual or interim mandatory filings, review of all template filings by professional accountants, as well as a time and date stamp record of each filing along with the unique ID from EMMA accompanying the copy of the actual document filed. DAC also offers its clients a series of training webinars each year qualified for 15-20 NASBA certified CPE credits, as well as model secondary market compliance policies and procedures.

TAX MATTERS

Federal Tax Exemption

In the opinion of Bond Counsel, under existing law, and assuming continuing compliance by the Authority and the University with certain certifications and agreements relating to the use of the Bond proceeds and covenants to comply with provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and all applicable regulations thereunder, now or hereafter enacted, interest on the Bonds is excludable from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for purposes of the federal individual and corporate alternative minimum taxes; however, interest on the Bonds held by a corporation (other than an S corporation, regulated investment company or real estate investment trust) may be indirectly subject to alternative minimum tax imposed under the Code, due to its inclusion in the adjusted current earnings of a corporate holder provided for in the Code.

The opinion of Bond Counsel on federal tax matters will be based upon and will assume the accuracy of certain representations and certifications, and compliance with certain covenants, of the Authority and the University to be contained in the transcript of proceedings for the issuance of the Bonds and that are intended to evidence and assure that the Bonds are and will remain obligations the interest on which is excludable from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of those certifications and representations or covenants.

The Code prescribes a number of qualifications and conditions for the interest on state and local obligations to be and to remain excludable from gross income for federal income purposes, some of which require future or continued compliance after issuance of the obligations in order for the interest to be and to continue to be so excluded from the date of issuance. Noncompliance with these requirements by the Authority or the University may cause the interest on the Bonds to be included in gross income for federal income tax purposes and thus to be subject to federal income tax retroactively to their date of issuance. The

Authority and the University have covenanted to take the actions required of them for the interest on the Bonds to be and to remain excludable from gross income for federal income tax purposes and not to take any actions that would adversely affect that exclusion. Bond Counsel has not undertaken to evaluate, determine or inform any person, including any holder of the Bonds, whether any actions taken or not taken, events occurring or not occurring, or other matters that might come to attention of Bond Counsel, would adversely affect the value of, or tax status of the interest on, the Bonds.

The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities and represent Bond Counsel’s judgment as to the proper treatment of the Bonds for federal income tax purposes. The opinion is not a guarantee of any result, and is not binding on the Internal Revenue Service or the courts.

State Tax Exemption

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

Original Issue Discount and Original Issue Premium

The Bonds maturing on ______are offered at a discount (“original issue discount”) equal generally to the difference between public offering price and principal amount. For federal income tax purposes, original issue discount on a Bond accrues periodically over the term of the Bond as interest with the same tax exemption and alternative minimum tax status as regular interest. The accrual of original issue discount increases the holder’s tax basis in the Bond for determining taxable gain or loss from sale or from redemption prior to maturity. Holders should consult their tax advisers for an explanation of the accrual rules.

The Bonds maturing on ______are offered at a premium (“original issue premium”) over their principal amount. For federal income tax purposes, original issue premium is amortizable periodically over the term of a Bond through reductions in the holder’s tax basis for the Bond for determining taxable gain or loss from sale or from redemption prior to maturity. Amortization of premium does not create a deductible expense or loss. Holders should consult their tax advisers for an explanation of the amortization rules.

Risk of Future Changes in Federal and State Tax Law

From time to time, there are legislative proposals in Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the market value of the Bonds. No prediction can be made as to whether any such proposal might be enacted, or whether such proposal, if enacted, would apply retroactively to the Bonds. In addition, regulatory pronouncements may be made from time to time, or litigation commenced, that could affect the tax exemption and/or tax consequences of holding tax-exempt obligations, such as the Bonds. No prediction can be made as whether such actions might occur, or what the impact of such an action might be on the Bonds. Prospective purchasers of the Bonds should consult their own tax advisers regarding any proposed legislation, regulatory initiatives or litigation, as to which Bond Counsel expresses no opinion.

Other

Bond Counsel is not rendering any opinion as to any federal or state tax matters other than those described under the captions “Federal Tax Exemption” and “State Tax Exemption” and as expressly stated in the proposed form of the opinion of Bond Counsel included as Appendix G hereto. The above summary of possible tax consequences is not exhaustive or complete. Prospective purchasers of the Bonds should consult their own tax advisors regarding the possible federal, state and local income tax consequences of ownership of the Bonds. Any statement regarding tax matters herein cannot be relied upon by any person to avoid tax penalties.

LEGAL MATTERS

Legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approval of McNees Wallace & Nurick LLC, Harrisburg, Pennsylvania, Bond Counsel. A signed copy of their opinion, dated and premised on facts existing and law in effect as of the date of original issuance and delivery of the Bonds, will be delivered to the Trustee at the time of such original issuance.

Certain legal matters will be passed upon by Guy P. Beneventano, Esquire, Linglestown, Pennsylvania, as counsel to the Authority; by McNees Wallace & Nurick LLC, Harrisburg, Pennsylvania, as counsel to the University; and by Fox Rothschild LLP, Philadelphia, Pennsylvania, as counsel to Underwriter.

RATING

S&P Global Ratings, a Standard & Poor's Financial Services LLC business (“S&P”) has assigned its municipal bond rating of “BB” to the Bonds, accompanied by a Stable Outlook, based on the creditworthiness of the University.

Certain information and materials not included in this Limited Offering Statement was furnished to S&P. Generally, such Rating Service bases its ratings on information and materials so furnished and on investigations, studies and assumptions by such Rating Service. The rating and outlook assigned to the Bonds reflects only the views of such Rating Service at the time such rating was issued, and an explanation of the significance of such rating and outlook may be obtained only from such Rating Service. Such rating and outlook are not a recommendation to buy, sell or hold the Bonds. There is no assurance that any such rating or outlook will continue for any given period of time or that they will not be lowered or withdrawn entirely by such Rating Service if, in its judgment, circumstances so warrant. Any such downward revision of such rating or outlook or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

UNDERWRITING

The Bonds are being purchased by RBC Capital Markets, LLC (the “Underwriter”) pursuant to a Bond Purchase Agreement among the Underwriter, the Authority and the University. The Underwriter has agreed to purchase the Bonds at an aggregate purchase price of $______(representing the par amount of the Bonds, less an Underwriter’s discount of $______and [plus/minus] an original issue [discount premium] of $______). The Bond Purchase Agreement provides, among other things, that the Underwriter will purchase all the Bonds, if any are purchased. The obligation of the Underwriter to pay for the Bonds is subject to certain terms and conditions set forth in the Bond Purchase Agreement, including delivery of specified opinions of counsel and of a certificate of the University that there has been no material adverse change in its condition (financial or otherwise) from that set forth in this Limited Offering Statement. The Bond Purchase Agreement also provides that the University will indemnify the

Underwriter and the Authority against losses, claims and liabilities arising out of any materially incorrect statement or information contained in or material information omitted from this Limited Offering Statement pertaining to the University. The initial public offering prices set forth on the inside front cover page of this Limited Offering Statement may be changed by the Underwriter from time to time without any requirement of prior notice. The Underwriter reserves the right to sell Bonds to certain dealers and others at prices lower than those offered to the public.

The Underwriter and its affiliates are full-service financial institutions engaged in various activities, that may include securities trading, commercial and investment banking, municipal advisory, brokerage, and asset management. In the ordinary course of business, the Underwriter and its affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Authority. The Underwriter and its affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Authority. The Underwriter does not make a market in credit default swaps with respect to municipal securities at this time but may do so in the future.

FINANCIAL ADVISOR

Susquehanna Group Advisors, Inc. (the “Financial Advisor”), Harrisburg, Pennsylvania, has been engaged by the Authority to assist the Authority in the development and implementation of the financial plan leading to the issuance of the Bonds.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The financial statements of the University as of and for the fiscal years ended June 30, 2016 and June 30, 2015 are included in Appendix B hereto and have been audited by Smith Elliot Kearns & Company LLC, as stated in their report appearing therein.

CERTAIN RELATIONSHIPS

McNees Wallace & Nurick LLC is acting as Bond Counsel and Counsel to the University in this matter, and also represents the Underwriter and the Authority from time to time in other unrelated matters.

OTHER MATTERS

The order and placement of materials in this Limited Offering Statement, including the Appendices, are not to be deemed a determination of relevance, materiality or importance, and this Limited Offering Statement, including the Appendices, must be considered in its entirety. The offering of the Bonds is made only by means of this entire Limited Offering Statement. The Appendices are integral parts of this Limited Offering Statement and should be read in their entirety together with the other sections of this Limited Offering Statement.

The references to and summaries or descriptions of provisions of the Bonds, the Project, the Loan Agreement and the Indenture contained herein and in the Appendices hereto, and all references to other materials not stated to be quoted in full, are only brief outlines of some of the provisions thereof and do not purport to summarize or describe all of the provisions thereof. Copies of the Loan Agreement and the Indenture may be obtained from the Underwriter as set forth herein under “INTRODUCTORY STATEMENT.”

30 The information set forth in this Limited Offering Statement, and in the Appendices hereto, should not be construed as representing all of the conditions affecting the Authority, the University, or the Bonds.

Statements made in this Limited Offering Statement involving matters of opinion, whether or not expressly so stated, are intended merely as such and not as representations of facts. All projections, estimates and other statements in this Limited Offering Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.

If and when included in this Limited Offering Statement, the words “expects,” “forecasts,” “projects,” “intends,” “anticipates,” “estimates,” “assumes” and analogous expressions are intended to identify forward-looking statements and any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. Such risks and uncertainties which could affect the financial condition and results of operations of the University include, among other things, changes in economic conditions and various other events, conditions and circumstances, many of which are beyond the control of the University. Such forward-looking statements speak only as of the date of this Limited Offering Statement. The University disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in the University’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The distribution of this Limited Offering Statement has been duly authorized by the Authority and the University. The Authority has not assisted in the preparation of this Limited Offering Statement, except for the statements pertaining to the Authority under the captions “THE AUTHORITY” and “LITIGATION” herein and, except as aforesaid, the Authority is not responsible for any statements made in this Limited Offering Statement. Except for the execution and delivery of documents required to effect the issuance of the Bonds, the Authority has not otherwise assisted in the public offer, sale or distribution of the Bonds. Accordingly, except as aforesaid, the Authority assumes no responsibility for the disclosures set forth in this Limited Offering Statement.

[Remainder of page intentionally left blank. Signature page follows.]

The contents hereof pertaining to the Authority under the captions “THE AUTHORITY” and “LITIGATION” (as it relates to the Authority) and the distribution hereof have been approved by the Authority. The contents hereof starting with the cover page and including the following material are all part of this Limited Offering Statement and have been approved by the University, other than information pertaining to the Authority under the captions “THE AUTHORITY,” “LITIGATION” (as it relates to the Authority) and “THE BONDS – Book Entry Only System “.

DAUPHIN COUNTY GENERAL AUTHORITY

By:

THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY

By: Chairman

By: President and CEO

[Signature Page to Limited Offering Statement] APPENDIX A

INFORMATION CONCERNING THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY [ THIS PAGE INTENTIONALLY LEFT BLANK ] Appendix A

Harrisburg University of Science and Technology

HISTORY AND ORGANIZATION

Background

Harrisburg University of Science and Technology (HU or the University) is a private, not-for- profit institution of higher education incorporated in the Commonwealth of Pennsylvania on December 13, 2001. The University’s primary educational center is located at 326 Market Street, City of Harrisburg, Dauphin County, Pennsylvania. The University also operates a satellite campus facility located at 1500 Spring Garden Street, City of Philadelphia, Pennsylvania, and offers online courses as described in greater detail in the later parts of this Appendix A.

In 2004 the HU Board of Trustees applied to the Pennsylvania Department of Education (PDE) for approval to operate as an education institution. PDE granted HU a University charter in 2005. The University first commenced operations at facilities located at 215 Market Street in Harrisburg, now the home of the Harrisburg Sci-Tech High School, and moved to its current education center in 2009 upon completion of the facility constructed with the proceeds of the Series 2007 A and B revenues bonds issued by the Harrisburg Authority, now Capital Region Water. Since its inception, HU has focused on developing and delivering educational programs in science, technology, engineering, and mathematics (STEM)-related fields.

HU enrolled its first cohort of 70 students in summer 2005 and graduated its inaugural class in 2007. During the 2016-2017 academic year (AY), 3,868 students took HU courses at the Harrisburg and Philadelphia locations, as well as online. HU has committed to serving non- traditional students and has historically enrolled many students who were nationally underrepresented in STEM-related fields, such as Black, Hispanic, and female students.

True to its mission, HU offers seven Bachelor of Science degrees (with 20 possible concentrations), five Master of Science degrees (with two potential concentrations), one Doctoral degree and four certificates in STEM-related fields. Additionally, undergraduate students may enroll in five-year, joint degree programs that lead to Bachelor of Science and Master of Science degrees in related fields. For example, a student may pursue a Bachelor of Science in Interactive Media with a Master of Science in Learning Technologies. HU makes strategic decisions about which academic programs to offer and how to grow enrollments based on the University mission and market needs.

Mission Statement

The following is the University’s mission statement: The Harrisburg University of Science and Technology offers innovative academic and research programs in science and technology that respond to local and global needs. The institution fosters a diverse community of learners, provides access and support to students who want to pursue a career in science and technology, and supports business creation and economic development.

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Vision Statement

Founded to address the need of Pennsylvania’s Capital Region for increased educational opportunities in applied science and technology-related fields, the vision of the University is to provide academic programs at undergraduate and graduate levels for a diversity of learners, using student-centered, technologically advanced, and experiential learning designs that emphasize student success, with a sharp focus on specific interdisciplinary competencies and strong linkages to career development. The desired outcome is the emergence of well-qualified, technically expert graduates whose understanding of applied science and technology-related fields is honed by direct industry experience and rounded by a sound, cross-disciplinary liberal education.

ACADEMIC OFFERINGS

In 2009 the Middle States Commission on Higher Education (MSCHE) first accredited Harrisburg University. HU’s accreditation was reaffirmed on March 3, 2016. MSCHE scheduled the next self-study evaluation for 2021-2022. Harrisburg University is currently approved to offer degrees at the Bachelor’s, Master’s and Doctor’s levels at both its Harrisburg and Philadelphia locations. The University is fully approved to offer distance education programs (also known as online programs). Harrisburg University’s Statement of Accreditation Status may be found on the MSCHE website (www.msche.org).

Undergraduate Education

HU offers seven Bachelor of Science programs in STEM-related academic fields, including (a) Analytics; (b) Biotechnology; (c) Computer and Information Sciences; (d) Geospatial Technology; (e) Interactive Media; (f) Integrative Sciences; and (g) Management and eBusiness. Students may choose areas of focus, or academic concentrations, within several of the Bachelor of Science programs. For example, students who major in Biotechnology may also choose a concentration in Food and Quality Assurance or Pharmaceutical Design. See Table 1 for a full list of Bachelor of Science degree programs and possible concentrations.

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Table 1

Areas of Study for the Bachelor of Science at Harrisburg University Academic Fields Concentration Options Analytics N/A Food Safety and Quality Assurance General Biotechnology Biotechnology Nanobiotechnology Nanobiotechnology and NanoFabrication Pharmaceutical Design Computer Science Cyber Security Computer and Software Engineering and System Analysis Information Sciences Computational Biology Machine Learning Geospatial Technology N/A Interactive Media N/A Biology Biological Chemistry Chemistry Environmental Impact of Pharmaceuticals Environmental Science and Renewable Integrative Sciences Energy Environmental Science and Renewable Energy with Nanotechnology Education Forensics Pharmaceutical Design (and Development) Management and Individualized Concentration eBusiness Digital Health

Graduate Education

HU offers Master of Science programs in five fields (a) Analytics; (b) Computer and Information Sciences; (c) Information Systems Engineering and Management; (d) Learning Technologies; and (e) Project Management. Master’s students in the Computer Information Sciences program may choose between two concentration options: Computer Science or Cyber Security. HU provides online instruction for master’s degree programs in Analytics, Project Management, and Learning Technologies. Master’s students have the option of enrolling in executive format courses that provide hybrid learning opportunities; that is, students can complete coursework online during weekdays and meet in-person during multiple weekends throughout the term.

Students who show exceptional academic performance may complete joint degree programs that allow students to earn Bachelor of Science and Master of Science degrees in five years. The joint degree programs are designed to lead to degrees in similar fields of study. Table 2 shows the joint degree program pairings.

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Table 2

Five-Year Bachelor of Science/Master of Science Programs Bachelor of Science Program Master of Science Program Analytics with a concentration in Analytics Healthcare Analytics Computer and Information Sciences with a Computer Information Services with a concentration in Computer Science concentration in Computer Science Computer and Information Sciences with a Computer Information Sciences with a concentration in Cyber Security concentration in Cyber Security Information Systems Engineering and Computer and Information Sciences with a Management with a concentration in concentration in Software Engineering and Software Engineering and Systems Systems Analysis Development Information Systems Engineering and Computer and Information Sciences with a Management with a concentration in concentration in Cyber Security Information Security Learning Technologies Interactive Media

Harrisburg University also offers a Doctor of Philosophy Degree in Data Science. Doctoral students have the option of enrolling in executive format courses that provide hybrid learning opportunities; that is, students can complete coursework online during weekdays and meet in- person during multiple weekends throughout the term. All Doctoral students complete a dissertation requirement.

All of HU’s master’s and doctoral programs are offered in an executive format. The executive format includes classroom face-to-face interactions, synchronous online interactions and asynchronous online work. An executive format program is often referred to as “blended learning.” It is a blend of online and face-to-face learning. Students travel to the Harrisburg University location 3 weekends during a semester for classroom work. They also attend mandatory synchronous online sessions with faculty in evenings during the week. Further course work is done asynchronously online by students. The executive format allows graduate students to work full-time jobs and still be enrolled as full-time students. For a weekend session in October 2016, the following map indicates from where students travelled to get to the University

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Figure 1

Given the University’s focus on technology programs, it is not surprising to see that many graduate students travel to HU from the “technology hubs” of the U.S. (e.g., Seattle, San Francisco, San Diego, Austin, New York, and Boston)

Professional Education

HU also offers non-degree continuing education opportunities for working professionals. For example, with the support of government and industry partners, HU offers certificates in the following areas:  K-12 Instructional Technology  Chief Information Security Officer  Active Learning Specialist  Healthcare Information Security and Privacy Practitioner Professional education is coordinated and administered by the Vice President for Strategic Workforce Development and University Centers. These programs are separate from undergraduate and graduate academic programs.

HU’s professional educational offerings are supported by business partners such as Cisco, IBM, SAS, Comcast, Deloitte, KPMG, Accenture, Microsoft, Verizon and Unisys. These business partners provide sponsorship dollars, corporate faculty and discounted software and hardware to HU. The University and its partners are organized in centers of activity aligned with HU programs and academic strengths as a means of forging relationships between strategic, external organizations, and the University to the benefit of its students and faculty, with the often additional

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(and intentional) benefit of having created alternative revenue streams for the University. HU created the centers and institutes to provide experiential opportunities for students, bridge to businesses and organizations, and drive economic development. The following are the four primary HU centers: Government Technology Institute (GTI)

Harrisburg University’s Government Technology Institute, the only one of its kind in Pennsylvania, is a leader in harnessing technology to make good government great. GTI connects government technology leaders with the HU faculty and advisors for education, training, resources, and networking. GTI’s signature initiative, Pennsylvania’s Chief Information Officer Certificate program, targets the unique challenges of public and private-sector executives. GTI also offers the IT Manager Certificate Program (ITM) designed for employees in positions managing information technology. Security Center of Excellence (SCE)

The Government Technology Institute at HU established the Security Center of Excellence to support government security leaders with educational programs. Having recently become a Global Academic Partner with (ISC)2, a global leader in information security standards, HU leverages these resources, plus its faculty, students, and business partners to connect local information security professionals with the latest best practices and technologies. A key focus of the SCE is its Chief Information Security Office Certificate Program (CISO), which launched its third cohort in January 2017. CISO enables IT leaders responsible for information security to further develop the knowledge and skills necessary to succeed at the executive level.

Analytics Institute

Developing the skills and readiness of leaders, analysts, data scientists, and other analytics professionals is a key component of the Analytics Institute, particularly given the rapid pace of change in tools, techniques, and challenges. The Institute is a targeted effort to support leaders and their staffs through educational programs, collaboration, and awareness raising initiatives. The Analytics Institute has held two highly successful Data Analytics Summits offering multiple educational tracks. On March 9-10, 2017, the Institute sponsored Data Analytics Summit III and is planning a fourth Summit in December 2017.

Agile Lean Center (ALC)

Through the ALC, HU aims to significantly improve business and project outcomes for state and local governments as well as local and global businesses. ALC provides professional development, certificate programs, and academic offerings to support efficient Agile and Lean business processes. A highlight of the ALC year is the Agile Lean Summit that took place May 1, 2017 and the Agile Lean Training which occurred April 27 -May 3, 2017.

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Students, events and revenue associated with HU Center activity is detailed below:

Actual 2016 Projected 2017 Students Events Revenue Students Events Revenue Centers Certificates 113 4 $122,765 200 8 $180,000 Contracted Training 306 11 $37,300 300 10 $35,000 Public Enrollment 166 10 $63,486 300 15 $70,000 Summit/Conference 1,074 3 $82,165 1,300 7 $90,000 Community Forum 277 9 $0 300 10 $0 Subtotal 1,936 37 $306,716 2,400 50 $375,000 Center Sponsors 25 $235,000 30 $270,000 Total 3,897 74 $540,716 4,830 100 $645,000

Degrees Awarded and Popular Fields of Study

As of spring 2017, HU has awarded 259 baccalaureate degrees in STEM-related fields. Among students who earned Bachelor of Science degrees, the most popular fields of study have been Computer and Information Sciences (88 degrees awarded), Integrative Sciences (79 degrees awarded), and Biotechnology (55 degrees awarded). The three most popular fields account for more than 87% of the total number of awarded baccalaureate degrees.

HU has awarded 726 master's degrees. At the master's level, Information Systems Engineering and Management is the most popular degree. Additionally, Project Management and Learning Technologies have, respectively, been the second and third most popular fields of study.

Program Competition

Based on data from students who submit SAT results (universities are able to see all of the other universities to which the student sent his or her SAT results), the following are the five most frequently mentioned universities and HU considers these its top undergraduate competitors:

Penn State University, State College, PA

Drexel University, Philadelphia, PA

Temple University, Philadelphia, PA

Albright College, Reading, PA

University of the Sciences, Philadelphia, PA

New Academic Programs

HU is developing undergraduate adult degree programs that will be flexible to the needs of working adults. The adult degree programs will offer completely online (i.e., not hybrid) courses in seven-week terms and will offer rolling admission six times each year. The curricula have been

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approved to offer on-line Bachelor of Science degrees in the field of Management and eBusiness. Adult degree students will be able to choose between two academic concentrations: Business Analytics or Digital Marketing. The adult degree program curriculum was designed in consultation with industry and employer partners. HU plans to expand the adult degree programs. Preliminary discussions have focused on developing online baccalaureate programs in cyber security or interactive media studies.

Faculty members at HU are currently designing additional residential doctoral programs in computer science and information systems engineering and management. HU will continue to hire new faculty members as needed to carry out the expansion of its graduate education programs.

GOVERNANCE

The Board of Trustees is the corporate body that governs the University. It is a self-perpetuating board consisting of not less than 15 nor more than 35 members. The current Board is composed of 22 members who draw upon their expertise in business and government to define and implement the mission of the University. The Board approved HU’s revised mission statement (see page A1) on September 17, 2015. Members may serve up to four terms, each lasting four years. Elections of board members are staggered to enhance institutional continuity.

The Board holds regular meetings five times each year (approximately every two months), including an annual meeting in conjunction with spring commencement and quarterly meetings as provided by the University’s Bylaws. Special meetings of the Board may also be called at the direction of the Chair by a majority of the members then in office. The Board conducts most of its business through a committee system. For example, the Board’s Executive Committee meets bimonthly, during months when the full board does not meet. Board officers are ex officio members of the Executive Committee. Each trustee sits on at least one of the following committees:  Executive (Chaired by J. Randall Grespin)  Academic and Student Affairs (Chaired by Robert S. Taylor)  Advancement (Chaired by Mark S. Singel)  Building and Grounds (Chaired by Robert Joyce)  Finance (Chaired by Gary D. St. Hilaire)  International Affairs (Chaired by Cynthia Traeger)  Nominating and Governance (Chaired by Robert M. Scaer)  Public Affairs (Chaired by Thomas G. Paese)

The names, titles, and affiliations of the trustees are listed in Table 3. Additionally, short biographies for the executive officers are included after the table.

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Table 3

Name Title Affiliation Rev. Dr. Lorina Marshall-Blake President Independence Blue Cross Foundation Bennett Chotiner, MD Medical Director Memorial Eye Institute Emily Stover DeRocco CEO and Principal E3 Consulting Shawn J. Farr Director of Finance Carlisle Area School District David Figuli, Esq. Executive Chairman Arist Education System Carmen Finestra Retired Writer and Producer Wind Dancer Films J. Randall Grespin Retired Managing Director Depository Trust Clearing Corporation Barbara Y. Groce Retired CEO Veterans Resource Central Bradley R. Jones President and CEO Harristown Development Corporation Robert Joyce Chief Operating Officer BioHitech America Robert A. Ortenzio Executive Chairman and Co-Founder Select Medical Thomas G. Paese, Esq. Executive Chairman Profectus Biosciences Mayur Patel Principal Laughner Patel Developers Sheri L. Philips Former Secretary of General Services State of Pennsylvania Jeffrey Piccola, Esq. Counsel Boswell, Tintner, Piccola Attorneys at Law Michael Rashid Retired President and CEO AmeriHealth Caritas, Subsidiary of Independence Blue Cross Robert M. Scaer President and COO Gannett Fleming Mark S. Singel President The Winter Group Gary D. St. Hilaire President and CEO Capital Blue Cross Robert S. Taylor Esq. Chairman and CEO Cameron Companies, LLC Cynthia Traeger CEO Pacific Siren International, LCC R. Timothy Weston, Esq. Partner K & L Gates, LLP

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J. Randall Grespin | Chair

Between 2001 and 2007, Mr. Grespin was a Managing Director for the Depository Trust and Clearing Corporation, the security industry’s utility created to clear and settle equity and fixed income transactions. Mr. Grespin has more than 25 years of experience in the financial services industry and is a leader in introducing technology to automate processes and lower operating costs. Before 2001, he served as Executive Vice President for business development for BISYS, a major independent distributor of life insurance and was President of The Underwriters Group when it was acquired by BISYS in 1996.

Robert S. Taylor | Vice Chair

Mr. Bob Taylor is the Founder and Chairman of the Cameron Companies, a diversified holding company specializing in business and government affairs consulting. Mr. Taylor earned a Bachelor of Arts degree from Slippery Rock State College and his Juris Doctor from Temple University School of Law. He is admitted to the United States Third Circuit Court of Appeals, the United States District Court of Eastern Pennsylvania and the Pennsylvania Supreme Court. Mr. Taylor has been a White House appointee to the United States Environmental Protection Agency, a trustee in bankruptcy in the Eastern District of Pennsylvania and a staff attorney to the Pennsylvania Worker's Compensation Appeal Board.

Mark S. Singel | Vice Chair

The Honorable Mark S. Singel was Lieutenant Governor of the Commonwealth of Pennsylvania between 1987 and 1995. Mr. Singel also served as Acting Governor of the Commonwealth from June 14 - December 13, 1993. Upon leaving public service, he founded Singel Associates and later served as Managing Director of Public Affairs Management. In February 2005, Mr. Singel established The Winter Group and continues to provide consulting services to clients in the retail, hospitality and gaming, manufacturing, technology, energy, health care, and non-profit sectors.

Mayur Patel | Secretary

Mr. Mayur Patel is a co-founder and principal of Laughner Patel Developers. Laughner Patel Developers provides real estate development services for projects ranging from medical office buildings to commercial office buildings to hotels. LPD has completed a number of high profile projects in the Central Pennsylvania region.

Barbara Y. Groce | Treasurer

Ms. Barbara Y. Groce served as Vice President for Community Relations for the Harrisburg Regional Chamber and Executive Director for ENVISION Capital Region. She was responsible for the overall management and coordination of the community-based regional strategic plan for Cumberland, Dauphin, and Perry Counties. She was charged with advancing the program’s goals of boosting the economic and cultural vitality of the tri-county region. Previously, Ms. Groce served as a Business Development Officer for Sovereign Bank and Regional Development Manager for Junior Achievement of South Central Pennsylvania.

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ADMINISTRATION

The Board of Trustees delegates authority to senior Board-appointed officers to oversee day-to- day operations at HU. Under the University’s Bylaws, the officers consist of a Chair, two Vice- Chairs, a President, a Secretary and Assistant Secretary and a Treasurer and Assistant Treasurer. Dr. Eric Darr currently serves as President and Chief Executive Officer and works with a cabinet of administrators to lead University staff who deliver instruction, conduct research, and provide student services. Dr. Darr’s biography is included below, along with short biographies for the University officers comprising the current members of the President’s Cabinet.

Eric Darr, Ph.D. | President and Chief Executive Officer

Dr. Eric Darr has served as President of HU since May 2013. Prior to becoming President, he served in other roles at the University, including Interim President, Executive Vice President, Provost, and Vice President of Finance and Administration. Prior to joining HU, Dr. Darr was Chief Operating Officer from 2000 until 2003 at KnowledgePlanet, Inc., a software company located in Harrisburg, PA. From 1997 to 2000, Dr. Darr led Ernst & Young’s Knowledge Management Consulting Services.

During his career, Dr. Darr has developed and taught doctoral and MBA courses in organizational learning, organizational change, organization design, process reengineering, business strategy, and technology management. Further, he developed and taught executive education courses in measuring intellectual capital, corporate renewal, managing information technology resources, improving product development, and creating organizational memory.

Dr. Darr has published numerous articles and book chapters on organizational learning, learning technologies, and competitive advantage. He has been invited to speak at universities in the United States, Austria, Great Britain, France, Australia, and the Netherlands. His research has been supported by the National Science Foundation and the Center for International Business Education and Research at University of California, Los Angeles.

Dr. Darr earned both a Bachelor of Science degree in Mechanical Engineering and a Master of Science degree in Psychology from Rensselaer Polytechnic Institute. He also earned a Master of Science degree in Organizational Behavior and a Doctor of Philosophy degree in Industrial Administration (Organizational Behavior and Theory) from Carnegie Mellon University.

Bilita Mattes, D.Ed. | Provost and Chief Academic Officer

Dr. Bilita Mattes oversees all graduate and undergraduate degree programs. She is responsible for academic outreach, as well as all non-traditional credit offerings, non-credit continuing professional education, contracted training, training grants, and distance learning. Before joining HU, Dr. Mattes worked in continuing higher education and outreach for 19 years. Prior to becoming involved in higher education, her professional background was in training and development within business and industry. Dr. Mattes received her undergraduate degree in international relations and cross-cultural communications from The American University in Washington, DC. She also completed a graduate degree from the University of Maryland in

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International Business and earned a doctorate in Adult Education from Pennsylvania State University.

Beverly Magda, Ph.D. | Associate Provost of Strategic Partnerships

Dr. Beverly Magda develops University partnerships with other academic institutions and corporations. Previously, she served as Associate Dean, Faculty Director, and Associate Professor of Technology Management and Systems Engineering Management at Georgetown University. At Georgetown, Dr. Magda developed, launched, and managed graduate programs (both on campus and online), conducted outreach and business development, and led the academic operations of the programs.

Dr. Magda has taught at Georgetown University, Johns Hopkins University, George Washington University, and Hood College at both the graduate and undergraduate levels. She earned a Ph.D. in Engineering Management and Systems Engineering from George Washington University, and also holds a Master of Science in Telecommunications Management and a Bachelor of Science in Computer and Information Science from University of Maryland University College.

Duane Maun | Vice President for Finance and Chief Financial Officer

Mr. Duane Maun oversees HU’s Business Office including general ledger accounting, accounts payable, student accounts, the University’s operating and capital budgets, and federal and state grant requirements. Prior to joining HU in 2006, Mr. Maun spent nearly 15 years in public accounting and consulting. He served as Interim Director of Budget and Finance at Shippensburg University of Pennsylvania where his duties included managing all financial aspects of the University, developing and maintaining internal controls, and external financial reporting. Mr. Maun was Senior Audit Manager for nearly three years at the Pennsylvania State System of Higher Education.

Mr. Maun graduated from Shippensburg University of Pennsylvania in 1991. He earned his Certified Public Accountant designation in 1994. Throughout his career, Mr. Maun has served clients in various industries, including higher education, not-for-profit organizations, governmental agencies, manufacturers, and financial institutions.

Douglas Firestone | Chief of Staff

Mr. Douglas Firestone seeks to build University international strategic relationships, especially with universities in Brazil and India. He also helps coordinate advancement efforts and development events. As Chief of Staff, he serves as liaison to the HU Board of Trustees.

Mr. Firestone was previously National Sales and Account Manager for Iron Mountain Incorporated. Subsequently, he founded StaffMasters USA and later Arcus Nearshore Solutions, which were information technology recruitment and consulting companies located in Harrisburg, PA and Costa Rica. Mr. Firestone was awarded a Bachelor of Science degree in Business Administration from Florida Southern College.

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Kelly Powell Logan | Vice President for Strategic Workforce Development and University Centers

Ms. Kelly Powell Logan is responsible for leading expansion of existing HU centers and creating new centers that meet strategic workforce needs. She helps HU form partnerships with employers, including state and municipal governments and works with faculty and industry experts to build and market education programs that meet employer needs.

Ms. Logan served as Secretary of the Office of Administration under Governor Corbett from 2011 until 2015. She was also Secretary of the Department of General Services for Governor Tom Ridge and Governor Mark Schweiker. Prior to joining the Corbett administration, Ms. Logan served as Executive Director of Public Service at the Pennsylvania Higher Education Assistance Agency. She graduated with a Bachelor of Science degree in Business Administration from Villanova University and a Master’s of Business Administration degree from Pennsylvania State University. She is also a graduate of Leadership Harrisburg Area’s Executive Leadership program and is past chair of the Capitol Regional Economic Development Corporation.

Steven Infanti | Associate Vice President of Admissions, Communications, and Marketing

Mr. Steven Infanti manages undergraduate admissions and University outreach and media relations. Mr. Infanti’s role is to raise the profile of HU as a student-centered institution. His marketing and communications background includes four years at the National Technology Transfer Center, three years at Penn State University, and seven years with Dick Jones Communications, a national media relations consulting firm.

Mr. Infanti is a first-generation college graduate. He earned the baccalaureate degree from Lock Haven University of Pennsylvania. As an undergraduate student at Lock Haven, Mr. Infanti wrote multiple articles for The New York Times and was a student member of the Board of Trustees. He served as a photojournalist in the U.S. Army between 1982 and 1986.

Alex Pitzner | Associate Vice President for Technology Services and Chief Information Officer

Mr. Alex Pitzner supports the administration and management operations of the University. He and his team also work with faculty to use technology to foster student learning. Additionally, his department oversees upgrading and developing new capabilities to streamline student services.

Mr. Pitzner has worked in the computer and telecommunication field for more than 20 years. Throughout his career, he has held positions in a variety of legal, financial, and educational businesses, including a number of leadership positions working as an information systems administrator and a network engineer. Mr. Pitzner received his undergraduate degree from University of Maryland, College Park.

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Ben Allatt | Associate Vice President of Human Resources

Mr. Ben Allatt is responsible for overseeing recruitment and hiring of University faculty members, student services professionals, and administrators. He conducts staff orientations for new employees at the University. Mr. Allatt was previously Vice President at JFC Medical. He has worked in the field of human resources since 2000 and earned a Bachelor of Science in Human Resource Management from Messiah College.

Robert Furey, Ph.D. | Chair of Faculty of the Whole

Dr. Robert Furey is Professor of Integrative Sciences and Chair of Faculty of the Whole (FoW). FoW is the University body that represents all faculty members, including full-time faculty, administrative faculty, and corporate faculty. Policies and procedures adopted by FoW apply to all instructors. As Chair of FoW, Dr. Furey provides academic leadership on issues related to learning assessment, academic programs, and experiential learning programs.

Dr. Furey he was Associate Professor of Behavioral Science at the Université Henri Poincaré, Vandouvre les Nancy, France. He has also worked as a visiting European researcher at the Free University of Brussels and Assistant Professor at George Mason University. Dr. Furey earned his doctorate at University of Tennessee, Knoxville in Life Sciences and Ethology.

FACILITIES

HU is an urban institution in the heart of Harrisburg, Pennsylvania, only two blocks from the state capitol building. Most HU activities are housed in a 16-story building referred to as The Academic Center located at 326 Market Street in the City of Harrisburg. The Academic Center encompasses 371,000 square feet of classrooms, laboratories, parking, and administrative office spaces. The Academic Center is adjacent to businesses, government offices, a hospital, and a satellite campus of Temple University. HU’s academic center is within one block of the Harrisburg train station and a local bus stop.

HU leases a three-story building located at 316 Blackberry Street in the City of Harrisburg, across the street from The Academic Center, which is known as the Blackberry Technology Center. The Blackberry Technology Center functions primarily as HU’s business accelerator and encompasses approximately 3,600 square feet of laboratory and office space. HU’s Geospatial Technology Lab is housed in the Blackberry building. HU also utilizes space in the Blackberry Technology Center to host start-up ventures and small companies. HU faculty members and students work in the Blackberry building on applied projects with industry partners.

One of HU’s strengths is its strategic location as the only science and technology-focused institution of higher education in Central Pennsylvania. The University is located near corporate headquarters for several companies in the biotechnology, computer information systems, engineering, healthcare, and insurance industries; these companies offer internships and job opportunities to HU students. Additionally, HU faculty collaborate and complete contract work

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with surrounding businesses. Finally, because of its location, HU is able to retain corporate executives as part-time faculty or members of the board of trustees.

Residence Halls

HU leases two buildings located at 301 and 335 Market Street in the City of Harrisburg from Brickbox Enterprises to provide affordable housing for students. Both residence halls are located on the same city block as The Academic Center. As part of HU’s mission to help revitalize the Harrisburg-area economy, HU seeks to contract with private companies rather than purchase its own residence halls so that the facilities remain on local property tax rolls. In 2012, HU entered into a ten-year lease for a nine-story building located at 301 Market Street and known as Market View Place (MVP). In 2013, HU entered into a second lease with Brickbox Enterprises for a seven-story building located at 335 Market Street called Residences on Market (ROM). Both buildings are reserved exclusively for HU students. The two buildings contain 220 beds configured in double and triple-bed apartments. Neither of the leases require HU to fill the beds or to pay a minimum fee. Beds in these buildings are made available to any student, however first-year students are required to live in these buildings. Upper classmen may reside in MVP or ROM. However, typically upper-class students chose to reside in other apartments located throughout the City of Harrisburg. Students apply for housing through Property Management Inc. (PMI). PMI manages the buildings on behalf of the University and Brickbox Enterprises.

Philadelphia Location

For the past three years, HU has offered the first-year curriculum to students in the Philadelphia metropolitan area. The Philadelphia facility helps increase enrollments by reducing living costs for first-time college students and easing their transition to main campus. HU historically leased its facilities from Hussian College, which holds a master lease agreement for approximately 18,000 square feet of the historic Bourse Building located at 13 South Fifth Street in Philadelphia, PA near Independence Hall. During the 2017-2018 academic year, the university will move its Philadelphia facility to 1500 Spring Garden Street in the City of Philadelphia. A request for approval to move facility locations was sent to the Middle States Commission on Higher Education on May 1, 2017. The move provides additional academic, office and conference space.

ENROLLMENT INFORMATION

Student Application and Matriculation

Details about student applications, acceptances and matriculants for the years 2014 – 2016 are presented below. Undergraduate applications grew by 15% over the period of time, while undergraduate matriculants increased 26% over the same period. Over the three year period, on average, 81.9% of the undergraduate applicants were granted acceptance for admission to the University. Transfer student (students transferring to HU from other universities or colleges) applications and matriculants remained relatively stable over the period 2014 – 2016. Graduate student applications and matriculants increased slightly over the period 2014 – 2016.

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Table 4

Fall 2016 Fall 2015 Fall 2014 Freshman Applicants 887 616 754 Freshman Acceptances 769 533 547 Freshman Matriculants 152 123 112 Transfer Applicants 65 76 61 Transfer Acceptances 44 46 39 Transfer Matriculants 29 33 22 Graduate Applicants 1,562 1,641 1,393 Graduate Acceptances 1,306 1,466 1,122 Graduate Matriculants 494 533 413

Undergraduate Admissions

For the 2016 fall semester, HU received 887 applications for admission as first-time (also known as freshmen) college students. The admissions office admitted 769 or 86.7% of the applicants. Of those granted admission, 152 paid deposits and enrolled as first-year students in fall 2016. As of June 12, 2017, the University received 1,312 applications for admissions as first-time college students in fall 2017. HU has admitted 942 or 71.8% of the applicants. Of those granted admission, 208 have paid deposits.

Part of HU’s mission is to serve minority and low-income students who are typically underrepresented in STEM-related fields. Research shows that minority and low-income applicants are negatively affected when colleges use standardized tests (i.e., SAT) in the admissions process (see e.g., Blau, Moller, & Jones, 2004; Hoffman & Lowitzki, 2005). Other research findings question the validity of the SAT as a predictor of college performance (e.g., Rothstein, 2004). For these reasons, HU does not require applicants to submit SAT scores as part of the admissions application process. In so doing, HU joins a broader movement of more than 850 colleges and universities that no longer require standardized test scores for undergraduate admissions (FairTest, 2016).

Graduate Admissions

In 2014, graduate student enrollments surpassed the undergraduate population, both in terms of headcounts and full-time students. For fall 2016, HU received 1,562 applications for admission to its master’s programs. The University granted admission to 1,306 applicants (83.6%) for the fall term. Of these applicants granted admission, 472 master’s students paid deposits and enrolled at HU in fall 2016. For summer 2017, HU received 1,880 applications for admission to its master’s programs. The University granted admission to 1,534 applicants (81.0%) for the summer term. Of the applicants granted admission, 786 students paid deposits and enrolled at HU in summer 2017.

HU graduate programs increased exponentially between 2013 and 2014, thus two different growth rates are used to describe the changes in the number of graduate student applications, admitted students, and student deposits. Between 2005 and 2013 the growth rates were higher for graduate

A-16 than undergraduate student admissions. Master’s applications increased at approximately 42% per year between 2005 and 2013. See Figure 2 for a graph of the three graduate student admissions metrics between 2005 and 2016. Also see Table 5 below for a summary of the growth rates from 2012 through 2016.

Figure 2. Graduate Student Fall Admissions, 2005-2016.

The figures in the above section represent fall admissions, but HU’s graduate programs also admit relatively large numbers of students in the spring and summer semesters. Thus, HU admits many more master’s-level students throughout the academic year than undergraduate students. The sections that follow describe student enrollments by academic year to better reflect the results of HU’s rolling admissions policies.

Unduplicated Headcounts of Enrolled Students

Over the past five years, HU’s unduplicated headcount (unduplicated indicates that these headcount numbers do not double count students who may be enrolled in multiple programs) increased from less than 400 to more than 4,000 students (see Table 5 and Figure 3). This growth represents increases in both the undergraduate and graduate student populations. HU’s unduplicated headcount includes undergraduate and graduate students.

Table 5 Total Student Enrollments at HU Academic Year Unduplicated Headcount 2011-2012 351 2013-2013 392 2013-2014 750 2014-2015 2,388 2015-2016 4,176

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Note: Headcount includes undergraduate and graduate students. Figure 3. Total Student Enrollments at Harrisburg University by Academic Year.

Full-Time and Part-Time Enrollments of Undergraduate and Graduate Students

Undergraduate students are classified as having full-time status if they take 12 or more units in a given semester. Graduate students are considered full-time if they enroll in six or more credits in a semester (on a six-semester academic calendar). Undergraduate students who enroll in fewer than 12 credits or graduate students who enroll in fewer than six credits in a semester are recorded as attending on a part-time basis.

Table 6 reports numbers of unduplicated undergraduate and graduate students who enrolled full- time during the past five academic years. Table 7 summarizes the number of students who enrolled part-time in each academic year beginning in fall 2011.

Table 6

Full-Time Student Enrollments at HU by Academic Year Academic Year Undergraduate Graduate 2011-2012 167 19 2012-2013 279 10 2013-2014 325 299 2014-2015 392 1,880 2015-2016 542 3,479 Note: Prior to the 2014-2015 AY, graduate students counted as full-time if they enrolled in nine or more credits per semester. In the 2014-2015 and 2015-2016 AYs, graduate students were counted as full-time if they were enrolled in six or more credits and in the Executive Format master's degree programs.

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International students (students attending HU on an F-1 visa) comprise less than 1% of the undergraduate enrollments and more than 98% of the graduate enrollment.

Table 7

Part-Time Student Enrollments at HU by Academic Year Academic Year Undergraduate Graduate 2011-2012 71 94 2012-2013 28 75 2013-2014 33 39 2014-2015 110 16 2015-2016 117 38 Note: Prior to the 2014-2015 AY, graduate students counted as part-time if they enrolled in fewer than nine credits per semester. In the 2014-2015 and 2015-2016 AYs, graduate students were counted as part-time if they were in the Executive Format master's degree programs and enrolled in fewer than six credits per semester

Articulation Agreements

Undergraduate and graduate recruiting and enrollment is aided when universities enter into articulation agreements with each other. An articulation agreement details what courses and/or programs will transfer from university A and be accepted by university B. The University uses articulation agreements to define pathways for students from community college (2-year degrees) to a four-year degree at HU. The University presently has articulation agreements in place with the following Community colleges:

Harrisburg Area Community College Delaware County Community College Bucks County Community College Community College of Philadelphia Reading Area Community College

HU also uses articulation agreements to aid in international student recruiting. The University presently has articulation agreements in place with the following international schools and universities:

Ryan International Schools (private K-12 schools located in India and the United Arab Emerites) Ramnarain Ruia College, Mumbai, India Ellenki Educational Society, Hyderabad, India Global Pathways Institute/Arcadia University, Mumbai, India

The University further uses articulation agreements to expand and enhance its program offerings. The University has an articulation agreement in place with Penn State University, State College, PA to provide a semester of instruction in nano-fabrication courses to HU students as part of the nano-biotechnology program.

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Retention and Graduation Rates

Undergraduate retention and graduation rates have increased over a five-year period. In fall 2011, less than one-third of undergraduate students were retained from the previous year (after accounting for students who are no longer in attendance because they graduated). By fall 2015, more than two-thirds of undergraduate students were retained from one year to the next.

Table 8

Fall-to-Fall Retention Rates for Full-Time Undergraduate Students by Academic Year

Number of Number of Students Enrolled Academic Year Retention Rate Students Retained in Prior AY 2011-2012 29.48% 102 346 2012-2013 61.34% 119 194 2013-2014 59.85% 158 264 2014-2015 66.42% 182 274 2015-2016 67.51% 187 277

On average, HU has achieved an 84% retention rate across all programs for international graduate students from their first semester to their second semester. The international student retention rate is impacted by several factors including (1) student transfers, (2) visa status change, and (3) academic dismissal from HU. An F-1 visa is issued to international students who are attending an academic program or English Language Program at a US college or university. F-1 students must maintain the minimum course load for full-time student status. All of HU’s international students are in the U.S. on an F-1 visa. Federal regulations permit F-1 students to easily transfer to other federally approved institutions. F-1 students are very mobile and transfer frequently. An institution that is the sponsor of the initial entry of the student cannot prohibit a transfer, when requested. A student that desires to transfer must simply present – in person, by fax or email - an Acceptance Letter of Admission from the new school and the institution’s Transfer Request Form. Once presented, the current institution is obligated to transfer the student, as requested. Students who entered the U.S. with an HU visa and then transferred from HU to other SEVP-eligible institutions are summarized here: AY 2014 42 AY 2015 261 AY 2016 302

Since January 2014, 605 of the 5,987 total international students ever enrolled at HU have transferred out (10%). The data demonstrate that the vast majority of international students who apply to HU intend to enroll in and complete a degree program at HU.

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Federal regulations also permit F-1 students to apply for a Change of Status to become a different type of visa holder without leaving the U.S. The preferred visa status is H-1B, where the approved applicant is permitted to be employed full-time in the U.S. for an initial 3-year period and then a subsequent 4-year period after that. The employer, on behalf of the beneficiary (the student), files a United States Custom and Immigration Services [USCIS] Form I-129 “Petition for a Non- immigrant Worker” to enter the annual General Quota lottery for H-1B or, if an eligible Master of Arts or Sciences was previously attained, the revered Master’s Quota lottery. The lottery selections to fill the annual quotas occur during the first few weeks of April each calendar year. Then, USCIS adjudicators review each petition against specific educational and occupational qualifications for the H-1B visa. A positive adjudication of the application will result in a grant of the Change of Status from F-1 to H-1B effective October 1st of a particular calendar year.

Once an F-1 student is successfully awarded an H-1B visa, they are no longer subject to F-1 SEVP regulations and no longer need to remain a full-time student in the SEVP-eligible institution. H- 1B students are permitted to attend an institution of higher education, if they so choose to continue to pursue the degree initially sought, but they are not required to do so. An H-1B student may be enrolled less than full-time and is permitted to take all coursework online, unlike an F-1 student who may only enroll in one online course each academic term and must remain in full-time enrollment status.

Accordingly, once F-1 students are in the U.S., they are very eager to seek H-1B visa status. This permitted change of status is a primary cause of an institution’s low retention rate calculation for the graduate programs offered because of the benefits this visa offers. While the retention rate may be adversely affected, the number of approved H-1B petitions each year reflects the strength of the academic program and employability of its students by the number of employer petitioners who hire HU students for CPT and then apply for H-1B.

Change of Status Approvals to H-1B Visa Status by HU students:

October 2014 55 (of 61 petitions submitted) October 2015 352 (of 365 petitions submitted) October 2016 742 (of 792 petitions submitted)

A third factor affecting retention rate is the number of academic dismissals occurring in any semester. As with any graduate student, academic dismissals happen for multiple reasons. The two principal reasons are failure to maintain satisfactory academic progress and violation of the University’s plagiarism policy. The number of academic dismissals by academic year is below: AY 2014 9 AY 2015 41 AY 2016 63

The low number of dismissals demonstrates that the vast majority of our international students are successfully completing their course work, making satisfactory academic progress, and following

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the University’s academic policies. In general, the retention and transfer data indicate that the international recruiting officers used by HU are operating with integrity, setting proper expectations, and recruiting high quality students.

Graduation rates increased for both undergraduate and graduate students since the 2007-2008 AY. Table 9 summarizes the numbers and percentages of students who graduated, based on the year they first attended HU. Undergraduate students who entered in the 2013-2014 academic year have not yet attended HU for 4 years, so only graduate student graduation rates are available for this cohort. The numbers of graduates include students who earned their degrees at HU at any point after they first enrolled. In other words, these calculations do not include arbitrary completion timelines (e.g., four-years or six-years for an undergraduate degree) and include students from the earlier AYs who may have taken longer to graduate.

Table 9

Graduation Rates of First-Time Students Undergraduate Graduate Academic Graduation Number of Number of Graduation Number of Number of Year Rate Students in Students Rate Students in Students Cohort Who First Cohort Who First who Enrolled in who Enrolled in Graduated AY Graduated AY 2007-2008 16.00% 20 125 23.08% 12 52 2008-2009 18.18% 24 132 24.44% 11 45 2009-2010 15.33% 21 137 40.24% 33 82 2010-2011 36.84% 42 114 30.88% 21 68 2011-2012 24.06% 32 133 48.65% 18 37 2012-2013 32.60% 45 138 46.15% 48 104 2013-2014 NA 152 43.23% 211 488

STUDENT PROFILE

Geographical Draw: U.S. Citizens and Permanent Residents

Early in the University’s history, most undergraduates were drawn from within the Commonwealth of Pennsylvania. However, HU now regularly enrolls students from throughout the region, particularly Maryland, New Jersey, and Washington, DC. The Admissions Department is also expanding recruiting efforts in Delaware and Virginia. Table 10 shows that HU has expanded its geographical draw for U.S. citizens and permanent residents beyond the Commonwealth of Pennsylvania and has established itself as a regional university.

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Table 10 Number of States in Geographical Draw for US Citizens and Permanent Residents by Academic Year Academic Year Undergraduate Students Graduate Students 2011-2012 9 7 2012-2013 10 4 2013-2014 9 20 2014-2015 9 24 2015-2016 10 20 Note: State counts include the District of Columbia and Puerto Rico.

In the 2015-2016 AY, the largest numbers of undergraduate students were drawn from Pennsylvania, Maryland, and New Jersey (in that order). Figure 4 provides regional and national longitudinal snapshots of the geographical draw of undergraduate students. During the same period, the largest numbers of graduate students came from Pennsylvania and North Carolina. The geographical draw for graduate students has grown larger than the geographical draw for undergraduate students.

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Figure 4. Geographical Draw of Undergraduate Students at Harrisburg University, 2005-2016.

Source: Harrisburg University Geospatial Technology Lab.

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Geographical Draw: International Students

The University has a larger geographical draw for international graduate students, relative to undergraduates. Over the past five AYs, the University enrolled small numbers of its undergraduate students from other countries. During this period, the undergraduate international students have tended to come from fewer than five countries. See Table 11.

Over the past five years, HU has enrolled larger numbers of international students in its graduate programs. In the 2011-2012 AY, international master’s students (i.e., non-U.S. citizens or permanent residents) were drawn from six other countries. By the 2015-2016 AY, the geographical draw for international graduate students included 76 countries (see Table 11). Last AY, the largest pluralities of international students came from India, China, and Nepal, respectively. HU master’s programs enrolled students from 80 countries during the 2016-2017 AY.

Table 11

Number of Countries in Geographic Draw for Non-US-Resident Students by Academic Year Academic Year Undergraduate Students Graduate Students 2012-2013 4 8 2013-2014 2 9 2014-2015 2 41 2015-2016 1 76 2016-2017 2 80 Note: Countries were classified according to the U.S. Central Intelligence Agency's World Factbook. Students from Hong Kong and Taiwan were classified as coming from China. Students from Palestine were counted as coming from Israel. Students from Tokelau were counted as coming from New Zealand. If each of these territories are counted as separate countries, then the 2014-2015 country count for graduate students would increase to 43 and the 2015-2016 country count for graduate students would increase to 80.

It should be noted that HU defines a student as an “international student” if their citizenship is outside of the United States. All international students at HU reside in the U.S., and are on F-1, student visas.

Other Undergraduate Student Demographics

HU aspires to admit undergraduate students from groups that are often under-represented in STEM-related fields of study. In particular, HU seeks to enroll first-generation students, ethnic or racial minority students, and female students. Table 12 shows that in the past five AYs, at least 45%—and up to 55%—of first-year undergraduate students were the first in their families to attend college. Table 13 shows that a majority of HU undergraduate students self-identified as non- White. Figure 5 shows that women made up more than 40% of the undergraduate student body.

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Table 12

Percent of First-Year Undergraduate Students Whose Parents Did Not Have a College Degree

Academic Year Percent 2012-13 55% 2013-14 46% 2014-15 51% 2015-16 46% 2016-17 48% Source: HU Financial Aid Office.

Table 13

Self-Reported Race or Ethnicity of Undergraduate Students by Academic Year Academic Year Asian Black Hispanic White (Non-Hispanic) 2012-2013 13 97 31 160 2013-2014 20 111 28 165 2014-2015 21 183 45 182 2015-2016 47 214 67 217 2016-2017 52 231 72 230

Note: Many students identify as belonging to more than one racial or ethnic category. Counts are based on ethnic classification (Hispanic or Non-Hispanic) and the first of five possible racial identification categories. The "Native Hawaiian or Pacific Islander" and "American Indian or Alaska Native" categories were suppressed due to small numbers of students.

Figure 5. Self-Identified Gender of Undergraduate Students by Academic Year.

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TUITION

In the 2006-2007 academic year, HU’s published undergraduate tuition (“sticker price”) was $14,000 per academic year for students who were enrolled full-time (i.e., 12-17 credits per semester). HU does not charge enrollment fees in addition to tuition costs. Tuition remained unchanged the following year, before steadily increasing to $23,900 per year in 2010-2011. Undergraduate tuition has remained at the same level for the past six years. Since the 2010 AY, HU has achieved financial strength by growing enrollments rather than raising tuition.

HU publishes estimated costs of undergraduate attendance including tuition, books and supplies, room and board, as well as miscellaneous or “other” expenses. These figures are reported to in the University catalog. See Figure 6 for trend data on annual published costs of attendance.

Figure 6. Published Annual Costs of Attendance at HU (Categories Shaded and Stacked).

$40,000

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000 AY AY AY AY AY AY AY AY AY AY '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Tuition Books and Supplies Room and Board Other Expenses

Although HU is required to report the full-rate for undergraduate tuition, in reality, most students did not pay the published full-rate tuition costs. In fact, compared to several groups of comparison schools in the region, undergraduate students at HU have a lower net cost of attendance. See Figure 7.

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Figure 7. Average Net Price for Students Receiving Grant or Scholarship Aid Relative to Comparison Groups of Four-Year Colleges and Universities.

Graduate students are charged a flat tuition rate of $800 per credit hour. The graduate tuition rate is competitive and has not been changed in several years. Graduate student enrollments have continued to increase, which suggests that tuition rates are not a significant hardship for many applicants.

FINANCIAL AID

As of the 2015-2016 academic year, 100% of all matriculating undergraduate students receive institutional grants. Since the 2011-2012 academic year, at least 60% of undergraduate students qualify for need-based federal financial aid. Additionally, more than 40% of first-year students receive state aid (see Table 14). Note that state grants are not awarded to students who come to HU from other states, which helps explain why the percentage of students receiving state grants has declined as HU has expanded its geographic draw.

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Table 14

Undergraduate Students' Financial Aid Eligibility and Expected Family Contributions of First-Year Students by Academic Year 2012-13 2013-14 2014-15 2015-16 2016-17 Percent of 60% 67% 67% 68% $66 Undergraduate Students Receiving Federal Program Aid Percent of 55% 51% 50% 48% 43% Undergraduate Students Receiving PA State Grants Median Expected $2,816 $1,383 $0 $114 $568 Family Contribution (EFC) for First-Year Students Minimum Expected $0 $0 $0 $0 $0 Family Contribution (EFC) for First-Year Students Maximum Expected $75,969 $94,420 $81,055 $126,902 $434,286 Family Contribution (EFC) for First-Year Students Note: Figures for AY 2016-2017 are preliminary. Source: HU Financial Aid Office.

During the fall 2016 semester, 45% of HU’s first-year students had parents or guardians who were not expected to make any financial contribution to support students’ costs of attending college. Federal financial aid calculations showed that another 45% of students were expected to receive some support from their parents—but not enough to cover the cost of tuition at HU. Only 10% of HU students were came families that were expected to be able to afford tuition, but not necessarily the other costs associated with attending college (e.g., room and board).

FACULTY

In the 2016-2017 academic year, HU employed 52 full-time faculty members. Additionally, HU hired 228 part-time faculty members—the largest number in the University’s history (see Table 15). At HU, part-time faculty members are termed “corporate faculty,” because many of them have significant industry experience and are more involved in developing academic programs than is typical for adjunct employees at other colleges and universities. Table 16 summarizes the student-faculty ratios at HU over the past five academic years. Table 17 shows that HU employs sufficient numbers of faculty members to maintain small class sizes and appropriate ratios of undergraduate students to professors.

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Table 15

Number of Faculty Members Employed at HU by Academic Year Academic Full-Time Corporate All Year Faculty Faculty Faculty 2012-2013 8 62 70 2013-2014 13 69 82 2014-2015 19 117 136 2015-2016 31 167 198 2016-2017 52 228 280

Table 16

Ratio of Undergraduate Students to Faculty at HU Academic Year Ratio 2012-2013 13:1 2013-2014 14:1 2014-2015 23:1 2015-2016 28:1 2016-2017 24:1

Table 17

Undergraduate Class Size at Harrisburg University by Academic Year Academic Year Average Number of Students 2012-2013 14 2013-2014 12 2014-2015 12 2015-2016 13 2016-2017 14

During the 2016-2017 academic year, the vast majority (81%) of full-time faculty members had earned doctorates or terminal degrees in their fields of expertise. The rest of the full-time faculty members are qualified to teach based on academic credentials, industry certifications, and professional experience. For example, it is important that HU have faculty members who are certified as Geographic Information Systems Professionals or Project Management Professionals. Faculty members at HU do not have tenure or collective bargaining agreements. Full-time professors are hired to multiyear appointments and can expect to continue their employment on an

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ongoing basis. The faculty of HU are organized under a group known as the Faculty of the Whole, which includes full- and part-time professors in the development of academic policies and programs. The term “Faculty of the Whole” is intended to indicate that all faculty, whether full- or part-time may participate in academic decision-making. A Chair person is elected by the faculty to set agendas, and to preside over Faculty of the Whole meetings.

FINANCIAL PERFORMANCE

Introduction

As noted previously, the University began as a newly-formed higher educational institution and has been in operation for only 10 years. As such, HU experienced various financial challenges common to many start-up enterprises as it sought to establish its place in the higher education marketplace and gain operational traction. These challenges are reflected, in part, in the matters discussed in the forepart to this Official Statement under the caption “BONDHOLDERS’ RISKS – University History Regarding 2007B Bonds and Prior Defaults.”

Notwithstanding these past difficulties, however, the University has begun to realize substantial improvement in its operational and financial performance, position and prospects, including rapid and significant changes in student enrollment and financial stability over the past 36 months. HU spent much of the first eight years of its existence building undergraduate programs in science and technology, while focusing its graduate efforts on technology programs. The University initially limited its student recruiting to the mid-Atlantic region; as a new institution, resources, people and money were constrained. In November 2013, as HU’s financial challenges continued to grow, the leadership of HU searched for new ways to capitalize on the institution’s strengths: high-quality technology programs, strong connections to employers, flexibility and affordability.

Given HU’s strengths, a decision was made to begin recruiting international graduate students. Graduate students are largely interested in a quality education that can advance their career interests. They tend not to be focused on many of things that interest undergraduate students (e.g., bands, sports teams, giant stadiums). Specifically, graduate students from India who were proficient in English and interested or employed in technology industries were recruited.

The first group of 65 international graduate students enrolled at HU in January 2014. Over the past 36 months HU’s international graduate student recruitment efforts have resulted in over 3,500 international graduate students enrolling at the University. Based upon student feedback, HU believes this occurred due to its competitive advantage in the market place by virtue of three primary factors: (1) program affordability, (2) quality of academic programs, and (3) connections to jobs.

Significant numbers of new faculty, support staff and student services personnel have been hired to focus on international students. The University’s intention is to continue to grow the scope and scale of its international activities, while maintaining its more historic focus on providing science and technology education to disadvantaged undergraduates. As a still relatively young institution, HU plans to continue its recruitment of additional students, grow its faculty ranks, implement new

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and innovative academic programs, build new facilities and expand its geographic areas of activity. Details about HU’s financial history, its current year and future plans follow.

