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Public Finance Authority

Public Finance Authority

Supplement dated November 14, 2017 to Preliminary Limited Offering Memorandum dated October 26, 2017

$14,660,000* $670,000* PUBLIC AUTHORITY AUTHORITY EDUCATION BONDS TAXABLE EDUCATION REVENUE BONDS (UWHARRIE CHARTER ACADEMY PROJECT) (UWHARRIE CHARTER ACADEMY PROJECT) SERIES 2017A SERIES 2017B

This Supplement dated November 14, 2017 to Preliminary Limited Offering Memorandum dated October 26, 2017 (this "Supplement") supplements the Preliminary Limited Offering Memorandum dated October 26, 2017 (the "Original PLOM") relating to the captioned bonds to reflect:

• modifications to the Indenture and Agreement that:

 create a repair and replacement fund in the Indenture and require the Borrower to fund such repair and replacement fund monthly based on a capital needs assessment to be conducted once every five years commencing no later than June 30, 2022;

 modify the additional Indebtedness incurrence tests applicable to the Borrower for the incurrence of -Term Parity Indebtedness, -Term Indebtedness, Non-Recourse Indebtedness, and Subordinated Indebtedness;

 permit the Trustee or the Beneficial Owners of not less than a majority of the Bonds then Outstanding to reject an Independent Consultant selected by the Borrower in certain circumstances as described below; and

 require monthly reporting on construction progress in connection with the Construction Project;

• updated and additional information regarding the Charter Modification, the application for which was submitted on November 6, 2017, and on which the Borrower has been informed that the Charter School will make its recommendation in December 2017 and the Board of Education will render its decision thereon in January 2018,

• newly available 2017 SAT composite data by school district, for public school students in the State of North Carolina, and for public school students in the United States, and

• an updated anticipated date of issuance of the Series 2017 Bonds of November 22, 2017.

Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Original PLOM.

Repair and Replacement Fund; Capital Needs Assessment

The Indenture as described in the Original PLOM is modified to create a Repair and Replacement Fund from which the Trustee may disburse funds for the repair and/or replacement of capital items or to fund capital improvements to the New Facility:

The Trustee shall deposit into the Repair and Replacement Fund as and when received (i) all moneys delivered to it for deposit therein as provided by Section 5.01(c) of the , and (ii) all other moneys received by the Trustee when accompanied by directions from an

* Preliminary, subject to change

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Authorized Representative of the Borrower that such moneys are to be paid into the Repair and Replacement Fund.

Amounts on deposit in the Repair and Replacement Fund may be disbursed by the Trustee from time to time to the Borrower upon receipt of a requisition therefor to pay for the repair and/or replacement of capital items or to fund capital improvements to the New Facility in the form provided in Exhibit E of the Loan Agreement signed by an Authorized Representative of the Borrower.

The Loan Agreement as described in the Original PLOM is modified to require the Borrower to fund the Repair and Replacement Fund monthly based on a Capital Needs Assessment to be conducted once every five years:

The Borrower shall cause an Independent Consultant to complete a capital needs assessment of the Borrower projecting the Borrower's capital needs for the New Facility and the total cost thereof for the five year period commencing on the immediately following July 1 (each a "Capital Needs Assessment") no later than June 30, 2022, and every fifth anniversary thereafter as long as the Bonds are Outstanding. The Borrower shall pay or cause to be paid to the Trustee on the fifteenth day of each month, commencing July 15, 2022, for deposit into the Repair and Replacement Fund, the Repair and Replacement Fund Contribution or the Modified Repair and Replacement Fund Contribution, as applicable (each as defined below).

The total cost set forth in a Capital Needs Assessment less the amount then on deposit in the Repair and Replacement Fund, divided by 60, shall be the "Repair and Replacement Fund Contribution" for such five-year period; provided, however, that in the event (i) the Borrower pays all or a portion of the cost of a capital need projected in the Capital Needs Assessment from a source of funds other than the Repair and Replacement Fund, the Repair and Replacement Fund Contribution for the remainder of the applicable five year period shall be decreased by the amount of such projected cost that is paid from such other source of funds divided by the number of Repair and Replacement Fund Contribution payments remaining in the applicable five year period; or (ii) a draw is made upon the Repair and Replacement Fund in excess of the cost for a capital need projected in the Capital Needs Assessment or in any amount for a capital need not projected in the Capital Needs Assessment, the Repair and Replacement Fund Contribution for the subsequent 12-month period shall be increased by the excess amount of such draw or the total amount of such unanticipated draw, as applicable, divided by 12 (the Repair and Replacement Fund Contribution as modified by either clause (i) or clause (ii), the "Modified Repair and Replacement Fund Contribution").

As a result of the foregoing changes to the Indenture and the Loan Agreement, the risk related to the absence of a repair and replacement fund described in the Original PLOM under the heading "BONDHOLDERS' RISKS – Risks of – Absence of Repair and Replacement Fund is no longer applicable and such heading and the text included therein are hereby deleted in their entirety.

Incurrence of Additional Long-Term Parity Indebtedness, Short-Term Indebtedness, Non-Recourse Indebtedness, and Subordinated Indebtedness

The Loan Agreement as described in the Original PLOM is modified so that the Borrower must meet the historical pro forma or historical and projected Service Coverage Ratio requirements as set forth below to incur additional Long-Term Indebtedness secured on a parity basis with the Bonds:

The Borrower may incur additional Long-Term Indebtedness secured on a parity basis by the on the Premises and the in the Pledged (subject to the terms of the USDA Documents) if any of the following tests is met:

(i) (A) Historical Coverage on Outstanding Debt. Delivery to the Trustee of a certificate of an Authorized Representative of the Borrower stating that, for the Borrower's most recently

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completed Fiscal Year immediately preceding the issuance of the Long-Term Indebtedness, the Borrower achieved a Debt Service Coverage Ratio equal to at least 1.20 to 1.0; and

(B) Projected Coverage for Long-Term Indebtedness. Delivery to the Trustee of a report of an Independent Consultant selected by the Borrower stating that the Debt Service Coverage Ratio for each of the first two consecutive Fiscal Years following the incurrence of such Long-Term Indebtedness or, if such Long-Term Indebtedness is being issued to finance improvements, equipment or new facilities, the first two consecutive Fiscal Years after such improvements, equipment or new facilities are placed in service, is projected to be at least 1.20 to 1 (taking into the proposed additional Long-Term Indebtedness and any Long-Term Indebtedness to be refinanced thereby and provided that, such projected Net Income Available for Debt Service shall be adjusted to provide for any Eliminated and for projected revenues and expenses anticipated as the result of any real or personal property acquired, constructed, or completed with the proceeds of any such Long-Term Indebtedness); or

(ii) Alternate Coverage for Additional Debt. In lieu of the requirements described above, the Borrower may deliver to the Trustee a certificate of an Authorized Representative of the Borrower stating that, based on the audited results of the operations for the most recently completed Fiscal Year, the Net Income Available for Debt Service (taking into account Eliminated Expenses) equals at least 1.20 times Maximum Annual Debt Service for all parity Long-Term Indebtedness then Outstanding plus the proposed additional Long-Term Indebtedness immediately following the completion of the related project being financed.

The Loan Agreement as described in the Original PLOM is modified to limit the aggregate Short-Term Indebtedness, Non-Recourse Indebtedness and Subordinated Indebtedness the Borrower may have outstanding at any time to the greater of $500,000 or 5% of the Borrower's operating revenues for the last preceding Fiscal Year for which audited financial statements have been prepared:

The Borrower may incur Short-Term Indebtedness, Non-Recourse Indebtedness, and Subordinated Indebtedness; provided, that in no event shall the aggregate principal amount of all Short-Term Indebtedness, Non-Recourse Indebtedness and Subordinated Indebtedness outstanding at any time exceed the greater of $500,000 or 5% of the Borrower's operating revenues for the last preceding Fiscal Year for which audited financial statements have been prepared.

Right to Reject Independent Consultant

The Loan Agreement as described in the Original PLOM is modified to provide the right for the Trustee or the Beneficial Owners of not less than a majority of the Bonds then Outstanding to reject an Independent Consultant selected by the Borrower within 30 days of such selection by the Borrower in connection with the Debt Service Coverage Ratio and Days on Hand covenants and the Long-Term Indebtedness incurrence test:

Upon the selection of an Independent Consultant as required by Sections 8.05(f), 8.05(g), or 8.13(b) of this Loan Agreement, the Borrower shall cause a notice of the selection of such Independent Consultant, in the form attached hereto as Exhibit C (the "Consultant Notice"), including the name of such Independent Consultant and a brief description of such Independent Consultant to be filed with EMMA. The Consultant Notice must also state each Beneficial Owner of the Bonds then Outstanding shall be deemed to have consented to the selection of such Independent Consultant unless such Beneficial Owner submits to the Trustee a written objection to the Independent Consultant in a manner acceptable to the Trustee (an "Objection Notice"), an example of which is attached hereto as Exhibit I to Exhibit C, within thirty days of the date the Consultant Notice is posted to EMMA (the "Objection Period"). If the Beneficial Owners of at least a majority in aggregate principal amount of the then Outstanding provide Objection Notices to the Trustee within the Objection Period, then the Borrower shall select an alternate Independent Consultant and post a new Consultant Notice with respect to the newly selected Independent Consultant.

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Construction Project Monthly Reporting

The Loan Agreement as described in the Original PLOM is modified to require monthly reporting in connection with the Construction Project:

The Borrower shall file with the Municipal Securities Rulemaking Board's Electronic Municipal Access ("EMMA") on the last calendar day of each month commencing with the report for December 2017 through and including the month in which the Construction Project is completed, a report from the Construction Administrator indicating the percentage of the Construction Project completed to such date, an updated for the Construction Project, the then-contemplated timeline for completion of the Construction Project, and a description of any changes in anticipated timing or cost from the construction report for the prior month.

Redlined versions of the Indenture and the Loan Agreement as compared to the Indenture and Loan Agreement included in Appendix D to the Original PLOM are included in Appendix D hereto.

Charter Modification

The Original PLOM is revised to reflect that the Borrower submitted its application for the Charter Modification on November 6, 2017, and has been informed that the Charter School Advisory Board ("CSAB") is expected to make its recommendation thereon in December 2017 and the North Carolina State Board of Education ("SBE") is expected to render its decision thereon in January 2018.

In addition, on November 13, 2017, the Borrower received a letter from the Office of Charter Schools ("OCS"), a subgroup within the SBE's Department of Public Instruction, indicating that OCS, while not in a decision making role with respect to the Charter Modification, anticipates that CSAB will recommend approval of the Charter Modification and anticipates that SBE will approve the Charter Modification.

Academic Performance Information

Appendix A to the Original PLOM is modified to include the following table, which shows 2017 SAT composite data by school district, for public school students in the State of North Carolina, and for public school students in the United States:

Total ERW Math Uwharrie Charter Academy 1070 544 527 Asheboro City Schools 1013 512 501 Randolph County Schools 1060 534 526 Chatham County Schools 1063 539 524 Guilford County Schools 1056 532 524 Montgomery County Schools 960 487 473 State of North Carolina (Public School) 1074 542 532 United States (Public School) 1044 527 517

Closing Date

The Original PLOM is revised to reflect that the anticipated date of issuance of the Series 2017 Bonds is November 22, 2017.

The information contained in this Supplement should be read in conjunction with the information contained in the Original PLOM, except for the information described herein, which supersedes such information contained in the Original PLOM.

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APPENDIX D

SUBSTANTIALLY FINAL FORMS OF THE INDENTURE AND LOAN AGREEMENT

[THIS PAGE INTENTIONALLY LEFT BLANK] INDENTURE OF TRUST

by and between

PUBLIC FINANCE AUTHORITY, as Issuer

and

U.S. NATIONAL ASSOCIATION, as Trustee

relating to

$[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

and

$[PRINCIPALB] Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Dated as of November 1, 2017

4836-5936-5195.175195.21 Table of Contents

Page

ARTICLE I DEFINITIONS; INDENTURE TO CONSTITUTE Section 1.01. Definitions 5 Section 1.02. Indenture To Constitute Contract 1817

ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF BONDS Section 2.01. Authorized Amount of Bonds 18 Section 2.02. All Bonds Equally and Ratably Secured by Trust Estate; Special Limited Obligation of Bonds and Pledges Securing the Same 18 Section 2.03. Authorization of Series 2017 Bonds; Payment of Bonds 19 Section 2.04. Execution of Bonds 20 Section 2.05. Registration, Transfer and Exchange of Bonds; Persons Treated As Registered Owners 21 Section 2.06. Lost, Stolen, Destroyed and Mutilated Bonds 23 Section 2.07. Delivery of Series 2017 Bonds 23 Section 2.08. Authentication Certificate 24 Section 2.09. Cancellation and Destruction of Bonds 24 Section 2.10. Temporary Bonds 24 Section 2.11. Additional Bonds 25 Section 2.12. Book-Entry System 27

ARTICLE III REVENUES AND FUNDS Section 3.01. Pledge of Trust Estate 29 Section 3.02. Establishment of Funds; Closing Deposits and Disbursements 29 Section 3.03. Payments Into the Bond Fund 30 Section 3.04. Use of Moneys in the Bond Fund 30 Section 3.05. Custody of the Bond Fund 30 Section 3.06. Payments Into the Debt Service Reserve Fund 31 Section 3.07. Use of Moneys in the Debt Service Reserve Fund 31 Section 3.08. Custody of the Debt Service Reserve Fund 32 Section 3.09. Payments Into and Use of Moneys in the Project Fund; Disbursements 32 Section 3.10. Completion of the Project 33 Section 3.11. Custody of the Project Fund 33 Section 3.12. Payments Into and Use of Moneys in the Cost of Issuance Fund 33 Section 3.13. Termination of Cost of Issuance Fund 33 Section 3.14. Custody of the Cost of Issuance Fund 34 Section 3.15. [Reserved]Repair and Replacement Fund 34 Section 3.16. Nonpresentment of Bonds 34 Section 3.17. Moneys To Be Held in Trust 3435 Section 3.18. and Condemnation Proceeds 3435

4836-5936-5195.175195.21 Table of Contents (continued) Page

Section 3.19. Repayment to the Borrower From the Funds 35 Section 3.20. Rebate Fund 35 Section 3.21. Custody of the Rebate Fund 3536

ARTICLE IV COVENANTS OF THE ISSUER Section 4.01. Performance of Covenants 3536 Section 4.02. Instruments of Further Assurance 3637 Section 4.03. Payment of Principal, Premium, if Any, and Interest 3637 Section 4.04. Unrelated Bond Issues 37 Section 4.05. Rights Under the Loan Agreement 37 Section 4.06. Performance of Obligations 3738 Section 4.07. Status of the Interest on the Bonds 3839

ARTICLE V REDEMPTION OF BONDS PRIOR TO Section 5.01. Optional Redemption of Bonds 39 Section 5.02. Redemption of Bonds Upon Occurrence of Certain Events 39 Section 5.03. Mandatory Sinking Fund Redemption 3940 Section 5.04. Mandatory Redemption Upon Determination of Taxability 4142 Section 5.05. Method of Selecting Bonds 4142 Section 5.06. Notices of Redemption 4142 Section 5.07. Bonds Due and Payable on Redemption Date; Interest Ceases To Accrue 4243 Section 5.08. Cancellation 43 Section 5.09. Partial Redemption of Bonds 43 Section 5.10. No Partial Optional Redemption in Event of 43 Section 5.11. Purchase in Lieu of Redemption 43

ARTICLE VI Section 6.01. 4344

ARTICLE VII DISCHARGE OF INDENTURE Section 7.01. Discharge of This Indenture 4445 Section 7.02. Survival 46

ARTICLE VIII DEFAULTS AND REMEDIES Section 8.01. Events of Default 47 Section 8.02. Remedies for Events of Default Under This Indenture 4748

ii 4836-5936-5195.175195.21 Table of Contents (continued) Page

Section 8.03. Direction of Remedies 49 Section 8.04. Rights and Remedies of Beneficial Owners 4950 Section 8.05. Application of Moneys 50 Section 8.06. Trustee May Enforce Rights Without Bonds 5152 Section 8.07. Proofs of Claim 5152 Section 8.08. Delay or Omission No Waiver 5253 Section 8.09. No Waiver of One Default To Affect Another 5253 Section 8.10. Discontinuance of Proceedings on Default; of Parties Restored 53 Section 8.11. Waivers of Events of Default 53 Section 8.12. No Obligation To Enforce Assigned Rights 5354 Section 8.13. No Impairment of Ability To Enforce Issuer’s Unassigned Rights 5354

ARTICLE IX CONCERNING THE TRUSTEE Section 9.01. Duties of the Trustee 54 Section 9.02. Fees and Expenses of Trustee 5657 Section 9.03. Resignation or Replacement of Trustee 57 Section 9.04. Conversion, Consolidation or Merger of Trustee 58

ARTICLE X SUPPLEMENTAL INDENTURES AND AMENDMENTS OF THE LOAN AGREEMENT AND THE DEED OF TRUST Section 10.01. Supplemental Indentures Not Requiring Consent of Registered Owners 58 Section 10.02. Supplemental Indentures Requiring Consent of Registered Owners 59 Section 10.03. Execution of Supplemental Indentures 5960 Section 10.04. Amendments, etc., of the Loan Agreement Not Requiring Consent of Registered Owners 60 Section 10.05. Amendments, etc., of the Loan Agreement Requiring Consent of Registered Owners 60 Section 10.06. Execution of Amended Loan Agreement 6061 Section 10.07. Amendments, etc., of the Deed(s) of Trust Not Requiring Consent of Registered Owners 61 Section 10.08. Amendments, etc., of the Deed(s) of Trust Requiring Consent of Registered Owners 61 Section 10.09. Execution of Amended Deed of Trust 6162 Section 10.10. Consent of Original Purchaser, Underwriter or Remarketing Agent 62

ARTICLE XI MISCELLANEOUS Section 11.01. Evidence of Signature of Registered Owners and Ownership of Bonds 62 Section 11.02. Parties Interested Herein 63

iii 4836-5936-5195.175195.21 Table of Contents (continued) Page

Section 11.03. Titles, Headings, Etc 63 Section 11.04. Severability 63 Section 11.05. Third-Party Beneficiaries 63 Section 11.06. Governing Law 63 Section 11.07. Execution in Counterparts 6364 Section 11.08. Non-Liability of the Issuer 64 Section 11.09. Notices 64 Section 11.10. Payments Due on Holidays 65 Section 11.11. No Personal Liability of the Indemnified Parties 65 Section 11.12. Bonds Owned by the Issuer or the Borrower 65 Section 11.13. Undertaking To Provide Ongoing Disclosure 66 Section 11.14. Right To Inspect 66 Section 11.15. Incorporation of Terms of Loan Agreement 66 Section 11.16. E-Verify 66 Section 11.17. Iran Certification: 66 Section 11.18. No Obligation of the State of North Carolina 67 EXHIBIT A FORM OF SERIES 2017A BOND EXHIBIT B FORM OF SERIES 2017B BOND EXHIBIT C-1 FORM OF LETTER (INVESTOR) EXHIBIT C-2 FORM OF INVESTOR LETTER (ADVISOR) EXHIBIT D CLOSING MEMORANDUM

iv 4836-5936-5195.175195.21 INDENTURE OF TRUST

THIS INDENTURE OF TRUST, dated as of November 1, 2017 (as the same may be amended and supplemented, including by Supplemental Indentures, the “Indenture”), is by and between the PUBLIC FINANCE AUTHORITY, a joint powers commission and a unit of and a body corporate and politic under the laws of the State of Wisconsin (together with its successors and assigns, the “Issuer”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association as trustee (the “Trustee”), being duly organized and existing under the laws of the United States of America with authority to act as trustee and accept trusts of the character set out herein.

W I T N E S S E T H :

WHEREAS, the Issuer was organized as a commission under and pursuant to Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as amended (the “Act”), commonly known as the “Joint Exercise of Powers Law,” and exists by virtue of that certain Joint Exercise of Powers Agreement Relating to the Public Finance Authority dated June 30, 2010, as amended by that certain Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated September 28, 2010, by and among Adams County, Wisconsin; Bayfield County, Wisconsin; Marathon County, Wisconsin; Waupaca County, Wisconsin; and the City of Lancaster, Wisconsin, as such agreement may be amended from time to time (the “Joint Exercise Agreement”); and

WHEREAS, the Issuer is authorized and empowered under the Act and by the Joint Exercise Agreement to, among other things, issue bonds, notes or other evidences of indebtedness in connection with, and to make to assist in the financing and of, “projects” (as defined in the Act) located inside and outside of the State (as defined herein); and

WHEREAS, Uwharrie Green School, Inc., a North Carolina nonprofit (the “Borrower”), has applied for the financial assistance of the Issuer in (a) financing and/or refinancing the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen , Asheboro, North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” and, together with the Existing Facility, the “Facilities”); (b) funding any required reserve funds for the Series 2017 Bonds; (c) funding capitalized interest on the Series 2017 Bonds; (d) financing and/or refinancing loans of or to the Borrower; and (e) paying all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the “Project”); and

WHEREAS, the Facilities are to be located within the territorial limits of the County of Randolph, State of North Carolina (the “Project Jurisdiction”), and the Issuer, based on representations of the Borrower, but without independent investigation, has found and determined that the financing and refinancing of the Facilities will promote significant economic, cultural and community development opportunities, including the creation or retention of

4836-5936-5195.175195.21 employment, the stimulation of economic activity and the promotion of improvements in the health, safety and of persons in the Project Jurisdiction; and

WHEREAS, the Issuer has determined to issue its bonds to finance and refinance the Facilities and has determined to enter into this Indenture and such supplements to this Indenture as may be required to secure all such bonds on a parity basis and to provide a reserve for the payment of debt service on such bonds; and

WHEREAS, the Issuer has found and determined: (a) that the Project is a qualified project under the Act; (b) that the Borrower is a qualified participant under the Act; and (c) that the financing and refinancing of the Project will, based on representations of the Borrower, but without independent investigation, serve a public purpose and will in all respects conform to the provisions and requirements of the Act; and

WHEREAS, the Borrower requested that the Issuer issue the Series 2017 Bonds and loan the proceeds thereof to the Borrower under that certain Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”) specifying the terms and conditions of such loan and the payment by the Borrower to the Issuer of amounts sufficient for the payment of the principal of, premium, if any, or interest on such Series 2017 Bonds and certain costs incidental thereto, which loan will assist the Borrower in financing and refinancing the Project, which is used or to be used by the Borrower in connection with its charter school operations; and

WHEREAS, in order to finance and/or refinance the Project, the Issuer has agreed to issue $[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A (the “Series 2017A Bonds”) pursuant to and secured by this Indenture; and

WHEREAS, in order to finance and/or refinance the Project, the Issuer has agreed to issue $[PRINCIPALB] Public Finance Authority Taxable Education Revenue Series 2017 Bonds (Uwharrie Charter Academy Project) Series 2017B (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Series 2017 Bonds”) pursuant to and secured by this Indenture; and

WHEREAS, the Series 2017A Bonds and Series 2017B Bonds are to be substantially in the forms thereof set forth in Exhibits A and B hereto, respectively, with such necessary or appropriate variations, omissions and insertions as permitted or required by this Indenture; and

WHEREAS, in order to secure the obligations of the Borrower under the Loan Agreement and the USDA Documents, the Borrower has entered into the Account Control Agreement (as defined in the Loan Agreement) for the benefit of the Trustee; and

WHEREAS, all things necessary (a) to make the Series 2017 Bonds, when authenticated by the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of the Issuer; and (b) to constitute this Indenture a valid, binding and legal instrument for the security of the Bonds (as defined herein) in accordance with its terms, have been done and performed;

NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:

2 4836-5936-5195.175195.21 That the Issuer, in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the Bonds by the Registered Owners (as defined herein) thereof and of the sum of One Dollar to it duly paid by the Trustee at or before the execution and delivery of these presents, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, in order to secure the payment of the principal of, premium, if any, and interest on all Bonds at any time Outstanding (as defined herein) under this Indenture, according to their tenor and effect, to secure the performance and observance of all the covenants and conditions in the Bonds and herein contained, and to declare the terms and conditions upon and subject to which the Bonds are issued and secured, has executed and delivered this Indenture and has granted, bargained, sold, alienated, assigned, pledged, set over and confirmed, and by these presents does grant, bargain, sell, assign, pledge, set over and confirm unto the Trustee, to the extent provided herein, and to its successors and assigns forever, a in the following described property, franchises and income (collectively, the “Trust Estate”):

(a) the rights and of the Issuer under the Account Control Agreement and the Loan Agreement, as amended from time to time, by and between the Issuer and the Borrower, except the Issuer’s Unassigned Rights (as defined herein);

(b) the rights, title and interests, if any, of the Issuer in the New Facility, subject to Permitted Encumbrances (as defined herein), except the Issuer’s Unassigned Rights;

(c) the Revenues (as defined herein) and all rights and interests of the Issuer in the Pledged Revenues (as defined herein), subject to Permitted Encumbrances, except the Issuer’s Unassigned Rights;

(d) the rights and interests of the Issuer under the Promissory Notes (as defined herein);

(e) all Funds created in this Indenture (other than the Cost of Issuance Fund and the Rebate Fund), except for (i) moneys or obligations deposited with or paid to the Trustee for the payment or redemption of Bonds that are no longer deemed to be Outstanding hereunder, (ii) all trust accounts containing all insurance and condemnation proceeds, and (iii) Issuer’s Unassigned Rights, subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture; and

(f) any and all other interests in real or personal property of every name and nature from time to time hereafter by delivery or by writing of any kind specifically mortgaged, pledged or hypothecated, as and for additional security hereunder by the Issuer or by anyone on its behalf or with its written consent in favor of the Trustee (including the Deed of Trust and proceeds of related title insurance), which is hereby authorized to receive any and all such property at any and all times and to hold and apply the same, subject to the terms hereof.

3 4836-5936-5195.175195.21 TO HAVE AND TO HOLD the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended to be, to the Trustee and its successors in said trust and assigns forever,

IN TRUST, NEVERTHELESS, upon the terms herein set forth in this Indenture, except as herein provided for the equal and proportionate benefit, security and protection of all Registered Owners of the Bonds issued under and secured by this Indenture without privilege, priority or distinction as to the or otherwise of any of the Bonds over any other of the Bonds except as otherwise provided in Article VII hereof or with respect to moneys otherwise held to redeem or pay particular Bonds hereunder;

SUBJECT ONLY TO THE RIGHTS OF THE ISSUER TO APPLY AMOUNTS UNDER THE PROVISIONS OF THIS INDENTURE, THE PLEDGE AND OF THE TRUST ESTATE HEREBY MADE SHALL IMMEDIATELY ATTACH THERETO AND SHALL BE EFFECTIVE, BINDING AND ENFORCEABLE FROM AND AFTER THE TIME OF THE DELIVERY BY THE TRUSTEE OF THE FIRST BONDS AUTHENTICATED AND DELIVERED UNDER THIS INDENTURE. THE SECURITY SO PLEDGED AND ANY ASSIGNMENT THEN OR THEREAFTER RECEIVED BY TRUSTEE FROM THE ISSUER AS SECURITY FOR THE BONDS SHALL IMMEDIATELY BE SUBJECT TO THE LIEN OF SUCH PLEDGE AND ASSIGNMENT AND THE LIEN OF SUCH PLEDGE AND ASSIGNMENT SHALL BE VALID AND BINDING AGAINST THE ISSUER, PURCHASERS THEREOF, AND ALL OTHER PARTIES HAVING CLAIMS AGAINST THE ISSUER IRRESPECTIVE OF WHETHER SUCH PARTIES HAVE NOTICE THEREOF AND WITHOUT THE NEED FOR ANY PHYSICAL DELIVERY, RECORDATION, FILING, OR FURTHER ACT.

PROVIDED, HOWEVER, that if the Issuer shall well and truly pay, or cause to be paid, the principal of the Bonds and the premium, if any, and the interest due or to become due thereon, at the times and in the manner mentioned in the Bonds according to the true intent and meaning thereof, and shall cause the payments to be made into the Bond Fund as hereinafter required or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee the entire amount due or to become due thereon, or certain securities as herein permitted and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee, the Issuer and the United States of America all sums of due or to become due to them in accordance with the terms and provisions hereof, then upon such final payments this Indenture and the rights hereby granted shall cease, terminate, and be void (except those provisions which specifically provide for their survival); otherwise this Indenture to be and remain in full force and effect.

IT IS HEREBY EXPRESSLY ACKNOWLEDGED that the Issuer has entered into this Indenture and issued the Bonds to fulfill the public purposes of the Act, and the Trustee hereby accepts such trust and covenants to enforce the provisions of this Indenture and the Loan Agreement so as to effect the public purposes of the Act.

THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all said

4 4836-5936-5195.175195.21 property, rights, interests, and revenues and funds hereby pledged, assigned and mortgaged are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant with the Trustee for the benefit of the Registered Owners from time to time of the Bonds as follows:

ARTICLE I

DEFINITIONS; INDENTURE TO CONSTITUTE CONTRACT

Section 1.01. Definitions. All words and phrases defined in Article I of the Loan Agreement and elsewhere in the Loan Agreement and not otherwise defined herein shall have the same meaning in this Indenture. In addition, the following terms, except where the context indicates otherwise, shall have the respective meanings set forth below:

“Accredited Investor” means an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended.

“Act” means Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as amended from time to time.

“Act of ” means the filing of a petition in bankruptcy under the United States Bankruptcy Code, or the institution of proceedings under state or other laws affecting creditors’ rights generally, by or against the Issuer or Borrower as ; provided that such filings or proceedings have not been dismissed or, if dismissed, are subject to appeal.

“Additional Bonds” means Bonds that may be issued under Section 2.11 of this Indenture.

“Additional Promissory Notes” means any nonnegotiable or notes, in addition to the Series 2017 Promissory Notes, executed and delivered by the Borrower to the Trustee in connection with the issuance of Additional Bonds, as provided in the Loan Agreement.

“Athletic Facility” means the facility used by the Borrower for sports and recreation activities of the School and located on approximately 30 acres of property at the intersection of Mack Road and Ludlum Lane in the Project Jurisdiction.

“Authorized Denominations” means (a) with respect to the Series 2017 Bonds, $5,000 and any integral multiple thereof (subject to the restrictions set forth in Section 2.05(b) hereof); and (b) in the case of Additional Bonds, the amount specified in the Supplemental Indenture authorizing the issuance thereof.

“Authorized Representative” means in the case of the Borrower, the Chairman of the , the Vice-Chairman of the Board of Directors, the Secretary of the Board of Directors, the Treasurer of the Board of Directors and the Executive Director and, when used with reference to the performance of any act, the discharge of any or the execution of any certificate or other document, any officer, employee or other person authorized to perform such act, discharge such duty or execute such certificate or other document.

5 4836-5936-5195.175195.21 “Beneficial Owner(s)” means the person or entity for whom the Bonds were deposited with DTC in the name of its nominee, Cede & Co.

“Bond Closing” means, as to any Series of Additional Bonds, the date upon which such Series of Additional Bonds are delivered for due consideration, and, as to the Series 2017 Bonds, [November __, 2017].

“Bond Counsel” means Kutak Rock LLP, Atlanta, Georgia, or such other firm of nationally recognized attorneys with a proven reputation in the field of municipal finance and experienced in the financing of facilities for non-exempt persons through the issuance of tax-exempt revenue bonds under the exemption provided under Section 103 of the Code, and approved by the Issuer and the Borrower.

“Bond Fund” means the Fund by that name created pursuant to Section 3.02 herein.

“Bond Purchase Agreement” means as to any Series of Additional Bonds, the bond purchase agreement related to such Series of Additional Bonds and, as to the Series 2017 Bonds, means the Bond Purchase Agreement related to the Series 2017 Bonds.

“Bonds” means the Series 2017 Bonds and any Additional Bonds.

“Borrower” means Uwharrie Green School, Inc., a North Carolina nonprofit corporation, or any surviving, resulting or transferee corporation, as provided in Section 8.02 of the Loan Agreement.

“ Day” means any day other than a Saturday or Sunday or a day on which the Federal Reserve System or the Trustee is closed.

“Capitalized Interest Account” means the account by that name created pursuant to Section 3.02 herein.

“Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC.

“Charter School Act” means the North Carolina Charter School Act, codified at N.C. Gen. Stat. § 115C-218, et seq., as amended.

“Code” means the Internal Revenue Code of 1986, as amended. References to the Code and sections of the Code include relevant applicable regulations thereunder, and any successor provisions to those sections or regulations and, in addition, all revenue rulings, announcements, notices, procedures and judicial determinations under the foregoing applicable to the Tax-Exempt Bonds, including the Series 2017 Bonds.

“Completion Date” means the date specified by the Borrower in a certificate delivered to the Trustee stating that the acquisition, construction, improvement and/or equipping of the New Facility is complete in accordance with Section 4.03 of the Loan Agreement.

6 4836-5936-5195.175195.21 “Continuing Disclosure Agreement” means, with respect to the Series 2017 Bonds, the Continuing Disclosure Agreement, dated as of November 1, 2017, entered into by the Borrower and Digital Assurance Certification, LLC, as dissemination agent, and, as to any Series of Additional Bonds, the Continuing Disclosure Agreement executed by the Borrower in connection with the issuance of such Series of Additional Bonds.

“Cost of Issuance Fund” means the fund by that name created pursuant to Section 3.02 herein.

“Costs of the Project” means Costs of the Project as defined in the Loan Agreement.

“Debt Service Reserve Fund” means the fund by that name created pursuant to Section 3.02 herein.

“Debt Service Reserve Fund Requirement” means, as of any date, the aggregate of the Series Debt Service Reserve Fund Requirement for all Series of Bonds for which any Bonds of such Series are at the time Outstanding.

“Deed of Trust” means a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, from the Borrower to Title Insurance Company (or another deed of trust trustee) for the benefit of the Trustee, relating to Bonds issued under this Indenture, as the same may be supplemented or amended from time to time in accordance with its terms.

“Determination of Taxability” means, with respect to a Series of Tax-Exempt Bonds, (i) the enactment of legislation or the adoption of final regulations or a final decision, ruling or technical advice by any federal judicial or administrative authority which has the effect of requiring interest on a Tax-Exempt Bond to be included in the gross income of the Owner for federal purposes or (ii) the receipt by the Trustee of a written opinion of nationally recognized bond counsel selected by the Borrower and approved by the Trustee to the effect that interest on a Tax-Exempt Bond must be included in the gross income of the Owner for federal income tax purposes. A Determination of Taxability will not result from the inclusion of interest on any Tax-Exempt Bond in the computation of the alternative minimum tax imposed by Section 55 of the Code, the branch profits tax on foreign imposed by Section 884 of the Code or the tax imposed on the net passive income of certain S corporations under Section 1375 of the Code.

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

“Fiscal Year” means each 12-month period commencing on July 1 and ending on June 30.

“Fitch” means Fitch Ratings.

“Funds” means, collectively, the Bond Fund, the Debt Service Reserve Fund, the Cost of Issuance Fund, the Rebate Fund, the Repair and Replacement Fund, the Project Fund, and any other funds, accounts or sub-accounts held by the Trustee hereunder.

7 4836-5936-5195.175195.21 “Generally Accepted Principles” means those accounting principles applicable in the preparation of financial statements of the Borrower, as promulgated by the Financial Accounting Standards Board or such other body recognized as authoritative by the American Institute of Certified Public Accountants.

“Government” means the United States of America, acting through the United States Department of Agriculture Rural Housing Service (formerly the Farmers Home Administration).

“Government Loan Facility” means the facility housing grades 9 through 12 of the Borrower located at 5326 U.S. Highway 220 Business South, Asheboro, North Carolina 27205.

“Government Obligations” means bills, certificates of indebtedness, notes, bonds or similar securities that are direct obligations of, or the principal and interest of which are unconditionally guaranteed by, the United States of America.

“Indebtedness” means (a) any indebtedness or guarantees of the Borrower which has been incurred or assumed, including in connection with the acquisition, construction, improvement, and/or equipping of the Facilities or property related thereto other than goods that are acquired in the ordinary course of business of the Borrower, including indebtedness subordinate as to security and payment to other Indebtedness; (b) all indebtedness, no matter how created, secured by the Government Loan Facility, whether or not such indebtedness is assumed by the Borrower; (c) any leases required to be capitalized in accordance with Generally Accepted Accounting Principles; and (d) all indebtedness secured by any mortgage, lien, charge, encumbrance, pledge or other security interest upon the Facilities or property related thereto owned by the Borrower whether or not the Borrower has assumed or become liable for the payment thereof. For the purpose of “Indebtedness,” there shall be excluded any particular Indebtedness if, upon or prior to the maturity thereof, there shall have been irrevocably deposited with the property depository in trust the necessary funds (or evidences of such Indebtedness or investments that will provide sufficient funds, if permitted by the instrument creating such Indebtedness) for the payment, redemption or satisfaction of such Indebtedness; and thereafter such funds, evidences of Indebtedness and investments so deposited shall not be included in any computation of the of the Borrower, and the income from any such deposits shall not be included in the calculation of Net Income Available for Debt Service.

“Interest Payment Date” means, as to a Series of Additional Bonds, the Interest Payment Date established in the related Supplemental Indenture and, as to the Series 2017 Bonds, means each [June 15] and [December 15], commencing [June 15, 2018].

“Investment Obligations” means the Investment Obligations for any Series of Additional Bonds as set forth in the related Supplemental Indenture and, as to the Series 2017 Bonds, any of the following that at the time are lawful investments under the laws of the State of North Carolina (such legality to be determined by an Authorized Representative of the Borrower and not the Trustee) for the money held under this Indenture:

(a) Government Obligations;

(b) direct and general obligations of any state of the United States of America or any municipality or political subdivision of such state, or obligations of any

8 4836-5936-5195.175195.21 corporations, if such obligations are rated in one of the two highest rating categories by S&P or Moody’s, or upon the discontinuance of either or both of such rating services, any other nationally recognized rating service;

(c) negotiable or nonnegotiable certificates of deposit, time deposits, or other similar banking arrangements, issued by any nationally or state-chartered bank or trust company (including the Trustee) or any savings and loan association, domiciled in the State of North Carolina, if either (i) the long-term obligations of such bank or trust company are rated in one of the two highest rating categories by S&P or Moody’s, or, upon the discontinuance of either or both of such rating services, any other nationally recognized rating service; or (ii) the deposits are continuously secured as to principal, but only to the extent not insured by the Federal Corporation, or similar corporation chartered by the United States of America, (A) by lodging with a bank or trust company, as security, obligations described in clause (a) or (b) above or, with the approval of the Trustee, other marketable securities eligible as security for the deposit of trust funds under applicable regulations of the Comptroller of the of the United States of America or applicable state law or regulations, having a market (exclusive of accrued interest) not less than the amount of such deposit; or (B) if the furnishing of security as provided in clause (A) of this paragraph is not permitted by applicable law, in such manner as may then be required or permitted by applicable state or federal laws and regulations regarding the security for the deposit of trust funds;

(d) repurchase agreements with respect to obligations listed in clause (a) or (b) above if entered into with a nationally or state-chartered bank, trust company or a “broker” or “dealer” (as defined by the Securities Exchange Act of 1934 as amended) which is a member of the Securities Investors Protection Corporation if (i) such obligations that are the subject of such are delivered to the Trustee or are supported by a safekeeping receipt issued by depository satisfactory to the Trustee; provided that such repurchase agreement must provide that the value of the underlying obligations shall be maintained at current market value, calculated no less frequently than monthly, of not less than the repurchase price; (ii) a prior perfected security interest in the obligations which are the subject of such repurchase agreement has been granted to the Trustee; and (iii) such obligations are free and clear of any adverse third-party claims;

(e) maturing in 270 days or less and rated in the highest rating category by two nationally recognized rating services;

(f) mutual funds invested solely in obligations listed in clause (a), (b) or (c) above;

(g) investment agreements with any nationally or state-chartered bank, , insurance company or trust company which has long-term debt obligations rated in one of the three highest categories by a nationally recognized rating agency. Should the issuer’s or guarantor’s quality be downgraded below “A,” the Trustee must have withdrawal rights;

9 4836-5936-5195.175195.21 (h) certificates or receipts issued by any nationally or state-chartered bank, trust company or “broker” or “dealer” (as defined by the Securities Exchange Act of 1934, as amended) which is a member of the Securities Investors Protection Corporation, organized and existing under the laws of the United States of America or any state thereof, the outstanding unsecured long-term debt of which is rated in either of the two highest rating categories by S&P or Moody’s, or, upon the discontinuance of either rating service, any other nationally recognized ratings service, in the capacity of custodian, which certificates or receipts evidence ownership or a portion of the principal of or interest on Government Obligations held (which may be in book entry form) by such bank, trust company or broker or dealer (as defined by the Securities Exchange Act of 1934, as amended) as custodian; and

(i) tax-exempt obligations (as defined in Section 150(a)(6) of the Code and which are not “investment property” as defined in Section 148(b)(2) of the Code) rated in one of the two highest rating categories by S&P or Moody’s, or upon the discontinuance of such ratings service, any other nationally recognized ratings service; provided that “Investment Obligations” shall not include a , commonly known as a “,” whose performance is derived, at least in part, from the performance of any underlying , including, without limitations, futures, options on securities, options on futures, forward , agreements, structured notes and participations in pools of mortgages or other assets. All ratings shall be determined at the time of initial investment; the Trustee has no obligation to monitor any changes in such ratings.

“Irrevocable Deposit” means the irrevocable deposit in trust of cash in an amount (or Government Obligations, the principal of and interest on which will be in an amount) and under terms sufficient to pay all or a specified portion of the principal of, premium, if any, and/or the interest on, as the same shall become due, any Indebtedness which would otherwise be considered Outstanding. The trustee of such deposit shall have possession of any cash and securities (other than book-entry securities) and may be the Trustee or any other trustee authorized to act in such capacity.

“Issuer” means the Public Finance Authority, its successors and assigns.

“Issuer Authorized Signatory” means any officer, director, or other person designated by resolution of the Board of Directors of the Issuer (whether such resolution is adopted in connection with the issuance of the Bonds or otherwise) or by the Issuer’s Bylaws as an “Authorized Signatory” empowered to, among other things, execute and deliver on behalf of the Issuer this Indenture, the other Issuer Documents and the Bonds; provided, that the Trustee has been furnished with a certified copy of any such resolution of the Issuer and a certified specimen signature of such officer, director or other person.

“Issuer Documents” means, with respect to a Series of Bonds, the Loan Agreement, this Indenture, the Tax Certificate, the Bond Purchase Agreement, and any other agreement, certificate, contract, or instrument to be executed by the Issuer in connection with the issuance of the Bonds or the financing of a portion of the expenses associated with the related Project.

10 4836-5936-5195.175195.21 “Issuer Indemnified Party” or “Issuer Indemnified Parties” means, collectively, (a) each Sponsor; (b) each Member; and (c) each of the Issuer’s, the Sponsors’ and the Members’ respective past, present, and future directors, board members, governing members, trustees, commissioners, officers, elected or appointed officials, counsel, contractors, subcontractors, advisors (including counsel and financial advisors), agents, authorized signatories and employees, and each of their respective heirs, successors and assigns, individually and collectively.

“Issuer’s Unassigned Rights” means the rights of the Issuer under Sections 5.01(j), (k) and (l), 6.06, 8.05(j), 8.06, 8.10, 10.04 and 12.13 of the Loan Agreement and the Issuer’s rights thereunder or under this Indenture to (a) inspect books and records; (b) give or receive notices, approvals, consents, requests, and other communications; (c) receive payment or reimbursement for expenses, including without limitation “Additional Payments” as defined in the Loan Agreement and the “Issuer’s Annual Fee” as defined in the Loan Agreement; (d) immunity from and limitation of liability; and (e) indemnification by the Borrower or any other Person; and (f) to enforce, in its own name and on its own behalf, those provisions hereof and of the Loan Agreement and any other document, instrument or agreement entered into with respect to the Bonds that provides generally for the foregoing enumerated rights or any similar rights of the Issuer or any Issuer Indemnified Party. For avoidance of doubt, the “Issuer’s Unassigned Rights” referenced in clauses (d), (e) and (f), above, shall be interpreted broadly to encompass (but not be limited to) the rights of the Issuer and the Issuer Indemnified Parties to immunity from and limitation of liability and indemnification by the Borrower as provided in the Loan Agreement and the right of any such Issuer Indemnified Party to enforce such right in his, her or its name.

“Joint Exercise Agreement” means that certain Amended and Restated Joint Exercise of Power Agreement Relating to the Public Finance Authority, dated as of September 28, 2010 by and among Marathon County, Wisconsin, Waupaca County, Wisconsin, Bayfield County, Wisconsin Adams County, Wisconsin and the City of Lancaster, Wisconsin, as may be amended from time to time.

“Letter of Representations” means the Letter of Representations from the Issuer to DTC.

“Loan Agreement” means the Loan Agreement dated as of November 1, 2017 by and between the Borrower and the Issuer and any amendments and supplements thereto made in conformity with the requirements thereto and hereto.

“Loan Payments” means any and all payments made by the Borrower pursuant to Section 5.01 of the Loan Agreement.

“Maximum Annual Debt Service” means, as of any date of calculation, the highest Annual Debt Service Requirements of the Borrower (excluding all or a portion of the final maturity payment for any Indebtedness in an amount equal to funds in a debt service reserve fund that are permitted and available to be applied to the payment of such final maturity at the time of such final maturity) with respect to all outstanding Indebtedness for any succeeding Fiscal Year.

11 4836-5936-5195.175195.21 “Member” means the parties to the Joint Exercise Agreement and any political subdivision that has been designated in the past, or from time to time in the future is designated, as a member of the Issuer pursuant to the Joint Exercise Agreement.

“Moody’s” means Moody’s Investors Service.

“Net Proceeds” means, when used with respect to any insurance payment or condemnation award, the gross proceeds thereof less the expenses (including attorneys’ fees) incurred in the collection of such gross proceeds.

“Outstanding” or “outstanding” means, when used with respect to the Bonds, as of any particular time, all Bonds which have been duly authenticated and delivered by the Trustee under this Indenture, except:

(a) Bonds theretofore cancelled by the Trustee or delivered to the Trustee for cancellation after purchase in the open market or because of payment at, or redemption prior to, maturity;

(b) Bonds for the payment or redemption of which cash funds (or securities to the extent permitted in Section 7.01 hereof) shall have been theretofore deposited with the Trustee (whether upon or prior to the maturity or redemption date of any such Bonds); provided that if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Trustee, shall have been filed with the Trustee;

(c) Bonds in lieu of which other Bonds have been authenticated under Section 2.05, 2.06 or 2.10 hereof;

(d) Bonds for which the conditions enumerated in Section 5.07 hereof have been met; and

(e) Bonds owned by the Borrower.

“Participants” means those broker-dealers, and other financial institutions from time to time for which DTC holds Bonds as a securities depository.

“Permitted Encumbrances” means, as of any particular time, those items described on Exhibit B attached to the Deed of Trust relating to the Series 2017 Bonds and any of the following affecting the Premises, any Project or the Pledged Revenues:

(a) Liens for , assessments and other governmental charges due but not yet payable or being actively contested in good faith by appropriate proceedings effectively staying any action or proceeding to foreclose any such Lien; provided that all such Liens in the aggregate have no reasonable likelihood of causing a Material Adverse Effect;

12 4836-5936-5195.175195.21 (b) the liens created by the Loan Agreement, the Deed of Trust, the other Borrower Documents or this Indenture;

(c) purchase money security interests with respect to any item of equipment related to the School;

(d) utility, access, and other easements and rights-of-way, mineral rights and reservations, restrictions and exceptions which would not in the aggregate (i) materially interfere with or impair any present use of the Premises or any reasonably probable future use of the Premises, or (ii) materially reduce the value which would be reasonably expected to be received for the Premises upon any sale (including any foreclosure of the mortgage granted by the Deed of Trust);

(e) landlord’s, warehouseman’s, carrier’s, worker’s, vendor’s, mechanic’s and materialmen’s Liens and similar Liens incurred in the ordinary course of business remaining undischarged for not longer than 60 days from the filing thereof or being contested in good faith by appropriate proceedings effectively staying any action or proceeding to foreclose any such Lien;

(f) judgment Liens against the Borrower so long as such judgment is being contested and execution thereon is stayed or while the period for responsive pleading has not lapsed;

(g) Liens in respect of judgments or awards that have become final and unappealable and remain undischarged for not longer than 60 days from the making thereof, to the extent that any such Lien does not constitute an Event of Default under Section 10.01(a)(ix);

(h) Liens in respect of pledges or deposits under worker’s compensation laws, unemployment insurance or similar legislation and in respect of pledges or deposits to secure bids, tenders, contracts (other than contracts for the payment of money), leases or statutory obligations, or in connection with surety, appeal and similar bonds incidental to the conduct of litigation;

(i) rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license or permit, or provision of law, affecting the Premises, to (i) terminate such right, power, franchise, grant, license or permit; provided that the exercise of such right would not materially impair the use of the Premises or materially and adversely affect the value thereof; or (ii) purchase, condemn, appropriate, or recapture, or designate a purchaser of, the Premises;

(j) rights reserved to or vested in any municipality or public authority to control or regulate the Premises or to use the Premises in any manner, which rights do not materially impair the use of the Premises or materially and adversely affect the value thereof;

(k) Liens and any other restrictions, exceptions, leases, easements or encumbrances which are existing on the date of initial issuance and delivery of the Series

13 4836-5936-5195.175195.21 2017 Bonds; provided that no such Lien (or the amount of Indebtedness secured thereby), restriction, exception, lease, easement or encumbrance may be increased, extended, renewed or modified to apply to the Premises not subject to such Lien on such date, unless such Lien as so extended, renewed or modified or otherwise qualified as a Permitted Encumbrance hereunder or is otherwise permitted pursuant to Section 8.13 of the Loan Agreement;

(l) Liens allowed to secure other additional Indebtedness pursuant to Section 8.13 of the Loan Agreement;

(m) restrictions imposed by donors to the Borrower upon the uses of gifts provided by such donors;

(n) Liens arising by reason of an Irrevocable Deposit;

(o) Liens on the Premises and the Pledged Revenues (subordinate to the Deed of Trust) to secure payment of Indebtedness subordinate to the obligations of the Borrower under Section 8.13 of the Loan Agreement;

(p) With respect to Premises acquired by the Borrower after the Bond Closing for the Series 2017 Bonds, any Lien on or any lease of the Premises existing on the date such Premises are acquired by the Borrower, whether by gift, grant bequest, or purchase; and

(q) Liens in favor of the Government evidenced by the USDA Documents relating to the Government Loan Facility.

“Person” includes an individual, association, corporation, , limited liability company, joint venture or a government or an agency or a political subdivision thereof.

“Pledged Revenues” means, to the extent permitted by law, all revenues, rentals, fees, third-party payments, receipts, accounts, or other income of the Borrower, including the rights to receive such revenues (each subject to Permitted Encumbrances), all as calculated in accordance with Generally Accepted Accounting Principles, including, without limitation, proceeds derived from insurance, condemnation proceeds, accounts, contract rights and other rights and assets, whether now or hereafter owned, held or possessed by the Borrower; and all gifts, grants, bequests, donations and contributions (including income and profits therefrom) to the extent permitted by the terms thereof and by law.

“Premises” means the “Premises” as defined in the Deed of Trust relating to the Series 2017 Bonds and any other property encumbered by any other Deed of Trust.

“Principal Payment Date” or “sinking fund payment date” means, as to a Series of Additional Bonds, the Principal Payment Date or sinking fund payment date established for that Series of Bonds in the related Supplemental Indenture and, as to the Series 2017 Bonds, means each [June 15], commencing [June 15, 2019].

14 4836-5936-5195.175195.21 “Project” means, with respect to the Series 2017 Bonds, the Project described in the Loan Agreement, and, as to any Series of Additional Bonds, the Project described in the related amendment to the Loan Agreement.

“Project Fund” means the fund by that name created pursuant to Section 3.02 herein and includes the subaccounts contained therein.

“Promissory Note(s)” or “Note(s)” means the Series 2017 Promissory Notes and any Additional Promissory Notes.

“Qualified Institutional Buyer” means a qualified institutional buyer as defined in Rule 144A promulgated pursuant to the Securities Act of 1933, as amended.

“Rating Agency” means Fitch, Moody’s, S&P, or any other nationally recognized rating agency.

“Rebate Analyst” means an independent certified public accountant, or bond counsel, or any firm of the foregoing, or financial institution, experienced in making the arbitrage and rebate calculations required pursuant to Section 148(f) of the Code, retained by the Borrower to facilitate compliance with Section 148(f) of the Code as it pertains to the Bonds.

“Rebate Analyst Fee” means the fees and expenses of the Rebate Analyst.

“Rebate Fund” means the Fund by that name created pursuant to Section 3.02 herein.

“Registered Owner” or “Owner” means the Person or Persons in whose name or names a particular Bond is registered on the registration records maintained for that purpose pursuant to Section 2.05 hereof.

“Regular Record Date” means the first day of the month of each Interest Payment Date (whether or not a Business Day).

“Regulations” means the temporary or final Income Tax Regulations applicable to the Bonds issued pursuant to sections 141 through 150 of the Code or section 103 of the Internal Revenue Code of 1954. Any reference to a section of the Regulations shall also refer to any successor provision to such section hereafter promulgated by the Internal Revenue Service pursuant to sections 141 through 150 of the Code and applicable to the Tax-Exempt Bonds, including the Series 2017 Bonds.

“Repair and Replacement Fund” means the Fund by that name created pursuant to Section 3.02 herein.

“Responsible Officer” means, when used with respect to the Trustee, any officer within the department of the Trustee, including any Vice President, assistant Vice President, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of

15 4836-5936-5195.175195.21 such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

“Revenues” means, to the extent permitted by law, all payments received by the Trustee for the account of the Issuer pursuant to the Loan Agreement, the Account Control Agreement and this Indenture.

“Series” means a Series of Bonds issued pursuant to this Indenture.

“Series Debt Service Reserve Fund Requirement” means, for the Series 2017 Bonds, an amount equal to 100% of the Maximum Annual Debt Service of the Series 2017 Bonds.

“Series 2017 Bonds” means the Series 2017A Bonds and the Series 2017B Bonds.

“Series 2017 Bonds Account” means the account by that name created pursuant to Section 3.02 herein.

“Series 2017 Project Account” means the account by that name created pursuant to Section 3.02 herein.

“Series 2017 Promissory Notes” means the Series 2017A Promissory Note and the Series 2017B Promissory Note.

“Series 2017A Bonds” means the Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A, issued pursuant to Section 2.03 hereof and substantially in the form of Exhibit A, in the original principal amount of $[PRINCIPALA].

“Series 2017A Promissory Note” means the Series 2017A Promissory Note, executed by the Borrower in the aggregate principal amount of $[PRINCIPALA] and made payable to the order of the Issuer, a form of which is attached to the Loan Agreement as Exhibit A thereto.

“Series 2017B Bonds” means the Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B, issued pursuant to Section 2.03 hereof and substantially in the form of Exhibit B, in the original principal amount of $[PRINCIPALB].

“Series 2017B Promissory Note” means the Series 2017B Promissory Note, executed by the Borrower in the aggregate principal amount of $[PRINCIPALB] and made payable to the order of the Issuer, a form of which is attached to the Loan Agreement as Exhibit B thereto.

“Special Record Date” means a special record date, which shall be a Business Day, fixed to determine the names and addresses of owners for purposes of paying interest on a special Interest Payment Date for the payment of defaulted interest, all as further provided in Section 2.03 hereof.