Historic Balance Sheets

The statements of financial position for Harrisburg University for the fiscal years 2012 through 2016 are presented below:

HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Statements of Financial Position June 30, 2016, 2015, 2014, 2013 and 2012

2016 2015 2014 2013 2012 Assets Cash‐Operating$ 12,545,433 $ 3,346,985 $ 198,004 $ 62,513 $ 140,555 Tuition and fees receivables less allowance of $531,816 for 2016; $240,000 for 2015; $411,000 for 2014; $358,000 for 2013 and $275,000 for 2012 3,659,980 2,147,848 809,970 407,411 315,499 Student loans receivable, less allowance of $15,594 for 2016; $17,409 for 2015 and 19,336 for 2014 10,395 11,606 12,890 ‐ ‐ Contributions receivable, net 500,356 192,463 214,125 578,749 2,155,391 Grants receivable 1,226,078 188,019 101,848 142,154 218,827 Other receivables 242,564 105,044 70,723 79,524 131,703 Prepaid Expenses 411,357 285,161 126,442 194,926 197,774 Security deposits 2,850 21,666 20,916 5,935 8,825 Debt issue costs, net of accumulated amortization of $160,136 for 2016; $143,206 for 2015; $126,275 for 2014; $109,344 for 2013 and $92,413 for 2012 341,436 358,366 375,297 392,228 409,159 Deferred financing cost, net of accumulated amortization of $15,438 for 2016; $11,658 for 2015; $7,877 for 2014; $4,096 for 2013 and $315 for 2012 3,466 7,246 11,027 14,808 18,589 Bond reserve funds 8,059,333 5,220,993 4,128,599 4,346,666 4,826,307 Assets held for sale ‐ ‐ ‐ 14,764,527 14,764,527 Property and equipment, net 57,403,436 58,770,463 60,909,505 63,032,476 65,072,288

Total Assets$ 84,406,684 $ 70,655,860 $ 66,979,346 $ 84,021,917 $ 88,259,444

Liabilities and Net Assets Liabilities Accounts payable$ 282,903 $ 361,565 $ 7,029,113 $ 1,909,955 $ 1,673,804 Accounts payable related to property and equipment 199,950 56,896 2,334,062 89,703 89,703 Accrued interest 1,398,282 1,354,382 81,896 3,099,983 1,245,628 Other accrued expenses 643,520 530,476 1,335,124 498,154 370,289 Accrued Expense ‐ assets held for sale ‐ ‐ ‐ 1,000,050 750,038 Deposits and deferred revenue 10,108,814 5,451,247 560,218 409,700 602,068 Deposits on assets held for sale ‐ ‐ ‐ 14,000,000 14,000,000 Notes payable 5,455,000 6,859,475 1,236,537 8,222,743 6,100,695 Notes payable related to property and equipment ‐ ‐ ‐ 74,202 184,259 Bonds payable 58,360,044 59,579,551 59,549,057 59,518,563 59,488,070

Total Liabilities 76,448,513 74,193,592 72,126,007 88,823,053 84,504,554

Net Assets (Deficit) Unrestricted 3,669,492 4,355,009 5,407,151 7,461,151 10,151,052 Investment in property and equipment 3,788,323 (8,269,394) (10,869,785) (12,983,190) (8,786,146) Other 7,457,815 (3,914,385) (5,462,634) (5,522,039) 1,364,906

Temporarily restricted 500,356 376,653 315,973 720,903 2,389,984

Total net assets (deficit) 7,958,171 (3,537,732) (5,146,661) (4,801,136) 3,754,890

Total liabilities and net assets (deficit)$ 84,406,684 $ 70,655,860 $ 66,979,346 $ 84,021,917 $ 88,259,444

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Over the past 5 years, Harrisburg University has experienced a significant strengthening of its Statement of Financial Position. One of the most significant changes has been in the unrestricted cash balance, increasing from a low of $62,513 as of June 30, 2013, to a high of $12,545,433 as of June 30, 2016. Another significant change year over year has been the growth in accounts receivables relating to tuition and fees, increasing from a low of approximately $315K as of June 30, 2012, to a high of approximately $3.7MM as of June 30, 2016. The increase in accounts receivable is in direct correlation with the increase in tuition revenues. The bond reserve funds also have shown a wide range of balances from a low of $$4,128,599 as of June 30, 2014 to a high of $8,059,333 as of June 30, 2016. The balance as of June 30, 2016 reflects HU’s financial ability to prepay its September 1, 2016 debt service obligation of approximately $3.1MM. The debt service obligation was paid on September 1, 2016, subsequent to the closing of the 2016 fiscal year.

The improvement in HU’s financial position has been reflected not only in its cash and accounts receivable, but also in a significant changes in its liabilities and net assets due to its positive results from operations. Accounts payable have decreased from a high of approximately $9.4MM as of June 30, 2012, to a low of approximately $483K as of June 30, 2016. Student tuition deposits and deferred revenues are shown under the caption “Deposit and deferred revenue”. The balance in this line item shows a low of approximately $410K as of June 30, 2013, to a high of just over $10.1MM as of June 30, 2016. This is a direct reflection of the increase in summer and late summer student enrollments. As of June 30, 2013, the University’s Statement of Financial Position reflected Assets held for sale in the amount of $14,764,527 and Deposits on assets held for sale in the amount of $14,000,000 relating to the parking garage contained within the HU Academic Center. A settlement agreement completing the transfer of the parking facility from the University to the Harrisburg Parking Authority was executed effective December 22, 2013, thus eliminating the Asset held for sale and the Deposits on assets held for sale. Another significant improvement is shown under the caption “Total net assets (deficit)”. As of June 30, 2014, HU had deficit net assets of $5,146,661. However, as of June 30, 2016, total net assets are shown at $7,958,171, representing an increase of over approximately $13MM in a matter of two fiscal years.

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Historic Income Statements

The statements of activities for Harrisburg University for the fiscal years 2012 through 2016 are presented below:

HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Statement of Activities Five Years Ended June 30, 2016, 2015, 2014, 2013 and 2012

2016 Total 2015 Total 2014 Total 2013 Total 2012 Total REVENUES, GAINS, AND OTHER SUPPORT Educational and general Tuition and fees 39,907,720 20,921,747 8,263,268 7,507,015 6,342,201 Less student aid (3,919,763) (2,693,763) (2,321,357) (2,194,926) (1,442,849) Tuition and fees, net 35,987,957 18,227,984 5,941,911 5,312,089 4,899,352 ‐ ‐ ‐ ‐ ‐ Private gifts, grants, and contributions 1,473,593 1,543,508 1,685,600 832,655 1,590,104 Governmental grants 2,891,750 4,130,246 4,526,189 1,547,646 2,687,034 Interest and dividends 21,031 7,476 1,815 2,223 2,881 Gain (loss) from sale of investments ‐ ‐ 3,335,523 (186,585) (2,933) Other sources 449,145 482,515 1,244,327 609,653 502,522 Total educational and general 40,823,476 24,391,729 16,735,365 8,117,681 9,678,960 Auxiliary revenues ‐ 7,966 910,795 886,591 428,673 Net assets released from restrictions ‐ ‐ ‐ ‐ ‐ Total revenues, gains and other support 40,823,476 24,399,695 17,646,160 9,004,272 10,107,633 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Expenses ‐ ‐ ‐ ‐ ‐ Educational and general ‐ ‐ ‐ ‐ ‐ Instructional 10,351,350 6,707,802 4,841,109 4,434,549 4,684,623 Research 584,281 1,526,370 1,632,559 1,311,649 982,215 Academic support 1,689,461 996,497 1,240,719 1,435,318 1,112,873 Student services 10,027,784 6,977,947 3,101,045 2,862,615 3,195,573 Institutional Support 6,674,697 6,582,150 5,812,333 6,321,519 7,467,505 Total educational and general 29,327,573 22,790,766 16,627,765 16,365,650 17,442,789 Auxiliary enterprises ‐ ‐ 1,363,920 1,194,648 654,826 Total expenses 29,327,573 22,790,766 17,991,685 17,560,298 18,097,615 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Change in net assets 11,495,903 1,608,929 (345,525) (8,556,026) (7,989,982) Net assets at beginning of year (3,537,732) (5,146,661) (4,801,136) 3,754,890 11,744,872 Net assets (deficit) at end of year 7,958,171 (3,537,732) (5,146,661) (4,801,136) 3,754,890

The impact of the substantial student enrollment increases over the years 2014, 2015 and 2016 can clearly be seen in the significant increase in tuition and fees. Gross tuition and fees increased from $8,263,268 in 2014 to $39,907,720 in 2016. Student aid did not grow at the same rate as tuition because the majority of the tuition revenue increase is driven by international students who do not receive aid. Revenue from private gifts, grants and contributions stayed relatively constant over the five year period. Government grant revenue decreased in 2016 because a National Science Foundation grant was moved from HU to a New York State System School. An associated

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reduction in research expenses was also realized in 2016, reflecting the loss of the NSF grant. Auxiliary revenues in 2012, 2013 and 2014 represent student housing revenues. As noted above, HU contracts for management of the student housing buildings to an outside vendor. The housing management contract was executed in 2015, and, as a result, the auxiliary revenue as well as auxiliary enterprise expense stopped in 2015. It should be noted that the housing operations resulted in a net loss for HU. Transitioning the housing operations to a vendor who is better equipped to execute has improved HU’s financial position. In total, revenue increased from $10,107,633 in 2012 to $40,823,476 in 2016.

Instructional and student service expenses have increased significantly over the five year period as should be expected given the rapid increase in student enrollment. Total expenses increased from $18,097,615 in 2012 to $29,327,573 in 2016. Expenses over the five year period increased much more slowly than the increase in revenue, due in large part, to excess capacity in physical and faculty resources which allowed for expansion without a corresponding significant increase in expenses. Excess facility capacity was largely eliminated by 2014, and direct additional expense in faculty and student services was required to meet the demands of increased enrollment.

Change in net assets over the five year period has improved nearly $20 million. The University had a significant negative change of assets ($7,989,982) in 2012 and substantial positive change of net assets of $11,495,903 in 2016. This turn-around is almost completely driven by a substantial increase in international graduate student enrollment.

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Year-to-Date Performance

The statements of financial position for Harrisburg University for the month ended May 31, 2017 is presented below:

Harrisburg University of Science and Technology Unaudited Balance Sheet May 31, 2017

May 31, 2017

ASSETS

Cash, Unrestricted 12,613,045 Cash, Restricted 1,000,000 Grants Receivable 67,953 Accounts Receivable 4,039,973 Allowance for Doubtful Accounts (547,410) Other Receivables 72,879 Contributions Receivable, Net 359,195 Prepaid Expenses 296,689 Property and Equipment, Net 63,181,098 Security Deposits 2,850 Deferred Financing Costs 3,466 Bond Issuance Costs 341,436 Bond Reserve Funds 7,966,858

TOTAL ASSETS $ 89,398,031

LIABILITIES

Accounts Payable 112,516 Accrued Expenses 1,266,784 Deposits and Deferred Revenue 4,371,213 Notes Payable 700,000 Bonds Payable, Less Discounts 57,035,044

TOTAL LIABILITIES 63,485,557

NET ASSETS

TOTAL NET ASSETS - Beginning of Fiscal Year 7,958,171

Change in Net Assets 17,954,303

TOTAL NET ASSETS - Ending 25,912,474

TOTAL LIABILITIES AND NET ASSETS $ 89,398,031

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Over the first eleven months of the fiscal year 2016-2017, Harrisburg University continued to strengthen its Statement of Financial Position. As of May 31, 2017, the University’s unrestricted cash balance was just over $12.6MM. The accounts receivable listed on the above Statement of Financial Position relates to student tuition and fees, and it has increased by approximately $300,000 as compared to the audited balance as of the June 30, 2016. This increase is a result of a larger enrollment for summer 2017 when compared to summer 2016. The unaudited balance in Property and Equipment, net has increased just over $5.7MM as compared to June 30, 2016. The large increase was the result of the University completing the fit-out of the 10th and 11th floors of the Academic Center located at 326 Market Street in the City of Harrisburg. The total expansion was paid for using cash from operations. The Bond Reserve Funds are approximately $3.1MM higher than the required Debt Service Reserve funding requirements. The $3.1MM represents the University’s advanced funding of the September 1, 2017 debt service payment obligation. Moving to the liability side of the Statement of Financial Position, $4,371,213 under the caption “Deposits and Deferred Revenue”, this line item accumulates the tuition revenues that have been charged as of May 31, 2017, but that have not yet been earned. The summer semester runs from May 6, 2017 through August 18, 2017. Tuition revenues are recognized as income on a per day basis over this time period.

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The statement of activities for Harrisburg University for the eleven months ended May 31, 2017 is presented below:

Harrisburg University of Science and Technology Unaudtited Statement of Activities For the Eleven Months Ending May 31, 2017

May 31, 2017 Revenues, Gains and Other Support Educational and General Tuition and Fees 49,250,736 Less Student Aid (4,974,736)

Tuition and fees, net 44,276,000

Private gifts, grants and contributions 376,105 Governmental grants 3,393,152 Interest and dividends 43,253 Other Sources 286,062 Total Educational and General 48,374,572

Auxiliary Revenues 56,530 Total revenues, gains and other support 48,431,102

Expenses Educational and General Instructional 8,618,773 Academic Support 1,932,567 Student Services 10,977,237 Institutional Support 8,948,222 Total Expenses 30,476,799

Change in Net Assets - Increase 17,954,303

The tuition and fees, net for the eleven months ending May 31, 2017 of $44,276,000 compares to $34,647,649 in net tuition revenue for the same time period ending May 31, 2016. The University’s net tuition revenue increased by nearly $10MM over a one year period. Total revenues for the eleven months ending May 31, 2017 of $48,431,102 compares to $38,340,785 for the same time period ending May 31, 2016. The growth in the University’s total revenue over the current fiscal year was driven by increased student enrollment, and the associated increase in tuition revenue.

Instructional expenses for the eleven months ending May 31, 2017 of $8,618,773 compares to $5,734,874 in instructional expenses for the same time period ending May 31, 2016. As noted previously, a significant number of new faculty were hired in the current fiscal year to meet increased student demands. Total expenses for the eleven months ending May 31, 2017 of $30,476,799 compares to $23,630,809 in total expenses for the same time period ending May 31,

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2016. In addition to new faculty hires, new student services personnel, and new recruiting personnel were added in the current fiscal year.

Investments and Endowment The University currently has an endowment fund with a corpus of $1,000,000 that is held with Fulton Bank. The endowment is managed and controlled by the University’s Board of Trustees. Currently the endowment funds are held in an account that yields a guaranteed rate of return. The University is permitted to use the earnings generated on the endowment funds for student scholarships as described by the terms of the Stabler Foundation Donor Agreement. The entire $1,000,000 is controlled by the Stabler Foundation Agreement. The University also has $100,000 held at The Foundation for Enhancing Communities. The University plans to form an investment committee of the Board of Trustees to explore various investment opportunities for endowment related funds.

Existing Debt and Debt Plans

The 2007B Bonds are the only long-term debt of the University, which will be refunded by proceeds of the Bonds.

The University currently has no plans to incur additional significant long-term debt.

Deferred Contribution Pension Plan The University sponsors a 403(b)-pension plan covering substantially all employees. The University may make discretionary contributions to the plan annually. Through January 2016, the plan was funded solely by employee contributions. In February 2016, the University began proving matching contributions up to a 3% match. The matching percentage increased to 4% in July 2016. Since the plan is a defined contribution plan, the University has no financial obligations to the plan other than making any matching requirements it approves.

CERTAIN FORECASTS

PROJECTIONS IN THIS SECTION ARE BASED UPON VARIOUS ASSUMPTIONS BY THE UNIVERSITY AS TO PERFORMANCE TRENDS, STUDENT ENROLLMENT AND FUTURE OPERATIONAL EXPECTATIONS, SOME OF WHICH ARE EXPLAINED HEREIN. THE ACHIEVEMENT OF THESE PROJECTED RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH PROJECTIONS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY PROJECTED FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THE PROJECTIONS. THE UNIVERSITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THESE PROJECTIONS IF OR WHEN ITS EXPECTATIONS OF THE EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH PROJECTIONS ARE BASED CHANGE.

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Five Year Forecast

The projected statements of activities for Harrisburg University for the fiscal years 2018 through 2022 are presented below:

Harrisburg University of Science and Technology Projected Statement of Activities

FY 2017/2018 FY 2018/2019 FY 2019/2020 FY 2020/2021 FY 2021/2022 Revenues, Gains and Other Support Educational and General Tuition and Fees 58,571,750 69,163,850 76,396,800 81,876,350 84,439,250 Less Student Aid (7,281,184) (8,567,200) (9,979,430) (10,138,750) (10,397,750) Tuition and fees, net 51,290,566 60,596,650 66,417,370 71,737,600 74,041,500 Private gifts, grants and contributions 600,000 800,000 1,500,000 1,500,000 1,500,000 Governmental grants 1,120,000 1,130,000 1,134,000 1,141,000 1,143,000 Interest and dividends 56,000 65,000 70,000 75,000 75,000 Other Sources 225,000 225,000 250,000 250,000 250,000 Total revenues, gains and other support 53,291,566 62,816,650 69,371,370 74,703,600 77,009,500

Expenses Educational and General Instructional 13,200,914 15,962,751 17,921,257 20,257,534 22,544,281 Academic Support 3,059,360 3,299,873 3,652,972 3,870,181 4,241,760 Student Services 12,558,658 13,649,449 14,127,451 14,802,257 15,306,310 Institutional Support 12,301,239 12,573,695 13,237,443 13,940,969 14,642,494 Total Expenses 41,120,171 45,485,768 48,939,123 52,870,941 56,734,845 Change in Net Assets - Increase 12,171,395 17,330,882 20,432,247 21,832,659 20,274,655

Gross tuition is projected to increase from $58,571,750 in 2018 to $84,439,250 in 2022. The projected gross tuition revenue is driven by the following assumption around enrollment growth over the five year period:

Projected Student Enrollments

2018 2019 2020 2021 2022

Traditional Undergraduate 488 600 705 725 745 International Undergraduate 20 50 100 150 150 Graduate - Masters 3507 3625 3743 3861 3972 Graduate - Doctoral 10 26 36 45 45

The projections assume nearly 20% per year growth in enrolled traditional undergraduate students in the years 2019 and 2020, and almost no growth in the years 2021 and 2022. The projections for 2019 and 2020 were made based on HU’s current enrollment funnel, specifically the number of current high school sophomores and juniors in the University’s inquiry pool. Conservative projections were made for fiscal years 2021 and 2022.

Starting from very small numbers, steady growth of enrolled international undergraduate students was assumed in the model. The growth rates are based on inquires already in the enrollment funnel.

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Graduate student at the Master’s level enrollment projections assume a very conservative 3% per year growth over the five year period. Current retention (84%) and student withdrawal rates were used to generate the projections. Graduate students at the Doctoral level are projected to grow from 10 in 2018 to 45 in 2022. Program capacity for a doctoral program is often around 50 full- time students because of the significant faculty load associated with doctoral dissertation work.

Tuition rates for undergraduate as well as graduate students were held nearly constant (less than 2% increase) through the five year period.

The increase in student aid from $7,281,184 in 2018 to $10,397,750 in 2022 is driven by the increase in enrolled traditional undergraduate students over the five year period. A tuition discount rate of 58% was assumed in 2018 and 2019, whereas a tuition discount rate of 50% was assumed in 2020, 2021 and 2022.

Revenue from private gifts, grants and contributions is projected to grow from $600,000 in 2018 to $1,500,000 in 2022. Anticipated increases in corporate contributions associated with a Pennsylvania tax credit program, Educational Improvement Tax Credit (EITC), drive the projections. The EITC program allows corporations in Pennsylvania to receive tax credits based on their contributions to eligible educational institutions.

Revenue from governmental grants is projected to remain steady over the five year period.

Total revenue is projected to grow from $53,291,566 in 2018 to $77,009,500 in 2022. The projected increase is largely driven by increases in student enrollment over the five year period. The projected increases in student enrollment are driven by continuing recruiting efforts. These conservative projections do include expanded program offerings, expanded physical locations, or expanded physical facilities.

Projected instructional expenses increased from $13,200,914 in 2018 to $22,544,281 in 2022. The projections assume that 35 new full-time faculty as well as 80 new part-time faculty are added over the five year period. Modest increases are projected for academic support, student services, and institutional support expenses over the five year period. In total, expenses are projected to increase from $41,120,171 in 2018 to $56,734,845 in 2022. Projected increases in expenses are driven by anticipated additional faculty hiring over the five year period.

The projected average annual change in net assets is $18,400,000 per year over the five year period. The projections are based on continuing and slightly expanding the current operations and programs. The projections do not include any of the following potential revenue enhancing activities being studied for consideration by HU for possible implementation in the future:

1. Launch a health science suite of programs, both bachelors and master’s levels. Programs would include nursing, pharmacy, medical and occupation therapists and technicians. 2. Launch two new doctoral programs in Information Systems Engineering & Management and Computer Science.

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3. Launch new undergraduate degree programs in environmental sustainability, mechatronics, healthcare administration, human centered design or technology entrepreneurship. 4. Launch new master’s degree programs in Healthcare Policy, Sustainability and Economics, Human Centered Design 5. Open an education center in Dubai, UAE. Offer graduate and undergraduate programs to technology students and workers in the region who would be unlikely to be granted visas to study in Pennsylvania. 6. Open an education center in Delhi, India. Offer graduate and undergraduate programs to science and technology students in the region who would be unlikely to be granted visas to study in Pennsylvania.

Covenants Forecast Based on the five-year projection set forth above, the following shows the pro forma debt service coverage ratios set forth in the Loan Agreement.

PRO FORMA DEBT SERVICE COVERAGE BASED ON FIVE YEAR FORECAST

FY 2017/2018 FY 2018/2019 FY 2019/2020 FY 2020/2021 FY 2021/2022 Funds available for debt service Change in unrestricted net assets 12,171,395 17,330,882 20,432,247 21,832,659 20,274,655 Depreciation and amortization 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 Interest expense 3,326,085 2,826,085 2,773,085 2,718,085 2,661,085 17,597,480 22,256,967 25,305,332 26,650,744 25,035,740

Maximum annual debt service 4,102,094 4,102,094 4,102,094 4,102,094 4,102,094 Debt service coverage projection 4.29 5.43 6.17 6.50 6.10

RISK ASSESSMENT OF INTERNATIONAL PROGRAMS

Much of the recent financial success of the University may be attributed to its international graduate programs. In December 2014, the Harrisburg University Board of Trustees requested that a risk analysis be completed concerning the international graduate programs. The analysis, completed by HU’s management team, using Porter’s Five Forces Model revealed that multiple factors contribute to HU’s competitive advantage in the market place:

1. The University’s Location – 3 hours travel time from most major Northeastern U.S. cities 2. Price point – priced mid-market 3. Low cost of living in Harrisburg 4. Connection to jobs – 92% placement rate over the past 10 years 5. Flexible design of all HU M.S. degree programs allows for significant individual customization 6. Quality of the academic experience – inclusion of industry expertise, data, problems 7. Superior student services and rapid response times

Based upon the risk analysis, and our competitive advantages, HU believes that the international graduate program is a sustainable source of revenue for the foreseeable future. More importantly, international graduate programs have become a core part of the University. Significant numbers A-42

of new faculty, support staff and student services personnel have been hired to focus on international students. Details are provided below.

The University continually monitors student experience, student performance, and program quality. For example, HU has increased program admittance requirements with regard to English language proficiency twice in the past 18 months. The University routinely collects, analyzes, and reacts to direct student feedback about orientation, student services, academic support and teaching. HU is vigilant about safeguarding its reputation for quality programs.

A good indicator of the quality of HU’s international graduate academic programs is the data for students transferring into the institution. Over 97% of HU’s international graduate students have transferred to HU from other U.S. universities. In fact, students from all 50 states have transferred to HU. For the June and September 2016 starts, HU had students transfer in from Harvard, MIT, Stanford, University of Pennsylvania, Dartmouth and Drexel. In January 2017, international students are transferring to HU from Princeton, NYU, Harvard, MIT and CMU. The chart below details the more than 140 universities from which students have transferred into HU since January 2015:

Arkansas State University MIT University of Alaska Ashland University Michigan State University University of Arkansas American College of Commerce Mississippi College University of Bridgeport Baylor University Morgan State University University of California Brandeis University Murray State University University of Central Missouri California International University Newman University University of Central Oklahoma California State University - Fullerton New Mexico State University University of Cincinnati Campbellsville University New York University University of Dallas CCBC North Carolina State University University of Detroit Central Michigan University North Dakota State University University of Findlay City University of New York Northeastern University University of Florida Cleary University Northern Illinois University University of Houston Cleveland State University Northwest Missouri State University of Illinois University CMU Northwestern University University of Michigan Columbia College - Missouri Northwestern Polytechnic University of Massachusetts University Concordia University NYU University of Minnesota Cornell University Oklahoma Christian University University of Mississippi Dartmouth College Oklahoma State University University of Missouri DePaul University Pace University University of Nebraska DeVry University Pittsburgh State University University of New Haven Drexel University Portland State University University of New Mexico Duke University Princeton University University of North Carolina East Carolina University Purdue University University of North Dakota

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Emory-Riddle University RIT University of North Texas Fairleigh Dickinson University Rutgers University of Northern New Jersey Ferris State University San Francisco State University University of Pennsylvania Florida Institute of Technology Savannah College of Art and University of Pittsburgh Design Florida International University Southeast Missouri State University of Rochester University Franklin University Southern Illinois University University of San Francisco Gannon University Southern New Hampshire University of South Carolina University Golden State University St. Cloud State University University of South Dakota Goldey-Beacom College Stanford University University of South Florida Harvard University Stevens Institute of Technology University of Southern California Hofstra University Stratford University University of Southern Mississippi Hult International Business School Sullivan University University of Texas Indiana University SUNY - Buffalo Villanova University Indiana University of PA SUNY - FIT Virginia Commonwealth University Johns Hopkins University SUNY - New Paltz Virginia International University Kean University SUNY - Polytechnic Washington University Lamar University Taylor Business Institute Wayne State University Lawrence Technological University Tennessee Technological Western Illinois University University Lincoln University Texas A&M Western Michigan University Long Island University Towson University Wilmington University Louisiana Tech Trine University Wright State University Marshall University University of Alabama Yeshiva University

When asked why they transferred to HU, students have typically responded that the quality of the academic programs is as good as the best, but at half the cost.

A different and independent measure of program quality comes from the Department of Homeland Security. DHS/SEVP is responsible for the non-immigrant student data contained in the SEVIS computer system and relies heavily upon Designated School Officers (DSOs) to maintain accurate demographic and education program data in the system. SEVP adjudicators frequently review student record data in SEVIS. Prior to becoming a DSO, a school employee must complete a training program to thoroughly learn and understand the SEVP program regulations and SEVIS computer system. A Certificate of Completion is awarded to the approved DSO when a satisfactory completion score is attained. HU has had four employees approved since 2015 as approved DSOs. While greatly expanding HU’s capacity to maintain and report visa data, it also demonstrates the high quality of attention and resources committed by HU to its international student programs.

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The second level of oversight involves DHS Immigration and Customs Enforcement (DHS-ICE) investigators locating enrolled F-1 students at their place of residence to conduct in-person interviews about their personal and academic experiences in the U.S. since arrival. Beginning in October 2014 and continuing through June of 2016, approximately 50 HU international students located in Florida, Texas, Massachusetts, New York and Pennsylvania were directly contacted by DHS Investigators for in-person interviews. Those students who were not present at their place of residence when visited by the investigator were asked to contact a local DHS office and schedule an interview. Each student contacted complied with the request. The students interviewed were asked to produce an original, valid passport, visa, Form I-20 Certificate and I- 94 Departure Record. The students were then asked whether the HU PDSO was, in fact, a real person who endorsed their Form I-20 Certificate. The agent then asked the students to describe the quality of the educational program offered by Harrisburg University. The students were asked to produce evidence of their travel to and attendance at weekend classes in Harrisburg, PA. Following the completion of a brief questionnaire, no student was subject to further proceedings by DHS-ICE.

On August 3, 2015, three (3) SEVP Adjudicators conducted an unannounced, on-site review at Harrisburg University. SEVP regulations define this as an “Out-of-Cycle Review.” The Adjudicators conducted a comprehensive interview with the authorizing Primary DSO official, toured all campus facilities, spoke to certain University staff, inspected the SEVIS record storage area, and completed a 30-page list of policy and procedural questions. When the on-site review was completed, the Primary DSO was served a formal “Request for Evidence” (RFE) for specific University and personnel documents and student records for 48 SEVP-selected students. The required 30-day response was submitted timely by September 3, 2015, in accordance with regulations. The University received no warnings, sanctions or other action items as a result of this review.

As of May 2017, 636 of the first 2,011 international graduate students who started programs in 2014 and 2015 have successfully graduated with their M.S. degree. Excluding the 1,136 students who left HU after attaining H1-B visa status, Harrisburg University has a 73% two-year graduation rate for its first cohorts of international graduate students. This graduation rate is comparable to that of many of the best international graduate programs across the U.S.

HU routinely monitors the effectiveness and quality of faculty resources, as well as administrative and student services personnel committed to the international graduate student programs. Specific measures include (but are not limited to) time from application submission to admission decision, time to process I-20s, time from student grade appeal submission to appeal decision, student grade distributions, course section sizes, instructor teaching loads, instructor advising loads, number of students needing graduation projects/advisors, and number of grade appeals. Additionally, student feedback concerning the admission process, quality of student services, satisfaction with University engagement, satisfaction with faculty, satisfaction with facilities, and overall University satisfaction is considered when evaluating resource needs.

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In response to the growth of the international student graduate programs over the last 2 years, 34 full-time faculty, 78 corporate faculty, 9 student services personnel and 3 SEVIS Designated Officials have been hired.

Beyond adding faculty and staff, HU has recently completed the fit-out of 35,000 sq. ft. of additional teaching and office space at its Academic Center, including 36 additional faculty and staff offices as well as 12 new classrooms and four state-of-the-art computer laboratories.

The University has expanded and enhanced its assessment of student learning outcomes across all of its programs, including the graduate programs, over the past 18 months. The good news about having significantly more students across programs is that more outcomes data is available for assessment and review. Data-driven program assessment and improvement is occurring on a regular basis. Based on student learning assessment results, and the desire to include sound assessment practices as the University grows, the M.S. in Project Management program is piloting “master” courses that act as templates for any instructor teaching that particular course. Advisors are assigned to the “master” courses to ensure that they are sound in design (to include effective assessment), aligned with program learning goals, up to date, relevant to industry, and sequenced correctly to monitor their delivery through peer review of colleagues. This ensures continuity across sections of a course taught by different instructors to include similar assessment practices.

Program quality and breadth may be improved also by partnering with world-class universities. HU continually monitors the environment for partnership opportunities. For example, the University has begun detailed conversations with BITS Pilani University and Jawaharlal Nehru Technological University (JNTU) in Hyderabad about joint degree programs, as well as faculty and student exchanges. These universities are particularly interested in HU’s programs in analytics, cyber security, and geospatial technology. Partnerships like these provide additional opportunities for HU to grow its student population while expanding its faculty base.

LITIGATION

The University is not currently subject to any controversy or litigation that would materially adversely affect the operations or financial condition of the University.

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REFERENCES

Blau, J. R., Moller, S., & Jones, L. V. Why Test? Talent loss and enrollment loss. Social Science

Research, 33, 409-434.

FairTest (2016). 850+ Colleges and Universities that Do Not Use SAT/ACT Scores to Admit

Substantial Numbers of Students into Bachelor Degree Programs. The National Center for

Fair & Open Testing. Retrieved from

http://fairtest.org/sites/default/files/OptionalPDFHardCopy.pdf

Hoffman, J. L., & Lowitzki, K. E. (2005). Predicting college success with high school grades and test scores: Limitations for minority students. The Review of Higher Education, 28(4), 455-

474.

Rothstein, J. M. (2004). College performance predictions and the SAT. Journal of

Econometrics, 121, 297-317

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List of Acronyms

AY Academic Year DHS Department of Homeland Security FoW Faculty of the Whole HU Harrisburg University of Science and Technology PDE Pennsylvania Department of Education MSCHE Middle States Commission on Higher Education SEVIS Student and Exchange Visitor Information System SEVP Student and Exchange Visitor Program STEM Science, Technology, Engineering, and Mathematics

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APPENDIX B

AUDITED FINANCIAL STATEMENTS OF THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY FOR THE FISCAL YEARS ENDED JUNE 30, 2016 AND 2015 [ THIS PAGE INTENTIONALLY LEFT BLANK ]

Audited June 30, Financial 2016 Statements

CONTENTS

PAGE

INDEPENDENT AUDITOR'S REPORT 1 ‐ 2

FINANCIAL STATEMENTS Statements of financial position 3 Statements of activities 4 Statements of cash flows 5 Notes to the financial statements 6 ‐ 22

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 23

NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 24

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 25 ‐ 26

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE AS REQUIRED BY THE UNIFORM GUIDANCE 27 ‐ 29

SCHEDULE OF FINDING AND QUESTIONED COSTS 30 ‐ 32

SCHEDULE OF PRIOR YEAR AUDIT FINDINGS RELATED TO FEDERAL AWARDS 33

INDEPENDENT AUDITOR’S REPORT

Board of Trustees Harrisburg University of Science and Technology Harrisburg, Pennsylvania

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Harrisburg University of Science and Technology, which comprise the statements of financial position as of June 30, 2016 and 2015, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these 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 financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the 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 entity'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 financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harrisburg University of Science and Technology as of June 30, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

OTHER MATTERS Other Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated November 10, 2016 on our consideration of Harrisburg University of Science and Technology’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Harrisburg University of Science and Technology’s internal control over financial reporting and compliance.

Chambersburg, Pennsylvania November 10, 2016

| 2 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Statements of Financial Position June 30, 2016 and 2015

2016 2015 ASSETS Cash ‐ operating $ 12,545,433 $ 3,346,985 Tuition and fees receivable, less allowance of $ 531,816 for 2016 and $ 240,000 for 2015 3,659,980 2,147,848 Student loans receivable, less allowance of $ 15,594 for 2016 and $ 17,409 for 2015 10,395 11,606 Contributions receivable, net 500,356 192,463 Grants receivable 1,226,078 188,019 Other receivables 242,564 105,044 Prepaid expenses 411,357 285,161 Security deposits 2,850 21,666 Debt issue costs, net of accumulated amortization of $ 160,136 for 2016 and $ 143,206 for 2015 341,436 358,366 Deferred financing cost, net of accumulated amortization of $ 15,438 for 2016 and $ 11,658 for 2015 3,466 7,246 Bond reserve funds 8,059,333 5,220,993 Property and equipment, net 57,403,436 58,770,463

Total Assets $ 84,406,684 $ 70,655,860

LIABILITIES AND NET ASSETS Liabilities Accounts payable$ 282,903 $ 361,565 Accounts payable related to property and equipment 199,950 56,896 Accrued interest 1,398,282 1,354,382 Other accrued expenses 643,520 530,476 Deposits and deferred revenue 10,108,814 5,451,247 Notes payable 5,455,000 6,859,475 Bonds payable 58,360,044 59,579,551

Total liabilities 76,448,513 74,193,592

Net Assets (Deficit) Unrestricted Investment in property and equipment 3,669,492 4,355,009 Other 3,788,323 (8,269,394) 7,457,815 (3,914,385)

Temporarily restricted 500,356 376,653

Total net assets (deficit) 7,958,171 (3,537,732)

Total liabilities and net assets (deficit) $ 84,406,684 $ 70,655,860

The Notes to the Financial Statements are an integral part of these statements.| 3 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Statements of Activities Years Ended June 30, 2016 and 2015

2016 2015 Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total REVENUES, GAINS, AND OTHER SUPPORT Educational and general Tuition and fees$ 39,907,720 $ ‐ $ 39,907,720 $ 21,055,747 $ ‐ $ 21,055,747 Less student aid (3,919,763) ‐ (3,919,763) (2,693,763) ‐ (2,693,763) Tuition and fees, net 35,987,957 ‐ 35,987,957 18,361,984 ‐ 18,361,984

Private gifts, grants, and contributions 917,608 555,985 1,473,593 940,613 468,895 1,409,508 Governmental grants ‐ 2,891,750 2,891,750 ‐ 4,130,246 4,130,246 Interest and dividends 21,031 ‐ 21,031 7,476 ‐ 7,476 Other sources 449,145 ‐ 449,145 490,481 ‐ 490,481 Total educational and general 37,375,741 3,447,735 40,823,476 19,800,554 4,599,141 24,399,695 Net assets released from restrictions 3,324,032 (3,324,032) ‐ 4,538,461 (4,538,461) ‐ Total revenues, gains, and other support 40,699,773 123,703 40,823,476 24,339,015 60,680 24,399,695

EXPENSES Educational and general Instructional 10,351,350 ‐ 10,351,350 6,707,802 ‐ 6,707,802 Research 584,281 ‐ 584,281 1,526,370 ‐ 1,526,370 Academic support 1,689,461 ‐ 1,689,461 996,497 ‐ 996,497 Student services 10,027,784 ‐ 10,027,784 6,977,947 ‐ 6,977,947 Institutional support 6,674,697 ‐ 6,674,697 6,582,150 ‐ 6,582,150 Total expenses 29,327,573 ‐ 29,327,573 22,790,766 ‐ 22,790,766

Change in net assets 11,372,200 123,703 11,495,903 1,548,249 60,680 1,608,929 Net assets at beginning of year (3,914,385) 376,653 (3,537,732) (5,462,634) 315,973 (5,146,661) Net assets (deficit) at end of year $ 7,457,815 $ 500,356 $ 7,958,171 $ (3,914,385) $ 376,653 $ (3,537,732)

The Notes to the Financial Statements are an integral part of these statements.| 4 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Statements of Cash Flows Years Ended June 30, 2016 and 2015

2016 2015 Cash flows from operating activities Change in net assets$ 11,495,903 $ 1,608,929 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation and amortization 1,861,637 1,959,258 Bond discount amortization 30,493 30,494 (Income) from forgiveness of debt (435,000) ‐ Changes in assets and liabilities: (Increase) decrease in: Tuition, fees, and student loans receivable (1,510,921) (1,336,594) Contributions receivable (307,893) 21,662 Grants receivable (1,038,059) (86,171) Other receivables (137,520) (34,321) Prepaid expenses (126,196) (158,719) Security deposits 18,816 (750) Increase (decrease) in: Accounts payable (78,662) (1,062,009) Accrued interest 43,900 19,258 Accrued expenses 113,044 (29,742) Deposits and deferred revenue 4,657,567 4,214,710 Net cash provided by operating activities 14,587,109 5,146,005

Cash flows from investing activities Purchases of property and equipment (473,900) (159,992) Increase (decrease) in accounts payable related to property and equipment 143,054 (25,000) Net cash (used in) investing activities (330,846) (184,992)

Cash flows from financing activities Repayments of debt principal (2,219,475) (719,638) Net cash (used in) financing activities (2,219,475) (719,638)

Increase (decrease) in cash and cash equivalents 12,036,788 4,241,375

Cash and cash equivalents, beginning of year 8,567,978 4,326,603

Cash and cash equivalents, end of year$ 20,604,766 $ 8,567,978

Summary of cash and cash equivalents Cash ‐ operating$ 12,545,433 $ 3,346,985 Bond reserve funds 8,059,333 5,220,993 $ 20,604,766 $ 8,567,978 Supplemental disclosures of cash flows information Cash paid for interest$ 3,697,373 $ 3,750,317

Non cash investing and financing activities Income from forgiveness of debt$ 435,000 $ ‐ Long term debt assumed in exchange for accounts payable$ ‐ $ 550,000 Reduction in accounts payable in exchange for property and equipment$ ‐ $ 360,488

The Notes to the Financial Statements are an integral part of these statements.| 5 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Harrisburg University of Science and Technology (the "University" or "HU") is an independent not‐for‐profit institution located in Harrisburg, Pennsylvania. The University is the nation’s only comprehensive university that integrates an affiliated college preparatory high school and a business accelerator. The University's academic and research programs in mathematics, science and technology are designed to meet the needs of the region's youth, workforce, and businesses, and to expand, attract, and create economic opportunities in the region.

The University admitted its first class of students for the Fall 2005 term. In June 2009, the University was accredited by the Middle States Commission on Higher Education. The Middle States Commission on Higher Education is an institutional agency recognized by the U.S. Secretary of Education and the Council for Higher Education Accreditation.

Basis of Accounting

These financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Financial Statement Presentation

The University reports information regarding its financial position and activities according to three classes of net assets depending on the existence or nature of any donor restrictions as follows:

Permanently restricted – Net assets subject to donor‐imposed restrictions that are to be maintained permanently by the University. Generally, the donors of these assets permit the University to use all or part of the income from these assets. The University had no permanently restricted net assets at June 30, 2016 or 2015.

Temporarily restricted – Net assets whose use by the University is subject to donor‐ imposed restrictions that can be fulfilled by actions of the University pursuant to those restrictions or that expire by passage of time.

Unrestricted – Net assets that are not subject to donor‐imposed restrictions. Unrestricted net assets may be designated for specific purposes by action of the Board of Trustees.

Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor‐imposed restrictions. Expenses are generally reported as decreases in unrestricted net assets. Expirations of donor‐imposed stipulations that simultaneously increase one class of net assets and decrease another are reported as reclassifications between the applicable classes of net assets.

| 6 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Contributions

Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence or nature of any donor restrictions.

Contributions, including unconditional promises to give, are recorded as revenues in the period the promise is made. Conditional promises to give are not recognized until the conditions are met or the pledge payments are received. Contributions of assets other than cash are recorded at their estimated fair value. Contributions to be received after one year (including those under the terms of gift annuities and charitable remainder trusts) are discounted at an appropriate discount rate. Amortization of discounts is recorded as additional contribution revenue in accordance with donor‐imposed restrictions, if any, on the contributions. An allowance for uncollectible contributions receivable is provided based upon management’s judgment including such factors as prior collection history, type of contribution, and nature of the fund‐ raising activity. The allowance for uncollectible promises to give was $ 105,937 and $ 101,937 at June 30, 2016 and 2015, respectively.

Contributions with donor‐imposed restrictions are reported as temporarily restricted revenues and are reclassified to unrestricted net assets when an expense is incurred that satisfies the donor‐imposed restriction. Contributions restricted for the acquisition of property and equipment are reported as temporarily restricted revenue. Those contributions are reclassified to unrestricted net assets when restrictions have been met. Contributed property and equipment is recorded at fair value at the date of donation. If donors stipulate how long the assets must be used, the contributions are recorded as restricted support. In the absence of such stipulations, contributions of property and equipment are recorded as unrestricted support.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits and other investments (including overnight repurchase agreements) with original maturities of three months or less, that are not held for endowment or other long‐term purposes. The University maintains its cash accounts in various financial institutions. A portion of the University’s cash balance may exceed FDIC insurance coverage at times throughout the year. Management considers this to be a normal business risk.

Bond Reserve Funds

This represents funds originated from bond proceeds that are set aside for payment of interest and principal on the University Revenue Bonds Series B of 2007 as described in Note 4. These monies are invested by the Trustee in the Federated Institutional Prime Obligations Fund, a money market account valued at $ 1 per share. This Fund invests primarily in short‐term, high quality, fixed income securities issued by banks, corporations and the U.S. Government. The terms of the bond agreement require a minimum balance of $ 4,826,050 at June 30, 2016 and 2015. The University maintained funds in excess of the required balance at June 30, 2016 due to making required deposits before June 30 for bond debt service payable on September 1.

| 7 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Tuition and Fees Receivable It is the University’s policy to provide an allowance for future losses on uncollectible tuition and fees receivable based on an evaluation of the underlying account balances, the historical collection experience of the University on such balances, the past due status, and other factors which, in management’s judgment, require consideration in estimating doubtful accounts. Actual write‐offs of uncollectible accounts are done periodically after collection efforts have been unsuccessful. Property and Equipment Property and equipment values represent cost at date of acquisition, or fair value at date of donation in the case of gifts. The University uses a capitalization threshold of $ 2,500. Depreciation is recorded using the straight‐line method over the estimated useful lives of the assets as follows: Buildings and improvements 40 years Furnishings and equipment 5 ‐ 7 years Leasehold improvements 2 – 10 years Computer software 3 years Library contents 10 years

The cost and accumulated depreciation of property sold or retired is removed from the related asset and accumulated depreciation accounts and any resulting gain or loss is recorded in the period of disposal.

Deposits and Deferred Revenue

Deposits and deferred revenue relates to summer session tuition for the portion of the session occurring after June 30 and all fall session tuition received prior to June 30.

Debt Issue Costs

Costs incurred in obtaining financing are capitalized and amortized using the straight‐line method over the lives of the debt.

Advertising Expense

The University expenses advertising costs as incurred. This expense amounted to $ 686,923 and $ 157,788 for the years ended June 30, 2016 and 2015, respectively.

Use of Estimates

Management of the University has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Accordingly, actual results could differ from those estimates. Significant estimates that could ultimately result in changes to amounts reflected in these financial statements include allowances for uncollectible tuition and fees receivable and contributions receivable, and depreciation of property and equipment. It is at least reasonably possible that a change in estimates could occur in the near term.

| 8 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentrations

The University received approximately 11% and 23% of its revenues in the form of private gifts, grants, and contributions and governmental grants during the years ended June 30, 2016 and 2015, respectively. Decreases in this funding could have a significant impact on the University.

Tax Status

Under provisions of the Internal Revenue Code, Section 501 (c)(3), and the applicable tax regulations of Pennsylvania, the University is exempt from taxes on income other than unrelated business income. Since the University had no net unrelated business income during the years ended June 30, 2016 and 2015, no provision for income taxes has been made. The University files Form 990, "Return of Organization Exempt from Income Tax". The Forms 990 are generally subject to examination for a period of three years after the returns are filed.

Reclassifications

Certain reclassifications have been made to the 2015 financial statements to be consistent with 2016 reporting. Such reclassifications had no impact on the change in net assets.

Deferred Contribution Pension Plan

The University sponsors a 403(b) pension plan covering substantially all employees. The University may make discretionary contributions to the plan annually. Through January 2016, the plan was funded solely by employee contributions. In February 2016, the University began providing matching contributions up to a 3% match. Contributions by the University to the plan were $ 79,000 for the year ended June 30, 2016. Since the plan is a defined contribution plan, the University has no financial obligations to the plan other than making any matching requirements it approves.

NOTE 2 CONTRIBUTIONS RECEIVABLE

Contributions receivable, representing donor promises to give, have been discounted to present value assuming their respective terms and a discount rate of 1.41% and 1.60% at June 30, 2016 and 2015, respectively. The pledges are scheduled to be collected as follows, net of the allowance for uncollectible promises to give and the present value discount:

2016 2015 Unconditional promises expected to be collected in: Less than one year$ 270,485 $ 225,551 One year to five years 345,000 71,000 Over five years ‐ ‐ Total unconditional promises to give 615,485 296,551 Allowance for uncollectible promises to give (105,937) (101,937) Discount for present value of cash flows (9,193) (2,151) Net unconditional promises to give$ 500,355 $ 192,463

| 9 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 3 PROPERTY AND EQUIPMENT

A summary of property and equipment of the University as of June 30 is as follows:

Accumulated Depreciated Cost Depreciation Cost 2016 Land$ 4,062,768 $ ‐ $ 4,062,768 Buildings and improvements 64,767,593 12,110,555 52,657,038 Leasehold improvements 17,363 1,815 15,548 Furnishings and equipment 2,643,423 2,252,908 390,515 Library contents 160,341 105,884 54,457 Computer software 103,088 102,237 851 Equipment deposit (A) 3,495 ‐ 3,495 Construction in process (B) 218,764 218,764‐ $ 71,976,835 $ 14,573,399 $ 57,403,436

2015 Land$ 4,062,768 $ ‐ $ 4,062,768 Buildings and improvements 64,741,593 10,491,474 54,250,119 Furnishings and equipment 2,415,637 2,051,655 363,982 Library contents 156,317 90,044 66,273 Computer software 103,088 99,300 3,788 Equipment deposit (C) 23,533 23,533‐ $ 71,502,936 $ 12,732,473 $ 58,770,463

(A) – Prior to June 30, 2016, the University made a deposit to purchase a new phone system for the 10th and 11th floors.

(B) – Prior to June 30, 2016, the University incurred architect expenses related to the fit out of the 10th and 11th floors.

(C) – Prior to June 30, 2015, the University placed a deposit on a new telephone system with a total cost of approximately $ 75,000. The system was completed and placed in service in August 2015.

Depreciation expense (including amortization expense of assets under capital lease) for the years ended June 30, 2016 and 2015 was $ 1,840,926 and $ 1,938,545, respectively.

During the year ended June 30, 2009, the University completed the construction of a 371,000 square foot Academic Center at 326 Market Street. The total cost of the project, including architect fees, feasibility studies, construction costs, furnishings and equipment, capitalized interest, and other related costs, was $ 80.3 million. This cost included $ 14,764,527 for the parking facility that was transferred to the Harrisburg Parking Authority (HAP) on December 22, 2013.

| 10 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 4 BONDS AND NOTES PAYABLE

Bonds Payable

On January 1, 2007, the University obtained financing in the form of two construction loans in the amounts of $ 27,690,000 (University Revenue Bond Series A of 2007) and $ 60,225,000 (University Revenue Bond Series B of 2007) with the Harrisburg Authority (Authority), with Commerce Bank N.A. originally functioning as Trustee (subsequently changed to UMB Bank effective May 15, 2012) under the Trust Indenture dated January 1, 2007. The proceeds were used to refinance various outstanding loans; to fund the acquisition and construction of the new academic center at 326 Market Street; and to establish certain bond reserve funds.

Final redemption of the Series A bonds occurred on September 1, 2009.

As to the Series B Bonds only, the University arranged for the issuance of a standby letter of credit (the “SLOC”) by First National Bank (formerly Metro Bank) pursuant to a Reimbursement Agreement dated as of January 1, 2007 (the “Reimbursement Agreement”) between the University and First National Bank. On the date of execution and delivery of the Series B Bonds, First National Bank issued in favor of the Trustee the SLOC in the amount of $ 3,300,000, which was able to be drawn to pay the debt service on the Series B Bonds as described in the Indenture, as such amounts may from time to time be reduced and reinstated as provided in the SLOC. The SLOC expired on September 1, 2011 and was not renewed. See the "Notes Payable" section of this footnote for amounts outstanding on this debt.

The Series B Bonds mature in 2036, but are subject to scheduled mandatory redemption by the Authority annually beginning on September 1, 2015 and continuing through final redemption on September 1, 2036.

Section 4.2 of the Loan Agreement provides that the University is required to make, as Loan Payments, payments which correspond as to amounts and due dates of the Bonds debt service, at least seventy‐five (75) business days (or earlier if required by the Indenture) prior to the date when such principal, premium, if any, and interest is due and payable. By Notice of Default dated June 2, 2014, the Trustee notified the University of its failure to make a required Loan Payment of $ 1,806,750, in anticipation of the Bonds Debt Service payment due on September 1, 2014. In its Notice of Default, the Trustee asserted that such failure constitutes an Event of Default under the Loan Agreement and the Indenture. As of June 30, 2015, the University has repaid all outstanding obligations to the Bond Trustee.

The County of Dauphin, Pennsylvania has also issued a limited guaranty of up to $ 1.5 million per year for a period of 10 years to be provided for the payment of a portion of debt service on the Series B Bonds (maximum guarantee of $ 15 million). The period for which the guaranty is in effect began January 1, 2010 and ends December 31, 2019 (the “Guarantee Period”), unless terminated earlier due to a Termination Event of the County Guarantee. Under the Guarantee Agreement, the County will make payment of not more than $ 1.5 million toward the amount of annual principal and interest due to the holders of the Series B Bonds if the Authority or the Trustee shall fail to pay, in full, for any year during the Guarantee Period, the principal of and interest on the Series B Bonds when the same becomes due and payable. See the Notes Payable Section for details on County payments on this guarantee.

| 11 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 4 BONDS AND NOTES PAYABLE (CONTINUED)

Bonds Payable (Continued)

The University Revenue Bonds bear interest at a rate of 6.0% for Series B and are secured by all the assets of the University. Upon a default of payment due on the Series B bonds, funds available from the County Guarantee would be used first, followed by the bond reserve funds.

Under the terms of the bond agreement and Dauphin County Guarantee Agreement, the University is required to maintain various financial covenants. The University was not in compliance with the liquidity covenant for either of the years ended June 30, 2016 or 2015. As a result, the University could only use Expendable Funds (as defined) in excess of $ 10 million to acquire or construct Capital Additions in either year, and the same restriction applies in the 2016‐2017 year. The University was in compliance in 2016 and 2015 with the rate covenant which became effective on June 30, 2011. The University believes it has complied with the limitation on capital additions in both years.

The balance outstanding for the bonds described above at June 30 is as follows:

2016 2015 University Revenue Bond Series B$ 58,975,000 $ 60,225,000 Less: Underwriter's bond discount (614,956) (645,449) $ 58,360,044 $ 59,579,551

Amortization expense of debt issue costs related to the above debt for each of the years ended June 30, 2016 and 2015 was $ 16,931. Amortization of the underwriter’s bond discount to interest expense for each of the years ended June 30, 2016 and 2015 was $ 30,494.

Bond principal payments due for the next five years and thereafter are as follows for the years ended June 30:

2017$ 1,325,000 2018 1,405,000 2019 1,495,000 2020 1,585,000 2021 1,685,000 Thereafter (2022 ‐ 2037) 51,480,000 $ 58,975,000

| 12 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 4 BONDS AND NOTES PAYABLE (CONTINUED) Notes Payable First National Bank (Formerly Metro Bank) The balance of the First National Bank SLOC described above was $ 1,500,695 at June 30, 2012. The University has no further ability to borrow on this SLOC. Under the amended terms of this loan agreement, effective April 2013, the University will make payment of interest only through September 1, 2015. Beginning on October 1, 2015, the University is scheduled to begin monthly payments of principal and interest in the amount of $ 67,661 . A final payment equal to all outstanding principal, interest, and other unpaid amounts shall be made on or before June 1, 2017. The outstanding balance is $ 1,100,000 and $ 1,345,641 at June 30, 2016 and 2015, respectively, and the interest rate is fixed at 6%. County of Dauphin During the years ended June 30, 2010 and 2011, the University borrowed $ 1,000,000 and $ 1,200,000, respectively, from the County of Dauphin, Pennsylvania. On February 29, 2012, the University borrowed $ 1.5 million from the County of Dauphin under the County Guarantee described above under "bonds payable". At that time, the University and the County of Dauphin entered into a promissory note for the entire $ 3.7 million at an interest rate of 0.5% and due date of December 29, 2019. On February 28, 2013, the University borrowed an additional $ 1.5 from the County of Dauphin under the County Guarantee. At that time, the University and the County of Dauphin entered into a promissory note for the entire $ 5.2 million at an interest rate of 0.5%. During the year ended June 30, 2014, the County forgave the $ 1.5 million borrowed on February 28, 2013, reducing the outstanding loan balance to $ 3.7 million at June 30, 2014. A $ 45,000 principal payment was made during 2015. The balance payable is $ 3,655,000 at June 30, 2016 and 2015. On February 26, 2016, the County advanced $ 994,755 to the University under the guarantee agreement. The County considers the 2014 debt forgiveness and the 2014‐2016 advances to be grants to HU and therefore does not expect repayment (see Note 7). The schedule below summarizes the activity with the County of Dauphin under the guarantee agreement and other borrowings:

Year Ended Guarantee Guarantee Other June 30 Loan Grant Loan Description 2010$ ‐ $ ‐ $ 1,000,000 Borrowing 2011 ‐ ‐ 1,200,000 Borrowing 2012 1,500,000 ‐ ‐ Borrowing 2013 1,500,000 ‐ ‐ Borrowing 2014 (1,500,000) 1,500,000 ‐ Debt Forgiveness 2014 ‐ 1,500,000 ‐ Grant 2015 ‐ 1,500,000 ‐ Grant 2015 (45,000) ‐ ‐ Principal Payment 2016 ‐ 994,755 ‐ Grant Cumulative Amount $ 1,455,000 $ 5,494,755 $ 2,200,000 (A)

(A) Under the terms of a promissory note dated February 28, 2013, the $ 3,655,000 owed to Dauphin County at June 30, 2016 and 2015 is at an interest rate of 0.5%, with repayment of both principal and interest due on December 29, 2019.

| 13 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 4 BONDS AND NOTES PAYABLE (CONTINUED) Notes Payable (Continued) Fulton Bank The University has a $ 500,000 line of credit with Fulton Bank, N.A. The terms have been amended and restated at various times, with the most recent amendment on July 31, 2015 setting the terms of the Promissory Note at an interest rate equal to the Fulton Bank Prime Rate plus 1.5%, with a floor of no less than 6.00%. This note functions as a revolving line of credit in the maximum amount of $ 500,000. Interest payments shall be due monthly and the outstanding principal, together with any interest due, shall be payable on December 31, 2015. This note had an outstanding balance of $ 449,834 at June 30, 2015 and was paid in full as of June 30, 2016. On April 15, 2014, the University borrowed an additional $ 200,000 on a separate time note due July 15, 2014 at an interest rate equal to Fulton Bank Prime plus 1.5%, with a floor of no less than 5.50%. This $ 200,000 note was paid in full during the year ended June 30, 2015. Individuals

The University has entered into several promissory notes with University donors. Interest on these notes accrues at 4.25%, and principal and interest is payable on demand each year on December 31, provided that the lender notifies the University prior to November 1 of its election to call the outstanding note. The balance remaining on these notes at June 30, 2016 and 2015, respectively, was $ 200,000 and $ 635,000. Individual loans forgiven during the years ended June 30, 2016 and 2015 amounted to $ 435,000 ($ 385,000 from a related party) and $ 0, respectively, and are reflected as contribution income.

On August 27, 2014, the University entered into an agreement with the building owner of the student housing units leased by the University to transfer furniture and building improvements owned by the University and to agree to pay $ 550,000 in the form of a non‐ interest bearing promissory note over a period of 24 monthly payments to the building owner beginning on September 10, 2014, in exchange for accounts payable. The outstanding balance on this note at June 30, 2015 was $ 274,000. The loan was paid in full at June 30, 2016.

Harrisburg Parking Authority

As part of the sales agreement to transfer the parking facility to HPA (Note 3), the University entered into a promissory note with HPA dated December 23, 2013 for $ 500,000. The note bears interest at 6% and principal and interest are not due until all debt to the bondholders, First National Bank, and the County of Dauphin are repaid.

| 14 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 4 BONDS AND NOTES PAYABLE (CONTINUED) Notes Payable (Continued) Note principal payments due for the next five (5) years and thereafter are as follows at June 30, 2016:

Harrisburg First National County of Parking Bank Dauphin Individuals Authority Total 2017 $ 1,100,000 $ ‐ $ 200,000 $ ‐ $ 1,300,000 2018 ‐ ‐ ‐ ‐ ‐ 2019 ‐ ‐ ‐ ‐ ‐ 2020 ‐ 3,655,000 ‐ ‐ 3,655,000 2021 ‐ ‐ ‐ ‐ ‐ Thereafter ‐‐ ‐ 500,000 500,000 $ 1,100,000 $ 3,655,000 $ 200,000 $ 500,000 $ 5,455,000

Outstanding notes payable at June 30, 2015 was as follows:

First National Bank $ 1,345,641 County of Dauphin 3,655,000 Fulton Bank 449,834 Individuals 909,000 Harrisburg Parking Authority 500,000 $ 6,859,475

Total interest expense on all debt was $ 3,771,767 and $ 3,800,069 for the years ended June 30, 2016 and 2015, respectively.

NOTE 5 RESTRICTED NET ASSETS

The nature of temporarily restricted net assets at June 30 was as follows:

2016 2015 Contributions receivable to be used for: Various operating expenses$ 500,356 $ 192,463 Grants receivable to be used for: Various operating expenses ‐ 184,190 $ 500,356 $ 376,653

| 15 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 6 ASSETS RELEASED FROM RESTRICTIONS

Net assets released from restrictions consist of the following for the years ended June 30, 2016 and 2015:

2016 2015 Time and Purpose restrictions accomplished National Science Foundation ‐ grant related expenses $ 505,878 $ 1,299,306 State Grant ‐ IAG 106,396 77,536 County of Dauphin grant 994,755 1,500,000 Other state and federal grants 1,468,910 1,171,063 Collections of outstanding pledges and contributions utilized for donor purpose 248,093 490,556 $ 3,324,032 $ 4,538,461

NOTE 7 GOVERNMENT GRANTS

In 2008, the University was approved for a $ 25 million Redevelopment Assistance Capital Program (RACP) reimbursement grant funded through the Commonwealth of Pennsylvania Office of Budget. In 2010, the University received approval for an additional $1.25 million grant. These funds, along with $ 1.4 million remaining from a prior $ 12 million RACP grant, a $ 5.0 million RACP grant approved in July 2011, and a $ 6.0 million RACP grant approved in September 2011 brought the total RACP funding for the combined Harrisburg University and Harrisburg Sci‐Tech High project to $ 49.25 million. There was no revenue from this grant in the years ended June 30, 2016 and 2015. Cumulative revenue recognized from the RACP grants applicable to this project was $ 46,133,988, leaving a balance of $ 2,807,262 in RACP grant funding available to be recognized in future periods, contingent upon meeting various matching requirements. On February 26, 2016, the County advanced $ 994,755 to HU under the County Guarantee agreement as described in the “Notes Payable” section of Note 4. On February 26, 2015, the County also advanced $ 1.5 million to HU under the terms of the same agreement. The County considers these advances to be grants to the University. The University is the recipient of multi‐year grants from the National Science Foundation that provide funding for the Science Education for New Civic Engagements and Responsibilities (SENCER) Project. Revenue of $ 425,536 at June 30, 2016 was recognized under this grant for the year ended June 30, 2016. Revenue of $ 1,285,156, including a $ 55,983 grant receivable at June 30, 2015, was recognized under this grant for the year ended June 30, 2015. This grant was significantly reduced during 2016. For both fiscal years 2016 and 2015, the University was awarded a $ 1,000,000 Job Training and Education Programs Grant from the Commonwealth of Pennsylvania. A grant receivable of $ 1,000,000 was recognized at June 30, 2016 since the proceeds were not received until July 2016. The fiscal year 2015 grant was received before year end. The University is the recipient of various other federal and state government grants. Revenue from these grants in the amounts of $ 471,459 , including $ 226,078 in grants receivable at June 30, 2016, was recognized for the year ended June 30, 2016. Revenue of $ 345,090, including grants receivable of $ 132,036 at June 30, 2015, was recognized for the year ended June 30, 2015.

| 16 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 8 SUMMARY OF EXPENSES

Expenses by natural classification for the years ended June 30 were as follows:

2016 2015 Salaries and wages$ 9,525,251 $ 6,174,342 Payroll taxes 582,815 415,506 Employee benefits 946,275 716,490 Travel 244,777 546,496 Supplies and other 468,951 879,077 Technology 499,089 379,790 Marketing 1,055,963 340,693 Facility management 995,546 836,698 Administration 9,375,501 6,742,348 Interest 3,771,767 3,800,069 Depreciation and amortization 1,861,638 1,959,257 $ 29,327,573 $ 22,790,766

Fundraising expenses totaled approximately $ 1,004,908 and $ 452,624 for the years ended June 30, 2016 and 2015, respectively.

NOTE 9 OPERATING LEASES

Total rents paid under operating leases for facilities and equipment were $ 92,501 and $ 52,938 for the years ended June 30, 2016 and 2015, respectively. See Note 10 for related party rent expense.