“Sponsor” means the National League of Cities, the National Association of Counties, the Wisconsin Counties Association, the League of Wisconsin Municipalities, and any other Person that holds itself out, or is identified by the Issuer, as an sponsoring the Issuer.

16 4836-5936-5195.175195.21 “S&P” means S&P Global Ratings, its successors and their assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Borrower by notice to the Issuer and the Trustee.

“State” means the State of Wisconsin.

“Supplemental Indenture” means any indenture supplemental to this Indenture entered into by and between the Issuer and the Trustee in accordance with Article X hereof.

“Tax-Exempt Bonds” means those Bonds the interest on which, in the opinion of Bond Counsel delivered at the time of issuance thereof, is excludable from gross income of the Beneficial Owner thereof for federal income tax purposes, including the Series 2017A Bonds.

“Title Company” means the title company selected by the Borrower as grantor under a Deed of Trust and, with respect to the Series 2017 Bonds, means First American Title Insurance Company, or its successors, affiliates or assigns.

“Trust Estate” means the property pledged, assigned and mortgaged to the Trustee pursuant to the granting clauses hereof.

“Trustee” means U.S. Bank National Association, a national banking association, and its successors and assigns.

“Trustee’s Annual Fees” means the annual fee of the Trustee payable to the Trustee as Trustee, Registrar and Paying Agent under this Indenture; provided that such fee does not include amounts due, if any, for extraordinary services and expenses of the Trustee.

“Trustee’s Expenses” means the reasonable expenses incurred by the Trustee under this Indenture, including reasonable counsel fees and expenses (including fees and expenses at trial or appellate proceedings), including amounts due, if any, for extraordinary services and expenses of the Trustee.

“Underwriter” means BB&T Capital Markets, a division of BB&T Securities, LLC.

“USDA Documents” means, collectively, the USDA Parity Agreement; that certain Promissory Note, dated October 19, 2016, by the Borrower to the United States Department of Agriculture; that certain Real Estate Deed of Trust for North Carolina, dated October 19, 2016, by and between the Borrower, William Kenney, as trustee thereunder, and the United States Department of Agriculture; and that certain United States Department of Agriculture Rural Development Security Agreement, dated October 19, 2016, between the Rural Development and the Borrower.

“USDA Parity Agreement” means that certain Parity Agreement, dated as of [______, 2017], by and among the Government, the Trustee and the Borrower.

Section 1.02. Indenture To Constitute Contract. In consideration of the purchase and acceptance of any or all of the Bonds by those who shall own the same from time to time, the

17 4836-5936-5195.175195.21 provisions of this Indenture shall be part of the contract of the Issuer with the Registered Owners of the Bonds, and shall be deemed to be and shall constitute contracts among the Issuer, the Trustee and the Registered Owners from time to time of the Bonds. The pledge made in this Indenture and the provisions, covenants and agreements herein set forth to be performed by or on behalf of the Issuer shall be for the equal benefit, protection and security of the Registered Owners of any and all of the Bonds except as otherwise provided in Article VII hereof or with respect to moneys otherwise held to redeem or pay particular Bonds hereunder. All of the Bonds, regardless of the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or pursuant to this Indenture.

ARTICLE II

AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF BONDS

Section 2.01. Authorized Amount of Bonds. No Bonds may be issued under this Indenture except in accordance with this Article. The total principal amount of Series 2017A Bonds that may be issued hereunder is hereby expressly limited to $[PRINCIPALA], except as provided in Sections 2.05, 2.06 and 2.10 herein. The total principal amount of Series 2017B Bonds that may be issued hereunder is hereby expressly limited to $[PRINCIPALB], except as provided in Sections 2.05, 2.06 and 2.10 herein.

Section 2.02. All Bonds Equally and Ratably Secured by Trust Estate; Special Limited Obligation of Bonds and Pledges Securing the Same. Except as hereinafter provided, all Bonds issued under this Indenture and at any time Outstanding shall in all respects be equally and ratably secured hereby, without preference, priority or distinction on account of the date or dates or the actual time or times of the issue or maturity of the Bonds, so that all Bonds at any time issued and Outstanding hereunder shall have the same right, lien and preference under and by virtue of this Indenture, and shall all be equally and ratably secured hereby.

The Bonds have been issued pursuant to and in full compliance with the laws of the State, particularly Section 66.0304, and by authority of resolutions adopted by the Issuer’s governing body. THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE, AND EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY SPONSOR, ANY MEMBER, ANY ISSUER INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY

18 4836-5936-5195.175195.21 POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER.

NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS, OR ANY COSTS INCIDENTAL THERETO, AGAINST ANY ISSUER INDEMNIFIED PARTY, UNDER ANY RULE OF LAW OR , STATUTE, OR CONSTITUTION OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, AND ALL SUCH LIABILITY OF ANY ISSUER INDEMNIFIED PARTY IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF AND CONSIDERATION FOR THE EXECUTION AND ISSUANCE OF THE SERIES 2017 BONDS.

Section 2.03. Authorization of Series 2017 Bonds; Payment of Bonds. The Issuer may issue, sell and deliver the Series 2017 Bonds for the purpose of providing for the financing and/or refinancing of the Project, upon the satisfaction of the conditions, and in the manner, provided for in this Indenture.

(a) There is hereby authorized to be issued hereunder and secured hereby an issue of bonds designated as “Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A.” There is hereby authorized to be issued hereunder and secured hereby an issue of bonds designated as “Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B.” The Series 2017 Bonds shall be issuable as fully registered bonds in Authorized Denominations and shall be numbered separately and lettered, if at all, in such manner as set forth in the Issuer’s resolution required by Section 2.07(a).

(b) The Series 2017 Bonds shall be dated as of the date of initial authentication and delivery thereof. The Series 2017 Bonds shall bear interest on the basis of a 360-day year, consisting of twelve 30-day months, from their date until payment of principal has been made or provided for, payable on each [June 15] and [December 15], commencing [June 15, 2018], except that Series 2017 Bonds which are delivered upon transfer, exchange or other replacement shall bear interest from the most recent Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid, from the date of the Bonds. The maximum to be borne by the Series 2017 Bonds (including any “taxable,” “default,” or “penalty” rate) shall not exceed 18% per annum.

The Series 2017A Bonds shall mature in the principal amounts, on the dates and shall bear interest at the rates set forth below.

Maturity Date Principal Amount Interest Rate

[June 15, 20__] [June 15, 20__] [June 15, 20__]

19 4836-5936-5195.175195.21 The Series 2017B Bonds shall mature in the principal amount, on the date and shall bear interest at the rate set forth below.

Maturity Date Principal Amount Interest Rate

[June 15, 20__]

(c) The Series 2017 Bonds are subject to the sinking fund provisions of Section 5.03 hereof. The Series 2017 Bonds are otherwise subject to prior redemption as herein set forth. The Series 2017A Bonds shall be substantially in the form and tenor set forth in Exhibit A hereto with such appropriate variations, omissions and insertions as are permitted or required by this Indenture. The Series 2017B Bonds shall be substantially in the form and tenor set forth in Exhibit B hereto with such appropriate variations, omissions and insertions as are permitted or required by this Indenture.

(d) The principal of and premium, if any, on the Bonds shall be payable in lawful money of the United States of America at the designated corporate trust office of the Trustee or at the designated office of its successor in trust. Payment of principal of and any premium on the Bonds shall be payable upon presentation and surrender of the Bonds at the designated corporate trust office of the Trustee. Payment of interest on any Bond shall be made to the Registered Owner thereof by check or draft mailed on each Interest Payment Date by the Trustee to the Registered Owner at his or her address as it last appears on the registration records kept by the Trustee at the close of business on the Regular Record Date for such Interest Payment Date (except that the Registered Owners of at least $500,000 in aggregate principal amount of Bonds Outstanding may, by written request received at least 10 Business Days prior to the Regular Record Date, receive payment of interest by at the address specified in such request, which address must be in the United States of America), but any such interest not so timely paid or duly provided for shall cease to be payable to the Registered Owner thereof at the close of business on the Regular Record Date and shall be payable to the Registered Owner thereof at the close of business on a Special Record Date for the payment of any such defaulted interest. Such Special Record Date shall be fixed by the Trustee whenever moneys become available for payment of the defaulted interest, and notice of such Special Record Date shall be given to the Registered Owners of the Bonds not less than 10 days prior thereto by first-class mail to each such owner as shown on the registration records on the date selected by the Trustee stating the date of the Special Record Date and the date fixed for the payment of such defaulted interest. All such payments shall be made in lawful money of the United States of America.

Section 2.04. Execution of Bonds.

(a) The Bonds shall be executed in the name and on behalf of the Issuer by the manual or facsimile signature of an Issuer Authorized Signatory.

20 4836-5936-5195.175195.21 (b) In case any Issuer Authorized Signatory whose signature or whose facsimile or electronic signature shall appear on the Bonds shall cease to be an Issuer Authorized Signatory, such signature or the facsimile thereof shall nevertheless be valid and sufficient for all purposes as if he or she had remained an Issuer Authorized Signatory until authentication; and any Bond may be signed on behalf of the Issuer by such persons as are at the time of execution of such Bond an Issuer Authorized Signatory, even though at the date of this Indenture, such person was not a director or an officer.

Section 2.05. Registration, Transfer and Exchange of Bonds; Persons Treated As Registered Owners.

(a) The Issuer shall cause books for the registration and for the transfer of the Bonds as provided in this Indenture to be kept by the Trustee. Upon surrender for transfer of any Bond at the designated corporate trust office of the Trustee duly endorsed for transfer or accompanied by an assignment, in form and with guarantee of signature satisfactory to the Trustee, duly executed by the Registered Owner or his attorney duly authorized in writing, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds for a like Series and aggregate principal amount of the same maturity. Notwithstanding any other provision hereof, including Section 2.05(b) below, the Trustee shall not be responsible for ensuring that any transfer restrictions binding on a beneficial owner other than a Registered Owner of such Bond have been complied with in connection with the transfer of Bonds.

(b) Notwithstanding any other provision hereof, each initial Beneficial Owner of the Bonds shall be either (i) a “Qualified Institutional Buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended); or (ii) an “accredited investor” (as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended) that, in the case of an accredited investor who is not a Qualified Institutional Buyer, has provided an “Investor Letter” substantially in the form of Exhibit C-1 or C-2 hereto, as applicable, or such other form as may be approved by the Issuer, to the Issuer and the Trustee; thereafter, neither the Bonds nor any beneficial ownership interest therein may be transferred by the Beneficial Owner thereof except in Authorized Denominations to a Beneficial Owner that is a Qualified Institutional Buyer or an accredited investor. Any accredited investor who is not a Qualified Institutional Buyer may only purchase and hold a minimum $25,000 in principal amount of Bonds regardless of any lower minimum denomination provided herein. In addition, any initial purchaser who is a Qualified Institutional Buyer and any subsequent transferee of the Bonds will be deemed to represent in connection with its acquisition of the Bonds that: (i) it is able to evaluate and understands the risks and the merits of investing in the Bonds (and is able to bear the risks of such investment for an indefinite time), (ii) it is capable of and has made its own investigation of the Borrower, the Facilities and the Project in connection with its decision to purchase the Bonds, (iii) it is a Qualified Institutional Buyer or an accredited investor and (iv) it will only transfer the Bonds in Authorized Denominations to a person it reasonably believes is a Qualified Institutional Buyer or accredited investor that purchases for its own account or for the account of another Qualified Institutional Buyer or accredited investor in accordance with applicable securities laws or exemptions

21 4836-5936-5195.175195.21 therefrom. The Issuer may remove the foregoing restrictions without notice to or consent of any Beneficial Owner. At such time as the Borrower shall provide to the Issuer and the Trustee written evidence to the effect that each Rating Agency then rating the Bonds have rated the Bonds “BBB-” or equivalent, or higher (without regard for gradation within a rating category and without regard for credit enhancement unless such credit enhancement extends through the final maturity date of the Bonds), this Section 2.05(b) shall be of no further force or effect and the Authorized Denominations of the Bonds shall be changed (if necessary) to denominations of $5,000 or any integral multiple thereof, in each case, notwithstanding whether at a future time the Bonds are no longer rated in such rating category. The Trustee shall not be responsible for determining that each Beneficial Owner meets the specifications set forth in this Section 2.05(b).

(c) Bonds may be exchanged at the designated corporate trust office of the Trustee for a like Series and aggregate principal amount of Bonds of the same maturity in Authorized Denominations. The Issuer shall execute and the Trustee shall authenticate and deliver Bonds which the Registered Owner making the exchange is entitled to receive, bearing numbers not contemporaneously Outstanding. The execution by the Issuer of any Bond of any Authorized Denomination shall constitute full and due authorization of such denomination and the Trustee shall thereby be authorized to authenticate and deliver such Bond.

(d) The Trustee shall not be required to transfer or exchange any Bond during any period beginning on a Regular Record Date or Special Record Date with respect to such Bond and ending at the close of business on the Business Day immediately preceding the next Interest Payment Date or Principal Payment Date, as applicable. The Trustee shall not be required to transfer or exchange any Bond subject to redemption during the period of five days before the mailing of notice of redemption as herein provided; except that Bonds not subject to mandatory sinking fund redemption in accordance with Section 5.03 hereof with respect to the Series 2017 Bonds and in accordance with the related Supplemental Indenture with respect to any Additional Bonds may be transferred or exchanged during such period in the event of a mandatory sinking fund redemption. After the giving of such notice the Trustee shall not be required to transfer or exchange any Bond, which Bond or portion thereof has been called for redemption.

(e) As to any Bond, the person in whose name the same shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, except to the extent otherwise provided herein with respect to Regular Record Dates and Special Record Dates for the payment of interest, and payment of either principal or interest on any Bond shall be made only to or upon the written order of the Registered Owner thereof or his legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums paid.

(f) The Trustee shall require the payment by any Registered Owner requesting exchange or transfer of any tax or other generally imposed governmental charge required to be paid with respect to such exchange or transfer.

22 4836-5936-5195.175195.21 Section 2.06. Lost, Stolen, Destroyed and Mutilated Bonds. Upon receipt by the Trustee of evidence satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Bond and, in the case of a lost, stolen or destroyed Bond, of indemnity satisfactory to them, and upon surrender and cancellation of the Bond, if mutilated, (a) the Issuer shall execute, and the Trustee shall authenticate and deliver, a new Bond of the same Series, date, maturity and Authorized Denomination in lieu of such lost, stolen, destroyed or mutilated Bond; or (b) if such lost, stolen, destroyed or mutilated Bond shall have matured or have been called for redemption, in lieu of executing and delivering a new Bond as aforesaid, the Trustee may pay such Bond. Any such new Bond shall bear a number not contemporaneously Outstanding. The applicant for any such new Bond may be required to pay all expenses and charges of the Issuer and of the Trustee in connection with the issuance of such Bond. All Bonds shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing conditions are exclusive with respect to the replacement and payment of mutilated, destroyed, lost or stolen Bonds, negotiable instruments or other securities.

Section 2.07. Delivery of Series 2017 Bonds. Upon the execution and delivery of this Indenture, the Issuer shall execute and deliver to the Trustee and the Trustee shall authenticate the Series 2017 Bonds and deliver them to the initial purchaser thereof as directed by the Issuer and as hereinafter in this Section provided.

Prior to the delivery by the Trustee of any of the Series 2017 Bonds, there shall have been filed with or delivered to the Trustee the following:

(a) a resolution duly adopted by the Issuer, authorizing the issuance of the Series 2017 Bonds and the execution and delivery of the Loan Agreement, the Bond Purchase Agreement related to the Series 2017 Bonds and this Indenture;

(b) a duly executed copy of this Indenture, the Loan Agreement, the Tax Certificate, the Account Control Agreement, the Deed of Trust and the USDA Parity Agreement;

(c) the Series 2017 Promissory Notes duly executed by the Borrower and duly endorsed by the Issuer to the order of the Trustee without recourse or warranty;

(d) the written order of the Issuer as to the delivery of the Series 2017 Bonds, signed by an Issuer Authorized Signatory;

(e) an opinion of Bond Counsel substantially to the effect that the Series 2017 Bonds constitute legal, valid and binding obligations of the Issuer and that the interest on the Series 2017A Bonds will be excluded from gross income for federal income tax purposes, in form and substance acceptable to the Issuer;

(f) a binding commitment to issue a lender’s policy of title insurance as required by Section 4.08 of the Loan Agreement;

(g) Opinion of Counsel with respect to the Borrower in form and substance acceptable to the Issuer, the Trustee, the Underwriter and Bond Counsel, to the effect that (i) the Borrower is a “501(c)(3) organization” within the meaning of Section 145 of the

23 4836-5936-5195.175195.21 Code, and not a private foundation within the meaning of Section 509(a) of the Code; and (ii) the Loan Agreement, the Note and the Deed of Trust have been duly authorized, executed and delivered by the Borrower and are enforceable against the Borrower, subject to bankruptcy and equitable principles;

(h) Internal Revenue Service form 8038 completed by the Issuer with respect to the Series 2017A Bonds together with a certificate of the Borrower with respect to the information contained therein;

(i) investor letter(s) regarding the Series 2017 Bonds substantially in the form attached hereto as Exhibits C-1 and C-2, as applicable, or such other form as may be approved by the Issuer, acceptable to the Issuer and executed by each purchaser of the Series 2017 Bonds that is an accredited investor but not a Qualified Institutional Buyer; and

(j) such other documents, certificates (including certificates issued by public officials) and opinions of counsel as the Issuer, the Underwriter, the Trustee or Bond Counsel may reasonably request.

Section 2.08. Authentication Certificate. The authentication certificate upon each of the Series 2017 Bonds shall be substantially in the form appended to the form of the Series 2017A Bonds and the Series 2017B Bonds attached hereto as Exhibits A and B, respectively. No Bond shall be secured hereby or entitled to the benefit hereof, or shall be valid or obligatory for any purpose, unless the certificate of authentication, substantially in such form, has been duly executed by the Trustee; and such certificate of the Trustee upon any Bond shall be conclusive evidence and the only competent evidence that such Bond has been authenticated and delivered hereunder. The certificate of authentication shall be deemed to have been duly executed if manually signed by an authorized signatory of the Trustee, but it shall not be necessary that the same authorized signatory sign the certificate of authentication on all of the Bonds issued hereunder.

Section 2.09. Cancellation and Destruction of Bonds. Whenever any Outstanding Bonds shall be delivered to the Trustee for the cancellation thereof pursuant to this Indenture, upon payment of the principal amount thereof or for replacement pursuant to Section 2.06 hereof, such Bonds shall be promptly cancelled and destroyed by the Trustee and evidence of such destruction shall be furnished by the Trustee to the Issuer and the Borrower, if requested.

Section 2.10. Temporary Bonds. Pending the preparation of definitive Bonds, the Issuer may execute and the Trustee shall authenticate and deliver temporary Bonds. Temporary Bonds shall be issuable as registered Bonds without coupons, of any Authorized Denomination, and substantially in the form of the definitive Bonds but with such omissions, insertions and variations as may be appropriate for temporary Bonds, all as may be determined by the Issuer. Every temporary Bond shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Bonds. As promptly as practicable the Issuer shall execute and shall furnish definitive Bonds and thereupon temporary Bonds may be surrendered in exchange therefor without charge at the designated corporate trust office of the Trustee, and the Trustee shall authenticate and deliver in

24 4836-5936-5195.175195.21 exchange for such temporary Bonds a like aggregate principal amount of definitive Bonds. Until so exchanged the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds.

Section 2.11. Additional Bonds.

(a) The Issuer may (but shall not be obligated to) issue Additional Bonds from time to time only with respect to the Project, pursuant to the terms and conditions of this Indenture.

(b) Any Additional Bonds shall, to the extent provided for herein and subject to the terms of the USDA Documents, be on a parity with the Series 2017 Bonds and any Additional Bonds theretofore or thereafter issued and Outstanding as to the assignment to the Trustee of the Issuer’s right, title and interest in the Trust Estate for the payment of debt service on the Bonds; provided, that nothing herein shall prevent the payment of debt service on any series of Additional Bonds from (i) being otherwise secured and protected from sources or by property or instruments not applicable to the Series 2017 Bonds and any one or more Series of Additional Bonds, or (ii) not being secured and protected from sources or by property or instruments not applicable to the Series 2017 Bonds and any one or more Series of Additional Bonds.

(c) Before the Trustee shall authenticate and deliver any Additional Bonds, the Trustee shall receive the following items:

(i) unless the Trustee is provided with a letter from the Rating Agency then rating the Series 2017 Bonds that upon issuance of the Additional Bonds the rating on the Outstanding Bonds (including the Additional Bonds) will not be lower than an investment grade rating, an investor letter, in form satisfactory to the Issuer, from each of the purchasers that is not a Qualified Institutional Buyer of the Additional Bonds as may be required by the Issuer;

(ii) duly executed counterparts of (A) the amendment to the Loan Agreement relating to the Project to be financed or refinanced from the proceeds of the Additional Bonds then to be issued and which amendment provides for payments sufficient to pay the debt service charges on the related Additional Bonds, and (B) the supplement to this Indenture providing for the issuance of and the terms and conditions of the Additional Bonds;

(iii) one or more Additional Promissory Notes in an aggregate principal amount equal to the aggregate principal amount of the related Additional Bonds and duly endorsed by the Issuer to the order of the Trustee without recourse or warranty;

(iv) a written order of the Issuer as to the delivery of the Additional Bonds, signed by an Issuer Authorized Signatory;

(v) a copy of the resolution duly adopted by the Issuer authorizing (A) the execution and delivery of a bond purchase agreement, if any, with the

25 4836-5936-5195.175195.21 underwriter, if any, of such Additional Bonds, the amendment to the Loan Agreement and supplement to this Indenture, each relating to the Additional Bonds; and (B) the issuance of the Additional Bonds;

(vi) an opinion of Bond Counsel: (A) to the effect that the Additional Bonds to be delivered will be valid and legal special obligations of the Issuer in accordance with their terms and will be secured hereunder equally and on a parity (except as otherwise permitted herein) with all other Bonds at the time outstanding hereunder as to the assignment to the Trustee of the Trust Estate; and (B) the issuance of the Additional Bonds will not result in the interest of any Outstanding Bonds that are Tax-Exempt Bonds becoming included in gross income for federal income tax purposes and that the issuance of the Additional Bonds will not result in the loss of exemption from the registration requirements under the Securities Act of 1933, as amended, of the Tax-Exempt Bonds and this Indenture;

(vii) a written opinion of counsel to the Borrower, to the effect that the Loan Agreement or the amendment to the Loan Agreement, the Deed of Trust or the amendment to the Deed of Trust and Additional Promissory Notes have been duly authorized, executed and delivered by the Borrower, and that the Loan Agreement or the amendment to the Loan Agreement, the Deed of Trust or the amendment to the Deed of Trust and Additional Promissory Notes constitute legal, valid and binding obligations of the Borrower, enforceable in accordance with their respective terms, subject to exceptions reasonably satisfactory to the Issuer and the Trustee for bankruptcy, insolvency and similar laws and the application of equitable principles;

(viii) evidence satisfactory to the Trustee that on delivery of the Additional Bonds then to be delivered there will be or has been paid into or provided for the Debt Service Reserve Fund any amounts required by this Indenture or the supplement to this Indenture relating to such Additional Bonds;

(ix) the Trustee has received a certification from Bond Counsel that the issuance of such Additional Bonds complies with the requirements of Section 8.13 of the Loan Agreement;

(x) if required by law to secure future advances or if requested by the Trustee, (A) a modification or amendment to the Deed of Trust, in form and substance satisfactory to the Trustee, describing the terms of issuance of such Additional Bonds and increasing the present amount of Bonds secured by such Deed of Trust, and such amendment shall be recorded with the appropriate governmental authority; and (B) an endorsement, meeting the requirements set forth below, to the mortgagee title insurance policy issued to the Trustee insuring such modified Deed of Trust (or if more than one mortgagee title insurance policy, together with tie-in endorsements, has been issued to the Trustee insuring such Deed of Trust, an endorsement to each such policy) that (1) amends the effective date and time of such policy to be the date and time of the recording of the

26 4836-5936-5195.175195.21 amendment to such Deed of Trust; and (2) increases the amount of such policy (if there is only one such policy) or increases the amount of all such policies in the aggregate (if there is more than one such policy) to an amount equal to the principal amount of all Bonds then Outstanding; and (C) continues to insure that such Deed of Trust, as amended, is a first priority Lien on New Facility described therein, subject to Permitted Encumbrances; and

(xi) such other documents, certificates (including certificates issued by public officials) and opinions of counsel as the Issuer, the Underwriter, the Trustee or Bond Counsel may reasonably request.

(d) When (i) the documents listed above have been received by the Trustee; and (ii) the Additional Bonds have been executed and authenticated, the Trustee shall deliver the Additional Bonds to or on the order of the underwriter of such Additional Bonds, but only upon payment to the Trustee of the specified amount (including, without limitation, any accrued interest) set forth in the order to which reference is made in Section 2.11(c)(iv) above. Satisfaction of the requirements set forth in this Section shall be conclusively evidenced by the delivery of such Additional Bonds by the Issuer and the delivery of the opinion of Bond Counsel referred to in Section 2.11(c)(vi).

Section 2.12. Book-Entry System.

(a) Notwithstanding any other provision hereof, each Series of Bonds shall be initially issued in the form of a separate single certificated fully registered Bond for each of the maturities of that Series of Bonds. Upon initial issuance, the ownership of each Bond shall be registered in the registration records kept by the Trustee in the name of Cede & Co., as nominee of DTC. Except as provided in Section 2.12(d) hereof, all of the Outstanding Bonds shall be registered in the registration records kept by the Trustee in the name of Cede & Co., as nominee of DTC.

(b) With respect to Bonds registered in the registration records kept by the Trustee in the name of Cede & Co., as nominee of DTC, the Issuer and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, none of the Issuer, the Borrower, or the Trustee shall have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any other person, other than a Registered Owner, as shown in the registration records kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption; or (iii) the payment to any Participant or any other person, other than a Registered Owner, as shown in the registration records kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest on the Bonds. The Issuer, the Borrower and the Trustee may treat and consider the Person in whose name each Bond is registered in the registration records kept by the Trustee as the absolute owner of such Bond for the purpose of payment of principal, premium and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such

27 4836-5936-5195.175195.21 Bond, and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Registered Owners, as shown in the registration records kept by the Trustee, or their respective attorneys duly authorized in writing, as provided in Section 2.05 hereof, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No Person other than a Registered Owner, as shown in the registration records kept by the Trustee, shall receive a certificated Bond evidencing the obligation to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to Regular Record Dates and Special Record Dates, the words “Cede & Co.” in this Indenture shall refer to such new nominee of DTC.

(c) The Trustee shall take all action necessary for all representations of the Issuer in the Letter of Representations with respect to the paying agents and the bond registrar, respectively, to at all times to be complied with.

(d) (i) DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the Issuer, the Borrower and the Trustee and discharging its responsibilities with respect thereto under applicable law.

(ii) The Trustee, in its sole discretion and without the consent of any other person, may terminate the services of DTC with respect to the Bonds if the Trustee determines that:

(A) DTC is unable to discharge its responsibilities with respect to the Bonds; or

(B) a continuation of the requirement that all of the Outstanding Bonds be registered in the registration records kept by the Trustee in the name of Cede & Co. or any other nominee of DTC, is not in the best interest of the Beneficial Owners of the Bonds.

(iii) Upon the termination of the services of DTC with respect to the Bonds pursuant to Section 2.12(d)(ii)(B) hereof, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to Section 2.12(d)(i) or (d)(ii)(A) hereof after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found which, in the opinion of the Trustee, is willing and able to undertake such functions upon reasonable and customary terms, the Trustee is obligated to deliver Bond certificates at the of the Beneficial Owners of the Bonds, as described in this Indenture, and the Bonds shall no longer be restricted to being registered in the registration records kept by the Trustee in the name of Cede & Co. as nominee of DTC, but may be registered in whatever name or names Registered Owners

28 4836-5936-5195.175195.21 transferring or exchanging Bonds shall designate, in accordance with the provisions of this Indenture.

(e) Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Letter of Representations.

ARTICLE III

REVENUES AND FUNDS

Section 3.01. Pledge of Trust Estate. Subject only to the rights of the Issuer to apply amounts under the provisions of this Article, a pledge and assignment of the Trust Estate to the extent provided herein is hereby made, and the same is pledged and assigned to secure the payment of the principal of, premium, if any, and interest on the Bonds. The pledge and assignment hereby made shall be valid and binding from and after the time of the delivery by the Trustee of the first Bonds authenticated and delivered under this Indenture. The security so pledged and any assignment then or thereafter received by the Issuer shall immediately be subject to the lien of such pledge and assignment and the obligation to perform the contractual provisions hereby made shall have priority over any or all other obligations and liabilities of the Issuer with respect to the Trust Estate and the lien of such pledge and assignment shall be valid and binding against the Issuer, purchasers thereof, and creditors of the Issuer irrespective of whether such parties have notice thereof and without the need for any physical delivery, recordation, filing, or further act.

Section 3.02. Establishment of Funds; Closing Deposits and Disbursements.

(a) The Issuer hereby establishes and creates the following funds, which shall be special trust funds held by the Trustee:

(i) Bond Fund, including a Capitalized Interest Account therein;

(ii) Debt Service Reserve Fund, including a Series 2017 Bonds Account therein;

(iii) Project Fund, including the Series 2017 Project Account therein;

(iv) Cost of Issuance Fund;

(v) Repair and Replacement Fund; and

(vi) (v) Rebate Fund.

(b) [On the date of the Bond Closing for the Series 2017 Bonds, the following amounts shall be deposited to the following Funds: (i) from Series 2017A Bond Proceeds, $[______] (representing $[PRINCIPALA] principal amount of the Series 2017A

29 4836-5936-5195.175195.21 Bonds [less/plus original issue discount/premium] of $[______] and less underwriter’s discount of $[______]), $[______] to the Series 2017 Bonds Account of the Debt Service Reserve Fund, $[______] to the Series 2017 Project Account of the Project Fund, $[______] to the Capitalized Interest Account and $[______] to the Cost of Issuance Fund; and (ii) from Series 2017B Bond Proceeds, $[______] (representing $[PRINCIPALB] principal amount of the Series 2017B Bonds less underwriter’s discount of $[______]), $[______] to the Series 2017 Project Account of the Project Fund, $[______] to the Series 2017 Bonds Account of the Debt Service Reserve Fund, $[______] to the Capitalized Interest Account and $[______] to the Cost of Issuance Fund.]

Section 3.03. Payments Into the Bond Fund. With respect to each Series of Additional Bonds, there shall be deposited into the Bond Fund on the date of the Bond Closing of a Series of Additional Bonds, accrued interest on such Series of Additional Bonds and an amount to pay capitalized interest, if any, all as specified in the Supplemental Indenture related to such Series of Additional Bonds. There shall be deposited into the Bond Fund as and when received (a) all moneys received from the Borrower pursuant to Section 5.01(a) of the Loan Agreement; (b) all moneys transferred to the Bond Fund pursuant to Section 3.07 or 6.01 hereof; (c) all other moneys deposited into the Bond Fund pursuant to the Loan Agreement or this Indenture; and (d) all other moneys received by the Trustee when accompanied by directions from an Authorized Representative of the Borrower, not inconsistent with the Loan Agreement or this Indenture, that such moneys are to be paid into the Bond Fund. There also will be retained in the Bond Fund, interest and other income received on investment of moneys in the Bond Fund as provided in Section 6.01 hereof.

Section 3.04. Use of Moneys in the Bond Fund. Except as provided in this Section and in Sections 3.19, 3.20, 6.01 and 8.05 hereof, moneys in the Bond Fund shall be used solely for the payment of the principal of, premium, if any, and interest on the Bonds on each Principal Payment Date and each Interest Payment Date, respectively. Moneys in the Capitalized Interest Account shall be used solely for the payment of interest on the appropriate Series of Bonds on each Interest Payment Date.

Section 3.05. Custody of the Bond Fund.

(a) The Bond Fund shall be in the custody of the Trustee, and the Issuer authorizes and directs the Trustee to withdraw sufficient funds from the Bond Fund to pay the principal of, premium, if any, and interest on the Bonds as the same become due and payable, and to withdraw sufficient funds from the Bond Fund for other purposes authorized in Section 3.04 hereof.

(b) Amounts on deposit in the Bond Fund shall be: (i) held in trust solely for the benefit of the Registered Owners and the Beneficial Owners of the Bonds, and (ii) applied only in accordance with the provisions of this Indenture. The Borrower shall have no legal, equitable nor reversionary interest in, or right to, such amounts. In the event of any Act of Bankruptcy by the Borrower, the Borrower has, in the Loan Agreement, waived any right it might otherwise have to assert, claim or contend that any

30 4836-5936-5195.175195.21 portion of the Bond Fund is property of its bankruptcy estate as defined by 11 U.S.C. § 541.

Section 3.06. Payments Into the Debt Service Reserve Fund. With respect to each Series of Bonds, there shall be established in the Debt Service Reserve Fund an account related to such Series of Bonds. The amounts in such accounts shall secure only the Series of Bonds related to such account. With respect to the Series 2017 Bonds (which shall be treated as one Series for this purpose), there shall be deposited in the account of the Debt Service Reserve Fund related to the Series 2017 Bonds an amount equal to the Series Debt Service Reserve Fund Requirement for the Series 2017 Bonds. Upon the issuance of each Series of Additional Bonds, there shall be deposited into the respective account of the Debt Service Reserve Fund, an amount specified in the related Supplemental Indenture equal to the related Series Debt Service Reserve Fund Requirement. There shall also be deposited into the Debt Service Reserve Fund (a) all moneys transferred to the Debt Service Reserve Fund from the Bond Fund, (b) all other moneys required to be deposited therein pursuant to the Loan Agreement or this Indenture, and (c) all other moneys received by the Trustee when accompanied by directions from an Authorized Representative of the Borrower not inconsistent with the Loan Agreement or this Indenture that such moneys are to be paid into the Debt Service Reserve Fund. In the event amounts on deposit in any account of the Debt Service Reserve Fund are less than the applicable Series Debt Service Reserve Fund Requirement, the Trustee shall notify by written notice, within five Business Days of when a Responsible Officer of the Trustee has knowledge of such deficiency, the Issuer and the Borrower of such deficiency and that such deficiency must be replenished in accordance with Section 5.01 of the Loan Agreement and Section 3.07 herein. Interest and other income received on investments of moneys in the Debt Service Reserve Fund shall be transferred to the Bond Fund so long as the Debt Service Reserve Fund is funded to an amount equal to the Debt Service Reserve Fund Requirement for the Series 2017 Bonds.

Section 3.07. Use of Moneys in the Debt Service Reserve Fund.

(a) Except as provided in Section 3.19 hereof, moneys in the accounts of the Debt Service Reserve Fund shall be used solely for the payment of the principal of, premium, if any, and interest on the Series of Bonds (on a pro rata basis with respect to the Series 2017A Bonds and the Series 2017B Bonds) related to such accounts in the event moneys in the Bond Fund are insufficient to make such payments when due, whether on an Interest Payment Date, sinking fund redemption date, maturity date or otherwise. Upon the occurrence of an Event of Default hereunder and the exercise by the Trustee of the remedy specified in Section 10.02(a) of the Loan Agreement and Section 8.02(a) hereof, any moneys in the Debt Service Reserve Fund shall be transferred by the Trustee to the Bond Fund. On the final maturity date of a Series of Bonds, any moneys in the account of the Debt Service Reserve Fund related to such Series of Bonds shall be used to pay the principal of and interest on such Bonds on such final maturity date. In the event of the redemption of a Series of Bonds in whole, any moneys in the account of the Debt Service Reserve Fund related to such Series of Bonds shall be transferred to the Bond Fund and applied to the payment of the principal of and premium, if any, on such Bonds. In the event of a prepayment in whole of amounts due under the Loan Agreement and the defeasance pursuant to Section 7.01 herein of all of the Outstanding Bonds of the related Series, any moneys in the account of the Debt Service Reserve Fund related to

31 4836-5936-5195.175195.21 such Series of Bonds shall be applied to the defeasance of such Series of Bonds. The Trustee shall value the Investment Obligations in the accounts of the Debt Service Reserve Fund semiannually on [June 15] and [December 15] of each year at the lesser of their market value or cost. If on any valuation date the amount in an account of the Debt Service Reserve Fund (determined pursuant to this Section) is greater than the related Series Debt Service Reserve Fund Requirement, such excess shall be transferred by the Trustee to the Bond Fund in accordance with Section 3.06 hereof. If on any valuation date the amount in an account of the Debt Service Reserve Fund (determined pursuant to this Section) is less than the related Series Debt Service Reserve Fund Requirement and the deficiency is caused solely by a decreased value of the Investment Obligations therein and not due to a transfer to cure a shortfall in the Bond Fund, the Borrower has agreed pursuant to Section 5.01 of the Loan Agreement that it shall pay to the Trustee, for deposit into the Series Debt Service Reserve Fund, an amount equal to the amount by which the account of Debt Service Reserve Fund amount is less than the Series Debt Service Reserve Fund Requirement with the next monthly deposit following that valuation date. If the amount in the account of the Debt Service Reserve Fund is less than the Series Debt Service Reserve Fund Requirement and the deficiency is caused by a transfer to cure a shortfall in the Bond Fund resulting from the failure of the Borrower to make the payments due on its Promissory Note(s), the Borrower has agreed pursuant to Section 5.01 of the Loan Agreement to pay to the Trustee all amounts transferred to the Bond Fund to make up for any amounts not paid on the Promissory Note(s) in not more than six substantially equal monthly installments beginning in the month following such deficiency, and provided that no such installment shall be less than $5,000.

(b) Amounts on deposit in accounts of the Debt Service Reserve Fund shall be: (i) held in trust solely for the benefit of the Registered Owners and the Beneficial Owners of the related Series of Bonds, and (ii) applied only in accordance with the provisions of this Indenture. The Borrower has no legal, equitable or reversionary interest in, or right to, such amounts. In the event of any Act of Bankruptcy, the Borrower in no event shall assert, claim or contend that any portion of the Debt Service Reserve Fund is property of its bankruptcy estate as defined by 11 U.S.C. § 541.

Section 3.08. Custody of the Debt Service Reserve Fund. The Debt Service Reserve Fund shall be in the custody of the Trustee but in the name of the Issuer, and the Issuer hereby authorizes and directs the Trustee to withdraw sufficient funds from the applicable accounts of the Debt Service Reserve Fund to pay the principal of, premium, if any, and interest on the Series 2017 Bonds and for the purposes described in Section 3.19 hereof, which authorization and direction the Trustee hereby accepts. In the event there shall be a deficiency in the Bond Fund on any payment date for the Series 2017 Bonds because of a default by a Borrower under the Loan Agreement, the Trustee shall promptly make up such deficiency from the Debt Service Reserve Fund.

Section 3.09. Payments Into and Use of Moneys in the Project Fund; Disbursements. With respect to the Series 2017 Bonds, there shall be deposited into the Series 2017 Project Account of the Project Fund from the proceeds of the Series 2017 Bonds, an aggregate amount of Series 2017A Bond proceeds equal to $[______] and an aggregate amount of Series 2017B Bond proceeds equal to $[______]. With respect to each Series of Additional Bonds, the

32 4836-5936-5195.175195.21 amount of proceeds to be deposited in the related subaccount of the Project Fund shall be provided for in the related Supplemental Indenture. The Trustee is hereby authorized and directed to make each disbursement required by the provisions of Section 4.02 of the Loan Agreement and the related Supplemental Indenture and to issue its checks or wire transfers therefor against the related subaccount of the Project Fund; provided that the Trustee will not disburse any amounts from the Project Fund (except for costs that are not Costs of the Project) until it has received the items set forth in Section 4.02 of the Loan Agreement. The Trustee shall keep and maintain adequate records pertaining to the Project Fund and all disbursements therefrom and shall provide monthly statements of transactions to the Borrower. The Trustee shall have no duty to confirm that the use of any disbursed funds by the Borrower complies with the provisions of this Indenture or the Loan Agreement.

Section 3.10. Completion of the Project. The completion of the Construction Project and payment or provision made for payment of the full cost of such Construction Project shall be evidenced by the filing with the Trustee the certificate required by the provisions of Section 4.03 of the Loan Agreement. Any balance remaining in the related subaccount of the Project Fund on the date such certificate is received shall be used in accordance with Section 4.03 of the Loan Agreement.

Section 3.11. Custody of the Project Fund. The Project Fund shall be in the custody of the Trustee but in the name of the Issuer, and the Issuer authorizes and directs the Trustee to withdraw sufficient funds from the appropriate subaccount of the Project Fund for Costs of the Project as requisitioned by the Borrower in the form attached to the Loan Agreement as Exhibit C thereto, which authorization and direction the Trustee hereby accepts.

Notwithstanding the foregoing, on the date of the Bond Closing, moneys held in the Project Fund representing proceeds of the Series 2017 Bonds shall initially be disbursed on the date of the Bond Closing by the Trustee as provided in Exhibit D attached hereto (including as set forth in the closing memorandum attached to such Exhibit D) without need for further requisition.

Section 3.12. Payments Into and Use of Moneys in the Cost of Issuance Fund.

(a) With respect to the Series 2017 Bonds, there shall be deposited into the Cost of Issuance Fund on the Bond Closing for the Series 2017 Bonds the amounts set forth in Section 3.02(b) hereof. With respect to each Series of Additional Bonds, there shall be deposited into the Cost of Issuance Fund that amount as provided in the related Supplemental Indenture. Such moneys shall be expended to pay issuance expenses in accordance with a written direction from the Borrower.

(b) The Trustee shall keep and maintain adequate records pertaining to the Cost of Issuance Fund and all payments therefrom, which shall be open to inspection by the Borrower, the Issuer or their duly authorized agents during normal business hours of the Trustee.

Section 3.13. Termination of Cost of Issuance Fund. With respect to the Series 2017 Bonds, any amounts remaining on deposit in the Cost of Issuance Fund 90 days after their

33 4836-5936-5195.175195.21 delivery shall be transferred to the related subaccount of the Project Fund and disbursed pursuant to Sections 3.09 and 3.10 herein. With respect to each Series of Additional Bonds, any amounts remaining on deposit in the Cost of Issuance Fund on the date 90 days after the Bond Closing of the related Series of Bonds shall be transferred to the related subaccount of the Project Fund and disbursed pursuant to Sections 3.09 and 3.10 herein.

Section 3.14. Custody of the Cost of Issuance Fund. The Cost of Issuance Fund shall be in the custody of the Trustee but in the name of the Issuer and the Issuer authorizes and directs the Trustee to withdraw sufficient funds from the Cost of Issuance Fund for the purposes set forth in Section 4.04 of the Loan Agreement and Section 3.12 hereof, which authorization and direction the Trustee hereby accepts.

Section 3.15. [Reserved].Repair and Replacement Fund.

(a) The Trustee shall deposit into the Repair and Replacement Fund as and when received (i) all moneys delivered to it for deposit therein as provided by Section 5.01(c) of the Loan Agreement, and (ii) all other moneys received by the Trustee when accompanied by directions from an Authorized Representative of the Borrower that such moneys are to be paid into the Repair and Replacement Fund.

(b) Amounts on deposit in the Repair and Replacement Fund may be disbursed by the Trustee from time to time to the Borrower upon receipt of a requisition therefor to pay for the repair and/or replacement of capital items or to fund capital improvements to the New Facility in the form provided in Exhibit E of the Loan Agreement signed by an Authorized Representative of the Borrower.

Section 3.16. Nonpresentment of Bonds. In the event any Bonds, or portions thereof, shall not be presented for payment when the principal thereof becomes due, either at maturity, the date fixed for redemption thereof, or otherwise, if funds sufficient for the payment thereof, including accrued interest thereon, shall have been deposited into the Bond Fund or otherwise made available to the Trustee for deposit therein, then on and after the date said principal becomes due, all interest thereon shall cease to accrue and all liability of the Issuer to the Registered Owner or Registered Owners thereof for the payment of such Bonds, shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such fund or funds in a separate trust account for the benefit of the Registered Owner or Registered Owners of such Bonds, who shall thereafter be restricted exclusively to such fund or funds for any claim of whatever nature on his, her or their part under this Indenture with respect to said Bond. Such moneys shall not be required to be invested during such period by the Trustee. If any Bond shall not be presented for payment within the period of four years following the date when such Bond becomes due, whether by maturity or otherwise, the Trustee shall return to the Issuer such funds theretofore held by it for payment of such Bonds. Thereafter, the Registered Owner of that Bond shall look only to the Issuer for payment and then only to amounts so received by the Issuer. The obligations of the Trustee under this Section shall be subject, however, to any law applicable to the unclaimed funds or the Trustee providing other requirements for the disposition of unclaimed property.

34 4836-5936-5195.175195.21 Section 3.17. Moneys To Be Held in Trust. All moneys required to be deposited with or paid to the Trustee under any provision of this Indenture shall be held by the Trustee in trust for the purposes specified in this Indenture, and, except for moneys deposited with or paid to the Trustee in the Rebate Fund or by or for the account of the Issuer pursuant to the Loan Agreement and this Indenture or for the payment or redemption of specific Bonds and moneys held by the Trustee in the Cost of Issuance Fund, and in the separate trust accounts pursuant to Sections 3.16 and 3.18 hereof (to the extent, in the case of moneys held pursuant to Section 3.18 hereof, such moneys are held pending disbursement for repair or replacement of any facilities or properties of the Borrower), shall, while held by the Trustee, constitute part of the Trust Estate and be subject to the lien hereof. Moneys held in the Rebate Fund shall be held in trust by the Trustee and shall be applied as provided in Section 3.20 hereof.

Section 3.18. Insurance and Condemnation Proceeds. Reference is hereby made to the provisions of the Loan Agreement wherein it is provided that under certain circumstances the Net Proceeds of insurance payments and condemnation awards are to be paid to the Trustee to be deposited in a segregated trust account established for such purpose and to be disbursed and paid out as therein provided. The Trustee hereby accepts and agrees to perform such duties and obligations specified in the Loan Agreement. The Trustee shall fully cooperate with the Borrower in the handling and conduct of any prospective or pending insurable event or condemnation proceeding with respect to any facilities or properties of the Borrower or any part thereof.

Section 3.19. Repayment to the Borrower From the Funds. Any amounts remaining in the Funds after payment in full of the Bonds (or making provision for such payment), the fees and expenses of the Trustee, the Issuer’s Annual Fee and all other amounts required to be paid hereunder and under the Loan Agreement to the Issuer and the Trustee and others (including payments into the Rebate Fund and to the United States Treasury, and payments in respect of the Issuer’s Unassigned Rights) shall be paid to the Borrower upon the expiration of the term of this Indenture.

Section 3.20. Rebate Fund. There shall be deposited into the Rebate Fund investment income on moneys in the Funds to the extent provided in the written direction of the Borrower pursuant to Section 4.06 of the Loan Agreement and subject to the limitations in Section 6.01(c) hereof, moneys received from the Borrower pursuant to Section 5.01(f) of the Loan Agreement, moneys transferred to the Rebate Fund from the Cost of Issuance Fund, the Debt Service Reserve Fund, the Project Fund, the Repair and Replacement Fund or the Bond Fund pursuant to the provisions of this Section and all other moneys received by the Trustee when accompanied by written directions not inconsistent with the Loan Agreement or this Indenture that such moneys are to be paid into the Rebate Fund. The Trustee shall cause amounts on deposit in the Rebate Fund to be forwarded to the United States Treasury (at the address provided in the Tax Certificate) at the times and in the amounts set forth in the Borrower’s written direction pursuant to Section 4.06 of the Loan Agreement.

If, upon receipt of the certification pursuant to Section 4.06 of the Loan Agreement, the moneys on deposit in the Rebate Fund are insufficient for the purposes thereof, notwithstanding Section 6.01(c) hereof, the Trustee shall transfer moneys to the Rebate Fund from the following Funds in the following order of priority: the Cost of Issuance Fund, the Repair and Replacement

35 4836-5936-5195.175195.21 Fund, the Debt Service Reserve Fund, the Project Fund and the Bond Fund. The Trustee shall provide notice to the Issuer if the certificate referred to in Section 4.06 of the Loan Agreement is not received by the Trustee as provided in Section 4.06 of the Loan Agreement to the effect that the amount in the Rebate Fund is in excess of the amount required to be therein, such excess shall be transferred to the Bond Fund.

Section 3.21. Custody of the Rebate Fund. The Rebate Fund shall be in the custody of the Trustee, but in the name of the Issuer, and the Issuer authorizes and directs the Trustee to withdraw funds from the Rebate Fund for the purposes set forth in Section 3.20 hereof, which authorization and direction the Trustee hereby accepts.

ARTICLE IV

COVENANTS OF THE ISSUER

Section 4.01. Performance of Covenants.

(a) The Issuer represents that it is duly authorized under the laws of the State, particularly the Act, to issue the Series 2017 Bonds and to execute this Indenture, to pledge the Trust Estate in the manner and to the extent herein set forth, that all actions on its part required for the issuance of the Series 2017 Bonds and the execution and delivery of this Indenture have been duly and effectively taken or will be duly taken as provided herein, and that this Indenture is a valid and enforceable instrument of the Issuer and that the Series 2017 Bonds in the hands of the Registered Owners thereof are and will be valid and enforceable obligations of the Issuer according to the terms thereof, except as the enforceability thereof may be limited by insolvency, bankruptcy, reorganization, arrangement, fraudulent conveyance, moratorium or other laws affecting the enforcement of creditors’ rights generally, to the exercise of judicial discretion in appropriate cases, to the limitation on legal remedies against joint powers commissions or governmental units of the State, such as the Issuer, and by the application of general principles of equity.

(b) The Issuer covenants that it will not knowingly take any action reasonably within its control which will permit an investment or other use of the proceeds of Tax-Exempt Bonds, and will not knowingly take any action with respect to the amounts payable under the Loan Agreement which, in either case, would cause the Tax-Exempt Bonds to be arbitrage bonds under Section 148(a) of the Code and the Regulations thereunder or “federally guaranteed” within the meaning of Section 149(b) of the Code and the Regulations thereunder, and it further covenants that it will comply with the requirements of such Sections and Regulations. The foregoing covenants shall extend throughout the term of the Tax-Exempt Bonds, to all Funds and accounts created under this Indenture and all money on deposit to the credit of any such Fund or account, and to any other amounts which are Tax-Exempt Bond proceeds for purposes of Section 148 of the Code and the Regulations thereunder.

(c) The Issuer covenants that it will not knowingly take any action or permit any action within its control to be taken which would adversely affect the exemption from federal income tax of interest on the Tax-Exempt Bonds; that all action on its part for the

36 4836-5936-5195.175195.21 issuance of the Series 2017 Bonds and the execution and delivery of this Indenture has been duly and effectively taken; and that the Series 2017 Bonds in the hands of the owners thereof are and will be valid and enforceable limited and special obligations of the Issuer according to the terms thereof and hereof.

Section 4.02. Instruments of Further Assurance. Subject to Section 4.06(b) hereof, the Issuer covenants that it will do, execute, acknowledge, and deliver or cause to be done, executed, acknowledged, and delivered by the parties within its control, such instruments supplemental hereto and such further acts, instruments, and transfers as the Trustee may reasonably require for the better assuring, transferring, mortgaging, conveying, pledging, assigning, and confirming unto the Trustee, the Issuer’s interest in and to all interests, revenues, proceeds, and receipts pledged hereby to the payment of the principal of, premium, if any, and interest on the Bonds in the manner and to the extent contemplated herein. The Issuer shall be under no obligation to prepare, record, or file any such instruments or transfers.

Section 4.03. Payment of Principal, Premium, if Any, and Interest. The Issuer will promptly pay or cause to be paid the principal of, premium, if any, and interest on all Bonds issued hereunder according to the terms hereof; provided, however, that the principal, premium, if any, and interest payments are payable solely from the Trust Estate, which is hereby specifically pledged to the payment thereof in the manner and to the extent herein specified; and provided, further, that this covenant is subject to Section 11.08 hereof. Nothing in the Bonds or in this Indenture shall be considered or construed as pledging any funds or assets of the Issuer other than the Trust Estate or creating any liability of the Issuer Indemnified Parties.

Section 4.04. Unrelated Bond Issues. The Issuer has, prior to the issuance of the Bonds, issued, and subsequent to the issuance of the Bonds, the Issuer expects to issue, various series of bonds in connection with the financing of other projects (said bonds together with any bonds issued by the Issuer between the date hereof and issuance of the Bonds shall be referred to herein as the “Other Bonds”). Any pledge, mortgage, or assignment made in connection with any Other Bonds shall be protected, and any funds pledged or assigned for the payment of principal, premium, if any, or interest on the Other Bonds shall not be used for the payment of principal, premium, if any, or interest on the Bonds. Correspondingly, any pledge, mortgage, or assignment made in connection with the Bonds shall be protected, and any funds pledged or assigned for the payment of the Bonds shall not be used for the payment of principal, premium, if any, or interest on the Other Bonds.

Section 4.05. Rights Under the Loan Agreement.

(a) The Issuer will observe all of the obligations, terms and conditions required on its part to be observed or performed under the Loan Agreement. The Issuer agrees that to the extent the Loan Agreement gives the Trustee some right or privilege, or in any way attempts to confer upon the Trustee the ability for the Trustee to protect the security for payment of the Bonds, that such parts of the Loan Agreement shall be as though they were set out in this Indenture in full.

(b) The Issuer agrees that the Trustee as assignee of certain of its rights under the Loan Agreement may enforce, in its name or in the name of the Issuer, all rights of the

37 4836-5936-5195.175195.21 Issuer (except the Issuer’s Unassigned Rights) and all obligations of the Borrower under and pursuant to the Loan Agreement for and on behalf of the Registered Owners, whether or not the Issuer is in default hereunder.

Section 4.06. Performance of Obligations.

(a) Any performance by the Issuer of all duties and obligations imposed upon it hereby, the exercise by it of all powers granted to it hereunder, the carrying out of all covenants, agreements and promises made by it hereunder, and the liability of the Issuer for all covenants hereunder, shall be limited solely to the Trust Estate, including revenues and receipts derived from the Loan Agreement, the Promissory Notes and the Deed of Trust.

(b) The Issuer shall have no obligation to pay the principal of, premium, if any, or interest on the Bonds, except from the Trust Estate. None of the provisions of this Indenture shall require the Issuer to expend or risk its own funds or to otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder, unless payable from the Trust Estate, or unless the Issuer shall first have been adequately indemnified to its satisfaction against the cost, expense, and liability which may be incurred thereby. The Issuer shall not be under any obligation hereunder to perform any administrative service with respect to the Bonds or the Project (including, without limitation, record keeping and legal services), it being understood that such services shall be performed or provided by the Trustee or the Borrower. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions expressly contained in this Indenture, in every Bond executed, authenticated, and delivered hereunder, in the Loan Agreement and in all of its proceedings pertaining thereto; provided, however, that the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof unless and until it shall have (i) been directed to do so by the Borrower or the Trustee; (ii) received from the party requesting such action or execution assurance satisfactory to the Issuer that the Issuer’s reasonable expenses incurred or to be incurred in connection with taking such action or executing such instrument have been or will be paid or reimbursed to the Issuer; and (iii) if applicable, received in a timely manner the instrument or document to be executed, in form and substance satisfactory to the Issuer. In complying with any provision herein or in the Loan Agreement requiring the Issuer to “cause” another Person to take or omit any action, the Issuer shall be entitled to rely conclusively (and without independent investigation or verification) (i) on the faithful performance by the Trustee or the Borrower, as the case may be, of their respective obligations hereunder and under the Loan Agreement and (ii) upon any written certification or opinion furnished to the Issuer by the Trustee or the Borrower, as the case may be. In acting, or in refraining from acting, under this Indenture and the Loan Agreement, the Issuer may conclusively rely on the advice of its counsel. The Issuer shall not be required to take any action hereunder or under the Loan Agreement that it reasonably believes to be unlawful or in contravention hereof of thereof.

(c) The Loan Agreement sets forth covenants and obligations of the Issuer and the Borrower, and reference is hereby made to the same for a detailed statement of said

38 4836-5936-5195.175195.21 covenants and obligations. Notwithstanding anything to the contrary in this Indenture, the Issuer shall have no obligation to and instead the Trustee, in accordance with this Indenture, shall have the right, without further direction from or action by the Issuer, take any and all steps, actions and proceedings, to enforce any or all rights of the Issuer under this Indenture and the Loan Agreement (other than the Issuer’s Unassigned Rights), including, without limitation, the rights to enforce the remedies upon the occurrence and continuation of an Event of Default and the obligations of the Borrower under the Loan Agreement.

Section 4.07. Tax Status of the Interest on the Bonds. The Issuer hereby acknowledges that in order to ensure that the tax status of the interest on any outstanding series of Tax-Exempt Bonds is not adversely affected, it has secured from the Borrower the covenants set forth in Sections 4.06 and 4.07 of the Loan Agreement.

ARTICLE V

REDEMPTION OF BONDS PRIOR TO MATURITY

Section 5.01. Optional Redemption of Bonds.

(a) The Series 2017A Bonds are subject to redemption at the of the Issuer (which option shall be exercised upon the written direction of the Borrower to the Trustee from prepayment of the Series 2017A Promissory Note made by the Borrower pursuant to Section 11.01 of the Loan Agreement) in whole or in part in Authorized Denominations on any date commencing [June 15, 20__], at a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date fixed for redemption, without premium. Upon the delivery of such written direction by the Borrower to the Trustee, the Issuer shall be deemed, without any action on the Issuer’s part, to have exercised its option to redeem the Series 2017A Bonds under this Section.

(b) The Series 2017B Bonds are not subject to optional redemption prior to their maturity.

(c) Additional Bonds shall be subject to optional redemption at such times and upon such terms as shall be fixed by the related Supplemental Indenture.

(d) In case of optional redemption of the Series 2017A Bonds, the Borrower shall, at least 45 days prior to the redemption date (unless a shorter notice shall be satisfactory to the Trustee), deliver a written request to the Issuer and the Trustee notifying the Issuer and the Trustee of such redemption date and of the principal amount of the Series 2017A Bonds to be redeemed and shall, prior to the redemption date, deliver to the Trustee funds sufficient to pay the redemption price of all Series 2017A Bonds subject to redemption.

Section 5.02. Redemption of Bonds Upon Occurrence of Certain Events. The Bonds of a Series are also subject to extraordinary redemption at the expense of the Borrower, from the Net Proceeds, as applicable, of any insurance policy or condemnation award and in the event the

39 4836-5936-5195.175195.21 New Facility or any portion thereof is damaged or destroyed or taken in condemnation proceedings as provided in Section 7.02 of the Loan Agreement. If called pursuant to this Section 5.02, such Bonds are callable on any date in whole or in part from and to the extent of funds on deposit under this Indenture and available for this purpose at a redemption price equal to the principal amount of each Bond redeemed plus accrued interest to the redemption date, without premium.

Section 5.03. Mandatory Sinking Fund Redemption.

(a) The Series 2017A Bonds maturing [June 15, 20__], are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

40 4836-5936-5195.175195.21 Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount

$$ * ______*Maturity Date.

The Series 2017A Bonds maturing [June 15, 20__], are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount

$$ * ______*Maturity Date.

The Series 2017A Bonds maturing [June 15, 20__], are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount

$$ * ______*Maturity Date.

The Series 2017B Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount

$$ * ______*Maturity Date.

41 4836-5936-5195.175195.21 (b) Additional Bonds of a Series may be subject to mandatory sinking fund redemption at such times and upon such terms as shall be fixed by the related Supplemental Indenture relating to such Bonds.

Section 5.04. Mandatory Redemption Upon Determination of Taxability. The Tax-Exempt Bonds of a Series are subject to mandatory redemption as a whole at the principal amount thereof, plus accrued interest thereon to the date of redemption, upon the occurrence of a Determination of Taxability related to such Tax-Exempt Bonds. The redemption date shall be the earliest practicable date selected by the Trustee, after consultation with the Borrower, but in no event later than six months following the finalization of the Determination of Taxability.

Section 5.05. Method of Selecting Bonds. Unless otherwise specifically stated herein, any partial redemption of Bonds shall be redeemed in such order of Series and maturity as the Borrower shall direct in writing, or if less than all of the Bonds in a single maturity shall be redeemed, the Bonds redeemed shall be selected by lot within such maturity. Redemptions of term Bonds shall be credited against the latest scheduled mandatory sinking fund payment for such Bonds.

Section 5.06. Notices of Redemption.

(a) All or a portion of the Bonds shall be called for optional redemption by the Trustee as herein provided upon receipt by the Trustee at least 45 days prior to the redemption date of a certificate of the Borrower specifying the principal amount of the Bonds to be called for redemption, the applicable redemption price or prices, and the provision or provisions of this Indenture pursuant to which such Bonds are to be called for redemption and whether such redemption will be conditional. In the case of every redemption, the Trustee shall cause notice of such redemption by mailing by first-class mail a copy of the redemption notice to the Registered Owners of the Bonds designated for redemption in whole or in part, at their addresses as the same shall last appear upon the registration records (or by such other means as required by the Depository Trust Company), in each case not more than 45 nor less than 20 days prior to the redemption date; provided, however, that failure to give such notice, or any defect therein, shall not affect the validity of any proceedings for the redemption of such Bonds. The Trustee shall furnish the Borrower with a copy of each notice of redemption, as soon as practicable after the delivery of notice to the Registered Owners of the Bonds.

(b) Each notice of redemption shall specify the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of the Bonds to be redeemed, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon will cease to accrue. If less than all the Outstanding Bonds are to be redeemed, the notice of redemption shall specify the numbers of the Bonds or portions thereof to be redeemed.

(c) If the Borrower’s certificate delivered to Section 5.06(a) above indicates that the redemption shall be conditional, the notice of redemption shall state that the redemption is conditioned upon satisfaction of such condition(s) identified in the

42 4836-5936-5195.175195.21 Borrower’s certificate, including but not limited to a condition that, on or prior to the redemption date, (i) sufficient moneys to redeem such Bonds have been received by the Trustee and that if such money is not so received, no Bonds shall be redeemed; or (ii) a written notice rescinding the redemption notice has not been received by the Trustee from the Borrower, and that if such written notice rescinding the redemption notice is received, no Bonds shall be redeemed. Upon receipt of any such written notice of rescission, the Trustee shall promptly notify the Registered Owners of such rescission. Any such rescission shall not constitute an Event of Default hereunder, and any Bonds called for redemption will remain Outstanding and will continue to bear interest until their maturity or subsequent call for redemption, at the same rate as they would have borne had they not been called for redemption.

Section 5.07. Bonds Due and Payable on Redemption Date; Interest Ceases To Accrue. On or before the redemption date specified in any notice of redemption of the Borrower delivered pursuant to Section 5.06 hereof, moneys sufficient to redeem all the Bonds called for redemption at the appropriate redemption price, including accrued interest to the date fixed for redemption, shall be deposited with the Trustee by the Borrower. On the redemption date, the principal amount of each Bond to be redeemed, together with the accrued interest thereon to such date and redemption premium, if any, shall become due and payable; and from and after such date, notice having been given and deposit having been made in accordance with the provisions of this Article, then, notwithstanding that any Bonds called for redemption shall not have been surrendered, no further interest shall accrue on any of such Bonds. From and after such date of redemption (such notice having been given and such deposit having been made) the Bonds to be redeemed shall not be deemed to be Outstanding hereunder, and the Issuer shall be under no further liability in respect thereof, except as provided in Section 3.16 hereof.

Section 5.08. Cancellation. All Bonds which have been redeemed and all Bonds delivered to the Trustee by the Borrower for cancellation shall be cancelled by the Trustee and destroyed as provided in Section 2.09 hereof.

Section 5.09. Partial Redemption of Bonds. Upon surrender of any Bond for redemption in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to the Registered Owner thereof, the cost of which shall be paid by the Borrower, a new Bond or Bonds of the same maturity and of Authorized Denominations, in an aggregate principal amount equal to that portion of the Bond not redeemed.

Section 5.10. No Partial Optional Redemption in Event of Default. Notwithstanding any provisions of this Article, the Bonds shall not be subject to partial optional redemption pursuant to Section 5.01 hereof if an Event of Default has occurred hereunder and has not been cured or otherwise waived by the Trustee for the purpose of making any such redemption payment.

Section 5.11. Purchase in Lieu of Redemption. At any time the Bonds are subject to redemption, the Borrower may direct the Trustee to purchase the Bonds which would otherwise be subject to redemption from money available for such redemption under this Indenture or other money provided to the Trustee by the Borrower and deposited by the Trustee in a separate account hereunder to be established by the Trustee at such time, and such Bonds shall be

43 4836-5936-5195.175195.21 cancelled upon purchase. The purchase price and maturities of such Bonds shall be determined by the Borrower, but the purchase price may not exceed par. The principal amount of Bonds purchased pursuant to this Section shall be credited against the latest scheduled mandatory sinking fund payment or payments for such Bonds unless otherwise directed by the Borrower. Written notice of such election must be given to the Trustee not less than five Business Days prior to the date the Trustee must send notice of redemption. If only a portion of a Bond is purchased pursuant to this section, the Trustee shall issue a new Bond with respect to the unpurchased portion of such Bond, in accordance with Section 5.09 hereof.

ARTICLE VI

INVESTMENTS

Section 6.01. (a) Moneys in all Funds hereunder shall be invested and reinvested by the Trustee in Investment Obligations, at the written direction of the Authorized Representative of the Borrower, which direction shall include a certification that such investment is then a lawful investment under the laws of the State of North Carolina and an Investment Obligation hereunder. If no such direction is received, the Trustee shall hold such amounts in cash. The Borrower covenants that at no time shall any funds constituting gross proceeds of the Tax-Exempt Bonds be used in any manner to cause or result in a prohibited payment under applicable regulations pertaining to, or in any other fashion as would constitute failure of compliance with, Section 148 of the Code. Investments of moneys in the Bond Fund shall mature or be redeemable without penalty at the option of the Trustee at the times and in the amounts necessary to provide moneys to pay the principal of, premium, if any, and interest on the Bonds as they become due at stated maturity or by redemption. Each investment of moneys in funds other than the Bond Fund shall mature or be redeemable without penalty at such time as may be necessary to make payments from such fund.

(b) Upon receipt of written directions from the Authorized Representative of the Borrower with respect thereto, which shall be in compliance with any restrictions contained in the Tax Certificate, the Trustee shall sell those investments and reinvest the proceeds therefrom in Investment Obligations maturing or redeemable as aforesaid. Any of those investments may be purchased from or sold to the Trustee or any bank, trust company or savings and loan association affiliated with the Trustee. The Trustee shall sell or redeem investments credited to the Bond Fund to produce sufficient moneys applicable hereunder to and at the times required for the purposes of paying the principal of, premium and interest on the Bonds when due as aforesaid, and shall do so without necessity for any order on behalf of the Issuer and without restriction by reason of any order. An investment made from moneys credited to the Project Fund, the Bond Fund or, the Cost of Issuance Fund or the Repair and Replacement Fund shall constitute part of that respective fund. Proceeds of the sale of and income on investments in the funds shall be credited to such funds. For purposes of this Indenture, the Investment Obligations shall be valued by the Trustee on each [June 15] and [December 15] at face amount or market value, whichever is less, except as otherwise provided in Article III. The Trustee shall not be responsible for any losses resulting from an investment made in accordance with this Section.

44 4836-5936-5195.175195.21 (c) Notwithstanding the provisions of this Section, any interest or other gain from any Fund shall be transferred to the Rebate Fund to the extent required by the written direction of the Borrower pursuant to Section 4.06 of the Loan Agreement, except that no such transfer shall be made from any Fund if such transfer would cause the amount then on deposit in such Fund to be less than required by the provisions of this Indenture. Any interest or other gain realized as a result of any investments or reinvestments of moneys in the Rebate Fund shall be retained in the Rebate Fund.

ARTICLE VII

DISCHARGE OF INDENTURE

Section 7.01. Discharge of This Indenture.

(a) If the Bonds are paid in accordance with their terms (or payment of the Bonds is provided for in the manner set forth in the following paragraph), together with all other sums payable hereunder, all amounts payable to the Issuer and the Trustee under the Loan Agreement and all amounts payable to the United States Treasury pursuant to Section 148 of Code, or provision made for the payment of the same, then this Indenture and the Trust Estate and all rights granted hereunder will thereupon cease, terminate and become void and be discharged and satisfied (except for those provisions which expressly provide for their survival). Also if all Outstanding Bonds are purchased by the Borrower and delivered to the Trustee for cancellation, and all other sums payable hereunder, all amounts payable to the Issuer and the Trustee under the Loan Agreement, and all amounts payable to the United States Treasury pursuant to Section 148 of the Code paid, or provision made for the payment of the same, then this Indenture and the Trust Estate and all rights granted hereunder will thereupon cease, terminate and become void and be discharged and satisfied (except for those provisions which expressly provide for their survival). In such events, upon the request of the Borrower, the Trustee shall assign and transfer to the Borrower all property then held by the Trustee hereunder with respect to the Borrower and shall execute such documents as may be reasonably required by the Borrower and shall turn over to the Borrower the appropriate amount of any surplus in any Fund pursuant to Section 3.19 hereof.

(b) Payment of any Outstanding Bond shall, prior to the maturity or redemption date thereof, be deemed to have been provided for within the meaning and with the effect expressed in this Section if: (i) in the case that said Bond is to be redeemed on any date prior to its maturity, the Borrower shall have given to the Trustee in form satisfactory to it irrevocable instructions to give, on a date in accordance with the provisions of Section 5.06 hereof, notice of redemption of such Bond on said redemption date, such notice to be given in accordance with the provisions of Section 5.06 hereof; (ii) there shall have been deposited with the Trustee either moneys in an amount which shall be sufficient, or Government Obligations which shall not contain provisions permitting the redemption thereof at the option of the issuer, the principal of and the interest on which when due, and without any reinvestment thereof, will provide moneys which, together with the moneys, if any, deposited with or held by the Trustee at the same time, shall be sufficient to pay when due the principal of and premium, if any, and interest due

45 4836-5936-5195.175195.21 and to become due on said Bond on and prior to the redemption date or maturity date thereof, as the case may be; (iii) there shall have been delivered to the Trustee a certificate from a firm of certified public accountants certifying as to the sufficiency of the deposit made pursuant to the preceding clause (ii); (iv) there shall have been delivered to the Trustee an opinion of Bond Counsel satisfactory to the Trustee and the Issuer that such payment does not adversely affect the exclusion from gross income of interest on the Tax-Exempt Bonds; and (v) in the event said Bond is not by its terms subject to redemption within the next 45 days, the Borrower shall have given the Trustee in form satisfactory to it irrevocable instructions to give, as soon as practicable in the same manner as the notice of redemption is given pursuant to Section 5.06 hereof, a notice to the Registered Owner of such Bond that the deposit required by clause (ii) above has been made with the Trustee and that payment of said Bond has been provided for in accordance with this Section and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal of and premium, if any, and interest on said Bond. Neither such securities nor moneys deposited with the Trustee pursuant to this Section or principal or interest payments on any such securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and premium, if any, and interest on said Bond; provided any cash received from such principal or interest payments on such securities deposited with the Trustee, if not then needed for such purpose, shall, to the extent practicable, be reinvested in securities of the type described in clause (ii) of this paragraph maturing at times and in amounts sufficient to pay when due the principal of and premium, if any, and interest to become due on said Bond on or prior to such redemption date or maturity date thereof, as the case may be. At such time as payment of a Bond has been provided for as aforesaid, such Bond shall no longer be secured by or entitled to the benefits of this Indenture, except for the purpose of any payment from such moneys or securities deposited with the Trustee.

(c) The release of the obligations of the Issuer and Borrower under this Section shall be without prejudice to the right of the Trustee or the Issuer to be paid reasonable compensation for all services rendered by it hereunder, on its Liabilities under Section 8.06 of the Loan Agreement and all its reasonable expenses, charges and other disbursements incurred on or about the administration of the trust hereby created and the performance of its powers and duties hereunder.

(d) Notwithstanding anything contained herein to the contrary, provision shall not be made for the payment of any Bonds if such provision would constitute an advance refunding under the Code, unless simultaneously with such provision for payment, the Borrower delivers to the Issuer and the Trustee an opinion of Bond Counsel to the effect that such provision will not adversely affect the exclusion from gross income of the interest on the Tax-Exempt Bonds.

(e) The provisions contained in this Section 7.01 apply equally to the discharge of the lien of this Indenture for all of the Bonds or any portion thereof.

Section 7.02. Survival. Notwithstanding the payment in full or defeasance of the Bonds, the discharge of this Indenture as set forth in Section 7.01 above, and the termination or

46 4836-5936-5195.175195.21 expiration of the Loan Agreement and the Deed of Trust, all provisions in this Indenture, the Loan Agreement or any other document in connection with the issuance of the Bonds concerning (a) the tax-exempt status of the Tax-Exempt Bonds; (b) the interpretation of this Indenture; (c) the governing law; (d) jurisdiction and the forum for resolving disputes; (e) the Issuer’s right to rely on written representations of others contained herein or in any other document or instrument issued or entered into in respect of the Bonds, regardless of whether the Issuer is a party thereto; (f) the indemnity of the Issuer and the Issuer Indemnified Parties from liability; (g) the Issuer’s and the Issuer Indemnified Parties’ lack of pecuniary liability; (h) the indemnity of the Trustee Indemnified Parties; (i) the rights, powers and duties of the Trustee as may be necessary and convenient for the payment of amounts due or to become due on the Bonds and the registration, transfer, exchange and replacement of Bonds; and (j) any other provision of this Indenture that expressly provides for its survival, shall survive and remain in full force and effect.

ARTICLE VIII

DEFAULTS AND REMEDIES

Section 8.01. Events of Default.

(a) Each of the following is hereby defined as and shall be deemed an “Event of Default” under this Indenture:

(i) failure in the payment by the Issuer of the principal of or premium, if any, on any Bond when the same shall become due and payable, whether at the stated maturity thereof, on a sinking fund payment date or upon proceedings for redemption;

(ii) failure in the payment by the Issuer of any installment of interest on any Bond when the same shall become due and payable;

(iii) failure by the Issuer to observe or perform any other covenant, agreement, contract or other provision of the Bonds or this Indenture (other than as referred to in Section 8.01(a)(i) or (ii) above) and such default shall continue for a period of 30 days after written notice to the Issuer and the Borrower by the Trustee specifying such default and requiring the same to be remedied, provided, with respect to any such failure described by this clause (iii), no Event of Default will be deemed to have occurred so long as a course of action adequate to remedy such failure shall have been commenced within such 30-day period and shall thereafter be diligently prosecuted to completion and the failure shall be remedied thereby within 90 days of such notification. The Borrower shall deliver a written report to the Trustee at least once every 30 days setting forth the status of all attempts to cure such default(s); and

(iv) the occurrence of an “Event of Default” under the Loan Agreement, the Account Control Agreement or any Deed of Trust.

47 4836-5936-5195.175195.21 (b) Upon the occurrence of an Event of Default under this Indenture as to which the Trustee is deemed to have notice or has received notice as provided in Section 9.01(h) herein, the Trustee shall promptly notify the Issuer and the Borrower by electronic mail, confirmed by overnight mail or courier, of such occurrence. Each notification of the occurrence of an Event of Default shall set forth the specific nature of the Event of Default or Events of Default. With respect to the occurrence of any Event of Default set forth in Section 8.01(a)(iii) and (iv) above, the Trustee shall be permitted to rely solely on the No Default Certificate delivered by the Borrower pursuant to Section 8.05(e) of the Loan Agreement.

(c) The time periods for cure set forth in Section 8.01(a)(iii) above shall not be applicable to any events or actions which cause or might cause a Determination of Taxability.

Section 8.02. Remedies for Events of Default Under This Indenture.

(a) Upon the occurrence of an Event of Default, with respect to Bonds issued hereunder, the Trustee shall have the following rights and remedies:

(i) Acceleration. The Trustee (A) may by notice in writing given to the Issuer and the Borrower; or (B) shall, upon the written request of the Beneficial Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, declare the principal amount of all Bonds then Outstanding and the interest accrued thereon to be immediately due and payable and said principal and interest shall thereupon become immediately due and payable. Upon any declaration of acceleration hereunder, the Issuer and the Trustee shall immediately declare all Loan Payments under the Loan Agreement to be immediately due and payable, as provided in Section 10.02 of the Loan Agreement.

(ii) Receivership. Upon the filing of a bill in equity or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Registered Owners, the Trustee shall be entitled as a matter of right to the appointment of a receiver or receivers, with respect to the Borrower, of the rents, revenues, income, products and profits related to the Borrower and the Facilities, pending such proceedings, but, notwithstanding the appointment of any receiver, trustee or other custodian, the Trustee shall be entitled to the possession and control of any cash, securities or other instruments at the time held by, or payable or deliverable under the provisions of this Indenture to, the Trustee.

(iii) Foreclosure. The Trustee shall have the right of foreclosure on all or any portion of any real and/or personal property described in a Deed of Trust, or any interest of the Issuer or the Borrower therein including pursuant to the power of sale under a Deed of Trust, and may realize upon the security interest in the Pledged Revenues (subject to the terms of the Parity Agreement) and exercise all of the rights and remedies of a secured party under the Uniform Commercial Code of the State of North Carolina with respect thereto.

48 4836-5936-5195.175195.21 (iv) Suit for Judgment on the Bonds. The Trustee shall be entitled to sue for and recover judgment, either before or after or during the pendency of any proceedings for the enforcement of the lien of this Indenture, for the enforcement of any of its rights, or the rights of the Beneficial Owners, but any such judgment against the Issuer shall be enforceable only against the Trust Estate. No recovery of any judgment by the Trustee shall in any manner or to any extent affect the lien of this Indenture or any rights, powers or remedies of the Trustee hereunder, or any lien, rights, powers or remedies of the Beneficial Owners of the Bonds, but such lien, rights, powers and remedies of the Trustee and of the Beneficial Owners shall continue unimpaired as before.

(v) Activation of Account Control Agreement. Notify the Primary under the Account Control Agreement of an Event of Default and take such actions permitted thereunder to activate the block on the held thereunder, and the Trustee is authorized to withdraw funds from such deposit account as necessary to make payments under the Loan Agreement, this Indenture and the Parity Agreement.

(vi) Additional Remedies. Subject to State of North Carolina law, including without limitation the Charter School Act, and subject to any available cure periods, the Trustee, at the direction of the Beneficial Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, shall have the right to enter into the New Facility and market the New Facility for sale.

(b) No right or remedy is intended to be exclusive of any other right or remedy, but each and every such right or remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute.

(c) If any Event of Default hereunder shall have occurred, the Beneficial Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, shall direct the Trustee as to the preferred remedy of such Beneficial Owners. The Trustee, after being indemnified or receiving other assurances as provided in Section 9.01 hereof, shall be obligated to exercise such one or more of the rights and powers conferred by this Section as directed by such Beneficial Owners of such Bonds.

Section 8.03. Direction of Remedies. Anything in this Indenture to the contrary notwithstanding, the Beneficial Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, at any time, to the extent permitted by law, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the time, method, and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver, or any other proceedings or remedies hereunder; provided that such direction shall not be otherwise than in accordance with the provisions hereof and applicable law; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such directions. The Trustee shall not be required to act on any direction given to it pursuant to this Section unless indemnified or receiving other assurances as provided in Section 9.01 hereof.

49 4836-5936-5195.175195.21 Section 8.04. Rights and Remedies of Beneficial Owners. No Beneficial Owner of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless a default has occurred of which the Trustee has been notified as provided in Section 9.01 hereof, or of which by Section 9.01 hereof it is deemed to have notice, nor unless such default shall have become an Event of Default and the Beneficial Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have made written request to the Trustee at the Notice Address provided herein and shall have offered reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, or unless they have also offered to the Trustee indemnity or other assurances as provided in Section 9.01 hereof or unless the Trustee shall thereafter fail or refuse to exercise within a reasonable period of time (not to exceed 30 days) the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such notification, request, and offer of indemnity or other assurances are hereby declared in every case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Beneficial Owners of the Bonds shall have the right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by his, her or their action or to enforce any right hereunder except in the manner herein provided and that all proceedings at law or in equity shall be instituted, had, and maintained in the manner herein provided and for the equal benefit of the Beneficial Owners of the Bonds then Outstanding. Nothing in this Indenture contained shall, however, affect or impair the right of any Beneficial Owner of Bonds to enforce the payment, by the institution of any suit, action or proceeding in equity or at law, of the principal of, premium, if any or interest on any Bond at and after the maturity thereof, or the obligation of the Issuer to pay the principal of, premium, if any, and interest on each of the Bonds to the respective Beneficial Owners of the Bonds at the time and place, from the Trust Estate and in the manner herein and in the Bonds expressed.

Section 8.05. Application of Moneys.

(a) Subject to the terms of the Parity Agreement, all moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the costs and expenses of the proceedings resulting in the collection of such moneys, including the costs and expenses of the Registered Owners, the Trustee’s Annual Fees, the Trustee’s Expenses, and the expenses, liabilities and advances incurred or made by the Trustee, and after payment of all sums due to the Trustee and to the Issuer (including payments in respect of the Issuer’s Unassigned Rights) hereunder and under the Loan Agreement, as applicable, be held or deposited into the Bond Fund during the continuance of an Event of Default and shall be applied as follows:

(i) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied:

FIRST, to the payment to the Persons entitled thereto of all of the interest then due on the Bonds, in the order of the maturity of such interest

50 4836-5936-5195.175195.21 and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; and

SECOND, to the payment to the Persons entitled thereto of the unpaid principal of and premium, if any, on any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), in the order of their due dates and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal due on such date, to the persons entitled thereto, without any discrimination or privilege.

(ii) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied first to the payment of the interest then due and unpaid upon all of the Bonds, and then to the principal then due and payable on the Bonds without preference or priority of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege.

(iii) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article then, subject to the provisions of Section 8.05(a)(ii) in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of Section 8.05(a)(i).

(c) Whenever moneys are to be applied pursuant to the provisions of this Section, such moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds; it shall fix the date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit of any such moneys and of the fixing of any such date, and shall not be required to make payment to the Registered Owner of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid.

(d) Whenever all of the Bonds, the premium, if any, and interest thereon have been paid under the provisions of this Section and all Trustee’s Annual Fees, all Trustee’s Expenses, and the Issuer’s Annual Fee and all other amounts to be paid to the Issuer or the Trustee or the United States Treasury hereunder or under the Loan Agreement have

51 4836-5936-5195.175195.21 been paid, or provision made for the payment thereof in accordance herewith, any balance remaining in the Funds shall be applied as provided in Section 3.19 hereof.

Section 8.06. Trustee May Enforce Rights Without Bonds. All rights of action and claims under this Indenture (except for the Issuer’s Unassigned Rights) or any of the Bonds Outstanding may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or proceedings relative thereto; and any suit or proceeding instituted by the Trustee shall be brought in its name as Trustee, without the necessity of joining as plaintiffs or defendants any Registered Owners of the Bonds.

Section 8.07. Proofs of Claim.

(a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Issuer or the Borrower or any other obligor upon the Bonds or the property of the Issuer, the Trustee (irrespective of whether the principal of the Bonds shall then be due and payable, from prepayment on the Promissory Notes, as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuer and/or the Borrower for the payment of overdue principal or interest) shall be entitled and empowered, by intervention of such proceeding or otherwise:

(i) to file and prove a claim for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Bonds then Outstanding and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Registered Owners allowed in such judicial proceeding; and to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and

(ii) any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Registered Owner to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Registered Owners, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel.

(b) So long as Bonds are Outstanding the Trustee is hereby appointed, and the successive respective Registered Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee, the true and lawful attorney in fact of the respective Registered Owners of the Bonds, with authority to make or file, in the respective names of the Registered Owners of the Bonds or on behalf of all Registered Owners of the Bonds, as a class, any proof of debt, amendment to proof of debt, petition or other documents and to execute any other papers and documents and to do and perform any and all acts and things for and on behalf of all Registered Owners of

52 4836-5936-5195.175195.21 the Bonds as a class, as may be necessary or advisable in the opinion of the Trustee, in order to have the respective claim of the Registered Owners of the Bonds against the Issuer, the Borrower or any other obligor allowed in receivership, insolvency, liquidation, bankruptcy or other proceeding, to which the Issuer, the Borrower or any other obligor, as the case may be, shall be a party. The Trustee shall have full power of substitution and delegation in respect of any such powers.

Section 8.08. Delay or Omission No Waiver. No delay or omission of the Trustee or of any Registered Owner to exercise any right or power accruing upon any default shall exhaust or impair any such right or power or shall be construed to be a waiver of any such default, or acquiescence therein; and every power and remedy given by this Indenture may be exercised from time to time and as often as may be deemed expedient.

Section 8.09. No Waiver of One Default To Affect Another. No waiver of any default hereunder, whether by the Trustee, the Beneficial Owners or the Registered Owners, shall extend to or affect any subsequent or any other then existing default or shall impair any rights or remedies consequent thereon.

Section 8.10. Discontinuance of Proceedings on Default; Position of Parties Restored. In case the Issuer, the Trustee, the Beneficial Owners or the Registered Owners shall have proceeded to enforce any rights under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or the Registered Owners, then and in every such case the Issuer, the Trustee, the Beneficial Owners and the Registered Owners shall be restored to their former position and rights hereunder and with respect to the Trust Estate, and all rights, remedies, and powers of the Issuer, the Trustee, the Beneficial Owners and the Registered Owners shall continue as if no such proceedings had been taken.

Section 8.11. Waivers of Events of Default. The Trustee may in its discretion waive any Event of Default hereunder and its consequences and rescind any declaration of acceleration of maturity of principal of and interest on the Bonds, and shall be required to do so upon the written request of the Beneficial Owners of a majority in aggregate principal amount of the Bonds then Outstanding; provided, however, that there shall not be waived (a) any Event of Default in the payment of the principal of or premium, if any, on any Outstanding Bonds at the date of maturity or redemption thereof or any default in the payment when due of the interest on any such Bonds, unless prior to such waiver or rescission, all arrears of interest or all arrears of payments of the principal and premium, if any, and all expenses of the Trustee and the Issuer, and all amounts to be paid to the Issuer and the Trustee hereunder and under the Loan Agreement, in connection with such default shall have been paid or provided for; (b) any default in the payment of amounts set forth in Section 5.01(f) of the Loan Agreement; or (c) any default or Event of Default in respect of the Issuer’s Unassigned Rights, which may only be waived with the Issuer’s written consent. In case of any such waiver or rescission, or in case any proceedings taken by the Trustee on account of any such default shall have been discontinued or abandoned or determined adversely to the Trustee, then and in every such case the Issuer, the Trustee and the Beneficial Owners shall be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to or affect any subsequent or other default, or impair any rights or remedies consequent thereon.

53 4836-5936-5195.175195.21 Section 8.12. No Obligation To Enforce Assigned Rights. Notwithstanding anything to the contrary in this Indenture or the Loan Agreement, the Issuer shall have no obligation to and instead the Trustee, in accordance with this Indenture and the Loan Agreement, shall have the right, without further direction from or notice to the Issuer, to take any and all steps, actions and proceedings, to enforce any or all rights of the Issuer under this Indenture and the Loan Agreement (other than the Issuer’s Unassigned Rights), including, without limitation, the rights to enforce the remedies upon the occurrence and continuation of an Event of Default and the obligations of the Borrower under the Loan Agreement.

Section 8.13. No Impairment of Ability To Enforce Issuer’s Unassigned Rights. No provision of this Indenture or the Loan Agreement shall be deemed or construed as limiting, affecting or impairing in any way the Issuer’s or any Issuer Indemnified Party’s right to enforce the Issuer’s Unassigned Rights, notwithstanding the existence or continuance of a default or Event of Default, or any action based thereon or occasioned by an Event of Default or an alleged Event of Default, and notwithstanding any waiver or forbearance by the Trustee, the Registered Owners or the Beneficial Owners of any default or Event of Default hereunder or thereunder. Any default or Event of Default in respect of the Issuer’s Unassigned Rights may only be waived with the Issuer’s written consent.

ARTICLE IX

CONCERNING THE TRUSTEE

Section 9.01. Duties of the Trustee. The Trustee hereby accepts the trusts imposed upon it by this Indenture and agrees to perform said trusts, but only upon and subject to the following express terms and conditions, and no implied covenants or obligations shall be read into this Indenture against the Trustee:

(a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under similar circumstances.

(b) The Trustee may execute any of the trusts hereof or powers hereunder and perform any of its duties by or through attorneys, agents, receivers or employees but shall be answerable for the conduct of the same in accordance with the standards specified above and in Section 9.01(g), and shall be entitled to act upon an opinion of counsel concerning all matters of the trust hereof and its duties hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon an opinion of counsel and shall not be responsible for any loss or damage resulting from any action or non-action taken by or omitted to be taken in good faith in reliance upon such opinion of counsel.

54 4836-5936-5195.175195.21 (c) The Trustee shall not be responsible for any recital herein or in the Bonds (except in respect to the certificate of authentication of the Trustee endorsed on the Bonds), or for insuring the Facilities or collecting any insurance moneys or for the validity of the execution by the Issuer of this Indenture or of any supplements hereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or for the value of or title to the Facilities, and the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Issuer, or on the part of the Borrower, except as specifically herein set forth; but the Trustee may require of the Borrower full information and advice as to the performance of the covenants, conditions, and agreements as to the condition of the Facilities contained herein or in the Loan Agreement. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 6.01 hereof.

(d) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder. The Trustee may become the Registered Owner of the Bonds with the same rights which it would have if not Trustee.

(e) The Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document 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 the consent of the Issuer or any person who at the time of making such request or giving such consent is the Registered Owner of any Bonds shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in place thereof.

(f) As to the existence or nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed on behalf of the Issuer by an Issuer Authorized Signatory or on behalf of the Borrower by an Authorized Representative of the Borrower or such other person as may be designated for such purpose by the Issuer or Borrower as sufficient evidence of the facts therein contained, and prior to the occurrence of a default of which the Trustee has been notified as provided in Section 9.01(h), or of which by said section it is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same.

(g) 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 gross negligence or willful misconduct and shall not be answerable for any negligent act of its attorneys, agents or receivers which have been selected by the Trustee with due care, subject to Section 9.01(a) hereof.

(h) The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except failure by the Borrower to cause to be made any of

55 4836-5936-5195.175195.21 the payments to the Trustee required to be made hereunder, under the Loan Agreement or under any Deed of Trust, or the failure by the Borrower to file with it any of the periodic documentation required, or to deposit with it the insurance report required hereunder, under the Loan Agreement (including Section 6.03 thereof) or under any Deed of Trust, unless a Responsible Officer of the Trustee has actual notice thereof or unless the Trustee shall be specifically notified in writing of such default by the Borrower, the Issuer or a Registered Owner and all notices or other instruments required by this Indenture to be delivered to the Trustee, must, in order to be effective, be delivered at the address of the Trustee provided for in Section 11.09 hereof, and, in the absence of such notice so delivered, the Trustee may conclusively assume that there is no default except as aforesaid. The voluntary giving of any periodic reminder or notices to the Borrower by the Trustee shall not be construed as a duty to do so or to monitor compliance by the Borrower or as notice of any defaults by the Borrower.

(i) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust in the manner and for the purposes for which they were received but need not be segregated from other funds except to the extent required by this Indenture or law. The Trustee shall not be under any liability for interest on any moneys received hereunder except such as may be agreed upon.

(j) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right, but shall not be required, to inspect any and all of the Trust Estate, including all books, papers and records of the Issuer or the Borrower pertaining to the Borrower, the Facilities and the Bonds.

(k) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises.

(l) Notwithstanding anything in this Indenture contained, the Trustee shall have the right, but shall not be required, to demand in respect of the authentication of any Bonds, the withdrawal of any cash, the release of any property or any action whatsoever within the purview of this Indenture, any showings, certificates, opinions, appraisals or other information or or evidence thereof, in addition to that by the terms hereof required, as a condition of such action by the Trustee deemed desirable for the purpose of establishing the right of the Issuer or the Borrower to the authentication of any Bonds, the withdrawal of any cash, the release of any property, or the taking of any other action by the Trustee.

(m) Before taking any action under this Indenture, the Trustee may require that reasonable indemnity or other assurances be furnished to it for the reimbursement of all expenses which it may incur and to protect it against all risk and liability by reason of any action so taken, including without limitation any and all environmental liability, and except only any liability which may result from its negligence or willful misconduct. The Trustee may take action without requiring such indemnification or other assurances and in such event, the Trustee shall be entitled to indemnification by the Borrower pursuant to

56 4836-5936-5195.175195.21 Section 8.06 of the Loan Agreement and to reimbursement of its fees and expenses pursuant to Section 9.02 hereof.

(n) The Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or other disclosure prepared or distributed in connection with the Bonds. The Trustee will take all necessary actions including filing continuation statements, if necessary, to preserve the Lien and security interest created by the Deed of Trust; provided however, that the Borrower has accepted the primary obligation to file continuation statements pursuant to the terms of the Loan Agreement and shall pay all fees and expenses of the Trustee in connection therewith as set forth in Section 9.02 below. Such fees shall be considered “extraordinary fees.”

Section 9.02. Fees and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for its reasonable fees for its services rendered hereunder as and when the same become due and all expenses reasonably and necessarily made or incurred by the Trustee in connection with such services, including any extraordinary fees of the Trustee and reasonable legal fees and expenses, as and when the same become due as provided in Section 5.01 of the Loan Agreement.

Section 9.03. Resignation or Replacement of Trustee.

(a) The present or any future Trustee may resign by giving to the Issuer, the Borrower and the Registered Owners 60 days’ notice of such resignation. Such resignation shall take effect immediately on the appointment of a successor. The present or any future Trustee may be removed at any time by an instrument or concurrent instruments in writing signed by the Issuer or by the Registered Owners of a majority in aggregate principal amount of the Bonds and such removal shall take effect immediately on the appointment of a successor. The Trustee may also be removed at any time for any breach of the trust set forth herein.

(b) In case the present or any future Trustee shall at any time resign or be removed or otherwise become incapable of acting, a successor may be appointed by the Registered Owners of a majority in aggregate principal amount of the Bonds Outstanding by an instrument or concurrent instruments signed by such Registered Owners, or their attorneys-in-fact duly appointed; provided that the Borrower if not then in default under the Loan Agreement, with the consent of the Issuer, may appoint a successor until ratified, or a new successor shall be appointed, by the Registered Owners as herein authorized. The Borrower, upon making such appointment, shall forthwith give notice thereof to the Registered Owners and the Issuer, which notice may be given concurrently with the notice of resignation given by any resigning Trustee. Any successor so appointed by the Borrower shall immediately and without further act be superseded by a successor appointed in the manner above provided by the Registered Owners of a majority in aggregate principal amount of the Bonds then Outstanding. In the event that the Borrower or the Registered Owners fail to appoint a successor (within 60 days, in the case of a resignation), the Trustee may petition a court of competent jurisdiction for appointment of a successor trustee.

57 4836-5936-5195.175195.21 (c) Every successor trustee shall always be a bank or trust company in good standing, be qualified to act hereunder, be subject to examination by a federal or state authority and have capital and surplus of not less than $75,000,000. Any successor appointed hereunder shall execute, acknowledge and deliver to the Issuer an instrument accepting such appointment hereunder, and thereupon such successor shall, without any further act, deed or conveyance, become vested with all the estates, properties, rights, powers and trusts of its predecessor in the trust hereunder with like effect as if originally named as Trustee herein; but the Trustee retiring shall, nevertheless, on the written demand of its successor, execute and deliver an instrument conveying and transferring to such successor, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of the predecessor (subject, however, to the terms and conditions herein set forth, including, without limitation, the right of the predecessor Trustee to be paid and reimbursed in full for its fees and expenses pursuant to Section 9.02 hereof and to be indemnified pursuant to Section 8.06 of the Loan Agreement), and shall duly assign, transfer and deliver to the successor all properties and moneys held by it under this Indenture. Should any instrument in writing from the Issuer be reasonably required by any successor for such vesting and confirming, the Issuer shall execute, acknowledge and deliver the said deeds, conveyances and instruments on the request of such successor, subject to Section 4.06(b) hereof.

(d) The instruments evidencing the resignation or removal of the Trustee and the appointment of a successor hereunder, together with all other instruments provided for in this Section (other than notices), shall be filed and/or recorded by the successor Trustee in each recording office where this Indenture shall have been filed and/or recorded.

Section 9.04. Conversion, Consolidation or Merger of Trustee. Any bank or trust company into which the Trustee or its successor may be converted, merged or with which it may be consolidated, or to which it may sell or transfer its trust business as a whole shall be the successor of the Trustee under this Indenture with the same rights, powers, duties and obligations and subject to the same restrictions, limitations and liabilities as its predecessor, all without the execution or filing of any papers or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any of the Bonds to be issued hereunder shall have been authenticated, but not delivered, any successor Trustee may adopt the certificate of any predecessor Trustee, and deliver the same as authenticated; and, in case any of such Bonds shall not have been authenticated, any successor Trustee may authenticate such Bonds in the name of such successor Trustee.

ARTICLE X

SUPPLEMENTAL INDENTURES AND AMENDMENTS OF THE LOAN AGREEMENT AND THE DEED OF TRUST

Section 10.01. Supplemental Indentures Not Requiring Consent of Registered Owners. At the request of the Borrower, the Trustee or the Issuer may (but shall not be obligated to), without the consent of, or notice to, the Registered Owners, enter into such

58 4836-5936-5195.175195.21 indentures supplemental hereto (which supplemental indentures shall thereafter form a part hereof) for any one or more or all of the following purposes:

(a) to add to the covenants and agreements of the Issuer contained in this Indenture for the protection or benefit of the Registered Owners, other covenants and agreements thereafter to be observed for the protection or benefit of the Registered Owners, or to surrender or limit any right or power herein reserved or conferred upon the Issuer;

(b) to cure any ambiguity, or to cure, correct or supplement any defect or inconsistent provision contained in this Indenture, or to make any provisions with respect to matters arising under this Indenture or for any other purpose if such provisions are necessary or desirable and do not materially adversely affect the interests of the Registered Owners of the Bonds;

(c) to subject to the lien of this Indenture additional revenues, properties or collateral;

(d) to modify, alter, amend or supplement this Indenture in such a manner as shall permit the qualification hereof under the Trust Indenture Act of 1939, as from time to time amended; or

(e) to provide for the issuance of Additional Bonds, unless consent is required pursuant to Section 2.11 hereof.

Section 10.02. Supplemental Indentures Requiring Consent of Registered Owners.

(a) Exclusive of supplemental indentures covered by Section 10.01 hereof, the Registered Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, to consent to and approve the execution by the Issuer and the Trustee of such indenture or indentures supplemental hereto as shall be deemed necessary or desirable by the Issuer for the purpose of modifying, altering, amending, adding to, or rescinding, in any particular, any of the terms or provisions contained in this Indenture.

(b) If at any time the Issuer shall request the Trustee to enter into such supplemental indenture for any of the purposes set forth in this Section, the Trustee shall, upon being reasonably indemnified by the Borrower (to the extent reasonably required by the Trustee) with respect to expenses, mail by first-class mail notice of the proposed execution of such supplemental indenture to the Registered Owners of the Bonds at their addresses as the same shall last appear upon the registration records. The Borrower shall be responsible for such expenses. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the designated corporate trust office of the Trustee for inspection by all Registered Owners. If, within 60 days following the mailing of such notice, the Registered Owners of the requisite principal amount of the Bonds Outstanding at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof

59 4836-5936-5195.175195.21 as herein provided, no Registered Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.

Section 10.03. Execution of Supplemental Indentures. The Trustee is authorized to join with the Issuer in the execution of any such supplemental indenture and to make further agreements and stipulations which may be contained therein, but the Trustee shall not be obligated to enter into any such supplemental indenture which materially adversely affects its rights, duties, or immunities under this Indenture. The Trustee shall require delivery of an opinion of Bond Counsel acceptable to the Trustee to the effect that each such supplemental indenture (a) has been validly authorized and duly executed by the Issuer and is enforceable against the Issuer in accordance with its terms, (b) will not adversely affect the qualification of the Bonds as obligations which may be issued pursuant to the Act, (c) will not adversely affect the exclusion from gross income of interest on the Tax-Exempt Bonds for federal income tax purposes, and (d) is permitted pursuant to the terms of this Indenture. Any supplemental indenture executed in accordance with the provisions of this Article shall thereafter form a part of this Indenture and all the terms and conditions contained in any such supplemental indenture as to any provision authorized to be contained therein shall be deemed to be part of this Indenture for any and all purposes. In case of the execution and delivery of any supplemental indenture, express reference may be made thereto in the text of the Bonds issued thereafter, if any.

Section 10.04. Amendments, etc., of the Loan Agreement Not Requiring Consent of Registered Owners. The Issuer and the Trustee may (but shall not be obligated to), without the consent of or notice to the Registered Owners, consent to any amendment, change or modification of the Loan Agreement as may be required (a) by the provisions of the Loan Agreement or this Indenture, (b) for the purpose of curing any ambiguity or formal defect or omission, (c) to conform the Loan Agreement to any Supplemental Indenture, or (d) in connection with any other change therein which is not to the adverse prejudice of the Trustee nor materially adversely affects the interests of the Registered Owners of the Bonds.

Section 10.05. Amendments, etc., of the Loan Agreement Requiring Consent of Registered Owners. Except for the amendments, changes or modifications referred to in Section 10.04 hereof, neither the Issuer nor the Trustee shall consent to any other amendment, change or modification of the Loan Agreement without the giving of notice to and receiving the written approval or consent of the Registered Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, subject to the same limitations set forth in Section 10.02 hereof. Such notice and consent shall be given and procured as provided in Section 10.02 hereof. If at any time the Issuer and the Borrower shall request the consent of the Trustee to any such proposed amendment, change or modification of the Loan Agreement, the Trustee shall, upon being reasonably indemnified by the Borrower with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided in Section 10.02 hereof. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the designated office of the Trustee for inspection by all Registered Owners. If, within 60 days following the mailing of such notice, the Registered

60 4836-5936-5195.175195.21 Owners of the requisite principal amount of the Bonds Outstanding at the time of the execution of any such amendment, change or modification shall have consented to and approved the execution of the agreement reflecting such amendment, change or modification thereof as herein provided, no Registered Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.

Section 10.06. Execution of Amended Loan Agreement. The Trustee shall, prior to its consent to any supplemental amendment or change to the Loan Agreement, require delivery of an opinion of Bond Counsel or counsel to the Borrower, as applicable, acceptable to the Trustee to the effect that such supplemental amendment or change to the Loan Agreement (a) has been validly authorized and duly executed by the Issuer and the Borrower and is enforceable against the Issuer and the Borrower in accordance with its terms, (b) will not adversely affect the qualification of the Bonds as obligations which may be issued pursuant to the Act, (c) will not adversely affect the exclusion from gross income of interest on the Tax-Exempt Bonds for federal income tax purposes, and (d) is permitted pursuant to the terms of this Indenture. After execution thereof, any supplemental amendment, modification or change to the Loan Agreement executed in accordance with the provisions of this Article shall thereafter form a part of the Loan Agreement and all the terms and conditions contained in any such amendment, modification or change to the Loan Agreement as to any provision authorized to be contained therein shall be deemed to be part of the Loan Agreement for any and all purposes.

Section 10.07. Amendments, etc., of the Deed(s) of Trust Not Requiring Consent of Registered Owners. The Issuer and the Trustee may (but shall not be obligated to), without the consent of or notice to the Registered Owners, consent to any amendment, change or modification of a Deed of Trust as may be required (a) by the provisions of the Deed of Trust or this Indenture, (b) for the purpose of curing any ambiguity or formal defect or omission, or (c) in connection with any other change therein which is not to the adverse prejudice of the Trustee nor materially adversely affects the interests of the Registered Owners of the Bonds.

Section 10.08. Amendments, etc., of the Deed(s) of Trust Requiring Consent of Registered Owners. Except for the amendments, changes or modifications referred to in Section 10.07 hereof, neither the Issuer nor the Trustee shall consent to any other amendment, change or modification of a Deed of Trust without the giving of notice and the written approval or consent of the Registered Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, subject to the same limitations set forth in Section 10.02 hereof. Such notice and consent shall be given and procured as provided in Section 10.02 hereof. If at any time the Borrower shall request the consent of the Trustee to any such proposed amendment, change or modification of a Deed of Trust, the Trustee shall, upon being reasonably indemnified by the Borrower with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided in Section 10.02 hereof. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the designated office of the Trustee for inspection by all Registered Owners. If, within 60 days following the mailing of such notice, the Registered Owners of the requisite principal amount of the Bonds Outstanding at the time of the execution of any such amendment, change or

61 4836-5936-5195.175195.21 modification shall have consented to and approved the execution of the agreement reflecting such amendment, change or modification thereof as herein provided, no Registered Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.

Section 10.09. Execution of Amended Deed of Trust. The Trustee shall, prior to its consent to any supplemental amendment or change to a Deed of Trust, require delivery of an opinion of Bond Counsel or counsel to the Borrower, as applicable, acceptable to the Trustee to the effect that such supplemental amendment or change to such Deed of Trust (a) has been validly authorized and duly executed by the Borrower and the trustor thereunder and is enforceable against the Borrower and the trustor thereunder in accordance with its terms, (b) will not adversely affect the qualification of the Bonds as obligations which may be issued pursuant to the Act, (c) will not adversely affect the exclusion from gross income of interest on the Tax-Exempt Bonds for federal income tax purposes, and (d) is permitted pursuant to the terms of this Indenture. After execution thereof, any supplemental amendment, modification or change to a Deed of Trust executed in accordance with the provisions of this Article shall thereafter form a part of such Deed of Trust and all the terms and conditions contained in any such amendment, modification or change to a Deed of Trust as to any provision authorized to be contained therein shall be deemed to be part of such Deed of Trust for any and all purposes.

Section 10.10. Consent of Original Purchaser, Underwriter or Remarketing Agent. Notwithstanding anything in this Indenture to the contrary, (a) any original purchaser, underwriter or remarketing agent holding any Bonds may, regardless of its intent to sell or distribute such Bonds in the future, consent as the Registered Owner of such Bonds to any supplemental agreement pursuant to this Article X, including any supplemental agreement that adversely affects the interests of other Registered Owners; and (b) any such holder providing its consent under this Section 10.10 shall not be entitled to receive, nor shall the Trustee be required to provide, to such holder, any prior notice or other documentation regarding such supplemental agreement.

ARTICLE XI

MISCELLANEOUS

Section 11.01. Evidence of Signature of Registered Owners and Ownership of Bonds.

(a) Any request, consent or other instrument which this Indenture may require or permit to be signed and executed by the Registered Owners may be in one or more instruments of similar tenor, and shall be signed or executed by such Registered Owners in person or by their attorneys appointed in writing. Proof of the execution of any such instrument or of an instrument appointing any such attorney, or the Registered Owners of Bonds shall be sufficient (except as otherwise herein expressly provided) if made in the following manner, but the Trustee may, nevertheless, in its discretion require further or other proof in cases where it deems the same desirable:

62 4836-5936-5195.175195.21 (i) The fact and date of the execution by any Registered Owner or his or her attorney of such instrument may be proved by the certificate of any officer authorized to take acknowledgments in the jurisdiction in which he purports to act that the person signing such request or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before a notary public.

(ii) The Registered Owner of any Bond and the amount and numbers of such Bonds and the date of owning the same shall be proved by the registration records of the Issuer kept by the Trustee.

(b) Any request or consent of the Registered Owner of any Bond shall bind all future owners of such Bond in respect of anything done or suffered to be done by the Issuer or the Trustee in accordance therewith.

Section 11.02. Parties Interested Herein. With the exception of rights herein expressly conferred on the Borrower and the Issuer Indemnified Parties, and except as set forth in Section 11.05 hereof, nothing in this Indenture expressed or implied is intended or shall be construed to confer upon or to give to, any person other than the Issuer, the Trustee and the Registered Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and agreements in this Indenture contained by and on behalf of the Issuer, the Trustee and the Registered Owners shall be for the sole and exclusive benefit of the Issuer, the Trustee and the Registered Owners of the Bonds.

Section 11.03. Titles, Headings, Etc. The titles and headings of the articles, sections, and subsections of this Indenture have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof.

Section 11.04. Severability. In the event any provision of this Indenture shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

Section 11.05. Third-Party Beneficiaries. Each of the Issuer Indemnified Parties and the Borrower, to the extent of the rights expressly conferred on the Issuer Indemnified Parties (including, without limitation, their rights to immunity and exculpation from liability) and the Borrower herein, shall be considered to be intended Third-Party Beneficiaries of this Indenture entitled to enforce such right in his, her, its or their own name. Nothing in this Indenture shall confer any right upon any person other than the parties hereto and the specifically designated Third-Party Beneficiaries of this Indenture.

Section 11.06. Governing Law. This Indenture shall be governed by and construed in accordance with the laws and judicial decisions of the State, excluding conflicts of law principles. All claims of whatever character arising out of this Indenture, or under any statute or common law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings between the Issuer and any other party hereto, if and to the extent that such claim potentially could or actually does involve the Issuer, shall be brought in any state or federal court

63 4836-5936-5195.175195.21 of competent jurisdiction located in the Dane County, Wisconsin. By executing and delivering this Indenture, each party hereto irrevocably: (a) accepts generally and unconditionally the exclusive jurisdiction and venue of such courts; (b) waives any defense of forum non conveniens; and (c) agrees not to seek removal of such proceedings to any court or forum other than as specified above. The foregoing shall not be deemed or construed to constitute a waiver by the Issuer of any prior notice or procedural requirements applicable to actions or claims against or involving political subdivisions of the State that may exist at the time of and in connection with such matter.

Section 11.07. Execution in Counterparts. This Indenture 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. The exchange of copies of this Indenture and of signatures by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original indentures and signature pages for all purposes.

Section 11.08. Non-Liability of the Issuer. The Issuer shall not be obligated to pay the principal of, premium, if any, or interest on the Bonds, or any costs incidental thereto, except from the Trust Estate. The Issuer shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Indenture, the Bonds or the Loan Agreement, except only to the extent amounts are received for the payment thereof from the Borrower under the Loan Agreement, and except as may result solely from the Issuer’s own willful misconduct.

The Trustee hereby acknowledges that the Issuer’s sole source of moneys to repay the Bonds will be provided by the Trust Estate, and hereby agrees that if such amounts shall ever prove insufficient to pay all principal, premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise) or any costs incidental thereto, then the Trustee shall give notice to the Borrower in accordance with Section 8.01(b) of this Indenture to pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal, premium, if any, or interest on the Bonds, or costs incidental thereto including, but not limited to, any deficiency or default caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Borrower, the Issuer or any third party, subject to any right of reimbursement from the Trustee, the Issuer or any such third party, as the case may be, therefor.