The University has several long‐term leases with a related party for office space at June 30, 2016. The leases run for five (5) years and have one (1) year renewal options. The University also has a 39 month lease agreement for the use of copiers. Future lease commitments under these leases are as follows at June 30, 2016:

Year ended June 30 2017$ 87,958 2018 89,681 2019 81,288 2020 62,781 2021 23,973 $ 345,681

| 17 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 10 RELATED PARTY TRANSACTIONS

The University received private gifts and contributions from members of its Board of Directors totaling $ 592,778 and $ 336,739 during 2016 and 2015, respectively. Total net contributions receivable from members of the Board at June 30, 2016 and 2015 were $ 31,126 and $ 89,192, respectively.

A board member is President and CEO of the company that provides health insurance to University employees beginning in fiscal year 2016. The University paid $ 290,464 to this company for health insurance during 2016.

A board member owns a firm that contracts with the University to provide government relations services. The University paid $ 48,000 and $ 26,000 to this firm during 2016 and 2015, respectively.

A board member owns a building in which the University has a five year lease for two floors of office space, which began in fiscal year 2016. The University paid $ 32,100 in rental payments under the terms of this lease during 2016.

A board member is the President and CEO of a non‐profit organization that provide janitorial and security services to the University. The University paid $ 42,832 and $ 42,829 for these services during 2016 and 2015, respectively.

NOTE 11 FAIR VALUE MEASUREMENTS

Generally accepted accounting principles define fair value, describe a framework for measuring fair value, and require disclosure about fair value measurements. The established framework includes a three‐level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded and reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy and those investments included in each are as follows:

Level 1 – Represented by quoted prices available in an active market. Level 1 securities include highly liquid government bonds, treasury securities, mortgage products and exchange traded equities and mutual funds.

Level 2 – Represented by assets and liabilities similar to Level 1 where quoted prices are not available, but are observable, either directly or indirectly through corroboration with observable market data, such as quoted prices for similar securities and quoted prices in inactive markets and estimated using pricing models or discounted cash flows. Level 2 securities would include U.S. agency securities, mortgage‐backed agency securities, obligations of states, and political subdivisions and certain corporate, asset backed securities, swap agreements, and life insurance contracts, as well as money market funds and mutual funds quoted at net asset value of the underlying securities.

| 18 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 11 FAIR VALUE MEASUREMENTS (CONTINUED)

Level 3 – Represented by financial instruments where there is limited activity or unobservable market prices and pricing models significant to determining the fair value measurement include the reporting entity’s own assumptions about the market risk. Level 3 securities would include hedge funds, private equity securities, and those with internally developed values. Contributions receivable are carried at fair value due to discounting to present value and classified as Level 3 based on the unobservable inputs related to the allowance for uncollectible contributions.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The following is a description of the valuation methodologies used for instruments measured at fair value on the University's statement of financial position, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Federated Institutional Prime Obligation Fund (Bond Reserve Fund)

This fund is a money market account that invests primarily in short‐term, high quality, fixed income securities issued by banks, corporations and the U.S. Government. It pursues current income consistent with stability of principle. This fund is classified within Level 2 of the valuation hierarchy.

Contributions Receivable

Contributions receivable are valued at the initial pledge amount committed by the donor discounted to their present value less any allowance for uncollectible contributions as determined by management based upon management’s analysis of specific promises made and prior collection history. Such receivables are classified within Level 3 of the valuation hierarchy. The most significant unobservable input used in the measurement of fair value for contributions receivable is the determination of the allowance for uncollectible contributions.

The following table sets forth by level within the fair value hierarchy, the University's financial assets that were accounted for at fair value on a recurring basis as of June 30, 2016 and 2015:

Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) 2016 Contributions receivable$ 500,356 $ ‐ $ ‐ $ 500,356 Money Market Fund 8,059,333 ‐ 8,059,333 ‐

Total$ 8,559,689 $ ‐ $ 8,059,333 $ 500,356

2015 Contributions receivable$ 192,463 $ ‐ $ ‐ $ 192,463 Money Market Fund 5,220,993 ‐ 5,220,993 ‐

Total$ 5,413,456 $ ‐ $ 5,220,993 $ 192,463

| 19 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 11 FAIR VALUE MEASUREMENTS (CONTINUED)

Contributions Receivable (Continued)

The changes in assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 inputs) are as follows for the years ended June 30:

2016 2015 Fair Value as of July 1 $ 192,463 $ 214,125 Total gains or losses included in change in net assets Contribution revenue from pledges 510,000 110,000 Change in discount on unconditional promises to give (7,041) (1,217) Bad debts from promises to give and change in allowance (4,000) (68,937) Contributions collected (191,066) (61,508) Fair Value as of June 30 $ 500,356 $ 192,463

The University had no liabilities subject to fair value reporting requirements at June 30, 2016 and 2015.

NOTE 12 COMMITMENTS AND CONTINGENCIES

Memorandum of Understanding

A memorandum of understanding (MOU) with the Harrisburg School District was executed on October 12, 2006 under which the University agrees to provide fully funded scholarships to each graduate of the SciTech High program attending the University, as long as the graduates agree to remain Harrisburg residents for five years after graduation from the University and attain sufficient academic grades as identified in the agreement.

Contractual Commitment

The University has a Marketing and Recruiting Agreement with a management company under which the University pays a fee to assist in marketing and recruiting international graduate students. The liability is not fixed until the "Census Date" of the term enrolled. As a result, the University incurred a liability in the amount of $ 1,731,240 on July 5, 2016. Since there was no liability to the University until the "Census Date", this expense will be recorded in the year ended June 30, 2017.

Construction Contracts

As of June 30, 2016, the University had a commitment for professional services related to the fit‐out of the 10th and 11th floors as follows (See Note 12 for subsequent event):

Total Estimated Total Costs Total Costs Costs Incurred to be Incurred 10th & 11th floor fit‐out Professional services$ 426,502 $ 218,764 $ 207,738

| 20 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 12 COMMITMENTS AND CONTINGENCIES (CONTINUED)

Financial Responsibility

34 CFR §668 addresses the requirements for the University to be considered "financially responsible" in order to continue to participate in Title IV Federal Student Aid.

Based on communication to the University from the Department of Education dated July 31, 2013 and the University’s response to that communication dated August 12, 2013, the University began operating under the “Provisional Certification Alternative” option of the Financial Responsibility regulations as defined at 34 CFR §668.175(f). By agreeing to this option, the University acknowledged that it had not met the Department’s standard of financial responsibility for the fiscal year ended June 30, 2012. As a condition of the Provisional Certification Alternative, the University obtained a letter of credit in the amount of $ 282,500 payable to the U.S. Department of Education issued on October 11, 2013 and expiring on October 11, 2014.

Based on subsequent communications to the University from the Department of Education and the University’s responses to those communications, the University continues to operate under the “Provisional Certification Alternative” option of the Financial Responsibility regulations as defined at 34 CFR §668.175(f). By agreeing to this option, the University acknowledged that it had not met the Department’s standard of financial responsibility for the fiscal years ended June 30, 2013, June 30, 2014, or June 30, 2015. As a condition of the Provisional Certification Alternative, the University obtained annual amendments to the letter of credit. The most recent amendment was issued on June 30, 2016 in the amount of $ 387,000 payable to the U.S. Department of Education and expiring on June 30, 2017.

An institution may be provisionally certified for a period up to three complete award years. Continued participation in Title IV Federal Student Aid is subject to ongoing approval by the U. S. Department of Education. The University was notified in July 2016 that its certification was extended for an additional three year period ending June 30, 2019.

Accreditation

The University is accredited by the Middle States Commission on Higher Education. The University was notified by letter from the Commission dated June 27, 2014 that the University has been placed on probation by the Commission because of insufficient evidence that the University is currently in compliance with its “Institutional Resources” and “Assessment of Student Learning” standards. The University submitted a monitoring report addressing the issues described in the letter to the Commission on March 27, 2015. The institution remained accredited while on probation. Probation ended March 3, 2016.

| 21 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Financial Statements Years Ended June 30, 2016 and 2015

NOTE 13 SUBSEQUENT EVENTS

The University has evaluated events and transactions subsequent to June 30, 2016 through November 10, 2016, the date these financial statements were available to be issued. Based on the definitions and requirements of generally accepted accounting principles, management has identified several events that have occurred subsequent to June 30, 2016 and through November 10, 2016 which require recognition or disclosure in the financial statements.

On July 12, 2016, the University entered into a contract with Reynolds Construction, LLC for the fit‐out of the 10th and 11th floors of the Academic Center located at 326 Market Street in Harrisburg, Pennsylvania. This contract has a guaranteed maximum price of $ 3,721,334. The University estimates that an additional $ 770,000 will be incurred related to audio visual components and furniture and fixtures. This space will include over 30 offices, classrooms, a computer lab, a science lab, maker space, a studio, and a large assembly hall. Construction is planned to be substantially complete by December 23, 2016.

On October 13, 2016, the University transferred $1,775,000 to the Bond Trustee to completely fund the March 1, 2017 bond interest payment.

| 22 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Schedule of Expenditures of Federal Awards Year Ended June 30, 2016

Total Passed‐ Federal Revenue/ Through to CFDA Grant Period Expenditures Subrecipients U.S. Department of Education Student Financial Assistance Cluster Federal Supplemental Educational Opportunity Grants 84.007 07/01/15 – 06/30/16$ 14,975 $ ‐ Federal Work Study 84.033 07/01/15 – 06/30/16 13,749 ‐ Pell Grant Program 84.063 07/01/15 – 06/30/16 930,629 ‐ Federal Direct Student Loans 84.268 07/01/15 – 06/30/16 3,107,63 ‐6 Total Student Financial Assistance Cluster ‐ 4,066,989

Supporting Effective Instuction State Grant (subrecipient from Drexel University ‐ subcontract #238114) 84.367 10/1/15 ‐ 9/30/16 ‐ 9,680 Total Department of Education ‐ 4,076,669

National Science Foundation Engaging Mathematics 47.076 09/01/13 ‐ 11/30/15 47,397 ‐ Informal Science Education Program 47.076 09/01/15 ‐ 11/30/15 112,307 8,692 Innovative Corps 47.076 06/01/15 ‐ 05/31/16 24,359 ‐ Course Curriculum and Laboratory Improvement Program 47.076 07/01/15 ‐ 11/30/15 7,743265,832 Total National Science Foundation 449,895 16,435

Total Federal Assistance $ 4,526,564 $ 16,435

See accompanying notes to Schedule of Expenditures of Federal Awards.

| 23 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2016

NOTE 1 GENERAL

The accompanying schedule of federal awards presents the expenditures of federal awards programs of Harrisburg University of Science and Technology (the University). The University is described in Note 1 to the University’s financial statements.

NOTE 2 BASIS OF ACCOUNTING/INDIRECT COST RATE

The accompanying schedule of federal awards is presented using the accrual basis of accounting, which is described in Note 1 to the University’s financial statements. The University has elected to use the 10% de minimus indirect cost rate for its federal programs.

NOTE 3 RELATIONSHIP TO FINANCIAL STATEMENTS

Amounts reported in the accompanying schedule agree with amounts included in the University’s financial statements in all material respects.

NOTE 4 FEDERAL DIRECT STUDENT LOANS

The University is only responsible for the performance of certain administrative duties and is not considered the lender with respect to the student loan programs, and accordingly, these loans are not included in its financial statements and it is not practical to determine the balance of loans outstanding to students and former students of the University under these programs. The amount reported on the Schedule of Expenditures of Federal Awards represents new loan advances during the year.

NOTE 5 FINANCIAL RESPONSIBILITY

The University’s Equity, Primary Reserve, and Net Income ratios for the year ended June 30, 2016 yield a composite score of 1.9 out of a possible 3.0 as described in 34 C.F.R. §668.172, Financial Ratios. Accordingly, the University achieved the minimum score of 1.5 and meets the requirement of the financial standards for this period. As a result of composite scores less than 1.5 for the three most recent prior fiscal years, the University has been subject to “zone alternative” disbursement requirements . The “zone alternative” is only available if the composite score is in the range from 1.0 to 1.4. As noted in Note 11 to the financial statements, the University is operating under the “Provisional Certification Alternative” option under the Financial Responsibility Regulations as defined at 34 CFR §668.175(f).

In addition, as noted in Note 4 to the financial statements, the University was not in compliance with the "liquidity" debt covenant at June 30, 2016 or June 30, 2015. 34 CFR §668.171 indicates that "an institution is not current in its debt payments if it is in violation of any existing loan agreement at its fiscal year end, as disclosed in a note to its audited financial statements".

The University is required to notify the School Participation Division of the U.S. Department of Education upon the occurrence of any predetermined oversight or financial events. This notification must include details of the circumstances surrounding the event(s) and the steps taken or planned to resolve the issue. The University has made the required notifications to the Department regarding its covenant noncompliance, and continues to work with the Department to assure that the University continues to be eligible to participate in the Title IV Student Assistance Program.

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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Trustees Harrisburg University of Science and Technology Harrisburg, Pennsylvania

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Harrisburg University of Science and Technology, which comprise the statement of financial position as of June 30, 2016, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements, and have issued our report thereon dated November 10, 2016.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In planning and performing our audit of the financial statements, we considered Harrisburg University of Science and Technology’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Harrisburg University of Science and Technology's internal control. Accordingly, we do not express an opinion on the effectiveness of Harrisburg University of Science and Technology’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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COMPLIANCE AND OTHER MATTERS

As part of obtaining reasonable assurance about whether Harrisburg University of Science and Technology’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

PURPOSE OF THIS REPORT

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Harrisburg University of Science and Technology’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Harrisburg University of Science and Technology’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Chambersburg, Pennsylvania November 10, 2016

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INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Board of Trustees Harrisburg University of Science and Technology Harrisburg, Pennsylvania

REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM

We have audited Harrisburg University of Science and Technology’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Harrisburg University of Science and Technology’s major federal programs for the year ended June 30, 2016. Harrisburg University of Science and Technology’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Harrisburg University of Science and Technology’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Harrisburg University of Science and Technology’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Harrisburg University of Science and Technology’s compliance.

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Basis for Qualified Opinion on Title IV Student Financial Assistance Programs

As described in item 2016‐001 in the accompanying schedule of findings and questioned costs, Harrisburg University of Science and Technology did not comply with requirements regarding financial responsibility that are applicable to its Title IV Student Financial Assistance Programs. Compliance with such requirements is necessary, in our opinion, for Harrisburg University of Science and Technology to comply with the requirements applicable to that program.

Qualified Opinion on Title IV Student Financial Assistance Programs

In our opinion, except for the noncompliance described in the “Basis for Qualified Opinion” paragraph, Harrisburg University of Science and Technology complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on Title IV Student Financial Assistance Programs for the year ended June 30, 2016.

REPORT ON INTERNAL CONTROL OVER COMPLIANCE Management of Harrisburg University of Science and Technology is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Harrisburg University of Science and Technology’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of Harrisburg University of Science and Technology’s internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Harrisburg University of Science and Technology's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Chambersburg, Pennsylvania November 10, 2016

| 29 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Schedule of Findings and Questioned Costs June 30, 2016

Section I ‐ Summary of Auditor’s Results

Financial Statements

Type of auditor's report issued: Unmodified

Internal control over financial reporting:

 Material weakness identified:  Yes ⊠ No  Significant deficiencies identified that are not considered to be material weakness(es)?  Yes ⊠ None Reported

Noncompliance material to financial statements noted?  Yes ⊠ No

Federal Awards

Internal control over major programs:

 Material weakness identified?  Yes ⊠ No  Significant deficiencies identified that are not considered to be a material weakness(es)?  Yes ⊠ None Reported

Type of auditor's report issued on compliance for the major programs: Qualified

 Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? ⊠ Yes  No

Identification of the major programs:

CFDA Number(s) Name of Federal Program Title IV Student Financial Assistance Cluster 84.007 FSEOG Program 84.033 Federal Work Study Program 84.063 Pell Grant Program 84.268 Federal Direct Student Loans

Dollar threshold used to distinguish between type A and type B programs $ 750,000

Auditee qualified as low‐risk auditee?  Yes ⊠ No

| 30 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Schedule of Findings and Questioned Costs (Continued) June 30, 2016

Section II ‐ Financial Statement Findings

A. Material Weakness in Internal Control

There were no findings relating to internal control over financial reporting.

B. Compliance Findings

There were no compliance findings relating to the financial statement audit required to be reported. Section III – Federal Award Findings and Questioned Costs

A. Material Weakness in Internal Control Over Compliance None Noted B. Compliance Finding Finding 2016‐001:

CFDA No.: 84.007, 84.033, 84.063, 84.268 Federal Award No.: 039483; G39483; 008968 Name of Federal Agency: U. S. Department of Education Program Title: Student Financial Assistance Cluster Federal Award Year: 7/1/15 ‐ 6/30/16

Criteria: A general standard under Section 668.171 of the Code of Federal Regulations (CFR) is that the institution must remain current in its debt payments. Section 668.171(b)(3)(i) states that an “institution is not current in its debt payments if it is in violation of any existing loan agreement at its fiscal year end, as disclosed in a note to its audited financial statements”.

Condition: As disclosed in Note 4 to the financial statements, the University is not in compliance with the Liquidity Covenant for Bonds Payable for the year ended June 30, 2016. As a result, the University is not considered to be current in its debt payments.

Cause: The University had significant decreases in its net assets from inception through June 30, 2014, resulting in a negative balance of net assets of $ 5.1 million at June 30, 2014. Consequently, despite increases in net assets of $ 1.6 million in fiscal year 2015 and $ 11.5 million in fiscal year 2016, the University has not been able to meet its liquidity covenant.

Effect: The University has been in contact with the Department of Education to make the Department aware of this issue and will need to continue to work with the Department to assure that the University remains eligible to participate in the Title IV Student Assistance Program.

| 31 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Schedule of Findings and Questioned Costs (Continued) June 30, 2016

Section III – Federal Award Findings and Questioned Costs (Continued)

Effect (Continued): The University was notified in July 2013 that it would be provisionally certified for a period up to three complete years, requiring the University to comply with the requirements of the Provisional Certification Alternative as described in 34 CFR §668.175(d). This certification was extended in July 2016 for an additional three year period expiring June 30, 2019. This includes posting a letter of credit payable to the U.S. Department of Education in the amount of $ 282,500, which was done on October 11, 2013. On March 25, 2015 the letter of credit was amended to $ 333,000. The most recent amendment was issued on June 30, 2016 in the amount of $ 387,000 payable to the U.S. Department of Education and expiring on June 30, 2017.

Questioned Costs: There are no questioned costs as a result of this finding.

Perspective Information: The noncompliance with the liquidity covenant has been an issue for over five (5) years and will not be resolved until net assets increase to a level that "expendable funds" are 25% of outstanding debt. At June 30, 2016, this was only 7.2% based on the debt covenants from Harrisburg Authority.

Repeat Finding: This is a repeat finding initiated in the year ended June 30, 2011 as Finding 2011‐1.

Views of Responsible Officials: The University’s composite score and bond related debt covenant ratios continue to improve. Based on the results for fiscal year 2015‐ 2016, the University met the composite score requirement. The University will continue to work with the bond holders to satisfy the bond related covenants. The audited financial statements will be submitted to the Department of Education as soon as they are available. Once reviewed, the Department of Education will provide HU with guidance relating to the University's participation in the Title IV program. Harrisburg University understands the rules surrounding the regulation and will comply with the Department's determination.

| 32 HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Summary Schedule of Prior Audit Findings June 30, 2016

Finding 2015‐001

Condition: The University did not comply with minimum standards of financial responsibility as defined in CFR 668.171 to maintain a minimum composite score of at least 1.5 out of a possible 3.0 for the combination of Equity, Primary Reserve, and Net Income ratios. The University’s score for the year ended June 30, 2015 was 0.1.

In addition, the University did not comply with the general standard under Section 668.171 that the institution remains current in its debt payments due to noncompliance with the Liquidity Covenant for its Bonds Payable. All debt payments were current as of June 30, 2015, however the University was out of compliance with the Liquidity Covenant for its Bonds Payable.

Status: For the year ended June 30, 2016, the composite score index was 1.9. All debt payments are current as of June 30, 2016. However, the University remains out of compliance with the Liquidity Covenant for its Bonds Payable (see Finding 2016‐001). This finding has been repeated every year since it was initially reported as Finding 2011‐1.

| 33 [ THIS PAGE INTENTIONALLY LEFT BLANK ] APPENDIX C

FORM OF INDENTURE [ THIS PAGE INTENTIONALLY LEFT BLANK ]

APPENDIX C FORM OF INDENTURE

DAUPHIN COUNTY GENERAL AUTHORITY

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. AS TRUSTEE

TRUST INDENTURE Dated as of July 1, 2017

Securing

$______

DAUPHIN COUNTY GENERAL AUTHORITY University Revenue Bonds Series of 2017 (The Harrisburg University of Science and Technology Project)

McNees Wallace & Nurick LLC 100 Pine Street Harrisburg, PA 17101 Bond Counsel

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Table of Contents

Page

ARTICLE I DEFINITIONS ...... 8 Section 1.1 Use of Terms in Loan Agreement ...... 8 Section 1.2 Definitions ...... 8 Section 1.3 Interpretation; Time of Day ...... 14 Section 1.4 Captions, Headings and Table of Contents ...... 14 ARTICLE II AUTHORIZATION AND TERMS OF BONDS ...... 15 Section 2.1 Amount, Form and Issuance of 2017 Bonds ...... 15 Section 2.2 Designation, Denominations, Interest Rates, Maturity and Dated Dates ...... 15 Section 2.3 Execution and Authentication of Bonds ...... 16 Section 2.4 Source of Payment of the Bonds ...... 16 Section 2.5 Registration, Transfer and Exchange of Bonds ...... 16 Section 2.6 Mutilated, Lost, Wrongfully Taken or Destroyed Bonds ...... 17 Section 2.7 Cancellation of Bonds ...... 18 Section 2.8 Payment of Principal and Interest ...... 18 Section 2.9 Persons Deemed Owners ...... 18 Section 2.10 Book Entry System for the Bonds ...... 19 Section 2.11 Issuance of Additional Bonds ...... 20 Section 2.12 Disposition of Proceeds of Additional Bonds ...... 21 Section 2.13 Issuance of Bonds for Other Projects ...... 21 ARTICLE III REDEMPTION OF BONDS ...... 21 Section 3.1 Terms of Redemption ...... 21 Section 3.2 Partial Redemption ...... 22 Section 3.3 Authority’s Election to Redeem ...... 23 Section 3.4 Notice of Redemption ...... 23 Section 3.5 Payment of Redeemed Bonds ...... 24 ARTICLE IV INDENTURE FUNDS ...... 24 Section 4.1 Establishment of Project Fund; Application of 2017 Bond Proceeds ...... 24 Section 4.2 Debt Service Fund ...... 25 Section 4.3 Debt Service Reserve Fund ...... 26 Section 4.4 Investment of Project Fund, Debt Service Fund, Debt Service Reserve Fund and Rebate Fund...... 27 Section 4.5 Debt Service Fund Moneys to be Held in Trust ...... 28 Section 4.6 Nonpresentment of Bonds ...... 28

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Section 4.7 Creation of Rebate Fund ...... 29 ARTICLE V COVENANTS AND REPRESENTATIONS OF AUTHORITY ...... 30 Section 5.1 Corporate Existence; Compliance with Laws ...... 30 Section 5.2 Payment of Debt Service ...... 30 Section 5.3 No Further Assignment of Pledged Revenues ...... 30 Section 5.4 Rights and Enforcement of Loan Agreement ...... 30 Section 5.5 Further Assurances ...... 30 Section 5.6 Authority Not to Adversely Affect Tax-Exempt Status ...... 30 Section 5.7 Bonds Not to Become Arbitrage Bonds ...... 30 Section 5.8 Observance and Performance Agreements ...... 31 Section 5.9 Representations and Warranties ...... 31 ARTICLE VI DEFAULT AND REMEDIES ...... 31 Section 6.1 Defaults; Events of Default ...... 31 Section 6.2 Notice of Default ...... 32 Section 6.3 Acceleration ...... 32 Section 6.4 Other Remedies; Rights of Registered Owners ...... 33 Section 6.5 Right of Registered Owners to Direct Proceedings ...... 34 Section 6.6 Application of Moneys ...... 34 Section 6.7 Remedies Vested in Trustee ...... 35 Section 6.8 Rights and Remedies of Registered Owners ...... 35 Section 6.9 Termination of Proceedings ...... 36 Section 6.10 Waivers of Events of Default ...... 36 Section 6.11 Certain Rights of Authority ...... 36 Section 6.12 Trustee’s Right to Appointment of Receiver ...... 36 Section 6.13 Trustee and Registered Owners Entitled to All Benefits Under Act ...... 36 ARTICLE VII TRUSTEE ...... 37 Section 7.1 Trustee’s Acceptance and Responsibilities ...... 37 Section 7.2 Certain Rights and Obligations of Trustee ...... 38 Section 7.3 Fees, Charges and Expenses of Trustee ...... 42 Section 7.4 Intervention by Trustee ...... 42 Section 7.5 Successor Trustee ...... 43 Section 7.6 Resignation by Trustee ...... 43 Section 7.7 Removal of Trustee ...... 43 Section 7.8 Appointment of Successor Trustee ...... 43 Section 7.9 Adoption of Authentication ...... 44 Section 7.10 Designation and Succession of Authenticating Agent, Registrar, Transfer Agent and Paying Agent ...... 44

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Section 7.11 Dealing in Bonds ...... 45 Section 7.12 Representations, Agreements and Covenants of Trustee ...... 45 ARTICLE VIII SUPPLEMENTS AND AMENDMENTS ...... 45 Section 8.1 Supplemental Indentures Not Requiring Consent of Registered Owners ...... 45 Section 8.2 Indentures Requiring Consent of Registered Owners ...... 47 Section 8.3 Consent of University ...... 47 Section 8.4 Authorization to Trustee; Effect of Supplement ...... 47 Section 8.5 Modification by Unanimous Consent ...... 47 Section 8.6 Amendment of Loan Agreement ...... 47 Section 8.7 Trustee Authorized to Join in Supplements and Amendments; Reliance on Counsel .... 48 Section 8.8 Notice to Rating Services ...... 48 ARTICLE IX DEFEASANCE...... 48 Section 9.1 Defeasance ...... 48 Section 9.2 Provision for Payment ...... 48 Section 9.3 Deposit of Funds for Payment of Bonds ...... 49 Section 9.4 Survival of Certain Provisions ...... 49 ARTICLE X MISCELLANEOUS...... 50 Section 10.1 Limitation of Rights; No Personal Recourse ...... 50 Section 10.2 Severability ...... 50 Section 10.3 Notices ...... 50 Section 10.4 Suspension of Mail ...... 51 Section 10.5 Payments Due on Days Not Business Days ...... 51 Section 10.6 Binding Effect ...... 52 Section 10.7 Counterparts ...... 52 Section 10.8 Governing Law ...... 52

EXHIBIT A – FORM OF 2017 BOND

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TRUST INDENTURE

THIS TRUST INDENTURE dated as of July 1, 2017 (the “Indenture”) entered into by and between DAUPHIN COUNTY GENERAL AUTHORITY, a body corporate and politic organized and existing under the laws of the Commonwealth of Pennsylvania (the “Authority”), and The Bank of New York Mellon Trust Company, N.A., a national banking association, as trustee (the “Trustee”),

WITNESSETH:

WHEREAS, the Authority is a body corporate and politic organized under provisions of the Pennsylvania Municipality Authorities Act (Ch. 56, 53 Pa. Cons. Stat. §§56015622), as amended (the “Act”); and

WHEREAS, The Harrisburg University of Science and Technology (the “University”) is a nonprofit corporation organized under the laws of the Commonwealth of Pennsylvania (the “Commonwealth”); and

WHEREAS, the University owns and operates certain University facilities located at 326 Market Street, City of Harrisburg, Dauphin County, Pennsylvania, which comprise a condominium unit in the Condominium under the Declaration (the “University Facility”); and

WHEREAS, under and pursuant to a Trust Indenture dated as of January 1, 2007 (the “2007 Indenture”), Capitol Region Water, successor in interest to The Harrisburg Authority, issued its University Revenue Bonds, Series of 2007 (The Harrisburg University of Science and Technology Project) in the aggregate principal amount of $87,915,000, comprised of its University Revenue Bonds, Series A of 2007 (The Harrisburg University of Science and Technology Project) in the aggregate principal amount of $27,690,000 (the “2007A Bonds”) and its University Revenue Bonds, Series B of 2007 (The Harrisburg University of Science and Technology Project) in the aggregate principal amount of $60,225,000 (the “2007B Bonds”), the proceeds of which financed, inter alia, the construction, development, equipping and improvement of the University Facility. The 2007A Bonds have been paid and are no longer outstanding under the 2007 Indenture; and

WHEREAS, the Authority is authorized by the Act to finance buildings and facilities for private, nonprofit, nonsectarian colleges and universities which it determines to be “eligible educational institutions” within the meaning of the Act; and

WHEREAS, the University has requested the Authority to make a loan to the University in the amount of $______to finance a project (the “2017 Project”) consisting of (i) the current refunding of the outstanding 2007B Bonds; and (ii) the payment of certain costs and expenses related to issuing the 2017 Bonds (as defined below); and

WHEREAS, the Authority has determined that the University is an “eligible educational institution” as defined in the Act, and by resolution duly approved has agreed to provide financing to the University to fund the costs of the 2017 Project; and

WHEREAS, in order to obtain funds with which to finance the 2017 Project, the Authority proposes to issue hereunder on behalf of the University its University Revenue Bonds, Series of 2017 (The Harrisburg University of Science and Technology Project) in the aggregate principal amount of $______(the “2017 Bonds”); and

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WHEREAS, the Authority will lend the proceeds of the 2017 Bonds to the University, to be applied to the 2017 Project pursuant to a Loan Agreement dated as of July 1, 2017 (the “Loan Agreement”) providing for, among other things, the repayment of such loan and the pledge of the Unrestricted University Revenues (as hereinafter defined) as security therefor; and

WHEREAS, the Authority has duly adopted resolutions authorizing and directing the execution and delivery of, among others, this Indenture and the Loan Agreement, and the issuance hereunder of the 2017 Bonds; and

WHEREAS, the Commissioners of the County of Dauphin have declared, by resolutions duly adopted, that the financing of the 2017 Project by the Authority is desirable for the health, safety and welfare of the people in the area served by the University; and

WHEREAS, in order to secure payment of the 2017 Bonds, the Authority has assigned to the Trustee all of its right, title and interest in and to all funds and accounts established under the Indenture (other than the Rebate Fund) and the Pledged Revenues (as defined below); and

WHEREAS, the performance of the obligations of the University under the Loan Agreement will be secured, further by an Open-End Mortgage and Security Agreement of even date herewith (the “2017 Bonds Mortgage”) from the University, as mortgagor, to the Trustee, as mortgagee, on the University Facility; and

WHEREAS, all acts and things necessary to make the 2017 Bonds when executed by the Authority, authenticated by the Trustee and issued by the Authority, the valid and binding legal obligations of the Authority in accordance with their terms, and to constitute these presents a valid and binding Indenture enforceable in accordance with its terms, have been done and performed; and

WHEREAS, the Authority desires to provide for the issuance, from time to time, of Additional Bonds (as hereinafter defined) under this Indenture for purposes which shall be authorized by this Indenture;

NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, in order to secure the payment of the principal of, premium, if any, on and interest on the Bonds under this Indenture according to their tenor and effect) and the performance and observance by the Authority of all the covenants expressed or implied herein and in the Bonds, and to declare the terms and conditions upon and subject to which the Bonds are issued and secured, and for and in consideration of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the registered owners thereof, and of the acceptance by the Trustee of the trusts hereby created, and intending to be legally bound hereby, the Authority has executed and delivered this Indenture, and by these presents does hereby sell, assign, transfer, set over and pledge unto The Bank of New York Mellon Trust Company, N. A., as trustee, its successors in the trust and its and their assigns forever, to the extent provided herein, all of the right, title and interest of the Authority in and to the Loan Agreement and all loan payments and other amounts payable or which may become payable thereunder (other than its rights to receive payment of its Annual Administrative Fees and all Administrative Expenses and the other Unassigned Authority’s Rights, as such terms are defined in the Loan Agreement), to the Unrestricted University Revenues payable from the University (subject to the rights of holders of other Parity Obligations, as defined in the Loan Agreement), to all funds and accounts established under the Indenture (other than the Rebate Fund) (collectively, the “Pledged Revenues”) and the 2017 Bonds Mortgage (all of the foregoing, the “Trust Estate”);

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TO HAVE AND TO HOLD the same and any other revenues, property, contracts or contract rights, accounts receivable, chattel paper, investments, 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 Indenture unto the Trustee and its successors in trust hereby created and its and their assigns forever;

IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, for the equal and ratable use, benefit and security of all present and future Registered Owners and registered owners of all 2017 Bonds issued and to be issued under this Indenture and Additional Bonds issued hereunder, without preference, priority or distinction as to lien or otherwise of any one Bond over any other Bond (except as otherwise specifically provided in the Indenture), so that each and every 2017 Bond issued under this Indenture and the Additional Bonds shall have the same right, lien and privilege under the Indenture (except as aforesaid and except as otherwise described in this Indenture), and so that the 2017 Bonds and the Additional Bonds shall be equally and proportionately secured hereby and thereby; provided, however, that the Project Fund created herein shall secure the 2017 Bonds but not the Additional Bonds;

AND IT IS HEREBY COVENANTED AND AGREED by the parties hereto that the terms and conditions upon which the Bonds are executed, delivered, issued and held by all persons who shall from time to time be or become registered owners thereof, and that the Pledged Revenues are to be held and applied upon and subject to the further covenants, conditions and trusts as hereinafter set forth, are as follows:

(Balance of page intentionally left blank)

C-7 ARTICLE I DEFINITIONS

Section 1.1 Use of Terms in Loan Agreement. Terms used in this Indenture which are defined in the Loan Agreement and are not otherwise defined in this Indenture shall have the meanings set forth in the Loan Agreement unless the context or use clearly indicates another meaning or intent.

Section 1.2 Definitions. In addition to the terms defined in the recital clauses of this Indenture, as used herein:

“Additional Bonds” means all Bonds authenticated and delivered hereunder and of any series other than the 2017 Bonds.

“Affiliate” means any person directly or indirectly controlling, controlled by or under common control with the University.

“Beneficial Owner” means any Person who acquires beneficial ownership interest in a Bond held by the Securities Depository. In determining the Beneficial Owner of any bond, the Trustee may rely upon representations made and information give to the Trustee by the Securities Depository or its Participants with respect to any Bond held by the Securities Depository in which a beneficial ownership is claimed.

“Bond” or “bonds” mean any bond or all of the bonds, as the case may be, authenticated and delivered under this Indenture, including the 2017 Bonds.

“Bond Counsel” means an attorney-at-law or a firm of attorneys of nationally recognized standing in matters pertaining to bonds (including the tax status of interest thereon) 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.

“Bond Registrar” and “Bond Register” shall have the respective meanings specified in Section 2.5.

“Bond Year” means with respect to any series of Bonds, the one-year period beginning on the day after the expiration of the preceding Bond Year (except that the last Bond Year shall end on the date on which such Bonds mature). The first Bond Year shall be the one year period beginning on the calendar date on which the Bonds are issued and ending on the date which is December 31 in the next succeeding calendar year.

“Book-Entry System” means any book-entry system for the Bonds maintained by the Securities Depository and described in Section 2.10.

“Business Day” means any day other than (a) a Saturday, Sunday or legal holiday, (b) a day on which banks located in Philadelphia, Pennsylvania, New York, New York or any other city in which the Payment Office of the Trustee is located are required or authorized by law or executive order to close, or (c) a day on which The New York Stock Exchange is closed.

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“Certified Resolution of the Authority” means a copy of a resolution certified by the Secretary or Assistant Secretary of the Authority, under its corporate seal, to have been duly adopted by the Authority Board and to be in full force and effect on the date of such certification.

“Certified Resolution of the University” means a copy of a resolution of the Board of Trustees or of a duly authorized committee thereof, certified by the secretary or assistant secretary of the Board of Trustees or other officer of the Board of Trustees serving in a similar capacity to have been duly adopted and to be in full force and effect on the date of such certification,

“Closing Statement” means the Closing Receipt, Closing Statement and Settlement Reconciliation executed by the Trustee, the University and the Authority on the date of issuance of the 2017 Bonds, pursuant to which the Trustee acknowledges receipt of the proceeds of the 2017 Bonds and the Authority directs the initial disposition thereof.

“Code” means the Internal Revenue Code of 1986, as amended from time to time. References to the Code and Sections of the Code include the relevant regulations, temporary regulations and proposed regulations thereunder and under the Internal Revenue Code of 1954, as amended, and any successor provisions to those Sections, regulations, temporary regulations or proposed regulations.

“Consultant” means a person, who shall be otherwise unaffiliated with the University, appointed by the University, or if required to be appointed by the Authority or another person, satisfactory to the University, and in each instance not unsatisfactory to the Trustee, qualified to pass upon the matters under consideration and having a favorable reputation for skill and experience in such matters.

“Cost” or “Costs”, in connection with any portion of any Project, means all expenses which are properly chargeable thereto as a cost of a project under the Act or which are incidental to the financing, acquisition, renovation, equipping, expansion and construction of any portion of any such Project. Whenever Costs are to be paid, such payment may be made by way of reimbursement to the University, the Authority or others who have paid the same.

“Counsel” means an attorney-at-law or law firm (who or which may be Bond Counsel or counsel for the University, the Trustee or the Authority).

“Debt Service” means for any period or payable at any time, the principal of, premium, if any, on and interest on the Bonds for that period or payable at that time whether due on an Interest Payment Date, at maturity or upon acceleration or redemption.

“Debt Service Fund” means the Debt Service Fund so designated and created pursuant to Section 4.2 hereof.

“Debt Service Reserve Fund” means the Debt Service Reserve Fund so designated and created pursuant to Section 4.3 hereof.

“Debt Service Reserve Fund Requirement” means with respect to the Debt Service Reserve Fund, to the extent permitted by applicable law, including, without limitation, federal income tax law, the maximum annual debt service due for the current or succeeding Bond Year, calculated as of the date of issuance of the Bonds secured by the Debt Service Reserve Fund in any Fiscal Year. Pursuant to Section 148 of the Code, the amount of sale proceeds of the Bonds deposited to the Debt Service Reserve Fund may not exceed 10% of such sale proceeds and the Debt Service Reserve Fund will be treated as reasonable required reserve only to the extent the amount deposited therein upon

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issuance of the Bonds does not exceed the least of (a) the maximum annual principal and interest requirements on the Bonds, (b) 10% of the sale proceeds of the Bonds, and (c) 125% of the average annual principal and interest requirements for the Bonds.

“Delivery Office” means the office of the Trustee, as registrar and transfer agent, where 2017 Bonds may be delivered for transfer or exchange: c/o the Bank of New York Mellon, 111 Sanders Creek Parkway, East Syracuse, New York 10357.

“DTC” means The Depository Trust Company, New York, New York and its successors and assigns.

“Event of Default” means any of the events described as an Event of Default in Section 6.1.

“Excess Earnings” means an amount equal to the sum of (a) plus (b) where:

(a) is the excess of (i) the aggregate amount earned from the date of issuance of the 2017 Bonds on all nonpurpose investments in which gross proceeds of the 2017 Bonds are invested (other than investments attributable to an excess described in this clause (a)), over (ii) the amount that would have been earned if such nonpurpose investments (other than amounts attributable to an excess described in this clause (a)) were invested at a rate equal to the yield on the 2017 Bonds; and

(b) is any income attributable to the excess described in clause (a).

The sum of (a) plus (b) shall be determined in accordance with Section 148(f) of the Code. As used herein, the terms “gross proceeds”, “nonpurpose investments” and “yield” have the meanings assigned to them for purposes of Section 148(f) of the Code. “Excess Earnings”, however, shall not include any amount earned on the Debt Service Fund during the period from March 30 of any year to March 30 of the immediately following year, if the gross earnings on such Fund for such period are less than $100,000.

“Extraordinary Services” and “Extraordinary Expenses” mean 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 Indenture, other than Ordinary Services and Ordinary Expenses.

“Financial Consultant” means a firm of investment bankers, a financial consulting firm, a law firm or a firm of certified public accountants, satisfactory to the University and the Trustee, which is experienced in the calculation of amounts required to be rebated to the United States under Section 148 (f) of the Code.

“Interest Payment Date” means each April 15 and October 15, commencing October 15, 2017.

“Investment Securities” means and includes any of the following securities which at the time are legal investments under the laws of the Commonwealth for moneys held pursuant to this Indenture:

(a) U.S. Government Obligations;

(b) obligations issued or guaranteed by any of the following federal agencies which are fully guaranteed by the full faith and credit of the United States of America: (i) General Services

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Administration - participation certificates; (ii) Government National Mortgage Association (“GNMAs”) - guaranteed mortgage-backed securities and guaranteed participation certificates; (iii) Farmers Home Administration - certificates of beneficial ownership; (iv) and (v) U.S. Maritime Administration - guaranteed Title XI financings; provided, however, that stripped securities are only permitted if stripped by the agency itself;

(c) obligations issued by any of the following federal agencies which obligations represent the full faith and credit of the United States of America: (i) Export-Import Bank of the United States; (ii) Rural Economic Community Development Administration; (iii) U.S. Maritime Administration; (iv) Small business Administration; (v) Federal Housing Administration; (vi) U.S. Department of Housing & Urban Development - local authority bonds; and (vii) Federal Financing Bank;

(d) direct obligations issued or guaranteed by any of the following federal agencies which are not fully guaranteed by the faith and credit of the United States of America: (i) Federal National Mortgage Association (“FNMAs”) - senior debt obligations rated Aaa by Moody’s and AAA by Standard & Poor’s; (ii) Federal Home Loan Mortgage Corporation (“FHLMCs”) - participation certificates and senior debt obligations rated Aaa by Moody’s and AAA by Standard & Poor’s; (iii) Federal Home Loan Banks - senior debt obligations; and (iv) Resolution Funding Corp. (REFCORP) - debt obligations;

(e) obligations issued by any state of the United States of America or any political subdivision thereof which are rated in one of the two highest rating categories by Moody’s and Standard & Poor’s;

(f) commercial paper (having original maturities of not more than 270 days) rated, at the time of purchase, P-1 by Moody’s and A-1 or better by Standard & Poor’s;

(g) certificates of deposit, savings accounts, deposit accounts or money market deposits in amounts that are continuously and fully insured by the Federal Deposit Insurance Corporation, including the Bank Insurance Fund and the Savings Association Insurance Fund;

(h) federal funds or bankers’ acceptances (in each case having maturities of not more than 365 days following the date of purchase) of any domestic commercial bank (including without limitation the Trustee or any bank affiliated with the Trustee) or United States branch office of a foreign bank; provided that such bank has an unsecured, uninsured and unguaranteed obligation rating of P-1 or A-3 or better by Moody’s and A-1 or A or better by Standard & Poor’s;

(i) investments in money market 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 of AAAm or AAAm-G by Standard & Poor’s, and if rated by Moody’s rated Aaa, Aa 1 or Aa2, 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 fees from such funds for services rendered, (ii) the Trustee charges and collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates;

(j) repurchase agreements, investment agreements (also referred to as guaranteed investment contracts) and forward delivery agreements; and

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(k) Savings accounts, deposit accounts or money market deposits of any bank (including any banking affiliates of the Trustee), trust company or savings and loan association which are fully insured by the Federal Deposit Insurance Corporation or, to the extent not so insured, collateralized in accordance with the laws of the Commonwealth relating to the investment of public funds (72 Pa. C.S.A. §3836-1 et seq., Act of August 6, 1971, P.L. 281, No. 72) and secured by a first priority UCC lien in favor of the Trustee;

“Limited Term Debt” shall have the meaning set forth in the Loan Agreement.

“Loan Payments” means the payments due to the Authority from the University pursuant to the Loan Agreement.

“Long Term Debt” shall have the meaning set forth in the Loan Agreement.

“Officer’s Certificate” means in the case of the University, a certificate, executed by the Chairman of the Board of Trustees of the University, or any other authorized officer, and in the case of the Authority, the Executive Director or Deputy Executive Director and Secretary, Treasurer, or Assistant Secretary-Treasurer of the Authority or any other authorized officer.

“Ordinary Services” and “Ordinary Expenses” mean those services normally rendered, and those expenses (including attorney’s fees, costs and expenses) normally incurred, by a trustee under instruments similar to this Indenture, excluding any service performed in anticipation of or after the occurrence of an Event of Default,

“Outstanding Bonds”, “Bonds outstanding”, “Outstanding” or “outstanding” means as of the applicable date, all Bonds which have been authenticated and delivered, or which are being delivered by the Trustee under this Indenture except (i) Bonds canceled by the Trustee and (ii) Bonds or portions thereof for the payment of which cash or certain Investment Securities specified in Section Section 9.2(a)(2) hereof shall have been deposited with the Trustee in accordance with Section 9.2 (whether on or prior to a maturity or redemption date). For purposes of approval or consent by the Registered Owners, “Outstanding Bonds”, “Bonds outstanding”, “Outstanding” or “outstanding” shall not include Bonds that a Responsible Officer of the Trustee actually knows are owned by or on behalf of the Authority, the University or an Affiliate (unless all of the Outstanding Bonds are so owned).

“Participant” means any broker, dealer, bank or other financial institution or other Person for which, from time to time, the Securities Depository effectuates book-entry transfers and pledges of securities pursuant to the Book-Entry System.

“Payment Office” means the office of the Trustee where Bonds may be surrendered for payment upon redemption, acceleration or maturity: exchange: c/o The Bank of New York Mellon, 111 Sanders Creek Parkway, East Syracuse, New York 10357.

“Person” means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.

“Pledged Revenues” shall have such meaning as described in the habendum clauses hereto.

“Project” means each project the Costs of which shall be financed with the proceeds of any Additional Bonds issued hereunder, excluding the 2017 Project.

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“Project Costs” means, with respect to the 2017 Project, costs of the 2017 Project permitted under the Act, including, but not limited to, the following:

(a) fees, charges and expenses incurred in connection with the authorization, sale, issuance and delivery of the 2017 Bonds, including without limitation bond discount, printing expense, insurance, recording fees and the initial fees and expenses of the Trustee and Authority; provided that the amount of the proceeds of the 2017 Bonds used to finance issuance costs shall not exceed 2% of the aggregate face amount of the 2017 Bonds less the net amount of original issue discount in connection with the first sale thereof, within the meaning of Section 147(g) of the Code;

(b) all costs which are allocable to the retirement of the outstanding 2007B Bonds and all costs, fees, expenses and charges incidental to, properly chargeable to and reasonably necessary or desirable in connection with the refunding of the 2007B Bonds;

(d) payments made to the Rebate Fund or the Debt Service Reserve Fund.

“Project Fund” means the fund so designated and established pursuant to Section 4.1 hereof.

“Rating Service” means Moody’s Investors Service (“Moody’s”), if the Bonds are rated by such at the time, Standard & Poor’s Global Ratings (“Standard & Poor’s”), if the Bonds are rated by such at the time, and Fitch Ratings (“Fitch”), if the Bonds are rated by such at the time, and their respective successors and assigns, or if any of them shall be dissolved or no longer assigning credit ratings to long term debt, then any other nationally recognized entity assigning credit ratings to long term debt designated in writing by the Authority.

“Rebate Fund” means the fund so designated and established pursuant to Section 4.7 hereof.

“Register” means the books of the Authority maintained by the Trustee, as registrar and transfer agent, for the registration of the Bonds and the transfer of the Bonds.

“Registered Owner” means the person in whose name a Bond is registered on the Register.

“Regular Record Date” means the close of business on the fifteenth day of the calendar month (whether or not a Business Day) next preceding each Interest Payment Date.

“Regulatory Body” means and include (a) the United States of America and any department of or corporation, agency or instrumentality heretofore or hereafter created, designated or established by the United States of America, (b) the Commonwealth, any political subdivision thereof, and any department of or corporation, agency or instrumentality heretofore or hereafter created, designated or established by the Commonwealth, (c) the County and any department of or corporation, agency or instrumentality heretofore or hereafter created, designated or established by the County, and (d) any other public or private body having or exercising regulatory jurisdiction and authority over the School or accrediting organizations, but shall not include the Authority.

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“Representation Letter” means the Blanket Letter of Representations, together with DTC’s Operational Arrangements referred to therein, of the Authority on file with DTC and incorporated herein by reference.

“Responsible Officer” means, when used with respect to the Trustee, any vice president, assistant vice president or other officer of the Trustee within the corporate trust office specified in Section 10.3 (or any successor corporate trust office) having direct responsibility for the administration of this Indenture.

“Securities Depository” means initially The Depository Trust Company (“DTC”), New York, New York, and its successors and assigns, or a successor clearing agency designated pursuant to Section 2.10 hereof and its successors and assigns.

“Special Record Date” means the date established by the Trustee pursuant to Section 2.8 hereof in connection with the payment of overdue interest on the Bonds.

“Supplemental Indenture” means any amendment or supplement to this Indenture, duly executed by the Trustee and the Authority.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., until a successor Trustee shall have become such pursuant to the applicable provisions of the Indenture, and thereafter.

“Trust Estate” shall have the meaning assigned to such term in the foregoing habendum clause of this Indenture.

“Unrestricted University Revenues” shall have the meaning assigned to such term in the Loan Agreement.

“U.S. Government Obligations” means direct obligations of, and obligations the timely payment of the principal of and interest on which is unconditionally guaranteed by, the United States of America, including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America.

Section 1.3 Interpretation; Time of Day. Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa. The terms “hereof”, “hereby”, “herein”, “hereto”, “hereunder”, “hereinafter” and similar terms refer to this Indenture; and the term “hereafter” means after, and the term “heretofore” means before, the date of this Indenture. Words of any gender include the correlative words of the other genders, unless the context indicates otherwise.

In this Indenture, all references to any time of the day shall refer to Eastern standard time or Eastern daylight saving time, as in effect in the City of Harrisburg, Pennsylvania on such day.

Section 1.4 Captions, Headings and Table of Contents. The captions, headings and table of contents in this Indenture are solely for convenience of reference and in no way define, limit or describe the scope of any Articles, Sections, Subsections, paragraphs, subparagraphs or clauses hereof.

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ARTICLE II AUTHORIZATION AND TERMS OF BONDS

Section 2.1 Amount, Form and Issuance of 2017 Bonds. Except as provided in Section 2.6 hereof, the 2017 Bonds shall be limited to $______in aggregate principal amount, and shall contain substantially the terms recited in the form of 2017 Bond set forth in Exhibit A to this Indenture. No 2017 Bonds may be issued under this Indenture except in accordance with this Article II.

All 2017 Bonds shall provide that Debt Service in respect thereof shall be payable only out of the Pledged Revenues, or otherwise as described in this Indenture. The Authority shall cause a copy of the text of the opinion of Bond Counsel delivered in connection with the issuance of the 2017 Bonds to be printed on or attached to the 2017 Bonds, and upon request of the Authority and deposit with the Trustee of an executed counterpart of such opinion, the Trustee shall certify by manual or facsimile signature that printed on or attached to the 2017 Bonds is the complete text of such opinion. Pursuant to recommendations promulgated by the Committee on Uniform Security Identification Procedures, “CUSIP” numbers may be printed on the 2017 Bonds. The Bonds may bear such endorsement or legend satisfactory to the Trustee as may be required to conform to usage or law with respect thereto.

Upon the execution and delivery of this Indenture, the Authority shall execute the 2017 Bonds in the aggregate principal amount of $______and deliver them to the Trustee for authentication. The Trustee shall authenticate the 2017 Bonds and deliver them to, or on the order, of the initial purchaser thereof upon receipt of a written request and authorization to the Trustee on behalf of the Authority, signed by an authorized officer of the Authority, and upon payment to the Trustee of the amount specified therein, which amount shall be deposited by the Trustee in the Project Fund and such amount so deposited shall thereafter be transferred or applied to the payment of costs of the 2017 Project in accordance with the written direction of the Authority contained in its Closing Statement.

Section 2.2 Designation, Denominations, Interest Rates, Maturity and Dated Dates.

(a) The 2017 Bonds shall be issued and designated “Dauphin County General Authority University Revenue Bonds, Series of 2017 (The Harrisburg University of Science and Technology Project)”. The 2017 Bonds shall be issued as fully registered bonds, substantially in the form attached hereto as Exhibit A.

(b) The 2017 Bonds shall be issued in minimum denominations of $100,000 and any integral multiple of $5,000 in excess thereof.

(c) The 2017 Bonds shall bear interest at the rates and mature, subject to prior redemption as provided in the form thereof recited in this Indenture, on the dates set forth in Exhibit B attached to this Indenture.

(d) The 2017 Bonds shall initially be dated the date of delivery. Thereafter, 2017 Bonds executed and delivered upon exchange or transfer or in substitution for 2017 Bonds mutilated, lost or destroyed, shall be dated the date of their authentication.

(e) The 2017 Bonds shall bear interest from the Interest Payment Date to which interest has been paid next preceding the date of authentication, unless the date of authentication (i) is an Interest Payment Date, in which event the 2017 Bonds shall bear interest from the date of authentication, or (ii) is prior to the first Regular Record Date for the 2017 Bonds, in which event such 2017 Bonds shall bear interest from their dated date. Interest accruing on the 2017 Bonds shall be computed on the basis of a 360-day year of twelve 30-day months,

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Section 2.3 Execution and Authentication of Bonds. The Bonds shall be executed by the manual or facsimile signature of the Chairman or Vice Chairman of the Authority, and the corporate seal of the Authority or a facsimile thereof shall be affixed, imprinted, lithographed or reproduced thereon and attested by the manual or facsimile signature of the Secretary or Assistant Secretary of the Authority. In case any officer whose signature or a facsimile of whose signature shall appear on any Bond shall cease to be that officer before the authentication of the Bond, the signature of such officer or the facsimile thereof nevertheless shall be valid and sufficient for all purposes, the same as if he had remained in office until that time, Any Bond may be executed on behalf of the Authority by an officer who, on the date of execution is the proper officer, although on the date of authentication of the Bond that person was not the proper officer.

No Bond shall be valid or become obligatory for any purpose or shall be entitled to any security or benefit under this Indenture unless and until a certificate of authentication has been duly executed by the manual signature of a duly authorized signer of the Trustee. The authentication by the Trustee upon any Bond shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered hereunder and is entitled to the security and benefit of this Indenture.

Section 2.4 Source of Payment of the Bonds. To the extent provided in and except as otherwise permitted by this Indenture, the Bonds shall be limited obligations of the Authority and the Debt Service thereon shall be payable equally and ratably solely from the Pledged Revenues and shall be secured by the Trust Estate, pursuant to the granting clauses of this Indenture. Neither the general credit nor the taxing power of the Commonwealth or any political subdivision thereof is pledged to the payment of the Bonds, and the Bonds shall not be or be deemed obligations of the Commonwealth or any political subdivision thereof. The Authority has no taxing power.

Section 2.5 Registration, Transfer and Exchange of Bonds. All Bonds shall be issued in fully registered form, and may be transferred and exchanged in the manner provided herein. The Trustee shall act as registrar and transfer agent for the Bonds (the “Bond Registrar”). So long as any of the Bonds remain outstanding, the Authority will cause the Bond Registrar to maintain a register (sometimes referred to as the “Bond Register”) for the registration and transfer of Bonds and to be kept at the Delivery Office of the Trustee.

Bonds may be exchanged at the option of the Registered Owners for Bonds of any authorized denomination or denominations in an aggregate principal amount equal to the unmatured and unredeemed principal amount of the same series and bearing interest at the same rate and maturing on the same date or dates as, the Bonds being exchanged. The exchange shall be made upon presentation and surrender of the Bonds being exchanged at the Delivery Office of the Trustee, together with an assignment duly executed by the Registered Owner or its duly authorized attorney in form and with guarantee of signature satisfactory to the Trustee.

Any Bond may be transferred upon the Register, upon presentation and surrender thereof at the Delivery Office of the Trustee, together with an assignment duly executed by the Registered Owner or its duly authorized attorney in form and with guaranty of signature satisfactory to the Trustee. Upon transfer of any Bond, the Authority shall execute in the name of the transferee, and the Trustee shall authenticate and deliver, a new Bond or Bonds of any authorized denomination or denominations in an aggregate principal amount equal to the unmatured and unredeemed principal amount of the same series and bearing interest at the same rate and maturing on the same date or dates as, the Bonds presented and surrendered for transfer.

In all cases in which Bonds shall be exchanged or transferred hereunder, the Authority shall execute, and the Trustee shall authenticate and deliver, Bonds in accordance with the provisions of

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this Indenture. The exchange or transfer shall be made without charge; provided that the Authority or the Trustee may make a charge for every exchange or transfer of Bonds sufficient to reimburse them for any tax or excise required to be paid with respect to the exchange or transfer. The charge shall be paid before a new Bond is delivered.

All Bonds issued upon any transfer or exchange of Bonds shall be the valid obligations of the Authority, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Bonds surrendered upon transfer or exchange. The Trustee shall not be required to exchange or transfer (i) any Bond selected for redemption, in whole or in part, or (ii) any Bond during the period of 15 days preceding any Interest Payment Date.

In case any Bond is redeemed in part only, on or after the redemption date and upon presentation and surrender of the Bond, the Authority shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds in authorized denominations in an aggregate principal amount equal to the unmatured and unredeemed portion of, and bearing interest at the same rate and maturing on the same date or dates as, the Bond redeemed in part.

Section 2.6 Mutilated, Lost, Wrongfully Taken or Destroyed Bonds. If any Bond is mutilated, lost, wrongfully taken or destroyed, in the absence of written notice to the Authority or a Responsible Officer of the Trustee that a lost, wrongfully taken or destroyed Bond has been acquired by a bona fide purchaser, the Authority shall execute, and the Trustee shall authenticate and deliver a new Bond of like date, maturity and denomination and of the same series as the Bond mutilated, lost, wrongfully taken or destroyed; provided that (i) in the case of any mutilated Bond, the mutilated Bond first shall be surrendered to the Trustee, and (ii) in the case of any lost, wrongfully taken or destroyed Bond, there first shall be furnished to the Authority, the University and the Trustee evidence of the loss, wrongful taking or destruction satisfactory to the Trustee, together with indemnity satisfactory to it and to the Authorized Representative of the Authority. The Authority and the Trustee may charge the Registered Owner of a mutilated, lost, wrongfully taken or destroyed Bond their reasonable fees and expenses (including attorney’s fees, costs and expenses) in connection with their actions pursuant to this Section.

Notwithstanding the foregoing, the Trustee shall not be required to authenticate and deliver any substitute Bond for a Bond which has been called for redemption or which has matured or is about to mature and, in any such case, the principal or redemption price and interest then due or becoming due shall be paid by the Trustee in accordance with the terms of the mutilated, lost, wrongfully taken or destroyed Bond without substitution therefor.

Every substituted Bond issued pursuant to this Section shall constitute an additional contractual obligation of the Authority and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Bonds duly issued hereunder unless the Bond alleged to have been lost, wrongfully taken or destroyed shall be at any time enforceable by a bona fide purchaser for value without notice. In the event the Bond alleged to have been lost, wrongfully taken or destroyed shall be enforceable by anyone, the Authority may recover the substitute Bond from the Registered Owner to whom it was issued or from anyone taking under the Registered Owner except a bona fide purchaser for value without notice.

All Bonds shall be held and owned on the express condition that the foregoing provisions of this Section are exclusive with respect to the replacement or payment of mutilated, lost, wrongfully taken or destroyed Bonds and, to the extent permitted by law, shall preclude any and all other rights and remedies with respect to the replacement or payment of negotiable instruments or other investment securities without their surrender, notwithstanding any law or statute to the contrary now existing or hereafter enacted.

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Section 2.7 Cancellation of Bonds. Any Bond surrendered pursuant to this Article for the purpose of payment, redemption, retirement, exchange, replacement or transfer shall be canceled upon presentation and surrender thereof to the Trustee. The University may deliver at any time to the Trustee for cancellation any Bonds previously authenticated and delivered hereunder, which the University may have purchased pursuant to the provisions of this Indenture, All Bonds so delivered shall be canceled promptly by the Trustee. Certification of the surrender and cancellation of any Bonds shall be made to the Authority upon written request of the Authority by the Trustee. Canceled Bonds shall be destroyed by the Trustee in accordance with applicable law and regulations and the Trustee’s policies and procedures by shredding or incineration after their cancellation. The Trustee shall upon written request of the Authority provide certificates describing the destruction of canceled Bonds to the Authority.

Section 2.8 Payment of Principal and Interest. Debt Service of the Bonds shall be payable in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts. Principal of and any premium on any Bond shall be payable when due upon presentation and surrender of such Bond at the Payment Office of the Trustee. Interest on any Bond shall be paid on each Interest Payment Date by check which the Trustee shall cause to be mailed on that date to the person in whose name the Bond is registered on the Register at the close of business on the Regular Record Date applicable to that Interest Payment Date at the address appearing therein. If and to the extent, however, that the Authority shall fail to make payment or provision for payment of interest on any Bond on any Interest Payment Date, that interest shall cease to be payable to the person who was the Registered Owner of that Bond as of the applicable Regular Record Date. When moneys become available for payment of such interest, the Trustee shall establish a Special Record Date for the payment of that interest, which shall be not more than 15 nor fewer than 10 days prior to the date of the proposed payment. The Trustee shall cause notice of the proposed payment and of the Special Record Date to be mailed by first class mail, postage prepaid, to each Registered Owner at its address as it appears on the Register not fewer than 10 days prior to the Special Record Date, and thereafter that interest shall be payable to the persons who are the Registered Owners of the Bonds at the close of business on the Special Record Date.

At the written request of a Registered Owner of at least $1,000,000 aggregate principal amount of Bonds received by the Trustee at least three (3) Business Days before the corresponding Regular Record Date, interest on the Bonds payable on any Interest Payment Date shall be paid by wire transfer in immediately available funds to the bank account within the continental United States specified in the written request of such Registered Owner.

Subject to the foregoing provisions of this Section 2.8, each Bond delivered under this Indenture upon registration of transfer of or exchange for or in lieu of any other Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond.

Section 2.9 Persons Deemed Owners. Except as provided in Section 2.8 and in the first paragraph of Section 2.6, (i) the Registered Owner of any Bond shall be deemed and regarded as the absolute owner thereof for all purposes of this Indenture, (ii) payment of or on account of the Debt Service on any Bond shall be made only to or upon the order of that Registered Owner or its duly authorized attorney in the manner permitted by this Indenture, and (iii) neither the Authority nor the Trustee shall, to the extent permitted by law, be affected by notice to the contrary. All of those payments shall be valid and effective to satisfy and discharge the liability upon that Bond, including without limitation the interest thereon to the extent of the amount or amounts so paid.

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Section 2.10 Book Entry System for the Bonds.

(a) The Bonds shall initially be issued in the form of one typewritten fully registered Bond for the aggregate principal amount of the Bonds of each maturity, which Bond shall be registered in the name of the Securities Depository or its nominee provided that if the Securities Depository shall request that the Bond be registered in the name of a different nominee, the Bond Registrar shall exchange all or any portion of the Bond for an equal aggregate principal amount of Bonds registered in the name of such nominee or nominees of the Securities Depository. No Person other than the Securities Depository or its nominee shall be entitled to receive from the Authority or the Trustee either a Bond or any other evidence of ownership of the Bonds, or any right to receive any payment in respect thereof unless the Securities Depository or its nominee shall transfer record ownership of all or any portion of the Bonds, in connection with discontinuing the Book-Entry System as provided in this Section 2.10.

(b) So long as the Book-Entry System is in effect, the Trustee and the Bond Registrar shall comply with the terms of any agreement with the Securities Depository, and notwithstanding anything in this Indenture to the contrary, such agreement shall govern with respect to notices, voting, payment, and delivery of Bonds.

(i) The Securities Depository or the Authority, based upon advice from the Securities Depository, advises the Trustee and the Bond Registrar in writing that the Securities Depository is no longer willing or able to properly discharge its responsibilities under any agreement(s) with the Authority and the Trustee, and the University is unable to locate a qualified successor Securities Depository satisfactory to the Trustee, the Authority and the University;

(ii) The University may elect to terminate the Book-Entry System by written notice to the Securities Depository, the Authority and the Trustee; or

(iii) After the occurrence and during the continuance of an Event of Default, the Beneficial Owners of a majority in aggregate Outstanding principal amount of the Bonds, through the Participants and the Securities Depository, may elect to discontinue the Book-Entry System and so advise the Trustee, the Authority, the University and the Securities Depository in writing.

Upon the occurrence of any event hereinabove described, the Trustee shall notify the Securities Depository of the occurrence of such event and of the availability of definitive or temporary certificated Bonds to Beneficial Owners, in an aggregate Outstanding principal amount representing the ownership interest of each such Beneficial Owner, making such adjustments and allowances as it may find necessary or appropriate as to accrued interest and previous payments of principal or redemption price. Definitive certificated Bonds shall be issued only upon surrender to the Trustee of the Bond held by the Securities Depository, accompanied by written registration instructions for the definitive certificated Bonds. Neither the Authority, the Trustee nor the Bond Registrar shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon issuance of definitive certificated Bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be imposed upon and performed by the Trustee and the Bond Registrar, to the extent applicable with respect to such definitive certificated Bonds.

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(d) Except for payment of principal at maturity, any provision of this Indenture permitting or requiring the delivery of Bonds shall, while the Book-Entry System is in effect, be satisfied by the notation on the books of the Securities Depository or a Participant, if applicable, of the transfer of the Beneficial Owner’s interest in such Bond.

(e) Neither the Authority, the Trustee, the Bond Registrar, or the University will have any responsibility or obligation to Participants, to indirect Participants or to any Beneficial Owner with respect to (i) the accuracy of any records maintained by the Securities Depository, any Participant, or any indirect Participant; (ii) the payment by the Securities Depository, any Participant or indirect Participant of any amount with respect to the principal of, or premium, if any, or interest on the Bonds; (iii) any notice which is permitted or required to be given by Beneficial Owners under this Indenture; (iv) the selection by the Securities Depository or any direct or indirect Participant of any Person to receive payment in the event of a partial redemption of the Bonds, or (v) any consent given or other action taken by the Securities Depository as Bondholder.

(f) Payments by the Participants or indirect Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant or indirect Participant and not of the Securities Depository, the Trustee or the Authority, subject to any statutory and regulatory requirements as may be in effect from time to time.

Section 2.11 Issuance of Additional Bonds. The Authority may issue one or more series of Additional Bonds from time to time to pay the Cost of undertaking a Capital Addition or the Cost of refunding all or a portion of the Outstanding Bonds of any one or more series or all of any particular Long Term Debt other than the 2017 Bonds. The Trustee shall authenticate and deliver such Additional Bonds at the request of the Authority, but only upon compliance with applicable requirements set forth herein and in the Loan Agreement, and upon delivery to the Trustee of:

(a) In each case, an Officer’s Certificate of the University (i) setting forth in reasonable detail the estimated uses of the proceeds of the Additional Bonds and demonstrating the adequacy of such proceeds, together with the proceeds of any additional financing contemplated for such uses and with any other available moneys for such uses, and (ii) stating that no Event of Default has occurred and is continuing, and that the applicable requirements for the issuance of the Additional Bonds under all financing documents then in effect have been satisfied.

(b) In each case, a Certified Resolution of the Authority authorizing (i) the execution and delivery of a Supplemental Indenture providing for, among other things, the date, rate or rates of interest on, interest payment dates, maturity dates and redemption provisions of such Additional Bonds, and (ii) the issuance, sale, execution and delivery of the Additional Bonds.

(c) In each case, an Officer’s Certificate of the University demonstrating the capacity of the University to incur the Long Term Debt pursuant to Section 5.9(a) of the Loan Agreement.

(d) In each case, an opinion or opinions of Counsel, containing customary and usual qualifications and exceptions, to the effect that (i) the Additional Bonds have been duly issued for a permitted purpose under this Section 2.11, (ii) all consents or approvals required to be obtained from any Regulatory Body for the issuance of the Additional Bonds have been obtained, (iii) the issuance of the Additional Bonds and execution and delivery of related documents will not constitute a breach or default on the part of the Authority or the University, of or under any applicable laws or regulations, or, to the knowledge of counsel, court orders or rulings of regulatory bodies to which the Authority or the

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University is subject, (iv) all documents delivered by the Authority and the University in connection with the issuance of the Additional Bonds have been duly and validly authorized, executed and delivered and such execution and delivery and all other actions taken by the Authority and the University in connection with the issuance of the Additional Bonds have been duly authorized by all necessary corporate actions, and (v) all conditions precedent to the issuance of the Additional Bonds pursuant to this Indenture have been satisfied.

(e) In each case, executed counterparts or certified copies of such documents as are, in the opinion of Counsel, necessary or appropriate for the purposes for which the Additional Bonds are being issued, including but not limited to a Supplemental Indenture setting forth the terms and forms of Additional Bonds thereof and directing the payments to be made into the funds and accounts in respect thereof, which Supplemental Indenture may provide for the creation of additional funds and accounts, and further including a supplement to the Loan Agreement.

(f) An opinion or opinions of Bond Counsel that (i) all conditions prescribed herein as precedent to the issuance have been fulfilled; (ii) the Additional Bonds have been validly authorized and executed and when authenticated and delivered pursuant to the request of the Authority will be valid obligations of the Authority entitled to the benefit of the trust created hereby; and (iii) the issuance of such Additional Bonds will not adversely affect the excludability from gross income for federal income tax purposes of interest paid on any series of tax-exempt Bonds theretofore issued.

(g) In the case of any Additional Bonds issued for the purpose of refunding, Certified Resolutions of the Authority and the University authorizing the refunding and the taking of all necessary actions in connection therewith.

Section 2.12 Disposition of Proceeds of Additional Bonds. Upon the issuance and delivery of any series of Additional Bonds issued under this Article II, the Bond proceeds and other amounts received by the Trustee shall be deposited in a series-specific account within the Project Fund (unless the purpose is a refunding, in which case the proceeds and any other amounts to be added thereto shall be deposited in a redemption fund especially established for the purpose); except that any portion of such proceeds representing accrued or prepaid (capitalized) interest on the Bonds shall be deposited in the appropriate Capitalized Interest Account of the Debt Service Fund and any portion representing costs of issuance related to such series of Bonds shall be deposited in a Costs of Issuance Account established for such purpose in the Project Fund.

Section 2.13 Issuance of Bonds for Other Projects. Nothing in this Indenture shall prevent the Authority from issuing bonds, notes or other obligations or evidences of indebtedness under other indentures or resolutions for financing projects other than the 2017 Project or from pledging receipts, revenues and money from such other projects for payment of bonds issued to finance such other projects.

ARTICLE III REDEMPTION OF BONDS

Section 3.1 Terms of Redemption. The 2017 Bonds are subject to redemption prior to stated maturity as follows:

(a) Optional Redemption of 2017 Bonds. The 2017 Bonds maturing on October 15, ____, are subject to redemption prior to maturity by the Authority, at the written direction of the University, on or after ______in whole at any time or in part from time to time in such order of maturity as specified by the Authority at the written direction of the University, and within a maturity by

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lot, at the redemption price of 100% of the principal amount thereof, plus accrued interest to the redemption date.

(b) Extraordinary Optional Redemption, The 2017 Bonds are subject to redemption prior to maturity, at the option of the University, in whole or in part and if in part, at any time, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date, upon the occurrence of any of the following events:

(i) All or a substantial portion of the University Facility is damaged or destroyed by fire or other casualty, or title to or the temporary use of all or a substantial portion of such facilities is condemned or taken for any public or quasi-public use by any authority exercising or threatening the exercise of the power of eminent domain, or title thereto is found to be deficient, to such extent that in the determination of the University (A) such facilities cannot be reasonably restored or replaced to the condition thereof preceding such event, or (B) the University is thereby prevented from carrying on its normal operations, or (C) the cost of restoration or replacement thereof would exceed the net proceeds of any casualty insurance, title insurance, condemnation awards or sale under threat of condemnation with respect thereto, or (D) the University has otherwise determined not to effect repair, restoration or replacement of the facilities with condemnation awards or insurance proceeds pursuant to Section 5.6 of the Loan Agreement; or

(iii) [Reserved].

(c) Scheduled Mandatory Redemption of Bonds. The Bonds maturing on October 15, ____, are subject to scheduled mandatory redemption by the Authority on October 15 in the years and the amounts set forth at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date:

Year Principal

*Final Maturity

Section 3.2 Partial Redemption. If fewer than all of the Bonds of any maturity are to be redeemed, the selection of Bonds of such maturity to be redeemed, or portions thereof in amounts of $5,000 and any integral multiple of $1,000 in excess thereof, shall be made by lot by the Trustee; provided, however, no Bond shall be outstanding in a denomination of less than $100,000 after any redemption and provided, however, if DTC or its nominee is the Registered Owner of the Bonds, such selection shall be made by lot by DTC, the DTC Participants and indirect Participants in such manner as they may determine.

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Section 3.3 Authority’s Election to Redeem. Bonds shall be redeemed only by written notice from the University on behalf of the Authority to the Trustee. Such notice shall specify the redemption date and the principal amount of Bonds to be redeemed, and shall be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee in its sole discretion. In no event shall the redemption of Bonds result in a Bond of a denomination of less than $100,000.

Section 3.4 Notice of Redemption.

(a) When required to redeem Bonds under any provision of this Indenture, or when directed to do so by the Authority or the University pursuant to the provisions of this Indenture, the Trustee shall cause notice of the redemption to be given not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption by mailing copies of such notice of redemption by first class mail, postage prepaid, to all Registered Owners of Bonds to be redeemed at their registered addresses, but failure to mail any such notice or defect in the mailing thereof in respect of any Bond shall not affect the validity of the redemption of any other Bond with respect to which notice was properly given. Each such notice shall be dated and shall be given in the name of the Authority and shall state the following information;

(i) the identification numbers, as established under this Indenture, and the CUSIP numbers, if any, of the Bonds being redeemed, provided that any such notice shall state that no representation is made as to the correctness of CUSIP numbers either as printed on such Bonds or as contained in the notice of redemption and that reliance may be placed only on the identification numbers contained in the notice or printed on such Bonds;

(ii) any other descriptive information needed to identify accurately the Bonds being redeemed;

(iii) in the case of partial redemption of any Bonds, the respective principal amounts thereof to be redeemed;

(iv) the redemption date;

(v) the redemption price;

(vi) that on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date; and

(vii) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the Payment Office of the Trustee.

In addition, the Trustee shall at all reasonable times make available, at the expense of the requesting party, to the Authority and the University, complete information as to Bonds which have been redeemed or called for redemption.

(b) In addition to the foregoing notice, further notice of any redemption of Bonds hereunder shall be given by the Trustee, at least two Business Days in advance of the mailed notice to Registered Owners, electronically or by registered or certified mail or overnight delivery service to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA®) system or

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such other organization at the time approved by the SEC as a Nationally Recognized Municipal Securities Information Repository. The foregoing notice of redemption shall be sent to DTC not less than 30 and not more than 60 days prior to the redemption date by legible facsimile transmission, certified or registered mail, overnight delivery service or another secure method which enables the Trustee subsequently to verify the transmission of such notice. Such further notice shall contain the information required in Subsection 3.4(a). Failure to give all or any portion of such further notice shall not in any manner defeat the effectiveness of a call for redemption if notice thereof is given to the Registered Owners as prescribed in Subsection 3.4(a). Notwithstanding anything to the contrary herein, each of the Authority and the University acknowledges and agrees that in connection with any notice required to be posted to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA®) system pursuant to this Indenture, that the Trustee is not acting nor shall it be deemed to be acting as the disclosure/dissemination agent for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934.

(c) If at the time of mailing of notice of any optional redemption there shall not have been deposited moneys in the Debt Service Fund available for payment pursuant to Subsection 4.2(b) sufficient to redeem all the Bonds called for redemption, such notice may state that it is conditional in that it is subject to the deposit of the redemption moneys in the Debt Service Fund available for payment pursuant to Section 4.2 not later than 10:00 a.m. on the scheduled redemption date, in which case such notice shall be of no effect unless moneys are so deposited.

Section 3.5 Payment of Redeemed Bonds. If unconditional notice of the redemption has been duly given or duly waived by the Registered Owners of all Bonds called for redemption, or conditional notice of redemption has been so given or waived and moneys for such redemption have been duly deposited with the Trustee not later than the opening of business on the redemption date, then in either such case the Bonds called for redemption shall be payable on the redemption date at the applicable redemption price. Payment of the redemption price together with accrued interest shall be made by the Trustee out of Pledged Revenues or other funds deposited for such purpose, to or upon the order of the Registered Owners of the Bonds called for redemption upon surrender of such Bonds, except as otherwise provided in Section 2.10.

Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

All moneys deposited in the Debt Service Fund and held by the Trustee for the redemption of particular Bonds shall be held in trust for the account of the Registered Owners thereof and shall be paid to them upon presentation and surrender of those Bonds, except as otherwise provided in Section 2.10.

ARTICLE IV INDENTURE FUNDS

Section 4.1 Establishment of Project Fund; Application of 2017 Bond Proceeds. There is hereby established with the Trustee a trust fund designated as the “Project Fund” for the payment of Project Costs of the 2017 Project or the Costs of Projects, and within the Project Fund a “Costs of Issuance Account.” On the date of issuance of the 2017 Bonds, upon receipt of the proceeds of the sale of the 2017 Bonds, the Trustee shall deposit such proceeds in the Project Fund, including the Costs of Issuance Account, as directed by the Authority in its Closing Statement. The Trustee shall also deposit in the Project Fund any other moneys required or permitted to be deposited therein pursuant to this Indenture or the Loan Agreement and identified on the Closing Statement, to be applied to the costs of the 2017 Project or the Costs of Projects. The amount of proceeds of the 2017 Bonds listed in the Closing

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Statement to be deposited in the Costs of Issuance Account shall not be more than two percent of the proceeds of the 2017 Bonds.

Disbursements from the Project Fund shall be made only with respect to Project Costs of the 2017 Project or Costs of Projects and only upon compliance with the following:

(a) On the date of issuance of the 2017 Bonds, the Trustee shall make payments and transfers from the Project Fund and the Costs of Issuance Account in the amounts set forth in the Closing Statement.

(b) Except as provided in subsection (a) hereof with respect to disbursements of the proceeds of the 2017 Bonds, all payments from the Project Fund shall be made only upon receipt by the Trustee of a requisition in form satisfactory to the Trustee, signed by an Authorized Representative of the University, which shall state: (i) with respect to requisitions on account of costs of issuance related to the Bonds, that the aggregate amount of all disbursements from Bond proceeds for payment of such costs of issuance does not exceed two percent of such proceeds; (ii) that all amounts requested for disbursements will be used only for Costs of the Project; (iii) the name and address of the person to whom the payment is to be made; (iv) that the obligation was properly incurred and is a proper charge against the Project Fund; and (v) that the amount requisitioned is due and unpaid.

(c) The Closing Statement and any requisition may authorize the reimbursement to the Authority or the University for advances made in respect of the 2017 Project or Costs of Projects or the satisfaction of any indebtedness incurred by either or both, but only to the extent that such amounts are properly chargeable against the Project Fund. Any such Closing Statement or requisition shall relate to the underlying Project Cost in respect of which the requested reimbursement or repayment of indebtedness is to be made.

(d) Any 2017 Bond or other Bond proceeds remaining in the Costs of Issuance Account after payment of the costs of issuance shall be transferred to the Debt Service Fund and applied on the next Interest Payment Date to the payment of Debt Service due on the related Bonds. Moneys in the Costs of Issuance Account and the Project Fund shall be held for the security of Outstanding Bonds until applied to the payment of Project Costs or Costs of Projects.

Section 4.2 Debt Service Fund.

(a) Pledged Revenues to be Paid Over to the Trustee. The Authority has caused the Pledged Revenues to be paid directly to the Trustee. If, notwithstanding these arrangements, the Authority receives any payments pursuant to the Loan Agreement (other than payments to the Authority of its Administrative Expenses or other payments in respect of Unassigned Authority’s Rights), the Authority shall immediately pay over the same to the Trustee to be held as Pledged Revenues or otherwise applied pursuant to this Indenture. Except as provided in the immediately preceding sentence and as otherwise specifically directed under the terms of this Indenture, all Pledged Revenues received by the Trustee as Loan Payments under the Loan Agreement shall be deposited on into the Debt Service Fund.

(b) Creation of Debt Service Fund. There is hereby established with the Trustee a trust fund designated as the “Debt Service Fund”. Moneys held in the Debt Service Fund shall be applied by the Trustee in accordance with this Indenture to make payments when due of principal of, redemption price, if any, and interest on the 2017 Bonds and to pay any amount required to be deposited in the Rebate Fund pursuant to Section 4.7 hereof, to the extent other moneys are unavailable therefor. Each such fund shall constitute a trust fund for the benefit of the Registered Owners of the 2017 Bonds (other than the

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Rebate Fund), and the money and investments in each such fund shall be held separate and apart from money in any other fund or account, and disbursed only for the purposes and uses hereinafter authorized. The moneys on deposit within the Debt Service Fund shall be applied as follows:

(i) to the payment of interest, when due, on all Outstanding Bonds, including any accrued interest due in connection with purchases or redemptions of Bonds; and

(ii) to the payment, when due, of the principal or redemption price of Bonds then payable at maturity or upon mandatory redemption (but only upon surrender of such Bonds).

(c) If by 2:00 p.m. on the Business Day immediately preceding any principal or interest payment date there are not sufficient moneys in the Debt Service Fund on such date to pay principal of and interest on the 2017 Bonds to become due and owing on such date, moneys shall be transferred to the Debt Service Fund from the Debt Service Reserve Fund in an amount which, together with the amount then on deposit in the Debt Service Fund, will result in the Debt Service Fund having the balance required to be on deposit therein in order to pay interest and principal to become due and payable on such date.

(d) Credits. If at any time the Trustee has funds which under the provisions of this Indenture are to be applied to pay the principal of, premium, if any, or interest on the 2017 Bonds, the University, to the extent that such funds are to be so applied, shall be entitled to a credit equal to the amount of such funds, against payments due from the University under the Loan Agreement.

(e) Additional Debt Service Funds. The Trustee may establish such additional and separate debt service funds as directed by a Supplemental Indenture for the Additional Bonds.

Section 4.3 Debt Service Reserve Fund.

(a) There is hereby established with the Trustee a trust fund designated as the “Debt Service Reserve Fund.” Funds will be deposited in the Debt Service Reserve Fund in a sufficient amount to satisfy the Debt Service Reserve Fund Requirement for the 2017 Bonds. The moneys on deposit in the Debt Service Reserve Fund are pledged and shall be available for the payment of principal and interest, on the related series of Bonds, in respect of which the amount is established, pursuant to the provisions of Section 4.2 herein.

(b) On the date of issuance of the 2017 Bonds, the amount of $_____, which amount equals the Debt Service Reserve Fund Requirement for the 2017 Bonds, shall be deposited into the Debt Service Reserve Fund.

(c) In the event the Trustee utilizes any moneys in the Debt Service Reserve Fund to make up any deficiencies in the Debt Service Fund, the Authority will require the University to pay pursuant to the Loan Agreement, as requested by the Trustee, the amount necessary to maintain in the Debt Service Reserve Fund an amount equal to the Debt Service Reserve Fund Requirement on all Outstanding 2017 Bonds secured by such Debt Service Reserve Fund, such amount to be paid by the University within thirty (30) Business Days, following receipt by the University of written notice from the Trustee.

(d) If the 2017 Bonds secured by the Debt Service Reserve Fund is paid or redeemed in part or in full, the amount required to be maintained in such Debt Service Reserve Fund shall be

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reduced to an amount equal to the Debt Service Reserve Fund Requirement on the 2017 Bonds so secured and Outstanding thereafter.

(e) If the value of investments held in the Debt Service Reserve Fund calculated pursuant to Section 4.4 hereof, falls below the Debt Service Reserve Fund Requirement on such 2017 Bonds secured by the Debt Service Reserve Fund, the Trustee shall notify the University of such deficiency and the University shall pay such deficiency as additional payments under the Loan Agreement when so requested by the Trustee. If such deficiency occurs as a result of a decline in value of the Debt Service Reserve Fund as calculated pursuant to Section 4.4 hereof, funds sufficient to meet the Debt Service Reserve Fund Requirement shall be deposited into the Debt Service Reserve Fund in three consecutive equal monthly installments, the first of which shall be due on the first day of the month succeeding such notice from the Trustee. If at any time the value of the investments exceeds the Debt Service Reserve Fund Requirement on the Outstanding 2017 Bonds secured by the Debt Service Reserve Fund, the University shall be entitled to withdraw the amount of such excess by a transfer by the Trustee of such excess amount to the Debt Service Fund; provided, however, that upon liquidation of any investments to effect such payment or transfer, the value of the remaining investments in the Debt Service Reserve Fund is not less than the Debt Service Reserve Fund Requirement on the Outstanding 2017 Bonds secured by the Debt Service Reserve Fund.

(f) The Trustee may establish such additional and separate reserve funds as directed by a Supplemental Indenture for Additional Bonds,

Section 4.4 Investment of Project Fund, Debt Service Fund, Debt Service Reserve Fund and Rebate Fund. All moneys received by the Trustee under this Indenture shall be deposited with the Trustee, until or unless invested or deposited as provided in this Section. All deposits with the Trustee (whether original deposits or deposits or redeposits in time accounts) shall be secured as required by applicable law for such trust deposits.

Moneys in the Project Fund, the Debt Service Fund and the Debt Service Reserve Fund (except moneys representing principal of, premium, if any, or interest on any 2017 Bonds which are deemed paid under Section 9.2) shall be invested and reinvested by the Trustee (a) at the written direction of an Authorized Representative of the University, and so long as no Event of Default has occurred and is continuing under this Indenture, in Investment Securities that the University’s Authorized Representative assures meet the requirements of Section 5.11 of the Loan Agreement or (b) absent written direction from the University, shall be held uninvested and without liability for interest. Moneys in the Debt Service Fund representing principal of, premium, if any, or interest on any 2017 Bonds which are deemed paid under Section 9.2 shall be invested only if and as provided in Section 9.2.

Investments of moneys in the Debt Service Fund shall mature or be redeemable at the direction of the University at the times and in the amounts necessary to provide moneys to make Debt Service payments as they become due on Interest Payment Dates, at stated maturity or by redemption. The Trustee shall sell or redeem investments credited to the Debt Service Fund to produce sufficient moneys available hereunder at the times required for the purpose of paying Debt Service when due as aforesaid, and shall do so without necessity for any order by or on behalf of the Authority or the University and without restriction by reason of any order.

Any investment of moneys in any fund established under this Indenture may be purchased from or through, or sold to, the Trustee or any affiliate with the Trustee; and any such investment made through the purchase of shares of a fund described in clause (a), (b) or (e) of the definition of Investment Securities may be in a fund which is advised or administered by the Trustee or

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any affiliate of the Trustee (for which services the Trustee or such affiliate, as the case may be, may receive a fee). The Trustee shall conclusively rely upon the University’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 shall not be liable for any losses from any directed investments. Although the Authority and the University each recognizes that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the Authority and the University hereby agree that broker confirmations of investments are not required to be issued by the Trustee for each month in which a monthly statement is rendered by the Trustee.

Moneys in the Rebate Fund shall be invested and reinvested by the Trustee at the written direction of an Authorized Representative of the University in Government Obligations maturing, or subject to redemption by the Registered Owner at not less than the principal amount thereof or the cost of acquisition, whichever is lower, on or before the date or dates when the payments for which such moneys are held are to become due.

Any investment made from moneys credited to any fund established hereunder shall constitute part of that respective fund. Each fund established hereunder shall be credited with all proceeds of sale and income from the respective investment of moneys credited to such Fund, except that interest and income derived from any investments or deposits in the Debt Service Reserve Fund may be transferred to the Debt Service Fund to make up any deficiency therein.

The value of Investment Securities in any fund established hereunder shall be determined as follows:

(a) For the purpose of determining the amount in any fund, all Investment Securities credited to such fund shall be valued at fair market value. The Trustee shall determine the fair market value based on accepted industry standards and from information derived from accepted industry providers.

(b) As to certificates of deposit and bankers’ acceptances, the value thereof shall be the face amount thereof, plus accrued interest thereon; and

(c) As to any Investment Securities not specified above, the value thereof shall be established by prior agreement among the University and the Trustee.

Section 4.5 Debt Service Fund Moneys to be Held in Trust. Pledged Revenues and investments thereof in the Debt Service Fund shall, until applied as provided in this Indenture, be held by the Trustee for the benefit of the Registered Owners of the Outstanding Bonds in such Debt Service Fund, except that any portion of the Pledged Revenues representing principal of and interest on any 2017 Bonds which have matured or been called for redemption in accordance with Article III or for which provision for payment has been made pursuant to Section 9.2 hereof, shall be held for the benefit of the Registered Owners of such 2017 Bonds only.

Section 4.6 Nonpresentment of Bonds. In the event that any Bond shall not be presented for payment when the principal thereof becomes due in whole or in part, either at stated maturity or by redemption, or a check or draft for interest is uncashed, all liability of the Authority to that Registered Owner for such Bond or such check or draft shall thereupon cease and be discharged completely; provided that moneys sufficient to pay the principal of, premium, if any, and accrued interest then due on that Bond or such check or draft shall have been made available to the Trustee, with written

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direction to the Trustee that such moneys are to be held by the Trustee for the benefit of its Registered Owner.

Section 4.7 Creation of Rebate Fund. There is established with the Trustee a fund designated the “Rebate Fund.” Any provision hereof to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien hereunder. 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 Bond.

In accordance with the terms of Section 5.12(i) of the Loan Agreement, the University shall determine, or furnish information to a Financial Consultant to determine, the amount of Excess Earnings as of the following dates: (i) a date selected by the University that is not later than five years after the date of issuance of the Bonds, (ii) the last day of each succeeding five year period following such date on which there are Bonds outstanding, and (iii) the date on which the last Bond matures or is redeemed (each a “Computation Date”). Notice of such determination shall be provided to the Trustee and the Authority. Upon receipt of such notice, the Trustee shall notify the University in writing of the amount then on deposit in the Rebate Fund. If the amount then on deposit in the Rebate Fund is in excess of the Excess Earnings as determined by the University or the Financial Consultant, the Trustee shall at the written direction of the University forthwith pay that excess amount to the University. If the amount then on deposit in the Rebate Fund is less than such Excess Earnings, the University shall, within five days after receipt of the aforesaid notice from the Trustee (but in no event more than sixty (60) days after the Computation Date), 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 Excess Earnings. If the University does not pay that required amount within five days after receipt of the aforesaid notice from the Trustee (but in no event more than sixty (60) days after the Computation Date), the Trustee shall immediately transfer that amount from the Project Fund or from the Debt Service Fund to the Rebate Fund to the extent there are moneys available in either thereof. Within 60 days following each Computation Date, the Trustee, acting at the written direction of the University and on behalf of the Authority and the University, shall pay to the United States (in such manner and accompanied by such forms as the University shall deliver) 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 the University may direct the Trustee to pay) of the Excess Earnings earned from the date of the original delivery of the 2017 Bonds to the Computation Date. Within 60 days after the payment in full of all outstanding 2017 Bonds, the Trustee shall pay to the United States (in such manner and accompanied by such forms as the University shall deliver) from the moneys then on deposit in the Rebate Fund an amount equal to 100% of the Excess Earnings earned from the date of the original delivery of the Bonds to the date of such payment (less the amount of Excess Earnings, 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 the University. All computations of Excess Earnings pursuant to this Section and Section 5.12(i) of the Loan Agreement shall treat the amount or amounts, if any, previously paid to the United States pursuant to this Section as amounts on deposit in the Rebate Fund.

If all the gross proceeds of the 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 Bonds were issued within six months of the date of issuance of the Bonds, or if the 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 the provisions of this Section and Section 5.12(i) of the Loan Agreement shall not be applicable to the investment of original proceeds of the 2017 Bonds and the University shall not be required to comply with the foregoing provisions of this Section with respect to such proceeds; provided that the University shall remain responsible to determine

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Excess Earnings, 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 Bonds. The University shall notify the Trustee in writing of the applicability of this paragraph to the Bonds.

ARTICLE V COVENANTS AND REPRESENTATIONS OF AUTHORITY

Section 5.1 Corporate Existence; Compliance with Laws. The Authority covenants and represents that it shall: maintain its corporate existence; use its best efforts to maintain all its rights, powers, privileges and franchises; and comply with all valid and applicable laws, rules, regulations, orders, requirements and binding directions of any legislative, executive, administrative or judicial body relating to the Authority’s participation in the 2017 Project or the issuance of the Bonds.

Section 5.2 Payment of Debt Service. The Authority will pay all Debt Service, or cause it to be paid, but solely from the sources provided herein, on the dates, at the places and in the manner provided in this Indenture.

Section 5.3 No Further Assignment of Pledged Revenues. The Authority will not assign the Pledged Revenues or create any debt, lien or charge thereon, other than the assignment thereof under this Indenture and further assignments of pledges of the University’s Unrestricted University Revenues to secure Additional Bonds or other Parity Obligations of the University or as may otherwise be permitted under the Loan Agreement.

Section 5.4 Rights and Enforcement of Loan Agreement. The Trustee may enforce, in its name or in the name of the Authority, all rights of the Authority for and on behalf of the Registered Owners, and may enforce all covenants, agreements and obligations of the University under and pursuant to the Loan Agreement, regardless of whether the Authority is in default in the pursuit or enforcement of those rights, covenants, agreements or obligations; provided however, that the Authority shall at all times have the sole right to enforce the Unassigned Authority’s Rights. The Authority will take all actions within its authority to keep the Loan Agreement in effect in accordance with the terms thereof. The Authority shall give prompt notice to a Responsible Officer of the Trustee of any default known to the Authority under the Loan Agreement.

Section 5.5 Further Assurances. Except to the extent otherwise provided in this Indenture, the Authority shall not enter into any contract or take any action by which the rights of the Trustee or the Registered Owners may be impaired and shall, from time to time, execute and deliver such further instruments and take such further action as may be required to carry out the purposes of this Indenture.

Section 5.6 Authority Not to Adversely Affect Tax-Exempt Status. The Authority covenants that it shall take, or cause to be taken, all actions that may be required of the Authority for the interest on the Bonds to be and remain excluded from the gross income of the Registered Owners for federal income tax purposes, and shall not knowingly take any actions which would adversely affect that exclusion under the provisions of federal tax laws that apply to the Bonds.

Section 5.7 Bonds Not to Become Arbitrage Bonds.

(a) The Authority covenants for the benefit of the Registered Owners from time to time of the Bonds that it will not knowingly act so as to cause the proceeds of the Bonds, any moneys derived, directly or indirectly, from the use or investment thereof and any other moneys on deposit in any

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fund or account maintained in respect of the Bonds (whether such moneys were derived from the proceeds of the sale of the Bonds or from other sources) to be used in a manner which could cause the Bonds to be treated as “arbitrage bonds” within the meaning of the Code. The University by its execution of the Loan Agreement has covenanted to restrict the investment or other use of money in the funds created under this Indenture in such manner and to such extent, if any, as may be necessary, after taking into account reasonable expectations at the time the Bonds are delivered to their original purchaser, so that the Bonds will not constitute “arbitrage bonds” under the Code, and the Trustee hereby agrees to comply with the University’s written instructions to such end with respect to the investment of money in the Funds and Accounts created under this Indenture.

(b) The Authority acknowledges that the Bonds are part of the Authority’s program of making loans to 501(c)(3) organizations from the proceeds of the Authority’s bonds and covenants that it will not make a loan of the proceeds of its bonds to any 501(c)(3) organization unless such 501(c)(3) organization covenants that it will not purchase or permit any “related person” (within the meaning of Code section 147(a)(2)) to purchase Authority bonds in an amount related to the amount of the bonds issued for its benefit, unless and until it receives an opinion of Bond Counsel to the effect that such purchase will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the bonds to be purchased.

Section 5.8 Observance and Performance Agreements. The Authority will observe and perform faithfully at all times covenants, agreements, authority, actions, undertakings, stipulations and provisions to be observed or performed on its part under the Loan Agreement, this Indenture and the Bonds, and under all proceedings of the Authority pertaining thereto.

Section 5.9 Representations and Warranties. The Authority represents and warrants that:

(a) It is duly authorized by the laws of the Commonwealth, including the Act, to issue the Bonds, to execute and deliver this Indenture and the Loan Agreement and to provide the security for payment of the Debt Service in the manner and to the extent set forth in this Indenture.

(b) All actions required on its part to be performed for the issuance, sale and delivery of the Bonds and for the execution and delivery of this Indenture and the Loan Agreement have been or will be taken duly and effectively.

ARTICLE VI DEFAULT AND REMEDIES

Section 6.1 Defaults; Events of Default. The occurrence of any of the following events is defined as and declared to be and to constitute an Event of Default hereunder:

(a) Failure to pay the principal of or any premium on any Bond when such principal or premium shall become due and payable, whether at stated maturity, by redemption, by acceleration or otherwise;

(b) Failure to pay any interest on any Bond when such interest shall become due and payable;

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(c) Failure by the Authority to comply with the provisions of the Act relating to the Bonds or the 2017 Project or any Projects, or to observe or perform any other covenant, agreement or obligation on its part to be observed or performed and which is contained in this Indenture or in the Bonds, which failure shall have continued for a period of 30 days after written notice, by registered or certified mail, to the Authority and the University specifying the failure and requiring that it be remedied, which notice may be given by the Trustee in its discretion and shall be given by the Trustee at the written request of the Registered Owners of not less than the 25% in aggregate principal amount of Bonds outstanding;

(d) A draw on the Debt Service Reserve Fund and an accompanying failure of the University to replenish the same as required by this Indenture;

(e) The occurrence and continuance of an Event of Default as defined in the Loan Agreement; and

(f) The occurrence and continuance of an Event of Default under the 2017 Bonds Mortgage.

Section 6.2 Notice of Default. If any other Event of Default shall occur of which a Responsible Officer of the Trustee has notice or is deemed to have notice pursuant to Section 7.2(f) hereof, the Trustee shall give written notice of the Event of Default by registered or certified mail to the Authority, the Registered Owners of all Bonds outstanding as shown by the Register, and the University within five (5) days after a Responsible Officer of the Trustee has received or is deemed to have received notice of such Event of Default.

Section 6.3 Acceleration. Upon the occurrence and during the continuance of any Event of Default, the Trustee may, and upon written direction of the Registered Owners of a majority in principal amount of the Bonds then outstanding, shall, declare, by a notice in writing delivered to the Authority and the University, the principal of all Bonds outstanding (if not then already due and payable), together with interest accrued thereon, to be due and payable immediately. Upon any declaration that the principal of and interest on the Bonds are due and payable immediately, such principal and interest shall become and be due and payable immediately. The Trustee promptly after such declaration shall give notice thereof to all Registered Owners of the Bonds in the same manner as provided in Section 3.4 with respect to redemption of the Bonds, except that there shall be no minimum period of notice prior to the date of payment. Such notice shall specify the date, if known, on which payment of principal and interest shall be tendered to the Registered Owners of the Bonds. Upon any such declaration hereunder, the Trustee shall immediately exercise such rights as it may have under the Loan Agreement to declare all payments thereunder to be immediately due and payable.

If, after the principal of the Bonds has been so declared to be due and payable, all arrears of principal of and interest on the Bonds outstanding are paid, and the Authority and the University also perform all other things in respect of which either of them may have been in default hereunder or under the Loan Agreement and pay the reasonable fees and charges of the Trustee, including reasonable attorney’s fees, costs and expenses, then, and in every such case, the Trustee or the Registered Owners of a majority in principal amount of the Bonds then outstanding, by notice to the Authority and the University (and to the Registered Owners or the Trustee, as the case may be) may annul such declaration and its consequences, and such annulment shall be binding upon the Trustee and all Registered Owners; provided that no annulment shall extend to or affect any subsequent Event of Default or shall impair any rights consequent thereon.

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Section 6.4 Other Remedies; Rights of Registered Owners. With or without taking action under Section 6.3, upon the occurrence and during the continuance of an Event of Default, the Trustee may, except as otherwise provided in Section 7.2 hereof, pursue any available remedy to enforce the payment of Debt Service or the observance and performance of any other covenant, agreement or obligation under this Indenture, the Loan Agreement or any other instrument providing security, directly or indirectly, for the Bonds; provided that, if the University shall be in breach of Section 5.11 of the Loan Agreement, the Authority, upon five (5) days written notice to the University and the Trustee, in addition to any rights and remedies of the Trustee, may independently seek specific performance or otherwise enforce the covenants set forth in such Section; provided further that nothing herein shall be construed to require the Trustee to seek specific performance or otherwise enforce the covenants in such Section or to diminish, impair or otherwise limit the rights of the Trustee to enforce the Loan Agreement.

If any Event of Default has occurred and is continuing, the Trustee in its discretion may, and upon the written request of Registered Owners of a majority in principal amount of all Bonds 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 Registered Owners, including the right to require the Authority to enforce any rights under the Loan Agreement and to require the Authority to carry out any other provisions of this Indenture for the benefit of the Registered Owners and to perform its duties under the Act;

(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 Registered Owners; and

(d) By action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Registered Owners.

If an Event of Default under Subsection 6.1(d) occurs and is continuing, the Trustee in its discretion may, and upon the written request of Registered Owners of a majority in principal amount of all Bonds outstanding and upon receipt of indemnity to its satisfaction shall, enforce each and every right granted to it as assignee of the Loan Agreement.

No remedy conferred upon or reserved to the Trustee (or to the Registered Owners) by this Indenture is intended to be exclusive of any other remedy. Each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or otherwise to the Trustee or to the Registered Owners now or hereafter existing.

No delay in exercising or omission to exercise any remedy, right or power accruing upon any default or Event of Default shall impair that remedy, right or power or shall be construed to be a waiver of any default or Event of Default or acquiescence therein. Every remedy, right and power may be exercised from time to time and as often as may be deemed to be expedient.

No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Registered Owners, shall extend to or shall affect any subsequent default or Event of Default or shall impair any remedy, right or power consequent thereon.

As the grantee of a security interest in the Loan Agreement (except for the Unassigned Authority’s Rights), the Trustee is empowered to enforce each remedy, right and power granted to the Authority under the Loan Agreement. In exercising any remedy, right or power thereunder or hereunder,

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the Trustee shall take any action which would best serve the interests of the Registered Owners in the judgment of the Trustee (which may be based on the advice of its Counsel), applying the standards described in Sections 7.1 and 7.2.

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.

Section 6.5 Right of Registered Owners to Direct Proceedings. The Registered Owners of a majority in principal amount of the Bonds then Outstanding hereunder shall have the right to direct the method and place of conducting all remedial proceedings by the Trustee hereunder, provided such directions shall not be otherwise than in accordance with law or the provisions hereof and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Registered Owners not parties to such direction.

Section 6.6 Application of Moneys. After payment of any fees, costs, expenses, liabilities and advances of, paid, incurred or made by the Trustee, including those in the collection of moneys pursuant to any right given or action taken under the provisions of this Article or the provisions of the Loan Agreement (including, without limitation, reasonable attorney’s fees, costs and expenses, except as limited by law or judicial order or decision entered in any action taken under this Article) and any amount required pursuant to Section 4.7, all moneys so received by the Trustee, shall be applied as follows, subject to Section 3.5, Section 4.4, and Section 4.5:

(a) Unless the principal of all of the Bonds shall have become, or shall have been declared to be, due and payable, all of such moneys shall be deposited in the Debt Service Fund and shall be applied:

First — To the payment to the Registered Owners entitled thereto of all installments of interest then due on the Bonds, in the order of the dates of maturity of the installments of that interest, beginning with the earliest date of maturity and, if the amount available is not sufficient to pay in full any particular installment, then to the payment thereof ratably, according to the amounts due on that installment, to the Registered Owners entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Bonds; and

Second — To the payment to the Registered Owners entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds previously called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), whether at stated maturity or by redemption, in the order of their due dates, beginning with the earliest due date, with interest on those Bonds from the respective dates upon which they became due at the rates specified in those Bonds, and if the amount available is not sufficient to pay in full all Bonds due on any particular date, together with that interest, then to the payment thereof ratably, according to the amounts of principal due on that date, to the Registered Owners entitled thereto, without any discrimination or privilege,

The surplus, if any, remaining after the application of the moneys as set forth above shall be paid to the University or the person lawfully entitled to receive the same as a court of competent jurisdiction may direct,

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(b) If the principal of all of the Bonds shall have become due or shall have been declared to be due and payable pursuant to this Article, all of those moneys shall be deposited into the Debt Service Fund and shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest, of interest over principal, of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Registered Owners entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Bonds.

(c) If the principal of all of the Bonds shall have been declared to be due and payable pursuant to this Article, and if that declaration thereafter shall have been rescinded and annulled under the provisions of Section 6.3 or 6.10 subject to the provisions of paragraph (b) of this Section in the event that the principal of all of the Bonds shall become due and payable later, the moneys shall be deposited in the Debt Service Fund and shall be applied in accordance with the provisions of Article IV.

(d) Whenever moneys are to be applied pursuant to the provisions of this Section, those moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of moneys available for application and the likelihood of additional moneys becoming available for application in the future. Whenever the Trustee shall direct the application of those moneys, it shall fix the date upon which the application is to be made (and with respect to acceleration such date shall be fixed in accordance with Section 6.3), and upon that date, interest shall cease to accrue on the amounts of principal, if any, to be paid on that date, provided the moneys are available therefor. The Trustee shall give notice of the deposit with it of any moneys and of the fixing of that date, all consistent with the requirements of Section 2.8 for the establishment of, and for giving notice with respect to, a Special Record Date for the payment of overdue interest. Except as otherwise provided in Section 2.10, the Trustee shall not be required to make payment of principal of and any premium on a Bond to the Registered Owner thereof, until the Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if it is paid fully.

Section 6.7 Remedies Vested in Trustee. All rights of action (including without limitation, the right to file proof of claims) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding relating thereto. Any suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining any Registered Owners as plaintiffs or defendants. Any recovery of judgment shall be for the benefit of the Registered Owners of the outstanding Bonds, subject to the provisions of this Indenture.

Section 6.8 Rights and Remedies of Registered Owners. A Registered Owner shall not have any right to institute any suit, action or proceeding for the enforcement of this Indenture, for the execution of any trust hereof, or for the exercise of any other remedy hereunder, unless:

(a) there has occurred and is continuing an Event of Default of which a Responsible Officer of the Trustee has been notified, as provided in Subsection 7.2(f), or of which it is deemed to have notice under that Subsection,

(b) the Registered Owners of at least a majority in aggregate principal amount of 2017 Bonds then outstanding shall have made written request to the Trustee and shall have afforded the Trustee reasonable opportunity to proceed to exercise the remedies, rights and powers granted herein or to institute the suit, action or proceeding in its own name, and shall have offered indemnity to the Trustee as provided in Section 7.1 and Section 7.2.

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(c) the Trustee thereafter shall have failed or refused to exercise the remedies, rights and powers granted herein or to institute the suit, action or proceeding in its own name.

At the option of the Trustee, such notification (or notice), request, opportunity and offer of indemnity are conditions precedent in every case, to the institution of any suit, action or proceeding described above.

No one or more Registered Owners shall have any right to affect, disturb or prejudice in any manner whatsoever the security or benefit of this Indenture by its or their action, or to enforce, except in the manner provided herein, any remedy, right or power hereunder. Any suit, action or proceeding shall be instituted, had and maintained in the manner provided herein for the benefit of the Registered Owners of all Bonds outstanding. Notwithstanding the foregoing provisions of this Section or any other provision of this Indenture, the obligation of the Authority shall be absolute and unconditional to pay hereunder, but solely from the Pledged Revenues and other funds pledged under this Indenture, the principal or redemption price of, and interest on, the Bonds to the respective Registered Owners thereof on the respective due dates thereof, and nothing herein shall affect or impair the right of action, which is absolute and unconditional, of such Registered Owners to enforce such payment.

Section 6.9 Termination of Proceedings. In case the Trustee shall have proceeded to enforce any remedy, right or power under this Indenture in any suit, action or proceeding, and the suit, action or proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, the Authority, the Trustee and the Registered Owners shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the Trustee shall continue as if no suit, action or proceeding had been taken.

Section 6.10 Waivers of Events of Default. Except as hereinafter provided, at any time, in its discretion, the Trustee may (and upon the written request of the Registered Owners of a majority in aggregate principal amount of all Bonds outstanding, shall) waive any Event of Default with respect to the Bonds hereunder and its consequences and annul any corresponding acceleration of maturity of principal of the Bonds. There shall not be so waived, however, any Event of Default described in Subsection 6.1(a), (b) or (e) nor shall any acceleration in connection therewith be annulled, unless at the time of that waiver or annulment payments of the amounts and satisfaction of the other conditions provided in Section 6.3 for annulment have been made or provision has been made therefor. No waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

Section 6.11 Certain Rights of Authority. Notwithstanding any other provision hereof, upon the occurrence of an Event of Default described in Subsection 6.1(d) hereof, the Authority reserves the right to exercise or refrain from exercising remedies under the Loan Agreement with respect to such Event of Default and such Event of Default may not be waived or annulled without the prior written consent of the Authority.]

Section 6.12 Trustee’s Right to Appointment of Receiver. As provided by the Act, the Trustee shall be entitled as of right to the appointment of a receiver; and the Trustee, the Registered Owners 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.

Section 6.13 Trustee and Registered Owners Entitled to All Benefits Under Act. It is the purpose of this Article to provide such remedies to the Trustee and the Registered Owners as may be lawfully granted under the provisions of the Act, but should any remedy herein granted be held unlawful, the Trustee and the Registered Owners shall nevertheless be entitled to every remedy provided by the Act.

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It is further intended that, insofar as lawfully possible, the provisions of this Article shall apply to and be binding upon any trustee or receiver appointed under the Act.

ARTICLE VII TRUSTEE

Section 7.1 Trustee’s Acceptance and Responsibilities. The Trustee accepts the trusts imposed upon it by this Indenture, and agrees to observe and perform those trusts, but only upon and subject to the terms and conditions set forth in this Article, to all of which the parties hereto, the University and the Registered Owners agree. In its capacity as Trustee hereunder, the Trustee shall authenticate the Bonds and shall act as registrar, transfer agent and paying agent for the Bonds, all as provided herein.

(a) Prior to the occurrence of an Event of Default of which the Trustee has been notified, or of which the Trustee is deemed to have notice, as provided in Subsection 7.2(f), and after the cure or waiver of all defaults or Events of Default which may have occurred,

(i) the Trustee undertakes to perform only those duties and obligations which are set forth specifically in this Indenture, and no duties or obligations shall be implied to the Trustee; and

(ii) in the absence of bad faith or negligence on its part, the Trustee may rely conclusively, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are required specifically to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.

(b) In case a default or an Event of Default has occurred and is continuing hereunder (of which the Trustee has been notified, or is deemed to have notice as provided in Section 7.2(f)), the Trustee shall exercise those rights and powers vested in it by this Indenture and shall use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of its own affairs.

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, its own willful misconduct, except that

(i) this Subsection shall not be construed to affect the limitation of the Trustee’s duties and obligations provided in Subsection 7.1(a)(i) or the Trustee’s right to rely on the truth of statements and the correctness of opinions as provided in Subsection 7.1(a)(ii);

(ii) the Trustee shall not be liable for any error of judgment made in good faith by any of its officers, unless it shall be established that the Trustee was negligent in ascertaining the pertinent facts;

(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Registered Owners* of not less than a majority in principal amount of the Bonds then outstanding relating to

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the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and

(iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it; provided that this clause (iv) shall not relieve the Trustee of its duties with respect to making payments on the Bonds when due from funds available under the Indenture.

(d) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

(e) The Trustee accepts and agrees to perform any and all duties which are imposed upon the Trustee under DTC’s Operational Arrangements.

Section 7.2 Certain Rights and Obligations of Trustee.

(a) The Trustee (i) may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, or receivers and shall not be responsible for any willful misconduct or negligence on the part of any attorney, agent or receiver appointed by the Trustee with due care, (ii) shall be entitled to the advice of counsel concerning all matters of trusts hereof and duties hereunder, and (iii) may pay reasonable compensation in all cases to all of those attorneys, agents, receivers and employees reasonably employed by it in connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the Authority or the University) approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in good faith in reliance upon that opinion or advice.

(b) Except for its certificate of authentication on the 2017 Bonds and for any certificates delivered by the Trustee in connection with closing on the 2017 Bonds, the Trustee shall not be responsible for (i) any recital in this Indenture or in the Bonds, (ii) the validity, priority, recording, rerecording, filing or refiling of this Indenture or any Supplemental Indenture, (iii) any instrument or document of further assurance or collateral assignment, (iv) the initial financing statements, (v) the validity of the execution by the Authority of this Indenture, any Supplemental Indenture or instruments or documents of further assurance, (vi) the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, (vii) the value of or title to the facilities refinanced by the Bonds, or insurance of the facilities refinanced by the Bonds or collection of insurance moneys, or (viii) the maintenance of the security hereof. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, agreements or obligations on the part of the Authority or the University under the Loan Agreement except as set forth hereinafter; but the Trustee may require of the Authority or the University full information and advice as to the observance or performance of those covenants, agreements and obligations. Except as otherwise provided in Section 6.4, the Trustee shall have no obligation to observe or perform any of the duties of the Authority under the Loan Agreement. Notwithstanding anything to the contrary contained in this Indenture or any Supplemental Indenture, the Trustee shall not be responsible for any initial filings of any financing statements or the information contained therein (including the exhibits thereto), the perfection of any such security interests, or the accuracy or sufficiency of any description of collateral in such initial filings or for filing any modifications or amendments to the initial filings required by any amendments to Article 9 of the

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Uniform Commercial Code. In addition, unless a Responsible Officer of the Trustee shall have been notified in writing by the Authority or the University that any such initial filing or description of collateral was or has become defective, the Trustee shall be fully protected in (i) conclusively relying on such initial filing and descriptions in filing any financing or continuation statements or modifications thereto and (ii) filing any such financing or continuation statements in the same filing offices as the initial filings were made. The Trustee shall cause to be filed a continuation statement with respect to each Uniform Commercial Code financing statement relating to the Bonds which was filed at the time of the issuance thereof, in such manner and in such places as the initial filings were made, provided that a copy of the filed original financing statement is timely delivered to the Trustee. The University shall be responsible for the reasonable costs incurred by the Trustee in the preparation and filing of all continuation statements hereunder, including attorney’s fees, costs and expenses, if any.

(c) The Trustee shall not be accountable for the application by the Authority or any other person of the proceeds of any Bonds authenticated or delivered hereunder.

(d) The Trustee shall conclusively rely upon and shall be fully protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who is the Registered Owner of any Bonds at the time of making the request or giving the authority or consent, shall be conclusive and binding upon all future Registered Owners of the same Bond and of Bonds issued in exchange therefor or in place thereof.

(e) As to the existence or nonexistence of any fact for which the Authority, or the University may be responsible or as to the sufficiency or validity of any instrument, document, report, paper or proceeding, the Trustee shall be entitled to conclusively rely upon a certificate signed on behalf of the Authority or the University by an Authorized Representative or authorized officer thereof, as applicable, as sufficient evidence of the facts recited therein. Prior to the occurrence of a default or Event of Default hereunder of which the Trustee has been notified, as provided in Section 7.2(f) or of which by that Section the Trustee is deemed to have notice, the Trustee may accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient; provided that the Trustee in its discretion may require and obtain any further evidence which it deems to be necessary or advisable; and provided further that the Trustee shall not be bound to secure any further evidence. The Trustee may accept a certificate of the officer, or an assistant thereto, having charge of the appropriate records, to the effect that a resolution has been adopted by the Authority in the form recited in that certificate, as conclusive evidence that the resolution has been duly adopted and is in full force and effect.

(f) The Trustee shall not be required to take notice, and shall not be deemed to have notice, of any default or Event of Default hereunder, except Events of Default described in Section 6.1(a) and Section 6.1(b) unless a Responsible Officer of the Trustee shall be notified specifically of the default or Event of Default in a written instrument or document delivered to it by the Authority or the Registered Owners of at least 10% of the aggregate principal amount of Bonds outstanding or otherwise has actual knowledge thereof. In the absence of delivery of a notice satisfying those requirements, the Trustee may assume conclusively that there is no default or Event of Default, except as noted above.

(g) At any reasonable time, the Trustee and its duly authorized agents, attorneys, experts, engineers, accountants and representatives (i) may inspect and copy fully all books, papers and records of the Authority pertaining to the Project and the Bonds, and (ii) may make any memoranda from and in regard thereto as the Trustee may desire.

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(h) The Trustee shall not be required to give any bond or surety with respect to the execution of these trusts and powers or otherwise in respect of the premises.

(i) Notwithstanding anything contained elsewhere in this Indenture to the contrary, the Trustee may reasonably request any showings, certificates, reports, opinions, appraisals and other information, and any corporate action and evidence thereof, in addition to that required by the terms hereof, as a condition to the authentication of any Bonds or the taking of any action whatsoever within the purview of this Indenture, if the Trustee deems it to be desirable for the purpose of establishing the right of the Authority to the authentication of any Bonds or the right of any person to the taking of any other action by the Trustee; provided that the Trustee shall not be required to make any such request.

(j) Before taking action hereunder pursuant to Section 7.4 or Article VI, the Trustee may require that a satisfactory indemnity bond be furnished to it for the reimbursement of all expenses which it may incur (including attorney’s fees, costs and expenses) and to protect it against all liability by reason of any action so taken, including, but not limited to, any liability arising directly or indirectly under any federal, state or local statute, rule, law or ordinance related to the protection of the environment or hazardous substances, except liability which is adjudicated to have resulted from its negligence, or willful misconduct. The Trustee may, but shall not be required to, take action without that indemnity, and in that case, the Authority shall cause the University to reimburse the Trustee for all of the Trustee’s expenses pursuant to Section 7.3.

(k) Unless otherwise provided herein, all moneys received by the Trustee under this Indenture shall be held in trust for the purposes for which those moneys were received, until those moneys are used, applied or invested as provided herein; provided that those moneys need not be segregated from other moneys, except to the extent required by this Indenture or by law, The Trustee shall not have any liability for interest on any moneys received hereunder, except to the extent expressly provided herein or agreed with the Authority or the University.

(l) Any resolution of the Authority, and any opinions, certificates and other instruments and documents for which provision is made in this Indenture, may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Trustee for its actions taken hereunder.

(m) The Trustee may construe any ambiguous or inconsistent provisions of this Indenture in such manner as it deems reasonable, and any such construction of such provisions by the Trustee shall be binding upon the Authority, the University and the Registered Owners absent demonstrable error.

(n) Notwithstanding any provision of this Indenture to the contrary, the Trustee shall not be liable or responsible for the accuracy of any calculation or determination which may be required in connection with or for the purpose of complying with Section 148 of the Code, including, without limitation, the calculation of amounts required to be paid to the United States under the provisions of Section 148 of the Code, the maximum amount which may be invested in “nonpurpose obligations” as defined in the Code and the fair market value of any investments made hereunder, and the sole obligation of the Trustee with respect to the investments of funds hereunder shall be to invest the moneys received by the Trustee as provided herein pursuant to the written instructions of the University.

(o) At the written request of any Registered Owner or beneficial owner of the Bonds, the Trustee shall (i) request the University to provide the Trustee with copies of such financial statements and reports as the Trustee may be entitled to receive pursuant to Section 5.2 of the Loan Agreement and (ii) provide to such Registered Owner or beneficial owner at his expense copies of any financial

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statements and reports received by the Trustee pursuant to Section 5.2 of the Loan Agreement and/or any notices of litigation received by the Trustee pursuant to Section 5.7 of the Loan Agreement. The Trustee shall have no duty to review or analyze any such financial statements delivered to it or verify the accuracy thereof and shall hold such financial statements solely as a repository for the benefit of the holders of the Bonds; the Trustee shall not be deemed to have notice of any information contained therein or event of default which may be disclosed therein in any manner.

(p) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful misconduct.

(q) Except as otherwise expressly provided hereunder, the Trustee shall not be required to give or furnish any notice, demand, report, reply, statement advice or opinion to any Registered Owner, the Authority, the University or any other person, and the Trustee shall not incur any liability for its failure or refusal to give or furnish the same unless obligated or required to do so by express provisions hereof.

(r) In acting or omitting to act pursuant to the Loan Agreement, the Trustee shall be entitled to all of the rights and immunities accorded to it under this Indenture, including but not limited to this Article VII,

(s) The Trustee shall not be liable with respect to any action taken or omitted to be taken at the direction of the Registered Owners of a majority in aggregate principal amount of the Bonds Outstanding permitted to be given by them under this Indenture.

(t) The Trustee shall have no responsibility with respect to any information in any offering memorandum or other disclosure material distributed with respect to the Bonds (other than information regarding the Trustee furnished by the Trustee) or for compliance with securities laws in connection with the issuance and sale of the Bonds.

(u) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture or any Supplemental Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; hurricanes or other storms; wars; terrorism; similar military disturbances; sabotage; epidemic; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental action; it being understood that the Trustee shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.

(v) The Trustee shall have the right to accept and act upon directions or instructions given pursuant to this Indenture, any Supplemental Indenture, the Loan Agreement, the 2017 Bonds Mortgage or any other document reasonably relating to the Bonds and delivered using Electronic Means (defined below); provided, however, that the Authority or the University, as the case may be, shall provide to the Trustee an incumbency certificate listing Authorized Officers with the authority to provide such directions or instructions (each an “Authorized Officer”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If the Authority or the University elects to give the Trustee directions or instructions using Electronic Means and the Trustee in its discretion elects to act upon such directions or instructions, the Trustees’ understanding of such directions or instructions shall be deemed controlling. The Authority and the University each understands and agrees that the Trustee cannot

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determine the identity of the actual sender of such directions or instructions and that the Trustee shall conclusively presume that directions or instructions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority and the University, as the case may be, shall each be responsible for ensuring that only Authorized Officers transmit such directions or instructions to the Trustee and that all Authorized Officers treat applicable user and authorization codes, passwords and/or authentication keys as confidential and with extreme care. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such directions or instructions notwithstanding such directions or instructions conflict or are inconsistent with a subsequent written direction or written instruction. Each of the Authority and the University agree: (i) to assume all risks arising out of the use of Electronic Means to submit directions or instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized directions or instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting directions or instructions to the Trustee and that there may be more secure methods of transmitting directions or instructions; (iii) that the security procedures (if any) to be followed in connection with its transmission of directions or instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. “Electronic Means” shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys, or another method or system specified by the Trustee as available for use in connection with its services hereunder.

Section 7.3 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment or reimbursement by the University, as provided in the Loan Agreement, for reasonable fees for the Ordinary Services of the Trustee and its agents rendered hereunder and for all reasonable advances, counsel fees, costs and expenses and other Ordinary Expenses reasonably and necessarily paid or incurred by it and its agents in connection with the provision of Ordinary Services. For purposes hereof, fees for Ordinary Services provided for by their respective standard fee schedule or other fee arrangement shall be considered reasonable. In the event that it should become necessary for any of them to perform Extraordinary Services, they shall be entitled to reasonable extra compensation therefor and to reimbursement for reasonable and necessary Extraordinary Expenses incurred in connection therewith. The Trustee shall not be entitled to compensation or reimbursement for Extraordinary Services or Extraordinary Expenses occasioned by its negligence, willful misconduct.

The fees for the Trustee’s Ordinary Services and Ordinary Expenses and Extraordinary Service and Extraordinary Expenses shall be entitled to payment and reimbursement only from (i) the Project Fund, (ii) Additional Payments made by the University pursuant to the Loan Agreement, (iii) according to Section 6.6 hereof, or (iv) from other moneys available therefor. Any amounts payable to the Trustee pursuant to this Section shall be payable upon demand and shall bear interest from five Business Days following the date of demand therefor at the lesser of (i) Trustee’s or its primary banking affiliate’s then effective prime rate or (ii) the highest amount then allowed by law.

Section 7.4 Intervention by Trustee. The Trustee may intervene on behalf of the Registered Owners, and shall intervene if requested to do so in writing by the Registered Owners of at least 25% of the aggregate principal amount of Bonds outstanding, in any judicial proceeding involving any Bonds to which the Authority or the University is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Registered Owners of the Bonds. The rights and obligations of the Trustee under this Section are subject to the approval of that intervention by a court of competent jurisdiction. The Trustee may require that a satisfactory indemnity bond be provided to it in accordance with Sections 7.1 and 7.2 before it takes action hereunder.

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Section 7.5 Successor Trustee. Anything herein to the contrary notwithstanding,

(a) any corporation or association (i) into which the Trustee may be converted or merged, (ii) with which the Trustee or any successor to it may be consolidated, or (iii) to which the Trustee may sell or transfer its corporate trust assets and trust business as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger, consolidation, sale or transfer, ipso facto, shall be and become successor Trustee hereunder and shall be vested with all of the title to the whole property or trust estate hereunder; and

(b) that corporation or association, as successor Trustee, shall be vested further, as was its predecessor, with each and every trust, property, remedy, power, right, duty, obligation, discretion, privilege, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by, vested in or conveyed to the Trustee, without the execution or filing of any instrument or document or any further act on the part of any of the parties hereto.

Any such successor Trustee, however, (i) shall be a trust company, a national association or a bank having the powers of a trust company, (ii) shall be duly authorized to exercise trust powers within the Commonwealth, and (iii) shall have a reported capital and surplus of not less than $75,000,000.

Section 7.6 Resignation by Trustee. The Trustee may resign at any time from the trusts created hereby by giving written notice of the resignation to the Authority and the University and by mailing written notice of the resignation to the Registered Owners as their names and addresses appear on the Register at the close of business 15 days prior to the mailing. The resignation shall take effect only upon the appointment of a successor Trustee.

Section 7.7 Removal of Trustee. The Trustee may be removed at any time by an instrument or document or concurrent instruments or documents delivered to the Trustee at least thirty (30) days prior to the date of removal, with copies thereof mailed to the Authority, and the University, signed by or on behalf of the Registered Owners of not less than a majority in aggregate principal amount of the Bonds outstanding. So long as no Event of Default has occurred and is continuing hereunder or under the Loan Agreement, the Trustee may be removed at any time by an instrument or document executed by an Authorized Representative of the University and delivered to the Trustee and the Authority at least thirty (30) days prior to the date of removal.

The Trustee also may be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provision of this Indenture with respect to the duties and obligations of the Trustee by any court of competent jurisdiction upon the application of the Authority or the Registered Owners of not less than 25% in aggregate principal amount of the Bonds outstanding.

The removal of the Trustee pursuant to this Section shall take effect only upon the appointment of a successor Trustee.