Section 11.09. Notices. Except as otherwise provided in Section 8.01, all notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by certified mail, return receipt requested, postage prepaid, or overnight courier, or given by electronic mail, addressed as follows:

to the Issuer: Public Finance Authority 22 East Mifflin Street Suite 900 Madison, WI 53703 Facsimile: (608) 237-2368 E-mail: [email protected] and

64 4836-5936-5195.175195.21 [email protected] Attention: Scott Carper and Michael LaPierre

to the Borrower: Uwharrie Green School, Inc. 5326 U.S. Highway 220 South Asheboro, NC 27205 E-mail: [email protected] Attention: Heather Soja

to the Trustee: U.S. Bank National Association 214 N. Tryon Street, 27th Floor CN-NC-H27A Charlotte, North Carolina 28202 Email: [email protected] Attention: Global Corporate Trust Services

Section 11.10. Payments Due on Holidays. If the date for making any payment or the last day for performance of any act or the exercise of any right, as provided in this Indenture, is not a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day unless otherwise provided herein with the same force and effect as if done on the nominal date provided in this Indenture.

Section 11.11. No Personal Liability of the Indemnified Parties. No Issuer Indemnified Party shall be individually or personally liable for the payment of any principal of, premium, if any, or interest on the Bonds or any costs incidental thereto or any sum hereunder or under the Loan Agreement or any claim based thereon or be subject to any personal liability or accountability by reason of the execution and delivery of this Indenture or the Loan Agreement. No covenant or agreement contained in the Bonds or in this Indenture shall be deemed to be the covenant or agreement of any Trustee Indemnified Party (as defined in the Loan Agreement) or of any Issuer Indemnified Party in his, her, or its individual capacity, and no Trustee Indemnified Party or Issuer Indemnified Party shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

Section 11.12. Bonds Owned by the Issuer or the Borrower. In determining whether Registered Owners of Bonds in the requisite aggregate principal amount have concurred in any direction, consent or waiver under this Indenture, Bonds which are owned by the Issuer or the Borrower or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Borrower (unless the Issuer, the Borrower or such person owns all the Bonds which are then Outstanding) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only the Bonds which the Trustee knows are so owned shall be so disregarded. The Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Bonds and that the pledgee is not the Issuer, the Borrower or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Borrower. In case of a dispute

65 4836-5936-5195.175195.21 as to such right, any decision by the Trustee taken in good faith upon the advice of counsel shall be full protection to the Trustee.

Section 11.13. Undertaking To Provide Ongoing Disclosure. Pursuant to Section 2.05 of the Loan Agreement, the Borrower has undertaken all responsibility for compliance with continuing disclosure requirements, and neither the Trustee nor the Issuer shall have no liability to the Registered Owners of the Bonds or any other person with respect to Securities Exchange Commission Rule 15c2-12, as amended. Notwithstanding any other provision of this Indenture, failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder or under the Loan Agreement; however, a bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the noncompliant Borrower to comply with its obligations under Section 2.05 of the Loan Agreement.

Section 11.14. Right To Inspect.

(a) Following reasonable notice to the Borrower, at any and all reasonable times, the Trustee and the Issuer and their duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right during regular business hours fully to inspect the Facilities, including all books and records of the Borrower (excluding records the confidentiality of which may be protected by law), and to make such copies and memoranda from and with regard thereto as may be desired; provided however, that any disclosure to any third party of the results of any such inspection shall be made only if required by law and then only with proper respect and due regard for the confidentiality requests of the Borrower and of donors to the Borrower.

(b) Additionally, at the direction of the Borrower, the Issuer hereby appoints the Trustee to keep or cause to be kept proper books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts and disbursements received or disbursed according to this Indenture, and such books shall be available for inspections by the Registered Owner of any of the Bonds and by the Borrower during normal business hours of the Trustee and under reasonable conditions.

Section 11.15. Incorporation of Terms of Loan Agreement. The parties hereto acknowledge and agree that to the extent applicable, the terms and provisions of the Loan Agreement are incorporated herein as if they were contained in this Indenture.

Section 11.16. E-Verify: The Trustee understands that "E-Verify" is a federal program operated by the United States Department of Homeland Security and other federal agencies, or any successor or equivalent program used to verify the work authorization of newly hired employees pursuant to federal law in accordance with Section 64-25(5) of the General Statues of North Carolina, as amended. The Trustee uses E-Verify to verify the work authorization of its employees in accordance with Section 64-26(a) of the General Statues of North Carolina, as amended. The Trustee will not use any subcontractors in connection with this Indenture.

Section 11.17. Iran Divestment Certification: As of the date of this Indenture, the Trustee is not on any list created and maintained by the North Carolina Department of State

66 4836-5936-5195.175195.21 Treasurer pursuant to the Iran Divestment Act of 2015, Article 6E, Chapter 147 of the General Statues of North Carolina.

Section 11.18. No Obligation of the State of North Carolina. No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions.

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67 4836-5936-5195.175195.21 IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture to be executed in their respective corporate names by their duly authorized officers, all as of the date first above written.

PUBLIC FINANCE AUTHORITY

By Name: Title: Assistant Secretary

U.S. BANK NATIONAL ASSOCIATION, as Trustee

By Name : ______Title : ______

4836-5936-5195.175195.21 EXHIBIT A

FORM OF SERIES 2017A BOND

$[PRINCIPALA] PUBLIC FINANCE AUTHORITY EDUCATION REVENUE BONDS (UWHARRIE CHARTER ACADEMY PROJECT) SERIES 2017A

No. ______$______

Interest Rate Maturity Date Issue Date CUSIP

___% per annum [June 15, 20__] [November __, 2017] ______

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: DOLLARS

THIS SERIES 2017A BOND HAS BEEN AUTHORIZED AND ISSUED PURSUANT TO THE LAWS OF THE STATE, INCLUDING PARTICULARLY SECTION 66.0304 OF THE WISCONSIN STATUTES, AS AMENDED. BONDS ISSUED UNDER SECTION 66.0304 SHALL NOT BE INVALID FOR ANY IRREGULARITY OR DEFECT IN THE PROCEEDINGS FOR THEIR SALE OR ISSUANCE.

UNLESS THIS SERIES 2017A BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SERIES 2017A BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE (DEFINED BELOW), THIS SERIES 2017A BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. THIS SERIES 2017A BOND MAY NOT BE TRANSFERRED BY THE BENEFICIAL OWNER HEREOF TO ANY PERSON OTHER THAN (I) TO A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED); OR (II) TO AN “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES

4836-5936-5195.175195.21 ACT OF 1933, AS AMENDED) AND, IN THE CASE OF ANY ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, IN A MINIMUM PRINCIPAL AMOUNT OF $25,000, REGARDLESS OF ANY LOWER DENOMINATION AUTHORIZED BY THE INDENTURE.

PUBLIC FINANCE AUTHORITY (the “Issuer”), a unit of government and a body corporate and politic of the State of Wisconsin (the “State”), pursuant to Sections 66.0301, 66.0303 and 66.0304 Wisconsin Statutes, as amended (the “Act”), for value received, hereby promises to pay, from the sources hereinafter described, the principal amount stated above in lawful money of the United States of America to the Registered Owner named above, or registered assigns, on the maturity date stated above (unless this bond shall have been called for prior redemption, in which case on such redemption date), upon the presentation and surrender hereof at the designated corporate trust office of U.S. Bank National Association, as trustee (the “Trustee”) under an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and the Trustee, and to pay, from like sources, to the person who is the Registered Owner hereof on the first day of the month of any Interest Payment Date (the “Regular Record Date”) by check or draft mailed to such Registered Owner (except that registered owners of at least $500,000 in aggregate principal amount of the Series 2017 Bonds (as defined below) Outstanding (as defined in the Indenture) may, by written request received by the Trustee at least 10 Business Days (as defined in the Indenture) prior to the Regular Record Date, receive payment of interest by wire transfer at the address specified in such request, which address must be in the continental United States) at his or her address as it last appears on the registration books kept for that purpose at the offices of the Trustee, interest on said sum in like or currency from the date hereof at the interest rate set forth above, payable semiannually on [June 15] and [December 15] of each year, commencing [June 15, 2018], until payment of the principal hereof has been made or provided for. Any such interest not so timely paid or duly provided for shall cease to be payable to the Registered Owner hereof at the close of business on the Regular Record Date and shall be payable to the Registered Owner hereof at the close of business on a Special Record Date for the payment of any defaulted interest. Such Special Record Date shall be fixed by the Trustee whenever moneys become available for payment of the defaulted interest, and notice of the Special Record Date shall be given to the Registered Owners of the Series 2017 Bonds not less than 10 days prior thereto.

This bond is one of the Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A (the “Series 2017A Bonds”) duly authorized by the Issuer in the aggregate principal amount of $[PRINCIPALA], issued under and equally and ratably secured by the Indenture. In accordance with the Act, the Issuer issued the Series 2017A Bonds to make a loan to Uwharrie Green School, Inc., a North Carolina nonprofit corporation (the “Borrower”), to (a) finance and/or refinance the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” and, together with the Existing Facility, the “Facilities”); (b) fund any required reserve funds for the Series 2017 Bonds; (c) fund capitalized interest on the Series 2017 Bonds, if any; (d) finance and/or refinance

A- 2 4836-5936-5195.175195.21 working capital loans of or to the Borrower; and (e) pay all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the “Project”).

Simultaneously with the issuance of the Series 2017A Bonds, the Issuer will issue its Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Series 2017 Bonds”). In accordance with the Act, the Issuer issued the Series 2017B Bonds to make a loan to the Borrower to finance and/or refinance the Project. The Series 2017 Bonds, together with any “Additional Bonds” (as defined in the Indenture) issued under the Indenture, are referred to collectively as the “Bonds.”

As provided in the Indenture, Additional Bonds of the Issuer may be issued at the Issuer’s sole and exclusive discretion and may be secured on a parity basis with the Series 2017 Bonds. Such Additional Bonds may be issued from time to time in one or more series, in various principal amounts and for the benefit of the Borrower, may mature at different times, may bear interest at different rates and may otherwise vary as provided in the Indenture, and the aggregate principal amount of such Additional Bonds issued and to be issued under the Indenture is not limited.

The Series 2017 Bonds have been authorized and issued pursuant to and in full compliance with the laws of the State, particularly Section 66.0304 of the Wisconsin Statutes, as amended, and by authority of resolutions adopted by the Issuer. THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED IN THE INDENTURE), AND EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY SPONSOR (AS DEFINED IN THE INDENTURE), ANY MEMBER (AS DEFINED IN THE INDENTURE), ANY ISSUER INDEMNIFIED PARTY (AS DEFINED IN THE INDENTURE), THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER.

NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS OR ANY COSTS

A- 3 4836-5936-5195.175195.21 INCIDENTAL THERETO, AGAINST ANY ISSUER INDEMNIFIED PARTY, UNDER ANY RULE OF LAW OR EQUITY, STATUTE, OR CONSTITUTION OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, AND ALL SUCH LIABILITY OF ANY ISSUER INDEMNIFIED PARTY, IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF AND CONSIDERATION FOR THE EXECUTION AND ISSUANCE OF THE SERIES 2017 BONDS.

Redemption Provisions

Optional Redemption. The Series 2017A Bonds are subject to redemption at the option of the Issuer (which option shall be exercised upon the written direction of the Borrower to the Trustee from prepayment of the Series 2017A Promissory Note made by the Borrower pursuant to Section 11.01 of the Loan Agreement) in whole or in part in Authorized Denominations on any date commencing [June 15, 20__], at a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date fixed for redemption, without premium. Upon the delivery of such written direction by the Borrower to the Trustee, the Issuer shall be deemed, without any action on the Issuer’s part, to have exercised its option to redeem the Series 2017A Bonds under this Section.

Redemption of Series 2017 Bonds Upon Occurrence of Certain Events. The Series 2017 Bonds are also subject to extraordinary redemption at the expense of the Borrower from the Net Proceeds of any insurance policy or condemnation award and in the event the New Facility or any portion thereof is damaged or destroyed or taken in condemnation proceedings as provided in Section 7.02 of the Loan Agreement. If called pursuant to Section 5.02 of the Indenture, the Series 2017 Bonds are callable on any date in whole or in part from and to the extent of funds on deposit under the Indenture and available for this purpose at a redemption price equal to the principal amount of each Bond redeemed plus accrued interest to the redemption date, without premium.

Mandatory Sinking Fund Redemption. The Series 2017A Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as set forth in the Indenture.

Mandatory Redemption Upon Determination of Taxability. The Series 2017A Bonds are subject to mandatory redemption as a whole at the principal amount thereof, plus accrued interest thereon to the date of redemption, upon the occurrence of a Determination of Taxability related to the Series 2017A Bonds as provided in the Indenture.

Method of Selecting Series 2017 Bonds; Notices. Unless otherwise specifically stated herein, any partial redemption of Bonds shall be redeemed in such order of Series and maturity as the Borrower shall direct in writing, or if less than all of the Bonds in a single maturity shall be redeemed, the Bonds redeemed shall be selected by lot within such maturity. Redemptions of term Bonds shall be credited against the latest scheduled mandatory sinking fund payment for such Bonds.

A- 4 4836-5936-5195.175195.21 In the case of every redemption, the Trustee shall cause notice of such redemption by mailing by first-class mail a copy of the redemption notice to the Registered Owners of the Series 2017 Bonds designated for redemption in whole or in part, at their addresses as the same shall last appear upon the registration records, in each case not more than 45 nor less than 20 days prior to the redemption date; provided, however, that failure to give such notice, or any defect therein, shall not affect the validity of any proceedings for the redemption of such Series 2017 Bonds. The Trustee may state that the redemption is conditioned upon receiving from the Borrower, prior to the redemption date, sufficient amounts to redeem such Series 2017 Bonds and that if such money is not so received, no Series 2017 Bonds shall be redeemed.

Each notice of redemption shall specify the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of the Series 2017 Bonds to be redeemed, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon will cease to accrue. If less than all the Outstanding Series 2017 Bonds are to be redeemed, the notice of redemption shall specify the numbers of the Series 2017 Bonds or portions thereof to be redeemed.

Series 2017 Bonds which are delivered upon transfer, exchange or other replacement shall bear interest from the most recent Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid, from the date of the Series 2017 Bonds. The Series 2017 Bonds of each Series shall initially be issued as a single fully registered bond for each maturity.

This Series 2017A Bond is fully transferable by the Registered Owner hereof in person or by his or her duly authorized attorney on the registration books kept by the Trustee, upon surrender of this Series 2017A Bond together with a duly executed written instrument of transfer satisfactory to the Trustee; subject, however, to the terms of the Indenture which limit the transfer and exchange of Series 2017 Bonds during certain periods. Upon such transfer a new fully registered Series 2017A Bond or Series 2017A Bonds of Authorized Denominations for the same aggregate principal amount will be issued to the transferee in exchange therefor, all subject to the terms, limitations and conditions set forth in the Indenture. The Trustee and the Issuer shall require the payment by any Registered Owner of this Series 2017A Bond requesting exchange or transfer of the reasonable expenses of the Issuer, if any, of a reasonable transfer or exchange fee and of any tax or other governmental charge required to be paid with respect to such exchange or transfer. The Issuer and the Trustee may deem and treat the person in whose name this Series 2017A Bond is registered as the absolute owner hereof, whether or not this Series 2017A Bond shall be overdue, for the purpose of receiving payment and for all other purposes, except to the extent otherwise provided herein and in the Indenture with respect to Regular Record Dates and Special Record Dates for the payment of interest, and neither the Issuer nor the Trustee shall be affected by any notice to the contrary.

Notwithstanding the foregoing, so long as the ownership of the Series 2017 Bonds is maintained in book-entry form by The Depository Trust Company (the “Securities Depository”) or a nominee thereof, this Series 2017A Bond may be transferred in whole but not in part only to the Securities Depository or a nominee thereof or to a successor Securities Depository or its nominee.

A- 5 4836-5936-5195.175195.21 To the extent permitted by, and as provided in, the Indenture, modifications or amendments of the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the Issuer and of the Registered Owners of the Bonds may be made by the Issuer and the Trustee but without the consent of the Registered Owners of the Bonds in certain cases described in the Indenture, including any change which does not materially adversely affect the interests of the Registered Owners of the Bonds. Certain other amendments may be made by the Issuer and the Trustee with the consent of the Registered Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding; provided, however, that no such modification or amendment shall be made which will constitute an extension of the maturity of, or a reduction in the principal amount of, or a reduction of the rate of interest on or extension of the time of payment of interest on, or a reduction of any premium payable upon redemption of, any Bond, which are unconditional unless consented to by all Registered Owners adversely affected by such change. Any such consent by the Registered Owner of this Series 2017A Bond shall be conclusive and binding upon such Registered Owner and upon all future Registered Owners of this Series 2017A Bond and of any Series 2017A Bond issued upon the transfer or exchange of this Series 2017A Bond whether or not notation of such consent is made upon this Series 2017A Bond.

The Registered Owner of this Series 2017A Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the pledge, assignment or covenants made therein or to take any action with respect to an event of default under the Indenture or to institute, appear in, or defend any suit, action or other proceeding at law or in equity with respect thereto, except as provided in the Indenture. In case an event of default under the Indenture shall occur, the principal of all of the Bonds at any such time Outstanding may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Indenture. The Indenture provides that such declaration may in certain events be rescinded by the Trustee, with the consent of the Registered Owners of a requisite principal amount of the Bonds then Outstanding.

None of the members of the board of directors of the Borrower, the board of directors of the Issuer or any person executing the Series 2017 Bonds shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

The liability and obligations of the Issuer under the Loan Agreement and the Indenture with respect to all or any portion of the Series 2017 Bonds may be discharged at or prior to the maturity or redemption of the Series 2017 Bonds upon the making of provision for the payment thereof on the terms and conditions set forth in the Loan Agreement and the Indenture.

No covenant or agreement contained in the Series 2017 Bonds or in the Indenture shall be deemed to be the covenant or agreement of any appointed official, officer, agent, servant or employee of the Issuer in his or her individual capacity or of any officer, agent, servant or employee of the Trustee in his or her individual capacity, and neither the members of the governing body of the Issuer nor any official executing the Series 2017 Bonds, including any officer or employee of the Trustee, shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

A- 6 4836-5936-5195.175195.21 No covenant or agreement contained in the Loan Agreement shall be deemed to be the covenant or agreement of any appointed official, officer, agent, servant or employee of the Borrower in his or her individual capacity, and the members of the governing body of the Borrower shall not be liable personally or be subject to any personal liability or accountability by reason of the execution and delivery thereof.

It is hereby certified, recited and declared that all conditions, acts and things required by the Constitution or statutes of the State or by the Act or the Indenture to exist, to have happened or to have been performed precedent to the issuance of this Series 2017A Bond exist, have happened and have been performed.

Copies of the Indenture, the Loan Agreement, the Account Control Agreement, the Deed of Trust and other documents relating to the Series 2017 Bonds are on file at the designated office of the Trustee, and reference is made to those instruments for the provisions relating, among other things, to the limited liability of the Borrower, the terms of and security for the Series 2017 Bonds, the custody and application of the proceeds of the Series 2017 Bonds, the rights and remedies of the Registered Owners of the Series 2017 Bonds, amendments, and the rights, duties and obligations of the Issuer and the Trustee to all of which the Registered Owner hereof, by acceptance of this Series 2017A Bond, assents.

COPIES OF THE USDA DOCUMENTS, INCLUDING THE PARITY AGREEMENT WITH RESPECT TO THE BORROWER’S “PLEDGED REVENUES”, ALSO MAY BE OBTAINED FROM THE TRUSTEE.

This Series 2017A Bond shall not be entitled to any benefit under the Indenture or any indenture supplemental thereto, or become valid or obligatory for any propose until the Trustee shall have signed the certificate of authentication hereon.

A- 7 4836-5936-5195.175195.21 IN WITNESS WHEREOF, Public Finance Authority has caused this Series 2017A Bond to be signed in its name and on its behalf by the manual or facsimile signature of an Issuer Authorized Signatory.

PUBLIC FINANCE AUTHORITY

By Name: Title: Assistant Secretary

A- 8 4836-5936-5195.175195.21 [FORM OF CERTIFICATE OF AUTHENTICATION]

Date of Authentication:

This is one of the Series 2017A Bonds described in the within mentioned Indenture of Trust.

U.S. BANK NATIONAL ASSOCIATION, as Trustee

By Authorized Signatory

[END OF FORM OF CERTIFICATE OF AUTHENTICATION]

A- 9 4836-5936-5195.175195.21 [FORM OF ASSIGNMENT]

ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

(Please print or typewrite name and address of Transferee) (Tax Identification or Social Security No.) the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) the Trustee under the Indenture as registrar and attorney, to register the transfer of the within Series 2017A Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated:

Signature guaranteed by:

NOTICE: Signature of the registered owner NOTICE: The signature(s) of the registered must be guaranteed by an eligible guarantor owner to this assignment must correspond with institution pursuant to Securities and Exchange the name as it appears on the face of the within Rule 17Ad-15. Series 2017A Bond in every particular, without alteration or enlargement or any change whatsoever.

[END OF FORM OF SERIES 2017A BOND]

A- 10 4836-5936-5195.175195.21 EXHIBIT B

FORM OF SERIES 2017B BOND

$[PRINCIPALB] PUBLIC FINANCE AUTHORITY TAXABLE EDUCATION REVENUE BONDS (UWHARRIE CHARTER ACADEMY PROJECT) SERIES 2017B

No. ______$______

Interest Rate Maturity Date Issue Date CUSIP

___% per annum [June 15, 20__] [November __, 2017] ______

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: DOLLARS

THIS SERIES 2017B BOND HAS BEEN AUTHORIZED AND ISSUED PURSUANT TO THE LAWS OF THE STATE, INCLUDING PARTICULARLY SECTION 66.0304 OF THE WISCONSIN STATUTES, AS AMENDED. BONDS ISSUED UNDER SECTION 66.0304 SHALL NOT BE INVALID FOR ANY IRREGULARITY OR DEFECT IN THE PROCEEDINGS FOR THEIR SALE OR ISSUANCE.

UNLESS THIS SERIES 2017B BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SERIES 2017B BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE (DEFINED BELOW), THIS SERIES 2017B BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. THIS SERIES 2017B BOND MAY NOT BE TRANSFERRED BY THE BENEFICIAL OWNER HEREOF TO ANY PERSON OTHER THAN (I) TO A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED); OR (II) TO AN “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED) AND, IN THE CASE OF ANY ACCREDITED INVESTOR

4836-5936-5195.175195.21 WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, IN A MINIMUM PRINCIPAL AMOUNT OF $25,000, REGARDLESS OF ANY LOWER DENOMINATION AUTHORIZED BY THE INDENTURE.

PUBLIC FINANCE AUTHORITY (the “Issuer”), a unit of government and a body corporate and politic of the State of Wisconsin (the “State”), pursuant to Sections 66.0301, 66.0303 and 66.0304 Wisconsin Statutes, as amended (the “Act”), for value received, hereby promises to pay, from the sources hereinafter described, the principal amount stated above in lawful money of the United States of America to the Registered Owner named above, or registered assigns, on the maturity date stated above (unless this bond shall have been called for prior redemption, in which case on such redemption date), upon the presentation and surrender hereof at the designated corporate trust office of U.S. Bank National Association, as trustee (the “Trustee”) under an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and the Trustee, and to pay, from like sources, to the person who is the Registered Owner hereof on the first day of the month of any Interest Payment Date (the “Regular Record Date”) by check or draft mailed to such Registered Owner (except that registered owners of at least $500,000 in aggregate principal amount of the Series 2017 Bonds (as defined below) Outstanding (as defined in the Indenture) may, by written request received by the Trustee at least 10 Business Days (as defined in the Indenture) prior to the Regular Record Date, receive payment of interest by wire transfer at the address specified in such request, which address must be in the continental United States) at his or her address as it last appears on the registration books kept for that purpose at the offices of the Trustee, interest on said sum in like coin or currency from the date hereof at the interest rate set forth above, payable semiannually on [June 15] and [December 15] of each year, commencing [June 15, 2018], until payment of the principal hereof has been made or provided for. Any such interest not so timely paid or duly provided for shall cease to be payable to the Registered Owner hereof at the close of business on the Regular Record Date and shall be payable to the Registered Owner hereof at the close of business on a Special Record Date for the payment of any defaulted interest. Such Special Record Date shall be fixed by the Trustee whenever moneys become available for payment of the defaulted interest, and notice of the Special Record Date shall be given to the Registered Owners of the Series 2017 Bonds not less than 10 days prior thereto.

This bond is one of the Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B (the “Series 2017B Bonds”) duly authorized by the Issuer in the aggregate principal amount of $[PRINCIPALB], issued under and equally and ratably secured by the Indenture. In accordance with the Act, the Issuer issued the Series 2017B Bonds to make a loan to Uwharrie Green School, Inc., a North Carolina nonprofit corporation (the “Borrower”), to (a) finance and/or refinance the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” and, together with the Existing Facility, the “Facilities”); (b) fund any required reserve funds for the Series 2017 Bonds; (c) fund capitalized interest on the Series 2017 Bonds, if any; (d) finance and/or refinance working capital loans of or to the Borrower; and (e) pay all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the “Project”).

B- 2 4836-5936-5195.175195.21 Simultaneously with the issuance of the Series 2017B Bonds, the Issuer will issue its Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A (the “Series 2017A Bonds” and together with the Series 2017B Bonds, the “Series 2017 Bonds”). In accordance with the Act, the Issuer issued the Series 2017A Bonds to finance and/or refinance the Project.

As provided in the Indenture, Additional Bonds of the Issuer may be issued at the Issuer’s discretion and may be secured on a parity basis with the Series 2017 Bonds. Such Additional Bonds may be issued from time to time in one or more series, in various principal amounts and for the benefit of the Borrower, may mature at different times, may bear interest at different rates and may otherwise vary as provided in the Indenture, and the aggregate principal amount of such bonds and other obligations issued and to be issued under the Indenture is not limited.

The Series 2017 Bonds have been authorized and issued pursuant to and in full compliance with the laws of the State, particularly Section 66.0304 of the Wisconsin Statutes, as amended, and by authority of resolutions adopted by the Issuer’s governing body. THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED IN THE INDENTURE), AND EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY SPONSOR (AS DEFINED IN THE INDENTURE), ANY MEMBER (AS DEFINED IN THE INDENTURE), ANY ISSUER INDEMNIFIED PARTY (AS DEFINED IN THE INDENTURE), THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER.

NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO, AGAINST ANY ISSUER INDEMNIFIED PARTY, UNDER ANY RULE OF LAW OR EQUITY, STATUTE, OR CONSTITUTION OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, AND ALL SUCH LIABILITY OF ANY ISSUER INDEMNIFIED PARTY, IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF AND CONSIDERATION FOR THE EXECUTION AND ISSUANCE OF THE SERIES 2017 BONDS.

B- 3 4836-5936-5195.175195.21 Redemption Provisions

Redemption of Series 2017 Bonds Upon Occurrence of Certain Events. The Series 2017 Bonds are subject to extraordinary redemption at the expense of the Borrower from the Net Proceeds of any insurance policy or condemnation award and in the event the New Facility or any portion thereof is damaged or destroyed or taken in condemnation proceedings as provided in Section 7.02 of the Loan Agreement. If called pursuant to Section 5.02 of the Indenture, the Series 2017 Bonds are callable on any date in whole or in part from and to the extent of funds on deposit under the Indenture and available for this purpose at a redemption price equal to the principal amount of each Series 2017 Bond redeemed plus accrued interest to the redemption date, without premium.

Mandatory Sinking Fund Redemption. The Series 2017B Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as set forth in the Indenture.

Method of Selecting Bond; Notices. Unless otherwise specifically stated in the Indenture, any partial redemption of the Bonds shall be redeemed in such order of series and maturity as the Borrower shall direct, or if less than all of the Bonds in a single maturity shall be redeemed, the Bonds redeemed shall be selected by lot within such maturity.

In the case of every redemption, the Trustee shall cause notice of such redemption by mailing by first-class mail a copy of the redemption notice to the Registered Owners of the Bonds designated for redemption in whole or in part, at their addresses as the same shall last appear upon the registration records, in each case not more than 45 nor less than 20 days prior to the redemption date; provided, however, that failure to give such notice, or any defect therein, shall not affect the validity of any proceedings for the redemption of such Bonds. The Trustee may state that the redemption is conditioned upon receiving from the Borrower, prior to the redemption date, sufficient amounts to redeem such Bonds and that if such money is not so received, no Bonds shall be redeemed.

Each notice of redemption shall specify the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of the Bonds to be redeemed, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon will cease to accrue. If less than all the Outstanding Bonds are to be redeemed, the notice of redemption shall specify the numbers of the Bonds or portions thereof to be redeemed.

Bonds which are delivered upon transfer, exchange or other replacement shall bear interest from the most recent Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid, from the date of the Bonds. The Bonds of each Series shall initially be issued as a single fully registered bond for each maturity.

This Series 2017B Bond is fully transferable by the Registered Owner hereof in person or by his or her duly authorized attorney on the registration books kept by the Trustee, upon surrender of this Series 2017B Bond together with a duly executed written instrument of transfer

B- 4 4836-5936-5195.175195.21 satisfactory to the Trustee; subject, however, to the terms of the Indenture which limit the transfer and exchange of Series 2017B Bonds during certain periods. Upon such transfer a new fully registered Series 2017B Bond or Series 2017B Bonds of Authorized Denominations for the same aggregate principal amount will be issued to the transferee in exchange therefor, all subject to the terms, limitations and conditions set forth in the Indenture. The Trustee and the Issuer shall require the payment by any Registered Owner of this Series 2017B Bond requesting exchange or transfer of the reasonable expenses of the Issuer, if any, of a reasonable transfer or exchange fee and of any tax or other governmental charge required to be paid with respect to such exchange or transfer. The Issuer and the Trustee may deem and treat the person in whose name this Series 2017B Bond is registered as the absolute owner hereof, whether or not this Series 2017B Bond shall be overdue, for the purpose of receiving payment and for all other purposes, except to the extent otherwise provided herein and in the Indenture with respect to Regular Record Dates and Special Record Dates for the payment of interest, and neither the Issuer nor the Trustee shall be affected by any notice to the contrary.

Notwithstanding the foregoing, so long as the ownership of the Series 2017 Bonds is maintained in book-entry form by The Depository Trust Company (the “Securities Depository”) or a nominee thereof, this Series 2017B Bond may be transferred in whole but not in part only to the Securities Depository or a nominee thereof or to a successor Securities Depository or its nominee.

To the extent permitted by, and as provided in, the Indenture, modifications or amendments of the Indenture, or of any indenture supplemental thereto, and of the rights and obligations of the Issuer and of the Registered Owners of the Bonds may be made by the Issuer and the Trustee but without the consent of the Registered Owners of the Bonds in certain cases described in the Indenture, including any change which does not materially adversely affect the interests of the Registered Owners of the Bonds. Certain other amendments may be made by the Issuer and the Trustee with the consent of the Registered Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding; provided, however, that no such modification or amendment shall be made which will constitute an extension of the maturity of, or a reduction in the principal amount of, or a reduction of the rate of interest on or extension of the time of payment of interest on, or a reduction of any premium payable upon redemption of, any Bond, which are unconditional unless consented to by all Registered Owners adversely affected by such change. Any such consent by the Registered Owner of this Series 2017B Bond shall be conclusive and binding upon such Registered Owner and upon all future Registered Owners of this Series 2017B Bond and of any Series 2017B Bond issued upon the transfer or exchange of this Series 2017B Bond whether or not notation of such consent is made upon this Series 2017B Bond.

The Registered Owner of this Series 2017B Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the pledge, assignment or covenants made therein or to take any action with respect to an event of default under the Indenture or to institute, appear in, or defend any suit, action or other proceeding at law or in equity with respect thereto, except as provided in the Indenture. In case an event of default under the Indenture shall occur, the principal of all of the Bonds at any such time Outstanding may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in the Indenture. The Indenture provides that such declaration may in certain events be rescinded

B- 5 4836-5936-5195.175195.21 by the Trustee, with the consent of the Registered Owners of a requisite principal amount of the Bonds then Outstanding.

None of the members of the board of directors of the Borrower, the board of directors of the Issuer or any person executing the Series 2017 Bonds shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

The liability and obligations of the Issuer under the Loan Agreement and the Indenture with respect to all or any portion of the Series 2017 Bonds may be discharged at or prior to the maturity or redemption of the Series 2017 Bonds upon the making of provision for the payment thereof on the terms and conditions set forth in the Loan Agreement and the Indenture.

No covenant or agreement contained in the Series 2017 Bonds or in the Indenture shall be deemed to be the covenant or agreement of any appointed official, officer, agent, servant or employee of the Issuer in his or her individual capacity or of any officer, agent, servant or employee of the Trustee in his or her individual capacity, and neither the members of the governing body of the Issuer nor any official executing the Series 2017 Bonds, including any officer or employee of the Trustee, shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

No covenant or agreement contained in the Loan Agreement shall be deemed to be the covenant or agreement of any appointed official, officer, agent, servant or employee of the Borrower in his or her individual capacity, and the members of the governing body of the Borrower shall not be liable personally or be subject to any personal liability or accountability by reason of the execution and delivery thereof.

It is hereby certified, recited and declared that all conditions, acts and things required by the Constitution or statutes of the State or by the Act or the Indenture to exist, to have happened or to have been performed precedent to the issuance of this Series 2017B Bond exist, have happened and have been performed.

Copies of the Indenture, the Loan Agreement, the Account Control Agreement, the Deed of Trust and other documents relating to the Series 2017 Bonds are on file at the designated office of the Trustee, and reference is made to those instruments for the provisions relating, among other things, to the limited liability of the Borrower, the terms of and security for the Series 2017 Bonds, the custody and application of the proceeds of the Series 2017 Bonds, the rights and remedies of the Registered Owners of the Series 2017 Bonds, amendments, and the rights, duties and obligations of the Issuer and the Trustee to all of which the Registered Owner hereof, by acceptance of this Series 2017B Bond, assents.

COPIES OF THE USDA DOCUMENTS, INCLUDING THE PARITY AGREEMENT WITH RESPECT TO THE BORROWER’S “PLEDGED REVENUES”, ALSO MAY BE OBTAINED FROM THE TRUSTEE.

B- 6 4836-5936-5195.175195.21 This Series 2017B Bond shall not be entitled to any benefit under the Indenture or any indenture supplemental thereto, or become valid or obligatory for any propose until the Trustee shall have signed the certificate of authentication hereon.

B- 7 4836-5936-5195.175195.21 IN WITNESS WHEREOF, Public Finance Authority has caused this Series 2017B Bond to be signed in its name and on its behalf by the manual or facsimile signature of an Issuer Authorized Signatory.

PUBLIC FINANCE AUTHORITY

By Name: Title: Assistant Secretary

B- 8 4836-5936-5195.175195.21 [FORM OF CERTIFICATE OF AUTHENTICATION]

Date of Authentication:

This is one of the Series 2017B Bonds described in the within mentioned Indenture of Trust.

U.S. BANK NATIONAL ASSOCIATION, as Trustee

By Authorized Signatory

[END OF FORM OF CERTIFICATE OF AUTHENTICATION]

B- 9 4836-5936-5195.175195.21 [FORM OF ASSIGNMENT]

ASSIGNMENT

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

(Please print or typewrite name and address of Transferee) (Tax Identification or Social Security No.) the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) the Trustee under the Indenture as registrar and attorney, to register the transfer of the within Series 2017B Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated:

Signature guaranteed by:

NOTICE: Signature of the registered owner NOTICE: The signature(s) of the registered must be guaranteed by an eligible guarantor owner to this assignment must correspond with institution pursuant to Securities and Exchange the name as it appears on the face of the within Rule 17Ad-15. Series 2017B Bond in every particular, without alteration or enlargement or any change whatsoever.

[END OF FORM OF SERIES 2017B BOND]

B- 10 4836-5936-5195.175195.21 EXHIBIT C-1

FORM OF INVESTOR LETTER (INVESTOR)

Public Finance Authority Kutak Rock LLP Madison, Wisconsin Atlanta, Georgia

U.S. Bank National Association Atlanta, Georgia

Re: $[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A and $[PRINCIPALB] Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Ladies and Gentlemen:

The undersigned (“Investor”) is the purchaser of $[______] principal amount of the [check the applicable series]:

___ Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

___ Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

(the “Bonds”) issued by the Public Finance Authority (the “Issuer”) pursuant to that certain Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”).

Capitalized terms not defined herein shall be given the meaning ascribed thereto in the Indenture.

Investor has been informed that the Issuer will not sell or permit any Bonds to be sold to Investor unless Investor makes the representations, warranties and covenants herein and authorizes the Issuer and the Trustee to rely thereon and such representations, warranties and covenants are made by the Investor AS AN INDUCEMENT to the sale of the Bonds to Investor.

In connection with the sale of the Bonds to Investor, Investor hereby makes the following covenants and representations upon which you may rely:

1. Investor has received and reviewed a copy of (a) the Limited Offering Memorandum relating to the Bonds, dated [______, 2017]; and (b) such other documents, agreements, certificates and instruments referenced therein or pertaining thereto or to the Bonds to which Investor is a party or deems necessary and appropriate in its evaluation of the Bonds, and hereby represents and warrants that the information contained therein, along with all other additional information supplied by the Borrower to the Investor, is sufficient for the Investor to

4836-5936-5195.175195.21 decide to purchase the Bonds. The Investor acknowledges that the issuance and sale of the Bonds and the execution, delivery and performance of the Loan Agreement, the Account Control Agreement, the Note, the Bond Purchase Agreement, the Continuing Disclosure Agreement, the Deed of Trust, the Tax Certificate, the Bonds or the Indenture will be governed by and construed in accordance with the applicable laws of the State, the State of North Carolina and the United States of America, each as set forth therein.

2. Investor has sufficient knowledge and experience in financial and investment matters, including the purchase and ownership of municipal and other tax-exempt or taxable obligations, to be able to evaluate and understand the risks and merits of an investment in the Bonds (and is able to bear the risks of such investment for an indefinite time).

3. Investor is acquiring the Bonds solely for its own account for investment purposes, and does not presently intend to make a public distribution of, or to resell or transfer, all or any part of the Bonds, provided however, Investor reserves the right to sell or transfer the Bonds in the future in accordance with the transfer restrictions set forth in the Indenture and paragraph 7 below.

4. Investor understands that it may be required to bear the risks of this investment in the Bonds for an indefinite time, since any sale prior to maturity may not be possible.

5. The Bonds are a financially suitable investment for Investor consistent with Investor’s investment needs and objectives.

6. Investor is either (a) an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “1933 Act”); or (b) a “Qualified Institutional Buyer” as defined in Rule 144A under the 1933 Act; Investor understands that the Bonds are not registered under the 1933 Act and that such registration is not legally required as of the date hereof; and further understands that the Bonds (i) are not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, (ii) may not be resold, transferred, pledged or hypothecated, in whole or in part, unless they are registered under the 1933 Act, and applicable state securities laws or unless an exemption from registration is available; (iii) will not be listed in any or other securities exchange, (iv) will be delivered in a form which may not be readily marketable, and (v) will not carry a rating from any rating service.

7. Investor acknowledges that (a) the Bonds are not transferable except to (i) an “accredited investor,” or (ii) a “Qualified Institutional Buyer”; and (b) if the Bonds are transferred to an “accredited investor” who is not also a Qualified Institutional Buyer, such transferee must purchase and hold a minimum $25,000 in principal amount of Bonds regardless of any lower denomination provided in the Indenture; and Investor agrees to abide by such transfer restrictions. Investor shall be solely and exclusively responsible for compliance with such transfer restrictions, including having a reasonable belief that its transferee is an accredited investor or a Qualified Institutional Buyer, as the case may be.

8. Investor acknowledges that it has either been supplied with or been given access to information (including, without limitation, financial statements and other financial information

C-1- 2 4836-5936-5195.175195.21 and copies of the Indenture, the Loan Agreement and the Tax Certificate (as defined in the Indenture)), to which a reasonable investor would attach significance in making investment decisions, and Investor has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Borrower, the Facilities, the Project and the Bonds and the security therefor so that, as a reasonable investor, the Investor has been able to make its own independent decision to purchase the Bonds and to whether the Bonds are appropriate or proper for investment by the Investor. Investor acknowledges that it has not relied upon the Issuer or the Trustee for any information in connection with the Investor’s purchase of the Bonds.

9. INVESTOR ACKNOWLEDGES THAT THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER, ANY SPONSOR, ANY ISSUER INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER.

10. Investor has made its own inquiry and analysis with respect to the Bonds and the security therefor (including, without limitation, a credit evaluation of the Borrower, to the extent Investor deemed it necessary or appropriate), and other material factors affecting the security and payment of the Bonds. Investor is aware that the business of the Borrower involves certain economic variables and risks that could adversely affect the security for the Bonds.

11. The Investor hereby certifies that it is not now and has never been controlled by, or under common control, with the Borrower. The Borrower has been and is now not controlled by the Investor.

12. The Issuer and the Trustee have not undertaken and will not undertake steps to ascertain the accuracy or completeness of the information furnished to the Investor with respect to the Borrower, the Facilities, the Bonds or the Project. The Investor has not relied and will not rely upon the Issuer or its officers, directors, employees or agents or the Trustee in any way with regard to the accuracy or completeness of the information regarding the Borrower, the Facilities or the Project furnished to the Investor in connection with its purchase of the Bonds, nor have any such parties made any representation to the Investor with respect to that information.

C-1- 3 4836-5936-5195.175195.21 Dated [______]

By Name Title

C-1- 4 4836-5936-5195.175195.21 EXHIBIT C-2

FORM OF INVESTOR LETTER (ADVISOR)

Public Finance Authority Kutak Rock LLP Madison, Wisconsin Atlanta, Georgia

U.S. Bank National Association Atlanta, Georgia

Re: $[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A and $[PRINCIPALB] Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Ladies and Gentlemen:

In connection with the purchase on behalf of Investors (defined below) of $[______] principal amount of the [check the applicable series]:

___ Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

___ Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

(the “Bonds”) issued by the Public Finance Authority (the “Issuer”) pursuant to that certain Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”), the undersigned ______(“Advisor”) does hereby make the representations, warranties, and covenants set forth in paragraphs 1 through 14 hereof, on its own behalf and on behalf of Investors, as applicable, upon which representations, warranties, and covenants you are authorized to rely. Capitalized terms not defined herein shall be given the meaning ascribed thereto in the Indenture.

1. Advisor is registered with the Securities and Exchange Commission as an investment advisor under the Investment Advisers Act of 1940 and is 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.

2. Advisor is the duly appointed representative of the purchasers of the above-referenced principal amount of the Bonds (“Investor”), which have been issued and delivered on this date. Investors have executed [investment agreements] with Advisor pursuant to which, among other things, Advisor is authorized to make investment decisions and to deliver this letter on such Investors’ behalf.

3. Advisor acknowledges and each Investor has been or will be informed that the Issuer will not sell or permit any Bonds to be sold to Investors unless Advisor, on its own behalf

4836-5936-5195.175195.21 and on behalf of Investors, as applicable, makes the representations, warranties and covenants herein and authorizes the Issuer and the Trustee to rely thereon and such representations, warranties and covenants are made by the Advisor AS AN INDUCEMENT to the sale of the Bonds to Investor.

4. Advisor has received and reviewed a copy of (a) the Limited Offering Memorandum relating to the Bonds, dated [______, 2017]; and (b) such other documents, agreements, certificates and instruments referenced therein or pertaining thereto or to the Bonds to which Advisor deems necessary and appropriate in its evaluation on behalf of the Investors of the merits and risks of an investment in the Bonds, and hereby represents and warrants that the information contained therein, along with all other additional information supplied by the Borrower to the Advisor, is sufficient for the Advisor to decide to purchase the Bonds on behalf of the Investors. The Advisor acknowledges that the issuance and sale of the Bonds and the execution, delivery and performance of the Loan Agreement, the Account Control Agreement, the Note, the Bond Purchase Agreement, the Continuing Disclosure Agreement, the Deed of Trust, the Tax Certificate, the Bonds or the Indenture will be governed by and construed in accordance with the applicable laws of the State, the State of North Carolina and the United States of America, each as set forth therein.

5. Each Investor has sufficient knowledge and experience in financial and investment matters, including the purchase and ownership of municipal and other tax-exempt or taxable obligations, to be able to evaluate and understand the risks and merits of an investment in the Bonds (and is able to bear the risks of such investment for an indefinite time).

6. The Bonds are being purchased by Advisor for the account of Investors for investment purposes, and no Investor presently intends to make a public distribution of, or to resell or transfer, all or any part of the Bonds; provided that each Investor reserves the right to sell or transfer the Bonds in the future in accordance with the transfer restrictions set forth in the Indenture and described in the Indenture and paragraph 10 below.

7. Each Investor has been or will be informed that he, she, or it may be required to bear the risks of this investment in the Bonds for an indefinite time, since any sale prior to maturity may not be possible.

8. The Bonds are a financially suitable investment for each Investor consistent with such Investor’s investment needs and objectives.

9. Each Investor is either (a) an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “1933 Act”); or (b) a “Qualified Institutional Buyer” as defined in Rule 144A under the 1933 Act; each Investor has been or will be informed that the Bonds are not registered under the 1933 Act and that such registration is not legally required as of the date hereof; and further has been or will be informed that the Bonds ((i) are not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, (ii) may not be resold, transferred, pledged or hypothecated, in whole or in part, unless they are registered under the 1933 Act, and applicable state securities laws or unless an exemption from registration is available; (iii) will not be listed in any stock or

C-2- 2 4836-5936-5195.175195.21 other securities exchange, (iv) will be delivered in a form which may not be readily marketable, and (v) will not carry a rating from any rating service.

10. Advisor acknowledges and each Investor has been or will be informed that the Bonds are not transferable except in Authorized Denominations to (a) an “accredited investor” (in minimum principal amount of $25,000 regardless of any lower minimum Authorized Denomination provided for by the Indenture); or (b) a “Qualified Institutional Buyer”; and Investor agrees to abide by such transfer restrictions. Investors shall be solely and exclusively responsible for compliance with such transfer restrictions, including having a reasonable belief that their transferees are accredited investors or Qualified Institutional Buyers, as the case may be, and compliance with all federal and state securities laws in connection with any such transfer.

11. Advisor acknowledges that it has either been supplied with or been given access to information (including, without limitation, financial statements and other financial information and copies of the Indenture, the Loan Agreement and the Tax Certificate (as defined in the Indenture)), to which a reasonable investor would attach significance in making investment decisions, and Advisor has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Borrower, the Facilities, the Project and the Bonds and the security therefor so that, as a reasonable investor, Advisor has been able to make its own independent investigation and investigation and decision to purchase the Bonds on behalf of Investors and to whether the Bonds are appropriate or proper for investment. Advisor acknowledges that it has not relied upon the Issuer or the Trustee for any information in connection with the purchase of the Bonds on behalf of any Investor.

12. ADVISOR ACKNOWLEDGES AND EACH INVESTOR HAS BEEN OR WILL BE INFORMED THAT THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER, ANY SPONSOR, ANY ISSUER INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER.

C-2- 3 4836-5936-5195.175195.21 13. Advisor has made its own inquiry and analysis with respect to the Bonds and the security therefor (including, without limitation, a credit evaluation of the Borrower, to the extent Advisor deemed it necessary or appropriate), and other material factors affecting the security and payment of the Bonds. Advisor acknowledges and each Investor has been informed or will be informed that the business of the Borrower involves certain economic variables and risks that could adversely affect the security for the Bonds.

14. The Advisor hereby certifies that it is not now and has never been controlled by, or under common control, with the Borrower. The Borrower has been and is now not controlled by the Advisor.

15. The Issuer and the Trustee have not undertaken and will not undertake steps to ascertain the accuracy or completeness of the information furnished to the Advisor with respect to the Borrower, the Facilities, the Bonds or the Project. The Advisor has not relied and will not rely upon the Issuer or its officers, directors, employees or agents or the Trustee in any way with regard to the accuracy or completeness of the information regarding the Borrower, the Facilities or the Project furnished to the Advisor in connection with its purchase of the Bonds, nor have any such parties made any representation to the Advisor with respect to that information.

Dated [______]

By Name Title

C-2- 4 4836-5936-5195.175195.21 EXHIBIT D

CLOSING MEMORANDUM

See attached.

4836-5936-5195.175195.21 LOAN AGREEMENT

by and between

PUBLIC FINANCE AUTHORITY, as Issuer

and

UWHARRIE GREEN SCHOOL, INC., as Borrower

$[PRINCIPALA] PUBLIC FINANCE AUTHORITY Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

and

$[PRINCIPALB] PUBLIC FINANCE AUTHORITY Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Dated as of November 1, 2017

Pursuant to the Indenture, the Issuer has granted, bargained, sold, alienated, pledged, set over and confirmed to the Trustee for the benefit of the Registered Owners, all rights and interests of the Issuer in this Loan Agreement, as amended from time to time, except for the Issuer's Unassigned Rights.

4848-1712-4171.154171.19 Table of Contents

Page

ARTICLE I DEFINITIONS Section 1.01. Indenture Definitions 2 Section 1.02. Additional Definitions 2

ARTICLE II REPRESENTATIONS Section 2.01. Representations by the Issuer 13 Section 2.02. Representations by the Borrower 14 Section 2.03. Tax Covenants 16 Section 2.04. Borrower’s Covenant To Comply With Charter School Laws 1920 Section 2.05. Borrower’s Covenant To Provide Continuing Disclosure 20 Section 2.06. Environmental Representations 20 Section 2.07. Modification of the USDA Documents 21

ARTICLE III

TERM OF THE LOAN AGREEMENT 21

ARTICLE IV THE PROJECT; ISSUANCE OF THE SERIES 2017 BONDS Section 4.01. Agreement to Issue Series 2017 Bonds; Application of Series 2017 Bond Proceeds and Other Moneys 22 Section 4.02. Disbursements From the Project Fund 22 Section 4.03. Establishment of Completion Date 22 Section 4.04. Disbursements From the Cost of Issuance Fund 2223 Section 4.05. Obligation of the Borrower To Furnish Documents to Trustee 23 Section 4.06. Investment of Moneys and Rebate Fund 23 Section 4.07. Tax Covenant 2324 Section 4.08. Title Insurance 2324 Section 4.09. Disbursements from Repair and Replacement Fund 24

ARTICLE V PAYMENT PROVISIONS Section 5.01. Loan Payments and Other Amounts Payable 2425 Section 5.02. Pledge by Borrower 2728 Section 5.03. Payees of Payments 2728 Section 5.04. Obligations of Borrower Hereunder Absolute and Unconditional 2729

ARTICLE VI MAINTENANCE, TAXES AND INSURANCE Section 6.01. Maintenance and Modifications of Facilities, the Athletic Facility and the Government Loan Facility by Borrower 2829

4848-1712-4171.154171.19 Table of Contents (continued) Page

Section 6.02. Taxes, Other Governmental Charges and Utility Charges 2930 Section 6.03. Insurance Required 3031 Section 6.04. Application of Net Proceeds of Insurance 3233 Section 6.05. Advances by Issuer 3233 Section 6.06. Environmental Indemnity 3233 Section 6.07. Environmental Covenants 3435 Section 6.08. Additional Environmental Provisions 3536

ARTICLE VII DAMAGE, DESTRUCTION AND CONDEMNATION Section 7.01. Damage, Destruction and Condemnation 3638 Section 7.02. Extraordinary Mandatory Prepayment 3839 Section 7.03. Borrower Entitled to Certain Net Proceeds 3840 Section 7.04. No Change in Loan Payments; No Liens 3840 Section 7.05. Investment of Net Proceeds 3840

ARTICLE VIII SPECIAL COVENANTS Section 8.01. No Warranty of Condition or Suitability by the Issuer 3940 Section 8.02. Consolidation, Merger, Sale or Conveyance 3940 Section 8.03. Further Assurances 4041 Section 8.04. 4041 Section 8.05. Financial Statements; Reports; Annual Certificate; Financial Covenants; Investor Calls 4042 Section 8.06. Indemnification Covenants 4345 Section 8.07. Authority of Authorized Representative of the Borrower 4647 Section 8.08. Authority of Issuer Authorized Signatory 4648 Section 8.09. Licenses and Qualifications 4648 Section 8.10. Right To Inspect 4648 Section 8.11. Lease or Other Disposition of the Facilities 4748 Section 8.12. Nonsectarian Use 4749 Section 8.13. Limitations on Incurrence of Additional Indebtedness 4849 Section 8.14. Covenant To Comply With Indenture 4951 Section 8.15. [Reserved] 49Independent Consultant 51 Section 8.16. Continuation of Operation in Event of Casualty 4951 Section 8.17. Transfer of Assets 4951 Section 8.18. [Reserved] 5052 Section 8.19. [Reserved] 5052 Section 8.20. [Reserved] 5052 Section 8.21. Operation of the Facilities As a Project 5052 Section 8.22. Maintenance of 501(c)(3) Status; Prohibited Activities 5052

ARTICLE IX ASSIGNMENT AND PLEDGING; REDEMPTION OF SERIES 2017 BONDS

ii 4848-1712-4171.154171.19 Table of Contents (continued) Page

Section 9.01. Assignment and Pledge by Issuer 5052 Section 9.02. Redemption of Series 2017 Bonds 5053

ARTICLE X EVENTS OF DEFAULT AND REMEDIES Section 10.01. Events of Default 5053 Section 10.02. Remedies on Default 5355 Section 10.03. No Remedy Exclusive 5557 Section 10.04. Agreement To Pay Attorneys’ Fees and Expenses 5557 Section 10.05. Waiver 5558 Section 10.06. Proofs of Claim 5558 Section 10.07. Treatment of Funds in Bankruptcy 5659

ARTICLE XI PREPAYMENT OF THE LOANS Section 11.01. General Option To Prepay the Loans 5759 Section 11.02. Prepayment 5760 Section 11.03. Notice of Prepayment 5760 Section 11.04. Use of Prepayment Moneys 5860

ARTICLE XII MISCELLANEOUS Section 12.01. Notices 5860 Section 12.02. Binding Effect 5861 Section 12.03. Severability 5961 Section 12.04. Third-Party Beneficiaries 5961 Section 12.05. Amounts Remaining in Funds 5961 Section 12.06. Amendments, Changes and Modifications 5962 Section 12.07. Execution in Counterparts 5962 Section 12.08. Governing Law 5962 Section 12.09. Filing 6062 Section 12.10. Cancellation at Expiration of Term of Loan Agreement 6062 Section 12.11. [Reserved] 6063 Section 12.12. No Personal Liability of Officials of the Borrower, Issuer or the Trustee 6063 Section 12.13. Limitation of Liability of Issuer 6063 Section 12.14. No Obligation of the State of North Carolina 6265 Section 12.15. Covenant by the Borrower With Respect to Statements, Representations and Warranties 6265 Section 12.16. Captions 6365 Section 12.17. Payments Due on Holidays 6365 Section 12.18. Provision of General Application 6366 Section 12.19. Survival 6366

iii 4848-1712-4171.154171.19 Table of Contents (continued) Page

Section 12.20. Notice of Change in Fact 6366 EXHIBIT A FORM OF SERIES 2017A PROMISSORY NOTE EXHIBIT B FORM OF SERIES 2017B PROMISSORY NOTE EXHIBIT C FORM OF PROJECT FUND REQUISITION CERTIFICATE EXHIBIT D FORM OF COSTS OF ISSUANCE FUND REQUISITION CERTIFICATE EXHIBIT E FORM OF REPAIR AND REPLACEMENT FUND REQUISITION CERTIFICATE EXHIBIT F FORM OF COMPLETION CERTIFICATE EXHIBIT FG FORM OF BORROWER CERTIFICATE EXHIBIT H NOTICE OF SELECTION OF INDEPENDENT CONSULTANT

iv 4848-1712-4171.154171.19 LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of November 1, 2017 (this “Loan Agreement”), is by and between PUBLIC FINANCE AUTHORITY, a joint powers commission and a unit of government and a body corporate and politic under the laws of the State of Wisconsin (together with its successors and assigns, the “Issuer”) and UWHARRIE GREEN SCHOOL, INC., a North Carolina nonprofit corporation (the “Borrower”).