Section 7.8 Appointment of Successor Trustee. If (i) the Trustee shall resign, shall be removed, shall be dissolved, or shall become otherwise incapable of acting hereunder, (ii) the Trustee shall be taken under the control of any public agency, or (iii) a receiver shall be appointed for the Trustee by a court, then a successor Trustee shall be appointed by the University, with the written consent of the Authority and, if an Event of Default has occurred and is continuing under this Indenture, shall not be unsatisfactory to Registered Owners of a majority in aggregate principal amount of Bonds Outstanding; provided that if a successor Trustee is not so appointed within 10 days after (a) a notice of resignation or

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an instrument or document of removal is received by the Authority, as provided in Section 7.6 and Section 7.7, respectively, or (b) the Trustee is dissolved, taken under control, becomes otherwise incapable of acting or a receiver is appointed, in each case, as provided above, then, so long as the University shall not have appointed a successor Trustee, the Registered Owners of a majority in aggregate principal amount of Bonds outstanding may designate a successor Trustee by an instrument or document or concurrent instruments or documents in writing signed by or on behalf of those Registered Owners. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section within sixty (60) days of the resignation, removal, incapability or the occurrence of a vacancy in the office of Trustee, the Registered Owner of any Bond outstanding or any retiring Trustee, at the expense of the University, may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee.

Every successor Trustee appointed pursuant to this Section (i) shall be a trust company or a bank having the powers of a trust company, (ii) shall be duly authorized to exercise trust powers within the Commonwealth, (iii) shall have a reported capital and surplus of not less than $75,000,000, and (iv) shall be willing to accept the trusteeship under the terms and conditions of this Indenture.

Every successor Trustee appointed hereunder shall execute and acknowledge, and shall deliver to its predecessor, the Authority and the University, an instrument or document in writing accepting the appointment. Thereupon, without any further act, the successor shall become vested with all of the trusts, properties, claims, demands, causes of action, immunities, estates, titles, interests and liens of its predecessor. Upon the reasonable written request of its successor or the Authority, the predecessor Trustee (i) shall execute and deliver an instrument or document transferring to its successor all of the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of the predecessor Trustee hereunder, and (ii) shall take any other action necessary to duly assign, transfer and deliver to its successor all property (including, without limitation, all securities and moneys) held by it as Trustee. Should any instrument or document in writing from the Authority be requested by any successor Trustee for vesting and conveying more fully and certainly in and to that successor the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens vested or conveyed or intended to be vested or conveyed hereby in or to the predecessor Trustee, the Authority shall execute, acknowledge and deliver that instrument or document.

In the event of a change in the Trustee, the predecessor Trustee shall cease to be custodian of any moneys which it may hold pursuant to this Indenture and shall cease to be registrar, transfer agent, authenticating agent and paying agent for the Bonds. The successor Trustee shall become custodian for moneys held under this Indenture and registrar, transfer agent, authenticating agent and paying agent as and to the extent provided herein.

Section 7.9 Adoption of Authentication. In case any of the Bonds shall have been authenticated, but shall not have been delivered, any successor Trustee may adopt the certificate of authentication of any predecessor Trustee and may deliver those Bonds so authenticated as provided herein. In case any Bonds shall not have been authenticated, any successor Trustee may authenticate those Bonds either in the name of any predecessor or in its own name. In all cases, the certificate of authentication shall have the same force and effect as provided in the Bonds or in this Indenture with respect to the certificate of authentication of the predecessor Trustee.

Section 7.10 Designation and Succession of Authenticating Agent, Registrar, Transfer Agent and Paying Agent. The Trustee may, with the consent of the Authority and the University, appoint

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an agent or agents, with power to act on the Trustee’s behalf and subject to the Trustee’s direction in the authentication, registration, transfer and exchange of Bonds and payment of Debt Service under the provisions of this Indenture; provided that any paying agent so appointed shall have and maintain a rating assigned to its or its parent holding company’s long-term unsecured debt by Moody’s at least equal to “Baa3” (if the Bonds are then rated by Moody’s), by Standard & Poor’s at least equal to “BBB-” (if the Bonds are then rated by Standard & Poor’s), and by Fitch at least equal to “BBB-” (if the Bonds are then rated by Fitch), unless the Authority and the University receive written confirmation from the Rating Service that the appointment of a paying agent not meeting such rating requirement will not result in a reduction or withdrawal of its rating of the Bonds. For all purposes of this Indenture, the authentication, registration and delivery of Bonds by any such agent pursuant to this Section shall be deemed to be authentication, registration and delivery of those Bonds by the Trustee.

Any corporation or association with or into which any such agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any such agent shall be a party, or any corporation or association succeeding to the corporate trust business of any such agent, shall be the successor of that agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or the such agent or such successor corporation.

Any such agent may at any time resign by giving written notice of resignation to the Trustee, the University and the Authority. The Trustee may at any time terminate the agency of any such agent by giving written notice of termination to such agent, the Authority and the University. Upon receiving such a notice of resignation or upon such a termination, or in the case at any time any such agent shall cease to be eligible under this Section, the Trustee may appoint a successor agent. The Trustee shall give written notice of appointment of a successor agent to the Authority and the University and shall mail, within 10 days after that appointment, notice thereof to all Registered Owners as their names and addresses appear on the Register on the date of that appointment. The Trustee shall pay to any such agent from time to time reasonable compensation for its services, and the Trustee shall be entitled to be reimbursed for such payments as Ordinary Expenses, subject to Section 7.3.

The pertinent provisions of Subsections 7.2(b), (c), (d), (h) and (i) shall be applicable to any such agent.

Section 7.11 Dealing in Bonds. The Trustee, its affiliates, and any directors, officers, employees or agents thereof, in good faith, may become the owners of Bonds secured hereby with the same rights which it or they would have hereunder if the Trustee did not serve in such capacity. The Trustee and its affiliates may also engage in or be interested in any financial or other transaction with the Authority, the University, or any related party.

Section 7.12 Representations, Agreements and Covenants of Trustee. The Trustee hereby represents and covenants that it is a national banking association, duly authorized to exercise corporate trust powers in the Commonwealth, that it will take such action, if any, as is necessary to remain duly authorized to exercise corporate trust powers in the Commonwealth.

ARTICLE VIII SUPPLEMENTS AND AMENDMENTS

Section 8.1 Supplemental Indentures Not Requiring Consent of Registered Owners. This Indenture may be amended or supplemented at any time and from time to time, without notice to or the consent of the Registered Owners, by a Supplemental Indenture entered into between the Authority

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and the Trustee, consented to by the University, and authorized by a resolution of the Authority filed with the Trustee, for one or more of the following purposes:

(a) To cure any ambiguity, inconsistency or formal defect or omission in this Indenture;

(b) To grant to or confer upon the Trustee for the benefit of the Registered Owners any additional rights, remedies, powers or authority;

(c) To confirm any pledge of or lien on the Pledged Revenues, to assign additional revenues under this Indenture or to accept additional security or instruments of further assurance;

(d) To add to the covenants, agreements and obligations of the Authority under this Indenture, other covenants, agreements and obligations to be observed for the protection of the Registered Owners, or to surrender or limit any right, power or authority reserved to or conferred upon the Authority in this Indenture;

(e) To permit the use of a book entry system to identify the owner of an interest in an obligation issued by the Authority under this Indenture, whether that obligation was formerly, or could be, evidenced by a tangible security;

(f) To permit the Trustee to comply with any obligations imposed upon it by law;

(g) To make provisions relating to any letter of credit, bond insurance, guaranty or other credit enhancement which may be proposed for the benefit of the Registered Owners of any Outstanding Bonds;

(h) To achieve compliance of this Indenture with any applicable federal securities or tax laws;

(i) To make amendments to the provisions hereof relating to arbitrage matters under Section 148 of the Code if, in the opinion of Bond Counsel selected by the Authority, those amendments would not cause the interest on the Bonds outstanding to become included in the gross income of the Registered Owners thereof for federal income tax purposes, which amendments may, among other things, change the responsibility for making the relevant arbitrage calculations;

(j) To permit any other amendment which is not materially adverse to the interests of the Trustee or the Registered Owners;

(k) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to obtain, maintain or improve a rating of the Bonds by Moody’s, Standard & Poor’s or Fitch, as applicable; or

(l) to implement the issuance of Additional Bonds as provided in Article III hereof.

Before the Authority and the Trustee shall enter into any Supplemental Indenture pursuant to this Section, there shall have been delivered to the Trustee and the Authority an opinion of Bond Counsel to the effect that such Supplemental Indenture is authorized or permitted by this Indenture and the Act, that it will, upon the execution and delivery thereof, be valid and binding upon the Authority in accordance with its terms, and that it will not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes.

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Section 8.2 Indentures Requiring Consent of Registered Owners. In addition to the Supplemental Indentures permitted by Section 8.1, this Indenture may be amended or supplemented from time to time by a Supplemental Indenture consented to by the University and approved by the Registered Owners of a majority in aggregate principal amount of the Bonds then outstanding, except that, other than as permitted by Section 8.1, this Indenture may not be amended with respect to (a) the principal or redemption price or interest payable upon any Bonds, (b) the Interest Payment Dates, the dates of maturity or the redemption provisions of any Bonds, and (c) this Article VIII, without the unanimous consent of all Registered Owners. Before the Authority and the Trustee may enter into such Supplemental Indenture, there shall have first been delivered to the Trustee (1) the required consents, in writing, of Registered Owners and (2) an opinion of Bond Counsel to the effect that such Supplemental Indenture is authorized or permitted by this Indenture and the Act, that it will, upon the execution and delivery thereof, be valid and binding upon the Authority in accordance with its terms, and that it will not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes.

Section 8.3 Consent of University. Anything contained herein to the contrary notwithstanding, a Supplemental Indenture executed and delivered in accordance with this Article shall not become effective unless and until the University shall have consented in writing to the execution and delivery of that Supplemental Indenture.

Section 8.4 Authorization to Trustee; Effect of Supplement. The Trustee is authorized to join with the Authority in the execution and delivery of any Supplemental Indenture in accordance with this Article and to make the further agreements and stipulations which may be contained therein, Thereafter, (a) such Supplemental Indenture shall form a part of this Indenture; (b) all terms and conditions contained in that Supplemental Indenture as to any provision authorized to be contained therein shall be deemed to be a part of the terms and conditions of this Indenture for any and all purposes; (c) this Indenture shall be deemed to be modified and amended in accordance with the Supplemental Indenture; and (d) the respective rights, duties and obligations under this Indenture of the Authority, the University, the Trustee, and all Registered Owners of Bonds outstanding shall be determined, exercised and enforced hereunder in a manner which is subject in all respects to those modifications and amendments made by the Supplemental Indenture. The Trustee shall not be required to execute any Supplemental Indenture containing provisions materially adverse to the Trustee.

Section 8.5 Modification by Unanimous Consent. Notwithstanding anything contained elsewhere in this Indenture, the rights and obligations of the Authority and of the Registered Owners, and the terms and provisions of the Bonds and this Indenture or any Supplemental Indenture, may be modified or altered in any respect with the consent of (i) the Authority, (ii) the Registered Owners of all of the Bonds outstanding, and (iii) the University.

Section 8.6 Amendment of Loan Agreement. If the Authority (or Trustee as assignee of the Authority) and the University propose to amend the Loan Agreement, the Trustee may in each case consent thereto; provided that if such proposal would amend the Loan Agreement in such a way, other than to effect changes or modifications substantially of the type set forth in Section 8.1 hereof, which would materially adversely affect the interests of the Registered Owners, the Trustee shall notify and the Registered Owners of the proposed amendment and may consent thereto with the consent of the Registered Owners of a majority in aggregate principal amount of the Bonds then outstanding, except that no amendment materially adversely affecting the interests of the Registered Owners shall be consented to by the Trustee without notice to and the unanimous consent of all Registered Owners if such materially adverse amendment would (a) decrease the amounts payable under the Loan Agreement, (b) change the date of payment or prepayment provisions under the Loan Agreement, or (c) change any provisions with respect to amendment. Before the Authority shall enter into, and the Trustee shall consent to, any modification, alteration, amendment or supplement to the Loan Agreement pursuant to this Section, there

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shall have been delivered to the Authority and the Trustee an opinion of Bond Counsel to the effect that such amendment is authorized or permitted by this Indenture and the Act and will not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes.

Section 8.7 Trustee Authorized to Join in Supplements and Amendments; Reliance on Counsel. The Trustee is authorized to join with the Authority in the execution and delivery of any Supplemental Indenture or amendment permitted by this Article and in so doing shall be fully protected by an opinion of counsel that such Supplemental Indenture or amendment is so permitted.

Section 8.8 Notice to Rating Services. The Trustee shall promptly notify each Rating Service (if the Bonds are then rated by such Rating Service) of any material supplement or amendment to this Indenture or the Loan Agreement of which a Responsible Officer of the Trustee has actual notice.

ARTICLE IX DEFEASANCE

Section 9.1 Defeasance. When the principal of, redemption premium, if any, and interest on all Bonds issued hereunder have been paid, or provision has been made for payment of the same together with the compensation and expenses of the Trustee and all other sums payable hereunder by the Authority or the University, the right, title and interest of the Trustee in and to the Trust Estate shall thereupon cease and the Trustee, on the written demand of the Authority or the University, shall release this Indenture and shall, at the expense of the University, execute such documents to evidence such release as may be reasonably required by the Authority or the University and shall turn over to the University or to such person, body or authority as may be entitled to receive the same, all balances then held by it hereunder not required for the payment of the Bonds and such other sums payable hereunder. If payment or provision therefor is made with respect to less than all of the Bonds of any maturity, the particular Bonds (or portions thereof) of such maturity for which provision for payment shall have been considered made shall be selected by lot by the Trustee, and thereupon the Trustee shall take similar action for the release of this Indenture with respect to such Bonds.

Section 9.2 Provision for Payment.

(a) Provision for the payment of Bonds shall be deemed to have been made when the Trustee holds in the Debt Service Fund (1) cash in an amount sufficient to make all payments (including principal and interest payments) specified in Section 9.1 with respect to such Bonds, or (2) noncallable investments listed in paragraphs (a) and (b) of the definition of “Investment Securities” herein, or any combination of the foregoing, maturing on or before the date or dates when the payments specified above shall become due, the principal amount of which and the interest thereon, when due are or will be in the aggregate sufficient without reinvestment to make all such payments, or (3) any combination of cash and such obligations the amounts of which and interest thereon, when due, are or will be, in the aggregate, sufficient without reinvestment to make all such payments; provided that the Trustee shall have received (i) an opinion of Bond Counsel to the effect that a deposit of obligations described in clause (2) or (3) above will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on any of the Bonds or cause any of the Bonds to be classified as “arbitrage bonds” within the meaning of Section 148 of the Code; and (ii) a verification report from an independent certified public accountant or other qualified Consultant confirming that the deposit of such obligations is sufficient to make all payments specified in Section 9.1. If a forward supply contract is employed in connection such deposit, (y) the verification report shall expressly state that the adequacy of the escrow to accomplish the refunding relies solely on the initial escrowed investments and the maturing principal thereof and interest income thereon, and does not assume performance under or compliance with the forward supply contract, and (z) the applicable escrow agreement shall provide that

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in the event of any discrepancy or difference between the terms of the forward supply contract and the escrow agreement (or this Indenture, if no separate escrow agreement is used), the terms of the escrow agreement or this Indenture, if applicable, shall be controlling.

(b) Neither the moneys nor the obligations deposited with the Trustee pursuant to this Article shall be withdrawn or used for any purpose other than, and such obligations and moneys shall be segregated and held in trust for, the payment of the principal or redemption price of and interest on the Bonds (or portions thereof).

(c) Whenever moneys or obligations shall be deposited with the Trustee for the payment or redemption of Bonds more than 60 days prior to the date that such Bonds are to mature or be redeemed, the Trustee shall mail a notice to the Registered Owners of Bonds for the payment of which such moneys or obligations are being held at their registered addresses stating that such moneys or obligations have been deposited. Notwithstanding the foregoing, no deposit with the Trustee under this subsection shall be deemed a payment of any Bonds which are to be redeemed prior to their stated maturity until such Bonds shall have been irrevocably called or designated for redemption on a date thereafter on which such Bonds may be redeemed in accordance with the provisions of this Indenture and proper notice of such redemption shall have been given in accordance with Article III or the Authority shall have given the Trustee, in form satisfactory to the Trustee, irrevocable instructions to give, in the manner and at the times prescribed by Article III, notice of redemption.

Section 9.3 Deposit of Funds for Payment of Bonds. If the principal of any Bonds becoming due, either at maturity or by call for redemption or otherwise, together with the premium (if any) thereon and all interest accruing thereon to the due date, has been paid or provision therefor made in accordance with Section 9.2, all interest on such Bonds shall cease to accrue on the due date and all liability of the Authority with respect to such Bonds shall likewise cease, except as hereinafter provided. Thereafter, the Registered Owners of such Bonds shall be restricted exclusively to the funds so deposited for any claim of whatsoever nature with respect to such Bonds, and the Trustee shall hold such funds in trust for such Registered Owners uninvested and without liability for interest thereon. Moneys so deposited with the Trustee which remain unclaimed two years after the date payment thereof becomes due shall, at the written request of the University and if neither the Authority nor the University is at the time to the knowledge of the Trustee in default with respect to any covenant contained in the Indenture, the Bonds or the Loan Agreement, be paid to the University, and the Registered Owners of the Bonds for which the deposit was made shall thereafter be limited to a claim against the University; provided that the Trustee, before making payment to the University, may, at the expense of the University, cause a notice to be given to the Registered Owners at their registered addresses, stating that the moneys remaining unclaimed will be returned to the University after a specified date. In the absence of any such written request from the University, the Trustee shall from time to time deliver such unclaimed funds to or as directed by pertinent escheat authority, as identified by the Trustee in its sole discretion, pursuant to and in accordance with applicable unclaimed property laws, rules or regulations. Any such delivery shall be in accordance with the customary practices and procedures of the Trustee and the escheat authority.

Section 9.4 Survival of Certain Provisions. Notwithstanding the foregoing, any provisions of this Indenture which relate to the maturity of Bonds, interest payments and dates thereof, optional and mandatory redemption provisions, credit against mandatory sinking fund requirements, exchange, transfer and registration of Bonds, replacement of mutilated, lost, wrongfully taken or destroyed Bonds, safekeeping and cancellation of Bonds, nonpresentment of Bonds, holding of moneys in trust, payment of moneys to the University, the rebate of moneys to the United States in accordance with Section 4.7, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and be binding upon the Trustee and the Registered Owners notwithstanding the release and discharge of

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the lien of the Indenture. The provisions of this Article shall survive the release, discharge and satisfaction of the Indenture.

ARTICLE X MISCELLANEOUS

Section 10.1 Limitation of Rights; No Personal Recourse. With the exception of rights conferred expressly in this Indenture, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any person other than the parties hereto, the University and the Registered Owners of the Bonds any legal or equitable right, remedy, power or claim under or with respect to this Indenture or any covenants, agreements, conditions and provisions contained herein.

This Indenture does not pledge the general credit nor the taxing power of the Commonwealth or any political subdivision thereof. The liability of the Authority hereunder and under the Bonds and the Loan Agreement shall be limited to its interest in the Trust Estate.

No covenant or agreement contained in the Indenture, the Bonds or the Loan Agreement shall be deemed to be the covenant or agreement of any member, director, officer, attorney, agent or employee of the Authority or the University in an individual capacity. No recourse shall be had for the payment of any claim based thereon against any member, director, officer, agent, attorney or employee of the Authority or the University past, present or future, or their successors or assigns, as such, either directly or through the Authority or the University or any successor, whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise.

Section 10.2 Severability. In case any section or provision of this Indenture, or any covenant, agreement, stipulation, obligation, act or action, or part thereof, made, assumed, entered into or taken under this Indenture, or any application thereof, is held to be illegal or invalid for any reason, or is inoperable at any time, such illegality, invalidity or inoperability shall not affect the remainder thereof or any other section or provision of this Indenture or any other covenant, agreement, stipulation, obligation, act or action, or part thereof, made, assumed, entered into or taken under this Indenture, all of which shall be construed and enforced at the time as if the illegal, invalid or inoperable portion were not contained therein.

Section 10.3 Notices. Except as provided in Section 3.4 and Section 6.2 and except as otherwise specified herein, it shall be sufficient service or giving of any notice, request, complaint, demand or other instrument or document, if it is duly mailed by first class mail. Any party providing any notice hereunder shall cause a copy thereof to be provided to each Rating Service. Notices to the Authority, the Trustee, the University, Moody’s (if the Bonds are then rated by Moody’s), Standard & Poor’s (if the Bonds are then rated by Standard & Poor’s), Fitch (if the Bonds are then rated by Fitch) as follows:

(a) If to the Authority, at Dauphin County General Authority, 530 S Harrisburg Street, Harrisburg, PA 17113;

(b) If to the Trustee, at The Bank of New York Mellon Trust Company, N.A., 1735 Market Street, 9th Floor, Philadelphia PA 19103-7501, Attention: Corporate Trust;

(c) If to the University, at The Harrisburg University of Science and Technology, 326 Market Street, Harrisburg, PA 17101, Attention: President & CEO;

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(d) If to Moody’s, at Moody’s Investors Service, 99 Church Street, New York, NY 10007, Attention: Higher Education Group;

(e) If to Standard & Poor’s, at Standard & Poor’s Global Ratings, 55 Water Street, New York, NY 10041, Attention: Public Finance Group; and

(f) If to Fitch, at Fitch Ratings, One State Street Plaza, New York, NY 10004, Attention: Surveillance.

The foregoing parties may designate, by notice given hereunder, any further or different addresses to which any subsequent notice, request, demand or other instrument or document shall be sent. The Trustee shall designate, by notice to the Authority and the University, addresses to which notices or copies thereof shall be sent to the Trustee’s agents hereunder.

In connection with any notice mailed pursuant to the provisions of this Indenture, a certificate of the Trustee, the Authority, the University, or the Registered Owners, whichever mailed that notice, that the notice was so mailed shall be conclusive evidence of the proper mailing of the notice.

The Trustee hereby agrees to send written notice to each Rating Service upon the occurrence of any of the following events: (1) any change in the Trustee or any paying agent; (2) any amendment to the Indenture or the Loan Agreement of which the trustee has notice, (3) any redemption (other than mandatory sinking fund redemption) or advance refunding of any of the Bonds, including the principal amounts, maturities and CUSIP numbers thereof, and (4) payment of all principal, interest and premium, if any, on all of the Bonds.

Section 10.4 Suspension of Mail. If because of the suspension of delivery of first class mail or, for any other reason, the Trustee shall be unable to mail by first class of mail any notice required to be mailed by the provisions of this Indenture, the Trustee shall give such notice in such other manner as in the judgment of the Trustee shall most effectively approximate first class mailing thereof, and the giving of that notice in that manner for all purposes of this Indenture shall be deemed to be in compliance with the requirement for the mailing thereof.

Except as otherwise provided herein, the mailing of any notice shall be deemed complete upon deposit of that notice in the mail and the giving of any notice by any other means of delivery shall be deemed complete upon receipt of the notice by the delivery service.

Section 10.5 Payments Due on Days Not Business Days. If any Interest Payment Date, date of maturity of any Bonds, or date fixed for redemption of any Bonds is not a Business Day, then payment of interest and principal need not be made by the Trustee or any paying agent on that date, but that payment may be made on the next succeeding Business Day on which the Trustee or any paying agent is open for business with the same force and effect as if that payment were made on the Interest Payment Date, date of maturity or date fixed for redemption, and no interest shall accrue for the period after that date; provided that if the Trustee is open for business on the applicable Interest Payment Date, date of maturity or date fixed for redemption, it shall make any payment required hereunder with respect to payment of interest on outstanding Bonds and payment of principal of Bonds presented to it for payment, regardless of whether any paying agent shall be open for business or closed on the applicable Interest Payment Date, date of maturity or date fixed for redemption.

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Section 10.6 Binding Effect. This Indenture shall inure to the benefit of and shall be binding upon the Authority and the Trustee and their respective successors and assigns, subject, however, to the limitations contained herein.

Section 10.7 Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same instrument.

Section 10.8 Governing Law. This Indenture and the Bonds shall be deemed to be contracts made under the laws of the Commonwealth and for all purposes shall be governed by and construed in accordance with the laws of the Commonwealth, without regard to conflict of law principles.

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IN WITNESS WHEREOF, the Authority has caused this Indenture to be executed and delivered on its behalf by its Chairman or Vice Chairman and attested by its Secretary or Assistant Secretary and the Trustee has caused this Indenture to be executed and delivered on its behalf by one of its duly authorized officers and attested by one of its duly authorized officers all as of the day and year first above written.

ATTEST: DAUPHIN COUNTY GENERAL AUTHORITY

______(Assistant) Secretary (Vice) Chairman

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

By:______Authorized Officer

This execution page is part of the Trust Indenture dated as of July 1, 2017 between DAUPHIN COUNTY GENERAL AUTHORITY and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee, providing for the issuance of the Authority’s University Revenue Bonds, Series of 2017 (The Harrisburg University of Science and Technology Project).

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EXHIBIT A [FORM OF 2017 BOND]

EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO THE SECURITIES DEPOSITORY (AS DEFINED HEREIN), ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY, TO A SUCCESSOR SECURITIES DEPOSITORY SELECTED AND APPROVED AS PROVIDED IN THE INDENTURE DEFINED HEREIN OR TO A NOMINEE OF SUCH SUCCESSOR SECURITIES DEPOSITORY.

No. R- UNITED STATES OF AMERICA COMMONWEALTH OF PENNSYLVANIA DAUPHIN COUNTY GENERAL AUTHORITY UNIVERSITY REVENUE BONDS, SERIES OF 2017 (THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY PROJECT)

MATURITY DATE INTEREST RATE DATED DATE CUSIP

REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT:

THIS BOND WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS BOND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THIS BOND AGREES THAT THIS BOND MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN EXCEPTION THEREFROM.

Dauphin County General Authority (the “Authority”), a body corporate and politic organized and existing under the Pennsylvania Municipality Authorities Act, as amended, for value received, promises to pay to the registered owner named above, or registered assigns, upon surrender hereof, but solely from the sources and in the manner referred to herein, on the Maturity Date specified above, unless this Bond shall have been previously called for redemption in whole or in part and payment of the redemption price shall have been duly made or provided for, the Principal Amount specified above and to pay from those sources interest thereon at the annual rate specified above (computed on the basis of a 360-day year of twelve 30-day months) from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid next preceding the authentication date hereof, unless the date of authentication hereof (i) is an Interest Payment Date, in which event this Bond shall bear interest from the authentication date hereof, or (ii) is on or prior to the first Regular Record Date, in which event this Bond shall bear interest from the Dated Date specified above, such payments of interest to be made on April 15 and October 15 of each year, commencing October 15, 2017 (each, an “Interest Payment Date”) until the principal or redemption price hereof has been paid or provided for as aforesaid. The principal or redemption price of and interest on this Bond may be paid in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts.

The principal or redemption price of this Bond is payable when due upon presentation and surrender hereof at the designated corporate trust agency office of The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) in East Syracuse, New York(the “Payment Office”), or

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at the duly designated office of any duly appointed alternate or successor trustee. Interest on this Bond is payable on each Interest Payment Date by check mailed on such date to the person in whose name this Bond is registered on the registration books maintained by the Trustee (the “Register”) at the close of business on the Regular Record Date, which shall be the first (1st) day of the calendar month (whether or not a Business Day) next preceding any Interest Payment Date, at such owner’s address as it appears on the Register; provided that, at the written request of a registered owner of at least $1,000,000 in aggregate principal amount of 2017 Bonds (hereinafter defined) received by the Trustee at least three Business Days prior to any Regular Record Date, interest shall be payable in immediately available funds on any Interest Payment Date by wire transfer to the bank account within the continental United States specified by the registered owner in such request. If sufficient funds for the payment of interest becoming due on any Interest Payment Date 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 the applicable Regular Record Date. If sufficient funds thereafter become available for the payment of such overdue interest, the Trustee shall establish a Special Record Date for the payment of such overdue interest, which shall be not more than 15 nor fewer than 10 days prior to the date of the proposed payment, and shall mail a notice of the proposed payment and of the Special Record Date to the registered owners of all 2017 Bonds at least 10 days prior to the Special Record Date, and thereafter interest shall be payable to the persons listed on the Register as the registered owners of the 2017 Bonds at the close of business on the Special Record Date.

So long as The Depository Trust Company (“DTC”) or its nominee, Cede & Co., is the registered owner hereof, all payments of principal or redemption price of and interest on this Bond shall be payable in the manner and at the respective times of payment provided for in the Representation Letter defined in, and incorporated into, the Indenture (hereinafter defined).

This Bond is one of a duly authorized issue of the Authority’s University Revenue Bonds, Series of 2017 (Harrisburg University Project), issued in the aggregate principal amount of ______(the “2017 Bonds”). The 2017 Bonds are issued under and pursuant to a Trust Indenture dated as of July 1, 2017 (the “Indenture”) from the Authority to the Trustee.

The 2017 Bonds are payable from payments to be made by Harrisburg University of Science and Technology, a Pennsylvania nonprofit corporation (the “University”) pursuant to a Loan Agreement dated as of July 1, 2017 (the “Loan Agreement”) between the Authority and the University, and from any other moneys pledged to or held by the Trustee under the Indenture for such purpose, and there shall be no other recourse against the Authority or any other property now or hereafter owned by it. Except as otherwise specified in the Indenture, this Bond is entitled to the benefits of the Indenture equally and ratably as to principal, premium, if any, and interest with all other 2017 Bonds issued under the Indenture. Reference is made to the Indenture and to the Loan Agreement for a statement of the purposes for which the 2017 Bonds are issued, and for provisions concerning, inter alia, the application of the proceeds of the 2017 Bonds; the Pledged Revenues assigned and pledged for the security of the 2017 Bonds; the rights and obligations of the Authority and the Trustee; provisions relating to the rights of the registered owners of the 2017 Bonds; and amendments to the Indenture and the Loan Agreement. The acceptance of the terms and conditions of such documents, copies of which are available at the corporate trust office of the Trustee in Philadelphia, Pennsylvania, is an explicit and material part of the consideration of the Authority’s issuance hereof, and each registered owner by acceptance of this Bond accepts and assents to all such terms and conditions as if fully set forth herein. The registered owner shall have no right to enforce the provisions of the Indenture, or the Loan Agreement or the rights and remedies thereunder, except as provided in the Indenture. Capitalized terms used in this Bond which are not defined herein but which are defined in the Indenture shall have the respective meanings set forth in the Indenture.

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To secure its obligations as additional security for the 2017 Bonds, the Authority has granted the Trustee a lien on and security interest in the University Facility pursuant to an Open-End Mortgage and Security Agreement (the “2017 Bonds Mortgage”) from the Authority, as mortgagor, to the Trustee, as mortgagee.

THIS BOND IS A LIMITED OBLIGATION OF THE AUTHORITY AND IS PAYABLE SOLELY FROM THE SOURCES REFERRED TO HEREIN. NEITHER THE GENERAL CREDIT OF THE AUTHORITY NOR THE CREDIT OR THE TAXING POWER OF THE COUNTY OF DAUPHIN, THE COMMONWEALTH OF PENNSYLVANIA, OR OF ANY POLITICAL SUBDIVISION, AGENCY OR INSTRUMENTALITY THEREOF IS PLEDGED FOR THE PAYMENT OF THIS BOND, NOR SHALL THIS BOND BE OR BE DEEMED AN OBLIGATION OF THE COUNTY OF DAUPHIN, THE COMMONWEALTH OF PENNSYLVANIA OR OF ANY POLITICAL SUBDIVISION, AGENCY OR INSTRUMENTALITY THEREOF. THE AUTHORITY HAS NO TAXING POWER.

No recourse shall be had for the payment of the principal or redemption price of or interest on this Bond, or for any claim based hereon or on the Indenture, against any member, officer 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 by any legal or equitable proceeding or otherwise, all such liability of such members, officers or employees being released as a condition of and as consideration for the execution of the Indenture and the issuance of this Bond.

Optional Redemption. The 2017 Bonds maturing on ______, are subject to redemption prior to maturity by the Authority, at the direction of the University, on or after ______, in whole at any time or in part from time to time in such order of maturity as specified by the Authority at the direction of the University, and within a maturity by lot, at the redemption price of 100% of the principal amount thereof, plus accrued interest to the redemption date.

Extraordinary Optional Redemption. The 2017 Bonds are subject to redemption prior to maturity, at the option of the University, in whole or in part and if in part, pro rata as to each Series, at any time, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date, upon the occurrence of any of the following events:

(i) All or a substantial portion of the University Facility are damaged or destroyed by fire or other casualty, or title to or the temporary use of all or a substantial portion of such facilities is condemned or taken for any public or quasi-public use by any authority exercising or threatening the exercise of the power of eminent domain, or title thereto is found to be deficient, to such extent that in the determination of the University (A) such facilities cannot be reasonably restored or replaced to the condition thereof preceding such event, or (B) the University is thereby prevented from carrying on its normal operations, or (C) the cost of restoration or replacement thereof would exceed the net proceeds of any casualty insurance, title insurance, condemnation awards or sale under threat of condemnation with respect thereto, or (D) the University has otherwise determined not to effect repair, restoration or replacement of the facilities with condemnation awards or insurance proceeds pursuant to Section 5.6 of the Loan Agreement; or

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Scheduled Mandatory Redemption of 2017 Bonds. The 2017 Bonds are subject to scheduled mandatory redemption by the Authority on September 1 in the years and the amounts set forth at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the redemption date:

Year Principal Amount

If 2017 Bonds or portions thereof are called for redemption and, if on the redemption date moneys for the redemption thereof are held by the Trustee, thereafter those 2017 Bonds or portions thereof to be redeemed shall cease to bear interest, and shall cease to be secured by, and shall not be deemed to be outstanding under, the Indenture.

If fewer than all of the 2017 Bonds of any maturity are to be redeemed, the selection of 2017 Bonds of such maturity to be redeemed, or portions thereof in amounts of $100,000 and any integral multiple of $5,000 in excess thereof, shall be made by lot by the Trustee; provided, however, no 2017 Bond shall be outstanding in a denomination of less than $100,000 after any redemption and provided, however, if DTC or its nominee is the Registered Owner of the 2017 Bonds, such selection shall be made by lot by DTC, the DTC Participants and Indirect Participants in such manner as they may determine

Any redemption of this Bond shall be made as provided in the Indenture upon not less than thirty days’ notice by mailing a copy of the redemption notice by first class mail, postage prepaid to the registered owner hereof at the address shown on the Register, unless such notice is waived by the registered owner; provided, however, that failure to mail any notice or any defect therein or in the mailing thereof, as it affects any particular 2017 Bond, shall not affect the validity of the proceedings for redemption of any other 2017 Bonds.

If at the time of mailing of notice of any optional redemption there shall not have been deposited in the Debt Service Fund established under the Indenture moneys sufficient to redeem all the 2017 Bonds called for redemption, such notice may state that it is conditional, in that it is subject to the deposit of such redemption moneys in the Debt Service Fund not later than 10:00 a.m. prevailing time on the scheduled redemption date, in which case such notice shall be of no effect unless moneys are so deposited.

If less than all 2017 Bonds of any maturity are to be redeemed, the selection of 2017 Bonds of such maturity to be redeemed shall be made by the Trustee; provided, however, that so long as DTC or its nominee is the registered owner hereof, such selection of 2017 Bonds of any maturity to be redeemed shall be made by lot by DTC, the DTC Participants and Indirect Participants in such manner as they may determine. In the event that less than the full principal amount hereof shall have been called for redemption, the registered owner hereof shall surrender this Bond in exchange for one or more new 2017 Bonds in an aggregate principal amount equal to the unredeemed portion of the principal amount hereof

In case an Event of Default, as defined in the Indenture, shall have occurred, the principal of all 2017 Bonds then outstanding under the Indenture may become due and payable before their maturity dates upon the conditions and in the manner and with the effect provided in the Indenture.

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If at any time the Trustee holds moneys or securities as described in the Indenture sufficient to pay at redemption or maturity the principal or redemption price of and premium, if any, and interest on all 2017 Bonds outstanding under the Indenture, and if all other sums then payable by the Authority under the Indenture have been paid, then subject to the provisions of the Indenture the lien of the Indenture and other security held by the Trustee for the, benefit of the Registered Owners will be discharged. After such discharge, Registered Owners must look only to the deposited moneys and securities for payment.

The 2017 Bonds are issuable only as fully registered 2017 Bonds in the denomination of $100,000 or any integral multiple of $5,000 in excess thereof. Subject to the limitations provided in the Indenture and upon payment of any tax or governmental charge, if any, 2017 Bonds may be exchanged for a like aggregate principal amount of 2017 Bonds of the same maturity in authorized denominations.

This Bond is transferable by the registered owner hereof or his duly authorized attorney at the designated Payment Office of the Trustee, upon surrender of this Bond accompanied by a duly executed instrument of transfer in form and with guaranty of signature satisfactory to the Trustee, subject to such reasonable regulations as the Authority or the Trustee may prescribe, and upon payment of any tax or other governmental charge incident to such transfer. Upon any such transfer, a new 2017 Bond or Bonds of the same maturity in the same aggregate principal amount will be issued to the transferee. Except as set forth in this Bond and as otherwise provided in the Indenture, the person in whose name this Bond is registered shall be deemed the owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary.

The Trustee shall not be required (i) to register the transfer of or exchange any 2017 Bond during the period of 15 days preceding any interest payment date, or (ii) to register the transfer of or exchange any 2017 Bond so selected for redemption in whole or in part.

This Bond shall not be entitled to any security or benefit under the Indenture or be valid or become obligatory for any purpose until the Trustee’s Certificate of Authentication hereon shall have been duly executed.

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IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name by the manual or facsimile signature of its Chairman or Vice Chairman and its corporate seal or a facsimile thereof to be affixed, imprinted, lithographed or reproduced hereon and attested by the manual or facsimile signature of its Secretary or Assistant Secretary, all as of the Dated Date specified above.

ATTEST: DAUPHIN COUNTY GENERAL AUTHORITY

______(Assistant) Secretary (Vice) Chairman

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[FORM OF CERTIFICATE OF AUTHENTICATION]

This Bond is one of the 2017 Bonds described in the within mentioned Indenture. Attached hereto is the complete text of the opinion of McNees Wallace & Nurick LLC, Bond Counsel, a signed original of which is on file with the undersigned.

Date of Authentication: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

By:______

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[FORM OF ASSIGNMENT]

FOR VALUE RECEIVED, ______, the undersigned, hereby sells, assigns and transfers unto

______(the “Transferee”) Name ______Address Social Security or Federal Employer Identification Number: ______

The within Bond and all rights thereunder and hereby irrevocably constitutes and appoints ______as attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises.

Date: ______

Signature Guaranteed:

NOTICE: Signature(s) must be guaranteed by an approved eligible guarantor institution, an institution that is a participant in a Securities Transfer Association recognized signature guarantee program.

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[FORM OF ABBREVIATIONS]

Abbreviations

The following abbreviations, when used in the inscription on the face of the within Bond, shall be construed as though the terms which they represent were written out in full according to applicable laws or regulations.

TEN COM - as tenants in common TEN ENT - as tenants by the entireties

JT TEN - as joint tenants with the right of survivorship and not as tenants in common

UNIFORM GIFT MIN ACT ...... Custodian (Cust) ...... (Minor) under

Uniform Gifts to Minors Act (State)

Additional abbreviations may also be used though not in the above list.

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EXHIBIT B

Dauphin County General Authority $______UNIVERSITY REVENUE BONDS Series of 2017 (The Harrisburg University of Science and Technology Project) Dated: Date of Delivery

Maturity Dates, Maturing Principal and Interest Rates

Maturity Date Maturing Principal Interest Rate

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[ THIS PAGE INTENTIONALLY LEFT BLANK ] APPENDIX D

FORM OF LOAN AGREEMENT [ THIS PAGE INTENTIONALLY LEFT BLANK ] APPENDIX D

LOAN AGREEMENT

LOAN AGREEMENT between DAUPHIN COUNTY GENERAL AUTHORITY and THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY Dated as of July 1, 2017

$______DAUPHIN COUNTY GENERAL AUTHORITY

University Revenue Bonds Series of 2017 (The Harrisburg University of Science and Technology Project)

McNees Wallace & Nurick LLC 100 Pine Street Harrisburg, PA 17101 Bond Counsel

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Table of Contents

Page

ARTICLE I DEFINITIONS ...... 5 Section 1.1 Use of Terms Defined in Indenture ...... 5 Section 1.2 Definitions ...... 5 Section 1.3 Interpretation ...... 10 Section 1.4 Captions, Headings and Table of Contents ...... 10 Section 1.5 Changes in GAAP ...... 11 ARTICLE II REPRESENTATIONS ...... 11 Section 2.1 Representations of Authority ...... 11 Section 2.2 Representations and Warranties of University ...... 11 ARTICLE III ISSUANCE OF 2017 BONDS; SECURITY FOR THE UNIVERSITY’S PERFORMANCE ...... 13 Section 3.1 Issuance of 2017 Bonds; Application of Proceeds ...... 13 Section 3.2 Security for University’s Performance ...... 13 Section 3.3 Disbursements from Project Fund ...... 14 Section 3.4 Investment and Use of Fund Moneys ...... 14 Section 3.5 Rebate Fund ...... 14 ARTICLE IV LOAN BY AUTHORITY; LOAN PAYMENTS; OTHER PAYMENTS ...... 15 Section 4.1 Loan by Authority ...... 15 Section 4.2 Loan Payments ...... 15 Section 4.3 Additional Payments ...... 15 Section 4.4 Obligations Unconditional ...... 16 Section 4.5 Assignment of Authority’s Rights...... 16 Section 4.6 Financial Covenants ...... 16 ARTICLE V ADDITIONAL COVENANTS OF UNIVERSITY ...... 19 Section 5.1 Maintenance of Existence ...... 19 Section 5.2 Financial Statements; Books and Records ...... 19 Section 5.3 Taxes, Other Governmental Charges and Utility Charges ...... 19 Section 5.4 Insurance ...... 20 Section 5.5 Damage to or Condemnation of Facilities of the University ...... 21 Section 5.6 Proceeds of Property Damage Insurance; Condemnation ...... 21

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Section 5.7 Litigation Notice ...... 22 Section 5.8 Indemnification ...... 22 Section 5.9 Permitted Indebtedness ...... 23 Section 5.10 Security for Permitted Indebtedness ...... 25 Section 5.11 Tax Covenants of University ...... 25 Section 5.12 Further Tax Covenants of University ...... 26 Section 5.13 Environmental Matters ...... 29 Section 5.14 Continuing Disclosure ...... 29 ARTICLE VI REDEMPTION OF 2017 BONDS ...... 30 Section 6.1 Optional Redemption ...... 30 Section 6.2 Extraordinary Optional Redemption ...... 30 Section 6.3 Actions by Authority ...... 30 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ...... 30 Section 7.1 Events of Default ...... 30 Section 7.2 Remedies on Default ...... 32 Section 7.3 Remedies Not Exclusive ...... 33 Section 7.4 Payment of Legal Fees, Costs and Expenses ...... 33 Section 7.5 No Waiver ...... 33 Section 7.6 Notice of Default ...... 33 ARTICLE VIII MISCELLANEOUS ...... 33 Section 8.1 Term of Agreement ...... 33 Section 8.2 Notices ...... 34 Section 8.3 Limitation of Liability, No Personal Liability ...... 34 Section 8.4 Binding Effect ...... 34 Section 8.5 Amendments...... 34 Section 8.6 Counterparts ...... 35 Section 8.7 Severability ...... 35 Section 8.8 Governing Law ...... 35 Section 8.9 Assignment ...... 35 Section 8.10 Receipt of Indenture ...... 35

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LOAN AGREEMENT

THIS LOAN AGREEMENT dated as of July 1, 2017 between the DAUPHIN COUNTY GENERAL AUTHORITY (the “Authority”), a public instrumentality and body corporate and politic of the Commonwealth of Pennsylvania created by and existing under the Municipality Authorities Act (Ch. 56, 53 Pa. Cons. Stat. §§5601-5622), as amended (the “Act”), and THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY (the “University”), a not- for-profit corporation duly organized and validly existing under the laws of the Commonwealth of Pennsylvania (the “Commonwealth”) (the capitalized terms not defined in the recitals being used therein as defined or otherwise described in Article I of this Agreement),

WITNESSETH THAT:

WHEREAS, the University has requested the Authority to make a loan to the University in the amount of $______to fund a project (the “2017 Project”) consisting of: (i) the current refunding of the outstanding 2007B Bonds; and (ii) the payment of certain costs and expenses related to issuing the 2017 Bonds (as defined below); and

WHEREAS, in order to provide funds to finance the 2017 Project, the Authority, at the request of the University, proposes to issue on behalf of the University its University Revenue Bonds, Series of 2017 (Harrisburg University of Science and Technology Project) in the aggregate principal amount of $______(the “2017 Bonds”); and

WHEREAS, the 2017 Bonds are issued under and pursuant to that certain Trust Indenture dated as of July 1, 2017 (the “Indenture”), from the Authority to The Bank of New York Mellon Trust Company, N.A., as Trustee, (the “Trustee”); and

WHEREAS, the performance of the obligations of the University under the Loan Agreement will be secured, further, by an Open-End Mortgage and Security Agreement of even date herewith (the “2017 Bonds Mortgage”) from the University, as mortgagor, to the Trustee, as mortgagee on the University Facility; and

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WHEREAS, the Authority has entered into this Agreement with the University for the purposes of lending the proceeds of the 2017 Bonds to the University to be applied to the 2017 Project, and providing for the repayment of such loan, and the pledge of the Unrestricted University Revenues (as hereinafter defined) as security therefor; and

NOW, THEREFORE, intending to be legally bound, the Authority and the University hereby agree as follows:

ARTICLE I DEFINITIONS

Section 1.1 Use of Terms Defined in Indenture. Terms used in this Agreement which are defined in the Indenture and are not otherwise defined in this Agreement shall have the meanings set forth in the Indenture unless the context or use clearly indicates another meaning or intent.

Section 1.2 Definitions. In addition to the terms defined in the recital clauses of this Agreement, as used herein:

“Additional Payments” means the amounts required to be paid by the University pursuant to Section 4.3.

“Administrative Expenses” means those expenses reasonably and properly incurred by the Authority including without limitation, reasonable attorneys’ fees and expenses, in carrying out its responsibilities and duties, or in providing its services and facilities to the University, under the Act or the Indenture or pursuant to this Agreement.

“Agreement” means this Loan Agreement, as amended or supplemented from time to time.

“Annual Administrative Fee” means the annual fee for the general administrative services of the Authority.

“Authorized Representative” means, with respect to the Authority, each person at the time designated to act on behalf of the Authority by written certificate furnished to the Trustee containing the specimen signature of such person and signed on behalf of the Authority by its Secretary or Assistant Secretary, and, with respect to the University, each person at the time designated to act on behalf of the University by written certificate furnished to the Trustee containing the specimen signature of such person and signed on behalf of the University by its Secretary or Assistant Secretary or other such authorized officer.

“Bond Purchase Agreement” means the Bond Purchase Agreement dated ______, 2017 by and among the Authority, the University and RBC Capital Markets LLC, as Underwriter, relating to the sale of the 2017 Bonds.

“Bonds Debt Service” means, for any period or payable at any time, the principal of, premium, if any, on and interest on the 2017 Bonds for that period or payable at the time whether due on an Interest Payment Date, at maturity or upon acceleration or redemption.

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“Capital Additions” means all new or additional land and buildings, structures or other permanent improvements to land which the University or the Authority has authority to construct or acquire in connection with the University Facility and other ancillary projects, or the University’s operations generally, which new or additional land, buildings or structures and permanent improvements, replacements, additions, extensions and betterments to land shall be hereafter constructed or otherwise acquired by the University or the Authority.

“Closing Date” shall mean July __, 2017.

“Condominium” shall mean that Condominium created, defined and described in the Declaration, in which is located the Condominium unit comprising the primary University Facility.

“Condominium Association” mean the Unit Owners’ Association of the Condominium, a Pennsylvania nonprofit corporation, defined and created under the Declaration as the “Fourth Street Condominium Association,” its successors and assigns.

“Coverage Ratio” means, for any Fiscal Year, the ratio obtained by dividing the Net Income Available for Debt Service for such Fiscal Year by the Maximum Annual Debt Service on Long Term Debt for such Fiscal Year.

“Days Cash on Hand” means, for any Fiscal Year: (i) the sum of unrestricted (including temporarily restricted and released from restriction during the current Fiscal Year) cash, cash equivalents, liquid investments and marketable securities of the University, as shown on the University’s audited financial statements for each Fiscal Year (“Cash on Hand”); divided by (ii) the quotient of Operating Expenses for such Fiscal Year, divided by 365.

“Debt” shall mean, for purposes of this Agreement and the Indenture, all obligations for repayment of borrowed money, including Long Term Debt and Limited Term Debt, or obligations under capital leases, in each case as required to be classified as a liability on the audited financial statements of the University in accordance with generally accepted accounting principles applicable in the United States; provided, however, that, for purposes of avoidance of doubt, Debt shall not include (i) any termination payment obligations under, or mark-to-market valuations of, interest rate swaps, hedges or other derivatives agreement, (ii) any obligation which, on the date of this Agreement or on the date of incurrence of such obligation (if such obligation is not outstanding on the date of this Agreement), is classified as an off-balance sheet obligation or is debt that has been incurred by a bankruptcy remote corporation and is secured by a distinct revenue source, but which is reclassified on a future date as an on-balance sheet item, provided that at the time of such reclassification such obligation is self-supporting and payments with respect thereto are not a general obligation of the University Current obligations payable out of current revenues, including current payments for the funding of pension plans, (iii) obligations under contracts for supplies, services, and pensions, allocable to current operating expenses of current or future years in which the supplies are to be furnished, the services rendered, or the pensions paid; (iv) rentals payable under leases not required to be capitalized under generally accepted accounting principles applicable in the preparation of the University’s financial statements; and (v) any obligation to the extent the same is paid from restricted funds of the University.

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“Debt Service Requirements,” with reference to a specified period, means, without duplication: (a) interest payable on Long Term Debt during the period, excluding interest funded from the proceeds thereof, and interest on Long Term Debt to be redeemed during such period through any sinking fund, escrow or similar account, which would otherwise accrue after the redemption date; (b) amounts required to be paid into any mandatory sinking fund or similar account for Long Term Debt during the period; (c) amounts required to pay the principal of Long Term Debt, maturing during the period and not to be redeemed prior to maturity through any mandatory sinking fund, escrow or similar account; and (d) in the case of Long Term Debt in the form of capital lease obligations, the lease rentals payable during the period. With respect to any Long Term Debt for which a swap or other interest rate hedge is in effect, the interest payments due on such Long Term Debt shall be calculated net of any related exchange of regularly scheduled interest payments the between the University and its counterparty on the notional principal amount under such swap or other interest rate hedge agreement.

“Declaration” means that Declaration of Condominium of Fourth Street Condominium, dated December 16, 2013 and recorded in the Office of the Recorder of Deeds of Dauphin County, Pennsylvania as Instrument No. 20130038835, as the same may be amended, supplemented, modified, substituted or restated from time to time.

“EMMA” means the Electronic Municipal Market Access (EMMA) System created by the Municipal Securities Rulemaking Board.

“Event of Default” means any of the events described as an Event of Default in Section 7.1.

“Expendable Funds” means (Unrestricted Net Assets plus Temporarily Restricted Net Assets) minus Net Investment in Plant.

“Extraordinary Repairs” means repairs to facilities of the University necessary for the continued operation of such facilities and which cannot be paid for from the Unrestricted University Revenues in the normal course of operations of the University.

“Fiscal Year” means the fiscal year of the University, currently ending on June 30.

“Intercreditor Agreement” shall have the meaning set forth in Section 5.10 hereof.

“Limited Term Debt” means all Debt of the University payable upon demand or having a maturity of less than two years from the date incurred, excluding the current portion of any Long Term Debt.

“Loan” means the loan by the Authority to the University of the proceeds of the 2017 Bonds pursuant to Section 4.1 in the original principal amount of $______.

“Loan Payments” means the amounts required to be paid by the University in repayment of the Loan pursuant to Section 4.2.

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“Long Term Debt” means the outstanding 2017 Bonds, all Additional Bonds comprising Long Term Debt and all other outstanding Debt incurred by the University after the Closing Date, except Limited Term Debt.

“Maximum Annual Debt Service on Long Term Debt” means, as of any date of calculation, the highest Debt Service Requirement with respect to all Long Term Debt outstanding for any succeeding Fiscal Year.

“Net Income Available for Debt Service” means, as to any Fiscal Year, total unrestricted revenues, gains and other support as reported in the University’s audited financial statements for such Fiscal Year, MINUS the total Operating Expenses of the University for such Fiscal Year.

“Net Revenues” means for any period the Unrestricted University Revenues less Unrestricted University Expenses.

“Officer’s Certificate” means in the case of the University, a certificate, executed by the Chairman of the Board of Trustees of the University, or any other authorized officer.

“Operating Expenses” means, for any Fiscal Year, total unrestricted operating expenses as reported in the University’s audited financial statements for such Fiscal Year, excluding for purposes of avoidance of doubt interest expense, depreciation, amortization or other non-cash expenses.

“Outstanding”, in connection with Long Term Debt means, as of the time in question, all Bonds which have been authenticated and delivered under the Indenture or in the case of other Long-Term Debt, all such Long-Term Debt issued under the particular debt-incurring instrument, except:

(a) Long Term Debt theretofore repaid, canceled or required to be repaid or canceled pursuant to the terms of the debt incurring instrument;

(b) Long Term Debt for the payment, redemption, or purchase of which moneys or non-callable U.S. Government Obligations or other defeasance obligations provided or permitted under the instruments or agreements pursuant to which such Long Term Debt was issued or incurred, the principal of and interest on which, when due, will provide sufficient moneys to fully pay such Long Term Debt in accordance with the debt- incurring instrument, shall have been or shall concurrently be deposited with the Trustee or the obligee or trustee or escrow agent appointed for such purpose; provided that, if such Long-Term Debt is being redeemed or prepaid, the required notice of redemption or prepayment, if any, shall have been given or provision satisfactory to the Trustee shall have been made therefor or, and that if such Long Term Debt is being purchased, there shall be a firm commitment for the purchase and sale thereof;

(c) Long Term Debt in substitution for which other Long Term Debt has been authenticated and delivered pursuant to the debt-incurring instrument; and

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(d) Long Term Debt otherwise paid, redeemed or defeased in accordance with the instruments or agreements pursuant to which such Long Term Debt was issued or incurred

“Parity Obligations” means any Long Term Debt which by its terms is intended to be secured on a parity basis with the 2017 Bonds by a security interest in the Unrestricted University Revenues.

“Permanently Restricted Net Assets” means net assets subject to donor-imposed stipulations that they be maintained permanently by the University, as recorded on the annual financial statements of the University, or the equivalent as estimated by the University if the University’s accounting presentation format changes materially in the future.

“Permitted Indebtedness” shall have the meaning set forth in Section 5.9 hereof.

“Person” shall have the meaning assigned to such term in the Indenture.

“Principal User” means, with respect to any facility, a “principal user” as such term is used in Section 144(a) of the Code, including, without limiting the generality of the foregoing, (a) any person whose ownership interest in such facility exceeds 10% or, if no ownership interest in such facility exceeds 10%, any person (or persons, in the case of multiple equal owners) holding the largest ownership interest in such facility, (b) any person who leases more than 10% of such facility under a lease with a term (taking into account all options to renew and reasonably anticipated renewals) of more than one year, and (c) any person who enjoys the use of such facility in a degree comparable to the enjoyment of a person described in clauses (a) and (b); for purposes of determining the extent of a person’s ownership interest, lease interest, lease term and degree of enjoyment of a facility, the term “person” includes a person and all Related Persons with respect to such person.

“Project Costs” shall the meaning assigned to such term in the Indenture.

“Projected Coverage Ratio” shall mean for any Fiscal Year, the ratio obtained by dividing the Net Income Available for Debt Service for such Fiscal Year by the Maximum Annual Debt Service on Long Term Debt.

“Qualified 501(c)(3) Bonds” means bonds issued for the benefit of organizations described in Section 501(c)(3) of the Code meeting the requirements imposed by Section 145 of the Code or Section 103 of the Internal Revenue Code of 1954.

“Related Person” shall have the meaning set forth in Section 144(a)(3) of the Code and shall include (to the extent there provided) any parent, subsidiary, affiliated corporation or unincorporated enterprise, majority shareholder and commonly owned entity.

“Resolution” means the resolutions of the Board of the Authority authorizing the 2017 Bonds, the Indenture and this Agreement.

“Supplemental Loan Agreement” means any amendment or supplement to this Loan Agreement, duly executed by the Authority and the University.

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“Temporarily Restricted Net Assets” means net assets resulting from (a) contributions and other inflows of assets whose use by the University is limited by donor-imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the University pursuant to those stipulations as recorded in the University’s most recent audited financial statements.

“Unassigned Authority’s Rights” means all of the rights of the Authority to receive Additional Payments under Section 4.3, to be held harmless and indemnified under Section 5.8, to be reimbursed for attorney’s fees and expenses under Section 7.4, to receive copies of notices, reports and similar matters required hereunder, and to execute amendments, modifications or termination of this Agreement if and to the extent required under Section 8.5.

“University’s Agreements” means this Agreement and the Bond Purchase Agreement.

“Unrestricted Net Assets” means net assets that are neither Permanently Restricted Net Assets nor Temporarily Restricted Net Assets.

“Unrestricted University Expenses” means such expenses and other costs incurred by the University that would properly be recorded as deductions from Unrestricted Net Assets under generally accepted accounting principles during the period being measured, exclusive of depreciation and interest on Long Term Debt; or the equivalent as estimated by the University if the University’s accounting presentation format changes materially in the future.

“Unrestricted University Revenues” means such revenues, income and other moneys (both operating and non-operating) received by the University that would properly be recorded as additions to Unrestricted Net Assets under generally accepted accounting principles during the period being measured; provided that, for purposes of this definition, in each context involving measuring coverage for purposes of a financial covenant, an amount equal to the budgeted unrestricted investment earnings (realized and unrealized gains and income) of the University pursuant to the University’s endowment spending formula as determined by the Board of Trustees of the University for such fiscal year shall be included and the balance of realized and unrealized gains or losses and any income earned on such investments shall be excluded; or the equivalent as estimated by the University if the University’s accounting presentation format changes materially in the future.

Section 1.3 Interpretation. In this Agreement, unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa, the terms “hereof”, “hereby”, “herein”, “hereto”, “hereunder” and similar terms refer to this Agreement, and the term “hereafter” means after and the term “heretofore” means before the Closing Date, and words of any gender include the correlative words of the other genders. In this Agreement, unless otherwise indicated, all references to particular Articles, Sections, Subsections or paragraphs are references to the Articles, Sections, Subsections or paragraphs of this Agreement.

Section 1.4 Captions, Headings and Table of Contents. The captions, headings and table of contents in this Agreement are solely for convenience of reference and in no way

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define, limit or describe the scope or intent of any Articles, Sections, Subsections or paragraphs hereof.

Section 1.5 Changes in GAAP. If, after the date of this Agreement, there occurs any change in generally accepted accounting principles in the United States which (i) results in a change the required treatment of leases currently being accounted for as operating leases, or (ii) requires any other material change in the method of calculation of any covenant set forth in Section 4.6 [Financial Covenants] and which, in the case of such other change, is certified by an independent certified public accountant as being necessary to comply with generally accepted accounting principles, and, as a result thereof, the University notifies the Trustee in writing that the University wishes to amend any financial covenant (including any related definitions) to eliminate the effect of any such change on the operation of such covenant, then the University and the Trustee, as assignee of the Authority, shall amend this Loan Agreement so as to equitably reflect such change, with the desired result that the criteria for calculating such covenant shall be the same after such change as if such change had not been made and, until such notice is withdrawn or such covenant is amended in a manner satisfactory to the University, the University’s compliance with such covenant shall be determined on the basis of generally accepted accounting principles in the United States in effect immediately before the relevant change became effective.

ARTICLE II REPRESENTATIONS

Section 2.1 Representations of Authority. The Authority hereby represents that:

(a) The Authority is a public body, corporate and politic created pursuant to the Act. Under the Act, the Authority has the power to enter into the Indenture, the Bond Purchase Agreement and this Agreement and to carry out its obligations thereunder and to issue the 2017 Bonds to finance the 2017 Project.

(b) By adoption of the Resolution at a duly convened meeting of the Board of the Authority at which a quorum was present and acting throughout, the Authority has duly authorized the execution and delivery of the Indenture, the Bond Purchase Agreement and this Agreement and performance of its obligations thereunder and the issuance of the 2017 Bonds. Simultaneously with the execution and delivery of this Agreement, the Authority has duly executed and delivered the Indenture and issued and sold the 2017 Bonds.

(c) The Authority has not and will not pledge the income and revenues derived from this Agreement other than pursuant to and as set forth in the Indenture.

Section 2.2 Representations and Warranties of University. The University hereby represents and warrants that:

(a) The University is a not-for-profit educational institution situated within the Commonwealth, empowered to provide a program of education beyond the high school level, and recognized by the Pennsylvania Board of Education as an institution of

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higher education. The University places no restrictions upon the admission of students based upon race, creed or national origin.

(b) The University has full power and authority to execute, deliver and perform its obligations under the University’s Agreements and to enter into and carry out the transactions contemplated thereby.

(c) The University’s Agreements have been duly authorized, executed and delivered by the University and constitute valid and binding obligations of the University. The execution, delivery and performance of the University’s Agreements by the University do not, and will not, violate any provision of law applicable to the University or the University’s articles of incorporation or bylaws or any agreement or instrument to which the University is a party or by which it or any of its properties is bound.

(d) As of the date of issuance of the 2017 Bonds: (i) the University has received a letter from the Internal Revenue Service that it is an organization described in Section 501(c)(3) of the Code and is not a “private foundation” within the meaning of Section 509(a) of the Code, or corresponding provisions of prior law; (ii) such letter or other notification has not been modified, limited or revoked; (iii) the University is in compliance with all terms, conditions and limitations, if any, contained in such letter or other notification; (iv) the facts and circumstances which form the basis of such letter or other notification as represented to the Internal Revenue Service continue to exist; (v) the University is exempt from Federal income taxes under Section 501(a) of the Code; and (vi) the University is not under audit by the Internal Revenue Service.

(e) The aggregate of the following amounts does not, on the date of issuance of the 2017 Bonds, exceed $150,000,000:

the outstanding amount of any Qualified 501(c)(3) Bonds issued on or before August 5, 1997, allocable to the University, any other Principal User of the University facilities or any Related Person; and

the portion of the face amount of any Qualified 501(c)(3) Bonds issued after August 5, 1997, allocable to a refunding of any Qualified 501(c)(3) Bonds issued on or before August 5, 1997; and

the portion of the face amount of any Qualified 501(c)(3) Bonds issued after August 5, 1997, allocable to reimbursement of capital expenditures incurred on or prior to August 5, 1997.

(f) The information furnished by the University and used by the Authority in preparing the arbitrage certificate pursuant to Section 148 of the Code and information statement pursuant to Section 149(e) of the Code is accurate and complete as of the date of issuance of the 2017 Bonds.

(g) The proceeds of the 2017 Bonds will not exceed the Project Costs in an amount prohibited by the Code.

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(h) The costs of issuance financed with proceeds of the 2017 Bonds, including any Underwriter’s discount on the sale of the 2017 Bonds, will not exceed 2% of the proceeds of the 2017 Bonds.

(i) No costs of the 2017 Project, other than costs qualifying as “preliminary expenditures” under Treasury Regulations §1.150-2(f)(2), to be financed with the proceeds of the 2017 Bonds, have been paid by or on behalf of the University more than 60 days prior to the date of the University’s declaration of official intent to finance costs of the 2017 Project.

(j) The University has not used and does not reasonably foresee any use of moneys derived from the proceeds of the 2017 Bonds or any investment or reinvestment thereof which would cause the interest on the 2017 Bonds to be includable in gross income of the Holders for federal income tax purposes.

ARTICLE III ISSUANCE OF 2017 BONDS; SECURITY FOR THE UNIVERSITY’S PERFORMANCE

Section 3.1 Issuance of 2017 Bonds; Application of Proceeds. To provide funds to make the Loan for purposes of paying Project Costs, the Authority will issue the 2017 Bonds in the aggregate principal amount of $______. The 2017 Bonds will be issued pursuant to the Indenture and will bear interest, mature and be subject to redemption all as set forth therein. The University hereby approves the terms and conditions of the Indenture and the 2017 Bonds, and the terms and conditions under which the 2017 Bonds will be issued, sold and delivered.

The proceeds from the sale of the 2017 Bonds (including any original issue discount or premium) shall be loaned to the University pursuant to Section 4.1 and such proceeds (net of any Underwriter’s discount) shall be paid over to the Trustee for deposit under the Indenture as directed by the Authority in the Closing Statement. Pending disbursement for authorized purposes, the proceeds of the 2017 Bonds, together with any investment earnings thereon, shall constitute a part of the Trust Estate and shall be subject to the lien of the Indenture pursuant to the granting clauses therein as security for the obligations described in such granting clauses, and to such end the University hereby grants to the Trustee as security for such obligations a security interest in all of the University’s right, title and interest in and to the moneys in the funds under the Indenture.

Section 3.2 Security for University’s Performance.

(a) This Agreement is a general obligation of the University and the full faith and credit of the University are pledged for the payment of all sums due or to become due hereunder.

(b) The University hereby pledges to the Authority and grants to the Authority a lien upon and a security interest in all moneys and funds constituting the Unrestricted University Revenues to secure the University’s obligations under this Agreement, including but not limited to its obligations to make the payments required under Section 4.2 and Section 4.3 hereof. Such pledge and security interest shall not inhibit or preclude

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the University from expending, depositing or commingling the Unrestricted University Revenues so long as all required payments are made hereunder when due and no Event of Default exists hereunder. If any required payment is not made when due, any Unrestricted University Revenues subject to this security interest which are then on hand and not yet commingled with other funds of the University and not yet deposited in a bank account of the University, and any such Unrestricted University Revenues thereafter received, shall not be commingled or deposited but shall immediately or upon receipt be transferred to the Debt Service Fund to the extent required to make the amount on deposit in the Debt Service Fund at least equal to the requirements of the Debt Service Fund, and/or used to make any other required payment.

(c) The University shall join with the Authority and, subject to the terms of the Indenture, the Trustee to prepare and file such financing statements, continuation statements and other documents under the Pennsylvania Uniform Commercial Code or other applicable law as the Authority or the Trustee may reasonably require for the perfection and maintenance of any security interests granted hereby and shall pay the costs of filing the same in such public offices as the Authority or the Trustee shall designate.

(d) The Trustee, as assignee of the foregoing security interest, shall hold the security interest in the Unrestricted University Revenues for the equal and ratable benefit of the holders of all 2017 Bonds and all Additional Bonds, and shall exercise the remedies provided herein and by law for the equal and ratable benefit of the holders of all 2017 Bonds and all Parity Obligations, as if all Additional Bonds.

Section 3.3 Disbursements from Project Fund. Disbursements from the Project Fund shall be made to pay Project Costs of the 2017 Project. The University agrees that the sums so disbursed from the Project Fund will be used only for the payment of such Project Costs and will not be used for any other purpose, All disbursements from the Project Fund for the payment of Project Costs shall be made by the Trustee either in accordance with the Closing Statement or in accordance with the provisions of the Indenture relating to such disbursements.

Section 3.4 Investment and Use of Fund Moneys. Absent the existence of an Event of Default hereunder, and at the written direction of an Authorized Representative of the University, any moneys held under the Indenture shall be invested or reinvested by the Trustee in Investment Securities pursuant to the terms of the Indenture. Notwithstanding the above, upon the occurrence and during the continuance of an Event of Default under the Indenture, any moneys held under the Indenture shall be held uninvested and without liability for interest. The University hereby covenants that it will restrict the investment and reinvestment and the use of the proceeds of the 2017 Bonds in such manner and to such extent, if any, as may be necessary, after taking into account reasonable expectations at the time of delivery of and payment for the 2017 Bonds, so that the 2017 Bonds will not constitute arbitrage bonds under Section 148 of the Code.

Section 3.5 Rebate Fund. The University agrees to make such payments to the Trustee as are required of the University under Section 4.7 of the Indenture and Section 5.12(i) hereof and to pay the costs and expenses of any Financial Consultant engaged in accordance with

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Section 4.7 of the Indenture. The obligation of the University to make such payments shall remain in effect and be binding upon the University notwithstanding the release and discharge of the Indenture.

ARTICLE IV LOAN BY AUTHORITY; LOAN PAYMENTS; OTHER PAYMENTS

Section 4.1 Loan by Authority. Upon the terms and conditions of this Agreement, the Authority will make the Loan to the University on the date of issuance of the 2017 Bonds in a principal amount equal to the aggregate principal amount of the 2017 Bonds. The Loan shall be deemed fully advanced upon deposit or transfer of the proceeds of the 2017 Bonds (net of any bond discount) in accordance with the Closing Statement,

Section 4.2 Loan Payments. In consideration of and in repayment of the Loan the University shall make, as Loan Payments, payments which correspond, as to amounts and due dates, to the Bonds Debt Service to provide funds to pay the Bonds Debt Service as and when due as specified above, the University hereby agrees to make and shall make Loan Payments as follows:

(a) On or before the first day of each month (commencing July 1, 2017) the amount which, together with other available funds under the Indenture, is necessary to accumulate in equal monthly installments the amount required to provide for the payment of the principal of 2017 Bonds becoming due at maturity on the immediately succeeding October 15.

(b) On or before the first day of each month (commencing July 1, 2017) the amount which, together with other available funds under the Indenture, is necessary to accumulate in equal monthly installments the amount required to provide for the payment of interest on the 2017 Bonds becoming due on the immediately succeeding interest payment date.

It is the intention of the Authority and the University that, notwithstanding any other provision of this Agreement, the Trustee, as assignee of the Authority, shall receive funds from or on behalf of the University in such amounts and at such times as will enable the Authority to pay when due all of its Bonds Debt Service,

All Loan Payments shall be payable in lawful money of the United States of America and shall be made by or on behalf of the University to the Trustee at its office listed in Section 10.3 of the Indenture, for the account of the Authority and deposited in the Debt Service Fund created by the Indenture. Such Loan Payments shall be applied as provided in the Indenture.

The University shall be entitled to credits against the Loan Payments as and to the extent provided in Subsection 4.2(d) of the Indenture.

Section 4.3 Additional Payments. The University shall pay as Additional Payments hereunder: (a) to the Authority, the Annual Administrative Fee and any and all Administrative Expenses, including costs and expenses (including reasonable legal fees and expenses) incurred or to be paid by the Authority in connection with the issuance and delivery of

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the 2017 Bonds or otherwise related to actions taken by the Authority under this Agreement or the Indenture or any amendment thereof, supplement thereto or consent or waiver thereunder, including without limitation any annual charge made by a Rating Service to maintain a rating on the 2017 Bonds; (b) to the Trustee, the reasonable fees, charges and expenses (including attorney’s fees, costs and expense) of the Trustee and its agents for acting as such under the Indenture; and (c) to the Trustee, and at the times required under the Indenture, such additional amounts as are required to make up any deficiency which may occur in any of the funds established under the Indenture with respect to the 2017 Bonds.

Section 4.4 Obligations Unconditional. The obligations of the University to make Loan Payments and Additional Payments and any payments required hereunder shall be absolute and unconditional, and the University shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including without limitation any defense, set-off, recoupment or counterclaim which the University may have or assert against the Authority, the Trustee or any other person, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement, it being the intention of the parties that the payments required of the University hereunder will be paid in full when due without any delay or diminution whatsoever, Loan Payments required to be paid by or on behalf of the University hereunder shall be received by the Authority or the Trustee as net sums and the University agrees to pay or cause to be paid all charges against or which might diminish such net sums; provided, however, that the University may assert or pursue any claims or causes of actions by appropriate proceedings.

Section 4.5 Assignment of Authority’s Rights. To secure the payment of the Bonds Debt Service, the Authority shall pledge and assign to the Trustee all the Authority’s rights in, to and under this Agreement (except for the Unassigned Authority’s Rights), the Unrestricted University Revenues, the 2017 Bonds Mortgage and the other property comprising the Trust Estate. The University consents to such pledge and assignment and agrees to make or cause to be made Loan Payments directly to the Trustee without defense or set-off by reason of any dispute between the University and the Trustee, Whenever the University is required to obtain the consent of the Authority hereunder, the University shall also obtain the consent of the Trustee; provided that, except as otherwise expressly stipulated herein or in the Indenture, the University shall not be required to obtain the Trustee’s consent with respect to the Unassigned Authority’s Rights.

Section 4.6 Financial Covenants.

(a) Cash on Hand Requirement. The University covenants and agrees to comply with the following Days Cash on Hand requirement.

The Cash on Hand requirement will be tested as of June 30 in each Fiscal Year, commencing June 30, 2018, and shall be equal to or greater than 75 Days Cash on Hand.

The University will certify in an Officer’s Certificate, and provide confirmation of the same by its auditors in the notes to the annual audited financial statements or the management letter accompanying the audited financial statements, delivered to the Trustee with the University’s annual audited financial statements each year, commencing with the Fiscal Year

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ending June 30, 2018, that the Days Cash on Hand requirement has been met as of the preceding June 30 test date.

(b) Coverage Ratio. The University will certify in an Officer’s Certificate, and provide confirmation of the same by its auditors in the notes to the annual audit financial statements or the management letter accompanying the audited financial statements, delivered to the Trustee with the University’s annual audited financial statements each year, commencing with the Fiscal Year ending June 30, 2018, the Coverage Ratio. Commencing with the Coverage Ratio first determined based upon the University’s June 30, 2018 audit, if such Coverage Ratio certified to the Trustee is below 1.10 to 1, the University covenants to promptly retain, at its expense, an independent consultant to submit a written report and make recommendations (a copy of such report and recommendations shall be filed with the Authority and the Trustee and posted to EMMA) with respect to revenues or other financial matters of the University which are relevant to increasing the Coverage Ratio to at least 1.10 to 1. The University shall adopt and follow the recommendations of the independent consultant except where (i) the report of the independent consultant indicates that the University has achieved the highest level of Coverage Ratio reasonably attainable in light of the University’s current operations and circumstances or (ii) the University makes a good faith determination in a statement to the Authority and the Trustee that the independent consultant’s recommendations would violate state or federal law or the University’s Charter or written policies.

Notwithstanding the immediately preceding paragraph, it shall constitute an Event of Default hereunder if the Coverage Ratio for any Fiscal Year ending on or after June 30, 2018,

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is less than one times (1.00 to 1) (as evidenced by the University’s audited financial statements for such Fiscal Years).

(c) Calculations. For all purposes of this Agreement and the Indenture, including with respect to the Coverage Ratio and the Projected Coverage Ratio described in Error! Reference source not found., and any other required determinations required to qualify the incurrence of additional Debt pursuant to Section 5.9 of this Agreement, Debt Service Requirements on Long Term Debt may be calculated, as of any date, in accordance with the following provisions:

With respect to Long Term Debt (A) which is payable or required to be purchased or redeemed by or on behalf of the underlying obligor, at the option of the owner thereof, prior to its stated maturity date, (B) which is payable or required to be purchased or redeemed from the owner by or on behalf of the underlying obligor (other than at the option of the owner) prior to its stated maturity date, other than pursuant to any mandatory sinking fund or other similar fund or other than by reason of acceleration upon the occurrence of an event of default, or (C) 25% or more of the original principal of which matures during any consecutive twelve-month period, if such maturing principal amount is not required to be amortized below such percentage by mandatory redemption or prepayment prior to such twelve-month period (any of the foregoing being “Balloon Debt”), in each case Debt Service Requirements may be calculated based on the following assumptions:

(A) the amortization schedule of such Balloon Debt and the debt service payable with respect to such Balloon Debt for future periods shall be calculated on the assumption that such Balloon Debt is being issued or incurred simultaneously with such calculation; and

(B) such Balloon Debt is payable on a level annual debt service basis over 30 years from the date of the incurrence of such Balloon Debt (or, if the term thereof exceeds 30 years, over a period equal to such term).

If the terms of the Long Term Debt, including, without limitation, Balloon Debt, being considered are such that interest thereon for any future period of time is expressed to be calculated at a varying rate per annum, a formula rate or a fixed rate per annum based on a varying index, then for the purpose of making such determination of debt service, interest on such Long Term Debt for such period (the “Determination Period”) shall be computed by assuming that the rate of interest applicable to the Determination Period is equal to the average of the rate of interest (calculated in the manner in which the rate of interest for the Determination Period is expressed to be calculated) which was in effect on the last date of any six consecutive calendar months occurring in the nine full calendar months immediately preceding the month in which such calculation is made; provided that if the index or other basis for calculating such interest was not in existence for at least six full calendar months in such nine-month period next preceding the date of calculation, the rate of interest for such portion of such

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period shall be deemed to be the rate of interest borne by such Indebtedness when issued or incurred.

ARTICLE V ADDITIONAL COVENANTS OF UNIVERSITY

Section 5.1 Maintenance of Existence.

(a) The University shall do all things necessary to preserve and keep in full force and effect its existence as a not-for-profit corporation under the laws of the Commonwealth and shall not (i) dissolve or otherwise sell, transfer or dispose of all, or substantially all, of its assets or (ii) consolidate with or merge into any other entity; provided that, the preceding restrictions shall not apply to a transaction to which the Trustee consents in writing (which consent shall not be unreasonably withheld) if the transferee or the surviving or resulting entity, if other than the University, by written instrument satisfactory to the Trustee, irrevocably and unconditionally assumes and agrees to perform and observe the agreements and obligations of the University under this Agreement, no current rating on the 2017 Bonds is reduced or withdrawn by any rating agency then rating the 2017 Bonds (or, if there is no such current rating by a rating agency, the University has obtained the consent of a majority in aggregate principal amount of 2017 Bonds Outstanding and the provisions of Section 8.9 are satisfied.

(b) The University covenants that it will maintain the necessary accreditation to enable it to maintain its authority to operate as an institution of higher education in the Commonwealth.

Section 5.2 Financial Statements; Books and Records. The University shall prepare or have prepared annual financial statements and shall keep true and proper books of records and accounts in which full and correct entries are made of all its business transactions. Copies of such annual financial statements shall be provided to the Authority and the Trustee promptly upon request, and such books of records and accounts shall be made available for inspection during normal business hours upon request by the Trustee and its agents upon reasonable notice.

Section 5.3 Taxes, Other Governmental Charges and Utility Charges. The University shall pay, or cause to be paid before the same become delinquent, all taxes, assessments, whether general or special, and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to its facilities, including any equipment or related property installed or brought by the University therein or thereon, and all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of its facilities, in each case where the failure to pay such amounts would have a material adverse effect upon the University’s operations or financial condition. For purposes of this Section 5.3, the phrase “material adverse effect” shall refer to taxes and assessments in excess of $100,000. With respect to special assessments or other governmental charges that lawfully may be paid in installments over a period of years, the University shall be obligated to pay only such installments as are required to be paid during the term hereof. The University may, at its expense, in good faith contest any such taxes, assessments and other charges and, in the event of

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any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom, unless the Trustee shall notify the University that, in the opinion of counsel selected by the Trustee, by nonpayment of any such items the facilities of the University or any part thereof will be subject to material loss or forfeiture, in which event such taxes, assessments or charges shall be paid promptly.

Section 5.4 Insurance.

(a) The University covenants to keep, and to cause the Condominium Association to keep, the University Facility, as a unit in the Condominium (the “Unit”) continuously insured in accordance with the applicable provisions of the Declaration. In the event that the Declaration is terminated or is no longer in effect for any reason, the Mortgagor shall keep the University Facility insured in an amount not less than 100% of the full replacement costs thereof, covering such risks and with such deductibles so as to attain substantially the same coverages as set forth in the Declaration as of the date hereof.

(b) The Trustee, as mortgagee under the 2017 Bonds Mortgage, shall be entitled to the rights and protections as an “Eligible Mortgagee” and the 2017 Bonds Mortgage shall constitute a “Security Interest” each as set forth and defined in the Declaration. The University covenants to provide written notice to the Condominium Association of such designations in form and content required under the Declaration, and otherwise to take all such other actions as may reasonably be requested by the Trustee to effectuate the same.

(c) The University covenants to maintain, and to cause the Condominium Association to maintain, comprehensive general public liability insurance and all other liability insurance coverages, including worker’s compensation coverage and employer’s liability insurance, all in accordance with the Declaration. In the event that the Declaration is terminated or is no longer in effect for any reason, the University shall maintain comprehensive general public liability insurance in an amount of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) general aggregate per location, and worker’s compensation and employer’s liability insurance at required statutory levels, and to otherwise maintain all liability insurance so as to attain substantially the same coverages as set forth in the Declaration as of the date hereof.

(d) The Trustee and the Authority shall, to the extent not inconsistent with the provisions of the Declaration, be entitled to be named as additional insureds on all policies of general liability insurance obtained by the University with respect to operations at the University Facility. The Trustee shall be entitled to payments of proceeds of property insurance as an Eligible Mortgagee in accordance with the provisions and procedures set forth in the Declaration, subject to the provisions of Section 5.6 hereof.

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(e) Anything to the contrary herein notwithstanding, the University shall hold the Authority harmless and without liability for any claim whatsoever arising, directly or indirectly, as the result of insufficient insurance under this Section 5.4.

(f) The University covenants to furnish to the Trustee, upon written request of the Trustee (no more frequently than once every fiscal year, unless an Event of Default has occurred and is continuing), copies of all policies of insurance, or ACORD certificates evidencing such insurance, maintained by the University on the Unit as required hereunder, and shall, to the extent it is able to obtain the same from the Condominium Association, copies of all policies of insurance, or ACORD certificates evidencing such insurance, maintained by the Condominium Association with respect to the Unit as required under the Declaration.

(g) Promptly after the University has knowledge of the occurrence of loss or damage to the Unit covered by insurance required under Section 5.4(a), or promptly after the University has received notice of condemnation of the Unit, the University shall notify the Trustee.

Section 5.5 Damage to or Condemnation of Facilities of the University. If the Unit or other components of the Condominium comprising part of the University Facility shall be wholly or partially destroyed or damaged by fire or other casualty covered by insurance required under Section 5.4, or shall be wholly or partially condemned, the Authority and University covenant that they will take all actions and will do all things which may be necessary to enable recovery to be made upon such policies of insurance or on account of such taking, condemnation, conveyance, damage or injury in order that moneys due on account of losses suffered may be collected and paid in accordance with the provisions and procedures set forth in the Declaration, and, with respect to coverages maintained directly by the University, to the University, to the extent not inconsistent with the Declaration. Subject to the rights of the Condominium Association and other entitled Persons set forth in the Declaration, the University shall promptly demand, collect, sue, settle claims, receipt and release moneys which may be due and payable under such policies of insurance or on account of such condemnation, damage or injury.

Section 5.6 Proceeds of Property Damage Insurance; Condemnation.

(a) In the event of casualty or condemnation loss to the Unit, proceeds of insurance or condemnation awards shall be payable and distributed to the University and the Trustee in accordance with the applicable provisions and procedures set forth in the Declaration. All other insurance or condemnation proceeds affecting the Condominium or component parts thereof shall paid to such Persons entitled thereto under the Declaration and applied as set forth in the Declaration.

(b) If insurance proceeds or condemnation awards are received by the University on account of condemnation of, sale under threat of condemnation of or casualty loss, damage or injury to the Unit, such moneys shall first be applied in the manner and for the purposes set forth in Article XV of the Declaration. With respect to insurance proceeds or condemnation awards that may remain in possession of the

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University following application and use as required in the Declaration, then such awards or proceeds shall be either applied by the University to the repair, restoration, reconstruction or replacement of the loss or damage to the extent not previously undertaken, or paid by the University to the Trustee for deposit into the [Bond Fund] for extraordinary optional redemption of the 2017 Bonds in accordance with Section 3.1(b) of the Indenture.

Section 5.7 Litigation Notice. The University shall give the Trustee and the Authority prompt written notice of any action, suit or proceeding pending or threatened against it at law or in equity, or before any governmental instrumentality or agency, which, if adversely determined, would materially impair the right of the University to carry on its business or would materially and adversely affect its business, operations, properties, assets or financial condition.

Section 5.8 Indemnification. The University will indemnify and hold harmless the Authority and each past, present and future member, officer, employee, attorney and agent of the Authority for and against any and all claims, losses, damages or liabilities (including the costs and expenses of investigating or defending against any such claims) to which the Authority or any past, present or future member, officer, employee or agent of the Authority may become subject, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise directly or indirectly out of (a) any breach or default on the part of the University in the performance of any covenant or agreement of the University hereunder or under any related document, or arising from any act or failure to act by the University or any of its agents, contractors, servants, employees or licensees; (b) the authorization, issuance and sale of the 2017 Bonds, or the provision of any information or certification furnished in connection therewith concerning the 2017 Bonds, the 2017 Project or the University (including, without limitation, any information furnished by the University for inclusion in any certification made by the Authority or for inclusion in, or as a basis for preparation of, the information statements furnished by the Authority and any information or certification obtained from the University); (c) the University’s failure to comply with any requirements of this Agreement pertaining to compliance with the Code to assure such exclusion of the interest or the provisions set forth in Section 5.11 and Section 5.12; (d) any failure by the University to comply with the provisions of the Act; and (e) any claim, action or proceeding brought with respect to any matter set forth in clause (a), (b), (c) or (d) above.

The University covenants and agrees to hold the Trustee and its directors, officers, employees and agents (collectively, the “Indemnitees”) harmless from and against any and all liabilities, losses, damages, fines, suits, actions, demands, penalties, costs and expenses, including out-of-pocket, incidental expenses, legal fees, costs 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 Agreement and the Indenture. In addition to and not in limitation of the immediately preceding sentence, the University also covenants and agrees to indemnify and hold 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 Agreement and the Indenture, provided the trustee has not acted with

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gross negligence or engaged in willful misconduct. The provisions of this Section 5.8 shall survive the termination of this Agreement and the Indenture and the resignation or removal of the Trustee for any reason and shall inure to the benefit of the Trustee’s successors and assigns.

In case any action or proceeding is brought against the Authority or the Trustee or other indemnified party in respect of which indemnity may be sought hereunder, the party seeking indemnity promptly shall give notice of that action or proceeding to the University, and the University upon receipt of that notice shall have the obligation and the right to assume the defense of the action or proceeding; provided that failure of a party to give that notice shall not relieve the University from any of its obligations under this Section unless (and then only to the extent) that failure prejudices the defense of the action or proceeding by the University. Any one or more of the indemnified parties shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized by the University; (ii) the University has failed to assume promptly the defense and employ counsel satisfactory to such indemnified party; or (iii) the named parties to any such action (including any impleaded parties) include both such indemnified party and the University, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are in conflict with those available to the University (in which case the University shall not have the right to assume the defense of such action on behalf of such indemnified party, in any of which events such fees and expenses shall be borne by the University. The University shall not be liable for any settlement made without its consent, which shall not be unreasonably withheld. The University shall not make any settlement affecting the Trustee without the Trustee’s prior written consent, which shall not be unreasonably withheld.

The indemnification set forth above is intended to and shall (i) include the indemnification of all affected members, directors, officers, agents, attorneys and employees of the Authority and of the Trustee, (ii) be enforceable by the members, officers, employees of the Authority and of the Trustee, to the full extent permitted by law, and (iii) survive the termination of this Agreement and the Indenture.

Section 5.9 Permitted Indebtedness. The University covenants and agrees that it will not hereafter incur or assume (the terms “incur” and “assume”, for the purposes hereof, to mean and include the guaranteeing of or the direct or indirect assumption of liability for the Debt of a third party) any Debt other than the Long Term Debt and Limited Term Debt hereinafter permitted, which are in the aggregate referred to hereinafter as “Permitted Indebtedness.”

(a) If no Event of Default hereunder shall have occurred and then be continuing, the University may incur or assume Long Term Debt for such lawful purposes of the University as shall be specified in reasonable detail in a certified resolution of the University, provided that, on or before the date on which any Long Term Debt, whether secured or unsecured, is to be incurred or assumed, the University shall deliver to the Trustee:

A certificate of the chief financial officer of the University in form and substance acceptable to the Trustee demonstrating (A) the Coverage Ratio in

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each of the two Fiscal Years immediately preceding the incurrence or assumption of the Long Term Debt was not less than 1.15 to 1 during each such Fiscal Year; and (B) the Projected Coverage Ratio on all Long Term Debt to be outstanding as projected for the one full Fiscal Year next following the incurrence of any additional Long Term Debt, or in the case of Long Term Debt incurred for purposes of construction of capital improvements, the one full Fiscal Year following the placement into service of such improvements, will be not less than 1.15 to 1 during such Fiscal Year; or

In the case of Long Term Debt incurred or assumed for purposes of refunding outstanding Long Term Debt, a certificate of the chief financial officer of the University in form and substance acceptable to the Trustee demonstrating that either (A) the aggregate Debt Service Requirements on the refunding Long Term Debt will not exceed by more than 3% the aggregate Debt Service Requirements on the refunded Long Term Debt over its remaining term or (B) Net Income Available for Debt Service during the first full Fiscal Year for which interest due in such Fiscal Year has not been funded from interest reserves or escrow funds or accounts established with proceeds of Long Term Debt, following the date on which such Long Term Debt is incurred, will equal not less than 125% of the average Debt Service Requirements in future Fiscal Years on Long Term Debt Outstanding in such first Fiscal Year; or

In the case of Long Term Debt incurred or assumed for purposes of completion of a Capital Addition or funding Extraordinary Repairs, a certificate of the chief financial officer of the University in form and substance acceptable to the Trustee stating that, the Net Income Available for Debt Service, as projected for the first full Fiscal Year for which interest due in such Fiscal Year has not been funded from interest reserves or escrow funds or accounts established with proceeds of Long Term Debt, following the completion and placement into service of a Capital Addition or Extraordinary Repairs to be financed with the proceeds of the Long Term Debt will equal not less than 125% of the average Debt Service Requirements in future Fiscal Years on Long Term Debt Outstanding in such first Fiscal Year; or

In the case of Long Term Debt where the aggregate principal amount of such Long Term Debt to be incurred or assumed is not in excess of 1% of Unrestricted University Revenues for the Fiscal Year immediately preceding the incurring or assuming of such Long Term Debt, a certificate of the chief financial officer of the University in form and substance acceptable to the Trustee to such effect.

(b) The University may, from time to time, incur or assume Limited Term Debt in any amount up to 20% of Unrestricted University Revenues for the immediately preceding Fiscal Year, less any Limited Term Debt then outstanding.

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Section 5.10 Security for Permitted Indebtedness. Any Permitted Indebtedness incurred or assumed as provided in Section 5.9 above may be secured only as hereinafter provided:

(a) In the case of the issuance of Additional Bonds, by a lien on and security interest in the Unrestricted University Revenues ranking on a parity with the lien and security interest granted herein in such collateral, and by a mortgage on the University Facility on parity with the 2017 Bonds Mortgage; or

(b) In the case of all other Permitted Indebtedness, exclusive of Limited Term Debt:

by a mortgage or other lien on or security interest in, any property or interest in property, real, personal, or mixed, of the University other than the University Facility; or

by a purchase money security interest in fixtures and equipment made part of the University facilities; or

by a lien on and security interest in the Unrestricted University Revenues of the University ranking on a parity with the lien and security interest granted herein, in which case such Permitted Indebtedness shall constitute Parity Obligations; provided, however, that no such Permitted Indebtedness shall be secured by the moneys and investments held by the Trustee in any Funds created under the Indenture; and further provided, however, that if the University shall provide the holders of any Long Term Debt comprising Parity Obligations with a lien on, or security interest in, any property of the University in addition to the Unrestricted University Revenues, the University shall grant a parity lien on such other property in favor of the Trustee.

(c) Any Limited Term Debt constituting Permitted Indebtedness may be secured solely by: (i) a purchase money security interest in personal property acquired with the proceeds thereof; or (ii) a lien on and security interest in accounts receivable of the University or the Unrestricted University Revenues ranking on a parity with the lien and security interest granted herein, provided that the aggregate outstanding amount of Limited Term Debt secured by the Unrestricted University Revenues shall not exceed 15% of Unrestricted University Revenues for the preceding Fiscal Year.

(d) With respect to any Parity Obligations (other than Additional Bonds), the University shall, at its expense, cause there to be executed an Intercreditor Agreement reasonably acceptable to the Trustee.

Section 5.11 Tax Covenants of University. The University covenants and represents that it will at all times do and perform all acts and things necessary or desirable and within its reasonable control in order to assure that interest paid on the 2017 Bonds shall not be includable in the gross income of any Holder for federal income tax purposes, unless such Holder is a “substantial user” of the 2017 Project or a “related person” of such a user within the meaning of Section 147(a) of the Code. The University also covenants and represents that it shall

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not take or omit to take, or permit to be taken on its behalf, any actions which, if taken or omitted, would adversely affect the excludability from the gross income of the Holders of interest paid on the 2017 Bonds for federal income tax purposes. The University covenants for the benefit of the Holders that it will not use the proceeds of the 2017 Bonds, any moneys derived, directly or indirectly, from the use or investment thereof or any other moneys on deposit in any fund or account maintained in respect of the 2017 Bonds (whether such moneys were derived from the proceeds of the sale of the 2017 Bonds or from other sources) in a manner which would cause the 2017 Bonds to be treated as “arbitrage bonds” within the meaning of Section 148 of the Code or would otherwise violate Section 5.7 of the Indenture.

Section 5.12 Further Tax Covenants of University. The University further represents and covenants as follows:

(a) Action to Maintain Tax-Exempt Status. The University will take such actions as shall be necessary or desirable, from time to time and within its reasonable control, to cause all of the representations and warranties in this Section to remain true and correct during such periods as shall be necessary to maintain the exclusion of interest paid on the 2017 Bonds from the gross income of the Holders for federal income tax purposes, pursuant to the requirements of the Code. The University 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, if such action or circumstance, or its expectation on the date of issuance of the 2017 Bonds, would cause the interest paid by the Authority on the 2017 Bonds to be subject to federal income tax in the hands of the Holders thereof.

(b) Maintenance of Tax-Exempt Status of University. The University (1) will take whatever actions are necessary for the University to continue to be organized and operated in a manner which will preserve and maintain its status as an organization which is (i) described in Section 501(c)(3) of the Code, (ii) exempt from federal income taxes under Section 501(a) of the Code, and (iii) not a private foundation under Section 509(a) of the Code (or corresponding provisions of prior law); and (2) will not perform any acts or enter into any agreements which would cause any revocation or adverse modification of such federal income tax status.

(c) Ninety-five Percent Qualified Costs Test. No more than five percent (5%) of the net proceeds of the 2017 Bonds (less 2007 Bond proceeds used to finance costs of issuance) will be used to finance costs of the 2017 Project used or to be used (i) in unrelated trades or businesses (within the meaning of Section 513(a) of the Code) of an organization described in Section 501(c)(3) of the Code, or (ii) in the trade or business of a person other than an organization described in Section 501(c)(3) of the Code or a governmental entity. The University will not use the University Facilities which have been financed or refinanced with proceeds of the 2017 Bonds, or permit such facilities to be used, in whole or in part, by any Person (including, without limitation, any lessee) in a manner which would result in a violation of this clause (c).

(d) Ownership of University Facilities. So long as the 2017 Bonds are outstanding, the University Facilities which have been financed or refinanced with proceeds of the 2017 Bonds will be owned by the University or another organization that

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is exempt from federal income taxes under Section 501(a) of the Code and described in Section 501(c)(3) of the Code, or a governmental entity.

(e) Prohibition on Financing Certain Facilities. The University will not use any of the proceeds of the 2017 Bonds to provide residential rental property for family units, including any accommodation containing separate and complete facilities for living, sleeping, eating, cooking and sanitation which is available on other than a transient basis; provided that this restriction shall not apply to dormitories or fraternity and sorority houses. The University will not use any proceeds of the 2017 Bonds to provide any airplane, any sky box or other private luxury box, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.

(f) $150,000,000 Limitation on Acquisition of Other Property, Mergers and Leases. If the taxability condition described below is present, then neither the University nor any Related Person with respect to the University or any Principal User of the University Facilities will, during the test period (as such term is defined in the Code) in respect of the 2017 Bonds, either (i) be or become a Principal User of a facility financed with Qualified 501(e)(3) Bonds, issued prior to the issuance of the 2017 Bonds (a “prior issue”) or (ii) merge with or become a Related Person with respect to a Principal User of a facility financed by a prior issue. The taxability condition is that (A) the prior issue is a Qualified 501(c)(3) Bond (i) issued on or before August 5, 1997, (ii) the proceeds of which were used to reimburse expenditures incurred on or before August 5, 1997, (iii) more than 5% of the net proceeds of which were used to pay working capital costs or (iv) the proceeds of which were used to refund any prior issue included in (i), (ii) or (iii); (B) the test period for the prior issue has not expired as of the date of issuance of the 2017 Bonds; and (C) the portion of the prior issue allocable under the Code to the University (or any Related Person with respect to the University), or any other Principal User of the University Facilities (or any Related Person with respect to such Principal User), when added to the outstanding amount of the 2017 Bonds and any other prior issues allocable under the Code to the University (or any such Related Person), or such Principal User (or any such Related Person), as the case may be, would exceed $150,000,000. For purposes of the foregoing $150,000,000 limit, two or more organizations under common management or control will be treated as one organization. The University hereby represents that, as of the date of issuance of the 2017 Bonds, the foregoing taxability condition is not present.

(g) Lease of University Facilities. In connection with any lease or other grant by the University of the use of University facilities financed or refinanced with 2017 Bond proceeds, the University will require that the lessee or user of any portion of such facilities and all Related Persons with respect to such lessee or user will not violate the covenants set forth herein.

(h) Bond Maturity Limitation. The average reasonably expected economic life of the property financed or refinanced with the proceeds of the 2017 Bonds, disregarding land, will be at least 84% of the average maturity of the 2017 Bonds, as determined pursuant to Section 147(b) of the Code.

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(i) Arbitrage Rebate. Subject to the requirements set forth in Section 4.7 of the Indenture:

The University shall determine or retain a Financial Consultant to determine, within 60 days of the end of each Computation Date (as defined in the Indenture) the amount required to be rebated to the United States pursuant to Section 148(f) of the Code. Notwithstanding the foregoing, the University shall not be required to make such determination if there have been no investments made of amounts on deposit in any fund or account established under the Indenture in “nonpurpose investments” (as defined in Section 148(f)(6) of the Code) having a yield higher than the yield of the 2017 Bonds since the last Computation Date, and the University shall not be required to make such determination with respect to any portion of the 2017 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. The University shall notify the Trustee in writing at least fifteen days prior to the Computation Date if such determination is not required to be made, specifying the basis therefor.

The University shall pay, or cause to be paid, to the United States Treasury (A) not less frequently than 60 days after every Computation Date, an amount, as determined by the University 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 2017 Bonds, giving effect to any prior payments made pursuant to this paragraph, and (B) not later than sixty (60) days after the retirement of the last 2017 Bond or Bonds, 100% of the aggregate amount required to be rebated pursuant to Section 148(f) of the Code.

The provisions of this Section 5.12(i) may be amended, or deleted from this 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 for federal tax purposes of interest on the 2017 Bonds.

The University 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 the 2017 Bonds in obligations other than tax-exempt obligations. The obligation of the University to make such payments is unconditional and is not limited to funds representing the proceeds of the 2017 Bonds or income from the investment thereof or any other particular source.

(j) Nonpurpose Investments. After the expiration of any applicable temporary period under Section 148(c) of the Code, not more than the lesser of 5% or $100,000 of the gross proceeds of the 2017 Bonds (in addition to the amounts allowed under Sections 148(c) and (d) of the Code and subject to the yield adjustment provisions of Treasury Regulations §1.148-5(c)) will be invested in higher yielding investments.

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At no time will any funds constituting gross proceeds of the 2017 Bonds be used to acquire investments at other than fair market value within the meaning of the applicable Treasury Regulations pertaining to, or in any other fashion as would constitute failure of compliance with, Section 148 of the Code. Investments or deposits in certificates of deposit or pursuant to investment contracts shall not be made without compliance, at or prior to such investment or deposit, with the requirements of Treasury Regulations §1.148-5(d)(6)(ii) and (iii), respectively, or with any successor provisions thereto.

The terms “gross proceeds”, “yield”, “nonpurpose investments” and “higher yielding investments” have the meanings assigned to them for purposes of Section 148 of the Code.

(k) Certain Purchases of Authority Bonds Prohibited. The University covenants that during the term of this Loan Agreement, it will not purchase, or permit any “related person” (as defined in Section 147(a)(2) of the Code) to purchase, pursuant to any arrangement, formal or informal, the bonds issued by the Authority for the benefit of any 501(c)(3) organization in an amount related to the amount of the loan hereunder.

Section 5.13 Environmental Matters. The University covenants to comply in all material respects with all applicable federal, state and local laws, ordinances, rules and regulations pertaining to the environment (collectively, “Environmental Laws”), including, without limitation, those regulating hazardous or toxic wastes and substances (as such phrases may be defined in any Environmental Law), and to give prompt written notice to the Trustee and the Authority of any material violation or alleged material violation of any Environmental Law with respect to the University’s property. The University will indemnify and defend the Authority and the Trustee and their directors, officers, employees and agents, and hold the Trustee and the Authority harmless from, any loss, liability, damage, claim, action or cause of action, including, without limitation, court costs and reasonable attorney’s fees, costs and expenses and the allocated costs of in-house counsel and legal staff, consultants’ fees, costs and expenses and any clean-up or remediation costs, arising from any violation or alleged violation by the University of any Environmental Law with respect to the University’s property. This Section 5.13 shall survive the termination of this Agreement and the Indenture and the resignation or removal of the Trustee for any reason and shall inure to the benefit of the Trustee’s successors and assigns.

Section 5.14 Continuing Disclosure. The University hereby covenants and agrees to comply, or to cause compliance with, its obligations under the Continuing Disclosure Agreement executed and delivered by the University in connection with the issuance of the 2017 Bonds (the “Continuing Disclosure Agreement”). Notwithstanding any other provision of this Loan Agreement, failure of the University to comply, or cause compliance with, its obligations under the Continuing Disclosure Agreement, or any other requirements of U.S. Securities and Exchange Commission Rule 15c2-12, as it may from time to time hereafter be amended or supplemented, shall not be considered an Event of Default.

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ARTICLE VI REDEMPTION OF 2017 BONDS

Section 6.1 Optional Redemption. Provided no Event of Default has been declared in writing by the Trustee, at any time and from time to time, the University may deliver or cause to be delivered Loan Payments to the Trustee in addition to the scheduled Loan Payments required to be made under Section 4.2 and direct the Trustee in writing to use the Loan Payments so delivered for the purpose of calling 2017 Bonds for optional redemption in accordance with the applicable provisions of the Indenture and redeeming such 2017 Bonds at the redemption price stated in the Indenture. Such Loan Payments shall be held and applied as provided in Section 4.2 of the Indenture and delivery thereof shall not operate to abate or postpone Loan Payments otherwise becoming due or to alter or suspend any other obligations of the University under this Agreement. Whenever the 2017 Bonds are subject to optional redemption pursuant to the Indenture, the Authority will, but only upon direction of the University, direct the Trustee to call the same for redemption as provided in the Indenture.

Section 6.2 Extraordinary Optional Redemption. Upon the happening of one of the events set forth in Section 5.5 (but subject to the provisions of Section 5.6 hereof), and subject to the requirements contained in the Indenture, or any other event giving rise to the right to extraordinarily redeem 2017 Bonds under the Indenture, the University may deliver Loan Payments to the Trustee within 90 days from receiving proceeds related to such event as provided in Section 5.6, in addition to Loan Payments required to be made under Section 4.2 and direct the Trustee to use the Loan Payments so delivered for the purpose of calling 2017 Bonds for extraordinary optional redemption in accordance with the applicable process of the Indenture and redeeming such 2017 Bonds at the redemption price stated in the Indenture and/or the 2017 Bonds to be so redeemed.

Section 6.3 Actions by Authority. At the request of the University or the Trustee, the Authority shall take all steps required of it under the applicable provisions of the Indenture or the 2017 Bonds to effect the redemption of all or a portion of the 2017 Bonds pursuant to this Article.

ARTICLE VII EVENTS OF DEFAULT AND REMEDIES

Section 7.1 Events of Default. Each of the following shall be an Event of Default:

(a) Failure by the University to make or cause to be made any Loan Payment on or prior to the date on which such payment is due and payable;

(b) Failure by the University to observe and perform any other agreement, term or condition contained in this Agreement and continuation of such failure for a period of 30 days after notice thereof shall have been given to the University by Trustee, or for such longer period as the Trustee may agree to in writing but in no event longer than one hundred twenty (120) days; provided that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable

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period, such failure shall not constitute an Event of Default so long as the University institutes curative action within the applicable period and diligently pursues such action to completion;

(c) The University shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or the like of itself or of its property, or (ii) admit in writing its inability to pay its debts generally as they become due, or (iii) make a general assignment for the benefit of creditors, or (iv) be adjudicated a bankrupt or insolvent, or (v) commence a voluntary case under the United States Bankruptcy Code, or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief, or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization, or insolvency proceeding, or action shall be taken by it for the purpose of effecting any of the foregoing, or (vi) have instituted against it, without the application, approval or consent of the University, a proceeding in any court of competent jurisdiction, under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect of the University an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian or the like of the University or of all or any substantial part of its assets, or other like relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being contested by the University in good faith, the same shall (A) result in the entry of an order for relief or any such adjudication or appointment or (B) remain unvacated, undismissed and undischarged for a period of 120 days;

(d) Any representation or warranty made by the University herein or any statement in any report, certificate, financial statement or other instrument furnished in connection with this Agreement or with the purchase of the 2017 Bonds shall at any time prove to have been false or misleading in any material respect when made or given;

(e) The occurrence and continuance of an Event of Default under the Indenture;

(f) There shall occur and be continuing an event of default under the 2017 Bonds Mortgage, after giving effect to any notice and right to cure periods applicable thereto; and

(g) The Withdraw of the Certificate of Authority by the Pennsylvania Department of Education and the expiration of all available appeal periods.

The declaration of an Event of Default under paragraph (c) above, and the exercise of remedies upon any such declaration, shall be subject to any applicable limitations of federal bankruptcy law affecting or precluding that declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings.

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Section 7.2 Remedies on Default.

(a) Whenever an Event of Default shall have happened and be subsisting, any one or more of the following remedial steps may be taken:

If acceleration of the principal amount of the 2017 Bonds has been declared pursuant to Section 6.3 of the Indenture, the Trustee shall declare all Loan Payments to be immediately due and payable, whereupon the same shall become immediately due and payable; and

The Trustee may pursue any and all remedies now or hereafter existing at law or in equity to collect all amounts then due and thereafter to become due under this Agreement or to enforce the performance and observance of any other obligation or agreement of the University under this Agreement.

(b) The University covenants that, in the event of acceleration of all Loan Payments pursuant to Section 7.2, then, upon demand of the Trustee, the University will pay to the Trustee the whole amount of Loan Payments that then shall have become due and payable hereunder; and, in addition thereto, any unpaid Additional Payments and such further amounts as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agents and counsel, and any expenses or liabilities incurred by the Trustee. In case the University shall fail forthwith to pay such amounts upon such demand, the Trustee shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid.

(c) In case there shall be pending proceedings for the bankruptcy or reorganization of the University under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall have been appointed for the benefit of the creditors or the property of the University, the Trustee shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount due hereunder, including interest owing and unpaid in respect thereof, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the University, its creditors or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its fees, charges and expenses. Any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to pay to the Trustee any amount due it for compensation and expenses, including counsel fees and expenses incurred by it up to the date of such distribution.

Notwithstanding the foregoing, the Trustee shall not be obligated to take any step which in its opinion will or might cause it to expend money or otherwise incur liability unless and until satisfactory indemnity has been furnished to the Trustee at no cost or expense to the Trustee, Any amounts collected as Loan Payments or applicable to Loan Payments and any other amounts which would be applicable to payment of Debt Service collected pursuant to action

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taken under this Section shall be paid into the Debt Service Fund and applied in accordance with the provisions of the Indenture or, if the outstanding 2017 Bonds have been paid and discharged in accordance with the provisions of the Indenture, shall be paid as provided in Article IX of the Indenture for transfers of remaining amounts in the Debt Service Fund.

The provisions of this Section are subject to the further limitation that the annulment by the Trustee of its declaration that all of the 2017 Bonds are immediately due and payable also shall constitute an annulment of any corresponding declaration made pursuant to Subsection 7.2(a)(i); provided that no such waiver or rescission shall extend to or affect any subsequent or other default or impair any right consequent thereon.

Section 7.3 Remedies Not Exclusive. No remedy conferred upon or reserved to the Authority or the Trustee by this Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair that right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than any notice required by law or for which express provision is made herein.

Section 7.4 Payment of Legal Fees, Costs and Expenses. If an Event of Default should occur and the Authority, the Trustee should incur costs or expenses, including reasonable attorneys’ fees, costs and expenses, in connection with, among other things, the protection of their respective rights under this Agreement, the enforcement of this Agreement or the collection of sums due thereunder, the University shall pay or reimburse the Authority and the Trustee, as applicable, for the costs and expenses so incurred, upon demand.

Section 7.5 No Waiver. No failure by the Authority or the Trustee to insist upon the strict performance by the University of any provision hereof shall constitute a waiver of their right to strict performance and no express waiver shall be deemed to apply to any other existing or subsequent right to remedy the failure by the University to observe or comply with any provision hereof. The Trustee may waive any Event of Default hereunder.

Section 7.6 Notice of Default. The University shall notify the Trustee in writing immediately if it becomes aware of the occurrence of any Event of Default hereunder or of any fact, condition or event which, with the giving of notice or passage of time or both, would become an Event of Default.

ARTICLE VIII MISCELLANEOUS

Section 8.1 Term of Agreement. This Agreement shall be and remain in full force and effect from the date hereof until such time as all of the 2017 Bonds shall have been fully paid (or provision made for such payment) pursuant to the Indenture, the Indenture shall have been released pursuant to Section 9.1 thereof, and all other sums payable by the University

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under this Agreement shall have been paid, except for indemnification obligations of the University under Section 5.8 and Section 5.13, which shall survive any termination of this Agreement.

Section 8.2 Notices. All notices, certificates, requests or other communications hereunder shall be in writing and shall be deemed to be sufficiently given when mailed by registered or certified mail, postage prepaid, and addressed as specified in Section 10.3 of the Indenture.

Section 8.3 Limitation of Liability, No Personal Liability. In the exercise of the powers of the Authority or the Trustee hereunder or under the Indenture, including without limitation the application of moneys and the investment of funds, neither the Authority, the Trustee, nor their past, present and future members, officers, employees or agents shall be accountable to the University for any action taken or omitted by any of them in good faith and with the belief that it is authorized or within the discretion or rights or powers conferred except for those done or undertaken (i) with gross negligence, (ii) willful misconduct or (iii) breach of any applicable law. The Authority, the Trustee and their past, present and future members, officers, employees and agents shall be protected in acting upon any paper or document believed to be genuine, and any of them may conclusively rely upon the advice of counsel and may (but need not) require further evidence of any fact or matter before taking any action. In the event of any default by the Authority hereunder, the liability of the Authority to the University shall be enforceable only out of the Authority’s interest under this Agreement and there shall be no other recourse for damages by the University against the Authority, its past, present and future members, officers, attorneys, agents and employees, or any of the property now or hereafter owned by it or them. All covenants, obligations and agreements of the Authority contained in this Agreement or the Indenture shall be effective to the extent authorized and permitted by applicable law. No official executing the 2017 Bonds shall be liable personally on the 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof or by reason of the covenants, obligations or agreements of the Authority contained in this Agreement or the Indenture.

Section 8.4 Binding Effect. This Agreement shall inure to the benefit of and shall be binding in accordance with its terms upon the Authority, the University and their respective successors and assigns; provided that this Agreement may not be assigned by the University (except in connection with a sale or transfer of assets pursuant to Section 5.1 or in compliance with Section 8.9) and may not be assigned by the Authority except to the Trustee pursuant to the Indenture or as otherwise may be necessary to enforce or secure payment of Debt Service. This Agreement may be enforced only by the parties, their assignees and others who may, by law, stand in their respective places.

Section 8.5 Amendments. Except as otherwise expressly provided in this Agreement or the Indenture, subsequent to the issuance of the 2017 Bonds and unless and until all conditions provided for in the Indenture for release of the Indenture having been met, this Agreement may not be effectively amended, modified or terminated except by an instrument in writing signed by the University and the Authority, consented to by the Trustee, and in accordance with the provisions of Article VIII of the Indenture, as applicable.

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Section 8.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same instrument.

Section 8.7 Severability. If any provision of this Agreement is determined by a court to be invalid or unenforceable, such determination shall not affect any other provision hereof, each of which shall be construed and enforced as if the invalid or unenforceable portion were not contained herein. Such invalidity or unenforceability shall not affect any valid and enforceable application thereof, and each such provision shall be deemed to be effective, operative and entered into in the manner and to the full extent permitted by applicable law.

Section 8.8 Governing Law. This Agreement shall be deemed to be a contract made under the laws of the Commonwealth and for all purposes shall be governed by and construed in accordance with the laws of the Commonwealth without regard to conflict of law principles.

Section 8.9 Assignment. The University shall not assign this Agreement or any interest of the University herein, either in whole or in part, without the prior written consent of the Trustee, which consent shall be given if the following conditions are fulfilled: (i) the assignee assumes in writing all of the obligations of the University hereunder; (ii) in the opinion of counsel to the University, neither the validity nor the enforceability of this Agreement shall be adversely affected by such assignment; (iii) the 2017 Project shall continue in the opinion of Bond Counsel to be a “Project” as such term is defined in the Act after such assignment; (iv) such assignment shall not, in the opinion of Bond Counsel, have an adverse effect on the exclusion from gross income for federal income tax purposes of interest on the 2017 Bonds; and (v) consent by the Authority, which consent shall not be unreasonably withheld. Subject to the foregoing, the terms “Authority”, “University” and “Trustee” shall, where the context requires, include the respective successors and assigns of such persons. No assignment pursuant to this Section shall release the University from its obligations under this Agreement.

Section 8.10 Receipt of Indenture. The University hereby acknowledges that it has received an executed copy of the Indenture and is familiar with its provisions, and agrees that it is subject to and bound by the terms thereof and it will take all such actions as are required or contemplated of it under the Indenture to preserve and protect the rights of the Trustee and of the Holders thereunder and that it will not take any action which would cause a default thereunder. Any redemption of 2017 Bonds prior to maturity shall be effected as provided in the Indenture.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Authority and the University, intending to be legally bound, have caused this Agreement to be duly executed in their respective names, all as of the date first above written.

ATTEST: DAUPHIN COUNTY GENERAL AUTHORITY

______(Assistant) Secretary (Vice) Chairman

THE HARRISBURG UNIVERISITY OF SCIENCE AND TECHNOLOGY

By:______Chairman of the Board of Trustees

By:______President

This execution page is part of the Loan Agreement dated as of July 1, 2017, between Dauphin County General Authority and The Harrisburg University of Science and Technology.

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EXHIBIT A ASSIGNMENT

KNOW ALL PERSONS BY THESE PRESENTS that DAUPHIN COUNTY GENERAL AUTHORITY (the “Authority”), pursuant to a Resolution of its Board heretofore duly adopted does hereby sell, assign, transfer, and set over to The Bank of New York Mellon Trust Company, N.A., a national banking association, as Trustee (the “Trustee”) under the Trust Indenture dated as of July 1, 2017 (the “Indenture”) of the Authority, all of the right, title and interest of the Authority in and to the Loan Agreement dated as of July 1, 2017 (the “Loan Agreement”), between the Authority and The Harrisburg University of Science and Technology, and all loan payments and other amounts payable or which may become payable thereunder (except for amounts representing its Annual Administrative Fees and Administrative Expenses (as such terms are defined in the Loan Agreement), indemnification and reimbursement of its attorneys’ fees and expenses) and all security therefor, the same to be held in trust and applied by said Trustee as provided in said Indenture; and the Authority does hereby constitute and appoint the said Trustee its true and lawful attorney for it and in its name to collect and receive payment of any and all of said loan payments and other payments and to give good and sufficient receipts therefor, hereby ratifying and confirming all that said attorney may do in the premises, Said Trustee may, but, except as otherwise provided in said Indenture, shall not be required to, institute any proceedings or take any action in its name or in the name of the Authority to enforce payment or collection of any or all of such loan payments and other payments. Notwithstanding such assignment and transfer, so long as the Authority shall not be in default under the Indenture:

(a) The Authority shall have the right and duty to give all approvals and consents permitted or required under the Loan Agreement;

(b) The Authority shall have the right to receive copies of notices, reports and similar matters required under the Loan Agreement;

(c) The Authority shall have the right to give or withhold all consents and approvals required or permitted under the loan Agreement;

(d) The Authority shall have the right to execute any modifications, amendments or terminations of the Loan Agreement, to the extent and in the manner permitted by the Indenture; and

(e) There shall be no responsibility on the part of the Trustee for duties or responsibilities of the Authority contained in the Loan Agreement or in any supplements and/or amendments thereto,

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IN WITNESS WHEREOF, DAUPHIN COUNTY GENERAL AUTHORITY has caused this Assignment to be duly executed in its name by its Chairman or Vice Chairman and attested by its Secretary or Assistant Secretary, and this Assignment to be dated as of July 1, 2017.

ATTEST: DAUPHIN COUNTY GENERAL AUTHORITY

______(Assistant) Secretary (Vice Chairman)

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APPENDIX E

FORM OF MORTGAGE [ THIS PAGE INTENTIONALLY LEFT BLANK ] APPENDIX E

FORM OF MORTGAGE

This document prepared by and upon recording return to:

Daniel J. Malpezzi, Esq. McNees Wallace & Nurick LLC 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166

UPI No.: 03-001-072

______SPACE ABOVE THIS LINE FOR RECORDER’S USE

Open-End Mortgage

This Mortgage Secures Future Advances

THE SECURED PARTY (MORTGAGEE) DESIRES THIS MORTGAGE BE INDEXED AS A FIXTURE FILING AGAINST THE RECORD OWNER (MORTGAGOR) OF THE PROPERTY DESCRIBED HEREIN

THIS OPEN-END MORTGAGE (this “Mortgage”) is executed on this ___ day of July, 2017, but to be effective as of July __, 2017, by THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY, a Pennsylvania nonprofit corporation, with its principal offices located at 326 Market Street, Harrisburg, PA 17101 (the “Mortgagor”) to and in favor of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as Trustee under the Indenture described and defined below, having a corporate trust office located at 1735 Market Street, 9th Floor, Philadelphia, Pennsylvania 19103-7501 (the “Mortgagee”).

WHEREAS, the Mortgagor operates an institution of higher education located in the City of Harrisburg, Dauphin County, Pennsylvania; and

WHEREAS, the Mortgagor is the owner in fee simple of that Unit No. 1, known as the “Education Unit,” and its undivided percentage interests in the common elements and limited common elements (the “Unit”), more particularly described in Exhibit A attached hereto, created and defined pursuant to that Declaration of Condominium of Fourth Street Condominium (the

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“Condominium”), dated December 16, 2013 and recorded in the Office of the Recorder of Deeds of Dauphin County Pennsylvania as Instrument No. 20130038835 (the “Declaration”); and WHEREAS, The Dauphin County General Authority (the “Authority”) is a municipality authority created and existing under the Pennsylvania Municipality Authorities Act, Pa. Cons. Stat. §§5601-5622, as amended (the “Act”), and is authorized to finance buildings and facilities for private, nonprofit, nonsectarian colleges and universities which it determines to be “eligible educational institutions” as defined in the Act; and

WHEREAS, the Mortgagor operates an institution of higher education located in the City of Harrisburg, Pennsylvania having its primary educational facilities located in the Unit; and

WHEREAS, the Authority has found the Mortgagor to be an “eligible educational institution” as defined in the Act; and;

WHEREAS, the Mortgagor has determined to request the Authority to undertake a project for the benefit of the Mortgagor (the “Refunding Project”), consisting of (i) the current refunding of the outstanding University Revenue Bonds, Series B of 2007 (The Harrisburg University of Science and Technology Project) issued by Capitol Region Water, formerly The Harrisburg Authority, for the benefit of the Mortgagor (the “Refunded Bonds”), (ii) the funding of a debt service reserve fund or other required reserve funds and accounts and (iii) the payment of certain costs and expenses related to issuing the 2017 Bonds (as defined below); and

WHEREAS, for the purposes above described, the Authority has determined to issue, sell and deliver, on behalf of the Mortgagor, its $______original aggregate principal amount University Revenue Bonds, Series of 2017 (The Harrisburg University of Science and Technology Project) (the “2017 Bonds”), pursuant to the provisions and requirements of the Act and the Trust Indenture dated as of July 1, 2017 (the “Indenture”) by and between the Authority and the Mortgagee in its capacity as bond trustee thereunder (in such capacity, the “Trustee”); and

WHEREAS, the proceeds of the 2017 Bonds will be loaned by the Authority to the Mortgagor pursuant to a Loan Agreement dated as of July 1, 2017 (the “Loan Agreement” and together with the Indenture, the “Bond Documents”); and

WHEREAS, the Authority has assigned and pledged, among other things, the Loan Agreement and the sums payable thereunder (other than certain Unassigned Authority’s Rights, as defined in the Loan Agreement) to the Trustee under the Indenture for the payment and security of all principal of, redemption price, if any, and interest on, the 2017 Bonds; and

WHEREAS, to secure payment of the Loan Payments (as defined in the Loan Agreement) as provided in Section 4.2 of the Loan Agreement (the “Obligations”), the Mortgagor desires, pursuant to the provisions of this Mortgage, to grant to the Mortgagee a mortgage lien on all the Mortgagor’s right, title and interest in and to the Mortgaged Property (as hereinafter defined).

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NOW, THEREFORE, for the purpose of securing the payment and performance of the Obligations, the Mortgagor, for good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound hereby, does hereby give, grant, bargain, sell, convey, assign, transfer, mortgage, hypothecate, pledge, set over, and confirm unto the Mortgagee and does agree that the Mortgagee shall have a security interest in the following described property, all accessions and additions thereto, all substitutions therefor and replacements and proceeds thereof, and all reversions and remainders of such property now owned or held or hereafter acquired (the “Mortgaged Property”):

(a) All of the Mortgagor’s estate, rights, title, and interests in the Unit, including the Mortgagor’s undivided interest in the common elements and limited common elements appurtenant to the Unit, together with all of the easements, rights of way, privileges, liberties, hereditaments, gores, streets, alleys, passages, ways, waters, watercourses, air rights, oil rights, gas rights, mineral rights, and all other rights and appurtenances thereunto belonging or appertaining, and all of the Mortgagor’s estate, right, title, interest, claim, and demand therein and in the public streets and ways adjacent thereto to the extent appurtenant to the Unit, either in law or in equity;

(b) All the buildings, structures, building systems and improvements of every kind and description now or hereafter constituting a component part of the Unit, including all fixtures, machinery, apparatus, appliances, building systems, electrical components, HVAC systems installations, machinery, equipment, and other goods, which in each case have become so related to the Unit that an interest in them arises under real property law; and

To have and to hold the same unto the Mortgagee, its successors and assigns, forever.

Provided, however, that upon the earliest to occur of (i) payment in full of the Obligations on the maturity dates therefor, (ii) redemption of the 2017 Bonds in accordance with the Indenture and (iii) defeasance of the 2017 Bonds in accordance with the provisions of the Indenture, then the estate hereby granted and conveyed shall become null and void.

This Mortgage is an “Open-End Mortgage” as set forth in 42 Pa. C.S.A. §8143, secures a maximum principal amount of indebtedness outstanding at any time equal to the original aggregate principal amount of the 2017 Bonds, and secures all Obligations as well as protective advances made by Mortgagee as provided herein, and costs and expenses incurred by the Mortgagee by reason of a default or Event of Default (as hereinafter defined) by the Mortgagor under this Mortgage. All notices to be given to the Mortgagee pursuant to 42 Pa. C.S.A. §8143 shall be given as set forth in Section 14. This Mortgage also constitutes a financing statement and fixture filing

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as to items of the Mortgaged Property constituting “fixtures” pursuant to Section 9502(c) of the Pennsylvania Uniform Commercial Code.

1. Representations and Warranties Regarding Mortgaged Property. The Mortgagor represents and warrants to the Mortgagee that (i) the Mortgagor has good and marketable title to an estate in fee simple absolute in the Unit and has all right, title, and interest in all other property constituting a part of the Mortgaged Property, in each case free and clear of all liens and encumbrances, except as may otherwise be set forth in that Commitment for Title Insurance No. H095001198 issued by First American Title Insurance Company to the Mortgagee (such liens and encumbrances, as well as all other mortgages, liens, charges, pledges, security interests and other encumbrances as may be permitted under the terms of any of the Bond Documents, the “Permitted Encumbrances”) and (ii) this Mortgage is a valid and enforceable first lien on the Mortgaged Property (except for Permitted Encumbrances) and the Mortgagee shall, subject to the Mortgagor’s right of possession prior to an Event of Default, quietly enjoy and possess the Mortgaged Property. The Mortgagor shall preserve such title as it warrants herein and the validity and priority of the lien hereof for so long as the Obligations remain outstanding and shall warrant and defend the same to the Mortgagee against the claims of all persons claiming by, under or through Mortgagor.

2. Covenants. Until all of the Obligations shall have been fully paid, the Mortgagor shall:

(a) Legal Requirements. Promptly comply, in all material respects, with and conform to all present and future material laws, statutes, codes, ordinances, orders, and regulations and all covenants, restrictions, and conditions which may be applicable to the Mortgaged Property (the “Legal Requirements”).

(b) Impositions. Before interest or penalties are due thereon and otherwise when due, but subject to the right of the Mortgagor to contest the amount or validity of the same by appropriate proceedings and further subject to the terms, requirements, conditions and limitations set forth in the Declaration, the Mortgagor shall pay all taxes of every kind and nature, all charges for any easement or agreement maintained for the benefit of any of the Mortgaged Property, all general and special assessments (including any condominium or planned unit development assessments, if any), levies, permits, inspection and license fees, all water and sewer rents and charges, and all other charges and liens, whether of a like or different nature, imposed upon or assessed against the Mortgagor or any of the Mortgaged Property which, if unpaid, could result in a lien on the Mortgaged Property having priority over the lien of this Mortgage (the “Impositions”). Upon request by Mortgagee, the Mortgagor shall deliver to the Mortgagee written evidence of payment of any Impositions.