W I T N E S S E T H :

WHEREAS, the Issuer was organized as a commission under and pursuant to Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as amended (the “Act”), commonly known as the “Joint Exercise of Powers Law,” and exists by virtue of that certain Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated September 28, 2010, by and among Adams County, Wisconsin; Bayfield County, Wisconsin; Marathon County, Wisconsin; Waupaca County, Wisconsin; and the City of Lancaster, Wisconsin, as such agreement may be amended from time to time (the “Joint Exercise Agreement”); and

WHEREAS, the Issuer is authorized and empowered under the Act and by the Joint Exercise Agreement to, among other things, issue bonds, notes or other evidences of indebtedness in connection with, and to make loans to assist in the financing and refinancing of, “projects” (as defined in the Act) located inside and outside of the State of Wisconsin (the “State”); and

WHEREAS, the Borrower has applied for the financial assistance of the Issuer in (a) financing and/or refinancing the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” and, together with the Existing Facility, the “Facilities”); (b) funding any required reserve funds for the Series 2017 Bonds; (c) funding capitalized interest on the Series 2017 Bonds; (d) financing and/or refinancing working capital loans of or to the Borrower; and (e) paying all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the “Project”); and

WHEREAS, the Facilities are to be located within the territorial limits of the County of Randolph, State of North Carolina (the “Project Jurisdiction”), and the Issuer, based on representations of the Borrower, but without independent investigation, has found and determined that the financing and refinancing of the Facilities will promote significant economic, cultural and community development opportunities, including the creation or retention of employment, the stimulation of economic activity and the promotion of improvements in the health, safety and welfare of persons in the Project Jurisdiction; and

4848-1712-4171.154171.19 WHEREAS, pursuant to and in accordance with the Act, the Issuer proposes to make a loan (the “Series 2017A Loan”) to the Borrower pursuant to this Loan Agreement for the purposes of financing and/or refinancing the Project; and

WHEREAS, the Issuer has authorized the issuance of the Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A in the aggregate principal amount of $[PRINCIPALA] (the “Series 2017A Bonds”), pursuant to an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”), in order to fund the Series 2017A Loan; and

WHEREAS, pursuant to and in accordance with the Act, the Issuer proposes to make a loan (the “Series 2017B Loan”) to the Borrower pursuant to this Loan Agreement for the purposes of financing and/or refinance the Project; and

WHEREAS, the Issuer has authorized the issuance of the Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B in the aggregate principal amount of $[PRINCIPALB] (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Series 2017 Bonds”), pursuant to the Indenture, in order to fund the Series 2017B Loan; and

WHEREAS, the Issuer proposes to loan to the Borrower and the Borrower desires to borrow from the Issuer the proceeds of the Series 2017 Bonds for the purposes described above upon the terms and conditions hereinafter set forth in this Loan Agreement;

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto formally covenant, agree and bind themselves as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Indenture Definitions. All terms defined in Article I of the Indenture and elsewhere in the Indenture and not otherwise defined herein shall have the same meaning in this Loan Agreement.

Section 1.02. Additional Definitions. The following terms shall have the respective meanings set forth below:

“Account Control Agreement” means any and all agreements, whether there be one or more, among the Borrower, as “Debtor,” the Primary Depository Bank and the Trustee, as “Secured Party,” pursuant to which the Borrower agrees to grant the Trustee a security interest in and “control” of one or more of the Borrower's depository accounts related to the School in order to secure its obligations under this Loan Agreement and the USDA Documents; the initial Account Control Agreement being, that certain Account Control Agreement, executed and

2 4848-1712-4171.154171.19 delivered as of [November __, 2017], by and among the Borrower, the Primary Depository Bank and the Trustee.

“Accountant” means any independent certified public accounting firm licensed to practice in the State or in the State of North Carolina (which may be the firm of accountants that regularly prepares or audits the books and accounts of the Borrower) from time to time selected by the Borrower.

“Additional Payments” means payments to be made by the Borrower to the Issuer and the Trustee pursuant to Sections 5.01(h), (j), (k) and (l) hereof.

“Annual Debt Service Requirements” of any specified Person means, for any Fiscal Year, the principal of (and premium, if any) and interest and other debt service charges (which include for purposes hereof, any fees or premiums for any , surety bond, policy of insurance, bond purchase agreement, or any similar credit or liquidity support secured in connection therewith payable in such Fiscal Year) on all Long-Term Indebtedness of such Person coming due at Maturity or Stated Maturity, and, for such purposes (except with respect to the calculation of the Debt Service Reserve Fund Requirement), any one or more of the following rules shall apply:

(a) Committed Take Out. If such Person has received a binding commitment, within normal commercial practice, from any bank, savings and loan association, insurance company, or similar institution to refund or purchase any of its Long-Term Indebtedness at its Stated Maturity (or, if due on demand, or payable in respect of any required purchase of such Long-Term Indebtedness by such Person, at any date on which demand may be made), then the portion of the Long-Term Indebtedness committed to be refunded or purchased shall be excluded from such calculation and the principal of (and premium, if any) and interest on the Long-Term Indebtedness incurred for such refunding or purchase that would be due in the Fiscal Year for which the calculation is being made, if incurred at the Maturity or purchase date of the Long-Term Indebtedness to be refunded or purchased, shall be added;

(b) Pro Forma Refunding. In the case of Balloon Indebtedness, if the Person obligated thereon shall deliver to the Trustee a certificate of a nationally recognized firm of investment bankers or financial consultants dated within ninety (90) days of the date of delivery of such certificate to the Trustee stating that financing at a stated interest rate (which shall not be less than the Bond Buyer Index or, if the Bond Buyer Revenue Bond Index is unavailable, a comparable index chosen by the Borrower) with a Stated Maturity of not greater than 30 years is reasonably attainable on the date of such certificate to refund any of such Balloon Indebtedness, then for the purpose of calculating what future Annual Debt Service Requirements will be, any installment of principal of (and premium, if any) and interest and other debt service charges on such Balloon Indebtedness that could so be refunded shall be excluded from such calculation and the principal plus interest of the refunding debt shall be evenly allocated over the life of the

3 4848-1712-4171.154171.19 refunding debt with equal principal payments plus interest deemed due each year but solely for the purpose of spreading the principal requirements for calculation of coverage;

(c) Prefunded Payments. Principal of (and premium, if any) and interest and other debt service charges on Long-Term Indebtedness, or portions thereof, shall not be included in the computation of the Annual Debt Service Requirements for any Fiscal Year for which such principal, premium, interest, or other debt service charges are payable from funds irrevocably deposited or set aside in trust for the payment thereof (including any bonds which have been defeased) at the time of such calculations (including without limitation capitalized interest and accrued interest so deposited or set aside in trust or escrowed with the Trustee or any Independent Person approved by the Trustee);

(d) Variable Rate Debt. As to any Indebtedness that bears interest at a variable interest rate which cannot be ascertained at the time of calculation, an interest rate equal to the lesser of an annual interest rate equal to the Bond Buyer Revenue Bond Index (or, if the Bond Buyer Revenue Bond Index is unavailable, a comparable index chosen by the Borrower) and the weighted average rate of interest borne by such Indebtedness (or other indebtedness of comparable credit quality, maturity and purchase terms in the event that such Indebtedness was not outstanding) during the preceding Fiscal Year (or any period of comparable length ending within 180 days) prior to the date of calculation shall be presumed to apply for all future dates and the principal shall be evenly allocated over the life of the Indebtedness issue with an equal amount of principal deemed due each year but solely for the purpose of spreading the principal requirements for calculation of coverage;

(e) Contingent Obligations. In the case of any guarantees described in the definition of Indebtedness, the principal of (and premium, if any) and interest and other debt service charges on such Indebtedness for any Fiscal Year shall be deemed to be 25% of the principal of (and premium, if any) and interest and other debt service charges on the Indebtedness guaranteed due in such Fiscal Year; provided, however, that if the Borrower is actually required to make any payment in respect of such Indebtedness, the total amount payable by the Borrower in respect of such guarantee or other obligation in such Fiscal Year shall be included in any computation of the Annual Debt Service Requirements of the Borrower for such Fiscal Year and the amount payable by the Borrower in respect of such guarantee or other obligation in any future Fiscal Year shall be included in any computation of the estimated Annual Debt Service Requirements for such Fiscal Year; and

(f) Financial Products. In the event there shall have been issued or entered into in respect of all or a portion of any Long-Term Indebtedness a Financial Products Agreement, interest on such Long-Term Indebtedness shall be included in the calculation of Annual Debt Service Requirements by including for such period an amount equal to the amount payable on such Long-Term Indebtedness in such period at the rate or rates stated in such Long-Term Indebtedness plus any payments payable by the Borrower in

4 4848-1712-4171.154171.19 respect of such Financial Products Agreement minus any payments receivable by the Borrower in respect of such Financial Products Agreement.

“Architect” means Brockwell Associates, Inc., or any other architect employed by the Borrower in connection with the design of the New Facility.

“Balloon Indebtedness” means Long-Term Indebtedness where the principal of (and premium, if any) and interest and other debt service charges on such Long-Term Indebtedness due (or payable in respect of any required purchase of such Long-Term Indebtedness by such person on demand) in any Fiscal Year either are equal to at least 25% of the total principal of (any premium, if any) and interest and other debt service charges on such Long-Term Indebtedness or exceed by more than 50% the greatest amount of principal of (and premium, if any) and interest and other debt service charges on such Long-Term Indebtedness due in any preceding or succeeding Fiscal Year.

“Borrower Documents” means this Loan Agreement, the Deed of Trust, the Series 2017 Promissory Notes, the Account Control Agreement, the USDA Parity Agreement, the Bond Purchase Agreement, the Tax Certificate, the Continuing Disclosure Agreement and each of the other agreements, certificates, contracts or instruments to be executed by the Borrower in connection with the issuance of the Series 2017 Bonds or the financing of a portion of the expenses associated with the Project.

“Building” means that certain building or buildings and all other structures and facilities now owned or hereafter acquired (including all fixtures, heating and air conditioning equipment and all other equipment and machinery affixed to the Land or Building) which are located on the Land, as they may from time to time exist.

“Capital Improvements” means the acquisition of land, easements, facilities, and equipment (other than ordinary repairs and replacements), and the construction or reconstruction of improvements, betterments, and extensions which, under Generally Accepted Accounting Principles as prescribed by the Governmental Accounting Standards Board, are properly chargeable as capital items.

"Construction Administrator" means, with respect to the New Facility, Hubrich Contracting Inc., or such other entity appointed as such by the Borrower.

“Consulting Architect” means an individual or an independent engineering or architectural firm (which may be an individual or an engineering or architectural firm retained by the Borrower for other purposes) selected by the Borrower.

“Construction Project” means the construction of a single-story, 55,265 square foot building with 36 classrooms and an approximately 19,260 square foot gymnasium located at the New Facility.

5 4848-1712-4171.154171.19 “Costs of the Project” means the sum total of all reasonable or necessary costs incidental to the Project which may be financed pursuant to the Act and the Code.

“Days Cash On Hand” means, as of any date of determination, the product of 365 times a fraction, (a) the numerator of which is the aggregate amount of all Unrestricted Cash and Investments and (b) the denominator of which is total Operating Expenses (but including in Operating Expenses only the interest portion of debt service on Indebtedness), in each case for the Fiscal Year ending on the date of determination and determined in accordance with Generally Accepted Accounting Principles.

“Debt Service Coverage Ratio” means, as of any date of determination, the ratio obtained by dividing the Net Income Available for Debt Service for the relevant Fiscal Year by the Annual Debt Service Requirements of the Borrower for the relevant Fiscal Year, as such ratio is certified to by an Authorized Representative of the Borrower.

“Eliminated Expenses” means for the purposes of Section 8.13 hereof, any Operating Expenses that the Borrower certifies will be eliminated as a result of the issuance or incurrence of any Long-Term Indebtedness.

“Environmental Damages” means all judgments, losses, penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses of investigation and defense of any claim, whether or not such claim is ultimately defeated, and of any good faith or judgment, of whatever kind or nature, including without limitation reasonable attorneys’ fees and expert consultants’ fees and disbursements, any of which are incurred at any time as a result of the existence of Regulated Chemicals upon, about, beneath or migrating, or threatening to migrate, onto or from the Facilities, or the violation of Environmental Requirements pertaining to the Facilities, regardless of whether or not such Environmental Damages were caused by or within the control of the Borrower.

“Environmental Law” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the federal Hazardous Materials Transportation Law, 49 U.S.C. §§ 5101 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. §§ 1251 et seq. and the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; and any other applicable federal or state laws pertaining to the protection of the environment, as any such laws may be amended, modified or supplemented and any regulations promulgated pursuant to any of the foregoing.

“Environmental Report” means any Environmental Assessment (as defined in Section 6.08 herein), or other environmental report or conducted at the New Facility for any reason.

“Environmental Requirements” means all applicable federal, State of North Carolina regional or local laws, statutes, rules, regulations or ordinances, concerning public health, or the environment, including, but not limited to, the Comprehensive Environmental Response,

6 4848-1712-4171.154171.19 Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Solid and Amendments of 1984, 42 U.S.C. § 6901, et seq.; the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. § 1251, et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. § 2601, et seq.; the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. § 11001, et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. § 7401, et seq.; the National Environmental Policy Act of 1975, 42 U.S.C. § 4321, et seq.; the Rivers and Harbors Act of 1899, 33 U.S.C. § 401 et seq.; the Safe Drinking Water Act of 1974, as amended 42 U.S.C. § 300(f), et seq.; and all rules, regulations, policies and guidance documents promulgated or published thereunder, and any State of North Carolina, regional, parish or local statute, law, rule, regulation or ordinance relating to public health, or the environment, including, without limitation those relating to:

(a) releases, discharges, emissions or disposals to air, water, land or groundwater;

(b) the withdrawal or use of groundwater;

(c) the use, handling, or disposal of polychlorinated biphenyls (“PCBs”), asbestos or urea formaldehyde;

(d) the transportation, treatment, storage, disposal, release or management of Hazardous Materials (including, without limitation, petroleum, its derivatives, by-products or other hydrocarbons), and any other solid, liquid, or gaseous substance, exposure to which is prohibited, limited or regulated, or may or could pose a hazard to the health and safety of the occupants of any facilities or properties of the Borrower or any property adjacent to or surrounding any facilities or properties of the Borrower;

(e) the exposure of persons to toxic, hazardous, or other controlled, prohibited or regulated substances; and

(f) any Regulated Chemical.

“Event of Default” means those defaults specified in Section 10.01 hereof and in Section 8.01 of the Indenture.

“Existing Facility” has the meaning assigned thereto in the recitals of this Loan Agreement.

“Facility Lease Payments” means, for any period of calculation, the total of all rental payments under operating leases for any school facilities of the Borrower.

“Facilities” means, collectively, the Existing Facility and the New Facility.

7 4848-1712-4171.154171.19 “Financial Products Agreement” means any type of instrument or contract, which shall include, but not be limited to, (i) any contract known or referred to or which performs the function of an interest rate swap agreement, currency swap agreement, forward payment conversion agreements or ; (ii) any contract providing for payments based on levels of, or changes or differences in, interest rates, currency exchange rates, or stock or other indices; (iii) any contract to exchange cash flows or payments or a series of payments; (iv) any type of contract called, or designed to perform the function of, interest rate floors or caps, options, puts or calls, to or minimize any type of , including, without limitations, payment, currency, rate or other financial risk forward supply agreements; and (v) any other type of contract or arrangement that the governing board of the Borrower determines is to be used, or is intended to be used, to manage or reduce the cost of debt (including but not limited to be bond insurance policy), to convert any element of debt from one form to another, to maximum or increase investment return, to minimize investment return risk or to protect against any type of financial risk or uncertainty.

“Government Loan” means the loan to the Borrower from the Government evidenced by a certain note executed and delivered by the Borrower to the Government dated October 19, 2016.

“Hazardous Material” means: (a) any substances defined as “hazardous substances,” “pollutants,” “contaminants,” “hazardous materials,” “hazardous wastes,” or “hazardous or toxic substances” or related materials as now or hereafter defined in any Environmental Law; (b) those substances listed or otherwise identified as substances of the type referred to in the preceding clause (a) in the regulations adopted and publications issued pursuant to any Environmental Law, as the same may be amended, modified or supplemented; (c) any friable asbestos, airborne asbestos in excess of that generally found in the atmosphere where the applicable facility is located, or any substance or material containing asbestos, excluding any such materials located on the applicable facility prior to the date hereof so long as such materials are contained, maintained, abated or removed in compliance with all applicable Environmental Laws; and (d) any substance the presence of which on the applicable facilities are prohibited by any applicable Environmental Law; provided that Hazardous Material shall not include any such substances used in or resulting from the ordinary operation of the applicable facilities or for the cleaning of the applicable facilities; provided that such substances are stored, handled and disposed of in substantial compliance with all applicable Environmental Laws and other applicable laws and regulations.

“Indenture” means the Indenture of Trust, dated as of November 1, 2017, by and between the Issuer and the Trustee, including any indentures supplemental thereto made in conformity therewith, pursuant to which the Bonds are authorized to be issued and secured.

“Independent” when used with respect to any specified Person, means such a Person who (i) is in fact independent, (ii) does not have any direct financial interest or any material indirect financial interest in the Borrower, and (iii) is not connected with the Borrower as an officer, employee, promoter, trustee, partner, director or person performing similar function. Whenever it is provided that any Independent Person’s opinion or certificate shall be furnished to the

8 4848-1712-4171.154171.19 Trustee, such Person shall be appointed by an Order and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof.

“Independent Consultant” means a management consultant or certified public accountant selected by the Borrower and experienced in the management and financing of charter schools in North Carolina.

“Insurance Consultant” means an independent insurance consultant and/or firm or an insurance broker or an insurance agent (which may be a consultant, firm, broker or agent with whom the Borrower or the Issuer regularly transacts business) selected by the Borrower.

“Investment” has the meaning set forth in Section 1.148-1(b) of the Regulations.

“Investment Grade Rating” means a rating by Standard & Poor’s or Fitch of “BBB-” or higher, by Moody’s of “Baa3” or higher, or by another Rating Agency of the equivalent rating or higher.

“Issuer’s Annual Fee” has the meaning set forth in Section 5.01(k) hereof.

“Land” means, collectively, the real estate, interests in real estate, and other real property rights described in Exhibit A to the Deed of Trust relating to the Series 2017 Bonds or any other Deed of Trust relating to the Bonds issued under the Indenture, together with all real estate, interests in real estate and other real property rights made a part of the Land in connection with the substitution of such real estate and other real property rights pursuant to Section 8.11 hereof or as the result of replacement of property taken in condemnation, or otherwise, less such real estate, interests in real estate and other real property rights released under the provisions of Section 8.11 hereof or taken by the exercise of the power of eminent domain as provided in Section 7.02 hereof.

“Liabilities” means any causes of action (whether in contract, tort or otherwise), claims, fees, costs, charges, damages, demands (including Environmental Damages), judgments, liabilities, losses, suits and expenses (including, without limitation, reasonable costs of investigation, and fees and expenses of attorneys, accountants, consultants and other experts, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) of every kind, character and nature whatsoever.

“Lien” means any mortgage or pledge of, security interest in, or lien or encumbrance on, any property of the Borrower which secures any Indebtedness or other obligation of the Borrower excluding liens applicable to property in which the Borrower has only a leasehold interest unless the lien secures Indebtedness.

“Loan(s)” means the Series 2017A Loan and the Series 2017B Loan.

9 4848-1712-4171.154171.19 “Loan Agreement” means this Loan Agreement and any amendments and supplements hereto made in conformity with the requirements hereof and of the Indenture.

“Loan Payment(s)” means those payments required to be paid by the Borrower pursuant to Section 5.01 hereof.

“Long-Term Indebtedness” means any Indebtedness incurred, assumed or guaranteed by the Borrower maturing on or after the expiration of the one year period after it is initially incurred.

“Material Adverse Effect” or “Material Adverse Change” means a material adverse effect upon, or a material adverse change in, any of (a) the financial condition, operations, business, properties or prospects of the Borrower taken as a whole; (b) the ability of the Borrower to perform under this Loan Agreement or any Borrower Document in any material respect or any other material contract to which any one or more of them is a party in any material respect; (c) the legality, validity or enforceability of this Loan Agreement, any Borrower Document or the Indenture; (d) the perfection or priority of any Liens of granted under this Loan Agreement or any Borrower Document; (e) the status of the Borrower as an organization described in Section 501(c)(3) of the Code or the tax-exempt status of the interest on any Tax-Exempt Bonds; or (f) the status or effectiveness of the Borrower’s charter from the State of North Carolina to operate a charter school.

“Maturity” when used with respect to any Indebtedness (or any Note), means the date on which the principal of such Indebtedness (or Note) becomes due and payable as therein or herein provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for redemption or otherwise.

“Maximum Annual Debt Service" means, as of any date of calculation, the highest Annual Debt Service Requirements (excluding required payments from the Capitalized Interest Account on any year and all or a portion of the final maturity payment for any Indebtedness in an amount equal to funds on deposit in a debt service reserve fund that are permitted and available to be applied to the payment of such final maturity at the time of such final maturity) with respect to all outstanding Indebtedness for any succeeding Fiscal Year.

“Net Income Available for Debt Service” means, for any period of determination thereof, the Pledged Revenues of the Borrower for such period, plus the interest earnings on moneys held in the Debt Service Reserve Fund established under the Indenture (but only to the extent that such interest earnings are transferred to the Bond Fund), plus required payments from the Capitalized Interest Account, minus the total Operating Expenses of the Borrower for such period but excluding from Operating Expenses (a) debt service paid on Indebtedness; (b) any profits or losses which would be regarded as extraordinary items under Generally Accepted Accounting Principles; (c) gain or loss in the extinguishment of Indebtedness of the Borrower; (d) proceeds of the Series 2017 Bonds and any other Indebtedness permitted by this Loan Agreement; and (e) proceeds of insurance policies, other than policies for business interruption insurance, maintained by or for the benefit of the Borrower, the proceeds of any sale, transfer or

10 4848-1712-4171.154171.19 other disposition of the Facilities or any other of the Borrower’s assets by the Borrower, and any condemnation or any other damage award received by or owing to the Borrower.

“New Facility” has the meaning assigned thereto in the recitals of this Loan Agreement.

“Non-Recourse Indebtedness” means Indebtedness incurred for the purpose of financing Capital Improvements or tangible personal property secured by a lien on, or security interest in, the property being financed upon default in the payment of the principal thereof or interest thereon the obligee thereof may look only to the property securing the same and not to the credit of the Borrower nor to any other assets of the Borrower.

“Operating Expenses” means fees and expenses of the Borrower, including maintenance, repair expenses, utility expenses, administrative and legal expenses, miscellaneous operating expenses, debt service paid on Indebtedness, advertising costs, payroll expenses (including taxes), the cost of materials and supplies used for current operations of the Borrower, the cost of vehicles, equipment leases and service contracts, taxes upon the operations of the Borrower, charges for the accumulation of appropriate reserves for current expenses not annually recurrent, but which are such as may reasonably be expected to be incurred in accordance with Generally Accepted Accounting Principles, all in such amounts as reasonably determined by the Borrower; provided, however, “Operating Expenses” shall not include depreciation, or other non-cash expenses nor those expenses which are actually paid from any revenues of the Borrower which are not Pledged Revenues, nor payment for Capital Improvements.

“Opinion of Counsel” means an opinion in writing of legal counsel, who may be counsel to the Issuer, the Trustee or the Borrower.

“Order” of any specified Person means a written order signed in the name of such Person and delivered to the Trustee by an Authorized Representative of the Borrower.

“Phase I Report” means the Phase I Environmental Site Assessment Reports prepared by Modulus, PLLC, dated June 29, 2017.

“Primary Depository Bank” means the financial institution where the Borrower maintains its depository account related to the School, such financial institution being the same financial institution identified by the Borrower to the State Compliance Office as the financial institution with which to deposit the Pledged Revenues from the State Compliance Office.

“Private Business Use” means use, directly or indirectly, by any Private Person other than use as a member of, and on the same basis as, the general public.

“Private Person” means any person other than a “governmental unit” within the meaning of Section 150(a)(2) of the Code.

“Project” has the meaning assigned thereto in the recitals of this Loan Agreement.

11 4848-1712-4171.154171.19 “Regulated Chemicals” means any substance, including Hazardous Material, the presence of which requires investigation, permitting, control or remediation under Environmental Laws.

“School” means the charter school known as Uwharrie Charter Academy operated by the Borrower pursuant to a charter contract with the North Carolina State Board of Education.

“Series 2017 Bond Proceeds” mean the Series 2017A Bond Proceeds and the Series 2017B Bond Proceeds.

“Series 2017A Bond Proceeds” mean $[PRINCIPALA] proceeds from the sale of the Series 2017A Bonds.

“Series 2017A Loan” means the loan by the Issuer to the Borrower of the proceeds from the sale of the Series 2017A Bonds pursuant to this Loan Agreement.

“Series 2017B Bond Proceeds” mean $[PRINCIPALB] proceeds from the sale of the Series 2017B Bonds.

“Series 2017B Loan” means the loan by the Issuer to the Borrower of the proceeds from the sale of the Series 2017B Bonds pursuant to this Loan Agreement.

“Short-Term Indebtedness” means Indebtedness having an original maturity less than one year and not renewable at the option of the Borrower for a term greater than one year beyond the date of original incurrence.

“State Compliance Office” means the North Carolina State Board of Education, the State of North Carolina Department of Public Instruction, the State of North Carolina Office of Charter Schools, or any other body subsequently authorized by the State of North Carolina to grant, revoke, or suspend charters.

“Stated Maturity” when used with respect to any Indebtedness or any Note or any installment of interest thereon, means the date specified in such Indebtedness or Note as the fixed date on which the principal of such Indebtedness or Note installment of interest is due and payable.

“Subordinated Indebtedness” means Indebtedness which, with respect to any issue thereof, is evidenced by instruments, or issued under an indenture or other document, containing provisions for the subordination of such Indebtedness to the Bonds (to which appropriate reference shall be made in the instrument evidencing such Indebtedness).

“Tax Certificate” means the Tax Certificate as to Arbitrage and the provisions of Sections 103, 141 and 150 of the Internal Revenue Code of 1986, dated as of [November __, 2017], between the Issuer and the Borrower executed in connection with the initial issuance and delivery of the Series 2017 Bonds, as amended or supplemented from time to time pursuant to its terms, including without limitation in connection with the issuance and delivery of any Additional Bonds.

12 4848-1712-4171.154171.19 “Title Policy” means an ALTA extended coverage lender’s policy of title insurance in a form acceptable to the Underwriter.

“Trustee Indemnified Parties” means the Trustee, its officers, directors, employees and agents.

“Unrestricted Cash and Investments” means the sum of the Borrower’s unrestricted cash, cash equivalents, marketable securities, including without limitation board-designated assets, but excluding any trustee-held or similar funds held under the Indenture or similar debt documents. For the purposes of calculations of the liquidity requirements of Section 8.05(g) hereof, an unrestricted contribution from a third party or affiliate shall be treated as being made during the period of such calculation so long as the unrestricted contribution is made prior to the date the applicable certificate of Borrower is required to be delivered with respect to such calculation.

ARTICLE II

REPRESENTATIONS

Section 2.01. Representations by the Issuer. As of the date hereof, the Issuer represents as set forth in this Section; provided, however, that as to information furnished by the Borrower pursuant to this Loan Agreement, the Issuer is relying solely on such information in making the Issuer’s representations, and as to all matters of law, the Issuer is relying upon the advice of Bond Counsel; and, provided, further, that no Issuer Indemnified Party shall be individually liable for the breach of any representation, warranty, or agreement contained herein.

(a) The Issuer is a unit of government and a body corporate and politic duly organized and validly existing under the laws of the State.

(b) By official action of the Issuer prior to or concurrently herewith, the Issuer has authorized and approved the execution and delivery of the Issuer Documents and the consummation by the Issuer of the transactions contemplated thereby.

(c) The execution and delivery of this Loan Agreement and the other Issuer Documents, and the consummation of the transactions contemplated hereby and thereby, and the fulfillment of the terms hereof and thereof, do not and will not conflict with, or constitute on the part of the Issuer a material breach of or a default under, any existing (i) law; or (ii) other legislative act, constitution or other proceeding establishing or relating to the establishment of the Issuer or its affairs or its resolutions; or (iii) agreement, indenture, mortgage, lease, applicable court or administrative decree or order or other contract or instrument to which the Issuer is subject or is a party or by which it is bound, except as provided in the Issuer Documents.

(d) No officer or director of the Issuer has a personal financial interest in or has personally and financially benefited from this Loan Agreement or the Indenture or any such contract.

13 4848-1712-4171.154171.19 (e) The Issuer makes no representation or warranty that the amount of the Loan will be adequate or sufficient to finance or refinance the Project or that the Project will be adequate or sufficient for the purposes of the Borrower.

(f) To the knowledge of the Issuer, there is not pending or threatened any suit, action or proceeding against or affecting the Issuer before or by any court, administrative agency or other governmental authority contesting the validity, as to the Issuer, of this Loan Agreement or the Indenture, any of its obligations hereunder or thereunder or any of the transactions contemplated hereby or thereby.

(g) The Issuer has not pledged, assigned or granted, and will not pledge, assign or grant, any of its rights or interest under this Loan Agreement for any purpose other than as provided in the Indenture.

Section 2.02. Representations by the Borrower. The Borrower represents on its own behalf and on behalf of its successors and assigns that as of the date of execution of this Loan Agreement and as of the date of delivery of the Bonds to the initial purchasers thereof (and such representations and warranties shall survive the issuance of the Bonds and are to remain operative and in full force and effect regardless of the issuance of the Bonds or any investigations by or on behalf of the Issuer or the results thereof):

(a) the Borrower is a nonprofit corporation duly incorporated and in good standing under the laws of the State of North Carolina, has full legal right, power and authority to enter into this Loan Agreement and the other Borrower Documents, and to carry out and consummate all transactions contemplated by the Borrower Documents, and by proper corporate action has duly authorized the execution, delivery and performance of the other Borrower Documents;

(b) the officers of the Borrower executing the Borrower Documents are duly and properly in office and fully authorized to execute the same;

(c) the Borrower Documents have been duly executed and delivered by the Borrower;

(d) (i) the Borrower Documents, when assigned to the Trustee pursuant to the Indenture, will constitute the legal, valid and binding agreements of the Borrower enforceable against the Borrower by the Trustee (except for the Issuer’s Unassigned Rights) in accordance with their terms for the benefit of the Registered Owners of the Bonds; and (ii) the Issuer’s Unassigned Rights constitute the legal, valid, and binding agreements of the Borrower enforceable against the Borrower (A) by the Issuer in its own right or (B) in the case of the rights of any Issuer Indemnified Party (including, without limitation, the right of any Issuer Indemnified Party to indemnification and immunity from liability), by such Issuer Indemnified Party in his, her or its own right in accordance with their respective terms; except in each case as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights

14 4848-1712-4171.154171.19 generally, by the application of equitable principles regardless of whether enforcement is sought in a proceeding at law or in equity and by ;

(e) the execution and delivery of the Borrower Documents, the consummation of the transactions therein contemplated and the fulfillment of or compliance with the terms and conditions thereof, will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under the articles of incorporation of the Borrower, its bylaws, any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Borrower is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would have a Material Adverse Effect;

(f) no consent or approval of any trustee or holder of any indebtedness of the Borrower or any guarantor of indebtedness of or other provider of credit or liquidity to the Borrower, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority (except with respect to any state securities or “blue sky” laws) is necessary in connection with the execution and delivery of the Borrower Documents, or the consummation of any transaction herein or therein contemplated, or the fulfillment of or compliance with the terms and conditions thereof, except as have been obtained or made and as are in full force and effect or as the Borrower has covenanted to obtain or make in connection with the Project;

(g) there is no action, suit, proceeding, inquiry or investigation, before or by any court or federal, state, municipal or other governmental authority, or to the knowledge of the Borrower, after reasonable investigation, pending or threatened, against or affecting the Borrower or the assets, properties or operations of the Borrower which, if determined adversely to the Borrower or its interests, would have a Material Adverse Effect. All tax returns (federal, state and local) required to be filed by or on behalf of the Borrower have been filed, and all taxes shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Borrower in good faith, have been paid or adequate reserves have been made for the payment thereof which reserves, if any, are reflected in the audited financial statements of the Borrower;

(h) no written information, exhibit or report furnished to the Issuer by the Borrower in its application for financing or by the Borrower or its representative in connection with the negotiation of the Borrower Documents, regardless of whether the Issuer is a party thereto (including, without limitation, any financial statements, whether audited or unaudited, and any other financial information provided in connection therewith) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that

15 4848-1712-4171.154171.19 the representation in this clause (h) is made only to the Issuer and may not be relied upon by any other Person;

(i) The Borrower is, and shall maintain its status as, an organization described in Section 501(c)(3) of the Code, is exempt from federal income tax under Section 501(a) of the Code, and is not a private foundation as described in Section 509(a) of the Code.

(j) the Borrower has or, upon consummation of the transactions contemplated by the Borrower Documents, will have, good and marketable title to the New Facility free and clear from all encumbrances other than Permitted Encumbrances;

(k) since the Borrower’s audited consolidated balance sheets at June 30, 2016, and the related consolidated statements of income and consolidated statements of cash flows for the year ended June 30, 2016 (copies of which have been furnished to the Underwriter) there has been no material adverse change in the financial condition or results of operations of the Borrower; and

(l) no officer or director of the Issuer has a personal financial interest in or has personally and financially benefited from this Loan Agreement or the Indenture or any such contract.

Section 2.03. Tax Covenants. The Borrower covenants for the benefit of the Issuer and the Beneficial Owners, and their respective successors and assigns, that:

(a) the Borrower will not take any action or omit to take any action, which action or omission will adversely affect the excludability from gross income of the interest on any Tax-Exempt Bonds for federal income tax purposes or cause the interest on any Tax-Exempt Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code, and in the event of such action or omission, it will, promptly upon having such brought to its attention, take such reasonable actions based upon an opinion of Bond Counsel, and in all cases at the sole expense of the Borrower, as may be necessary to rescind or otherwise negate such action or omission. The Borrower will not directly or indirectly use or permit the use of any proceeds of any Tax-Exempt Bonds or any other funds of the Borrower, or take or omit to take any action that would cause any Tax-Exempt Bonds to be or become “arbitrage bonds” within the meaning of Section 148(a) of the Code (or their statutory predecessor), or to fail to meet any other applicable requirements of the Code (or their statutory predecessor). To that end, the Borrower will comply with all applicable requirements of the Code (or their statutory predecessor) to the extent applicable to any Tax-Exempt Bonds. In the event that at any time the Borrower is of the opinion that, for purposes of this Section 2.03, it is necessary to restrict or limit the on the investment of any moneys held by the Trustee or otherwise, the Borrower shall so instruct the Trustee in writing;

16 4848-1712-4171.154171.19 (b) the Borrower hereby covenants and agrees that it shall not, and the Issuer hereby covenants and agrees that it shall not knowingly, enter into any arrangement, formal or informal, pursuant to which the Borrower (or any “related party,” as defined in Section 1.150-1(b) of the Treasury Regulations) shall purchase any Tax-Exempt Bonds, other than a purchase in lieu of redemption. This covenant shall not prevent the Borrower from purchasing Bonds in the open market for the purpose of tendering them to the Trustee for purchase and ;

(c) The Borrower has received a determination letter from the Internal Revenue Service classifying the Borrower as an organization (i) described in Section 501(c)(3) of the Code that is exempt from federal income taxation under Section 501(a) of the Code (except with respect to “unrelated business taxable income” within the meaning of Section 512(a) of the Code); and (ii) which is not a “private foundation” as defined in Section 509(a) of the Code. The Borrower shall comply with all of the terms, conditions and limitations, if any, contained in the determination letter.

(d) With the intent not to limit the generality of the foregoing, the Borrower covenants and agrees that:

(i) the Borrower shall spend not less than 95% of the proceeds of any Tax-Exempt Bonds plus earnings thereon for capital Costs of the Project being financed or refinanced and all of such project will be used by the Borrower for its exempt purposes under Section 501(c)(3) of the Code. Capital costs are defined as costs of land or property of a character subject to allowance for depreciation under Section 167 of the Code and do not include inventory or working capital, costs of issuance or interest following completion of construction;

(ii) the Borrower (A) will take whatever actions are necessary for it to continue to be organized and operated in a manner which will preserve and maintain its status as an organization which is (1) described in Section 501(c)(3) of the Code, (2) exempt from federal income taxes under Section 501(a) of the Code (except as to unrelated or business income); and (B) will not intentionally perform any acts nor enter into any agreements which would cause any revocation or adverse modification of such federal income tax status;

(iii) except as permitted by Section 149(b)(3) of the Code, the Borrower will not permit any Tax-Exempt Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code;

(iv) the weighted average maturity of any Tax-Exempt Bonds does not or will not exceed 120% of the weighted average reasonably expected economic life of the property financed with such Bonds, determined in accordance with Section 147(b) of the Code. For purposes of the preceding sentence, the reasonably expected economic life of property shall be determined as of the date such property was placed in service or, if later, the date of issuance of such Bonds;

17 4848-1712-4171.154171.19 (v) the statements concerning any Tax-Exempt Bonds and the application of the proceeds of such Bonds required by Section 149(e) of the Code, and approved by the Borrower on behalf of the Issuer, are true and complete for the purposes for which intended. The Borrower shall prepare and submit, or cause to be submitted, true and complete amendments of, or supplements to, those statements if by an opinion of Bond Counsel such amendments or supplements are deemed to be necessary or advisable;

(vi) no changes will be made in any Tax-Exempt Bond-financed property or in the use of such facilities which will adversely affect the excludability from gross income for federal income tax purposes of the interest on any Tax-Exempt Bonds or will cause the interest on any Tax-Exempt Bonds, or any portion thereof, to constitute an item of tax preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. The Borrower will use any Tax-Exempt Bond-financed property or cause such property to be used so long as the Bonds remain unpaid so as to constitute a “project” within the meaning of the Act;

(vii) no net Tax-Exempt Bond proceeds will be used to reimburse the Borrower for any expenditure made by the Borrower more than 60 days prior to a qualifying declaration of intent (adopted April 25, 2017), which is approved by Bond Counsel, except for planning costs and other preliminary expenditures within the meaning of Section 1.150-2(0(2) of the Treasury Regulations not in excess of 20% of the issue price of any Tax-Exempt Bonds and de minimis expenses within the meaning of Section 1.150-2(0(1) of the Treasury Regulations.

(viii) the Borrower will not make any investment or deposit in Investment Obligations or which involves the payment or agreement to pay to a party other than the United States an amount that is required to be paid to the United States by entering into a transaction that reduces the amount required to be rebated to the United States pursuant Section 148 of the Code or results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm’s length and had the yield on the related Series of Bonds not been relevant to either party to the transaction; and

(ix) the costs of issuance financed with proceeds of any Tax-Exempt Bonds, including any bond discount on the sale of any Tax-Exempt Bonds, will not exceed 2% of the proceeds of such Tax-Exempt Bonds.

(e) The Borrower covenants to assume and comply with all requirements of the Code to determine and timely pay all amounts required to be rebated to the United States pursuant Section 148 of the Code with respect to any Tax-Exempt Bonds.

(f) All covenants and obligations of the Borrower contained in this Section 2.03 shall remain in effect and be binding upon the Borrower until the expiration of

18 4848-1712-4171.154171.19 statutes of limitations applicable to the liability of the Beneficial Owners for federal and state income taxes with respect to interest on any Tax-Exempt Bonds, notwithstanding the payment in full or defeasance of any Tax-Exempt Bonds, any earlier termination of this Loan Agreement or any provision for payment of principal of, and premium, if any, and interest on, the outstanding Tax-Exempt Bonds, the Note and Loan Payments and release and discharge of the Indenture.

(g) Notwithstanding any provision of this Section 2.03, if the Borrower provides, at the Borrower’s expense, to the Trustee and to the Issuer an opinion of Bond Counsel to the effect that any action required under the Tax Certificate, this Section or Section 3.20 of the Indenture is no longer required, or to the effect that some further action is required, to maintain the excludability from gross income of interest on any Tax-Exempt Bonds pursuant to Section 103(a) of the Code, the Borrower, the Issuer and the Trustee may rely conclusively on such opinion in complying with the provisions hereof and the Tax Certificate and Section 3.20 of the Indenture, and the covenants hereunder shall be deemed to be modified to that extent.

(h) The Borrower agrees that it will not take any action or omit to take any action or cause or permit any circumstance to arise or continue if such action or circumstance or omission would cause any revocation or adverse modification of the federal income tax status of any Tax-Exempt Bonds, unless it obtains, at the Borrower’s expense, an opinion of Bond Counsel, addressed to the Trustee that such revocation or modification will not adversely affect the excludability from gross income under Section 103(a) of the Code of interest paid on any Tax-Exempt Bonds or cause the interest on the Tax-Exempt Bonds, or any portion thereof, to become an item of tax preference for purposes of the alternative minimum tax imposed on individuals and Borrowers under the Code.

(i) The Borrower shall make the following payments:

(i) To Correct Underpayments. If the Borrower shall have failed to satisfy any requirement of Section 1.148-3 of the Treasury Regulations (whether or not such failure shall be due to any default by the Borrower with respect to Rebate Amounts), the Borrower shall (A) pay any amount required to correct such failure and any penalty imposed under Section 1.148-3(h) of the Treasury Regulations; and (B) in the event that the Borrower has any knowledge of the reason for such failure, deliver to the Issuer and the Trustee a brief written explanation of such failure and any basis for concluding that such failure was not due to willful neglect.

(ii) Preservation of Accounting Records. The Borrower shall retain accounting records relating to the accounts and subaccounts in the funds established under the Indenture, for at least six years after the first date on which no Tax-Exempt Bonds are outstanding.

19 4848-1712-4171.154171.19 (j) The Borrower further covenants, represents and warrants that the procedures set forth in the Tax Certificate implementing the above covenants shall be complied with to the extent necessary under the Code to maintain the exclusion from gross income of interest on any Tax-Exempt Bonds for federal income tax purposes (except to the extent noted in the preceding paragraph) or to avoid the application of any penalties under the Code, subject to any applicable statute of limitations. The Borrower shall appoint a Rebate Analyst reasonably acceptable to the Issuer and any successor Rebate Analyst for any Tax-Exempt Bonds, subject to the conditions set forth in the Tax Certificate.

Section 2.04. Borrower’s Covenant To Comply With Charter School Laws. The Borrower covenants to comply fully and in all respects with the provisions of the Charter School Act so long as any Series 2017 Bonds remain Outstanding.

Section 2.05. Borrower’s Covenant To Provide Continuing Disclosure. The Borrower hereby covenants to execute and deliver the Continuing Disclosure Agreement, required by Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (17 CFR Part 240, § 240.15c2-12) (the “Rule”), contemporaneously with the issuance of the Series 2017 Bonds. The Continuing Disclosure Agreement shall be for the benefit of the Registered Owners and each Registered Owner shall be a beneficiary of this Section 2.05 and such Continuing Disclosure Agreement with the right to enforce this Section 2.05 and the Continuing Disclosure Agreement directly against the Borrower.

Section 2.06. Environmental Representations. The Borrower, on behalf of itself and its successors and assigns, represents, warrants and covenants that:

(a) Condition of New Facility. To its knowledge, after due inquiry, except as set forth in the Phase I Report, the New Facility, including all personal property, is free from contamination by Regulated Chemicals, including, but not limited to, friable asbestos, and there has not been thereon a release, discharge or emission, or a threat of release, discharge or emission, of any Regulated Chemical on, under, in, or about the New Facility, nor has any such Regulated Chemical migrated or threatened to migrate from other properties upon, about or beneath the New Facility.

(b) Previous Use of New Facility. To the Borrower’s knowledge, after due inquiry, except as set forth in the Phase I Report, neither the Borrower nor any previous owner, tenant, occupant or user of the New Facility, nor any other Person has engaged in or permitted any operations or activities upon, or any use or occupancy of the New Facility, or any portion thereof, whether legal or illegal, accidental or intentional, for the purpose of or in any way involving the handling, manufacture, treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any Regulated Chemical, on, under, in or about the New Facility.

20 4848-1712-4171.154171.19 (c) Property Adjoining New Facility. To the Borrower’s knowledge, after due inquiry, except as set forth in the Phase I Report, any adjoining property has not been used as a manufacturing, storage or disposal site for Regulated Chemicals nor is any other property adjoining the New Facility in violation of Environmental Requirements.

(d) Compliance With Environmental Requirements. To the Borrower’s knowledge after due inquiry, except as set forth in the Phase I Report, the New Facility is in compliance with and has at all times been in compliance with all applicable Environmental Requirements and the Borrower has all permits and licenses required to be issued under the Environmental Requirements, if any, and is in full compliance with the terms and conditions of such permits and licenses, if any; such permits and licenses, if any, are in full force and effect; and no changes exist in the facts or circumstances reported or assumed in the application for or granting of such permits or licenses, if any.

(e) No Notice of Violations of Environmental Requirements. The Borrower has not received any notice, whether written or oral, concerning the New Facility, of any alleged violation or requiring compliance of Environmental Requirements, whether or not corrected to the satisfaction of the appropriate authority, or notice or other communication concerning alleged liability for Environmental Damages in connection with the New Facility, and to the Borrower’s knowledge there exists no investigation, administrative order, consent order and agreement, litigation, settlement or judgment, whether proposed, threatened, anticipated or in existence with respect to the New Facility.

(f) No Borrower Knowledge. The Borrower does hereby specifically represent and warrant that it has no affirmative knowledge or reason to believe that any condition, previous use, compliance or violation of Environmental Requirements are contrary to the description in Sections 2.06(a), (b), (c), (d) and (e).

Section 2.07. Modification of the USDA Documents. The Borrower hereby covenants that it will not modify, supplement or amend any USDA Document if such modification, supplement or amendment could reasonably be expected to have a Material Adverse Effect.

ARTICLE III

TERM OF THE LOAN AGREEMENT

This Loan Agreement shall remain in full force and effect from the date of delivery hereof until such time as all of the payments on the Series 2017 Promissory Notes shall have been fully paid or provision is made for such payment pursuant to Section 11.01 hereof and the Indenture and all reasonable and necessary fees and expenses of the Trustee accrued and to accrue through final payment of the Series 2017 Promissory Notes, all fees and expenses of the Issuer accrued and to accrue through final payment of the Series 2017 Promissory Notes and all other liabilities of the Borrower accrued and to accrue through final payment of the Series 2017 Promissory Notes under this Loan Agreement and the Indenture have been paid or provision is made for such payments pursuant to Section 11.01 hereof and the Indenture; provided, however,

21 4848-1712-4171.154171.19 notwithstanding any other provision hereof, but nevertheless subject to Section 12.19 of this Loan Agreement, (a) the indemnification provisions of Sections 6.06 and 8.06 hereof, the agreements contained in Section 10.04 hereof and any other agreements contained herein which expressly provide for their survival shall survive the termination of this Loan Agreement; (b) all agreements, representations and certifications by the Borrower as to the exclusion from gross income of interest on the Series 2017A Bonds shall survive termination of the term hereof until the expiration of statutes of limitation applicable to the liability of the Registered Owners of the Series 2017A Bonds for federal and state income taxes with respect to interest on the Series 2017A Bonds; and (c) upon the defeasance of the Indenture, all such indemnification provisions shall be enforceable by the Issuer, the Issuer Indemnified Parties and the Trustee Indemnified Parties, and all such agreements, representations and certifications regarding the exclusion from gross income of the interest on the Series 2017A Bonds shall be enforceable by the Registered Owners of the Series 2017A Bonds, directly against the Borrower.

ARTICLE IV

THE PROJECT; ISSUANCE OF THE SERIES 2017 BONDS

Section 4.01. Agreement to Issue Series 2017 Bonds; Application of Series 2017 Bond Proceeds and Other Moneys. In order to provide funds to make the Loans, the Issuer will sell and cause to be delivered to the initial purchasers thereof the Series 2017 Bonds and will make such Loans.

Section 4.02. Disbursements From the Project Fund. The Issuer has, in the Indenture, authorized and directed the Trustee to disburse the moneys in the appropriate subaccount of the Project Fund to pay the Costs of the Project. On the Bond Closing for each series of Bonds, the Trustee shall disburse amounts as set forth on Exhibit D of the Indenture (as such exhibit may be amended from time to time) to the parties listed on such exhibit from the Fund indicated on such exhibit. In addition, the Trustee shall transfer moneys in the subaccount of the Project Fund to the payees identified in a requisition to pay Costs of the Project, in the form attached hereto as Exhibit C, no more often than twice per month within five Business Days of receipt by the Trustee of such completed and executed requisition. To the extent required by applicable law, the Borrower shall submit all requests for disbursements within sixty (60) days of incurring the applicable Costs of the Project.

Section 4.03. Establishment of Completion Date.

(a) The Completion Date shall be evidenced to the Trustee by the furnishing of a certificate signed by the Authorized Representative of the Borrower, substantially in the form attached hereto as Exhibit EF, stating the Completion Date (as defined in such certificate) (which date shall not be later than the third anniversary of the date of issuance of the Series 2017 Bonds) and that the New Facility has been acquired, constructed, improved and/or equipped by the Borrower in substantial compliance with the plans and specifications relating thereto.

22 4848-1712-4171.154171.19 (b) Any moneys (including investment proceeds) on deposit in the Project Fund on the date of the Trustee’s receipt of the certificate described in paragraph (a) above may be used, at the direction of the Authorized Representative of the Borrower, to the extent indicated, for the payment of remaining Costs of the Project. Any moneys (including investment proceeds) not so used and remaining in the Project Fund on the earlier of the Completion Date and the date that is the third anniversary of the date of issuance of the Series 2017 Bonds shall be deposited by the Trustee in the Bond Fund.

Section 4.04. Disbursements From the Cost of Issuance Fund. The Issuer has, in the Indenture, authorized and directed the Trustee to make payments from the Cost of Issuance Fund for the payment of issuance expenses as provided in this Section. Payments shall be made from the Cost of Issuance Fund only for paying the costs of legal, accounting, organization, marketing, issuer, trustee or other special services and other fees and expenses, incurred or to be incurred by or on behalf of the Trustee, the Issuer or the Borrower in connection with the issuance of the Series 2017 Bonds. The Issuer does not make any warranty either express or implied that the moneys in the Cost of Issuance Fund available for payment of the foregoing costs will be sufficient to pay such costs in full, and the Borrower agrees to pay such costs in excess of the amount in the Cost of Issuance Fund from any moneys legally available for such purpose. The Borrower shall not be entitled, as a result of paying the issuance expenses pursuant to this Section, to any reimbursement therefor from the Issuer, the Trustee, the Registered Owners of the Series 2017 Bonds or the Beneficial Owners of the Series 2017 Bonds, nor shall it be entitled to any diminution in or postponement of the Loan Payments or other amounts required to be paid under this Loan Agreement. Each payment out of the Cost of Issuance Fund shall be made only upon receipt by the Trustee of an invoice from each payee in amounts not to exceed those as set forth in the requisition submitted by the Borrower in the form attached hereto as Exhibit D.

Section 4.05. Obligation of the Borrower To Furnish Documents to Trustee. The Borrower agrees that the requisitions referred to in Sections 4.02 and 4.04 hereof must be furnished to the Trustee before the Trustee will disburse funds held under the Indenture.

Section 4.06. Investment of Moneys and Rebate Fund. Any moneys held as a part of the Funds shall be invested, reinvested and transferred to other Funds by the Trustee at the written direction of the Authorized Representative of the Borrower as provided in Article VI of the Indenture. In addition, the Borrower covenants that any money held as a part of the Funds shall be invested in compliance with the procedures established by the Tax Certificate and the Indenture to the extent required to comply with the covenants contained in Section 2.03 hereof. The Borrower shall provide to the Trustee at least every five years from the date of issuance of the Bonds, as provided in the Tax Certificate, a certificate of an Authorized Representative of the Borrower to the effect that (a) all requirements of this Loan Agreement, the Indenture and the Tax Certificate with respect to the Rebate Fund have been met on a continuing basis; (b) the proper amounts have been and are on deposit in the Rebate Fund; and (c) timely payment of all amounts due and owing to the United States Treasury have been made. If the certifications required by either clause (b) or (c) above cannot be made, the certificate shall so state and shall be accompanied by either money of the Borrower together with a direction to the Trustee to

23 4848-1712-4171.154171.19 either deposit such money to the Rebate Fund or to pay such money over to the United States Treasury, as appropriate, or written directions to the Trustee to transfer investment income available in any Fund to the Rebate Fund or to the United States Treasury, as appropriate. The Borrower acknowledges the provisions of Section 6.01 of the Indenture which limit the amount of money to be so transferred from the Funds at its direction. The Borrower acknowledges that regulations of the Comptroller of the Currency grant it the right to receive brokerage confirmations of the security transactions as they occur. The Borrower specifically waives such notification to the extent permitted by law and will receive periodic cash transaction statements that will detail all investment transactions.

Section 4.07. Tax Covenant. The Borrower covenants, represents and warrants that the procedures set forth in the Tax Certificate implementing the covenants in Section 2.03 shall be complied with to the extent necessary under the Code to maintain the exclusion from gross income of interest on the Series 2017A Bonds for federal income tax purposes or to avoid the application of any penalties under the Code, subject to any applicable statute of limitations.

Section 4.08. Title Insurance.

(a) On the date of recordation of the Deed of Trust, the Trustee will be provided with an irrevocable, binding commitment to issue a standard owner’s title insurance policy insuring the Borrower’s interest in and an irrevocable, binding commitment to issue an extended form lender’s title insurance policy or policies insuring the Trustee’s interest in and Lien against the real estate described in Exhibit A to the Deed of Trust relating to the Series 2017 Bonds subject to Permitted Encumbrances, in an amount not less than the outstanding principal amount of the Series 2017 Bonds. Each such policy shall be in the form of a standard or extended American Land Title Association Policy, as applicable, and may not permit the title insurer to purchase any Bonds in lieu of providing payment under the policy unless, upon purchase, such Bonds are cancelled. The Deed of Trust shall be recorded in the real property records of Randolph County, North Carolina, and provide the Trustee with a perfected first priority Lien interest in the Premises, subject to any Permitted Encumbrances.

(b) Upon the execution by the Borrower of the Deed of Trust, and its subsequent recording, and upon the filing of Uniform Commercial Code financing statements or amendments thereto, the Trustee will have a valid Lien on the Premises and a valid security interest in the personal property subject to no Liens, charges or encumbrances other than the Permitted Encumbrances, and the Borrower will take all necessary actions including filing continuation statements to preserve such Lien and security interest.

Section 4.09. Disbursements from Repair and Replacement Fund. The Issuer has, in the Indenture, authorized the Trustee to disburse the moneys of the Repair and Replacement Fund to make payments from the Repair and Replacement Fund for the payment of costs of repairing and replacing the New Facility. Each payment out of the Repair and Replacement Fund shall be made upon receipt by the Trustee of a completed requisition, in the form attached hereto

24 4848-1712-4171.154171.19 as Exhibit E, signed by an Authorized Representative of the Borrower. Such funds may be used to pay for the Borrower’s obligation to maintain the New Facility under Section 6.01 hereof.