(c) Maintenance of Security. The Mortgagor shall keep the Mortgaged Property in good condition and order and state of repair and will make or cause to be made, as and when necessary, all repairs, renewals, and replacements, structural and nonstructural, exterior and interior, foreseen and unforeseen, ordinary and extraordinary, but subject to the terms,

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requirements, conditions and limitations set forth in the Declaration. The Mortgagor shall not remove, demolish or alter the Mortgaged Property nor commit or suffer waste with respect thereto, nor permit the Mortgaged Property to become deserted or abandoned.

3. Prohibitions on Transfer. The Mortgagor shall not sell, convey or otherwise transfer any interest in the Mortgaged Property, without the Mortgagee’s prior written consent, including any sale, conveyance, encumbrance, assignment, or other transfer of (including installment land sale contracts), or the grant of a security interest in, all or any part of the legal or equitable title to the Mortgaged Property, except for Permitted Encumbrances or as otherwise permitted hereunder or under the Bond Documents. Any default under this section shall constitute an immediate Event of Default hereunder without any notice or demand by the Mortgagee.

4. Insurance. The Mortgagor shall keep, or cause to be kept, the Unit and the other Mortgaged Property continuously insured in accordance with the applicable provisions of the Declaration. In the event that the Declaration is terminated or is no longer in effect for any reason, the Mortgagor shall keep the Mortgaged Property insured in an amount not less than 100% of the full replacement costs thereof, covering such risks and with such deductibles so as to attain substantially the same coverages as set forth in the Declaration as of the date hereof. The Mortgagor shall also maintain, or cause to be maintained, comprehensive general public liability insurance, all in accordance with the Declaration. In the event that the Declaration is terminated or is no longer in effect for any reason, the Mortgagor shall maintain comprehensive general public liability insurance in an amount of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) general aggregate per location, and worker’s compensation insurance. Mortgagee shall be covered as an insured under all such policies in accordance with the provisions and the procedures set forth in the Declaration. In addition, if the Unit is located in an area which has been identified by any governmental agency, authority, or body as a flood hazard area, then the Mortgagor shall maintain a flood insurance policy covering the Unit in an amount equal to the lesser of (a) the original amount of the Obligations or (b) the maximum limit of coverage available under the federal program.

5. Condemnation. The Mortgagor, immediately upon obtaining knowledge of any potential or threatened condemnation or taking, or upon the institution of any proceedings for the condemnation or taking, by eminent domain of any of the Mortgaged Property, shall notify the Mortgagee in writing of such threat or the pendency of such proceedings. The Mortgagee may participate in any related negotiations or proceedings in accordance with applicable law and to the extent not inconsistent with the provisions of the Declaration regarding condemnation. Any award or compensation for property taken or for damage to property not taken, whether as a result of condemnation proceedings or negotiations in lieu thereof payable to the Mortgagor under the Declaration procedures shall be applied as set forth in the Loan Agreement.

6. Application of Insurance Proceeds and Condemnation Awards. In the event of loss, proceeds of insurance or condemnation awards shall be payable and distributed to Mortgagor and Mortgagee in accordance with the Declaration and the applicable provisions of the Bond

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Documents, provided that the proceeds of insurance and condemnation awards shall in each case be applied as set forth in the Loan Agreement and subject in all respects to the rights of Mortgagor to use and apply proceeds or awards to repair, restoration or replacement of the Mortgaged Property as set forth in Section 5.6 of the Loan Agreement.

7. Environmental Matters. (a) For purposes of this Section 7, the term “Environmental Laws” shall mean all federal, state and local laws, regulations and orders, whether now or in the future enacted or issued, pertaining to the protection of land, water, air, health, safety or the environment. The term “Regulated Substances” shall mean all substances regulated by Environmental Laws, or which are known or considered to be harmful to the health or safety of persons, or the presence of which may require investigation, notification or remediation under the Environmental Laws. The term “Contamination” shall mean the discharge, release, emission, disposal or escape of any Regulated Substances into the environment in violation of any Environmental Law.

(b) The Mortgagor represents and warrants that, to the best of its knowledge (i) no Contamination is present at, on, or under the Mortgaged Property, and that no Contamination is being or has been emitted onto any surrounding property; (ii) all operations and activities of Mortgagor on the Mortgaged Property have been and are being conducted in accordance with all Environmental Laws, and the Mortgagor has all permits and licenses required for its operations under the Environmental Laws; (iii) no underground or aboveground storage tanks are located on or under the Mortgaged Property; and (iv) no legal or administrative proceeding is pending or threatened against Mortgagor relating to any environmental condition, operation, or activity on the Mortgaged Property, or any violation or alleged violation by Mortgagor of Environmental Laws.

(c) The Mortgagor shall ensure, at its sole cost and expense, that the Mortgaged Property and the conduct of all Mortgagor’s operations and activities thereon comply and continue to comply with all Environmental Laws. The Mortgagor shall notify the Mortgagee promptly and in reasonable detail in the event that the Mortgagor becomes aware of any violation of any Environmental Laws, the presence or release of any Contamination with respect to the Mortgaged Property, or any governmental or third party claims against Mortgagor or the Mortgaged Property relating to the environmental condition of the Mortgaged Property or the conduct of Mortgagor’s operations or activities thereon. The Mortgagor agrees not to cause, allow or permit the presence of any Contamination on the Mortgaged Property.

(d) The Mortgagee shall not be liable for, and the Mortgagor shall indemnify, defend and hold the Mortgagee and its officers, directors, agents, employees, successors and assigns under the Mortgage (the “Indemnified Parties”) and all of their respective successors and assigns harmless from and against all losses, costs, liabilities, damages, fines, claims, penalties and expenses (including reasonable attorneys’, consultants’ and contractors’ fees, costs and expenses incurred in the investigation, defense and settlement of claims, as well as costs incurred in connection with the investigation, remediation or monitoring of any Contamination) that the Mortgagee or any Indemnified Party may suffer or incur (including as holder of the Mortgage, as

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mortgagee in possession or as successor in interest to the Mortgagor as owner of the Mortgaged Property by virtue of a foreclosure or acceptance of a deed in lieu of foreclosure) as a result of or in connection with (i) any Environmental Laws (including the assertion that any lien existing or arising pursuant to any Environmental Laws takes priority over the lien of the Mortgage); (ii) the breach of any representation, warranty, covenant or undertaking by the Mortgagor in this Section 7; (iii) the presence on or the migration of any Contamination, under or through the Mortgaged Property; or (iv) any litigation or claim by the government or by any third party in connection with the environmental condition of the Mortgaged Property or the presence or migration of any Contamination on, under, to or from the Mortgaged Property. The indemnifications provided herein shall survive the termination of this Mortgage or the sooner resignation or removal of the Mortgagee as Trustee under the Indenture.

8. Inspection of Property. The Mortgagee shall have the right to enter the Mortgaged Property upon reasonable advance notice to Mortgagor, at reasonable times and in a manner that will not disrupt Mortgagor’s educational operations at the Mortgaged Property for the purpose of inspecting the order, condition and repair thereof, as well as the conduct of operations and activities of Mortgagor on the Mortgaged Property.

9. Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder: (a) any Event of Default as defined in the Loan Agreement or the Indenture (after giving effect to any notice or right to cure applicable thereto) shall occur and be continuing; (b) execution or foreclosure proceedings are instituted against the Mortgaged Property upon any other lien or claim, whether alleged to be superior or junior to the lien of this Mortgage; (c) the Mortgagor’s failure maintain in full force and effect any insurance required under Section 4 or a violation of Section 3 hereof shall occur; or (d) the Mortgagor shall fail to perform or observe any other covenant or obligation under this Mortgage and such failure shall continue for a period of 60 days from receipt of written notice by Mortgagor from Mortgagee, provided that if the failure is of such nature that it can be corrected but not within the applicable period, such failure shall not constitute an Event of Default so long as the Mortgagor institutes curative action within the applicable period and diligently pursues such action to completion.

10. Rights and Remedies of Mortgagee. If an Event of Default occurs and is continuing, the Mortgagee may, at its option and without demand, notice, or delay, do one or more of the following:

(a) If the Loan Payments (as defined in the Loan Agreement) regarding the 2017 Bonds have been accelerated (and which acceleration has not been annulled) by the Trustee pursuant to Section 7.2 of the Loan Agreement, the Mortgagee may declare the entire unpaid principal balance of the Obligations, together with all interest thereon, to be due and payable immediately, to the extent provided and as permitted pursuant to the Bond Documents.

(b) The Mortgagee may (i) institute and maintain an action of mortgage foreclosure against the Mortgaged Property and the interests of the Mortgagor therein, (ii) exercise

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all of its rights and remedies as Trustee under the Bond Documents and (iii) take such other action at law or in equity for the enforcement of any of the Obligations as the law may allow, and in each such action the Mortgagee shall be entitled to all costs of suit and attorneys’ fees, costs and expenses.

(c) The Mortgagee shall have the right, in connection with the exercise of its remedies hereunder, to the appointment of a receiver to take possession and control of the Mortgaged Property, without regard to the adequacy of the Mortgaged Property to secure the Obligations. A receiver while in possession of the Mortgaged Property shall have all legal powers, duties and obligations provided or required by applicable law.

(d) Notwithstanding anything contained herein to the contrary, upon the occurrence and continuance of an Event of Default, before taking any foreclosure action or any action which may subject the Mortgagee to liability under any environmental law, statute, regulation or similar requirement relating to the environment, the Mortgagee may require that a satisfactory indemnity bond, indemnity or environmental impairment insurance be furnished for the payment or reimbursement of all expenses to which it may be put and to protect it against all liability resulting from any claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability) and expenses (including attorney’s fees, costs and expenses) which may result from such foreclosure or other action and the Mortgagee shall not be required to take such foreclosure action if it reasonably determines that the approval of a governmental regulator that cannot be obtained is necessary for such foreclosure action.

11. Application of Proceeds. The Mortgagee shall apply the proceeds of any foreclosure sale of, or other disposition or realization upon, the Mortgaged Property to satisfy the Obligations in such order of application as is set forth in the Bond Documents for priority of payments to holders of the 2017 Bonds.

12. Mortgagee’s Right to Protect Security. Following the occurrence and during the continuance of an Event of Default, the Mortgagee is hereby authorized to do any one or more of the following: (a) appear in and defend any action or proceeding purporting to affect the security hereof or the Mortgagee’s rights or powers hereunder; (b) purchase such insurance policies covering the Mortgaged Property as it may elect if the Mortgagor fails to maintain the insurance coverage required hereunder; and (c) take such action as the Mortgagee may determine to pay, perform or comply with any Impositions or Legal Requirements, to cure any Events of Default and to protect its security in the Property.

13. Certain Waivers. The Mortgagor hereby waives and releases all benefit that might accrue to the Mortgagor by virtue of any present or future law exempting the Mortgaged Property, or any part of the proceeds arising from any sale thereof, from attachment, levy or sale on execution, or providing for any stay of execution, exemption from civil process or extension of time for payment or any rights of marshalling in the event of any sale hereunder of the Mortgaged Property, and, unless specifically required herein, all notices of the Mortgagor’s default or of the

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Mortgagee’s election to exercise, or the Mortgagee’s actual exercise of any option under this Mortgage.

14. Notices. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”) must be in writing and will be effective upon receipt. Notices shall be given in the manner and to the addresses set forth in Section 10.3 of the Indenture, or in such other manner to which the parties may separately agree, including electronic mail. Regardless of the manner in which provided, Notices may be sent to a party’s address as set forth above or to such other address as any party may give to the other for such purpose in accordance with this section.

15. Further Acts. If required by the Mortgagee, the Mortgagor will execute such commercially reasonable documentation necessary for the Mortgagee to obtain and maintain perfection of its liens and security interests in the Mortgaged Property. The Mortgagor will, at the cost of the Mortgagor, and without expense to the Mortgagee, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as the Mortgagee shall, from time to time, reasonable require for the better assuring, conveying, assigning, transferring or confirming unto the Mortgagee the property and rights hereby mortgaged, or which the Mortgagor may be or may hereafter become bound to convey or assign to the Mortgagee, or for carrying out the intent of or facilitating the performance of the terms of this Mortgage or for filing, registering or recording this Mortgage.

16. Changes in the Laws Regarding Taxation. If any law is enacted or adopted or amended after the date of this Mortgage which imposes a tax, either directly or indirectly, on the Mortgagor’s or the Mortgagee’s interest in the Mortgaged Property, the Mortgagor will pay such tax, with interest and penalties thereon, if any.

17. Recording Taxes; Documentary Stamps. If at any time the United States of America, any State thereof, or any subdivision of any such State shall require revenue or other stamps to be affixed to this Mortgage, or impose any recording or other tax or charge on the same, the Mortgagor will pay for the same, with interest and penalties thereon, if any.

18. Preservation of Rights. No delay or omission on the Mortgagee’s part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will the Mortgagee’s action or inaction impair any such right or power. The Mortgagee’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Mortgagee may have under other agreements, at law or in equity.

19. Illegality. If any provision contained in this Mortgage should be invalid, illegal, or unenforceable in any respect, it shall not affect or impair the validity, legality, and enforceability of the remaining provisions of this Mortgage.

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20. Changes in Writing. No modification, amendment or waiver of, or consent to any departure by the Mortgagor from, any provision of this Mortgage will be effective unless made in a writing signed by the Mortgagee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Mortgagor will entitle the Mortgagor to any other or further notice or demand in the same, similar or other circumstance.

21. Entire Agreement. This Mortgage (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

22. Survival; Successors and Assigns. This Mortgage will be binding upon and inure to the benefit of the Mortgagor and the Mortgagee and their respective heirs, executors, administrators, successors and assigns, including, without limitation, a successor Trustee under the Indenture; provided, however, that the Mortgagor may not assign this Mortgage in whole or in part except in connection with a transaction permitted under Section 5.1 of the Loan Agreement . 23. Interpretation. In this Mortgage, unless the Mortgagee and the Mortgagor otherwise agree in writing, the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; the word “or” shall be deemed to include “and/or,” the words “including,” “includes,” and “include” shall be deemed to be followed by the words “without limitation”; references to articles, sections (or subdivisions of sections), or exhibits are to those of this Mortgage; and references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Mortgage. Section headings in this Mortgage are included for convenience of reference only and shall not constitute a part of this Mortgage for any other purpose.

24. Special Condominium Provisions.

(a) The Mortgagor agrees that this Mortgage shall constitute a “Security Interest,” as defined in and for all purposes of the Declaration, and that the Mortgagee shall comprise an “Eligible Mortgagee,” as defined in and for all purposes of the Declaration. Mortgagor covenants to provide written notice to the Association (as defined in the Declaration) of such designations in form and content required under the Declaration, and otherwise to take all such other actions as may reasonably be requested by Mortgagee to effectuate the same;

(b) The Mortgagor shall fully and promptly perform and observe all its duties and obligations as the owner of the Unit under the Declaration, and shall comply with and

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conform to all present and future Condominium rules and regulations adopted or imposed by the Association;

(c) The Mortgagee acknowledges that the Mortgaged Property is subject to the provisions of the Pennsylvania Uniform Condominium Act (the “Uniform Act”) and is part of the Condominium, and agrees that: (1) foreclosure upon this Mortgage shall not terminate, extinguish or otherwise affect any provisions of the Declaration and any person who acquires title to all or any of the Units, Common Elements and/or Special Declarant Rights (each as defined or described in the Declaration and the Uniform Act), pursuant to foreclosure or by deed in lieu of foreclosure, shall acquire such title under and subject to the terms and provisions of the Declaration, subject to the provisions of Section 3304 of the Uniform Act. This acknowledgment of the Mortgagee does not constitute or imply any assumption or agreement by Mortgagee to perform any obligations or duties of the Mortgagor as set forth in the Uniform Act or the Declaration, and the relationship of the Mortgagee to the Mortgagor and to the Mortgaged Property shall, until title to the Unit and its appurtenant interest in the Common Elements and Limited Common Elements becomes vested in Mortgagee, be solely that of mortgagee and mortgagor;

(d) This Mortgage shall constitute a mortgage on the Unit created by the Declaration, together with the undivided interest in the Common Elements and Limited Common Elements assigned to such Unit pursuant to the Declaration and, to the extent provided in Section 3304(c) of the Uniform Act, a lien on the Special Declarant Rights as provided for under the Declaration and the Uniform Act; and

(e) The Mortgagor agrees to promptly furnish to the Mortgagee a copy of any future proposed amendment to the Declaration of which it receives a copy and on which it is entitled to vote as the owner of the Unit in the Condominium pursuant to Section 16.1 of the Declaration. The Mortgagor agrees to present any changes therein requested by the Mortgagee to the Association and the other Unit owners in the Condominium prior to voting thereon if requested changes are timely received from Mortgagee.

25. Governing Law and Jurisdiction. This Mortgage is governed by the laws of the Commonwealth of Pennsylvania, without regard to conflict of law principles. Each of the Mortgagor and the Mortgagee hereby irrevocably consents to the exclusive jurisdiction of the Court of Common Pleas of Dauphin County, Pennsylvania and the U.S. District Court for the Middle District of Pennsylvania. Each of the Mortgagee and the Mortgagor agree that the venue provided above is the most convenient forum for both the Mortgagee and the Mortgagor. Each of the Mortgagor and the Mortgagee waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Mortgage.

26. Change in Name or Locations. The Mortgagor hereby agrees that if its chief executive office, or if the Mortgagor changes its name, its type of organization, its state of organization or establishes a name in which it may do business that is not the current name of the

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Mortgagor, the Mortgagor will immediately notify the Mortgagee in writing of the additions or changes.

[Remainder of Page Intentionally Left Blank – Signature Page Immediately follows]

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WITNESS the due execution hereof as a document under seal, as of the date first written above, with the intent to be legally bound hereby.

WITNESS / ATTEST: THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY

______By:______(SEAL) Print Name:______Print Name:______Title:______Title: Chair, Board of Trustees

______By:______(SEAL) Print Name:______Print Name: Eric Darr Title:______Title: President & Chief Executive Officer

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CERTIFICATE OF ADDRESS

The undersigned certifies that as of the effective date of this Mortgage, the precise address of the Mortgagee is 1735 Market Street, 9th Floor, Philadelphia, Pennsylvania 19103-7501.

______On behalf of the Mortgagee

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ACKNOWLEDGMENTS

COMMONWEALTH OF PENNSYLVANIA ) ) ss: COUNTY OF ______)

On this, the ______day of July, 2017, before me, a Notary Public, the undersigned officer, personally appeared ______, who acknowledged himself/herself to be the Chair of the Board of Trustees of THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY, a Pennsylvania nonprofit corporation, and that he/she, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said corporation.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

______Notary Public My commission expires:

COMMONWEALTH OF PENNSYLVANIA ) ) ss: COUNTY OF ______)

On this, the ______day of July, 2017, before me, a Notary Public, the undersigned officer, personally appeared Eric Darr, who acknowledged himself to be the President & Chief Executive Officer of THE HARRISBURG UNIVERSITY OF SCIENCE AND TECHNOLOGY, a Pennsylvania nonprofit corporation, and that he, in such capacity, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing on behalf of said corporation.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

______Notary Public My commission expires:

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EXHIBIT A

Legal Description

ALL that certain Unit, being Unit No. 1 (the “Unit”), of the Fourth Street Condominium (the “Condominium”), located in the City of Harrisburg, Dauphin County, Pennsylvania, which has heretofore been submitted to the provisions of the Pennsylvania Uniform Condominium Act, ^* PaC.S. 3101 st seq., which Unit is designated in the Declaration of Condominium of Fourth Street Condominium (the “Declaration of Condominium”) and Declaration of Plats and Plans recorded in the Office of the Recorder of Deed of Dauphin County as Instrument No. 20130038835, recorded December 30, 2013, together with all amendments thereto.

TOGETHER with the undivided percentage interest in the Common Elements appurtenant to the Unit as more particularly set forth in the aforesaid Declaration of Condominium, as last amended.

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APPENDIX F

FORM OF DISCLOSURE DISSEMINATION DISCLOSURE AGREEMENT [ THIS PAGE INTENTIONALLY LEFT BLANK ] DISCLOSURE DISSEMINATION AGENT AGREEMENT

This Disclosure Dissemination Agent Agreement (the “Disclosure Agreement”), dated as of ______, 2017 is executed and delivered by The Harrisburg University of Science and Technology (the “Obligated Person”) and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the “Disclosure Dissemination Agent” or “DAC”) for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to assist the Obligated Person in processing certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the “Rule”).

The services provided under this Disclosure Agreement solely relate to the execution of instructions received from the Obligated Person through use of the DAC system and do not constitute “advice” within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). DAC will not provide any advice or recommendation to the Issuer (hereinafter defined), the Obligated Person, or anyone on behalf of the Issuer or Obligated Person, regarding the “issuance of municipal securities” or any “municipal financial product” as defined in the Act and nothing in this Disclosure Agreement shall be interpreted to the contrary. DAC is not a “Municipal Advisor” as such term is defined in Section 15B of the Securities Exchange Act of 1934, as amended, and related rules.

SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Limited Offering Memorandum (hereinafter defined). The capitalized terms shall have the following meanings:

“Annual Filing Date” means the date, set in Sections 2(a) and 2(f) hereof, by which the Annual Report is to be filed with the MSRB.

“Annual Financial Information” means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement.

“Annual Report” means an Annual Report containing Annual Financial Information described in and consistent with Section 3 of this Disclosure Agreement.

“Audited Financial Statements” means the annual financial statements of the Obligated Person for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i)(B) of the Rule and specified in Section 3(b) of this Disclosure Agreement. “Bonds” means the bonds as listed on the attached Exhibit A, with the 9-digit CUSIP numbers relating thereto.

F-1 “Certification” means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure required to be (or voluntarily) submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Obligated Person and include the full name of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies.

“Disclosure Representative” means Vice President for Finance and Chief Financial Officer, or his or her designee, or such other person as the Obligated Person shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent.

“Disclosure Dissemination Agent” means Digital Assurance Certification, L.L.C, acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the Obligated Person pursuant to Section 9 hereof.

“Failure to File Event” means the Obligated Person’s failure to file an Annual Report on or before the Annual Filing Date.

“Force Majeure Event” means: (i) acts of God, war, or terrorist action; (ii) failure or shut- down of the Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent beyond the Disclosure Dissemination Agent’s reasonable control, interruptions in telecommunications or utilities services, failure, malfunction or error of any telecommunications, computer or other electrical, mechanical or technological application, service or system, computer virus, interruptions in Internet service or telephone service (including due to a virus, electrical delivery problem or similar occurrence) that affect Internet users generally, or in the local area in which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government, regulatory or any other competent authority the effect of which is to prohibit the Disclosure Dissemination Agent from performance of its obligations under this Disclosure Agreement.

“Holder” means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes.

“Information” means, collectively, the Annual Reports, the Audited Financial Statements, the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and the Voluntary Financial Disclosures.

“Issuer” means Dauphin County General Authority, as issuer of the Bonds.

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“MSRB” means the Municipal Securities Rulemaking Board, or any successor thereto, established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934.

“Notice Event” means any of the events listed in Section 4(a) of this Disclosure Agreement, which comprise the disclosure events currently enumerated in paragraph (b)(5)(i)(C) of the Rule.

“Limited Offering Memorandum” means that Limited Offering Memorandum prepared by the Issuer and the Obligated Person in connection with the Bonds, as listed in Exhibit A.

“Trustee” means the institution identified as such in the document under which the Bonds were issued.

“Voluntary Event Disclosure” means information of the category specified in any of subsections (e)(vi)(1) through (e)(vi)(11) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(a) of this Disclosure Agreement.

“Voluntary Financial Disclosure” means information of the category specified in any of subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of this Disclosure Agreement that is accompanied by a Certification of the Disclosure Representative containing the information prescribed by Section 7(b) of this Disclosure Agreement.

SECTION 2. Provision of Annual Reports.

(a) The Obligated Person shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy each for the Issuer and the Trustee, if any, not later than the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB not later than __ days following the end of each fiscal year of the Obligated Person, commencing with the fiscal year ending June 30, 2017. Such date and each anniversary thereof is the “Annual Filing Date.” The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement.

(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail), with a copy to the Issuer, to remind the Obligated Person of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification no later than two (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing, with a copy to the Issuer, that the Obligated Person will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form attached as Exhibit B, which F-3

may be accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.

(c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 10:00 a.m. Eastern time on the Annual Filing Date (or, if such Annual Filing Date falls on a Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to File Event shall have occurred and the Obligated Person irrevocably directs the Disclosure Dissemination Agent to immediately send a Failure to File Event notice to the MSRB in substantially the form attached as Exhibit B without reference to the anticipated filing date for the Annual Report, which may be accompanied by a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.

(d) If Audited Financial Statements of the Obligated Person are prepared but not available prior to the Annual Filing Date, the Obligated Person shall, when the Audited Financial Statements are available, provide at such time an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification, together with a copy each for the Issuer and the Trustee, for filing with the MSRB.

(e) The Disclosure Dissemination Agent shall:

(i) verify the filing specifications of the MSRB each year prior to the Annual Filing Date;

(ii) upon receipt, promptly file each Annual Report received under Sections 2(a) and 2(b) hereof with the MSRB;

(iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) hereof with the MSRB;

(iv) upon receipt, promptly file the text of each Notice Event received under Sections 4(a) and 4(b)(ii) hereof with the MSRB, identifying the Notice Event as instructed by the Obligated Person pursuant to Section 4(a) or 4(b)(ii);

(v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure Agreement, as applicable), promptly file a completed copy of Exhibit B to this Disclosure Agreement with the MSRB, identifying the filing as “Failure to provide annual financial information as required” when filing pursuant to Section 2(b)(ii) or Section 2(c) of this Disclosure Agreement;

(vi) upon receipt, promptly file the text of each Voluntary Event Disclosure received under Section 7(a) hereof with the MSRB, identifying the Voluntary Event Disclosure as instructed by the Obligated Person pursuant to Section 7(a) (being any of the categories set forth below) when filing pursuant to Section 7(a) of this Disclosure Agreement:

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1. “amendment to continuing disclosure undertaking;”

2. “change in obligated person;”

3. “notice to investors pursuant to bond documents;”

4. “certain communications from the Internal Revenue Service;” other than those communications included in the Rule;

5. “secondary market purchases;”

6. “bid for auction rate or other securities;”

7. “capital or other financing plan;”

8. “litigation/enforcement action;”

9. “change of tender agent, remarketing agent, or other on-going party;”

10. “derivative or other similar transaction;” and

11. “other event-based disclosures;”

(vii) upon receipt, promptly file the text of each Voluntary Financial Disclosure received under Section 7(b) hereof with the MSRB, identifying the Voluntary Financial Disclosure as instructed by the Obligated Person pursuant to Section 7(b) (being any of the categories set forth below) when filing pursuant to Section 7(b) of this Disclosure Agreement:

1. “quarterly/monthly financial information;”

2. “Timing of annual disclosure (120/150 days);”

3. “change in fiscal year/timing of annual disclosure;”

4. “change in accounting standard;”

5. “interim/additional financial information/operating data;”

6. “budget;”

7. “investment/debt/financial policy;”

8. “information provided to rating agency, credit/liquidity provider or other third party;”

9. “consultant reports;” and

10. “other financial/operating data.”

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(viii) provide the Obligated Person, the Trustee and Issuer evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement.

(f) The Obligated Person may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Issuer, Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year.

(g) Anything in this Disclosure Agreement to the contrary notwithstanding, any Information received by the Disclosure Dissemination Agent before 10:00 a.m. Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this Disclosure Agreement and that is accompanied by a Certification and all other information required by the terms of this Disclosure Agreement will be filed by the Disclosure Dissemination Agent with the MSRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure Dissemination Agent shall have no liability for any delay in filing with the MSRB if such delay is caused by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts to make any such filing as soon as possible.

SECTION 3. Content of Annual Reports.

(a) Each Annual Report shall contain Annual Financial Information with respect to the Obligated Person, including the information provided in Appendix A to the Limited Offering Memorandum under the headings: “GOVERNANCE” – Table 3, “ENROLLMENT INFORMATION” – Tables 5, 6 and 8, “TUITION” - Figure 6 (for the prior three academic years), “FINANCIAL AID” – Table 14, “FACULTY” – Table 15, and “FINANCIAL PERFORMANCE – “Historic Balance Sheets” and “Historic Income Statements””.

(b) Audited Financial Statements as described in the Limited Offering Memorandum will be included in the Annual Report. Audited Financial Statements will be provided pursuant to Section 2(d).

Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the Obligated Person is an “obligated person” (as defined by the Rule), which have been previously filed with the Securities and Exchange Commission or available on the MSRB Internet Website. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Obligated Person will clearly identify each such document so incorporated by reference.

If the Annual Financial Information contains modified operating data or financial information materially different from the Annual Financial Information agreed to in this Agreement, the Obligated Person is required to explain, in narrative form, the reasons for the modification.

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SECTION 4. Reporting of Notice Events.

(a) The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of 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 Bond holders, if material;

8. Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution, or sale of property securing repayment of the Bonds, if material;

11. Rating changes;

12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person;

13. The consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, 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.

The Obligated Person shall, in a timely manner not later than nine (9) business days after its occurrence, notify the Disclosure Dissemination Agent in writing of the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall be accompanied by a Certification. Such notice or Certification F-7

shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Obligated Person desires to make, contain the written authorization of the Obligated Person for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Obligated Person desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event).

(b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer, Obligated Person or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within two business days of receipt of such notice (but in any event not later than the tenth business day after the occurrence of the Notice Event, if the Obligated Person determines that a Notice Event has occurred), instruct the Disclosure Dissemination Agent that either (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c) of this Section 4, together with a Certification. Such Certification shall identify the Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement), include the text of the disclosure that the Obligated Person desires to make, contain the written authorization of the Obligated Person for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Obligated Person desires for the Disclosure Dissemination Agent to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event).

(c) If the Disclosure Dissemination Agent has been instructed by the Obligated Person as prescribed in subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with MSRB in accordance with Section 2 (e)(iv) hereof. This notice may be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.

SECTION 5. CUSIP Numbers. The Obligated Person will provide the Disclosure Dissemination Agent with the CUSIP numbers for (i) new bonds at such time as they are issued or become subject to the Rule and (ii) any Bonds to which new CUSIP numbers are assigned in substitution for the CUSIP numbers previously assigned to such Bonds.

SECTION 6. Additional Disclosure Obligations. The Obligated Person acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Obligated Person, and that the duties and responsibilities of the Disclosure Dissemination Agent under this Disclosure Agreement do not extend to providing legal advice regarding such laws. The Obligated Person acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement.

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SECTION 7. Voluntary Filing.

(a) The Obligated Person may instruct the Disclosure Dissemination Agent to file a Voluntary Event Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Event Disclosure (which shall be any of the categories set forth in Section 2(e)(vi) of this Disclosure Agreement), include the text of the disclosure that the Obligated Person desires to make, contain the written authorization of the Obligated Person for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Obligated Person desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Obligated Person as prescribed in this Section 7(a) to file a Voluntary Event Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Event Disclosure with the MSRB in accordance with Section 2(e)(vi) hereof. This notice may be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-2.

(b) The Obligated Person may instruct the Disclosure Dissemination Agent to file a Voluntary Financial Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative. Such Certification shall identify the Voluntary Financial Disclosure (which shall be any of the categories set forth in Section 2(e)(vii) of this Disclosure Agreement), include the text of the disclosure that the Obligated Person desires to make, contain the written authorization of the Obligated Person for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Obligated Person desires for the Disclosure Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the Obligated Person as prescribed in this Section 7(b) hereof to file a Voluntary Financial Disclosure, the Disclosure Dissemination Agent shall promptly file such Voluntary Financial Disclosure with the MSRB in accordance with Section 2(e)(vii) hereof. This notice may be filed with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-3.

(c) The parties hereto acknowledge that the Obligated Person is not obligated pursuant to the terms of this Disclosure Agreement to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or any Voluntary Financial Disclosure pursuant to Section 7(b) hereof.

(d) Nothing in this Disclosure Agreement shall be deemed to prevent the Obligated Person from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure, in addition to that required by this Disclosure Agreement. If the Obligated Person chooses to include any information in any Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure in addition to that which is specifically required by this Disclosure Agreement, the Obligated Person shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure.

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SECTION 8. Termination of Reporting Obligation. The obligations of the Obligated Person and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the Obligated Person is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of counsel expert in federal securities laws to the effect that continuing disclosure is no longer required.

SECTION 9. Disclosure Dissemination Agent. The Obligated Person has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The Obligated Person may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee, if any, replace or appoint a successor to the Disclosure Dissemination Agent or discontinue the use of a third party dissemination agent. Upon termination of DAC’s services as Disclosure Dissemination Agent, whether by notice of the Obligated Person or DAC, the Obligated Person agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the Obligated Person shall remain liable to the Disclosure Dissemination Agent until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days’ prior written notice to the Issuer and the Obligated Person.

SECTION 10. Remedies in Event of Default. In the event of a failure of the Obligated Person or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders’ rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties' obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein.

SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent.

(a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent’s obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Obligated Person has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information, or any other information, disclosures or notices provided to it by the Obligated Person and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Obligated Person, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the Obligated Person’s failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine or liability for failing to determine whether the Obligated Person has complied with this Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon Certifications of the Obligated Person at all times. F-10

THE OBLIGATED PERSON AGREES TO INDEMNIFY AND SAVE THE DISCLOSURE DISSEMINATION AGENT AND ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, HARMLESS AGAINST ANY LOSS, EXPENSE AND LIABILITIES WHICH THEY MAY INCUR ARISING OUT OF OR IN THE EXERCISE OR PERFORMANCE OF THEIR POWERS AND DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES (INCLUDING ATTORNEYS FEES) OF DEFENDING AGAINST ANY CLAIM OF LIABILITY, BUT EXCLUDING LIABILITIES DUE TO THE DISCLOSURE DISSEMINATION AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The obligations of the Obligated Person under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds.

(b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The reasonable fees and expenses of external counsel shall be payable by the Obligated Person if the Obligated Person is then in default in the performance or observance of any of its duties or obligations hereunder.

(c) All documents, reports, notices, statements, information and other materials provided to the MSRB under this Agreement shall be provided in an electronic format and accompanied by identifying information as prescribed by the MSRB.

SECTION 12. No Issuer Responsibility. The Obligated Person and the Disclosure Dissemination Agent acknowledge that the Issuer has undertaken no responsibility, and shall not be required to undertake any responsibility, with respect to any reports, notices or disclosures required by or provided pursuant to this Disclosure Agreement, and shall have no liability to any person, including any Holder of the Bonds, with respect to any such reports, notices or disclosures.

SECTION 13. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Obligated Person and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Obligated Person and the Disclosure Dissemination Agent to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof not taking into account any subsequent change in or official interpretation of the Rule; provided neither the Obligated Person nor the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto.

SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Obligated Person, the Issuer, the Trustee (if any), the Disclosure Dissemination Agent, the underwriter, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity.

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SECTION 15. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of Florida (other than with respect to conflicts of laws).

SECTION 16. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

[Remainder of page intentionally left blank.]

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The Disclosure Dissemination Agent and the Obligated Person have caused this Continuing Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized.

DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent

By:______

Name:______

Title:______

Harrisburg University of Science and Technology, as Obligated Person

By:______

Name:______

Title:______

By:______

Name:______

Title:______

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1. EXHIBIT A

NAME AND CUSIP NUMBERS OF BONDS

Name of Issuer ______

Obligated Person(s) ______

Name of Bond Issue: ______

Date of Issuance: ______

Date of Limited Offering Memorandum ______

CUSIP Number: ______CUSIP Number: ______

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2. EXHIBIT B

NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT

Issuer ______

Obligated Person: ______

Name(s) of Bond Issue(s): ______

Date(s) of Issuance: ______

Date(s) of Disclosure

Agreement:

CUSIP Numbers:

NOTICE IS HEREBY GIVEN that the Obligated Person has not provided an Annual Report with respect to the above-named Bonds as required by the Disclosure Agreement between the Obligated Person and Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent. [The Obligated Person has notified the Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by ______].

Dated: ______

Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent, on behalf of the Obligated Person

______cc:

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EXHIBIT C-1

EVENT NOTICE COVER SHEET

This cover sheet and accompanying “event notice” may be sent to the MSRB pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).

Issuer’s and Obligated Person’s Names: ______Issuer’s Six-Digit CUSIP Number: ______Issuer’s Nine-Digit CUSIP Number(s) of the bonds to which this material event notice relates: ______Number of pages of attached: ______Description of Notice Event (Check One): 1. “Principal and interest payment delinquencies;” 2. “Non-Payment related defaults, if material;” 3. “Unscheduled draws on debt service reserves reflecting financial difficulties;” 4. “Unscheduled draws on credit enhancements reflecting financial difficulties;” 5. “Substitution of credit or liquidity providers, or their failure to perform;” 6. “Adverse tax opinions, IRS notices or events affecting the tax status of the security;” 7. “Modifications to rights of securities holders, if material;” 8. “Bond calls, if material;” 9. “Defeasances;” 10. “Release, substitution, or sale of property securing repayment of the securities, if material;” 11. “Rating changes;” 12. “Tender offers;” 13. “Bankruptcy, insolvency, receivership or similar event of the obligated person;” 14. “Merger, consolidation, or acquisition of the obligated person, if material;” and 15. “Appointment of a successor or additional trustee, or the change of name of a trustee, if material.”

____ Failure to provide annual financial information as required

I hereby represent that I am authorized by the Obligated Person or its agent to distribute this information publicly: Signature: ______Name: ______Title: ______Digital Assurance Certification, L.L.C. 315 E. Robinson Street Suite 300 Orlando, FL 32801 407-515-1100

Date:

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EXHIBIT C-2 VOLUNTARY EVENT DISCLOSURE COVER SHEET

This cover sheet and accompanying “voluntary event disclosure” may be sent to the MSRB, pursuant to the Disclosure Dissemination Agent Agreement dated as of _____ between the Obligated Person and DAC.

Issuer’s and Obligated Person’s Names:

______

Issuer’s Six-Digit CUSIP Number:

______

Issuer’s Nine-Digit CUSIP Number(s) of the bonds to which this notice relates:

______

Number of pages attached: _____

____ Description of Voluntary Event Disclosure (Check One):

1. “amendment to continuing disclosure undertaking;” 2. “change in obligated person;” 3. “notice to investors pursuant to bond documents;” 4. “certain communications from the Internal Revenue Service;” 5. “secondary market purchases;” 6. “bid for auction rate or other securities;” 7. “capital or other financing plan;” 8. “litigation/enforcement action;” 9. “change of tender agent, remarketing agent, or other on-going party;” 10. “derivative or other similar transaction;” and 11. “other event-based disclosures.”

I hereby represent that I am authorized by the Obligated Person or its agent to distribute this information publicly:

Signature:

Name: Title: : Digital Assurance Certification, L.L.C. 315 E. Robinson Street Suite 300 Orlando, FL 32801 407-515-1100

Date:

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EXHIBIT C-3 VOLUNTARY FINANCIAL DISCLOSURE COVER SHEET

This cover sheet and accompanying “voluntary financial disclosure” may be sent to the MSRB, pursuant to the Disclosure Dissemination Agent Agreement dated as of [C10] _____ between the Issuer and DAC.

Issuer’s and Obligated Person’s Names: ______

Issuer’s Six-Digit CUSIP Number:

______

Issuer’s Nine-Digit CUSIP Number(s) of the bonds to which this notice relates:

______

Number of pages attached: _____

____ Description of Voluntary Financial Disclosure (Check One):

1. “quarterly/monthly financial information;” 2. “change in fiscal year/timing of annual disclosure;” 3. “change in accounting standard;” 4. “interim/additional financial information/operating data;” 5. “budget;” 6. “investment/debt/financial policy;” 7. “information provided to rating agency, credit/liquidity provider or other third party;” 8. “consultant reports;” and 9. “other financial/operating data.”

I hereby represent that I am authorized by the Obligated Person or its agent to distribute this information publicly:

Signature:

Name: Title: :

Digital Assurance Certification, L.L.C. 315 E. Robinson Street Suite 300 Orlando, FL 32801 407-515-1100

Date:

rev/ 12/11

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APPENDIX G

PROPOSED FORM OF OPINION OF BOND COUNSEL [ THIS PAGE INTENTIONALLY LEFT BLANK ]

APPENDIX G

PROPOSED FORM OF BOND COUNSEL OPINION

[Date of Issuance of the Bonds] Dauphin County General Authority Harrisburg, Pennsylvania

Re: $______Dauphin County General Authority University Revenue Bonds, Series of 2017 (The Harrisburg University of Science and Technology Project)

Ladies and Gentlemen:

We have acted as Bond Counsel in connection with the issuance by the Dauphin County General Authority (the “Issuer”) of $______aggregate principal amount of its University Revenue Bonds, Series of 2017 (The Harrisburg University of Science and Technology Project) (the “2017 Bonds”) under the provisions of the Pennsylvania Municipality Authorities Act, as amended and supplemented, Act of June 19, 2001, P.L. 287, as amended (codified as Title 53 P.S. §§5601 - 5622) (the “Act”) and pursuant to a Trust Indenture dated as of July 1, 2017 (the “Indenture”) from the Issuer to The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

The 2017 Bonds are being issued for the purpose of providing funds which will be used to finance a project (the “Project”) for the benefit of The Harrisburg University of Science and Technology, a corporation not-for-profit under laws of the Commonwealth of Pennsylvania (the “University”), consisting generally of (i) the current refunding of the outstanding University Revenue Bonds, Series B of 2007 (The Harrisburg University of Science and Technology Project) previously issued by Capital Region Water, formerly The Harrisburg Authority; (ii) funding a debt service reserve or other necessary reserve funds or accounts; and (iii) the payment of certain costs of issuing the 2017 Bonds.

The Issuer and the University have entered into a Loan Agreement, dated as of July 1, 2017 (the “Loan Agreement”), under which the Issuer has agreed to lend the proceeds of sale of the 2017 Bonds to the University for purposes of the Project. Under the Loan Agreement, the University is obligated to make loan payments in amounts and at times sufficient to pay, when due, the principal or redemption price of and interest on the 2017 Bonds. Under the Indenture, the Issuer has assigned certain of its interests under the Loan Agreement, including its right to receive the payments under the Loan Agreement in respect of the 2017 Bonds, to the Trustee for the benefit of the holders of the 2017 Bonds.

As to questions of fact material to our opinion, we have relied upon representations of the Issuer and the University contained in the various documents and instruments mentioned herein, the

G-1

certified proceedings and other certifications of public officials furnished to us and certifications furnished to us by or on behalf of the University, without undertaking to verify such facts by independent investigation.

In the course of the performance of our duties as Bond Counsel to the Issuer, we have also examined such other documents, opinions, records, orders, notices, certificates, statutes, resolutions, decisions, and rulings as we have deemed necessary to enable us to furnish this opinion, including, inter alia, the following: the executed Indenture; the executed Loan Agreement; certain documents required by the Indenture to be furnished to the Trustee as conditions precedent to authentication and delivery by the Trustee of the 2017 Bonds; certificates executed by officers of the Issuer and the University; a Tax and Non-Arbitrage Certificate executed by the University and the Issuer (the “Tax Certificate”) and usual and required closing certificates, and documents. We have also examined an executed and authenticated 2017 Bond and assume that all 2017 Bonds have been similarly executed and authenticated, and that all 2017 Bonds will be issued in registered form and authenticated by the Trustee as required by the Indenture. We assume that the Indenture has been duly authorized, executed and delivered by the Trustee and the Loan Agreement has been duly authorized, executed, and delivered by the University. We do not render any opinion with respect to the priority of the lien of the Indenture or with respect to the adequacy of security for the 2017 Bonds or the sources of payment in respect of the 2017 Bonds.

In rendering this opinion, we have examined and relied upon the opinions of counsel to the Issuer and the University with respect, inter alia, to the due organization, existence and good standing of the Issuer and the University, respectively; the authorization, execution and delivery of the documents to which they are parties; and the validity and binding effect thereof on the Issuer and the University.

We have further relied upon the covenants of the Issuer and the University as set forth in the Indenture, in the Loan Agreement and in the Tax Certificate wherein they agree, inter alia, to comply continually with the applicable requirements of the Internal Revenue Code of 1986, as amended, and all applicable regulations thereunder in effect (the “Code”), in order to ensure that the interest payable on the 2017 Bonds is and shall remain excludable from the gross income of the owners of the 2017 Bonds. The University has represented in the Loan Agreement that it is an organization described in Section 501(c)(3) of the Code, is not a “private foundation” within the meaning of Section 509(a) of the Code and is exempt from federal income tax under Section 501(a) of the Code, except for unrelated business income subject to taxation under Section 511 of the Code. The University has covenanted that, throughout the term of the Loan Agreement, it will not carry on or permit to be carried on in any property now or hereafter owned by it any trade or business if the conduct of such trade or business would adversely affect the validity of the 2017 Bonds or cause the interest paid by the Issuer on the 2017 Bonds to be includible in gross income for purposes of federal income tax.

Based upon the foregoing, we are of the opinion that:

1. The Issuer is validly existing as a public body and a body corporate and politic with the corporate power and authority to issue the 2017 Bonds and to enter into and perform its obligations under the Indenture and the Loan Agreement.

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2. The Indenture and the Loan Agreement have been duly authorized, executed and delivered by the Issuer and, assuming such documents have been duly authorized, executed and delivered by the other parties thereto, are valid and binding obligations of the Issuer and are enforceable against the Issuer.

3. The 2017 Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding special obligations of the Issuer, payable solely from the moneys pledged or available for such purpose under the Indenture. The 2017 Bonds do not constitute a pledge of the general credit or taxing power of the County of Dauphin or of the Commonwealth of Pennsylvania or of any political subdivision thereof. The Issuer has no taxing power.

4. Under the laws of the Commonwealth of Pennsylvania as presently enacted and construed, the 2017 Bonds are exempt from personal property taxes in Pennsylvania, and interest on the 2017 Bonds is exempt from Pennsylvania personal income tax and corporate net income tax.

5. Interest on the 2017 Bonds is excludable from gross income for federal income tax purposes under existing laws as enacted and construed on the date of initial delivery of the 2017 Bonds. Interest on the 2017 Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. The opinion set forth in the preceding sentence is subject to the condition that the Issuer and the University comply with all requirements of the Code that must be satisfied subsequent to the issuance of the 2017 Bonds in order that the interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Issuer and the University have covenanted to comply with all such requirements. Our opinion assumes compliance with such covenants and we do not undertake to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the 2017 Bonds may affect the tax status of interest on the 2017 Bonds. Failure to comply with certain of such requirements may cause interest on the 2017 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2017 Bonds.

Ownership of tax-exempt obligations, including the 2017 Bonds, may result in collateral federal income tax consequences to certain taxpayers, including financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, S corporations with “excess net passive income” and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry such obligations. Other than as expressly set forth herein, we express no opinion as to any such collateral federal income tax consequences.

We have not been engaged and have not undertaken to review the accuracy, completeness or sufficiency of any offering material of the Issuer or the University relating to the 2017 Bonds and we express no opinion relating thereto.

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It is to be understood that the rights of the holders of the 2017 Bonds and the enforceability of the 2017 Bonds, the Indenture and the Loan Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases.

This opinion is rendered solely for the benefit of the addressee hereof in connection with the initial issuance of the 2017 Bonds. The addressee may not rely on this opinion letter for any other purpose and no other person may rely on this opinion letter for any purpose without the express written consent of the undersigned.

This opinion letter is limited to the matters set forth herein. This opinion letter is subject to future changes in applicable law and we do not undertake any obligation to update any of the opinions expressed in this letter. No opinion may be inferred or implied beyond the matters expressly stated herein, and our opinions expressed herein must be read in conjunction with the assumptions, limitations, exceptions and qualifications set forth herein. The law covered by the opinions expressed herein is limited to the laws of the Commonwealth of Pennsylvania and the federal law of the United States of America. Our engagement as Bond Counsel has concluded with the issuance of the 2017 Bonds.

Very truly yours,

MCNEES WALLACE & NURICK LLC

G-4 APPENDIX H

APPRAISAL OF EDUCATION UNIT IN THE CONDOMINIUM [ THIS PAGE INTENTIONALLY LEFT BLANK ]

Appraisal Report of

326 Market Street City of Harrisburg Dauphin County, PA

Prepared For

Effective Date of Appraisal April 18, 2017

Date of Report April 28, 2017

Prepared By Eric M. Lehmayer, MAI, LEED AP High Associates Ltd. 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

The Valuation Process

STEP 1 Identification of the Problem Identify client Identify the Identify the Identify the Identify the Assignment conditions and intended intended use purpose of the effective date of relevant Extraordinary Hypothetical users assignment (type of the opinion of characteristics of assumptions conditions value) value the property

STEP 2 Scope of Work Determination

STEP 3 Data Collection and Property Description Market Area Data Subject Property Data Comparable Property Data General characteristics of region, city, Subject characteristics of land use and Sales, listings, offerings, vacancies, cost and and neighborhood improvements, personal property, business assets, depreciation, income and expenses, capitalization etc. rates, etc.

STEP 4 Data Analysis Market Analysis Highest and Best Use Analysis Demand studies Site as though vacant Supply studies Ideal improvement Marketability studies Property as improved

STEP 5 Site Value Opinion

STEP 6 Application of the Approaches to Value Sales Comparison Cost Income Capitalization

STEP 7 Reconciliation of Value Indications and Final Opinion of Value

STEP 8 Report of Defined Value

2 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Location Maps ½ Mile Radius

Three Mile Radius and 10-Minute Drive Time

3 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Aerial View

Tax Assessment Map 03-001-072-000-0000

4 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Flood Map Map #: 42043C0319D Dated August 2, 2012 (Low Flood Risk)

5 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

April 28, 2017

Duane F. Maun, VP Finance and CFO Harrisburg University of Science and Technology 326 Market Street Harrisburg, PA 17101

Re: Real Property Appraisal of 326 Market Street City of Harrisburg Dauphin County, Pennsylvania

Dear Mr. Maun:

The property that is the subject of this report consists of a 15-story owner-occupied building that contains approximately 186,445 gross square feet that is occupied by Harrisburg University of Science and Technology. A parking garage that can accommodate 384 cars occupies an additional 163,142 square feet (seven floors on the building) and is accessible from the main building. The improvements are situated on a total of 0.5325 acres in the central business district of the City of Harrisburg, Dauphin County, PA.

The property is served by public sewer and public water, natural gas, and electric. Eric M. Lehmayer, MAI viewed the property on April 18, 2017, and was accompanied by Duane F. Maun and Marilyn J. Mullen who is the Property Manager for the building. Mr. Lehmayer has not appraised the subject property within the last three years.

In authorizing this work, you indicated that the value conclusion would serve as an estimate of the fee simple market value “As Is” as of the effective date of April 18, 2017. The purpose of this appraisal is to provide an opinion of the fee simple market value for estimating the market value of the property for collateral valuation. The intended user of this report is Duane F. Maun and others associated with Harrisburg University of Science and Technology.

The opinion of the “As Is” market value for the fee simple interest of the subject property, as of the effective date of April 18, 2017, and based on the estimated exposure and marketing times of at least 12 months, is estimated to be:

$31,700,000.00 Thirty One Million Seven Hundred Thousand Dollars $170.00 per square foot

This estimate assumes exposure to the market as summarized in the report that follows. The estimate also assumes a purchase in cash or its equivalent (in typically available financing terms) and negotiations free of seller or buyer duress.

The appraised value is qualified by certain definitions, limiting conditions, and certifications set forth within the report that follows. The appraisal report that follows is completed in compliance with the Uniform 6 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation. This appraisal is also completed in conformity with the Code of Ethics and Standards of Professional Practice of the Appraisal Institute and the guidelines set forth in the Financial Institutions Reform Recovery Enforcement Act (FIRREA).

If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.

Sincerely, HIGH ASSOCIATES LTD.

Eric M. Lehmayer, MAI, LEED AP PA Certified General Real Estate Appraiser #GA-001267L Expires June 30, 2017

7 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

TABLE OF CONTENTS

THE VALUATION PROCESS ...... 2

LOCATION MAPS ...... 3

AERIAL VIEW ...... 4

TAX ASSESSMENT MAP ...... 4

FLOOD MAP ...... 5

PHOTOGRAPHS OF SUBJECT PROPERTY ...... 10

EXECUTIVE SUMMARY ...... 15 DEFINITION OF MARKET VALUE ...... 16 SCOPE OF THE APPRAISAL (APPRAISAL DEVELOPMENT AND REPORTING PROCESS) ...... 16 PROPERTY RIGHTS APPRAISED ...... 17 HYPOTHETICAL CONDITIONS ...... 17 EXTRAORDINARY ASSUMPTIONS ...... 17 OWNERSHIP AND SALES HISTORY ...... 17 EXPOSURE TIME ...... 17 MARKETING PERIOD ...... 18 LOCATION DESCRIPTION ...... 18 DAUPHIN COUNTY ...... 18 MARKET AREA AND SURROUNDING NEIGHBORHOOD ...... 19

SITE SUMMARY AND ANALYSIS ...... 21

IMPROVEMENT SUMMARY...... 22 ECONOMIC LIFE AND USEFUL LIFE ...... 23 EFFECTIVE AGE AND REMAINING ECONOMIC LIFE ...... 24 FLOOD DESIGNATION ...... 26 ZONING ...... 26 SUMMARY OF TAX ASSESSMENT ...... 27 HIGHEST AND BEST USE ...... 27 HIGHEST AND BEST USE AS THOUGH VACANT ...... 27 HIGHEST AND BEST USE AS IMPROVED ...... 29

8 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

APPRAISAL METHODOLOGY ...... 29

INCOME CAPITALIZATION APPROACH ...... 30

SALES COMPARISON APPROACH ...... 38

CERTIFICATION ...... 54

LICENSE CERTIFICATES ...... 55

ASSUMPTIONS AND LIMITING CONDITIONS ...... 56

PRIVACY NOTICE ...... 58

CONFIDENTIALITY AND SECURITY POLICY ...... 59

APPRAISAL QUALIFICATIONS ...... 60

ADDENDA ...... 63

9 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Photographs of Subject Property Taken April 18, 2017 by E. Lehmayer

Entrance on Market Street Parking Garage Entrance Next Door

Lobby off N. 4th Street Market Street and N. 4th Street Elevations

Viewing East on Market Street Viewing West on Market Street

10 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Viewing North on N. 4th Street Viewing South on N. 4th Street

Pumps for Sprinkler System Pumps for Sprinkler System

Switch Gears Mechanical Systems

11 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Photographs of Subject Property

Mechanical Systems Gas Meter and Water Inlet for Fire

Backup Generator for Electricity Hazardous Material Storage

Reading Room New Construction on 10th Floor

12 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Photographs of Subject Property

Corner Gathering Space Small Conference Room

Manufacturing Technology Room Large Classroom

Class/Collaboration Room Laboratory

13 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Photographs of Subject Property

Classroom Executive Board Room

15th Floor Mechanicals

14 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

EXECUTIVE SUMMARY Client Duane F. Maun Harrisburg University of Science and Technology Property Identification Location 326 Market Street Harrisburg, PA 17101 Tax Parcel Identification 03-001-072-000-0000 Zoning DC - Downtown Center Census Tract 0201.00 FIPS Code 42043 Land Area (Acres/Sq. Ft.) 0.5325 23,196 Square Feet Existing Building Size (Sq. Ft.) 349,587 186,445 occupied by Harrisburg University Year Built and Condition 2009 Average to good Floor Area Ratio 15.07 Excess or Surplus Land None Property History Current Owner The Harrisburg University of Science and Technology Equitable Owner Not applicable Contract Price Not applicable Current Use Owner-occupied university Current Asking Price Not applicable Previous Sale Date May 2, 2005 Previous Sale Price $4,000,000.00 (vacant lot) Other Sales - Past 3 Years No sales. Property Rights Appraised Fee simple estate Most Likely Buyer Owner-occupant or investor Highest and Best Use Commercial development (As Vacant) As currently occupied (As Improved) Date of Value (Effective Date) April 18, 2017 Date of Viewing April 18, 2017 Date of Report April 28, 2017 Purpose of the Appraisal To provide an opinion of the "as is" market value Intended Use of Report Collateral valuation Intended User of Report Harrisburg University of Science and Technology Special Appraisal Instructions Appraisal report "As Is" Estimated Exposure Time At least 12 months Estimated Marketing Time At least 12 months Valuation Summary As Is Cost Approach Not Developed Income Capitalization Approach $30,100,000 Fee Simple Sales Comparison Approach $31,700,000 Fee Simple Concluded Market Value $31,700,000 Fee Simple

15 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Definition of Market Value1 "The most probable sales price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

(1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and acting in what they consider their own best interests; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Scope of the Appraisal (Appraisal Development and Reporting Process)  Developed the appraisal by applying The Valuation Process  An on-site review of the subject site, exterior of the improvements, and neighborhood was performed.  Investigated a wide array of improved sales, operating expenses, and rental data in the subject's market and considered the statements and opinions of market participants.  The general regional economy and specifics of the local market area were investigated.  Confirmed and analyzed the data and applied the income capitalization approach and the sales comparison approach. In accordance with the USPAP "Scope of Work Rule", it is the appraiser’s opinion that these approaches are sufficient to produce a credible valuation result for the fee simple interest for the subject property. The "Scope of Work Rule" states that the acceptability of an appraiser’s work is judged on two tests: the expectations of the parties who are regularly intended users for similar assignments and what an appraiser’s peers’ actions would be in performing the same or similar assignment.  Although the cost approach was considered, it is not developed due to the subjective estimates of all forms of depreciation and the lack of similar sales of land located within the City of Harrisburg.  The scope of this appraisal required collecting primary and secondary data relative to the subject property. The depth of the analysis is intended to be appropriate in relation to the significance of the appraisal issues as presented in the report. The data have been analyzed and confirmed with sources believed to

1 Office of the Comptroller of the currency under 12 CFR 323 (FDIC); 12 CFR 225, subpart G (FRB); 12 CFR 34.44, subpart C (OCC); and 12 CFR 564 (OTS) 16 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

be reliable, whenever possible, leading to the value conclusions provided in the report. Exterior inspections of the comparables were conducted. The valuation process involved applying market-derived and supported techniques and procedures considered appropriate to the assignment.  An appraisal report, as defined by the Uniform Standards of Professional Practice (USPAP), was prepared.

Property Rights Appraised Fee simple estate is defined as "absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat."

Hypothetical Conditions A hypothetical condition is a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis. In other words, hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends, or about the integrity of data used in an analysis. The hypothetical condition included in this report pertains to the approximately 13,000 square feet of space located on the 10th floor that was previously occupied by Highmark and is now under renovation for four new classrooms. It is assumed, for the purpose of this report, that the renovations are complete as of the effective date of the report.

Extraordinary Assumptions An extraordinary assumption is an assumption which, if found to be false, could alter the appraiser's opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property such as market conditions or trends; or about the integrity of data used in an analysis. There are no extraordinary assumptions included in this report.

Ownership and Sales History The property is owned by The Harrisburg University of Science and Technology and was purchased from Keystone Property Investments on April 27, 2005 (recorded on May 2, 2005) for the consideration of $4,000,000, evidenced by Deed 5972-573, recorded in the Dauphin County Recorder of Deeds Office.

Exposure Time Exposure time is the estimated length of time that the subject would have been offered on the market prior to a hypothetical sale of the property on the effective date of the appraisal. The estimate is based on data obtained from sales transactions, interviews with market participants, and published data. It also assumes an asking price that is generally consistent with the value estimate of the appraisal report.

17 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Data obtained from sales and interviews with local and regional brokers suggest that the probable exposure time for the property at the concluded market value is at least 12 months.

Relationship of Exposure Time and Marketing Time Exposure Effective Marketing Time Date Time

Marketing Period Marketing period is an opinion of the amount of time it may take to sell or lease the subject at the concluded market value during the period immediately subsequent to the effective date of the appraisal report. There continues to be uncertainty in market conditions although there are positive indicators of a continued strengthening economy in the United States. The economies in Europe continue to be fragile and the political unrest in the Middle East regions of the world as well as Eastern Europe and the Korean peninsula have a tremendous impact on the US economy and financial markets. Therefore, the subject's marketing period is estimated to be similar to the stated exposure time.

Location Description Dauphin County Dauphin County is comprised of 40 independent municipalities that cover 525 square miles and serve as home to more than 250,000 residents. Anchored by a stable work force employed by the Commonwealth of Pennsylvania and an industrial business base, the region also features significant tourist and agricultural sectors that add to the diversity and stability of the community. Businesses located in Dauphin County, Pennsylvania are within approximately 500 miles of half of the buying power in the United States and approximately 40% of the U.S. population.

Dauphin County’s population based on the Census 2010 is reported at 268,100, up approximately 6.5% (16,302) over the 2000 Census and is ranked sixth in terms of population but 20th in terms of percentage growth over previous decade.

18 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Pennsylvania Total Decennial Population, 2010 & 2000 Prepared by The Pennsylvania State Data Center Source: U.S. Census Bureau,Census 2000 & 2010 Redistricting Data (Public Law 94-171) Summary File. March 9, 2011

Census: April 1, 2010 Census: April 1, 2000 Change: 2000 to 2010

State & Percent Percent County Share of Share of FIPS Code Geographic Area Number State Total Rank Number State Total Rank Number Rank Percent Rank 42000 Pennsylvania 12,702,379 100.0% - 12,281,054 100.0% - 421,325 - 3.4% - 42043 Dauphin 268,100 2.1% 15 251,798 2.1% 15 16,302 13 6.5% 20

The unemployment rate for the Harrisburg/Carlisle metropolitan area as of the end of February 2017 is reported at 4.4%, indicating a continuing fluctuating rate and is lower than Pennsylvania (5.0%) and the nation (4.7%) for the same time period.

Unemployment Rates

12 11.5 11 10.5 10 9.5 9 8.5 8

% 7.5 7 6.5 6 5.5 5 4.5 4 3.5 3 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

Month-Year U.S. PA Harrisburg/Carlisle Lancaster Lebanon York Adams

Market Area and Surrounding Neighborhood The subject property is located mid-block between South 3rd Street and South 4th Street just east of Strawberry Square. The State Capitol Complex as well as the Amtrak station is within two blocks of the subject property. The Hilton Hotel and the Crown Plaza Hotel are also within easy walking distance of the subject. 19 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Surrounding uses include numerous retail shops, restaurants, offices, banks, apartments, and parking garages. The immediate neighborhood is defined as one block north to Aberdeen Street/Commonwealth Avenue, two blocks east to Chestnut Street, two blocks south to North 2nd Street, and two to three blocks west to the Capitol Complex. This area appears to be stable with an average amount of “for lease” availabilities but, for the most part, this business district is very vibrant during the workweek.

The overall quality of the improvements in the neighborhood is considered to be average to good with most buildings of an older vintage. There is no land available for development as the subject's immediate market is generally built-out; therefore, most new development is restricted to the demolition of existing improvements.

Employment in the subject's immediate market and the surrounding area is comprised of a mix of commercial, office, and institutional uses with government the most prominent employer. As the state capital, this area of Harrisburg is predominantly occupied as offices and support services. Public services including utilities, schools, and fire and police protection are all considered average and adequate for the market.

The financing of real estate in the subject's market follows the same basic trends as the other areas of Dauphin County. Loan to value ratios typically range between 60% and 80% with interest rates generally between 3.5% and 7.0%. Terms are fixed for a short period of time (3 to 7 years) but amortized for 15 to 25 years. Although this spread in rates and terms is quite wide, it demonstrates the differences between the quality of the borrower and the perceived risk of both the property and the borrower.