ARTICLE V

PAYMENT PROVISIONS

Section 5.01. Loan Payments and Other Amounts Payable.

(a) The Borrower shall pay as repayment of the Loans, until the principal of, premium, if any, and interest on the Series 2017 Promissory Notes have been paid or provision for the payment thereof otherwise made in accordance with this Loan Agreement, into the Bond Fund, on the first day of each month commencing [January, 2018], one-twelfth of the principal due on each Principal Payment Date; and commencing [July, 2018], one-sixth of the interest due on the Series 2017 Bonds on each subsequent Interest Payment Date; provided, however, that the Borrower shall receive a credit against such payments of interest to the extent funds are on deposit in the Capitalized Interest Account or otherwise on deposit in the Bond Fund in addition to funds deposited pursuant to this Section 5.01(a) and available to pay interest on the Series 2017 Bonds on the next Interest Payment Date or principal on the Series 2017 Bonds on the next Principal Payment Date, as applicable.

(b) The Borrower shall pay or provide for the payment of the required amount into accounts of the Debt Service Reserve Fund upon notice of any deficiency therein in accordance with Sections 3.06 and 3.07 of the Indenture. If the Trustee determines on any valuation date permitted by Sections 3.06 and 3.07 of the Indenture that the amount in an account of the Debt Service Reserve Fund is less than the related Series Debt Service Reserve Fund Requirement and the deficiency is caused solely by a decreased value of the Investment Obligations therein and not due to a transfer to cure a shortfall in the Bond Fund, the Borrower agrees to pay to the Trustee, for deposit into the account of the Debt Service Reserve Fund, an amount equal to the amount by which the amount in the account of the Debt Service Reserve Fund is less than the related Series Debt Service Fund Requirement in the next month following that valuation date. If the amount in the account of the Debt Service Reserve Fund is less than the related Series Debt Service Reserve Fund Requirement and the deficiency is caused by a transfer to cure a shortfall in the Bond Fund resulting from the failure of the Borrower to make the payments due hereunder, the Borrower agrees pursuant to this Section 5.01 to pay to the Trustee all amounts transferred to the Bond Fund to make up for any amounts not paid on the Series 2017 Promissory Notes in not more than six substantially equal monthly installments beginning in the month following such deficiency; and provided that no such installment shall be less than $5,000.

(c) The Borrower shall cause an Independent Consultant to complete a capital needs assessment of the Borrower projecting the Borrower's capital needs for the New Facility and the total cost thereof for the five year period commencing on the immediately

25 4848-1712-4171.154171.19 following July 1 (each a "Capital Needs Assessment") no later than June 30, 2022, and every fifth anniversary thereafter as long as the Bonds are Outstanding. The Borrower shall pay or cause to be paid to the Trustee on the fifteenth day of each month, commencing July 15, 2022, for deposit into the Repair and Replacement Fund, the Repair and Replacement Fund Contribution or the Modified Repair and Replacement Fund Contribution, as applicable (each as defined below).

(c) [Reserved].The total cost set forth in a Capital Needs Assessment less the amount then on deposit in the Repair and Replacement Fund, divided by 60, shall be the “Repair and Replacement Fund Contribution” for such five-year period; provided, however, that in the event (i) the Borrower pays all or a portion of the cost of a capital need projected in the Capital Needs Assessment from a source of funds other than the Repair and Replacement Fund, the Repair and Replacement Fund Contribution for the remainder of the applicable five year period shall be decreased by the amount of such projected cost that is paid from such other source of funds divided by the number of Repair and Replacement Fund Contribution payments remaining in the applicable five year period; or (ii) a draw is made upon the Repair and Replacement Fund in excess of the cost for a capital need projected in the Capital Needs Assessment or in any amount for a capital need not projected in the Capital Needs Assessment, the Repair and Replacement Fund Contribution for the subsequent 12-month period shall be increased by the excess amount of such draw or the total amount of such unanticipated draw, as applicable, divided by 12 (the Repair and Replacement Fund Contribution as modified by either clause (i) or clause (ii), the “Modified Repair and Replacement Fund Contribution”).

(d) During the term of this Loan Agreement, the Borrower shall pay or provide for the payment of all taxes and assessments, general or special, concerning or in any way related to the Facilities, the Athletic Facility or the Government Loan Facility or any part thereof, and any other governmental charges and impositions whatsoever related to the Facilities, the Athletic Facility or the Government Loan Facility, and premiums for insurance policies maintained on the Facilities, the Athletic Facility or the Government Loan Facility as required by this Loan Agreement.

(e) [Reserved].

(f) The Borrower shall pay or cause to be paid to the Trustee for deposit to the Rebate Fund all amounts required to be paid pursuant to this Loan Agreement, the Indenture, and the Tax Certificate at the times and in the manner specified herein and therein.

(g) In the event of a Determination of Taxability and mandatory redemption resulting therefrom as set forth in Section 5.04 of the Indenture, the Borrower agrees to prepay to the Trustee the Series 2017A Promissory Note.

26 4848-1712-4171.154171.19 (h) The Borrower agrees to pay all taxes and assessments of any type or character charged to the Issuer or to the Trustee affecting the amount available to the Issuer or the Trustee from payments to be received hereunder or in any way arising due to the transactions contemplated hereby (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Trustee and taxes based upon or measured by the net income of the Trustee; provided, however, that the Borrower shall have the right to protest any such taxes or assessments and to require the Issuer or the Trustee, at the Borrower’s expense, to protest and contest any such taxes or assessments levied upon them and that the Borrower shall have the right to withhold payment of any such taxes or assessments pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the Issuer or the Trustee.

(i) The Borrower agrees to pay all reasonable fees, charges and expenses of the Trustee for services rendered under the Indenture, including its reasonable attorneys’ fees and expenses, any extraordinary fees, and all amounts referred to in Section 9.02 of the Indenture, as and when the same become due and payable, and, subsequent to default, the Borrower shall pay such fees and expenses in accordance with the Trustee’s then current fee schedule for default administration and all counsel fees and expenses, advances and other expenses made or incurred by the Trustee in connection with such services.

(j) The Borrower agrees to pay the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Issuer or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under the Borrower Documents or the Indenture, including, but not limited to, any audit or inquiry by the Internal Revenue Service or any other governmental body.

(k) The Borrower agrees to pay the Issuer’s Annual Fee and the reasonable fees and expenses of the Issuer or any agent or attorney selected by the Issuer to act on its behalf in connection with the Borrower Documents, the Bonds or the Indenture, including, without limitation, any and all reasonable expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or in connection with any litigation, investigation, inquiry or other proceeding which may at any time be instituted involving the Borrower Documents, the Bonds or the Indenture or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of the Borrower, its properties, assets or operations or otherwise in connection with the administration of the Borrower Documents.

(l) The Additional Payments in subsections (h), (j) and (k) shall be billed to the Borrower by the Issuer or the Trustee from time to time, together with a statement certifying that the amount billed has been incurred or paid by the Issuer or the Trustee for one or more of the above items. After such a demand, amounts so billed shall be paid by

27 4848-1712-4171.154171.19 the Borrower within 30 days after receipt of the bill by the Borrower. Notwithstanding the foregoing, the Issuer may, but shall not be required to, submit a bill to the Borrower for payment of the Issuer’s Annual Fee. The “Issuer’s Annual Fee” shall be calculated, and shall be due and payable by the Borrower to the Issuer in semi-annual installments due and payable on the six-month anniversary of the Bond Closing for the Series 2017 Bonds and subsequently on the same day each sixth month thereafter. The amount of each semiannual payment shall be in an amount determined by multiplying (i) the principal amount of the Series 2017 Bonds Outstanding as of the last day of the calendar month preceding such payment due date by (ii) 0.03% (3 basis points) by (iii) one-half. Any invoice furnished to the Borrower by the Issuer or the Trustee pursuant to this Section 5.01 shall be deemed to constitute a written notice under Section 10.01(a)(ii) sufficient to cause the 45-day period specified in said Section 10.01(a)(ii) to commence.

(m) In the event the Borrower should fail to make or fail to cause to be made any of the payments required by this Section, the item or installment in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same and interest at the highest rate of interest borne by any of the Series 2017 Bonds, or the maximum rate permitted by law if less than such rate.

Section 5.02. Pledge by Borrower. In fulfillment of its obligations hereunder, the Borrower hereby pledges to the payment of the Loans and the Series 2017 Promissory Notes securing such Loans, the following (subject to Permitted Encumbrances):

(a) all of the Borrower’s right, title and interest in and to the New Facility, including all related additions, replacements, substitutions and proceeds for the purposes of securing such Loans;

(b) all Pledged Revenues; and

(c) any and all other interests in real or personal property of every name and nature from time to time hereafter, by delivery or by writing of any kind, specifically mortgaged, pledged or hypothecated, as and for additional security by the Borrower or by anyone on its behalf.

Section 5.03. Payees of Payments. The Loan Payments provided for in Section 5.01(a) hereof shall be paid in immediately available funds to the Trustee for the account of the Issuer and shall be deposited into the Bond Fund. The payments provided for in Section 5.01(b) hereof shall be paid to the Trustee as provided in Section 3.06 and 3.07 of the Indenture. The rebate payments provided for in Section 5.01(f) hereof shall be paid to the Trustee and deposited into the Rebate Fund pursuant to Section 3.20 of the Indenture and, with respect to the Rebate Analyst Fee, be paid to the Rebate Analyst. The payments provided for in Sections 5.01(d), (g), (h), (i), (j), (k) and (l) shall be paid to the parties identified therein or otherwise to whom such payments are due.

28 4848-1712-4171.154171.19 Section 5.04. Obligations of Borrower Hereunder Absolute and Unconditional. Except as may be otherwise provided herein, the obligations of the Borrower to make the payments required hereunder and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional, and the Borrower agrees that it will make payments directly to the Trustee without defense or set off by reason of any dispute between the Borrower and the Issuer or the Trustee. The Borrower (a) will not suspend or discontinue, or permit the suspension or discontinuance of, any payments provided for herein; (b) will perform and observe all of its other agreements contained in this Loan Agreement, the Deed of Trust and the Series 2017 Promissory Notes; and (c) except as provided in Article XI hereof, will not terminate this Loan Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure to complete the Project, failure of consideration, eviction or constructive eviction, destruction of or damage to the New Facility, commercial frustration of purpose, or change in the tax or other laws or administrative rulings of or administrative actions by the United States of America or the State of North Carolina or any political subdivision of either, any failure of the Issuer to perform and observe any agreement, or any duty, liability, or obligation arising out of or connected with this Loan Agreement, or any failure of the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Indenture, whether express or implied. The Borrower may at its own cost and expense and in its own name, prosecute or defend any action or proceeding or take any other action involving third persons which the Borrower deems reasonably necessary in order to secure or protect its or its lessees’ rights of possession, occupancy and use of the Facilities.

In addition to and without in any way limiting its obligations to pay and indemnify the Issuer and the Issuer Indemnified Parties against fees, costs and charges arising out of or in connection with the Borrower Documents, the Series 2017 Bonds or the Indenture the Borrower shall pay, upon the closing of the issuance of the Series 2017 Bonds and as a condition thereto: (a) to the Issuer the Issuer’s issuance fee of 0.20% (20 basis points) of the par amount of the Bonds, minimum of $15,000, less, if applicable, any application fee heretofore paid by the Borrower to the Issuer; and (b) attorneys’ fees incurred by the Issuer in connection with the issuance of the Series 2017 Bonds.

ARTICLE VI

MAINTENANCE, TAXES AND INSURANCE

Section 6.01. Maintenance and Modifications of Facilities, the Athletic Facility and the Government Loan Facility by Borrower. The Borrower agrees that during the term of this Loan Agreement the Facilities, the Athletic Facility and the Government Loan Facility shall be operated and maintained, in compliance with all governmental laws, building codes, ordinances, and regulations and zoning laws as shall be applicable to such Facilities, the Athletic Facility and the Government Loan Facility, unless the same are being contested in good faith by appropriate proceedings. The Borrower agrees that during the term of this Loan Agreement it will, at its own expense, (a) keep the Facilities, the Athletic Facility and the Government Loan Facility in as safe

29 4848-1712-4171.154171.19 of a condition as required by law; and (b) except to the extent the Borrower has determined that any portion of the Facilities, the Athletic Facility or the Government Loan Facility is obsolete or not useful in its operations, keep the Facilities, the Athletic Facility and the Government Loan Facility in good repair and in good operating condition, making, from time to time, all necessary repairs thereto (including external and structural repairs) and renewals and replacements thereof all of which shall be accomplished in a workmanlike manner in accordance with all applicable laws. The Borrower may dispose of portions of the Facilities, the Athletic Facility and the Government Loan Facility that the Borrower determines to be obsolete or not useful to operations of the Facilities, the Athletic Facility and the Government Loan Facility. The Borrower may also, at its own expense, make, from time to time, any additions, modifications or improvements to the Facilities, the Athletic Facility and the Government Loan Facility it may deem desirable for its purposes that do not substantially reduce its value; provided that all such additions, modifications and improvements made by the Borrower which are affixed to the Premises shall become a part of the Premises and subject to the Deed of Trust. The Borrower will not permit the removal of any personal property owned by the Borrower from the Facilities, the Athletic Facility and the Government Loan Facility unless such personal property is obsolete, sold for fair market value or will be replaced with personal property of an equal or greater value. In the event that the Borrower shall fail to pay any of the foregoing items required by this Section 6.01 to be paid by the Borrower, the Issuer or the Trustee may (but shall be under no obligation to) pay the same, and any amounts so advanced therefor by the Issuer or the Trustee shall become an additional obligation of the Borrower under this Loan Agreement, which amount the Borrower agrees to pay on demand together with interest thereon at a rate which shall be 3% per annum above the highest rate of interest borne by any of the Series 2017 Bonds or the maximum rate permitted by law if less than such rate.

Section 6.02. Taxes, Other Governmental Charges and Utility Charges.

(a) The Borrower will pay or cause to be paid, as applicable, as the same become due, (i) all taxes and governmental charges of any kind whatsoever or payments in lieu of taxes that may at any time be lawfully assessed or levied against or with respect to the Facilities, the Athletic Facility and the Government Loan Facility or any interest therein, or any machinery, equipment, or other property installed or brought by the Borrower therein or thereon which, if not paid, will become a Lien on the Facilities, the Athletic Facility and the Government Loan Facility (other than a Permitted Encumbrance) or a charge on the Pledged Revenues prior to or on a parity with the charge thereon under this Loan Agreement; (ii) all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Facilities, the Athletic Facility and the Government Loan Facility; and (iii) all assessments and charges lawfully made by any governmental body for public improvements that may be secured by a Lien on the Facilities, the Athletic Facility and the Government Loan Facility provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Borrower shall be obligated to pay only such installments as may have become due during the term of this Loan Agreement or that may

30 4848-1712-4171.154171.19 be necessary to prevent the imposition of a Lien (other than a Lien that is a Permitted Encumbrance).

(b) In the event that the Borrower shall fail to pay any of the items required by this Section 6.02 to be paid or caused to be paid by the Borrower, the Issuer or the Trustee may (but shall be under no obligation to) pay the same and any amounts so advanced therefor by the Issuer or the Trustee shall become an additional obligation of the Borrower payable to the one making the advance, which amount the Borrower agrees to pay on demand together with interest thereon at a rate which shall be 3% per annum above the highest rate of interest borne by the Series 2017 Bonds or the maximum rate permitted by law if less than such rate.

Section 6.03. Insurance Required.

(a) Beginning on the date of execution hereof and thereafter throughout the term of this Loan Agreement, the Borrower shall provide, maintain and keep in force or cause to be provided, maintained and kept in force, the following insurance coverages, paying as the same become due and payable all premiums with respect thereto:

(i) a lender’s title insurance policy or policies in an aggregate amount as required by Section 4.08 herein;

(ii) insurance against loss or damage to the Facilities, the Athletic Facility and the Government Loan Facility and all improvements therein (including, during any period of time when the Borrower is making alterations, repairs or improvements to the Facilities, the Athletic Facility and the Government Loan Facility; improvements and betterments coverage), all subject to standard form exclusions, with uniform standard extended coverage endorsement limited only as may be provided in the standard form of extended coverage endorsement at the time in use in the State of North Carolina, in an amount equal to the greater of the full replacement value of the Facilities, the Athletic Facility and the Government Loan Facility or the aggregate principal amount of the Promissory Notes then outstanding (unless the Insurance Consultant confirms that the latter is not available);

(iii) commercial comprehensive general liability and automobile liability insurance against claims arising in, on or about the Facilities, the Athletic Facility and the Government Loan Facility, including in, on or about the sidewalks or premises adjacent to the Facilities, the Athletic Facility and the Government Loan Facility, providing coverage limits not less than $1,000,000 per occurrence and $2,000,000 in aggregate;

(iv) business interruption or rent loss insurance (or a combination of the two) equal to 12 months’ debt service on the Bonds and six months’ Operating Expenses; and

31 4848-1712-4171.154171.19 (v) such other forms of insurance as are customary in the industry or as the Borrower is required by law or written agreement to provide with respect to the Facilities, the Athletic Facility and the Government Loan Facility, including, without limitation, any legally required workers’ compensation insurance and disability benefits insurance.

(b) All the insurance coverage required by this Section 6.03 may be subject to deductible clauses in such amounts as are customary for facilities of similar size, type and character within the State of North Carolina. At least every three years from November 1, 2017, the Borrower shall employ, at the Borrower’s expense, an Insurance Consultant to review the insurance coverage required by this Section 6.03 and to render to the Issuer and the Trustee a report as to the adequacy of such coverage and as to its recommendations, if any, for adjustments thereto. The insurance coverage required by this Section 6.03 may be reduced or otherwise adjusted by the Borrower without the consent of the Trustee or the Issuer, provided that all coverages after such reduction or other adjustment are certified by the Insurance Consultant to be adequate and customary for facilities of like size, type and character, taking into account the availability of such insurance, the terms upon which such insurance is available, the cost of such available insurance and the effect of such terms and such cost upon the Borrower’s fees, rentals and charges for the use of the Facilities, the Athletic Facility and the Government Loan Facility.

(c) The insurance coverage required by this Section 6.03 shall be increased or otherwise adjusted by the Borrower if, as a result of such review, the Insurance Consultant finds that the existing coverage is inadequate. The insurance coverage required by this Section 6.03, and modification thereof permitted or required by this paragraph, shall at all times be adequate and customary for facilities of like size, type and character, and the Borrower shall request that the Insurance Consultant so certify in the report required by this Section. The Borrower shall pay any fees charged by such Insurance Consultant and any expenses incurred by the Issuer and the Trustee.

(d) All policies maintained (or caused to be maintained) by the Borrower pursuant to this Section 6.03 shall be taken out and maintained with generally recognized, responsible insurance companies rated not less than “A” by A.M. Best (or any successor), authorized to write insurance in the State of North Carolina, which may include “captive” insurance companies or governmental insurance pools, selected by the Borrower. The insurance policies required by Sections 6.03(a)(i) and (a)(ii) above, shall name the Trustee, the Issuer and the Borrower as insureds as their respective interests may appear (provided that with respect to insurance maintained pursuant to Section 6.03(a)(i), the Trustee shall also be named as a mortgagee, and the Trustee shall also be named as an additional insured on the policies required by Sections 6.03(a)(iii) and (a)(iv), and, provided further that all insurance proceeds for losses, and except for worker’s compensation and liability insurance and as provided for in the Parity Agreement, shall be paid directly to the Trustee). Such policies or certificates of insurance shall (i) provide

32 4848-1712-4171.154171.19 that the insurer will endeavor to mail not less than 30 nor more than 60 days’ written notice to the Issuer and the Trustee of any amendment or cancellation prior to expiration of such policy, and (ii) be satisfactory in all other respects to the Issuer.

(e) The Borrower shall deliver to the Trustee (i) upon the date of issuance of the Series 2017 Bonds, the certificate(s) of insurance which the Borrower is then required to maintain pursuant to this Section 6.03, together with evidence as to the payment of all premiums then due thereon; (ii) at least 15 days prior to the expiration of any such policies evidence as to the renewal thereof, if then required by this Section 6.03, and the payment of all premiums then due with respect thereto; and (iii) promptly upon request by the Issuer or the Trustee, but in any case within 90 days after the end of each fiscal year, a certificate of an Authorized Representative of the Borrower setting forth the particulars as to all insurance policies maintained by the Borrower pursuant to this Section 6.03 and certifying that such insurance policies are in full force and effect, that such policies comply with the provisions of this Section 6.03 and that all premiums then due thereon have been paid.

(f) The Trustee shall have no duty to review or analyze documents, including any reports, financial statements, insurance policies or certificates, or other material delivered to the Trustee under the terms of this Agreement and shall only be required to act on such information if it creates an Event of Default hereunder. The Trustee shall not be deemed to have notice of any information contained therein or Event of Default which may be disclosed in any manner therein, and shall only be required to act on such information as specifically directed pursuant to the terms of this Loan Agreement.

Section 6.04. Application of Net Proceeds of Insurance. The Net Proceeds of the insurance carried pursuant to Sections 6.03(a)(i) and (a)(ii) hereof shall be applied as provided in Article VII hereof. The Net Proceeds of insurance carried pursuant to Sections 6.03(a)(iii), (a)(iv) and (a)(v) hereof shall be applied toward extinguishment or satisfaction of the liability with respect to which such insurance proceeds have been paid.

Section 6.05. Advances by Issuer. In the event the Borrower shall fail to maintain or cause to be maintained the full insurance coverage required by this Loan Agreement or shall fail to keep the Facilities, the Athletic Facility and the Government Loan Facility in the condition required hereby (except as otherwise herein permitted), the Issuer may (but shall be under no obligation to) take out the required policies of insurance and pay the premiums on the same, or make the required repairs, renewals and replacements; and all amounts advanced therefor by the Issuer shall become an additional obligation of the Borrower under this Loan Agreement to the one making the advance, which amounts the Borrower agrees to pay immediately upon demand together with interest thereon at a rate which shall be 3% per annum above the highest interest rate borne by any of the Series 2017 Bonds or the maximum rate permitted by law if less than such rate.

Section 6.06. Environmental Indemnity.

33 4848-1712-4171.154171.19 (a) In addition to, and not in limitation of, the indemnification set forth in Section 8.06 hereof, Borrower and its successors and assigns, shall and do hereby indemnify and hold harmless the Registered Owners, the Beneficial Owners, their respective successors, assigns, trustees, directors, officers, employees and agents, the Trustee Indemnified Parties, the Issuer and the Issuer Indemnified Parties (as defined in the Indenture) (collectively referred to in this Section 6.06 as “Indemnified Parties”), for, from and against any and all Liabilities that Indemnified Parties may incur as a result of or in connection with the assertion against Indemnified Parties, or against all or a portion of the Facilities, of any claim, civil, criminal or administrative, which:

(i) arises out of the actual, alleged or threatened discharge, dispersal, release, storage, treatment, generation, disposal or escape of any Regulated Chemical on or from the Facilities; or

(ii) actually or allegedly arises out of the use of any Regulated Chemical, the existence or failure to detect the existence or proportion of any Regulated Chemical in the soil, air, surface water or groundwater, or the performance or failure to perform the abatement or removal of any Regulated Chemical or of any soil, water, surface water or groundwater containing any Regulated Chemical on, in, under, or affecting all or a portion of the Facilities; or

(iii) arises out of any misrepresentations of the Borrower concerning any matter involving Regulated Chemicals or Environmental Requirements; or

(iv) arises out of the Borrower’s failure to provide all information, make all submissions and filings, and take all steps required by appropriate government authority under any Environmental Requirement, whether currently existing or hereinafter enacted.

(b) Without prejudice to the survival of any other agreements of the Borrower hereunder, this indemnification shall survive any termination, payment, or satisfaction of the indebtedness and the termination of this Loan Agreement, and any foreclosure or any other transfer of any kind of the Facilities and shall continue and survive ad infinitum.

(c) Nothing contained herein shall be deemed to provide indemnification to any Trustee Indemnified Party with respect to any Liabilities arising from the gross negligence or willful misconduct of such Trustee Indemnified Party; or to the Issuer or any Issuer Indemnified Party with respect to any Liabilities arising from the willful misconduct of the Issuer or Issuer Indemnified Party.

(d) The Borrower’s indemnification contained herein shall be effective not only with any existing Environmental Requirements affecting the Borrower, Indemnified Parties and/or the Facilities, but also for any hereinafter enacted Environmental Law, regulation, statute or program, whether federal, state or local affecting the Borrower, the Indemnified Parties and/or the Facilities.

34 4848-1712-4171.154171.19 (e) The Borrower’s indemnification contained herein shall extend to any and all like claims which arise from the acts or omissions of any user, tenant, lessee, agent or invitee of the Borrower.

(f) The obligations under this Section shall not be affected by any investigation by or on behalf of Indemnified Parties, or by any information which Indemnified Parties may have or obtain with respect thereto.

(g) The Borrower’s indemnification contained herein shall include the duty to defend any and all claims, and Indemnified Parties may participate in the defense of any claim without relieving the Borrower of any obligation hereunder. This duty to defend shall apply and constitute an obligation of the Borrower regardless of any challenge by the Borrower to this provision, the indemnification contained herein, or any other provision of this Loan Agreement. This duty to defend shall apply regardless of the validity of the Borrower’s indemnification, as may ultimately be determined by a court of competent jurisdiction.

Section 6.07. Environmental Covenants.

(a) Use of Facilities, the Athletic Facility and the Government Loan Facility. The Borrower will not conduct, or allow to be conducted, any business, operation, or activity on, under, or in the Facilities, the Athletic Facility and the Government Loan Facility, or employ or use the Facilities, the Athletic Facility and the Government Loan Facility or allow for it to be employed or used, to manufacture, transport, treat, store, or dispose of any Regulated Chemical which would violate Environmental Requirements.

(b) Notice of Environmental Problem. The Borrower (provided that the Borrower shall only forward to the Trustee those notices, letters, citations, orders, warnings, complaints, inquiries, claims or demands actually received by the Borrower) shall promptly provide a copy to Trustee, and in no event later than 15 days from Borrower’s receipt or submission, of any notice, letter, citation, order, warning, complaint, inquiry, claim or demand (other than any such notice, letter, citation, order, warning, complaint, inquiry, claim or demand that could not reasonably be expected to have a Material Adverse Effect) that:

(i) the Borrower or any lessee has violated any Environmental Requirement related to the Facilities, the Athletic Facility and the Government Loan Facility;

(ii) there has been a release, or there is a threat of release, of any Regulated Chemical from the Facilities, the Athletic Facility and the Government Loan Facility;

35 4848-1712-4171.154171.19 (iii) the Borrower may be or is liable, in whole or in part, for the costs of cleaning up, remediating, removing or responding to a release of any Regulated Chemical; and

(iv) any portion of the Facilities, the Athletic Facility and the Government Loan Facility is subject to a Lien in favor of any governmental entity for any liability, costs or damages, under Environmental Requirements arising from, or costs incurred by such governmental entity in response to, a release of any Regulated Chemical.

(c) Response Action. The Borrower shall take all appropriate responsive action, including any removal and remedial action (“Response Action”), in the event of a release, emission, discharge or disposal of any Regulated Chemical in, on, under or about the Facilities, the Athletic Facility and the Government Loan Facility, required to remain in compliance with Environmental Requirements, and to keep the Facilities, the Athletic Facility and the Government Loan Facility free from, and unaffected by, Regulated Chemicals.

(d) No Liens or Encumbrances. The Borrower shall prevent the imposition of any Liens or encumbrances against the Facilities, the Athletic Facility and the Government Loan Facility for the costs of any Response Action.

(e) Additional Environmental Reports. As long as there are any Series 2017 Bonds Outstanding, the Borrower shall provide the Trustee with a copy of any Environmental Report performed during that time.

Section 6.08. Additional Environmental Provisions.

(a) Right To Notify Agencies. To the extent the Trustee receives written notice, whether from the Borrower or any other party, stating that the Borrower is in violation of any Environmental Requirement, and the Trustee determines that such notice requires notification to the respective governmental agency(ies), the Trustee retains the right to so notify the respective agency(ies). The Trustee agrees to make written demand upon the Borrower, as circumstances may require, to notify the respective agency(ies), however, the Trustee retains the right to separately notify the respective agency(ies), and the Borrower shall have no cause of action against the Trustee as a result of any such notification.

(b) Right of Inspection.

(i) The Trustee at any time and from time to time, with reasonable cause and notice, either prior to or after the occurrence of any Event of Default hereunder may require the Borrower to submit to the Trustee within 90 days of either the notice required under Section 6.07(b) hereof or a written request from the Trustee, a written environmental site assessment (“Environmental

36 4848-1712-4171.154171.19 Assessment”), in scope, form and substance, and prepared by an independent, competent and qualified engineer, satisfactory to the Trustee, showing that the engineer made all appropriate inquiry consistent with good commercial and customary practice, such that consistent with generally accepted engineering practice and procedure, no evidence or indication came to light which would suggest there was a release of Regulated Chemicals on, under, in, or about the Facilities which could necessitate Response Action, and which demonstrates that the Facilities comply with all applicable Environmental Requirements, and that the Borrower is in compliance with the representations and warranties set forth in Section 2.06 hereof in all material respects.

(ii) The Borrower will cooperate with the consultants and supply to the consultants such historical and operational information as may be reasonably requested by the consultants, together with any notices, permits or other written communications pertaining to violations of Environmental Requirements and any and all necessary information and make available personnel having knowledge of such matters as may be required by the Trustee, Trustee’s agents, consultants and engineers to complete an Environmental Assessment.

(iii) Should the Borrower fail to perform an Environmental Assessment within the time period set forth in Section 6.08(b)(i) hereof, the Trustee shall have the right but not the obligation to retain an environmental consultant to perform said Environmental Assessment.

(iv) The cost of performing any Environmental Assessment shall be paid by the Borrower upon demand of Trustee and any such obligations shall be included in the Indebtedness.

(c) Event of Default. If an Environmental Assessment reveals any violations of Environmental Requirements or the Borrower receives a notice of a violation of Environmental Requirements, and the Borrower fails to immediately notify the Trustee and the Issuer and to cure the violation in the time period and the manner specified in Section 10.01(a)(ii) hereof (except that notice from the Issuer or the Trustee to the Borrower otherwise required under said Section 10.01(a)(ii) shall not be required), such action will constitute an Event of Default.

(d) No Assumption of Risk. The Trustee’s rights under this Section 6.08 shall be exercised by it in its discretion and not for the benefit of the Borrower. The Trustee shall have no obligation (unless directed and indemnified as provided in the Indenture) to enter into the Facilities or to take any other action which is authorized by this Section for the protection of its security interest. The Borrower specifically agrees and acknowledges that any action permitted under this Section 6.08 shall not be construed to be the management or control of the Facilities by the Trustee.

37 4848-1712-4171.154171.19 ARTICLE VII

DAMAGE, DESTRUCTION AND CONDEMNATION

Section 7.01. Damage, Destruction and Condemnation. In the event of a casualty or condemnation with respect to the Facilities, and so long as no Event of Default exists and is continuing, the Net Proceeds from any insurance policy or the Net Proceeds of any condemnation award resulting from such casualty or condemnation shall be used as follows:

(a) whenever such Net Proceeds from any insurance policy or condemnation award are less than or equal to $125,000, such Net Proceeds shall be paid directly to the Borrower and used for the repair, replacement or restoration of the Facilities to substantially the same condition as existed prior to such damage, destruction or condemnation;

(b) whenever such Net Proceeds from any insurance policy or condemnation award are greater than $125,000, such Net Proceeds shall be paid to the Trustee and held in a special, segregated trust account established pursuant to Section 3.18 of the Indenture to be applied to repair, replace or restore the Facilities unless the Loan is to be prepaid as provided in Section 7.02; and

(c) if the Borrower directs the Trustee in writing that the proceeds held by the Trustee are to be used to repair, replace or restore the Facilities, the proceeds in such special trust account shall be disbursed by the Trustee for the repair, restoration or replacement of the Facilities upon the receipt by the Trustee from the Borrower of (i) a certificate of an Authorized Representative of the Borrower which substantially states that such repairs, replacements or restorations will restore the Facilities to substantially its original condition, will be completed in accordance with plans and specifications previously provided to the Trustee and that such repairs, replacements or restorations when completed in accordance with the plans and specifications previously furnished to the Trustee will comply with all applicable statutes, codes and regulations; (ii) a certificate of an Authorized Representative of the Borrower stating that sufficient moneys are available in such special trust account to pay for such repair, restoration or replacements to be completed and together with available business interruption insurance and other available Pledged Revenues, to pay debt service on the Bonds and Operating Expenses during the restoration period and if at any time during the restoration, the insurance or casualty proceeds are less than the estimated costs to restore, repair or replace the Facilities, the Borrower shall provide the Trustee with cash or cash equivalents in an amount equal to the shortfall; (iii) disbursement requisitions from the Borrower; (iv) applicable Lien waivers; (v) a guaranteed maximum price construction contract; (vi) evidence that the Borrower has acquired all permits and licenses necessary for such construction; and (vii) an opinion of Bond Counsel to the effect that neither such repairs, replacements nor restorations nor such use of such casualty or condemnation proceeds adversely affects the exclusion from gross income for federal income tax purposes of interest on the Tax-Exempt Bonds. If such Net Proceeds are in excess of

38 4848-1712-4171.154171.19 $250,000, in addition to those requirements listed in clauses (i) through (vi) above, the Borrower shall also deliver to the Trustee: (A) evidence of the existence of performance and payment bonds therefore, and (B) an endorsement to the applicable title insurance policy insuring the continued priority of the Lien of the Deed of Trust. The Trustee shall retain 10% of the requested disbursements until the repairs, replacements, restorations or improvements are 50% complete, as certified by an Authorized Representative of the Borrower, and 5% thereafter, and until receipt of certificates of occupancy, waivers of Liens and, if such Net Proceeds are in excess of $250,000, an endorsement to the title policy for the Premises insuring the continued priority of the Deed of Trust. If at any time during the restoration, the insurance or casualty proceeds are less than the estimated costs to restore, repair or replace the Facilities, the Borrower will provide the Trustee with cash or cash equivalents in an amount equal to the shortfall. If after completion of any such repairs, replacements, or improvements any funds remain in said special trust fund, the remaining funds shall be transferred by the Trustee to the Debt Service Reserve Fund to the extent the balance therein is less than the Debt Service Reserve Fund Requirement, with any excess being transferred to the Bond Fund.

Section 7.02. Extraordinary Mandatory Prepayment. The Loans and Series 2017 Promissory Notes securing the Loans are subject to mandatory prepayment as a whole or in part at the principal amount thereof plus accrued interest thereon to the date of prepayment, but without premium, from Net Proceeds in the case of clause (a) or (b) below, if any of the events set forth below shall occur:

(a) if the Net Proceeds of any insurance policy or condemnation award with respect to the New Facility are in excess of $125,000, and the New Facility shall have been damaged or destroyed in whole or in part to such extent that, as expressed in a certificate of an Authorized Representative of the Borrower filed with the Trustee, (i) the New Facility cannot reasonably be restored within a period of six consecutive months to the condition thereof immediately preceding such damage or destruction, (ii) the Borrower is prevented from carrying on its normal operations for a period of six consecutive months, or (iii) the cost of restoration thereof would exceed the Net Proceeds of insurance carried thereon pursuant to the requirements of Section 6.03 hereof;

(b) if the Net Proceeds of any insurance policy or condemnation award with respect to the New Facility are in excess of $125,000, and title to, or the temporary use for a period of six months or more of, all or substantially all of the New Facility shall have been taken under the exercise of the power of eminent domain by any governmental authority, or person, firm or corporation acting under governmental authority or because of a defect in title; and

(c) as a result of any changes in the constitution of the State, or the State of North Carolina, or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or by final decree, judgment or order of any court or administrative body (whether state or federal) entered after the contest thereof by the Borrower in good faith, this Loan Agreement shall have become void or

39 4848-1712-4171.154171.19 unenforceable or impossible of performance in accordance with the intent and purposes of the parties as expressed in this Loan Agreement.

Section 7.03. Borrower Entitled to Certain Net Proceeds. The Borrower shall be entitled to the Net Proceeds of any insurance payment or condemnation award or portion thereof attributable to damage or destruction or takings of its property not included under the Deed of Trust.

Section 7.04. No Change in Loan Payments; No Liens. All buildings, improvements and equipment acquired in the repair, rebuilding or restoration of the Facilities shall be deemed a part of the Facilities and shall be available for use and occupancy by the Borrower, without the payment of any payments hereunder other than the Loan Payments and other payments required to be made under this Loan Agreement, to the same extent as if they were specifically described herein; provided that no buildings, improvements or equipment shall be acquired subject to any Lien or encumbrance other than Permitted Encumbrances.

Section 7.05. Investment of Net Proceeds. Any Net Proceeds of any insurance payments or condemnation awards with respect to the Facilities held by the Trustee pending restoration, repair or rebuilding shall be invested in Investment Obligations in the same manner as provided in Section 6.01 of the Indenture. Any earnings or profits on such investments shall be considered part of the Net Proceeds.

ARTICLE VIII

SPECIAL COVENANTS

Section 8.01. No Warranty of Condition or Suitability by the Issuer. The Issuer makes no warranty, either express or implied, as to the Facilities or that it will be suitable for the Borrower’s purposes or needs or that the proceeds of the Series 2017 Bonds will be sufficient to pay the Costs of the Project.

Section 8.02. Consolidation, Merger, Sale or Conveyance. The Borrower agrees that during the term of this Loan Agreement it will maintain its corporate existence, will continue to be a nonprofit corporation duly qualified to do business in the State of North Carolina, will not merge or consolidate with, or sell or convey, except as provided in Section 8.11 hereof, all or substantially all of its interest in the New Facility to, any Person unless (a) no Event of Default has occurred and is continuing; (b) it first acquires the consent of the Owners to such transaction; (c) it provides to the Trustee notice of its intent at least 90 days in advance of such consolidation, merger, sale or conveyance; and (d) the acquirer of the interest in the Facilities or the corporation with which it shall be consolidated or the resulting corporation in the case of a merger:

(a) shall assume in writing the performance and observance of all covenants and conditions of this Loan Agreement;

40 4848-1712-4171.154171.19 (b) shall provide the Trustee with an opinion of Bond Counsel to the effect that such merger, consolidation, sale or conveyance, would not adversely affect the validity of any of the Outstanding Bonds or the exclusion from gross income for federal income tax purposes of interest on the Outstanding Tax-Exempt Bonds;

(c) shall provide the Issuer and the Trustee with an Opinion of Counsel to the Borrower (which may be rendered in reliance upon the Opinion of Counsel to such other corporation), stating that none of the other corporations which are a party to such consolidation, merger or transfer has any pending litigation other than that arising in the ordinary course of business, or has any pending litigation which might reasonably result in a substantial adverse judgment. For the purposes of the preceding sentence, the term “substantial adverse judgment” shall mean a judgment in an amount which exceeds the insurance or reserves therefor by a sum which is more than 2% of the aggregate net worth of the resulting, surviving or transferee corporation immediately after the consummation of such consolidation, merger or transfer and after giving effect thereto;

(d) shall deliver to the Trustee within 30 days of the close of such transaction, copies of all documents executed in connection therewith, one document of which shall include an Opinion of Counsel that all conditions herein have been satisfied and that all liabilities and obligations of the Borrower under the Borrower Documents shall become obligations of the new entity; provided, however, the Borrower shall not be released from same; and

(e) in the case of a consolidation, merger, sale or conveyance, shall provide evidence to the Trustee that (i) the entity can continue to operate the School as a charter school in accordance with the Charter School Act; and (ii) on an historical pro forma basis for the preceding Fiscal Year for which audited financial statements are available, the entity would have complied with the Debt Service Coverage Ratio requirements of Section 8.05(f) and the liquidity requirements of Section 8.05(g).

Section 8.03. Further Assurances. The Issuer (subject to Section 12.13(e)) and the Borrower agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Loan Agreement, subject, however, to the terms and conditions of Article X of the Indenture.

Section 8.04. Audits. The Borrower agrees that it will have its books and records audited annually commencing with the Fiscal Year ending June 30, 2017, by an Accountant as soon as practicable after the close of such Fiscal Year, and shall furnish such report to the Trustee and the Underwriter. The audit report shall include a demonstration of compliance with all financial covenants herein and shall be furnished to the Trustee no later than December 31 after the end of each Fiscal Year. If the audit report is not available by December 31 of any Fiscal Year, the Borrower shall furnish to the Trustee unaudited financial statements in a format similar to the audit report, and the audit report shall be furnished to the Trustee as soon as practical, but in no event later than March 30th of any Fiscal Year. The Trustee shall have no duty to review such

41 4848-1712-4171.154171.19 report and shall not be deemed to have notice of any information contained therein or event of default which may be disclosed in any manner therein.

Section 8.05. Financial Statements; Reports; Annual Certificate; Financial Covenants; Investor Calls.

(a) Maintenance of Books and Accounts. The Borrower agrees that it will maintain proper books of records and accounts with full, true and correct entries of all of its dealings substantially in accordance with practices generally used for public charter school accounting.

(b) Financial Reports, Enrollment Reports and Charter Compliance Reporting. The Borrower shall file with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (“EMMA”), as soon as is practicable, if not otherwise stated herein, the following information: (i) the amount of money that the Borrower will receive each year from the State of North Carolina; (ii) a copy of the Borrower’s annual budget, certified by the Borrower, on or before July 15 of each Fiscal Year, commencing July 15, 2018; (iii) the Borrower’s Average Daily Membership, as reported to the State Compliance Office; (iv) copies of written complaint notifications from the State Compliance Office, along with the Borrower’s responses thereto, within ten days of receiving such complaint notifications and responding thereto; (vi) notices of any meetings in which the Borrower is before the State Compliance Office for issues of non-compliance along with the minutes of such meetings and any responses provided by the Borrower; (vii) the School’s School Improvement Plan, as and when required to be submitted to the State Compliance Office; and (viii) within ten days of the Borrower’s receipt thereof, notice of approval or denial of any application by the Borrower for any modification to the Borrower’s charter from the State of North Carolina to operate the School; and (ix) on the last calendar day of each month commencing with the report for December 2017 through and including the month in which the Construction Project is completed, a report from the Construction Administrator indicating the percentage of the Construction Project completed to such date, an updated budget for the Construction Project, the then-contemplated timeline for completion of the Construction Project, and a description of any changes in anticipated timing or cost from the construction report for the prior month.

(c) Other Reporting. The Borrower will provide to the Dissemination Agent for filing with EMMA no later than May 15, August 15, November 15 and February 15, as applicable, after the close of each Fiscal Year quarter (March 31, June 30, September 30 and December 31) commencing with the Fiscal Quarter ending December 31, 2017, unaudited financial statements for the previous quarter reflecting year-to-date revenues and expenses in comparative form with the Borrower’s operating budget as submitted by the Borrower to its governing board (the “Quarterly Reports” and, each a “Quarterly Report”).

42 4848-1712-4171.154171.19 (d) Notice of Charter Noncompliance. Unless previously disseminated, the next Quarterly Report to be disseminated shall contain a copy or complete description of any notice, report or communication with respect to charter noncompliance that would allow the State Compliance Office to begin any process or proceedings toward charter revocation or which indicate an intent to renew any such charter.

(e) Borrower Reports. The Borrower will deliver to the Trustee within six weeks after the end of each of the Borrower’s Fiscal Years, and within three Business Days of the occurrence of any Event of Default under Sections 8.01(a)(iii) and (iv) of the Indenture, a certificate in the form attached hereto as Exhibit FG, executed by an Authorized Representative.

(f) Debt Service Coverage Ratio. The Borrower is required to deliver annually, upon completion of the Borrower’s annual audit, to the Trustee a certificate stating the Debt Service Coverage Ratio for the Fiscal Year then ended and evidencing the calculation thereof on and as of June 30 of such year, commencing with the Fiscal Year ending June 30, 2018. The Debt Service Coverage Ratio as of the testing date is required to be at or above 1.10 to 1.00 for each Fiscal Year, commencing with the Fiscal Year ending June 30, 2018. If, for any Fiscal Year ending June 30, 2018, or after, such Debt Service Coverage Ratio is below 1.10 to 1.00, the Borrower shall retain, at its expense, an Independent Consultant to submit a written report and make recommendations within 45 days of being retained (a copy of such report and recommendations shall be filed with the Trustee) with respect to increasing income of the Borrower, decreasing Operating Expenses or other financial matters of the Borrower which are relevant to increasing the Debt Service Coverage Ratio to at least the required level. The Borrower agrees that promptly upon the receipt of such recommendations, subject to applicable requirements or restrictions imposed by law, it shall employ a best efforts approach to revise its methods of operation and take such other actions to comply with any reasonable recommendation of the Independent Consultant identified in the report of the Independent Consultant. Within five Business Days of receipt of the certificate to be delivered under this Section, the Trustee is required to notify Registered Owners of the Outstanding Bonds of the Debt Service Coverage Ratio if the Debt Service Coverage Ratio is below 1.00 to 1.00. So long as the Debt Service Coverage Ratio is not below 1.00 to 1.00, and so long as the Borrower shall retain an Independent Consultant and use its best efforts to comply with such Independent Consultant’s reasonable recommendations (subject to applicable requirements or restrictions imposed by law), no default or Event of Default shall be declared solely by reason of a violation of the requirements of this Section.

Notwithstanding the foregoing provisions in this Section, the failure of the Borrower to have a Debt Service Coverage Ratio of at least 1.00 to 1.00 for any Fiscal Year ending June 30, 2018, or after, shall be an Event of Default hereunder.

The foregoing is subject to the qualification that if applicable State or federal laws or regulations, or the rules and regulations of the agencies having jurisdiction, shall not

43 4848-1712-4171.154171.19 permit the Borrower to maintain such level of Debt Service Coverage Ratio, then the Borrower shall, in conformity with the then prevailing laws, rules or regulations, maintain its Debt Service Coverage Ratio equal to the maximum permissible level.

(g) Liquidity Requirement. The Borrower hereby covenants and agrees that, commencing with the Fiscal Year ending June 30, 2018, it will maintain as of the relevant testing date at least twenty-five (25) Days Cash on Hand; commencing with the Fiscal Year ending June 30, 2019, it will maintain as of the relevant testing date at least thirty-five (35) Days Cash on Hand; and commencing with the Fiscal Year ending June 30, 2020 and for each Fiscal Year thereafter, it will maintain as of the relevant testing date at least forty (40) Days Cash on Hand.

The covenant described above is to be tested on and as of June 30 of each year for the Fiscal Year then ended and evidenced by a certificate of the Borrower delivered to the Trustee and the Underwriter setting forth the calculation of such amount based on the results of the annual audit of the Borrower for such Fiscal Year upon release of such audit. If on any testing date the Borrower’s minimum Days Cash on Hand is below that required as described above, the Borrower is required to retain, at its expense, an Independent Consultant to submit a written report and make recommendations within 45 days of being retained (a copy of such report and recommendations shall be filed with the Trustee) with respect to increasing income of the Borrower, decreasing Operating Expenses of the Borrower or other financial matters of the Borrower which are relevant to increasing the Borrower’s Days Cash on Hand to at least the required level. The Borrower agrees that promptly upon the receipt of such recommendations, subject to applicable requirements or restrictions imposed by law, it shall employ a best efforts approach to revise its methods of operation and take such other actions to comply with any reasonable recommendation of the Independent Consultant identified in the report of the Independent Consultant. So long as the Borrower shall retain an Independent Consultant and use its best efforts to comply with such Independent Consultant’s reasonable recommendations (subject to applicable requirements or restrictions imposed by law), no default or Event of Default shall be declared solely by reason of a violation of the requirements of this Section 8.05(g).

The foregoing is subject to the qualification that if applicable State or federal laws or regulations, or the rules and regulations of the agencies having jurisdiction, shall not permit the Borrower to maintain such level of Days Cash on Hand, then the Borrower shall, in conformity with the then prevailing laws, rules or regulations, maintain its Days Cash on Hand equal to the maximum permissible level.

(h) Investor Calls. Within thirty (30) days following receipt by the Dissemination Agent of the audited financial statements of the Borrower for the Fiscal Year ending June 30, 2018 and within thirty (30) days following receipt by the Dissemination Agent of the audited financial statements for each Fiscal Year thereafter, the Borrower shall organize and schedule a conference call for the benefit of the Beneficial Owners of the Bonds. The Borrower shall cause notice of such conference call setting forth the date,

44 4848-1712-4171.154171.19 time and call-in information of such conference call to be given to the Dissemination Agent, the Issuer, the then current Beneficial Owners of the Bonds and to the public in general and shall provide or cause the Dissemination Agent to provide notice of such conference call to be posted on EMMA in a timely manner but in no event less than five (5) business days prior to the date set for such conference call.

(i) Contracts To Comply With Tax Covenants. Any contract entered into between the Borrower and any Independent Consultant engaged by the Borrower pursuant to this Section 8.05 must meet the requirements of this Loan Agreement.

(j) Additional Documents Upon Request. The Borrower will provide the Issuer with any of the documents specified in this Section 8.05 upon request by the Issuer.

The Trustee shall not be required to ensure compliance by the Borrower with the provisions of this Section.

Section 8.06. Indemnification Covenants.

(a) To the fullest extent permitted by law, the Borrower agrees to fully and forever and irrevocably release and to the fullest extent permitted by law indemnify, hold harmless and defend (i) the Trustee Indemnified Parties; (ii) the Issuer; and (iii) the Issuer Indemnified Parties (as defined in the Indenture) (collectively, the “Indemnified Parties”), against any and all Liabilities to which the Indemnified Parties, or any of them, may become subject under any statutory law or regulation (including federal or state securities laws and regulations and federal tax laws and regulations) or at common law or otherwise, arising out of or based upon or in any way relating to:

(i) the Bonds, the Indenture, the Borrower Documents or the Tax Certificate (no provision of which shall be deemed to limit, restrict, or impair in any way the rights of the Indemnified Parties under this Section 8.06) or the execution or amendment hereof or thereof or in connection with transactions contemplated hereby or thereby, including the issuance, sale or resale of the Bonds;

(ii) the performance and observance by or on behalf of the Issuer of those things on the part of the Issuer agreed to be performed or observed hereunder or under the Indenture and the documents identified in Subsection (i) above;

(iii) any act or omission of the Borrower or any of its affiliates or affiliated persons, agents, contractors, employees, tenants or licensees in connection with the Facilities, the operation of the Facilities, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or construction of, the Facilities or any part thereof;

45 4848-1712-4171.154171.19 (iv) any lien or charge upon payments by the Borrower to the Issuer and the Trustee hereunder, or any taxes (including, without limitation, all ad valorem taxes and sales taxes), assessments, impositions and other charges imposed on the Issuer or the Trustee in respect of any portion of the Facilities;

(v) any violation of any Environmental Law or Environmental Requirements with respect to, or the release of any Regulated Chemicals from, the Facilities or any part thereof;

(vi) the defeasance and/or redemption, in whole or in part, of the Bonds;

(vii) any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in any offering or disclosure document or disclosure or continuing disclosure document for the Bonds or any of the documents relating to the Bonds, or any omission or alleged omission from any offering or disclosure document or disclosure or continuing disclosure document for the Bonds of any material fact necessary to be stated therein in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (excepting only any statements, omissions or alleged omissions specifically identified in any such offering or disclosure document as having been provided by the applicable Indemnified Party(ies));

(viii) any declaration of taxability of interest on the Tax-Exempt Bonds, or allegations that interest on the Tax-Exempt Bonds is taxable or any regulatory audit or inquiry regarding whether interest in the Tax-Exempt Bonds is taxable;

(ix) the Trustee’s acceptance or administration of the trust of the Indenture, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party; and

(x) any injury to or death of any person or damage to property in or upon the Facilities or growing out of or connected with the use, nonuse, condition or occupancy of the Facilities; except (A) in the case of the foregoing indemnification of the Trustee Indemnified Parties, to the extent such damages are caused by the gross negligence or willful misconduct of such Trustee Indemnified Party; or (B) in the case of the foregoing indemnification of the Issuer or the Issuer Indemnified Parties, to the extent such damages are caused by the willful misconduct of the Person seeking indemnification.

THE BORROWER ACKNOWLEDGES AND AGREES THAT THE ISSUER AND THE ISSUER INDEMNIFIED PARTIES SHALL BE INDEMNIFIED HEREUNDER AGAINST LIABILITIES ARISING FROM THE ISSUER’S OR ANY ISSUER

46 4848-1712-4171.154171.19 INDEMNIFIED PARTY’S OWN NEGLIGENCE OF ANY KIND, DESCRIPTION OR DEGREE (EXPRESSLY WAIVING THE PROVISIONS OF SECTION 895.045 OF THE WISCONSIN STATUTES AND THE STATUTORY AND COMMON-LAW COMPARATIVE OR CONTRIBUTORY NEGLIGENCE LAWS OF ANY OTHER JURISDICTION), OR BREACH OF CONTRACTUAL DUTY, WITHOUT REGARD TO OR THE NECESSITY OF ANY BREACH OR FAULT ON THE PART OF THE BORROWER, EXCEPT INSOFAR AS AND TO THE EXTENT THAT ANY SUCH LIABILITIES ARISE FROM THE WILLFUL MISCONDUCT OF THE PERSON SEEKING INDEMNIFICATION.

In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party, shall assume the investigation and defense thereof, including the employment of counsel selected by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the Borrower if in the judgment of such Indemnified Party a exists by reason of common representation or if all parties commonly represented do not agree as to the action (or inaction) of counsel.

The rights of any persons to indemnity hereunder and rights to payment of fees and reimbursement of expenses shall survive the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or removal. The provisions of this Section shall remain valid and in effect notwithstanding repayment of the Loans hereunder or payment, redemption defeasance of the Bonds or termination of this Loan Agreement or the Indenture.

Insofar as any other document or instrument issued or delivered in connection with the Series 2017 Bonds (including, without limitation, the documents referred to in Subsection (i) above) purports to constitute an undertaking by or impose an obligation upon the Borrower to provide indemnification to the Issuer or the Issuer Indemnified Parties, the indemnification provision or provisions of such document shall not be deemed, interpreted or construed in any way as a modification of or limitation upon the Borrower’s obligations or the rights of the Issuer or the Issuer Indemnified Parties under this Section 8.06, and the provisions of this Section 8.06 shall in every respect supersede the indemnification provisions of any such other document and shall apply thereto as if fully set forth therein.

Section 8.07. Authority of Authorized Representative of the Borrower. Whenever under the provisions of this Loan Agreement or the Indenture the approval of the Borrower is required, or the Issuer or the Trustee is required to take some action at the request of the Borrower, such approval or such request shall be made by the Authorized Representative of the Borrower unless otherwise specified in this Loan Agreement or the Indenture. The Issuer or the

47 4848-1712-4171.154171.19 Trustee shall be authorized to act on any such approval or request and the Borrower shall have no complaint against the Issuer or the Trustee as a result of any such action taken in accordance with such approval or request. The execution of any document or certificate required under the provisions of this Loan Agreement or the Indenture by an Authorized Representative of the Borrower shall be on behalf of the Borrower and shall not result in any personal liability of such Authorized Representative.