Conclusions Overall, the subject's neighborhood is considered to be in a stable stage and has very few property availabilities for sale or for lease. The location is attractive to office users due to the proximity of the State Capitol Complex.

20 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Site Summary and Analysis Physical Description Site Area 0.5325 Acres 23,196 Square Feet Primary Road Frontage Market Street and North 4th Street Secondary Road Frontage Strawberry Street (alley) Excess/Surplus Land Area None Configuration Rectangular Topography Generally level and at street grade Zoning District DC - Downtown Center Adjacent Land Uses Mixed commercial, institutional, and office uses Flood Zone Located in a low flood risk area Community Map/Panel Map #42043C0319D dated August 2, 2012 Access Market Street parking garage Visibility Average Functional Utility Average Adequacy of Utilities Adequate Landscaping Adequate Drainage and Soils Storm sewers Curbs and Sidewalks Concrete sidewalk and curb on Market and 4th Streets Utilities Water Public Sewer Public Natural Gas Public Electricity Yes Telephone Yes Mass Transit Capital Area Transit Route 1 Other Detrimental Easements None known or disclosed Encroachments None known or disclosed Deed Restrictions None known or disclosed Reciprocal Parking Rights None known or disclosed Common Ingress/Egress None known or disclosed

21 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Improvement Summary Number of Existing Buildings 1 Number of Stories 15 Gross Building Area 349,587 Square Feet Includes garage of 163,142 sf Occupied by Harrisburg University 186,445 Square Feet Rentable Area 163,139 Square Feet Years Built 2009 Actual Age (Years) 8 Effective Age (Years) 8 Total Economic Life (Years) 50 Age/Life Depreciation 16.0% Functional Utility Average to good Foundation Concrete Frame Steel and masonry Exterior Walls Precast, masonry, glass Interior Walls Predominantly painted drywall Windows Fixed pane Doors Predominantly wood and glass with metal doors for service areas Roof Predominantly flat rubber with some standing seam metal Ceiling Predominantly acoustic ceiling panels Ceiling Clearance 8 to 10 feet with ceiling finishes, 20+ feet in lobby areas HVAC System Steam boilers for heat, chillers for cooling, all with twin systems Elevator 1 service and 5 passenger elevators (OTIS with 2,500 pound capacity) Stairs Several internal stair cases Interior Lighting Predominantly fluorescent fixtures with LED on 10th and 11th floors Most rooms are motion-activated lights Flooring VCT, carpet, ceramic tile Electric 3000 amps Plumbing Adequate restrooms on each floor with motion sensors on all fixtures Furnishings Personal property excluded Parking Lot Next door parking garage with 384 spaces. 180 spaces rented monthly. Parking Spaces and Ratio 180 1.10 spaces per 1,000 square feet of gba Overhead Doors 1 0.06 doors per 10,000 square feet of gba Site Improvements Site is predominantly impervious Landscaping Adequate in terms of municipal codes

The subject property is fully sprinklered with a wet pipe system except for the main computer room which is equipped with a dry chemical system. The first floor is predominantly occupied with two lobbies, administrative offices, mechanical rooms, and student common areas. The second floor is used for the library, study and collaboration rooms/areas, and the IT department including the server

22 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA room and administrative offices. Floors 3, 4, 5, 6, 7, 8, and 9 comprise the parking garage that is accessible via the elevator bays. The garage is owned and operated by an independent entity and not by Harrisburg University. Approximately 50% of Floor 10, or 13,000 square feet, is under renovation for the addition of four new classrooms which are assumed to be completed for the purpose of this appraisal. The remaining space is used as faculty offices, meeting spaces, and lobby. Floors 11, 12, and 13 are used for classrooms and offices. Chemistry and biology laboratories are located in Floors 12 and 13. Floor 14 is occupied with executive and senior administrative offices, board room, and large tiered lecture hall. Also included on this floor is a courtyard with fountain. Floor 15 is for mechanicals including heating and cooling systems and air handlers.

Floor Areas Square Feet % to Total All 15 floors 349,587 100.0% Less: 7 floors of garage 163,142 46.7% Harrisburg U occupied space 186,445 53.3% Less: 15th floor mechanicals 23,306 6.7% Rentable floor area 163,139 46.7%

Economic Life and Useful Life An improvement's economic life is the period over which improvements to real property contribute to property value. This period is usually shorter than the property's physical life expectancy which is the total period the improvement can be expected to exist physically. Useful life is the period of time over which a structure may reasonably be expected to perform the function for which it was designed. At the end of the building's economic life, there are several options available to the owner:  Renovation  Rehabilitation  Remodeling  Demolition and replacement with a suitable new structure

23 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

All aspects of a property and its market, including the quality and condition of the construction (physical condition), the functional utility of the improvements, and the market and locational externalities, must be considered in the estimation of a property's economic life and its effective age.2

Physical factors consider the rate at which the physical components of an improvement wear out, given the quality of construction, the use of the property, maintenance standards, and the region's climate. Functional factors consider the rate at which construction technology, tastes in architecture, energy efficiency, and building design change. Functional factors can render an improvement functionally obsolete regardless of its age and/or condition. External factors consider short-term and long-term influences such as the stage of a neighborhood's life cycle, the availability and affordability of financing, and supply and demand factors.

The subject improvements were constructed in the 2009 and are in generally average to good condition. The property is well maintained and has average to above-average finishes.

Effective Age and Remaining Economic Life Effective age is the age indicated by the condition and utility of a structure and is based on an appraiser's judgment and interpretation of market perceptions. Even in the same market, buildings do not necessarily depreciate at the same rate. The maintenance standards of owners or occupants can influence the pace of building depreciation. If one building is better maintained than other buildings in its market area, the effective age of that building may be less than its actual (chronological) age. If a building is poorly maintained, its effective age may be greater than its actual age. If a building has received typical maintenance, its effective age and actual age may be the same.

Physical deterioration consists of curable and incurable factors. Curable physical deterioration includes items of deferred maintenance, which require immediate repair. Incurable physical

2 Effective age is the age indicated by the condition and utility of a structure and is based on an appraiser's judgment and interpretation of market perceptions. 24 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

deterioration applies to short-lived and long-lived components that are not treated as curable items. These items include:  Components that are less than 100% physically deteriorated and are therefore incurable because it is not economically feasible to cure them;  Short-lived components that are not ready for replacement as of the effective date of the appraisal but will probably have to be replaced in the foreseeable future;  Long-lived components, also known as the basic structure, consist of items that have a life expectancy equal to that of the entire structure. There were no major factors associated with physical deterioration noted at the time of the property inspection although it was indicated that the heating and cooling systems were undergoing replacements of various mechanical components that are believed to be typical for their age. A leak was noted in the lobby of the 13th floor that is believed to be originating from the courtyard fountain on the 14th floor in the executive office section.

Functional obsolescence is categorized by curable and incurable obsolescence. Curable functional obsolescence is a curable defect caused by a flaw in the structure, materials, or design. Incurable functional obsolescence is a defect caused by a deficiency or superadequacy in the structure, materials, or design that cannot be practically or economically corrected.

The subject property is fully functional for its intended use as an educational facility. Functional obsolescence was not noted at the time of the property inspection.

External obsolescence is a form of depreciation resulting from externalities outside the boundaries of the subject property and is usually incurable but may be either temporary or permanent. External obsolescence is usually market-wide and affects most properties in the same immediate market area or neighborhood.

Causes of external obsolescence include reduced demand for a particular property type such as an oversupply of shopping centers in an area, reduced demand for a particular type of product such as skating rinks, or an oversupply of space for a particular use such as shopping center space.

25 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Additional causes of external obsolescence may include increased costs necessitated by government regulation such as ADA requirements, changing technology, economic conditions affecting construction costs such as increasing interest rates or the unavailability of financing, or negative locational factors caused by neighboring properties or zoning regulations and land use controls.

The subject property is situated in a prominent location within the central business district of the City of Harrisburg. The immediate area is an active neighborhood with hotels, offices, parking garages, and numerous restaurants. The Capitol Complex is a short walk from the subject property. External and economic obsolescence is not a factor.

The property's effective age, as of the effective date of this appraisal, is judged to be approximately 8 years in its “As Is” condition. The total economic life of similar properties is estimated to be approximately 50 years or more, depending on the intensity of its use. Therefore, the remaining economic life is approximately 42 years and represents approximately 16% overall depreciation based on the economic age-life method3. Site improvements are minimal.

Flood Designation FEMA maps indicate that the property is located in a low flood risk area as indicated on Map Number 42043C0319D dated August 2, 2012. A copy of the flood map is included at the beginning of this report.

Zoning

Zoning Summary Current zoning DC - Downtown Center Legally conforming Believed to be Uses permitted Numerous Zoning change Not likely in immediate future Source: City of Harrisburg Zoning Ordinance

3 Economic age-life method measure total depreciation by the ratio between the effective age and total economic life of a building and results in a lump sum deduction for depreciation. All forms of depreciation are included in this calculation. 26 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Based on the zoning map presented at the beginning of this report and the permitted use within this zoning district, it is concluded that the subject property is a permitted use and is believed to conform to the current zoning ordinance.

Summary of Tax Assessment Real estate tax assessments are administered by Dauphin County and are estimated by jurisdiction on a township basis for the subject. The property is located in the City of Harrisburg. Real estate taxes in this jurisdiction represent ad valorem taxes, meaning a tax applied in proportion to value. The real estate taxes for an individual property may be determined by multiplying the assessed value for a property by the composite rate that includes the municipality, school district, and county tax rates.

The current real estate tax assessment is $28,256,100 with $1,304,700 attributable to the land and $26,951,400 attributable to the improvements. It should be noted that the subject property is “tax exempt” and does not pay real estate taxes.

Highest and Best Use The concept of highest and best use represents the premise upon which value is based. The four criteria the highest and best use must satisfy are:  Legal permissibility  Physical possibility  Financial feasibility  Maximum profitability Highest and best use analysis involves assessing the subject both as if vacant and as improved.

Highest and Best Use as Though Vacant Legally Permissible Zoning codes, land use plans, easements, and private deed restrictions often restrict permitted uses. The site is located within the central business district of the City of Harrisburg and is surrounded by office buildings and commercial uses including restaurants, retail, institutional, and government

27 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

uses . Given the prevailing uses in the area of the subject, a commercial, office, or institutional use has been given further consideration in determining highest and best use of the site, as though vacant.

Physically Possible The physical characteristics of the site should reasonably accommodate any use that is not restricted by its size of 0.5325 acres (23,196 square feet). The site is served by all public utilities, is generally rectangular in configuration, and has generally level topography. There are no known adverse easements or encroachments that would inhibit the full utilization of the site. There is adequate lot width, depth, and overall area to allow various types of permitted development. Conformity suggests that an office, commercial, or institutional use would be a reasonable use of the land.

Financially Feasible The appraisal principal of conformity holds that real property value is created and sustained when the characteristics of a property conform to the demands of the market. Financially feasible uses are those uses that produce the greatest income from the land. The subject site is located on a signalized corner with good frontage on Market Street and North 4th Street just blocks from two major hotels, the State Capitol Complex, and other popular venues. In fact, its Walk Score is 95 out of 100, considered a Walker’s Paradise4. Overall, this location is considered to be good indicating that most office, commercial, and institutional properties should be financially feasible.

Maximally Profitable Of the uses that are considered legally permissible, physically possible, and financially feasible, the use that provides the highest rate of return over the longest period of time is considered the highest and best use of the property. The ideal improvement would conform to the surrounding developments. Considering the legally permitted uses, surrounding neighborhood uses and zoning, and financially feasible uses, the highest and best use, as if vacant, for the subject property would be for an office, commercial, or institutional development.

4 www.walkscore.com 28 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Highest and Best Use as Improved As an improved property, the analysis must consider the following alternatives:  Operate the property with no significant modifications.  Implement property modifications to increase revenue potential, improve the functional utility, enhance marketability, or extend the remaining economic life.  Raze the improvements to allow for an alternate development.

An analysis of the improvements is presented below.

"As Improved" Property Feature Evaluation Size Maximizes the site Condition Average Functional Utility Average Consistency with Highest and Best Use as Vacant Consistent Conclusion Continuation of the current owner-occupancy

The subject property is an owner-occupied educational facility (Harrisburg University of Science and Technology) with support offices located throughout the building. The building is fully functional for its intended use and, reportedly, its enrollment has been favorable with approximately 500 undergraduate students and over 3,000 graduate students.

Appraisal Methodology In estimating the market value of a given property, it is normal appraisal practice to assemble as much relevant data from the marketplace as possible. This data is then applied in the three recognized approaches to value: the cost approach, the income capitalization approach, and the sales comparison approach.

In the cost approach, an estimated reproduction or replacement cost of the building and land improvements as of the date of appraisal is developed (including an estimate of entrepreneurial profit or incentive), and an estimate of the losses in value that have taken place due to wear and tear, design and plan deficiencies, or neighborhood influences is subtracted. An estimate of the value of the land is then added to this depreciated building cost estimate.

29 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

The cost approach is considered but is not developed since market participants would place little to no weight on the cost approach in this instance. The lack of recent comparable land sales increases the unreliability of this approach.

In the income capitalization approach, the potential rental income of the property is calculated and deductions are made for vacancy and collection loss and expenses. The prospective net operating income of the property is then estimated. To support this estimate, operating statements for the subject property in previous years and for comparable properties are reviewed. An applicable capitalization method and appropriate yield rates are developed and used in computations that lead to an indication of value.

The income capitalization is developed although the subject is completely owner-occupied by Harrisburg University.

In the sales comparison approach, properties similar to the subject property that have been sold recently or for which listing prices or offers are known are compared to the subject. Data from generally comparable properties are used and comparisons are made to demonstrate a probable price at which the subject property would sell if offered on the market.

After arriving at an indication of value from the valuation approaches used in this appraisal, the results are correlated into a single conclusion of value based on the approach or approaches that have the highest quality and/or quantity of data available and the one(s) in which the appraiser has the greatest confidence. All pertinent data and facts that were used in the appraisal process have been analyzed on the following pages of this report.

Income Capitalization Approach The income capitalization approach consists of methods and techniques used to analyze a property's capacity to generate economic benefits and convert those benefits into an indication of present value. The steps taken to apply the income capitalization approach are as follows:

30 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

 Estimate potential gross income (PGI). This involves analyzing the subject's current leases to establish the potential income from leased space and then estimating market rent to apply to the subject's vacant space.  Estimate vacancy and credit loss.  Estimate operating expenses.  Calculate net operating income (NOI) by deducting vacancy and credit loss and operating expenses from gross income.  Select a capitalization rate from the market to use in direct capitalization.  Apply the appropriate capitalization process to the NOI estimate to estimate market value.

Economic Profile of Property The subject property is owner-occupied as a university as it has been since its original construction; however, floors 3, 4, 5, 6, 7, 8, and 9 consist of the parking garage that is owned by an independent entity and not Harrisburg University. Therefore, the total occupied area of Harrisburg University is 186,445 square feet. For the purposes of this income analysis, the 15th floor’s floor area of 23,306 square feet is deducted since it houses chillers and other mechanical equipment. The total floor area applied to the income is 163,139 square feet.

Three of the sales used in the sales comparison approach indicate rents ranging between $17.60 and $19.00 per square foot on a Gross basis whereby the landlord is responsible for all or most of the operating expenses. There are no tenant reimbursements to the landlord. Sale 2 reported a lease rate of $18.00, Sale 3 reported a rate of $19.00, and Sale 4 reported a lease rate of $17.60 per square foot.

Sales 2 and 4 are Class B properties while Sale 3 is a Class A property. Based on the adjustments made in the sales comparison approach, Sale 3 is a heavily weighted sale in the analysis. Therefore, a lease rate of $19.00 is reasonable and is applied in this income analysis.

31 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Potential Gross Rent Potential gross rent is the total income attributable to real property at full occupancy before vacancy and operating expenses are deducted.

Expense Recoveries Assuming a lease based on Gross terms, there would be no expense recoveries from tenants since the landlord is responsible for operating expenses under a Gross lease. It should be noted that it is assumed that janitorial expenses and utilities associated with the common areas only are paid by the landlord.

Vacancy and Credit Loss There may be times over the course of its economic life that tenant turnover will create vacancy. Collection loss due to slow payment or non-payment of rent must be considered as well. REIS Reports, a nationally-recognized real estate publication, indicates the Harrisburg office vacancy in 4Q16 was 16.2%. The subject is an owner-occupied property of 163,139 rentable square feet occupied as a university. As such, it is believed that the average vacancy rate would be slightly less than the typical office property located in the Harrisburg market. Therefore, an overall vacancy and credit loss factor of 15% is applied to the subject property.

Total Effective Gross Income Effective gross income (EGI) results when vacancy and credit losses are deducted from total potential gross income.

Analysis of Operating Expenses Operating expenses for the subject property are estimated based on data from comparable properties and internal files.

Fixed operating expenses include real estate taxes and property insurance. A replacement reserve represents the costs of replacement of long-lived property items such as roof cover and parking lot surface. Although property owners seldom include an expense line for replacement reserves, most 32 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

lenders and appraisers incorporate this expense as part of the overall property operating data. For the subject property, an estimate of $0.10 per square foot is applied. Property insurance is projected to be $0.55 per square foot based on a three-year history of the property. Since the subject property is rated as tax-exempt, there are no real estate taxes applied to this property.

Variable expenses include property maintenance and repairs, grounds maintenance including snow removal, utilities and trash removal, and a management fee and common area maintenance (CAM) costs. The projected costs are based on a review of the last three years of expenses, internal files, on-line research, and conversations with market participants. Generally, management fees are based on a percentage of income collected (effective gross income) and may range between 2.0% and 6% of EGI. A management fee of 4.3% is applied to the annual EGI based on the management contract with PMI (Property Management, Inc.).

Net Operating Income Net operating income is the subtraction of operating expenses from effective gross income.

Capitalization Rate Analysis Capitalization is defined as the translation of net income into an indication of value. The primary methods of calculating capitalization rates include direct capitalization and yield capitalization.

Direct capitalization is a method used to convert an estimate of a single year's (first year) income expectancy into an indication of value in one direct step, either by dividing the income estimate by an appropriate rate or by multiplying the income estimate by an appropriate factor. Direct capitalization is most appropriate in instances where the income stream is anticipated to remain generally stable or increasing at the same rate as operating expenses. It is most effective when the property being appraised has achieved a stabilized operating level which is the case with the subject property.

Yield capitalization is a method used to convert future benefits (annual cash flow) into present value by discounting each future benefit at an appropriate yield rate (discount rate) or by developing an overall rate that explicitly reflects the investment's income pattern, value change, and yield rate.

33 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

This method is most effective for properties that have not reached a stabilized operating level or anticipate significant fluctuations in income over the holding period. Since it is assumed that the subject is a stabilized property and rent increases at a constant rate and expenses are anticipated to increase at a generally constant rate, then yield capitalization is not required in this analysis.

Several methods may be used to estimate an overall capitalization rate (OAR) applicable to the estimated NOI for the subject and include the review of investor surveys that are based on property sales, extraction of rates from comparable sales, the band of investment method, interviews with market participants, and the debt coverage ratio method used primarily by lenders.

Analysis of Comparable Sales The recent sale of three office buildings located in the Camp Hill and Mechanicsburg market sold at OARs ranging from 9.5% to 10.5%; however, it should be noted that two of the properties were Class B and one was Class A (at 9.5%). The properties were multi-tenanted and located in suburban locations in Cumberland County.

Data pertaining to institutional-grade national CBD office properties from PwC Real Estate Investor Survey5 indicate a range of 3.5% to 7.5% and an average of 5.55% on the national survey. Suburban office properties range between 5.0% and 9.5% with an average of 6.61%. The national secondary office market which best represents the Harrisburg market indicates a range of 4.5% to 9.5% and an average of 7.35%.

Although the Harrisburg City market may be considered an institutional-grade office market, it is still considered to be a secondary market. However, the favorable influence of the proximity to the State Capitol Complex tends to have a positive influence on the property. Therefore, an OAR of 7.0%, slightly lower than the average for secondary markets, is reasonable and is applied to the subject.

5 PwC Real Estate Investor Survey, PriceWaterhouseCoopers, First Quarter 2017. 34 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Band of Investment This method involves deriving the proper equity dividend rate from the marketplace and applying it, at current mortgage rate and terms, to estimate the value of the income stream.

A recent survey conducted by RealtyRates.com Investor Survey for the 1st Quarter 2017 provides the following data regarding permanent financing for office property.

 Interest Rate: 3.2% to 9.77% with an average of 5.99%  Loan-to-Value Ratio: 50% to 90% with an average of 73%  Amortization (Years): 15 to 40 years with an average of 30 years  Term (Years) 3 years to 30 years with an average of 8 years  Debt Coverage Ratio: 1.10 to 2.15 with an average of 1.63  Equity Dividend Rates: 7.59% to 16.10% with an average of 12.27%

Applying the averages from RealtyRates provides a mortgage constant of 0.071869.

Conversations with local real estate investors indicated that, in the past several years, equity return expectations for a property similar to the subject would range between 8% and 15%. It should be noted that equity returns are higher with higher risk properties. Considering these factors, an equity dividend rate of 10.0% is applied.

Based on the band-of-investment, an appropriate OAR for the subject property would be 7.9% as shown in the following table.

Band of Investment Calculations Portion of Weighted Value Rate Rate Mortgage 73% x 7.19% = 0.0525 Equity 27% x 10.00% = 0.0270 100% 0.0795 Rounded to: 7.9%

An additional method used predominantly in the lending world for calculating a potential OAR is through the debt-coverage-ratio method. The debt coverage ratio (DCR) is the ratio of net operating income to annual debt service and measures the ability of a property to meet its debt

35 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

service out of net operating income. It is calculated by multiplying the debt coverage ratio, mortgage constant, and loan-to-value ratio as follows:

Debt Coverage Ratio - Low End OAR = DCR x M x Rm OAR = 1.1 x 0.73 x 0.07187 OAR = 0.0577

Debt Coverage Ratio - High End OAR = DCR x M x Rm OAR = 2.15 x 0.73 x 0.07187 OAR = 0.1128

Debt Coverage Ratio - Average OAR = DCR x M x Rm OAR = 1.63 x 0.73 x 0.07187 OAR = 0.0855

The OAR by the debt coverage ratio method, applying the average, is 8.55%.

An OAR of 7.0% is applied to the subject property and is supported by various sales, publications, and methodologies.

Value Indication – Direct Capitalization Applying the capitalization rate of 7.0% to the estimated NOI provides a value indication as of the effective date of this report of $30,069,554, rounded to: $30,100,000.00 Thirty Million One Hundred Thousand Dollars $161.44 per gross square foot $184.51 per rentable square foot

A summary of the income capitalization approach is presented on the following page.

36 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Summary of the Income Capitalization Approach Leaseable Rate Annual Sq. Ft. per S.F. Amounts TOTALS Potential Gross Income (PGI) Rentable Existing Building 163,139 $19.00 $3,099,641 Gross Building Area 186,445 $3,099,641 Plus: Reimbursable Income $0.00 $0 Total Potential Gross Revenue $3,099,641 Less: Vacancy and Collection Loss 15.0% $2.85 $464,946 Effective Gross Income (EGI) $2,634,695 Annual Operating Expenses Fixed Expenses Property Insurance $0.55 = $102,589 Property Taxes (This property is Tax-Exempt) $0.00 = $0 Structural Reserve $0.10 = $16,314 Total Fixed Expenses $0.65 $118,903 Variable Expenses Grounds and Landscape Maintenance $0.02 = $3,263 Snow Removal $0.01 = $1,867 Repairs and Maintenance $0.64 = $120,000 Utilities (Common Areas Only) $0.45 = $73,413 HVAC Contracts, Maintenance, Repairs $0.40 = $75,000 Cleaning Contract (Common Areas Only) $0.15 = $24,471 Trash Removal $0.00 = $0 Office Supplies/Postage $0.00 = $0 Miscellaneous Expenses $0.00 = $0 Management 4.3% $0.61 = $112,910 Total Variable Expenses $2.28 $410,923 Total Expenses $3.25 $529,826 NET OPERATING INCOME (NOI) $12.90 $2,104,869 Overall Capitalization Rate 7.00% Indicated Market Value: $30,069,554 Rounded to: $30,100,000 Per gross square foot: $161.44 Per rentable square foot: $184.51

37 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Sales Comparison Approach The sales comparison approach is an appraisal method in which the subject property is compared to similar properties that have sold. This approach is based on the Principle of Substitution, which states that if several competing commodities, goods or services are available, then the one with the lowest price will attract the greatest demand and receive the widest distribution.

This approach is considered important to most appraisal problems since it is based on the price paid for similar properties by typical buyers in the open market. It is applicable to the appraisal of all properties for which there are a sufficient number of comparable sales. The approach is most reliable when the property type under analysis is bought and sold regularly.

Units of Comparison An important step in the sales comparison approach is the selection of an appropriate unit of comparison for the building valuation. Units of comparison can typically include a price per square foot, price per cubic foot or price per front foot. The unit of comparison in which market participants place the most weight for buildings such as the subject is price per square foot.

Comparable Sales Presented on the following pages is a narrative discussion of office and education building transactions. The comparable sales are listed in order of the date of sale, beginning with the most recent sale. Maps that indicate the location of each sale are also presented on subsequent pages. It should be noted that the office building sales are all located within the Harrisburg-Mechanicsburg- Camp Hill markets and have dates of sale ranging between April 2015 and March 2017. Sales of schools are located out of the subject’s general market area and are older transactions ranging between December 2009 and February 2016.

The green highlighted sales are judged to be the most comparable to the subject property in terms of general location and general physical characteristics. Therefore, Sale 1, 2, 3, 4, and 7 are used for the adjustment analysis.

38 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Summary of Sales - OFFICES Date of Sale Bldg. Sale Price Land Sale # Location Market Sale Price Size per SF Size (ac) 1 214 Senate Ave. Camp Hill Mar-17 $13,900,000 91,447 $152.00 4.44 2 275 Grandview Ave. Camp Hill Mar-17 $6,700,000 57,015 $117.51 4.09 3 4999 Louise Dr. Mechanicsburg Dec-16 $8,450,000 60,000 $140.83 5.60 4 3801 Paxton St. Harrisburg Nov-16 $6,700,000 61,200 $109.48 9.22 5 1001 N. 6th St. Harrisburg Sep-16 $6,385,000 58,000 $110.09 1.07 6 1000 Nationwide Dr. Harrisburg Apr-16 $23,352,420 164,567 $141.90 17.79 7 2550 Interstate Dr. Harrisburg Mar-16 $10,600,000 89,350 $118.63 10.50 8 5035 Ritter Rd. Mechanicsburg Apr-15 $10,100,000 56,556 $178.58 5.54 9 1426 N. 3rd St. Harrisburg Listing $11,250,000 70,512 $159.55 0.41 High $23,352,420 164,567 $178.58 17.79 Low $6,385,000 56,556 $109.48 0.41 Mean $10,826,380 78,739 $136.51 6.52 Median $10,100,000 61,200 $140.83 5.54

Summary of Sales - SCHOOLS Date of Sale Bldg. Sale Price Land Sale # Location Market Sale Price Size per SF Size (ac) 1 2 Iron Bridge Dr. Collegeville Feb-16 $2,475,000 10,000 $247.50 2.49 2 500 James Hance Ct. Exton Nov-12 $13,600,000 67,800 $200.59 7.70 3 1641 Old Phila. Pk. Lancaster Dec-11 $47,000,000 272,500 $172.48 64.00 4 601 S. Queen St. Lancaster Jun-11 $5,000,000 23,631 $211.59 2.70 5 42 N. Prince St. Lancaster Dec-09 $10,900,000 63,000 $173.02 0.57 High $47,000,000 272,500 $247.50 64.00 Low $2,475,000 10,000 $172.48 0.57 Mean $15,795,000 87,386 $201.03 15.49 Median $10,900,000 63,000 $200.59 2.70 Sale 5 is eliminated due primarily to its age as it was constructed in 1982. Sale 6 is a two property portfolio with the other property located in Harleysville. Both were occupied by Nationwide Mutual Insurance Company on a sale leaseback. The Harrisburg property sold at $141.90 per square foot and included approximately 18 acres. The building was constructed in 1976. Sale 8 is located in Rossmoyne Business Center south of Mechanicsburg. This is a one- story business center building constructed in 1988 and occupied by a single tenant (Administrative Offices of Pennsylvania Courts) on a long term lease. Its vastly different physical characteristics make this property an unfavorable choice for comparing to the subject property. Sale 9 is a listing and is not suitable for comparisons since the final disposition of the property is unknown.

39 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Location Map of Comparable Office Sales

40 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Location Map of Comparable School Sales

A review of the school sales indicates the following reasons for their omission in this analysis. Sale 1, located in Montgomery County, is a one-story pre-school located in a mixed use business park of offices and light industrial users. The property was purchased for investment purposes and financed by Valley National Bank for $1,856,000. Although this is a recent sale, its physical comparability does not indicate a truly comparable property. Sale 2 is located in Oakland Business Park which includes a combination of industrial and office uses. It is situated between US Route 30 (Exton Bypass) and Lincoln Highway which is the business route. The property consists of a two-story building occupied by a charter school for elementary school students. The buyer (the charter school) exercised their option to purchase the property after five years of occupancy. Efforts to contact the parties to the transaction did not materialize so additional details of the sale are not available. Sale 3 is the Lancaster location of Harrisburg Area Community College. The property consists of approximately 64 acres in suburban Lancaster County and is improved with multiple masonry buildings that are mostly two-story classroom buildings totaling approximately 272,500 square feet. Reportedly, the property sold for $172.48 per square foot; however, on-going litigation

41 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

between the grantor and grantee (the grantee was the tenant) does not permit accurate reporting of the sale. This was a transaction involving the exercise of a purchase option. Overall, this property is not a good comparable sale as it relates to the subject property. Sale 4 is located on the south side of the City of Lancaster and is owner-occupied by the Community Action Program of Lancaster County. Essentially, this is a two-story office building used for administering public programs for Lancaster County and includes a child care center. Its overall physical characteristics coupled with its location do not make this sale a suitable comparable property. Sale 5 is the former Pennsylvania Academy of Music that is located within the central business district of the City of Lancaster in walking distance to the Fulton Theater, Central Market, and many other major venues in the city. The sale was a deed in lieu of foreclosure with the bank acquiring the property in December 2009 for $173 per square foot. The bank ultimately sold the property in March 2011 to the Commonwealth of Pennsylvania to operate one of their state schools known as Millersville University. The sale price was the same as what the bank’s transfer indicated in 2009. The property remains a music education school and includes a state-of-the-art theater. Although its location in the City of Lancaster is generally comparable to that of the subject, its physical attributes, as well its date of sale, are not comparable to those of the subject.

Although the characteristics of the individual school sales are not considered to be comparable to the subject, they do indicate a difference in the prices of schools versus office properties. The mean price of the office buildings is $137.05 while the mean of the schools is $201.03 or 48% higher than the office sales. The median office sale is $140.83 while the school median is $200.59 for a difference of 43% greater for the schools. A direct correlation between the means and medians is difficult since two of the school sales are considered to be questionable in terms of arm’s length transaction and pending legal issues. Nonetheless, it appears to be clear that school buildings tend to sell for a premium over traditional office buildings. Consequently, an upward adjustment for functional utility will be required for the comparable office building sales and a final quantitative adjustment may be applied.

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COMPARABLE IMPROVED SALE #1 214 Senate Avenue Pennsboro Township Cumberland County, PA

Sale Status: Closed Recorded Date: March 8, 2017 Building Size (s.f.):91,447 Sale Price: $13,900,000 Price per S.F. $152.00

Office Class: A

SALE INFORMATION Transaction Data Sale Analysis $ Value Per Unit Value Grantor: Szeles Building & Leasing LP Market Financing Adj: $0 Grantee: Real Estate Capital Management Condition of Sale Adj: $0 Deed Book/Page # : 201706014 Expenditures Adj: $0 Property Rights: Leased Fee Adjusted Sale Price: $13,900,000 $152.00 % of Interest Conveyed: 100% Source of Information: Agent and public records Tax Identification: 09-20-1854-011 Confirmed by: E. Lehmayer 4-17 PROPERTY INFORMATION Building Related Gross Building Area (sf): 91,447 Number of Stories: 7 Rentable Area (sf) 91,447 Number of Occupants: Multiple tenants Assessed Value: $8,600,000 $94.04 Construction Class: Precast Office Space SF 91,447 Roof: Flat rubber Office Space % 100.0% Electric: Adequate Year Built/Effective Age: 1978 / 15 HVAC: Chillers and assumed steam boilers Parking Spaces: 439 Sprinklers: 100% Parking Ratio/1,000 SF GBA: 4.80 Condition at Sale: Average Land Related Gross Land Area: (ac./sf) 4.44 193,406 Flood Plain: None known Floor-Area-Ratio: 0.47 Encumbrance Issues: None Zoning: Permits offices Encumbrance Desc.: None Site Configuration: Irregular Ground Lease: None Topography: Generally level Utilities: All public

Known as the West Shore Office Center. Well located with good access to major transportation arteries including Camp Hill Bypass and Taylor Bridge Bypass. Harrisburg's central business district is minutes by car. The neighborhood is predominantly office with a strong residential backup. This property was part of a two-property package with the second property Sale 2 in this analysis. Reportedly, this property was 99% occupied at the time of sale.

43 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

COMPARABLE IMPROVED SALE #2 275 Grandview Avenue East Pennsboro Township Cumberland County, PA

Sale Status: Closed Recorded Date: March 8, 2017 Building Size (s.f.):57,015 Sale Price: $6,700,000 Price per S.F. $117.51

Office Class: B

SALE INFORMATION Transaction Data Sale Analysis $ Value Per Unit Value Grantor: Szeles Real Estate Development Market Financing Adj: $0 Grantee: Real Estate Capital Management Condition of Sale Adj: $0 Deed Book/Page # : 201706117 Expenditures Adj: $0 Property Rights: Leased Fee Adjusted Sale Price: $6,700,000 $117.51 % of Interest Conveyed: 100% Source of Information: Agent and public records Tax Identification: 09-19-1592-018A Confirmed by: E. Lehmayer 4-17 PROPERTY INFORMATION Building Related Gross Building Area (sf): 57,015 Number of Stories: 3 Rentable Area (sf) 57,015 Number of Occupants: Multiple tenants Assessed Value: $3,500,000 $61.39 Construction Class: Masonry Office Space SF 57,015 Roof: Flat rubber Office Space % 100.0% Electric: Adequate Year Built/Effective Age: 1973 / 15 HVAC: Chillers and assumed steam boilers Parking Spaces: 342 Sprinklers: 100% Parking Ratio/1,000 SF GBA: 6.00 Condition at Sale: Average Land Related Gross Land Area: (ac./sf) 4.09 178,160 Flood Plain: None known Floor-Area-Ratio: 0.32 Encumbrance Issues: None Zoning: Permits offices Encumbrance Desc.: None Site Configuration: Irregular Ground Lease: None Topography: Generally level Utilities: All public

Located on the northwest corner of Erford Road and Grandview Avenue in proximity of Taylor Bridge Bypass and minutes from center city Harrisburg. This property was part of a two-property package with the second property Sale 1 in this analysis. Reportedly, this property was 100% occupied at the time of sale. Built in 1973 it was renovated in 2004.

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COMPARABLE IMPROVED SALE #3 4999 Louise Drive Lower Allen Township Cumberland County, PA

Sale Status: Closed Recorded Date: December 19, 2016 Building Size (s.f.):60,000 Sale Price: $8,450,000 Price per S.F. $140.83

Office Class: A

SALE INFORMATION Transaction Data Sale Analysis $ Value Per Unit Value Grantor: Szeles Real Estate Development Market Financing Adj: $0 Grantee: Members 1st Federal Credit Union Condition of Sale Adj: $0 Deed Book/Page # : 201634213 Expenditures Adj: $0 Property Rights: Leased Fee Adjusted Sale Price: $8,450,000 $140.83 % of Interest Conveyed: 100% Source of Information: Agent and public records Tax Identification: 13-10-0256-016C Confirmed by: E. Lehmayer 4-17 PROPERTY INFORMATION Building Related Gross Building Area (sf): 60,000 Number of Stories: 3 Rentable Area (sf) 60,000 Number of Occupants: Multiple tenants Assessed Value: $4,250,000 $70.83 Construction Class: Masonry Office Space SF 60,000 Roof: Flat rubber Office Space % 100.0% Electric: Adequate Year Built/Effective Age: 1998 / 15 HVAC: Chillers and assumed steam boilers Parking Spaces: 390 Sprinklers: 100% Parking Ratio/1,000 SF GBA: 6.50 Condition at Sale: Average Land Related Gross Land Area: (ac./sf) 5.60 243,936 Flood Plain: None known Floor-Area-Ratio: 0.25 Encumbrance Issues: None Zoning: Permits offices Encumbrance Desc.: None Site Configuration: Rectangular Ground Lease: None Topography: Generally level Utilities: All public

Located in Rossmoyne Business Center. Good access to Route 15 interchange and to I-76 (PA Turnpike). Occupancy was reported to be 100% at time of sale. Built in 1973 it was renovated in 2004. The buyer purchased this property for future growth of their business as they also own two properties that they fully occupy directly across Louise Drive.

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COMPARABLE IMPROVED SALE #4 3801 Paxton Street Swatara Township Dauphin County, PA

Sale Status: Closed Recorded Date: November 30, 2016 Building Size (s.f.):61,200 Sale Price: $6,700,000 Price per S.F. $109.48

Office Class: B

SALE INFORMATION Transaction Data Sale Analysis $ Value Per Unit Value Grantor: F.N.B. Corporation Market Financing Adj: $0 Grantee: 3801 Paxton Equities, LLC Condition of Sale Adj: $0 Deed Book/Page # : 20160032678 Expenditures Adj: $0 Property Rights: Leased Fee Adjusted Sale Price: $6,700,000 $109.48 % of Interest Conveyed: 100% Source of Information: Agent and public records Tax Identification: 63-027-297 Confirmed by: E. Lehmayer 4-17 PROPERTY INFORMATION Building Related Gross Building Area (sf): 61,200 Number of Stories: 2 Rentable Area (sf) 61,200 Number of Occupants: 1 Assessed Value: $6,039,100 $98.68 Construction Class: Precast Office Space SF 61,200 Roof: Flat rubber Office Space % 100.0% Electric: Adequate Year Built/Effective Age: 2006 / 10 HVAC: Chillers and assumed steam boilers Parking Spaces: 509 Sprinklers: 100% Parking Ratio/1,000 SF GBA: 8.32 Condition at Sale: Average Land Related Gross Land Area: (ac./sf) 9.22 401,623 Flood Plain: None known Floor-Area-Ratio: 0.15 Encumbrance Issues: None Zoning: Permits offices Encumbrance Desc.: None Site Configuration: Irregular Ground Lease: None Topography: Generally level Utilities: All public

Located in Tecport Business Center with very good exposure to Paxton Street and I-83. This property was previously occupied by Commerce Bank/Metro Bank and, after acquisition, F.N.B. (First National Bank). It was sold to 3801 Paxton Equities who leased 100% of the property to Computer Aid, Inc. who is a related party to Paxton Equities. Reportedly, the buyer purchased the furniture for an additional $300,000 that is not reflected in the $6,700,000 purchase price.

46 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

COMPARABLE IMPROVED SALE #7 2550 Interstate Drive Susquehanna Township Dauphin County, PA

Sale Status: Closed Recorded Date: March 15, 2016 Building Size (s.f.):89,350 Sale Price: $10,600,000 Price per S.F. $118.63

Office Class: B

SALE INFORMATION Transaction Data Sale Analysis $ Value Per Unit Value Grantor: Lexington Harrisburg LP Market Financing Adj: $0 Grantee: Linlo Properties X LP Condition of Sale Adj: $0 Deed Book/Page # : 2016007014 Expenditures Adj: $0 Property Rights: Leased Fee Adjusted Sale Price: $10,600,000 $118.63 % of Interest Conveyed: 100% Source of Information: Agent and public records Tax Identification: 62-021-140 Confirmed by: E. Lehmayer 4-17 PROPERTY INFORMATION Building Related Gross Building Area (sf): 89,350 Number of Stories: 4 Rentable Area (sf) 89,350 Number of Occupants: Multiple Assessed Value: $8,565,300 $95.86 Construction Class: Masonry Office Space SF 89,350 Roof: Flat rubber Office Space % 100.0% Electric: Adequate Year Built/Effective Age: 1998 / 15 HVAC: Chillers and assumed steam boilers Parking Spaces: 581 Sprinklers: 100% Parking Ratio/1,000 SF GBA: 6.50 Condition at Sale: Average Land Related Gross Land Area: (ac./sf) 10.50 457,380 Flood Plain: None known Floor-Area-Ratio: 0.20 Encumbrance Issues: None Zoning: Permits offices Encumbrance Desc.: None Site Configuration: Irregular Ground Lease: None Topography: Generally level Utilities: All public

Located in an office park north of the City of Harrisburg with very good access to I-81 and I-83 as well as Progress Avenue. The property is the regional headquarters for AT&T Wireless but is also occupied by several other tenants. Numerous apartment communities are located within proximity to this property.

47 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Analysis and Adjustment of Sales The adjustment process is typically applied through either quantitative or qualitative analysis, or a combination of the two. Quantitative adjustments are often developed as dollar or percent amounts and are most credible when there is sufficient data to perform a paired sales or statistical analysis.

Qualitative adjustments are developed through comparisons (e.g., superior, inferior, etc.) and are often a realistic way to reflect the thought process of market participants when only limited data is available.

Elements of Comparison Key value elements under scrutiny that may require adjustments are real property rights conveyed, financing terms, conditions of sale, expenditures at purchase, market conditions, location, and physical characteristics. These factors are the primary influences on property prices and tend to affect the differences in price levels.

Real Property Rights Conveyed This adjustment is generally applied to reflect the transfer of property rights different from those being appraised, such as differences between properties leased at market rent and those leased at rent either below or above market levels. The leased fee was transferred in all of the comparable sales. It was indicated that the leases at the comparables were within the ranges of the market; therefore, no adjustments are required.

Financing Adjustments This adjustment is generally applied to a property that transfers with atypical financing such as having assumed an existing mortgage at a favorable rate. Conversely, a property may be encumbered with an above-market mortgage which has no prepayment clause or a very costly prepayment clause. Such atypical financing often plays a role in the negotiated sale price. In this analysis, no adjustments are required.

48 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Conditions of Sale This adjustment is applied if there are any unusual circumstances surrounding the transaction, such as foreclosures; bulk sales, related parties, quick sale for cash, or assemblages and similar type transactions. No adjustments are required.

Expenditures at Purchase This adjustment is appropriate in situations where the sale price has been influenced by expenditures that the buyer intended to make immediately after purchase. Examples include buyer- paid sales commissions, costs to cure deferred maintenance, and costs to remediate environmental contamination. No known adjustments are required.

Changing Market Conditions Real estate values normally change over time. The rate of this change fluctuates due to investors' perceptions of prevailing market conditions. This adjustment category reflects market differences occurring between the effective date of the appraisal and the sales date of a comparable, when values have appreciated or depreciated. No adjustments are required.

Relative Comparison Analysis There are five properties that are included for the comparison to the subject by the sales comparison approach. The unit of comparison employed in this analysis is the price per square foot. It should be noted that all of the comparable sales are in locations judged to be inferior to that of the subject since the comparables are in suburban locations that lack the synergies available in center city locations. Also noted is that all of the comparables have superior floor area ratios and parking ratios since the comparables all have sufficient land for on-site parking. The subject rents 180 parking spaces within the garage that is incorporated into the subject’s structure although it is owned by an independent entity. All of the comparable sales are much smaller than the subject and indicates an adjustment for economies of scale where smaller buildings typically sell for a higher unit rate than larger buildings; therefore, downward adjustments would be required to the comparables. Functional utility is another element of comparison that is inferior in all of the

49 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA comparable sales. The comparables represent traditional office buildings but the subject is constructed as an education facility with offices, laboratories, large community rooms/lecture halls, and offices for staff, educators, and support functions. Therefore, in terms of functional utility, all of the comparable sales are inferior to the subject.

 Sale 1: This property was sold in March 2017 for a consideration of $13,900,000 or $152.00 per square foot for its 91,447 square feet. In addition to the differences previously discussed, this property’s effective age is inferior when compared to the subject. Overall, this property is considered to be inferior to the subject and suggests that the subject would sell for more than $152.00 per square foot.  Sale 2: This is the sale of a 57,015 square foot office building that sold in March 2017 for a consideration of $6,700,000 or $117.51 per square foot. The characteristics of this property are inferior in terms of its effective age, building class (this is a B class versus the subject’s A class). These characteristics and those previously discussed suggest that the subject property would sell for more than $117.51 per square foot.  Sale 3: This property transferred in December 2016 for a consideration of $8,450,000 or $140.83 per square foot for its 60,000 square feet. In addition to the differences previously discussed, the effective of this building is inferior. Overall, the analysis indicates that the subject would likely sell for more than $140.83 per square foot.  Sale 4: This property was sold in November 2016 for a consideration of $6,700,000 or $109.48 per square foot for its 61,200 square feet. This building is considered a class B office building that is inferior to the subject’s class A category. Overall, this property is considered to be inferior to the subject and suggests that the subject would sell for more than $109.48 per square foot.  Sale 7: This property was sold in March 2016 for a consideration of $10,600,000 or $118.63 per square foot for its 89,350 square feet. This property is inferior in terms of its effective age and B classification as well as the other characteristics previously presented. Overall, this property is considered to be inferior to the subject and suggests that the subject would sell for more than $118.63 per square foot.

50 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

The value indications derived from the comparable sales are reconciled into a single value indication by arranging the sales in an array relative to the subject, as follows:

Sale Adj. Price Comparability Weight Weighted 1 $152.00 Inferior 25% $38.00 3 $140.83 Inferior 25% $35.21 7 $118.63 Inferior 15% $17.80 2 $117.51 Inferior 15% $17.63 4 $109.48 Inferior 20% $21.90 100% $130.53

Each of the comparable sales is weighted based on the adjustments applied to each of the sales. Bracketing the Subject Property All of the comparable sales are considered to be inferior to the subject property with the highest price per square foot at $152.00 per square foot. A comparison of traditional office sales to school building sales indicated a premium for schools of around 47% based on the difference between the means of each group. However, the mean within the school grouping is believed to be skewed since several of the sales are questionable when considering the terms of the transactions. Although a premium should be recognized in the subject property, a difference of approximately 30% is reasonable considering the subject’s age, position in the market, and overall physical attributes.

Based on this analysis, the opinion of the “As Is” market value for the subject property, as of the effective date of the appraisal of April 18, 2017, and subject to exposure and marketing time as previously summarized, is based on approximately $170.00 per square foot and is equivalent to $31,695,650, rounded to:

$31,700,000.00 Thirty One Million Seven Hundred Thousand Dollars $170.00 per Square Foot (rounded)

An adjustment grid is presented on the following page.

51 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

0% 0% 0% 0% 0% 10.50 0.00% 89,350 $118.63 $118.63 $118.63 $118.63 $118.63 $118.63 Inferior Inferior Superior $10,600,000 $118.63 SALE #7 2550 Interstate2550 Dr. Susquehanna Twp. More than Leased Fee at Market Market Arm's Length Arm's Mar-16 0.20 5.12 Similar Similar 0% 0% 0% 0% 0% 9.22 0.00% 61,200 $109.48 $109.48 $109.48 $109.48 $109.48 $109.48 Inferior Inferior Superior $6,700,000 $109.48 SALE #4 Swatara Twp. 3801 Paxton3801 St. More than Leased Fee at Market

Market Arm's Length Arm's Nov-16 0.15 6.56 Similar Similar 0% 0% 0% 0% 0% 5.60 0.00% 60,000 $140.83 $140.83 $140.83 $140.83 $140.83 $140.83 Inferior Inferior Superior $8,450,000 $140.83 SALE #3 4999 Louise4999 Dr. Lower Allen Twp. More than Leased Fee at Market

Market Arm's Length Arm's Dec-16 0.25 4.07 Similar Similar 0% 0% 0% 0% 0% 4.09 0.00% 57,015 $117.51 $117.51 $117.51 $117.51 $117.51 $117.51 Inferior Inferior Superior $6,700,000 $117.51 SALE #2 E. Pennsboro Twp. 275 Grandview275 Ave. More than Leased Fee at Market

Market Arm's Length Arm's Mar-17 0.32 3.12 Similar Similar 0% 0% 0% 0% 0% 4.44 0.00% 91,447 $152.00 $152.00 $152.00 $152.00 $152.00 $152.00 Inferior Inferior Superior $13,900,000

$152.00 SALE #1 214 Senate Ave. Pennsboro Twp. ADJUSTMENTS TO IMPROVED SALES ADJUSTMENTS TO IMPROVED More than Leased Fee at Market Market Arm's Length Arm's Mar-17 0.47 2.11 Similar Similar 8.04 0.533 #DIV/0! 186,445 SUBJECT Fee Simple PROPERTY As of Apr-17 Arm's Length Downtown Center ELEMENT OF COMPARISON SALE PRICE SALE BUILDING SIZE (square feet) (square SIZE BUILDING SALE PRICE/SF SALE LAND SIZE (acres) SIZE LAND PROPERTY RIGHTS CONVEYED ADJUSTMENT ADJUSTED SALE PRICE/UNIT FINANCING ADJUSTMENT ADJUSTED SALE PRICE/UNIT CONDITIONS OF SALE ADJUSTMENT ADJUSTED SALE PRICE/UNIT BUYER EXPENDITURES ADJUSTMENT ADJUSTED SALE PRICE/UNIT MARKET CONDITIONS ADJUSTMENT ADJUSTED SALE PRICE/UNIT LOCATION ADJUSTMENT PHYSICAL CHARACTERISTICS ADJUSTMENT FLOOR AREA RATIO (FAR) ADJUSTMENT ECONOMIC CHARACTERISTICS ADJUSTMENT USE/ZONING ADJUSTMENT FINAL ADJUSTED SALE PRICE/ACRE

52 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

RECONCILIATION and VALUE CONCLUSION

Estimate Value SUMMARY "AS IS" of Value per Sq. Ft. Income Capitalization Approach (Direct Capitalization) $30,100,000 $161.44 Cost Approach Not Developed Sales Comparison Approach $31,700,000 $170.02

Reconciliation involves the weighting of alternative value indications based on the judged reliability and applicability of each approach to value to arrive at a final value conclusion. Reconciliation is required because different value indications result from the use of multiple approaches and within the application of a single approach.

The income capitalization approach was developed by applying direct capitalization. Although the property is owner-occupied, it has the potential to be leased. Generally comparable leases were reviewed and operating expenses were applied in the analysis after a review of comparable properties, the subject’s operating statements, and conversations with other market participants. The overall capitalization rate was reconciled after review of market sales, published sources, and the calculations of the band of investment and the debt coverage ratio. The income capitalization approach is supportable of market value.

The sales comparison approach was developed. This approach is best suited for the estimate of the fee simple market value of owner-occupied or non-income producing properties. There were recent sales of generally similar Class A and B office properties located within the general market area of the subject. This approach is most supportable of market value.

Therefore, the concluded reconciled opinion of market value of the “AS IS” fee simple interest in the subject property as of April 18, 2017, subject to the marketing and exposure times previously presented, is:

$31,700,000.00 Thirty One Million Seven Hundred Thousand Dollars $170.00 per square foot (rounded)

53 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

CERTIFICATION I certify that, to the best of my knowledge and belief, 1. The statements of fact contained in this report are true and correct. 2. The reported analysis, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions and conclusions. 3. I have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved. 4. I have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. 5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. My engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice and in accordance with the appraisal-related mandates within Title XI of the Federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). 10. I have made a personal viewing of the property that is the subject of this report. 11. No one provided significant real property appraisal assistance to the person(s) signing this certification. 12. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 13. As of the date of this report, Eric M. Lehmayer, MAI is a designated member of the Appraisal Institute and has completed the requirements of the continuing education program of the Appraisal Institute.

Eric M. Lehmayer, MAI PA Certified General Real Estate Appraiser #GA-001267-L Expires June 30, 2017

54 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

LICENSE CERTIFICATES

55 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

ASSUMPTIONS AND LIMITING CONDITIONS

In conducting this appraisal, we have assumed, except as otherwise noted in our report, as follows:

1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgements or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes.

Our appraisal report is subject to the following limiting conditions, except as otherwise noted in our report.

1. An appraisal is inherently subjective and represents an opinion as to the value of the property appraised. 2. The conclusions stated in the appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, the right is reserved to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. The appraiser is not required to give testimony or to be in attendance in court or any government or other hearing with reference to the property without written contractual arrangements having been made relative to such additional employment. 6. I have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct. 7. No opinion is expressed as to the value of subsurface oil gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal.

56 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters, geologic considerations, such as soils and seismic stability, and civil, mechanical, electrical, structural and other engineering and environmental matters. 9. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. This appraisal report shall be considered only in its entirety. No part of this appraisal report shall be utilized separately or out of context. 10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the appraisers. 11. Information, estimates and opinions contained in this report, obtained from sources outside of the office of the undersigned, are assumed to be reliable and have not been independently verified. 12. Any income and expense estimates contained in this appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13. No assurance is provided that the methodology and/or results of the appraisal will not be successfully challenged by the Internal Revenue Service. In particular, the methodology for appraising certain types of properties, including without limitation, government subsidized housing, which has been the subject of debate. 14. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 15. No consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 16. The current purchasing power of the dollar is the basis for the value stated in our appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 17. The value found herein is subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 18. The analyses contained in this report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material.

57 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

19. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of this property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. In as much as compliance matches each owner's financial ability with the cost to cure the non-conforming physical characteristics of a property, we cannot comment on compliance to ADA. Given that compliance can change with each owner's financial ability to cure non-accessibility, the value of the subject does not consider possible non-compliance. Specific study of both the owner's financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 20. This appraisal report has been prepared for the exclusive benefit of the client to whom this report is addressed. It may not be used or relied upon by any other party. All parties who use or rely upon any information in this report without our written consent do so at their own risk. 21. No studies have been provided to us indicating the presence or absence of hazardous materials on the site or in the improvements, and our valuation is predicated upon the property being free and clear of any environment hazards. 22. We have not been provided with any evidence or documentation as to the presence or location of any flood plain areas and/or wetlands. Wetlands generally include swamps, marshes, bogs, and similar areas. We are not qualified to detect such areas. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non-existent or minimal.

PRIVACY NOTICE What information we collect: We collect and use information we believe is necessary to provide you with our appraisal services. We may collect and maintain several types of personal information needed for this purpose, such as:

 · Information we receive from you on applications, letters of engagement, forms found on our website, correspondence, or conversations, including, but not limited to, your name, address, phone number, social security number, date of birth, bank records, salary information, the income and expenses associated with the subject property, the sale price of the subject property, and the details of any financing on the subject property;

 · Information about your transactions with us, our affiliates or others, including, but not limited to, payments history, parties to transactions and other financial information;

 · Information we receive from a consumer reporting agency such as a credit history. · What information we disclose: Except as described below, we do not share nonpublic personal information. We will not rent, sell, trade, or otherwise release or disclose any personal information about you. We will not disclose consumer information to any third party for use in telemarketing, direct mail or other marketing purposes.

· We limit the sharing of nonpublic personal information about you with financial or non-financial companies, including companies affiliated with us, and other third parties to the following:

(i) We may share information when it is necessary or required to process a loan or other financial transaction; 58 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

(ii) We may share information when it is required or permitted by law, such as to protect you against fraud or in response to a subpoena;

(iii) We may disclose some or all of the information described above with:

(a) Companies that perform marketing services on our behalf; or

(b) Other financial institutions for the limited purpose of jointly offering, endorsing or sponsoring a financial product or service. CONFIDENTIALITY AND SECURITY POLICY · We consider privacy to be fundamental to our relationship with clients. We are committed to maintaining the confidentiality, integrity and security of clients' personal information. Internal policies have been developed to protect this confidentiality, while allowing client needs to be served.

· We restrict access to personal information to authorized individuals who need to know this information to provide service and products for you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to protect your nonpublic personal information. We do not disclose this information about you or any former consumers or customers to anyone, except as permitted by law. The law permits us to share this information with our affiliates. The law also permits us to share this information with companies that perform marketing services for us, or other financial institutions that have joint marketing agreements with us. · When we share nonpublic information referred to above, the information is made available for limited purposes and under controlled circumstances. We require third parties to comply with our standards for security and confidentiality. We do not permit use of consumer/customer information for any other purpose nor do we permit third parties to rent, sell, trade or otherwise release or disclose information to any other party.

59 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Eric M. Lehmayer, MAI, MRICS, LEED AP Appraisal Qualifications Current Position with High Associates Ltd. Director of Appraisal Services Certified General Appraiser

Professional Designations Member of the Appraisal Institute, MAI Member #12399 LEED AP, USGBC (United States Green Building Council)

Certifications and Licenses Certified General Appraiser, Commonwealth of Pennsylvania (1994) #GA-001267-L Real Estate Associate Broker, Commonwealth of Pennsylvania (1989) #AB-048027-L Real Estate Instructor, Commonwealth of Pennsylvania, #RI-004334

Work Experience 2007 - Present - Director of Appraisal Services, High Associates Ltd., Lancaster, PA 2002 - 2007 - Appraisal Services Manager, High Associates, Ltd., Lancaster, PA 1998 - 2002 - Real Estate Financial Analyst, High Associates, Ltd., Lancaster, PA 1992 - 1998 - Certified General Appraiser, Weinstein Realty Advisors; York, PA 1985 - 1992 - Associate Broker (Commercial/Industrial) Coldwell-Banker, York, PA

Education The American University-Washington, D.C.-1975 - Bachelor of Science-Business Administration

Recent Real Estate Courses and Seminars Appraisal Institute National USPAP Update, March 2016 Case Studies in Appraising Green Residential Buildings, November 2015 Business Practices and Ethics, February 2015 Case Studies in Appraising Green Commercial Buildings, October 2014 7-Hour National USPAP Update, January 2014 Residential & Commercial Valuation of Solar, November 2013 Green Buildings: Principles and Concepts, November 2012 Review of PA Appraisers Certification Act, September 2012 Oil and Gas Valuation, November 2011 Instructor Leadership and Development Conference, August 2010 Hotel Appraisal by Stephen Rushmore, MAI, July 2010 Appraising Historic Preservation Easements, January 2009 The Appraiser as an Expert Witness: Preparation and Testimony, October 2008 Condemnation Appraising: Basic Principles and Applications, May 2008 Yellow Book-Uniform Appraisal Standards for Federal Land Acquisitions, Jan. 2008

60 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Teaching Activities Associate Instructor for Appraisal Institute, "Basic Appraisal Principals" and "Basic Appraisal Procedures" and numerous seminars Instructor, "Real Estate Fundamentals" and "Real Estate Practice", and various seminars

Testimony as Expert Witness Pennsylvania Court of Common Pleas – York County, Lancaster County, Schuylkill County Board of Assessment Appeals – Counties of: Adams, Chester, Cumberland, Dauphin, Lancaster, Luzerne, York Board of View, Lancaster County

Community Activities Spring Garden Township, elected President Commissioner (December 2017) Spring Garden Township, elected Commissioner, Ward 2, (2014-2017) YAUFR (York Area United Fire & Rescue), Representative Secretary/Treasurer, 2017 YAUFR (York Area United Fire & Rescue), Alt. Representative (2014-2015-2016) Spring Garden Township, Chairman - Zoning Hearing Board, (2005-2013) Spring Garden Township, Co-Chair - Zoning Hearing Board, (2003-2004) Spring Garden Township, Zoning Hearing Board Member, (1998-2003) Spring Garden Township, Co-Chairman-Planning Commission, (1995-1998)

Professional Activities Appointed by Gov. Tom Wolf and confirmed by the PA State Senate to the State Board of Certified Real Estate Appraisers (2016-2020) Appointed by Gov. Tom Corbett and confirmed by the PA State Senate to the State Board of Certified Real Estate Appraisers (2011-2015), Elected Vice Chair for 2015 Board of Directors of Central PA Chapter of the Appraisal Institute (2014-2015) Government Relations Chair, Central PA Chapter of the Appraisal Institute (2012) Regional Education Liaison Region VI-Appraisal Institute (2009-2012) President-Central Pennsylvania Chapter of the Appraisal Institute, (2007 and 2008) Member, Green Building Association of Central Pennsylvania Elected Professional Member, MRICS - Royal Institution of Chartered Surveyors Member of Appraisal Council of Lancaster County Association of Realtors® Member of C & I Council of Lancaster County Association of Realtors® Chairperson of Public Relations, Central PA Chapter of the Appraisal Institute, (2003) Member, Association of Realtors® (LCAR, PAR, NAR) Lancaster County Association of Realtors®, Commercial/Industrial Council York County Board of Realtors®, Education Committee (1991) York County Board of Realtors®, Commercial/Industrial Committee, (1987-1991)

61 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

Partial List of Clients, Markets, and Property Categories

Lenders Adams County National Bank National Penn Bank Bancorp Bank Northwest Savings Bank Cecil Bank Orrstown Bank Cole Taylor Bank Paragon Commercial Bank (Charlotte, NC) Dollar Bank PeoplesBank Ephrata National Bank PNC F&M Trust Sovereign Bank First National Bank Susquehanna Bancshares Fulton Financial Corporation Union National Financial Corporation Graystone Bank Wells Fargo/Wachovia Corporation Integrity Bank Wilmington Trust Jonestown Bank and Trust Company WSFS Bank M&T Bank York Traditions Bank Metro Bank

Markets Covered (Italicized are Primary) Adams County Lancaster County Bedford County Lebanon County Berks County Lehigh County Bucks County Lycoming County Chester County Monroe County Columbia County Montgomery County Cumberland County Northampton County Dauphin County Perry County Delaware County Schuylkill County Franklin County York County Lackawanna County

Companies - Government Agencies - Economic Development Barley Snyder LLC McNees Wallace & Nurick LLC Brubacher Excavating Company Mette Evans & Woodside Charter Homes and Neighborhoods Michael Baker, Inc. City of Lancaster Millersville University Civil War Trust Nestle Waters North America Inc. Comcast New Holland Auto Group Conestoga Bus Company Nissin Foods Conestoga Wood Specialties Novink Cunningham & Chernicoff, P.C. Palmyra School District East Cocalico Township Pequea Valley School District Elizabethtown College PFG Capital Corporation EnergyWorks P.H. Glatfelter Company Faulkner BMW Pinnacle Health Franklin & Marshall College Roberts Oxygen Gastroenterology Associates R&T Mechanical General Services Administration Schott N.A. Giambalvo Motor Company Shank's Extracts Goods Furniture Simon Lever LLC Graham Packaging Sonic Hartman Underhill & Brubaker LLP S.O.C.O. Enterprises Hearthstone Manor South Eastern Economic Development Co. of PA Heil Trailer International Thaddeus Stevens College of Technology The Heritage Center of Lancaster County UGI Keefer Wood Allen & Rahal United Methodist Church Kemper Equipment, Inc. United Way of Lancaster County K&L Gates LLP U.S. Small Business Administration Lancaster General Hospital Willow Valley Associates Leonhardt Manufacturing Windstream Corporation Manheim Area Economic Development Corp World Gourmet Martin Limestone YMCA of Lancaster 62 326 MARKET STREET, CITY OF HARRISBURG, DAUPHIN COUNTY, PA

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