Section 8.08. Authority of Issuer Authorized Signatory. Whenever under the provisions of this Loan Agreement or the Indenture the approval of the Issuer is required, or the Borrower or the Trustee is required to take some action at the request of the Issuer, such approval or such request shall be executed by an Issuer Authorized Signatory (and in no event individually) and may be based (i) insofar as it relates to factual matters, upon a certificate of or representation by the Trustee or the Borrower; and (ii) insofar as it related to legal or accounting matters, upon a certificate or opinion or representation by counsel or an accountant, in each case under clause (i) and (ii) without further investigation or inquiry by such Issuer Authorized Signatory or otherwise on behalf of the Issuer. The Borrower or the Trustee shall be authorized to act on any approval or request made by the Issuer, and the Issuer shall have no complaint against the Borrower or the Trustee as a result of any such action taken in accordance with such approval or request. The execution of any document or certificate required under the provisions of this Loan Agreement or the Indenture by an Issuer Authorized Signatory shall be on behalf of the Issuer and shall not result in any personal liability of such Issuer Authorized Signatory.

Section 8.09. Licenses and Qualifications. The Borrower will do, or cause to be done, all things necessary to obtain, renew and secure all permits, licenses and other governmental approvals and to comply, or cause its lessees to comply, with such permits, licenses and other governmental approvals necessary for operation of the School as a charter school (as defined in the Charter School Act) (subject, however, to Section 8.11 hereof).

Section 8.10. Right To Inspect. Following reasonable written notice to the Borrower, at any and all reasonable times during business hours, the Trustee, the Issuer and their duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect the Facilities, including all books and records of the Borrower (excluding records the confidentiality of which may be protected by law), and to make such copies and memoranda from and with regard thereto as may be desired; provided, however, that they shall maintain these books and records in confidence unless required by applicable law to do otherwise and it is necessary to distribute the information to some other third party under applicable law.

Section 8.11. Lease or Other Disposition of the Facilities. The Borrower shall have the right to lease all or any part of the Facilities; provided, however, that the terms and provisions of any future leases will allow the Borrower to comply with the provisions of this Loan Agreement (including but not limited to those in Section 2.03 hereof) and contain the restrictions upon the use of the Facilities contained in Section 8.12 of this Loan Agreement; and provided further that any future leases will provide for rental payments to be made directly to the Trustee to the extent of then current payments required under Section 5.01(a) hereof. In addition: (a) no assignment or lease will relieve the Borrower from primary liability for any obligations under this Loan

48 4848-1712-4171.154171.19 Agreement, and in the event of any such assignment or lease the Borrower will continue to remain primarily liable for payment of the amounts specified in this Loan Agreement and for performance and observance of the other agreements on its part provided to be performed and observed by the Borrower to the same extent as though no assignment or lease had been made; (b) the assignee or lessee must assume the obligations of the Borrower under this Loan Agreement to the extent of the interest assigned or leased; (c) the assignee or lessee must receive no greater interest in the Facilities than that held by the Borrower; in particular, any assignment or lease must be granted only subject to the rights of the Issuer and the Trustee under this Loan Agreement and the Indenture, and must terminate upon any foreclosure of the Borrower’s rights under this Loan Agreement or under the Deed of Trust; and (d) the Borrower must, at least 10 days prior to the execution of such assignment or lease, furnish or cause to be furnished to the Issuer and the Trustee a true and complete draft copy of each assignment, assumption of obligation or lease, as the case may be, in form and substance acceptable to the Issuer and a form of opinion from Bond Counsel to the effect that the assignment or lease does not affect the tax-exempt status of the outstanding Tax-Exempt Bonds, and a form of opinion from independent counsel that the assignment or lease has been accomplished in accordance with State of North Carolina law and this Loan Agreement and is enforceable against the assignee or transferee. Other than leases permitted by this Section 8.11 or as provided in Section 8.02 hereof, the Borrower agrees that it will not sell or otherwise dispose of the New Facility.

Section 8.12. Nonsectarian Use. The Borrower agrees that it will be nonsectarian in its programs, admission policies and employment practices and all other operations. The Borrower will comply with all applicable state and federal laws concerning discrimination on the basis of race, creed, color, sex, national origin, or religious belief and will respect, permit, and not interfere with the religious beliefs of persons working for the Borrower. The Borrower further agrees that it will not use or permit any portion of the Facilities, the Athletic Facility and the Government Loan Facility to be used for sectarian instruction or study or as a place for devotional activities or religious worship as part of its chartered educational activities.

Section 8.13. Limitations on Incurrence of Additional Indebtedness. The Borrower shall not incur additional Indebtedness except pursuant to this Section 8.13.

(a) Senior Indebtedness. The Borrower shall not incur additional Indebtedness secured by Liens on the Premises or the security interest in the Pledged Revenues that are senior to the Lien of the Deed of Trust on the Premises or the security interest in the Pledged Revenues granted by this Loan Agreement and the Deed of Trust.

(b) Long-Term Parity Indebtedness. The Borrower may incur additional Long-Term Indebtedness secured on a parity basis by the Liens on the Premises and the security interest in the Pledged Revenues (subject to the terms of the USDA Documents) if any of the following tests is met:

(i) (A) Historical Coverage on Outstanding Debt. Delivery to the Trustee of a certificate of an Authorized Representative of the Borrower stating that, for the Borrower’s most recently completed Fiscal Year

49 4848-1712-4171.154171.19 immediately preceding the issuance of the Long-Term Indebtedness, the Borrower achieved a Debt Service Coverage Ratio equal to at least 1.11.20 to 1.01.00; and

(B) Projected Coverage for Long-Term Indebtedness. Delivery to the Trustee of a report of a certified public accountantan Independent Consultant selected by the Borrower stating that (i) the sum of (X) estimated Maximum Annual Debt Service for all then Long-Term Indebtedness Outstanding (taking into account Eliminated Expenses), including the proposed Long-Term Indebtedness to be incurred, plus (Y) estimated Facility Lease Payments (taking into account Eliminated Expenses), in each casethe Debt Service Coverage Ratio for each of (X) and (Y) for the first two consecutive Fiscal Year immediately following the completion of the related project being financed, is less than (ii) twenty percent (20%) of estimated Pledged Revenues for the most recent Fiscal Year for which a budget has been adopted. The report shall take into account (i) the audited results of operations and verified enrollment of the related project for the most recently completed Fiscal Year and (ii) the projected enrollment for the Fiscal Year immediately following the completion of the new related project, and shall assume thatYears following the incurrence of such Long-Term Indebtedness or, if such Long-Term Indebtedness is being issued to finance improvements, equipment or new facilities, the first two consecutive Fiscal Years after such improvements, equipment or new facilities are placed in service, is projected to be at least 1.20 to 1.00 (taking into account the proposed additional Long-Term Indebtedness shall have been outstanding for the entire year.and any Long-Term Indebtedness to be refinanced thereby and provided that, such projected Net Income Available for Debt Service shall be adjusted to provide for any Eliminated Expenses and for projected revenues and expenses anticipated as the result of any real or personal property acquired, constructed, or completed with the proceeds of any such Long-Term Indebtedness); or

(ii) Alternate Coverage for Additional Debt. In lieu of the requirements described above, the Borrower may deliver to the Trustee a certificate of an Authorized Representative of the Borrower stating that, based on the audited results of the operations for the most recently completed Fiscal Year, the Net Income Available for Debt Service (taking into account Eliminated Expenses) equals at least 1.101.20 times Maximum Annual Debt Service for all parity Long-Term Indebtedness then Outstanding plus the proposed additional Long-Term Indebtedness immediately following the completion of the related project being financed.

50 4848-1712-4171.154171.19 (c) Short-Term Indebtedness, Non-Recourse Indebtedness, and Subordinated Indebtedness. The Borrower may incur Short-Term Indebtedness, Non-Recourse Indebtedness, and Subordinated Indebtedness for any corporate purpose(s).; provided, that in no event shall the aggregate principal amount of all Short-Term Indebtedness, Non-Recourse Indebtedness and Subordinated Indebtedness outstanding at any time exceed the greater of $500,000 or 5% of the Borrower’s operating revenues for the last preceding Fiscal Year for which audited financial statements have been prepared.

Indebtedness may be incurred under any of Sections 8.13(b) and (c) even though other Indebtedness is simultaneously being incurred under a different clause of this Section 8.13, but subject to the terms of the USDA Documents.

In connection with the Borrower’s incurrence of additional Indebtedness pursuant to this Section, the Borrower and the Trustee will enter into such amendments to the Borrower Documents and the Parity Agreement and any other documents and take such further actions as in each case are necessary and appropriate to reflect and implement the parity position of such Indebtedness.

Section 8.14. Covenant To Comply With Indenture. The Borrower hereby acknowledges its receipt and approval of the Indenture, agrees to be bound by its terms and accepts all obligations and duties imposed thereby.

Section 8.15. [Reserved]Independent Consultant. Upon the selection of an Independent Consultant as required by Sections 8.05(f), 8.05(g), or 8.13(b) of this Loan Agreement, the Borrower shall cause a notice of the selection of such Independent Consultant, in the form attached hereto as Exhibit H (the "Consultant Notice"), including the name of such Independent Consultant and a brief description of such Independent Consultant to be filed with EMMA. The Consultant Notice must also state each Beneficial Owner of the Bonds then Outstanding shall be deemed to have consented to the selection of such Independent Consultant unless such Beneficial Owner submits to the Trustee a written objection to the Independent Consultant in a manner acceptable to the Trustee (an "Objection Notice"), an example of which is attached hereto as Appendix I to Exhibit H, within thirty days of the date the Consultant Notice is posted to EMMA (the "Objection Period"). If the Beneficial Owners of at least a majority in aggregate principal amount of the Bond then Outstanding provide Objection Notices to the Trustee within the Objection Period, then the Borrower shall select an alternate Independent Consultant and post a new Consultant Notice with respect to the newly selected Independent Consultant.

Section 8.16. Continuation of Operation in Event of Casualty. In the event of any damage to or destruction of the Facilities, the Athletic Facility and the Government Loan or any part thereof by fire, lightning, vandalism, malicious mischief and extended coverage perils, the Borrower shall make all diligent and reasonable efforts to continue operation of the School in such a manner that will ensure continuation of Loan Payments or shall obtain or use other

51 4848-1712-4171.154171.19 financing resources to continue operation of the School and ensure due and timely payment of the Loan Payments.

Section 8.17. Transfer of Assets. Except as permitted by Section 6.01 hereof and this Article VIII, the Borrower agrees that it will not further transfer Pledged Revenues or other assets related to the New Facility without complying with the terms of the USDA Documents and obtaining the consent of the holders or Beneficial Owners of at least a majority of the aggregate principal amount of the Bonds Outstanding, provided it represents the owners of Bonds Outstanding of such percentage, except for transfers of assets:

(a) with respect to any transfer of assets to any Person in the ordinary course of such Borrower’s business and for fair market value as determined by an appraiser or other qualified professional; or

(b) to any Person if the aggregate net book value of the assets transferred pursuant to this clause in any Fiscal Year does not exceed $10,000; or

(c) to any Person if prior to the sale, lease or other disposition there is delivered to the Trustee (i) a certificate of the Borrower’s accountant demonstrating that the liquidity requirement of Section 8.05(g) hereof would have been satisfied if the action had occurred on the first day of the then-current Fiscal Year, or (ii) a report of an Independent Consultant demonstrating projected liquidity (as determined in accordance with Section 8.05(g)) for the following two Fiscal Years to be at least 10% of Operating Expenses.

Section 8.18. [Reserved].

Section 8.19. [Reserved].

Section 8.20. [Reserved].

Section 8.21. Operation of the Facilities As a Project. So long as Bonds are outstanding, the Borrower shall operate, or cause to be operated, the Facilities as a “Project” within the meaning of the Act.

Section 8.22. Maintenance of 501(c)(3) Status; Prohibited Activities. The Borrower shall file all required reports, returns and documents with the Internal Revenue Service so as to maintain its status as an organization described in Section 501(c)(3) of the Code, and shall not use or operate the Facilities, the Athletic Facility or the Government Loan Facility in any manner and shall not engage in any activities or take any action that might reasonably be expected to result in the Borrower ceasing to be a “501(c)(3) organization” within the meaning of Section 145 of the Code. The Borrower shall promptly notify the Trustee and the Authority of any loss of its status as a “501(c)(3) organization” or of any investigation, proceeding or ruling that might result in such loss of status.

52 4848-1712-4171.154171.19 ARTICLE IX

ASSIGNMENT AND PLEDGING; REDEMPTION OF SERIES 2017 BONDS

Section 9.01. Assignment and Pledge by Issuer. The Issuer shall assign its rights and interests (other than the Issuer’s Unassigned Rights) in and under this Loan Agreement, including the Pledged Revenues, to the Trustee pursuant to the Indenture as security for payment of the principal of, or premium, if any, and interest on the Series 2017 Bonds. The Borrower hereby consents to such assignment.

Section 9.02. Redemption of Series 2017 Bonds. Upon the agreement of the Borrower to deposit moneys into the Bond Fund in an amount sufficient to redeem Series 2017 Bonds subject to redemption, the Trustee, at the written request of the Borrower, shall forthwith take all steps (other than the payment of the money required for such redemption) permitted and necessary under the applicable redemption provisions of the Indenture to effect such redemption of the Series 2017 Bonds on the redemption date.

ARTICLE X

EVENTS OF DEFAULT AND REMEDIES

Section 10.01. Events of Default.

(a) The following shall be Events of Default under this Loan Agreement and the term Event of Default shall mean, whenever it is used in this Loan Agreement, any one or more of the following events:

(i) Failure by the Borrower to pay the Loan Payments required to be paid under Section 5.01(a) hereof on the fifteenth day of any [June or December] or the twentieth day of any other month, excluding [June and December].

(ii) Failure by the Borrower to observe or perform any other covenant, condition or agreement on its part to be observed or performed herein other than as referred to in this Section, for a period of 45 days’ after written notice specifying such failure and requesting that it be remedied, shall have been given to the Borrower by the Issuer or the Trustee; provided, with respect to any such failure covered by this clause, no Event of Default shall be deemed to have occurred so long as a course of action adequate in the judgment of the Trustee to remedy such failure shall have been commenced within such 45-day period and shall thereafter be diligently pursued to completion and the failure shall be remedied within 90 days’ of such notification, unless said remedy cannot be performed within 90 days and the Borrower is actively working toward a remedy.

(iii) The dissolution or liquidation of the Borrower. The phrase “dissolution or liquidation of the Borrower,” as used in this subsection, shall not

53 4848-1712-4171.154171.19 be construed to include the cessation of the corporate existence of the Borrower resulting either from a merger or consolidation of the Borrower into or with another domestic corporation or a dissolution or liquidation of the Borrower following a transfer of all or substantially all of its assets under the conditions permitting such actions contained in Section 8.02 hereof.

(iv) The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of the Borrower in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Borrower or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.

(v) The commencement by the Borrower of a voluntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Borrower or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of the Borrower generally to pay its as such debts become due, or the taking of corporate action by the Borrower in furtherance of any of the foregoing.

(vi) Failure of the Borrower to comply with any covenants contained in the Tax Certificate.

(vii) The occurrence of an Event of Default under the Indenture and the Loan Agreement or an event of default under the USDA Documents or any Borrower Document.

(viii) Any representation or warranty made by the Borrower herein or made by the Borrower in any statement or certificate furnished by the Borrower either required hereby or in connection with the execution and delivery of this Loan Agreement and the sale and the issuance of the Series 2017 Bonds, shall prove to have been untrue in any material respect as of the date of the issuance or making thereof.

(ix) Judgment for the payment of money in excess of $100,000 (which is not covered by insurance) is rendered by any court or other governmental body against the Borrower, and the Borrower does not discharge same or provide for its discharge in accordance with its terms, or procure a stay of execution thereof within 60 days from the date of entry thereof, and within said 60-day period or such longer period during which execution of such judgment shall have been

54 4848-1712-4171.154171.19 stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal while providing such reserves therefor as may be required under Generally Accepted Accounting Principles.

(x) A writ or warrant of attachment or any similar process shall be issued by any court against the New Facility, and such writ or warrant of attachment or any similar process is not released or bonded within 60 days after its entry.

(xi) Any of Borrower’s representations and warranties in the Borrower Documents with respect to environmental matters are false in any material respect.

(xii) The Borrower ceases to operate as a charter school (as defined in the Charter School Act) or the Borrower’s charter contract is terminated, revoked, expires or is not renewed.

(xiii) The Debt Service Coverage Ratio is less than 1.00 to 1.00 in any Fiscal Year ending on or after June 30, 2018.

(b) The foregoing provisions of Section 10.01(a)(ii) hereof are subject to the following limitations: if by reason of force majeure the Borrower is unable in whole or in part to carry out its agreements herein contained, other than the obligations on the part of the Borrower contained in Article V and in Sections 6.02, 6.03, 6.06 and 8.06 hereof, the Borrower shall not be deemed in default during the continuance of such inability. The term “force majeure” as used herein shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States of America, the State or of the State of North Carolina or any of their departments, agencies, or officials, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquake; fire; hurricane; tornadoes; storms; floods; washouts; droughts; arrests; restraint of government and people; explosions; breakage or accident to machinery, transmission pipes or canals; partial or entire failure of utilities; or any other cause or event not reasonably within the control of the Borrower. The Borrower agrees, however, if possible, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out its agreements; provided, that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Borrower, and the Borrower shall not be required to make settlement of strikes, lockouts or other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Borrower unfavorable to the Borrower.

55 4848-1712-4171.154171.19 Section 10.02. Remedies on Default.

(a) Whenever an Event of Default referred to in Section 10.01 hereof shall have occurred and is continuing, the Issuer, or the Trustee where so provided herein, may take any one or more of the following remedial steps:

(i) the Trustee (acting as assignee of the Issuer) or the Issuer (in the event of a failure of the Trustee to act under this subsection), as and to the extent provided in the Indenture, may declare the Loan Payments payable hereunder for the remainder of the term of this Loan Agreement to be immediately due and payable, whereupon the same shall become due and payable;

(ii) the Trustee (acting as assignee of the Issuer) or the Issuer (in the event of a failure of the Trustee to act under this subsection), as and to the extent provided in the Indenture, may exercise the power of sale or foreclose under the Deed of Trust on the Premises and may realize upon the security interest in the Pledged Revenues (subject to the terms of the Parity Agreement) and may exercise all the rights and remedies of a secured party under the North Carolina Uniform Commercial Code with respect thereto; and

(iii) the Trustee (acting as assignee of the Issuer) or the Issuer (in the event of a failure of the Trustee to act under this subsection or with regard to the Issuer’s Unassigned Rights), as and to the extent provided in the Indenture, may take whatever action at law or in equity as may appear necessary or desirable to collect the amounts then due and thereafter to become due, or to enforce performance or observance of any obligations, agreements, or covenants of the Borrower under the Borrower Documents.

(b) Notwithstanding the foregoing, prior to the exercise by the Issuer or the Trustee of any remedy that would prevent the application of this paragraph, the Borrower may, at any time, pay all accrued payments hereunder (exclusive of any such payments accrued solely by virtue of declaration pursuant to Section 10.02 (a)(i) above and fully cure all defaults, and in such event, the Borrower shall be fully reinstated to its position hereunder as if such Event of Default had never occurred, provided, that the right to cure and extinguish such Event of Default as hereinbefore provided shall not be available if the Trustee or the Issuer exercised any such remedy at the direction of a majority in principal amount of the Bonds then Outstanding, as provided in the Indenture, unless the holders of a majority in principal amount of the Bonds then Outstanding consent to such cure and extinguishment.

(c) In the event that the Borrower fails to make any payment required hereby, the payment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid.

56 4848-1712-4171.154171.19 (d) Whenever any Event of Default has occurred and is continuing under this Loan Agreement, the Trustee may, but except as otherwise provided in the Indenture shall not be obligated to, exercise any or all of the rights of the Issuer under this Article (other than the Issuer’s Unassigned Rights), upon notice as required to the Issuer. In addition, the Trustee shall have available to it all of the remedies prescribed in the Indenture. The Issuer may, without the consent of the Trustee, take whatever action at law or in equity may appear necessary or appropriate to enforce the Issuer’s Unassigned Rights and to collect all sums then due and thereafter to become due to the Issuer under this Loan Agreement.

(e) Any amounts collected pursuant to action taken under the immediately preceding paragraph (other than sums collected for the Issuer on account of the Issuer’s Unassigned Rights, which sums shall be paid directly to the Issuer), after reimbursement of any reasonable costs incurred by the Issuer or the Trustee in connection therewith shall be applied in accordance with the provisions of the Indenture.

(f) If the Issuer or the Trustee (or the Trustee on behalf of the Issuer), shall have proceeded to enforce their respective rights under this Loan Agreement and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Issuer or the Trustee, then and in every such case, the Borrower, the Issuer and the Trustee shall be restored to their respective positions and rights hereunder, and all rights, remedies and powers of the Borrower, the Issuer and the Trustee shall continue as though no such proceedings had been taken.

(g) Notwithstanding anything to the contrary in this Loan Agreement or the Indenture, the Issuer shall have no obligation to and instead the Trustee, in accordance with the Indenture, shall have the right, without further direction from or action by the Issuer, to take any and all steps, actions and proceedings, to enforce any or all rights of the Issuer (other than the Issuer’s Unassigned Rights) under the Indenture or this Loan Agreement, including, without limitation, the rights to enforce the remedies upon the occurrence and continuation of an Event of Default and the obligations of the Borrower hereunder.

(h) No provision of this Loan Agreement or the Indenture shall be deemed or construed as limiting, affecting or impairing in any way the Issuer’s or any Issuer Indemnified Party’s right to enforce the Issuer’s Unassigned Rights, notwithstanding the existence or continuance of a default or Event of Default, or any action based thereon or occasioned by an Event of Default or an alleged Event of Default, and notwithstanding any waiver or forbearance by the Trustee, the Registered Owners or the Beneficial Owners of any default or Event of Default hereunder or thereunder. Any default or Event of Default in respect of the Issuer’s Unassigned Rights may only be waived with the Issuer’s written consent.

Section 10.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be exclusive of any other available remedy or remedies,

57 4848-1712-4171.154171.19 but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than notice required herein or by applicable law. Such rights and remedies as are given the Issuer hereunder shall also extend to the Trustee, the Beneficial Owners and the Registered Owners of the Series 2017 Bonds, subject to the Indenture.

Section 10.04. Agreement To Pay Attorneys’ Fees and Expenses. If an Event of Default has occurred and is continuing hereunder and the Issuer or the Trustee employ attorneys or incur other expenses for the collection of Loan Payments or the enforcement of performance or observance of any obligation or agreement on the part of the Borrower herein contained, the Borrower agrees that it will, on demand therefore, pay to the Issuer or the Trustee, as the case may be, the reasonable fees of such attorneys and such other reasonable expenses incurred by the Issuer or the Trustee. The obligations of the Borrower arising under this Section shall continue in full force and effect notwithstanding the final payment of the Bonds or the termination of this Loan Agreement.

Section 10.05. Waiver. In the event any agreement contained in this Loan Agreement should be breached by any party and thereafter waived by any other party, such waiver shall be limited to the particular breach waived and shall not be deemed to waive any other breach hereunder. In view of the assignment of the Issuer’s rights in and under this Loan Agreement (except for the Issuer’s Unassigned Rights) to the Trustee under the Indenture, the Trustee shall have no power to waive any Event of Default hereunder without the consent of the Issuer. Notwithstanding the foregoing, a waiver of an Event of Default under the Indenture or a rescission of a declaration of acceleration of the Bonds and a rescission and annulment of its consequences shall constitute a waiver of the corresponding Event of Default under this Loan Agreement and a rescission and annulment of its consequences; provided, that no such waiver or rescission shall extend to or affect any subsequent or other default hereunder or impair any right consequent thereon.

Section 10.06. Proofs of Claim.

(a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Issuer or the Borrower or any other obligor upon the Bonds or the property of the Issuer, the Trustee (irrespective of whether the principal of the Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuer and/or the Borrower for the payment of overdue principal or interest) shall be entitled and empowered, by intervention of such proceeding or otherwise;

58 4848-1712-4171.154171.19 (i) to file and prove a claim for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Bonds then outstanding and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Owners allowed in such judicial proceeding; and to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and

(ii) any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Owner to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Beneficial Owners, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel.

(b) So long as Bonds are outstanding, the Trustee is appointed under the terms of the Indenture, and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee, the true and lawful attorney in fact of the respective Owners of the Bonds, with authority to make or file, in the respective names of the Owners of the Bonds or on behalf of all Owners of the Bonds, as a class, any proof of debt, amendment to proof of debt, petition or other documents and to execute any other papers and documents and to do and perform any and all acts and things for and on behalf of all Owners of the Bonds as a class, as may be necessary or advisable in the opinion of the Trustee, in order to have the respective claim of the Owners of the Bonds against the Issuer, the Borrower or any other obligor allowed in receivership, insolvency, liquidation, bankruptcy or other proceeding, to which the Issuer, the Borrower or any other obligor, as the case may be, shall be a party. The Trustee shall have full power of substitution and delegation in respect of any such powers.

Section 10.07. Treatment of Funds in Bankruptcy. The Borrower acknowledges and agrees that in the event Borrower commences a case under the United States Bankruptcy Code located at 11 U.S.C. § 101 et. seq. (the “Bankruptcy Code”) or is the subject of an involuntary case that results in an order for relief under the Bankruptcy Code: (a) amounts on deposit in any of the Funds are not, nor shall they be deemed to be, property of Borrower’s bankruptcy estate as defined by § 541 of the Bankruptcy Code; (b) that in no event shall Borrower assert, claim or contend that amounts on deposit in any of the Funds are property of Borrower’s bankruptcy estate; and (c) that amounts on deposit in any of the Funds are held in trust solely for the benefit of the Registered Owners and the Beneficial Owners, shall be applied only in accordance with the provisions of the Indenture and the Borrower has no legal, equitable nor reversionary interest in, or right to, such amounts.

59 4848-1712-4171.154171.19 ARTICLE XI

PREPAYMENT OF THE LOANS

Section 11.01. General Option To Prepay the Loans. So long as no Event of Default pursuant to Section 10.01 hereof exists, the Borrower shall have and is hereby granted the option exercisable at any time to prepay all or any portion of the Loans by depositing with the Trustee an amount of money or securities, to the extent permitted by Section 7.01 of the Indenture, representing the principal amount, the premium, if any, and interest on the Loans to be paid at maturity, with respect to the Series 2017 Bonds, or prepaid to the date a corresponding amount of Series 2017 Bonds are redeemed. The exercise of the option granted by this Section shall not be cause for redemption of Series 2017 Bonds unless such redemption is permitted at that time under the provisions of the Indenture and the Borrower specifies the date for such redemption. Prior to the date the related Series 2017 Bonds are subject to redemption, the Series 2017 Promissory Notes are prepayable at any time in an amount sufficient to defease a related amount of respective Series 2017 Bonds in accordance with Article VII of the Indenture. In the event the Borrower prepays all of the Loans pursuant to this Section, pays all reasonable and necessary fees and expenses of the Trustee accrued and to accrue through final payment of the Series 2017 Bonds as a result of such prepayment, and all of its liabilities accrued and to accrue hereunder to the Issuer through final payment of the Series 2017 Bonds as a result of such prepayment, and all other amounts payable by the Borrower hereunder, including required payments to the Rebate Fund, this Loan Agreement shall terminate except as otherwise provided herein.

Section 11.02. Prepayment Credits. In the event of prepayment by the Borrower of the Loans in whole, and premium, if any, the amounts then contained in any account of the Debt Service Reserve Fund related to the Series 2017 Bonds and the amounts of the Borrower’s payments on the Series 2017 Promissory Notes contained in the Bond Fund shall be credited first to the Rebate Fund so that it is fully funded for the final payment to the federal government and then against the Borrower’s prepayment obligation.

Section 11.03. Notice of Prepayment. In order to exercise the option granted by this Article, the Borrower shall give written notice to the Trustee specifying the date of making the prepayment, which date shall be not less than 45 days nor more than 90 days from the date the notice is mailed. In the case of any prepayment pursuant to this Article XI, the Borrower shall make arrangements with the Trustee for giving the required notice of redemption, if any, with respect to any Series 2017 Bonds to be redeemed and shall pay to the Trustee an amount of money sufficient to redeem all of the Series 2017 Bonds to be called for redemption at the appropriate price prior to the redemption date.

Section 11.04. Use of Prepayment Moneys. By virtue of the assignment of the rights of the Issuer (except for the Issuer’s Unassigned Rights) under this Loan Agreement to the Trustee, the Borrower agrees to and shall pay any amount required to be paid by it under this Article XI directly to the Trustee (other than amounts to be paid to the Issuer with respect to the Issuer’s Unassigned Rights). The Trustee shall use the moneys so paid to it by the Borrower (other than

60 4848-1712-4171.154171.19 amounts to be paid to the Trustee for its own account) as provided in this Loan Agreement and in the Indenture.

ARTICLE XII

MISCELLANEOUS

Section 12.01. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by certified mail, return receipt requested, postage prepaid, facsimile, email, or overnight courier, addressed as follows:

to the Issuer: Public Finance Authority 22 East Mifflin Street Suite 900 Madison, WI 53703 Facsimile: (608) 237-2368 E-mail: [email protected] and [email protected] Attention: Scott Carper and Michael LaPierre

to the Borrower: Uwharrie Green School, Inc. 5326 U.S. Highway 220 South Asheboro, NC 27205 E-mail: [email protected] Attention: Heather Soja

to the Trustee: U.S. Bank National Association 214 N. Tryon Street, 27th Floor CN-NC-H27A Charlotte, North Carolina 28202 Email: [email protected] Attention: Global Corporate Trust Services

A duplicate copy of each notice, certificate or other communication given hereunder by the Issuer or the Borrower shall also be given to the Trustee. The Issuer, the Borrower or the Trustee may, by notice hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.

Section 12.02. Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the Issuer and the Borrower, and their respective successors and assigns, subject, however, to the limitations contained in Sections 8.02, 9.01 and 12.10 hereof.

Section 12.03. Severability. In the event any provision of this Loan Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

61 4848-1712-4171.154171.19 Section 12.04. Third-Party Beneficiaries. It is specifically acknowledged and agreed that, to the extent of their rights hereunder (including, without limitation, their rights to immunity and exculpation from pecuniary liability) each Issuer Indemnified Party is a Third-Party Beneficiary of this Loan Agreement entitled to enforce such rights in his, her, its or their own name. Each of the Trustee Indemnified Parties and the Registered Owners of the Series 2017 Bonds are also intended “Third-Party Beneficiaries” of this Loan Agreement. Nothing in this Loan Agreement shall confer any right upon any Person other than parties hereto, and those specifically designated as Third-Party Beneficiaries of this Loan Agreement.

Section 12.05. Amounts Remaining in Funds. It is agreed by the parties hereto that any amounts remaining in the Funds upon termination of this Loan Agreement, provided the Series 2017 Bonds have been fully retired and all amounts due hereunder have been paid in full, shall belong to and be paid to the Borrower by the Trustee, as provided in the Indenture.

Section 12.06. Amendments, Changes and Modifications. Except as otherwise provided in this Loan Agreement or in the Indenture, this Loan Agreement may not be effectively amended, changed, modified, altered or terminated without the written consent of the Issuer and the Borrower.

Section 12.07. Execution in Counterparts. This Loan 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.

Section 12.08. Governing Law. This Loan Agreement shall be governed by and construed in accordance with the laws and judicial decisions of the State of North Carolina provided, that, with respect to the existence, corporate powers, legal capacity, rights (including, without limitation, rights to indemnification and exculpation from liability), privileges, powers, obligations and liabilities of the Issuer and the Issuer Indemnified Parties, as applicable, this Loan Agreement shall be governed by the laws of the State, excluding conflicts of law principles. All claims of whatever character arising out of this Loan Agreement, or under any statute or common law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings between the Issuer and any other party hereto, if and to the extent that such claim potentially could or actually does involve the Issuer, shall be brought in any state or federal court of competent jurisdiction located in Dane County, Wisconsin. By executing and delivering this Loan Agreement, each party hereto irrevocably, with respect to the claims referenced in the preceding sentence: (a) accepts generally and unconditionally the exclusive jurisdiction and venue of such courts; (b) waives any defense of forum non conveniens; and (c) agrees not to seek removal of such proceedings to any court or forum other than as specified above. The foregoing shall not be deemed or construed to constitute a waiver by the Issuer of any prior notice or procedural requirements applicable to actions or claims against or involving governmental units of the State that may exist at the time of and in connection with such matter.

Section 12.09. Filing. The Borrower shall cause the security interest in the Premises granted by the Deed of Trust to be recorded with the Register of Deeds for Randolph County, North Carolina. In addition, the Borrower shall cause the security interest in the rights to receive

62 4848-1712-4171.154171.19 the Pledged Revenues, the Funds and trust accounts referred to in Section 5.01 hereof granted to the Issuer, the assignment of such security interest to the Trustee and the security interest in the Deed of Trust granted to the Trustee to be perfected by the filing of financing statements which shall fully comply with the applicable Uniform Commercial Code in the office of the Secretary of State of North Carolina or the office of the Register of Deeds of Randolph County, North Carolina, as applicable, and in such other office as is at the time provided by law as the proper place for the filing thereof. The parties hereto further agree that all necessary continuation statements shall be filed by the Borrower within the time prescribed by the North Carolina Uniform Commercial Code in order to continue such security interests.

Section 12.10. Cancellation at Expiration of Term of Loan Agreement. Upon the termination of this Loan Agreement, and provided the Bonds have been fully retired and all amounts due hereunder have been paid in full, the Issuer shall deliver to the Borrower any documents and take or cause the Trustee to take such actions as may be necessary to evidence the termination of this Loan Agreement and the discharge of the Lien hereof and of the Deed of Trust.

Section 12.11. [Reserved].

Section 12.12. No Personal Liability of Officials of the Borrower, Issuer or the Trustee.

(a) None of the covenants, stipulations, promises, agreements and obligations of the Issuer, the Trustee or the Borrower contained herein shall be deemed to be covenants, stipulations, promises, agreements or obligations of any Indemnified Party or any director, officer, employee or agent of the Borrower in his or her individual capacity, and no recourse shall be had for the payment of the principal of or premium, if any, or interest on the Bonds or for any claim based thereon or any claim hereunder against any Indemnified Party or any director, officer, employee or agent of the Borrower.

(b) No Issuer Indemnified Party shall be individually or personally liable for the payment of any principal of, premium, if any, or interest on the Bonds or any costs incidental thereto or any sum hereunder or under the Indenture or be subject to any personal liability or accountability by reason of the execution and delivery of this Loan Agreement or the Indenture.

Section 12.13. Limitation of Liability of Issuer.

(a) The Issuer shall not be obligated to pay the principal of, or premium, if any, or interest on the Bonds or any costs incidental thereto, except from the Trust Estate. Neither the faith and credit nor the taxing power of any Member, the State or any other political subdivision thereof or any political subdivision approving the issuance of the Bonds, nor the faith and credit of the Issuer or any Sponsor, is pledged to the payment of the principal of, premium, if any, or interest on the Bonds or any costs incidental thereto. The Issuer has no taxing power. The Issuer shall not be directly, indirectly, contingently

63 4848-1712-4171.154171.19 or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Loan Agreement, the Bonds or the Indenture, except only to the extent amounts are received for the payment thereof from the Borrower under this Loan Agreement, and except as may result solely from the Issuer’s own willful misconduct.

(b) The Borrower hereby acknowledges that the Issuer’s sole source of moneys to repay the Bonds is the Trust Estate, and hereby agrees that if the payments to be made under this Loan Agreement shall ever prove insufficient to pay all principal, premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise) or any costs incidental thereto, then upon notice or demand from the Trustee, the Borrower shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal, premium, if any, or interest when due, including, but not limited to, any deficiency or default caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Issuer, the Borrower or any third party, subject to any right of reimbursement from the Trustee, the Issuer or any such third party, as the case may be, therefor.

(c) Anything in this Loan Agreement to the contrary notwithstanding, it is expressly understood and agreed by the parties hereto that the Issuer may rely conclusively on the truth and accuracy of any certificate, opinion, notice, or other instrument furnished to the Issuer by the Borrower, the Trustee or Bond Counsel, in either case without any obligation by the Issuer to verify as to the existence of any fact or state of affairs required hereunder to be noticed by the Issuer.

(d) No recourse shall be had for the enforcement of any obligation, covenant, promise, or agreement of the Issuer contained in any Issuer Documents, or in any Bond or for any claim based hereon or otherwise in respect hereof or upon any obligation, covenant, promise, or agreement of the Issuer contained in any agreement, instrument, or certificate executed in connection with the Facilities or the issuance and sale of the Bonds, against any Issuer Indemnified Parties, whether by virtue of any constitutional provision, statute, or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that no personal liability whatsoever shall attach to, or be incurred by, any Issuer Indemnified Party, either directly or by reason of any of the obligations, covenants, promises, or agreements entered into by the Issuer with the Borrower or the Trustee to be implied therefrom as being supplemental hereto or thereto, and that all personal liability of that character against each and every Issuer Indemnified Party is, by the execution of the Bonds, this Loan Agreement, and the other Issuer Documents, and as a condition of, and as part of the consideration for, the execution of the Bonds, this Loan Agreement, and the other Issuer Documents, is expressly waived and released.

(e) None of the provisions of this Loan Agreement shall require the Issuer to expend or risk its own funds or to otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder, unless payable

64 4848-1712-4171.154171.19 from the Trust Estate under the Indenture, or the Issuer shall first have been adequately indemnified to its satisfaction against the cost, expense, and liability which may be incurred thereby. The Issuer shall not be under any obligation hereunder to perform any administrative service with respect to the Bonds or the Project (including, without limitation, any record keeping or legal services), it being understood that such services shall be performed or provided as arranged by the Trustee or the Borrower. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions expressly contained in this Loan Agreement, the Indenture, and in any and every Bond executed, authenticated, and delivered under the Indenture; provided, however, that the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof unless and until it shall have (i) been requested to do so by the Borrower or the Trustee; (ii) received from the party requesting such action or execution assurance satisfactory to the Issuer that the Issuer’s reasonable expenses incurred or to be incurred in taking such action or executing such instrument have been or will be paid or reimbursed to the Issuer; and (iii) if applicable, received in a timely manner the instrument to be executed, in form and substance satisfactory to the Issuer. In complying with any provision herein or in the Indenture requiring the Issuer to “cause” another Person to take or omit any action, the Issuer shall be entitled to rely conclusively (and without independent investigation or verification) (i) on the faithful performance by the Trustee or the Borrower, as the case may be, of their respective obligations hereunder and under the Indenture and (ii) upon any written certification or opinion furnished to the Issuer by the Trustee or the Borrower, as the case may be. In acting, or in refraining from acting under this Loan Agreement or the Indenture, the Issuer may conclusively rely on the advice of its counsel. The Issuer shall not be required to take any action hereunder or under the Indenture that it reasonably believes to be unlawful or in contravention hereof of thereof.

Section 12.14. No Obligation of the State of North Carolina. No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions.

Section 12.15. Covenant by the Borrower With Respect to Statements, Representations and Warranties. It is understood by the Borrower that all such statements, representations and warranties made in this Loan Agreement shall be deemed to have been relied upon by the Issuer as an inducement to issue the Series 2017 Bonds, and that if any such statements, representations and warranties were false at the time they were made or (with respect to those representations and warranties which are to continue) are materially breached during the term hereof, such misrepresentation or breach shall constitute a breach of this Loan Agreement which may give rise to an event of default hereunder. This subsection shall not apply to any misrepresentation or breach that was not intentionally made by Borrower, does not have a material effect on the Loan if not remedied, does not constitute a material breach, and Borrower reasonably remedies any such misstatement or breach upon notice of such.

65 4848-1712-4171.154171.19 Section 12.16. Captions. The captions and headings in this Loan Agreement are for convenience only and in no way define, limit, or describe the scope or intent of any provisions or sections of this Loan Agreement.

Section 12.17. Payments Due on Holidays. If the date for making any payment or the last date for performance of any act or the exercise of any right, as provided in this Loan Agreement, is not a Business Day such payments may be made or act performed or right exercised on the next succeeding Business Day unless otherwise provided herein, with the same force and effect as if done on the nominal date provided in this Loan Agreement.

Section 12.18. Provision of General Application. Any consent or approval of the Issuer required pursuant to this Loan Agreement shall be in writing and shall not be unreasonably withheld, conditioned or delayed.

Section 12.19. Survival. The provisions of this Loan Agreement and the Indenture and any other document in connection with the issuance of the Bonds to which the Issuer is a party concerning (a) the tax-exempt status of the Tax-Exempt Bonds (including, but not limited to, provisions concerning rebate); (b) the interpretation of this Loan Agreement; (c) the governing law, jurisdiction and venue; (d) the Issuer’s right to rely on written representations of others contained herein or in any other document regardless of whether the Issuer is a party thereto; (e) the indemnification rights and exculpation from pecuniary liability of the Issuer and the Issuer Indemnified Parties; and (f) any other provision of this Loan Agreement not described or enumerated above that expressly provides for its survival, shall survive and remain in full force and effect notwithstanding the payment or redemption in full, or defeasance of the Bonds, the discharge of the Indenture, and the termination or expiration of this Loan Agreement.

Section 12.20. Notice of Change in Fact. The Borrower will notify the Issuer and the Trustee promptly after the Borrower becomes aware of (a) any change in any fact or circumstance represented or warranted by the Borrower in this Loan Agreement or in connection with the issuance of the Bonds which would make any such representation or warranty false when made, if such changed fact or circumstance could reasonably be expected to have a Material Adverse Effect; and (b) any default or event which, with notice or lapse of time or both, could become an Event of Default under the Indenture or any Borrower Document, specifying in each case the nature thereof; and what action the Borrower has taken, is taking, and/or proposes to take with respect thereto; and (c) any Internal Revenue Service audit of the Borrower or the Bonds; and (d) any material litigation affecting the Bonds, the Borrower or the Facilities which could reasonably be expected to have a Material Adverse Effect; and (e) any default in any Indebtedness of the Borrower.

[Remainder of page intentionally left blank]

66 4848-1712-4171.154171.19 IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan Agreement to be executed in their respective corporate names by their duly authorized signatories, all as of the date first above written.

PUBLIC FINANCE AUTHORITY

By Name: Title: Assistant Secretary

UWHARRIE GREEN SCHOOL, INC.

By: Name: Title:

4848-1712-4171.154171.19 EXHIBIT A

FORM OF SERIES 2017A PROMISSORY NOTE

$[PRINCIPALA] [November __, 2017]

FOR VALUE RECEIVED, the undersigned, Uwharrie Green School, Inc., a North Carolina nonprofit corporation (the “Borrower”), hereby promises to pay to the order of PUBLIC FINANCE AUTHORITY (together with its successors and assigns, the “Issuer”), the principal sum of [______DOLLARS] ($[PRINCIPALA]), together with interest thereon, in installments, on the dates and in the amounts as described in the Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), by and between the Borrower and the Issuer. The Borrower further agrees to pay as the premium hereon the amount of the premium due, if any, upon any prepayment hereof in accordance with the Loan Agreement.

This Note has been issued to evidence a loan made by the Issuer to the Borrower in accordance with the Loan Agreement. Pursuant to the Loan Agreement, the Issuer has loaned the Borrower the proceeds of the Issuer’s $[PRINCIPALA] aggregate principal amount of Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A (the “Series 2017A Bonds”). The Series 2017A Bonds are issued by the Issuer pursuant to and in accordance with an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Loan Agreement and the Indenture.

Interest on and principal of this Note shall be due on the first day of each month, commencing [January 1, 2018], or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017A Bonds shall be available for payment by the Trustee in the amounts and on dates set forth on Schedule I attached to this Note; provided, however, that the Borrower shall receive a credit against such payments of interest to the extent funds are on deposit in the Capitalized Interest Account or otherwise on deposit in the Bond Fund in addition to funds deposited pursuant to Section 5.01(a) of the Loan Agreement and available to pay interest on the Series 2017 Bonds on the next Interest Payment Date or principal on the Series 2017 Bonds on the next Principal Payment Date, as applicable.

Payments of both principal and interest are to be irrevocably assigned by the Issuer to the Trustee pursuant to the Indenture. Such assignment is to be made as security for the payment of the Bonds of the Issuer to the extent provided in the Indenture. All of the terms, conditions and provisions of the Indenture are, by this reference thereto, incorporated herein as part of this Note.

Payments hereon are to be made in immediately available funds at the designated trust office of the Trustee or at such other place as the Trustee may direct in writing, in accordance with the terms hereof and of the Indenture.

4848-1712-4171.154171.19 This Note is issued pursuant to the Loan Agreement and is entitled to the benefits and is subject to the conditions thereof. All the terms, conditions and provisions of the Loan Agreement are, by this reference thereto, incorporated herein as part of this Note, and shall control in the interpretation and enforcement of this Note.

In addition to the foregoing, the Borrower hereby promises to pay to the full extent required by the Indenture and the Loan Agreement: (a) the amount required to be deposited into the Rebate Fund in accordance with Section 3.20 of the Indenture; (b) all of the payments and additional charges set forth in Section 5.01 of the Loan Agreement; and (c) all costs and expenses of collection incurred in connection with any default by the Borrower hereunder and all other payments required to be made by the Borrower pursuant to the Indenture and the Loan Agreement including without limitation those payments referred to in Section 8.06 of the Loan Agreement.

In the event the Borrower fails to make any of the payments required in this Note, such payment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon (to the extent legally enforceable) until paid.

The principal of this Note is subject to optional and mandatory prepayment by the Borrower from time to time as set forth in the Loan Agreement.

The Borrower shall have the option to prepay the unpaid balance hereof in whole or in part only as provided in and in accordance with the provisions of the Loan Agreement and the Indenture.

In the event an installment is required under this Note on a date that is not a Business Day (as defined in the Indenture), such installment shall be due on the next succeeding Business Day.

The Borrower agrees that if, and as often as, this Note is placed in the hands of any attorney for collection or to defend or enforce any of the Issuer’s and/or the Trustee’s rights hereunder, the Borrower will pay to the Issuer and/or the Trustee its reasonable attorneys’ fees, together with all court costs and other expenses actually paid or incurred by the Issuer and/or the Trustee.

The Borrower and all other persons who may become liable for all or part of this obligation severally waive presentation for payment, demand, notice of nonpayment and protest, all pleas of division and discussion and consent to any extension of time (whether one or more) or renewal hereof. Any such extension or renewal may be made without notice and without discharging liability hereunder.

Upon default in any of the terms or conditions of this Note or upon the occurrence and continuation of an “Event of Default” under the Loan Agreement, at the option of the holder hereof, the entire indebtedness hereby evidenced shall become due and payable then and thereafter as the holder may elect, regardless of the date of maturity hereof, but subject to the

A- 2 4848-1712-4171.154171.19 provisions of the Loan Agreement. Prior to the exercise of such option, the Trustee shall give written notice to the Borrower.

During the existence of any such Event of Default, the Trustee may apply any payments received on any amount due hereunder or under the terms of the Loan Agreement or the Indenture pursuant to and in accordance with the Loan Agreement and the Indenture.

The obligations of the Borrower to make payments hereunder, under the Indenture and the Loan Agreement and to perform and observe all agreements on its part contained herein and therein shall be absolute and unconditional. Until this Note is terminated and paid in full and all amounts due or to become due under the Loan Agreement are paid in full and the Loan Agreement is terminated, the Borrower (a) will not suspend or discontinue any payments under the Loan Agreement or neglect to perform any of its duties required thereunder or hereunder; (b) will perform and observe all of its obligations set forth in the Loan Agreement, the Deed of Trust (defined in the Indenture) and this Note; and (c) except as provided in the Loan Agreement, will not terminate the Loan Agreement, the Deed of Trust or this Note for any cause.

No recourse shall be had for the payment of the principal of, premium, if any, or interest on the Bonds or for any claim based thereon or arising under the Loan Agreement, the Deed of Trust or this Note or upon any obligation, covenant or agreement herein against any past, present or future officer, director, trustee, member, employee or agent of the Borrower, whether directly or indirectly and all such liability of any such individual as such is hereby expressly waived and released as a condition of and in consideration for the execution hereof and the issuance of the Bonds.

The records of the Trustee shall be prima facie evidence of the amount owing on this Note.

This Note is to be construed according to the laws of the State of North Carolina without regard to any conflicts of law provisions contained therein.

No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions.

A- 3 4848-1712-4171.154171.19 IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date first above written.

Uwharrie Green School, Inc.

By Name Title

A- 4 4848-1712-4171.154171.19 PAY TO THE ORDER OF U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, WITHOUT RECOURSE AGAINST PUBLIC FINANCE AUTHORITY BUT WITH RECOURSE AGAINST UWHARRIE GREEN SCHOOL, INC.

PUBLIC FINANCE AUTHORITY

By Name: Title: Assistant Secretary

A- 5 4848-1712-4171.154171.19 SCHEDULE I

Series 2017A Payment Schedule

Interest on and principal of this Note shall be due on the first day of each month, commencing [January 1, 2018], or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017A Bonds shall be available for payment by the Trustee in the amounts and on dates set forth below.

Payment Date Principal Interest Total

$%$

Total $[PRINCIPALA] $[______] $[______]

A- 6 4848-1712-4171.154171.19 EXHIBIT B

FORM OF SERIES 2017B PROMISSORY NOTE

$[PRINCIPALB] [November __, 2017]

FOR VALUE RECEIVED, the undersigned, Uwharrie Green School, Inc., a North Carolina nonprofit corporation (the “Borrower”), hereby promises to pay to the order of PUBLIC FINANCE AUTHORITY (together with its successors and assigns, the “Issuer”), the principal sum of [______DOLLARS] ($[PRINCIPALB]), together with interest thereon, in installments, on the dates and in the amounts as described in the Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), by and between the Borrower and the Issuer. The Borrower further agrees to pay as the premium hereon the amount of the premium due, if any, upon any prepayment hereof in accordance with the Loan Agreement.

This Note has been issued to evidence a loan made by the Issuer to the Borrower in accordance with the Loan Agreement. Pursuant to the Loan Agreement, the Issuer has loaned the Borrower the proceeds of the Issuer’s $[PRINCIPALB] aggregate principal amount of Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B (the “Series 2017B Bonds”). The Series 2017B Bonds are issued by the Issuer pursuant to and in accordance with an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Loan Agreement and the Indenture.

Interest on and principal of this Note shall be due on the first day of each month, commencing [January 1, 2018] or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017B Bonds shall be available for payment by the Trustee in the amounts and on dates set forth on Schedule I attached to this Note; provided, however, that the Borrower shall receive a credit against such payments of interest to the extent funds are on deposit in the Capitalized Interest Account or otherwise on deposit in the Bond Fund in addition to funds deposited pursuant to Section 5.01(a) of the Loan Agreement and available to pay interest on the Series 2017 Bonds on the next Interest Payment Date or principal on the Series 2017 Bonds on the next Principal Payment Date, as applicable.

Payments of both principal and interest are to be irrevocably assigned by the Issuer to the Trustee pursuant to the Indenture. Such assignment is to be made as security for the payment of the Bonds of the Issuer to the extent provided in the Indenture. All of the terms, conditions and provisions of the Indenture are, by this reference thereto, incorporated herein as part of this Note.

Payments hereon are to be made in immediately available funds at the designated trust office of the Trustee or at such other place as the Trustee may direct in writing, in accordance with the terms hereof and of the Indenture.

4848-1712-4171.154171.19 This Note is issued pursuant to the Loan Agreement and is entitled to the benefits and is subject to the conditions thereof. All the terms, conditions and provisions of the Loan Agreement are, by this reference thereto, incorporated herein as part of this Note, and shall control in the interpretation and enforcement of this Note.

In addition to the foregoing, the Borrower hereby promises to pay to the full extent required by the Indenture and the Loan Agreement: (a) all of the payments and additional charges set forth in Section 5.01 of the Loan Agreement; and (b) all costs and expenses of collection incurred in connection with any default by the Borrower hereunder and all other payments required to be made by the Borrower pursuant to the Indenture and the Loan Agreement including without limitation those payments referred to in Section 8.06 of the Loan Agreement.

In the event the Borrower fails to make any of the payments required in this Note, such payment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon (to the extent legally enforceable) until paid.

The principal of this Note is subject to optional and mandatory prepayment by the Borrower from time to time as set forth in the Loan Agreement.

The Borrower shall have the option to prepay the unpaid balance hereof in whole or in part only as provided in and in accordance with the provisions of the Loan Agreement and the Indenture.

In the event an installment is required under this Note on a date that is not a Business Day (as defined in the Indenture), such installment shall be due on the next succeeding Business Day.

The Borrower agrees that if, and as often as, this Note is placed in the hands of any attorney for collection or to defend or enforce any of the Issuer’s and/or the Trustee’s rights hereunder, the Borrower will pay to the Issuer and/or the Trustee its reasonable attorneys’ fees, together with all court costs and other expenses actually paid or incurred by the Issuer and/or the Trustee.

The Borrower and all other persons who may become liable for all or part of this obligation severally waive presentation for payment, demand, notice of nonpayment and protest, all pleas of division and discussion and consent to any extension of time (whether one or more) or renewal hereof. Any such extension or renewal may be made without notice and without discharging liability hereunder.

Upon default in any of the terms or conditions of this Note or upon the occurrence and continuation of an “Event of Default” under the Loan Agreement, at the option of the holder hereof, the entire indebtedness hereby evidenced shall become due and payable then and thereafter as the holder may elect, regardless of the date of maturity hereof, but subject to the provisions of the Loan Agreement. Prior to the exercise of such option, the Trustee shall give written notice to the Borrower.

B- 2 4848-1712-4171.154171.19 During the existence of any such Event of Default, the Trustee may apply any payments received on any amount due hereunder or under the terms of the Loan Agreement or the Indenture pursuant to and in accordance with the Loan Agreement and the Indenture.

The obligations of the Borrower to make payments hereunder, under the Indenture and the Loan Agreement and to perform and observe all agreements on its part contained herein and therein shall be absolute and unconditional. Until this Note is terminated and paid in full and all amounts due or to become due under the Loan Agreement are paid in full and the Loan Agreement is terminated, the Borrower (a) will not suspend or discontinue any payments under the Loan Agreement or neglect to perform any of its duties required thereunder or hereunder; (b) will perform and observe all of its obligations set forth in the Loan Agreement, the Deed of Trust (defined in the Indenture) and this Note; and (c) except as provided in the Loan Agreement, will not terminate the Loan Agreement, the Deed of Trust or this Note for any cause.

No recourse shall be had for the payment of the principal of, premium, if any, or interest on the Bonds or for any claim based thereon or arising under the Loan Agreement, the Deed of Trust or this Note or upon any obligation, covenant or agreement herein against any past, present or future officer, director, trustee, member, employee or agent of the Borrower, whether directly or indirectly and all such liability of any such individual as such is hereby expressly waived and released as a condition of and in consideration for the execution hereof and the issuance of the Bonds.

The records of the Trustee shall be prima facie evidence of the amount owing on this Note.

This Note is to be construed according to the laws of the State of North Carolina without regard to any conflicts of law provisions contained therein.

No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions.

B- 3 4848-1712-4171.154171.19 IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date first above written.

Uwharrie Green School, Inc.

By Name Title

B- 4 4848-1712-4171.154171.19 PAY TO THE ORDER OF U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, WITHOUT RECOURSE AGAINST PUBLIC FINANCE AUTHORITY BUT WITH RECOURSE AGAINST UWHARRIE GREEN SCHOOL, INC.

PUBLIC FINANCE AUTHORITY

By Name: Title: Assistant Secretary

B- 5 4848-1712-4171.154171.19 SCHEDULE I

Series 2017B Payment Schedule

Interest on and principal of this Note shall be due on the first day of each month, commencing [January 1, 2018], or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017B Bonds shall be available for payment by the Trustee in the amounts and on dates set forth below.

Payment Date Principal Interest Total

$%$

Total $[PRINCIPALB] $[______] $[______]

B- 6 4848-1712-4171.154171.19 EXHIBIT C

FORM OF PROJECT FUND REQUISITION CERTIFICATE

Request No. Date:

PROJECT FUND REQUISITION CERTIFICATE

TO: U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE (THE "TRUSTEE"), UNDER THE INDENTURE OF TRUST, DATED AS OF NOVEMBER 1, 2017 (THE "INDENTURE"), BY AND BETWEEN THE PUBLIC FINANCE AUTHORITY (THE "ISSUER"), AND THE TRUSTEE, AND THE LOAN AGREEMENT, DATED AS OF NOVEMBER 1, 2017 (THE "LOAN AGREEMENT"), BY AND BETWEEN THE ISSUER AND UWHARRIE GREEN SCHOOL, INC. (THE "BORROWER").

The undersigned Authorized Representative of the Borrower (as defined in the Indenture) hereby requests that the following amounts be transferred to the following payees for the following Costs of the Project (as defined in the Loan Agreement) (the "Costs"), the aggregate amount of which is $[______] (the "Requested Amount"):

Payee Amount Description of Work

The undersigned Authorized Representative of the Borrower hereby states and certifies that: 1. these Costs are valid costs under the Act (as defined in the Indenture) and no part thereof has been included in any other Requisition Certificate previously filed with the Trustee under the provisions of the Indenture or reimbursed to the Borrower from Bond (as defined in the Indenture) proceeds;

2. no Event of Default currently exists (or with the passage of time, will exist) under the Borrower Documents (as defined in the Loan Agreement); [and]

3. the estimated completion date for the Construction Project (as defined in the Loan Agreement) is now ______; [paragraph 4 applies only to the final draw request: and 4. The Construction Project was completed on ______, and has been acquired, constructed/renovated and equipped by the Borrower in substantial compliance with the plans and specifications relating thereto.]

UWHARRIE GREEN SCHOOL, INC., a North Carolina nonprofit corporation, as Borrower

C- 2 4848-1712-4171.154171.19 By: Authorized Representative

[This section applies only to the initial draw request; paragraphs 1 and 2 apply only to the first draw request for a hard cost: The undersigned Construction Administrator hereby certifies that there have been delivered to the Construction Administrator in connection with the Construction Project:

1. if required by the construction contract for the Construction Project, payment and performance bonds issued by a responsible bonding company licensed to do business in the State of North Carolina and rated at least "A" by S&P or A.M. Best Company, Inc. in an amount not less than the guaranteed maximum price under the construction contract for the Construction Project;

2. a copy of the building permit and/or grading permit, as applicable, authorizing the construction and/or grading, as applicable, of the Construction Project; and

3. a lien agent has been established and all filings under the State of North Carolina lien law have been made.]

The undersigned Construction Administrator hereby [further] states and certifies that:

1. the estimated completion date for the Construction Project is now ______;

2. the cost of that portion of the improvements completed since the last disbursement is $______;

3. all construction completed prior to the date of this draw request has been performed and completed in accordance with the plans and specifications;

4. [for all draw requests after the initial draw request: all amounts previously drawn have been paid to the Payee named in the next preceding requisition and lien waivers or partial lien waivers and/or paid invoices evidencing such payment have been received;]

5. payment of all Costs requisitioned herein shall satisfy all outstanding claims for labor, materials and fixtures and any lien waivers or partial lien waivers and/or paid invoices evidencing such payment shall be obtained;

6. the undisbursed amount on deposit in the Project Fund created under the Indenture related to the Construction Project is sufficient to pay the cost of completing the construction of improvements in accordance with the plans and specifications for the Construction Project payment of any retainages then owed; [and]

C- 3 4848-1712-4171.154171.19 7. we have received the executed certificate entitled "Architect's Certificate for Payment" contained on the "Application and Certificate for Payment" (AIA Document G702) from the architect for the Construction Project;

8. [paragraphs 8 and 9 apply only to the final disbursement: the Construction Project was completed on ______, and has been acquired, constructed/renovated and equipped by the Borrower in substantial compliance with the plans and specifications relating thereto; and

9. a permanent certificate of occupancy has been issued and all so-called "punch-list" items have been completed.]

The Construction Administrator hereby authorizes the Trustee to make a disbursement from the Project Fund in the amount of the Requested Amount.

[______]

By: Name: Title:

C- 4 4848-1712-4171.154171.19 EXHIBIT D

FORM OF COSTS OF ISSUANCE FUND REQUISITION CERTIFICATE

Request No.

Date:

COSTS OF ISSUANCE FUND REQUISITION CERTIFICATE

TO: U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE (THE “TRUSTEE”), UNDER THE INDENTURE OF TRUST, DATED AS OF NOVEMBER 1, 2017, BY AND BETWEEN PUBLIC FINANCE AUTHORITY (THE “ISSUER”) AND THE TRUSTEE, AND THE LOAN AGREEMENT, DATED AS OF NOVEMBER 1, 2017 (THE “LOAN AGREEMENT”), BY AND BETWEEN THE ISSUER AND THE BORROWER (AS DEFINED THEREIN).

The undersigned Authorized Representative of the Borrower hereby requests that the following amounts be transferred to the following payees for the following costs of issuance (as described in Section 4.04 of the Loan Agreement) (the “Issuance Costs”):

Payee Amount Description Wiring Instructions

$

The undersigned Authorized Representative of the Borrower hereby states and certifies that:

(i) these Issuance Costs were properly incurred in connection with the issuance of the Series 2017 Bonds;

(ii) these Issuance Costs are valid costs under the Act;

(iii) no part of these Issuance Costs has been included in any other Requisition Certificate previously filed with the Trustee under the provisions of the Indenture or reimbursed to the Borrower from Series 2017 Bond Proceeds; and

(iv) no Event of Default currently exists (or with the passage of time, will exist) under the Borrower Documents.

4848-1712-4171.154171.19 Uwharrie Green School, Inc.,

By Name Title

D- 2 4848-1712-4171.154171.19 EXHIBIT E

FORM OF REPAIR AND REPLACEMENT FUND REQUISITION CERTIFICATE

Request No.

Date:

REPAIR AND REPLACEMENT FUND REQUISITION CERTIFICATE

TO: U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE (THE “TRUSTEE”), UNDER THE INDENTURE OF TRUST, DATED AS OF [______1, 2017], BY AND BETWEEN PUBLIC FINANCE AUTHORITY (THE “ISSUER”) AND THE TRUSTEE, AND THE LOAN AGREEMENT, DATED AS OF [______1, 2017] (THE “LOAN AGREEMENT”), BY AND BETWEEN THE ISSUER AND THE BORROWER (AS DEFINED THEREIN).

The undersigned Authorized Representative of the Borrower hereby requests that the following amounts be transferred to the following payees for the following Costs of the Project (as defined in the Loan Agreement) (the “Costs”)

Payee Amount Description Wiring Instructions

$

The undersigned Authorized Representative of the Borrower hereby states and certifies that:

(i) these Costs of the Project are valid costs under the Act and no part thereof has been included in any other Requisition Certificate previously filed with the Trustee under the provisions of the Indenture or reimbursed to the Borrower from Series 2017 Bond Proceeds;

(ii) no Event of Default currently exists (or with the passage of time, will exist) under the Borrower Documents; and

(iiii) these Costs of the Project were incurred according to Section 5.01(c) of the Loan Agreement.

4848-1712-4171.154171.19 Uwharrie Green School, Inc.,

By Name Title

4848-1712-4171.19 EXHIBIT F

FORM OF COMPLETION CERTIFICATE

$[PRINCIPALA] $[PRINCIPALB] PUBLIC FINANCE AUTHORITY PUBLIC FINANCE AUTHORITY Education Revenue Bonds Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) (Uwharrie Charter Academy Project) Series 2017A Series 2017B

Pursuant to Section 4.03 of the Loan Agreement dated as of November 1, 2017 (the “Loan Agreement”) by and between Public Finance Authority and Uwharrie Green School, Inc. (the “Borrower”), the undersigned Authorized Representative of the Borrower hereby represents without prejudice to any rights against those parties which then exist or subsequently may come into being, that:

(i) the Construction Project was substantially completed on ______, 201_ (the “Completion Date”); and

(ii) the New Facility has been acquired, constructed, improved and/or equipped by the Borrower in substantial compliance with the plans and specifications relating thereto.

Any moneys (including investment proceeds) on deposit in the Project Fund are hereby directed to [pay remaining Costs of the Project][deposited in the Bond Fund]. All capitalized terms, not otherwise defined herein, shall have such meanings as set forth in the Loan Agreement.

Uwharrie Green School, Inc.,

By Name Title

______, 201_ [to be mailed to the Trustee]

4848-1712-4171.19 EXHIBIT FG

FORM OF BORROWER CERTIFICATE

THIS BORROWER CERTIFICATE (this “Certificate”) is furnished to U.S. Bank National Association (the “Trustee”), as trustee under the Indenture of Trust dated as of November 1, 2017 (the “Indenture”), by and between the Public Finance Authority (the “Issuer”) and the Trustee, pursuant to the Loan Agreement dated as of November 1, 2017 (the “Agreement”), by and between the Issuer and Uwharrie Green School, Inc. (the “Borrower”). Unless otherwise defined herein, the terms used in this Certificate shall have the meanings assigned thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the ______of the Borrower;

2. I am familiar with the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower during the ______period ended ______, 20__;

3. [I am familiar with the provisions of this Loan Agreement and the Tax Certificate, and to the best my knowledge, based on such review and familiarity, the Borrower has fulfilled all of its obligations thereunder throughout the fiscal year][For annual reports only];

4. [The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes an Event of Default during or at the end of the period described in paragraph 2 or as of the date of this Certificate][Use if no default];

5. [The examinations described in paragraph 2 disclosed an event or events which constitute an Event of Default during or at the end of the period described in paragraph 2 or as of the date of this Certificate. On Schedule I hereto are listed, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event][Use upon a default].

The foregoing certifications delivered with this Certificate in support hereof are made this ____ day of ______, 20__.

FG- 1 4848-1712-4171.154171.19 Uwharrie Green School, Inc., a North Carolina nonprofit corporation

By Name Title

FG- 2 4848-1712-4171.154171.19 SCHEDULE I

FG- 3 4848-1712-4171.154171.19 EXHIBIT H

NOTICE OF SELECTION OF INDEPENDENT CONSULTANT TO THE HOLDER OF

$[PRINCIPALA] $[PRINCIPALB] Public Finance Authority Public Finance Authority Education Revenue Bonds Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) (Uwharrie Charter Academy Project) Series 2017A Series 2017B

NOTICE IS HEREBY GIVEN, pursuant to the Indenture of Trust, dated as of November 1, 2017 (the "Indenture"), and the Loan Agreement, dated as of November 1, 2017, in connection with the above referenced bonds (the "Bonds"), that an Independent Consultant has been selected in accordance with the Loan Agreement. Each Beneficial Owner is deemed to have consented to the selection of the below described Independent Consultant unless such Beneficial Owner provides a written objection ("Objection Notice") in substantially the form attached hereto as Appendix I to the Trustee within thirty (30) days of the date of this Notice.

Independent Consultant: [ ______] Reason for Independent Consultant: [______] Description of Independent Consultant: [______]

Dated: ______, 20__

U.S. Bank National Association

H- 1 4848-1712-4171.19 APPENDIX I

FORM OF NOTICE OF OBJECTION OF THE HOLDER OF

$[PRINCIPALA] $[PRINCIPALB] Public Finance Authority Public Finance Authority Education Revenue Bonds Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) (Uwharrie Charter Academy Project) Series 2017A Series 2017B

[DATE]

U.S. Bank National Association 214 N. Tryon Street, 27th Floor CN-NC-H27A Charlotte, North Carolina 28202 Attention: Global Corporate Trust Services

The undersigned ("Beneficial Owner") hereby certifies that s/he is the owner of an aggregate principal amount of [$______] of the above-captioned bonds (the "Bonds") and that (i) s/he has reviewed the Notice Of Selection Of Independent Consultant To The Holder Of [name of Bonds] (the "Independent Consultant Notice") dated as of [______, 20__] and posted to EMMA on [______, 20__] and (ii) s/he hereby objects to the selection of the Independent Consultant set forth in the Independent Consultant Notice pursuant to the Loan Agreement dated as of November 1, 2017 and the Indenture of Trust dated as of November 1, 2017.

The Beneficial Owner acknowledges that for this Notice of Objection to be valid, it must be received by the Trustee at the above address within thirty (30) days of the posting of the Independent Consultant Notice to EMMA.

Name of Beneficial Owner

By: Name: Title: Date:

Bonds Beneficially Owned: $

H- 2 4848-1712-4171.19 CUSIP:

H- 3 4848-1712-4171.19 This Preliminary Limited Offering Memorandum and the information contained herein is subject to completion, amendment and change without notice. Under no circumstances shall the Preliminary Limited Offering Memorandum constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2017 Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. that deliveryoftheSeries2017Bondswillbe madeonoraboutNovember__,2017,throughthefacilitiesofDTCinNewYork, againstpaymenttherefor. counsel totheIssuer.SpecializedPublicFinance Inc.,Dallas,Texas,isemployedasFinancialAdvisortotheBorrowerinconnection withtheissuanceofSeries2017Bonds.Itisexpected of certainmattersbyLex-isSchoolLawServices, Durham,NorthCarolina,ascounseltotheBorrower,andapprovalofcertainmatters byvonBriesen&Roper,s.c.,Milwaukee,Wisconsin,as as tovalidityandtaxexemptionbyKutakRock LLP,Atlanta,Georgia,BondCounsel,theapprovalofcertainmattersbyIceMillerColumbus, Ohio,ascounseltotheUnderwriter,approval essential tomakeaninformedinvestmentdecision. Offering Memorandum.See“BONDHOLDERS’RISKS”herein. I ACCREDITED INVESTOR WHO regardless and * Preliminary, subjecttochange Dated: November__,2017 Dated: DateofDelivery on theSeries2017Bondsunderlawsofanystate.Foramorecompletedescription,see“TAXMATTERS”herein. alternative minimumtax.InterestontheSeries2017BBondsisincluded in gross income forfederaltaxpurposes. Bond Counsel expresses no opinionastothetreatment of interest with certaincovenants,interestontheSeries2017ABondsisexcludablefromgrossincomeforfederaltaxpurposesandnotaspecificpreferenceitemof under Section501(c)(3)oftheCode,existinglaws,regulations,rulingsandjudicialdecisionsassumingaccuracycertainrepresentationscontinuingcompliance NEW ISSUE-BOOK-ENTRYONLY Borrower shallinvolveorbesecuredbythefaith,credit,taxingpowerofStateNorth Carolinaoritspoliticalsubdivisions. herein) istheresponsibilityofDTC and disbursement of suchpaymentstotheBeneficialOwners(asdefinedherein)isresponsibility the DTCParticipants,asmorefullydescribedherein. directly toDTCoritsnominee,Cede&Co.,solongasCo.istheregisteredownerofSeries2017Bonds.DisbursementsuchpaymentParticipants (asdefined beneficial interests will not receive certificates representing their interest in the Series 2017 Bonds. Payments of principal of, premium, if any, and interest on the Series 2017 Bonds will be made as registeredownerandnomineeforTheDepositoryTrustCompany,NewYork,York(“DTC”).PurchasesoftheSeries2017Bondswillbemadeinbook-entryformonly. Purchasersof 2017 Bondswillbeissuedasfullyregisteredbondsinthedenominationof$5,000oranyintegralmultiplesexcessthereof,andinitiallyname ofCede&Co., the Series2017BondswillbeaneventofdefaultunderGovernmentLoandocuments.See“SECURITYFORTHESERIESBONDS”herein. proceeds relatingtotheNewFacility.AneventofdefaultunderGovernmentLoandocumentswillbeanEventDefaultAgreementand with respectto to theGovernmentLoanFacilitiesandAthleticFacility.ThehasnorightsinoranyreservesescrowsrelatingSeries2017Bondsinsurance condemnation proceeds oftheSeries2017Bonds.Inaddition,TrusteehasnorightsinortoanyreservesescrowsrelatingGovernmentLoaninsurancecondemnation relating Facilities, the AthleticFacility,orAssets(asdefinedinParityAgreement)financedbyGovernmentLoanandhasnorightsany Assetsthatwerefinancedwiththe the Series2017BondsconsistsofNewFacility;nosuchrealpropertycollateralissharedbyorbetweenGovernmentandTrustee.TheTrusteehasrightsin Loan pledge oftheBorrower’srevenues.TherealpropertycollateralforGovernmentLoanconsistsFacilitiesandAthleticFacility collateralfor as aconditiontotheissuanceofSeries2017Bonds,beenteredintoconcurrentlywithdeliveryGovernmentandTrusteeshare,on paritybasis,a is securedbyapledgeoftheBorrower’srevenueandfirstmortgagelienonGovernmentLoanFacilitiesAthleticFacility(asdefinedherein).Pursuanttoparityagreement required, (formerly theFarmersHomeAdministration)(the“Government”)tofinanceacquisition,construction,improvement,andequippingofGovernmentLoanFacilities.The Loan interest oftheBorrowerinExistingFacility.See“THESERIES2017BONDS”and“SECURITYFORTHEherein. Notes, whichgrantsalienonandsecurityinterestintheNewFacility,subjecttocertain“PermittedEncumbrances”describedtherein.Thereisnomortgageorassignmentof theleasehold November 1,2017(the“DeedofTrust”),bytheBorrowertoInvestorsTitleInsuranceCompany,forbenefitTrustee,asbeneficiary,securerepaymentSeries 2017 Promissory the rights,titleandinterests of theIssuerin the NewFacilitygrantedbyBorrowerinDeedofTrust,AssignmentLeasesandRents, SecurityAgreementandFixtureFilingdatedasof Payments (asdefinedinAppendixD)tobemadebytheBorrowerunderLoanAgreement.TheSeries2017BondsaresecuredapledgeofTrustEstateherein), whichincludes PROJECT.” site on which the New Facility is to be located from an unrelated third party for a purchase price of $136,000 on March 4, 2016. See APPENDIX A – “THE BORROWER, THE SCHOOL AND THE are servedattheExistingFacilityandgrades9-125326USHighway220BusinessSouth,Asheboro,NorthCarolina(the“GovernmentLoanFacilities”).TheBorroweracquired 2017 Bonds;(d)financeand/orrefinanceworkingcapitalloansofortotheBorrower;and(e)payallaportioncostsissuanceSeriesBonds(collectively,“Project”). Facility” and,togetherwiththeExistingFacility,“Facilities”)ownedbyBorrower;(b)fundanyrequiredreservefundsforSeries2017Bonds;(c)capitalizedintereston 40 acretractoflandinRandolphCounty,NorthCarolina,attheSoutheastcornerwherePisgahCoveredBridgeRoad(StateRoute1114)andInterstateHighway73/74intersect(the“New educational facilitylocatedat301LewallenRoad,Asheboro,NorthCarolina27205(the“ExistingFacility”)leasedbytheBorrowerand(ii)antobeonapproximately between theIssuerandBorrower.ProceedsofSeries2017Bondswillbeusedto(a)financeand/orrefinanceacquisition,construction,improvementequipping(i)anexisting loaned toUwharrieGreenSchool,Inc.,aNorthCarolinanonprofitcorporation(the“Borrower”),pursuantLoanAgreement,datedasofNovember1,2017“LoanAgreement”),byand Trust, datedasofNovember1,2017(the“Indenture”),byandbetweentheIssuerU.S.BankNationalAssociation,trustee“Trustee”).TheproceedsSeriesBondswillbe Project) Series2017Bintheaggregateprincipalamountof$670,000*(the“SeriesBonds”and,togetherwith2017ABonds,2017Bonds”)pursuanttoanIndenture Charter AcademyProject)Series2017Aintheaggregateprincipalamountof$14,660,000*(the“SeriesBonds”)anditsTaxableEducationRevenueBonds(Uwharrie HEREIN AND APPENDIX H-1 – “FORM OF INVESTOR LETTER (INVESTOR)” AND APPENDIX H-2 – “FORM OF INVESTOR LETTER (ADVISOR)” ATTACHED HERETO. NO FURTHER EFFECT UPON THE OCCURRENCE OF CERTAIN EVENTS SET FORTH HEREIN. SEE “BONDHOLDERS’ RISKS – ; TRANSFER RESTRICTIONS” O and PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER. BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO THE ISSUER, ANY MEMBER (AS DEFINED HEREIN), ANY SPONSOR (AS DEFINED HEREIN), ANY ISSUER INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE substantially AS DEFINED HEREIN) ssuer wner

The Series2017Bondsareoffered,subjectto priorsale,when,asandifacceptedbyBB&TCapitalMarkets,adivisionofSecurities, LLC(the“Underwriter”)andsubjecttoanopinion This coverpagecontainscertaininformationforgeneralreferenceonly.Itisnotasummary ofthisissue.InvestorsmustreadtheentireLimitedOfferingMemorandumtoobtaininformation Investment inthe Series 2017 Bonds involves a significant degree of riskfor a variety of reasons as describedunder“BONDHOLDERS’ RISKS” herein and under other sections of this Limited In theopinionofKutakRockLLP,BondCounsel,inrelianceonLex-isSchoolLawServices,Durham,NorthCarolina,thatBorrowerisanorganizationdescribed No indebtednessofanykindincurredorcreatedbytheBorrowershallconstitutean oftheStateNorthCarolinaoritspoliticalsubdivisions,andnoindebtedness The Series2017Bondsaresubjecttomandatoryandoptionalredemptionasdescribedonpage(i)hereofunder“THESERIESBONDS-Redemption”herein. Interest ontheSeries2017BondswillaccruefromdateofdeliverythereofandbepayablesemiannuallyeachJune15December15,commencing2018*.The Series The Borrower usedthe proceeds of a loan (the “Government Loan”) from the United States of America, acting throughthe United States Department of Agriculture Rural Housing Service The Series2017BondswillbepayablefromthemoneysheldforpaymentthereofbyTrusteeunderIndenture,includingamountsinadebtservicereservefund and Loan The BorrowercurrentlyoperatesthecharterschoolknownasUwharrieCharterAcademy(the“School”)fromtwocampuses,oneofwhichitleasesandowns:grades5-8 The PublicFinanceAuthority(the“Issuer”),aunitofgovernmentandbodycorporatepolitictheStateWisconsin“State”),willissueitsEducationRevenueBonds(Uwharrie E THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF the any ach

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$14,660,000* Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

$______% Term Bonds Maturing June 15, 20__, Price: _____%, CUSIP NO: ______** $______% Term Bonds Maturing June 15, 20__, Price: _____%, CUSIP NO: ______** $______% Term Bonds Maturing June 15, 20__, Price: _____%, CUSIP NO: ______**

$670,000* Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

$670,000* _____% Term Bonds Maturing June 15, 20__, Price: _____%, CUSIP NO: ______**

** The above-referenced CUSIP numbers have been assigned by an independent company not affiliated with the Issuer, the Borrower, the Underwriter or Trustee, and are included solely for the convenience of the holders of the Series 2017 Bonds. None of the Issuer, the Borrower, the Underwriter or the Trustee is responsible for the selection or use of such CUSIP numbers, and no representation is made as to their correctness on the Series 2017 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to change after the issuance of the Series 2017 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities. This Limited Offering Memorandum contains certain statements that are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended. All statements other than statements of historical facts included in this Limited Offering Memorandum, including without limitation statements that use terminology such as "estimate," "expect," "intend," "anticipate," "believe," "may," "will," "continue" and similar expressions, are forward-looking statements. These forward-looking statements include, among other things, the discussions related to the Borrower's charter school operations and expectations regarding student enrollment, future operations, revenues, capital resources and expenditures for capital projects. Although the Borrower believes that the assumptions upon which the forward-looking statements contained in this Limited Offering Memorandum are based are reasonable, any of the assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect. All phases of the operations of the Borrower, including the Borrower's operation of the School involve risks and uncertainties, many of which are outside the control of the Borrower and any one of which, or a combination of which, could materially affect the results of the Borrower's operations and whether the forward-looking statements ultimately prove to be correct. Factors that could cause actual results to differ from those expected include, but are not limited to, general economic conditions such as inflation and interest rates, both nationally and in the area of the State of North Carolina ("North Carolina" or the "State of North Carolina") where the Facilities and the Government Loan Facilities (collectively, the "Campuses") are located; changes in general business regulation that could adversely impact the Borrower's operations; unanticipated delays in completion of the Project and/or unanticipated cost overruns; the willingness of North Carolina to fund charter school operations at present or increased levels; competitive conditions within the School's market, including the acceptance of the education services offered by the School; lower enrollments than projected;

* Preliminary, subject to change

(i)

unanticipated expenses; the capabilities of the Borrower's management; changes in government regulation of the education industry or in the North Carolina charter school statute; future claims for accidents or other torts at the Campuses and the extent of insurance coverage for such claims; and other risks discussed in this Limited Offering Memorandum. Important factors that could cause actual results to differ materially from the Borrower's expectations ("cautionary statements") are disclosed in this Limited Offering Memorandum including in conjunction with the forward-looking statements included in this Limited Offering Memorandum, under "BONDHOLDERS' RISKS" and in APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT" and APPENDIX B-1 –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o dealer, broker, salesperson or other person has been authorized by the Issuer, the Borrower or the Underwriter to give any information or to make any representation with respect to the Series 2017 Bonds other than those contained in this Limited Offering Memorandum, 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 Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2017 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 Issuer, the Borrower and other sources that are believed to be reliable. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Limited Offering Memorandum nor any sale hereunder shall create any implication that there has been no change in the financial condition or operations of the Issuer, the Borrower, the School, the Campuses, the Project, or other matters described herein since the date hereof. This Limited Offering Memorandum contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions or that they will be realized. The explanations of provisions of laws and descriptions of the documents in this Limited Offering Memorandum are summaries thereof and reference is made to the actual laws and documents for a complete understanding of the contents of such documents. Neither the Issuer (except as set forth herein) nor the Trustee assumes any responsibility for this Limited Offering Memorandum and has not reviewed or undertaken to verify any information contained herein. The order and placement of materials in this Limited Offering Memorandum, including the Appendices, are not deemed to be a determination of relevance, materiality or importance, and this Limited Offering Memorandum, including the Appendices, must be considered in its entirety. The offering of the Series 2017 Bonds is made only by means of this entire Limited Offering Memorandum.

(ii)

In making an investment decision, investors must rely on their own examinations of the Borrower, the School, the Campuses, the Project, and the terms of the offering, including the merits and risks involved. The Series 2017 Bonds have not been approved or disapproved by the Securities and Exchange Commission or any state , nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or completeness of this Limited Offering Memorandum. Any representation to the contrary may be a criminal offense. The Borrower has covenanted to provide continuing disclosure as described in this Limited Offering Memorandum in APPENDIX F — "FORM OF CONTINUING DISCLOSURE AGREEMENT," pursuant to Rule 15c2-12 of the Securities and Exchange Commission. The Issuer has not, and will not, undertake any responsibilities to provide continuing disclosure with respect to the Series 2017 Bonds and will have no liability to bondholders with respect to any such disclosures. The Underwriter has provided the following sentence for inclusion in this Limited Offering Memorandum: The Underwriter has reviewed the information in this Limited Offering Memorandum in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

(iii)

TABLE OF CONTENTS

SUMMARY STATEMENT ...... i INTRODUCTORY STATEMENT ...... 1 THE ISSUER ...... 6 THE BORROWER, THE SCHOOL AND THE PROJECT ...... 9 SOURCES AND USES OF FUNDS ...... 11 DEBT SERVICE SCHEDULE ...... 12 THE SERIES 2017 BONDS ...... 13 SECURITY FOR THE SERIES 2017 BONDS ...... 16 BONDHOLDERS' RISKS ...... 21 ENFORCEABILITY OF OBLIGATIONS ...... 36 LEGAL MATTERS ...... 36 TAX MATTERS ...... 37 ; LIMITED OFFERING ...... 42 CONTINUING DISCLOSURE ...... 43 ABSENCE OF MATERIAL LITIGATION ...... 44 FINANCIAL INFORMATION ...... 44 CERTAIN RELATIONSHIPS ...... 45 FINANCIAL ADVISOR ...... 45 MISCELLANEOUS ...... 45

APPENDIX A – THE BORROWER, THE SCHOOL AND THE PROJECT A-1 APPENDIX B-1 – FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2014, 2015 AND 2016 B-1-1 APPENDIX B-2 – FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022 B-2-1 APPENDIX C – CHARTER SCHOOLS IN NORTH CAROLINA C-1 APPENDIX D – SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS D-1 APPENDIX E – FORM OF BOND COUNSEL OPINION E-1 APPENDIX F – FORM OF CONTINUING DISCLOSURE AGREEMENT F-1 APPENDIX G – BOOK-ENTRY ONLY SYSTEM G-1 APPENDIX H-1 – FORM OF INVESTOR LETTER (INVESTOR) H-1-1 APPENDIX H-2 – FORM OF INVESTOR LETTER (ADVISOR) H-2-1

(iv)

SUMMARY STATEMENT The following introductory material is only a brief description of, and is qualified by, the more complete information contained throughout this Limited Offering Memorandum. A full review should be made of the entire Limited Offering Memorandum and the documents summarized or described herein. The offering of the Series 2017 Bonds to potential investors is made only by means of the entire Limited Offering Memorandum. No person is authorized to detach this Summary Statement from this Limited Offering Memorandum or otherwise use it without the entire Limited Offering Memorandum. For the definitions of certain words and terms used in this Summary Statement, see APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS." Purpose of the Issue ...... The Public Finance Authority (the "Issuer") is issuing its $14,660,000* Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A (the "Series 2017A Bonds") and its $670,000* Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B (the "Series 2017B Bonds" and, together with the Series 2017A Bonds, the "Series 2017 Bonds") pursuant to an Indenture of Trust, dated as of November 1, 2017 (the "Indenture"), by and between the Issuer and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds from the sale of the Series 2017 Bonds will be loaned to Uwharrie Green School, Inc. (the "Borrower") pursuant to the terms of a Loan Agreement, dated as of November 1, 2017 (the "Loan Agreement"), by and between the Issuer and the Borrower, and will be used to (a) finance and/or refinance the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 (the "Existing Facility") leased by the Borrower and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina, at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect (the "New Facility" and, together with the Existing Facility, the "Facilities") owned by the Borrower; (b) fund any required reserve funds for the Series 2017 Bonds; (c) fund capitalized interest on the Series 2017 Bonds; (d) finance and/or refinance working capital loans of or to the Borrower; and (e) pay all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the "Project"). See "SOURCES AND USES OF FUNDS" and "THE BORROWER, THE SCHOOL AND THE PROJECT."

* Preliminary, subject to change

i

The Issuer ...... The Issuer is a unit of government and a body corporate and politic separate and distinct from, and independent of, the State of Wisconsin (the "State") and the Members (as defined herein). The Issuer was created in 2010 pursuant to Section 66.0304 of the State of Wisconsin State Statutes by local for the public purpose of providing local governments a means to efficiently and reliably finance projects that benefit local governments, nonprofit and other eligible private borrowers in the State of Wisconsin and throughout the country. See "THE ISSUER." The Borrower, the School and the Project ...... The Borrower is a North Carolina nonprofit corporation that incorporated on December 20, 2010, and has received a determination letter from the Internal Revenue Service to the effect that it is an organization exempt from federal income taxation pursuant to Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as a result of the application of Section 501(c)(3) of the Code. The Borrower operates a North Carolina public charter school known as Uwharrie Charter Academy (the "School") pursuant to the North Carolina Charter School Act, codified at N.C. Gen. Stat. § 115C-218, et seq., as amended (the "Charter Schools Act") and the charter contract by and between the Borrower and the North Carolina State Board of Education ("SBE"), effective July 1, 2013 (the "Charter"). The Charter will expire according to its terms on June 30, 2023, if not renewed prior to such date. The Charter permits the Borrower to operate the School for students in grades 5-12 and to expand annually within certain parameters set forth in the Charter and the Charter Schools Act. The Borrower commenced operations of the School for the 2013-14 school year, during which the School served approximately 181 students in grades 9-10. For the 2016-17 school year, the School served approximately 820 students in grades 6-12. As of the 20th day Average Daily Membership count for the 2017-18 school year, the School served approximately 1,019 students in grades 5-12. Management of the Borrower ("Management") expects the School to expand to serve approximately 1,600 students in grades K-12 for the 2018-19 school year, with stabilized enrollment of approximately 1,680 students in grades K-12 being achieved for the 2021-22 school year.

ii

Such enrollment and grade level expansion is subject to risks described in this Limited Offering Memorandum, including those related to approval of the Charter Modification (as defined herein) by SBE and completion of the Construction Project (as defined herein). While Management expects to obtain approval of the Charter Modification, Management believes that the School could expand its enrollment and grade levels within the limitations of the Charter while still generating revenues sufficient to support the Construction Project and create cash reserves. The Borrower currently operates the School from two campuses, one of which it leases and one of which it owns: grades 5-8 are served at an existing educational facility located at the Existing Facility and grades 9-12 are served at 5326 US Highway 220 Business South, Asheboro, North Carolina (the "Government Loan Facilities"). In addition, the Borrower owns the approximately 30 acre site on which athletic facilities for the School are located at 843 Ludlum Lane, Asheboro, North Carolina 27205 (the "Athletic Facility"). The Borrower acquired the New Facility from an unrelated third party for a purchase price of $136,000 on March 4, 2016. The Facilities, the Government Loan Facilities, and the Athletic Facility, collectively, are sometimes referred to herein as the "School Facilities." The Borrower will use the proceeds of the Series 2017 Bonds for the Project, a portion of which includes the construction of a single-story, 55,265 square foot building with 36 classrooms (the "New Facility Construction Project") and an approximately 19,260 square foot gymnasium (the "Gymnasium Construction Project" and, together with the New Facility Construction Project, the "Construction Project"). The New Facility Construction Project is expected to cost approximately $9,709,892.35 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017. The Gymnasium Construction Project is expected to cost approximately $2,745,436.40 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017.

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See "BONDHOLDERS' RISKS – Risks of Real Estate Investment – Completion of the Construction Project." Upon completion of the Construction Project, Management expects the School to serve students in grades K-4 from the Existing Facility, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Government Loan Facilities. See "THE BORROWER, THE SCHOOL AND THE PROJECT," "BONDHOLDERS' RISKS – Risks of Real Estate Investment," and "THE PROJECT." Limited Obligations ...... THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER, ANY SPONSOR (AS DEFINED HEREIN), ANY ISSUER INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR

iv

INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER. See "SECURITY FOR THE SERIES 2017 BONDS." No Indebtedness of the State of North Carolina ... No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions. Registration and Denominations ...... The Series 2017 Bonds will be issued by the Issuer as fully registered bonds without coupons in denominations of $5,000 or any integral multiple of $5,000 in excess thereof (the "Authorized Denominations"); provided, however, in the case of any accredited investor who is not a Qualified Institutional Buyer (each as defined herein), the Series 2017 Bonds to be transferred must be in a minimum principal amount of $25,000. Purchase and Transfer Restrictions; Investor Letter Requirement ...... EACH INITIAL BENEFICIAL OWNER OF THE SERIES 2017 BONDS SHALL BE EITHER (I) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED); OR (II) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED) THAT, IN THE CASE OF AN ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, HAS PROVIDED AN "INVESTOR LETTER" SUBSTANTIALLY IN THE FORM OF APPENDIX H-1 OR APPENDIX H-2 HERETO, AS APPLICABLE, OR SUCH OTHER FORM AS MAY BE APPROVED BY THE ISSUER, TO THE ISSUER AND THE TRUSTEE; THEREAFTER, NEITHER THE SERIES 2017 BONDS NOR ANY BENEFICIAL OWNERSHIP INTEREST THEREIN MAY BE TRANSFERRED BY THE BENEFICIAL OWNER THEREOF EXCEPT IN AUTHORIZED DENOMINATIONS TO A BENEFICIAL OWNER THAT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR. ANY ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY ONLY PURCHASE AND HOLD A MINIMUM $25,000 IN PRINCIPAL AMOUNT OF SERIES 2017 BONDS REGARDLESS OF ANY

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LOWER MINIMUM DENOMINATION PROVIDED HEREIN. IN ADDITION, ANY INITIAL PURCHASER THAT IS A QUALIFIED INSTITUTIONAL BUYER AND ANY SUBSEQUENT TRANSFEREE OF THE SERIES 2017 BONDS WILL BE DEEMED TO REPRESENT IN CONNECTION WITH ITS ACQUISITION OF THE SERIES 2017 BONDS THAT: (I) IT IS ABLE TO EVALUATE AND UNDERSTANDS THE RISKS AND THE MERITS OF INVESTING IN THE SERIES 2017 BONDS (AND IS ABLE TO BEAR THE RISKS OF SUCH INVESTMENT FOR AN INDEFINITE TIME), (II) IT IS CAPABLE OF AND HAS MADE ITS OWN INVESTIGATION OF THE BORROWER, THE FACILITIES AND THE PROJECT IN CONNECTION WITH ITS DECISION TO PURCHASE THE SERIES 2017 BONDS, (III) IT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR AND (IV) IT WILL ONLY TRANSFER THE SERIES 2017 BONDS IN AUTHORIZED DENOMINATIONS TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED INVESTOR WHO PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED INVESTOR IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OR EXEMPTIONS THEREFROM. THE ISSUER MAY REMOVE THE FOREGOING RESTRICTIONS WITHOUT NOTICE TO OR CONSENT OF ANY BENEFICIAL OWNER. AT SUCH TIME AS THE BORROWER SHALL PROVIDE TO THE ISSUER AND THE TRUSTEE WRITTEN EVIDENCE TO THE EFFECT THAT EACH RATING AGENCY THEN RATING THE SERIES 2017 BONDS HAVE RATED THE SERIES 2017 BONDS "BBB-" OR EQUIVALENT, OR HIGHER (WITHOUT REGARD FOR GRADATION WITHIN A RATING CATEGORY AND WITHOUT REGARD FOR CREDIT ENHANCEMENT UNLESS SUCH CREDIT ENHANCEMENT EXTENDS THROUGH THE FINAL MATURITY DATE OF THE SERIES 2017 BONDS), THESE RESTRICTIONS SHALL BE OF NO FURTHER FORCE OR EFFECT AND THE AUTHORIZED DENOMINATIONS OF THE SERIES 2017 BONDS SHALL BE CHANGED (IF vi

NECESSARY) TO DENOMINATIONS OF $5,000 OR ANY INTEGRAL MULTIPLE OF $5,000 IN EXCESS THEREOF, IN EACH CASE, NOTWITHSTANDING WHETHER AT A FUTURE TIME THE SERIES 2017 BONDS ARE NO LONGER RATED IN SUCH RATING CATEGORY. SEE "BONDHOLDERS' RISKS – SECONDARY MARKET; TRANSFER RESTRICTIONS" HEREIN AND APPENDIX H-1 – "FORM OF INVESTOR LETTER (INVESTOR)" AND APPENDIX H-2 – "FORM OF INVESTOR LETTER (ADVISOR)" ATTACHED HERETO.

Book-Entry-Only Registration...... The Series 2017 Bonds will be issued in fully registered form and will be registered initially in the name of "Cede & Co." as nominee for The Depository Trust Company, New York, New York ("DTC"), a securities depository. Beneficial ownership interests may be acquired through participants in the DTC system (the "Participants"). Such beneficial ownership interests will be recorded in the records of the Participants. Persons for which Participants acquire interests in the Series 2017 Bonds (the "Beneficial Owners") will not receive certificates evidencing their interests in the Series 2017 Bonds so long as DTC or a successor securities depository acts as the securities depository with respect to the Series 2017 Bonds. So long as DTC or its nominee is the registered owner of the Series 2017 Bonds, payments of principal, premium, if any, and interest on the Series 2017 Bonds, as well as notices and other communications made by or on behalf of the Issuer pursuant to the Indenture, will be made to DTC or its nominee only. Disbursement of such payments, notices and other communications by DTC to Participants, and by Participants to the Beneficial Owners, is the responsibility of DTC and the Participants pursuant to rules and procedures established by such entities. See APPENDIX G – "BOOK-ENTRY-ONLY SYSTEM" for a discussion of the operating procedures of the DTC system with respect to payments, registration, transfers, notices, and other matters. Payment Provisions ...... The Series 2017 Bonds will be issued in the aggregate principal amounts and will bear interest at the rates set forth on page (i) hereof. Interest will be payable semiannually on June 15 and December 15 (each an "Interest Payment Date") of each year,

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commencing June 15, 2018*. Interest will be calculated on the basis of a 360-day year with twelve months of thirty days. Redemption ...... The Series 2017 Bonds are subject to optional, extraordinary and mandatory sinking fund redemption. The terms and provisions regarding such redemption are set forth in "THE SERIES 2017 BONDS – Redemption." Security ...... General. The Series 2017 Bonds are special, limited obligations of the Issuer as described under "Limited Obligations" herein. The Series 2017 Bonds will be payable from the moneys held for the payment thereof by the Trustee under the Indenture, including amounts held in a debt service reserve fund and Loan Payments (as defined in Appendix D) to be made by the Borrower under the Loan Agreement. Under the Loan Agreement and the promissory notes given pursuant thereto, the Borrower is obligated unconditionally to pay amounts sufficient to provide for the payment of the principal of, premium, if any, and interest on the Series 2017 Bonds, plus certain other payments, and the Series 2017 Bonds are payable solely from funds payable by the Borrower under the terms and conditions of the Loan Agreement. No representation or assurance can be made that the Borrower will continue to generate sufficient Pledged Revenues to meet its obligations under the Loan Agreement. Trust Estate. The Series 2017 Bonds are secured by a pledge of (a) the rights and interests of the Issuer under the Account Control Agreement and the Loan Agreement, as amended from time to time, by and between the Issuer and the Borrower, except the Issuer's Unassigned Rights (as defined herein); (b) the rights, title and interests, if any, of the Issuer in the New Facility, subject to Permitted Encumbrances (as defined herein), except the Issuer's Unassigned Rights; (c) the Revenues (as defined herein) and all rights and interests of the Issuer in the Pledged Revenues (as defined herein), subject to Permitted Encumbrances, except the Issuer's Unassigned Rights; (d) the rights and interests of the Issuer under the Series 2017 Promissory Notes (as defined herein); (e) all Funds created in the Indenture (other than the Cost of Issuance Fund and the Rebate Fund), except for (i)

* Preliminary, subject to change

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moneys or obligations deposited with or paid to the Trustee for the payment or redemption of Bonds that are no longer deemed to be Outstanding hereunder, (ii) all trust accounts containing all insurance and condemnation proceeds, and (iii) the Issuer's Unassigned Rights, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture; and (f) any and all other interests in real or personal property of every name and nature from time to time after the date of issuance of the Series 2017 Bonds by delivery or by writing of any kind specifically mortgaged, pledged or hypothecated, as and for additional security hereunder by the Issuer or by anyone on its behalf or with its written consent in favor of the Trustee (including the Deed of Trust and proceeds of related title insurance), which is hereby authorized to receive any and all such property at any and all times and to hold and apply the same, subject to the terms hereof. Deed of Trust. The Borrower has executed a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of November 1, 2017 (the "Deed of Trust"), by the Borrower to Investors Title Insurance Company, for the benefit of the Trustee, as beneficiary, to secure the repayment of the Series 2017 Promissory Notes, which grants a lien on and security interest in the New Facility, subject to certain "Permitted Encumbrances" described in the Deed of Trust. There is no mortgage on or assignment of the leasehold interest of the Borrower in the Existing Facility. Government Loan and Parity Agreement. The Borrower used the proceeds of a $8,827,000 loan from the United States of America, acting through the United States Department of Agriculture Rural Housing Service (formerly the Farmers Home Administration) (the "Government") evidenced by a promissory note dated as of October 19, 2016 (the "Government Loan"), to finance the acquisition, construction, improvement, and equipping of the Government Loan Facilities. The Government Loan bears interest at 2.375% per annum and is payable in equal annual installments of principal and interest totaling $344,341 due on each October 19 up to its final maturity on October 19, 2056, on which a final payment of $339,845.15 is due. The Government Loan is secured by a pledge of the Borrower's ix

revenue and a first mortgage lien on the Government Loan Facilities and the Athletic Facility. Pursuant to a parity agreement required, as a condition to the issuance of the Series 2017 Bonds, to be entered into concurrently with the delivery of the Series 2017 Bonds (the "Parity Agreement"), by and between the Government, the Trustee, and the Borrower, the Government and the Trustee share, on a parity basis, a pledge of the Borrower's revenues. The real property collateral for the Government Loan consists of the Government Loan Facilities and the Athletic Facility and the real property collateral for the Series 2017 Bonds consists of the New Facility; no such real property collateral is shared by or between the Government and the Trustee. In the event of a default under either the Government Loan or the Loan documents, the Parity Agreement provides that the Government and the Trustee will agree to cooperate with each other with respect to the , collection and sale of the Pledged Revenues. The Parity Agreement also describes how any sales proceeds and/or amounts collected will be shared or allocated by or between the Government and the Trustee in the event of a default and/or acceleration. The Trustee has no rights in the Government Loan Facilities, the Athletic Facility, or the Assets (as defined in the Parity Agreement) financed by the Government Loan and the Government has no rights in any Assets that were financed with the proceeds of the Series 2017 Bonds. The Parity Agreement provides that the Government, the Trustee, and the Borrower also agree that any Assets separately financed by the Government Loan and the Loan shall not be subject to the Parity Agreement and any rights and remedies of the Government and the Trustee with respect to the applicable Assets shall be unaffected by the parity arrangement for the Pledged Revenues set forth therein. In addition, the Trustee has no rights in or to any reserves or relating to the Government Loan or to any insurance or condemnation proceeds relating to the Government Loan Facilities and the Athletic Facility. The Government has no rights in or to any reserves or escrows relating to the Series 2017 Bonds or to any insurance or condemnation proceeds relating to the New Facility.

x

An event of default under the Government Loan documents will be an Event of Default under the Loan Agreement and an Event of Default with respect to the Series 2017 Bonds will be an event of default under the Government Loan documents. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – Parity Agreement" and "SECURITY FOR THE SERIES 2017 BONDS." The USDA Documents (as defined in APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture") are available from the Borrower upon request. Debt Service Coverage Ratio Covenant ...... The Borrower is required to deliver annually, upon completion of the Borrower's annual audit, to the Trustee a certificate stating the Debt Service Coverage Ratio for the Fiscal Year then ended and evidencing the calculation thereof, commencing with the Fiscal Year ending June 30, 2018. The Debt Service Coverage Ratio as of the testing date is required to be at or above 1.10 to 1.00 for each Fiscal Year, commencing with the Fiscal Year ending June 30, 2018. See "SECURITY FOR THE SERIES 2017 BONDS-Payments Under the Loan Agreement; Assignment of Loan Agreement – Financial Covenants – Debt Service Coverage Ratio" for a description of the Debt Service Coverage Ratio requirement. Liquidity Covenant ...... Under the Loan Agreement, the Borrower covenants and agrees that, commencing with the Fiscal Year ending June 30, 2018, it will maintain as of the relevant testing date at least twenty-five (25) Days Cash on Hand; commencing with the Fiscal Year ending June 30, 2019, it will maintain as of the relevant testing date at least thirty-five (35) Days Cash on Hand; and commencing with the Fiscal Year ending June 30, 2020 and for each Fiscal Year thereafter, it will maintain as of the relevant testing date at least forty (40) Days Cash on Hand. See "SECURITY FOR THE SERIES 2017 BONDS – Payments Under the Loan Agreement; Assignment of Loan Agreement – Financial Covenants – Liquidity Covenant" herein. Bondholders' Risks ...... Purchase of the Series 2017 Bonds involves a significant degree of risk and the Series 2017 Bonds are a speculative investment. Prospective purchasers are advised to read this entire Limited Offering Memorandum and the Appendices attached hereto in

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their entirety, particularly the section "BONDHOLDERS' RISKS" herein, for a discussion of certain risk factors, which should be considered in connection with an investment in the Series 2017 Bonds. Continuing Disclosure ...... The Borrower has agreed for the benefit of the Registered Owners and Beneficial Owners of the Series 2017 Bonds to provide certain financial information, including certain quarterly and annual financial information, other operating data, and notices of material events. See "CONTINUING DISCLOSURE," APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement," and APPENDIX F – "FORM OF CONTINUING DISCLOSURE AGREEMENT." Tax Status ...... In the opinion of Kutak Rock LLP, Bond Counsel, in reliance on the opinion of Lex-is School Law Services, Durham, North Carolina, that the Borrower is an organization described under Section 501(c)(3) of the Code, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2017A Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Interest on the Series 2017B Bonds is included in gross income for federal income tax purposes. Bond Counsel expresses no opinion as to the treatment of interest on the Series 2017 Bonds under the laws of any state. For a more complete description, see "TAX MATTERS" herein. Delivery Information ...... The Series 2017 Bonds are offered when, as, and if issued by the Issuer and accepted by BB&T Capital Markets, a division of BB&T Securities, LLC, as underwriter for the Series 2017 Bonds (the "Underwriter"), subject to the prior sale and the approving legal opinion of Bond Counsel and certain other conditions. It is expected that the Series 2017 Bonds will be available for delivery through the facilities of DTC on or about November __, 2017. Financial Information ...... The audited financial statements of the Borrower for the Fiscal Years ended June 30, 2014, 2015, and 2016, included in this Limited Offering Memorandum in APPENDIX B-1 – "FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2014, 2015 AND 2016" have been audited by Maxton McDowell, Certified Public Accountant (the

xii

"Auditor"), to the extent and for the periods indicated in its reports thereon. Such financial statements have been included in reliance upon the reports of the Auditor. The Borrower is not aware of any facts that would make such financial statements misleading. These financial statements were prepared using the standards applicable to governmental entities. The audited financial statements included in Appendix B-1 are an integral part hereof and should be read in their entirety. Certain unaudited financial information of the Borrower for the Fiscal Year ended June 30, 2017, prepared by Management, is included in APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT" herein. Such unaudited financial information has been prepared by Management and has not been examined or reviewed by the Auditor or any other independent certified public accountant. See "BONDHOLDERS' RISKS." The Borrower has operated the School since 2013. The Borrower's projections of revenues and expenses for the five Fiscal Years ending June 30, 2018 through 2022 contained in APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" (the "Projections") were prepared by Management in consultation with Specialized Public Finance Inc. The Projections constitute "forward-looking" statements of the type described in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See "FINANCIAL INFORMATION" and "BONDHOLDERS' RISKS." In order to expand enrollment and grade levels as described herein in connection with the construction of the New Facility, the Borrower will need to obtain approval of a modification of the Charter (the "Charter Modification"). See " – Application for Charter Modification" herein. While Management expects that the Charter Modification will be approved, there can be no assurance that the Charter Modification will be approved. The Projections include one scenario in which the Charter Modification is approved and another scenario, as a sensitivity analysis, in which the Charter Modification is not approved. Refer to APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 xiii

THROUGH 2022" to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results. Underwriter, Counsel, and Trustee ...... BB&T Capital Markets, a division of BB&T Securities, LLC, will serve as the Underwriter. All legal matters incident to the authorization, issuance, sale and delivery of the Series 2017 Bonds by the Authority are subject to the approving opinion of Kutak Rock LLP, Bond Counsel, whose approving opinion will be delivered with the Series 2017 Bonds, and the proposed form of which is set forth in APPENDIX E – "FORM OF BOND COUNSEL OPINION." Such bond counsel opinion delivered may vary from that form if necessary to reflect facts and law on the date of delivery. Certain legal matters will be passed on for the Borrower by its counsel, Lex-is School Law Services, Durham, North Carolina, for the Issuer by its counsel von Briesen & Roper, s.c., Milwaukee, Wisconsin, and for the Underwriter by its counsel Ice Miller LLP, Columbus, Ohio. U.S. Bank National Association, Charlotte, North Carolina will serve as the Trustee for the Series 2017 Bonds. Certain fees that are payable with respect to the Series 2017 Bonds to various counsel, the Underwriter and the Trustee are contingent upon the issuance and delivery of the Series 2017 Bonds. Additional Information ...... The summaries of or references to constitutional provisions, statutes, resolutions, agreements, contracts, financial statements, reports, publications and other documents or compilations of data or information set forth in this Limited Offering Memorandum do not purport to be complete statements of the provisions of the items summarized or referred to and are qualified in their entirety by the actual provisions of such items, copies of which are either publicly available or available upon request and the payment of a reasonable copying, mailing and handling charge from BB&T Capital Markets, a division of BB&T Securities, LLC, 333 Clay Street, Suite 3800, Houston, Texas 77002, Attention: Paula Permenter, Managing Director.

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LIMITED OFFERING MEMORANDUM $14,660,000* $670,000* PUBLIC FINANCE AUTHORITY PUBLIC FINANCE AUTHORITY EDUCATION REVENUE BONDS TAXABLE EDUCATION REVENUE BONDS (UWHARRIE CHARTER ACADEMY PROJECT) (UWHARRIE CHARTER ACADEMY PROJECT) SERIES 2017A SERIES 2017B

INTRODUCTORY STATEMENT The following is a brief introduction as to certain matters discussed elsewhere in this Limited Offering Memorandum and is qualified in its entirety as to such matters by such discussion and the text of the actual documents described or referenced. Any capitalized term not required to be capitalized is used with the meaning assigned in Appendix D or in the Indenture of Trust dated as of November 1, 2017 (the "Indenture"), between Public Finance Authority (the "Issuer") and U.S. Bank National Association, Charlotte, North Carolina (the "Trustee"), the Loan Agreement dated as of November 1, 2017 (the "Loan Agreement"), by and between the Issuer and Uwharrie Green School, Inc., a North Carolina nonprofit corporation (the "Borrower"), or other document with respect to which the term is used. Definitions contained in the text hereof are for ease of reference only and are qualified in their entirety by the definitions in Appendix D or the documents with respect to which such terms relate. The Appendices hereto are an integral part of this Limited Offering Memorandum and each potential investor should review the Appendices in their entirety. General This Limited Offering Memorandum provides information regarding the Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A in the aggregate principal amount of $14,660,000* (the "Series 2017A Bonds") and its Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B in the aggregate principal amount of $670,000* (the "Series 2017B Bonds" and, together with the Series 2017A Bonds, the "Series 2017 Bonds") to be issued by the Issuer pursuant to the Indenture. Pursuant to the Loan Agreement, proceeds of the Series 2017 Bonds will fund a loan (the "Loan") to the Borrower. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement." The Borrower has requested that the Issuer issue the Series 2017 Bonds and loan the proceeds thereof to the Borrower. The Borrower intends to use the proceeds of the Series 2017 Bonds (a) finance and/or refinance the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 (the "Existing Facility") leased by the Borrower and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina, at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect (the "New Facility" and, together with the Existing Facility, the "Facilities") owned by the Borrower; (b) fund any required reserve funds for the Series 2017 Bonds; (c) fund capitalized interest on the Series 2017 Bonds; (d) finance and/or refinance working capital loans of or to the Borrower; and (e) pay all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the "Project"). See "SOURCES AND USES OF FUNDS" and "THE BORROWER, THE SCHOOL AND THE PROJECT" and APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT." The Borrower currently operates the charter school known as Uwharrie Charter Academy (the "School") from two campuses, one of which it leases and one of which it owns: grades 5-8 are served at the Existing Facility and grades 9-12 are served at 5326 US Highway 220 Business South, Asheboro, North Carolina (the "Government Loan Facilities"). The Borrower acquired the site on which the New

* Preliminary, subject to change

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Facility is to be located from an unrelated third party for a purchase price of $136,000 on March 4, 2016. See APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT." Loan Agreement and Deed of Trust The Borrower's obligations to make Loan Payments will be evidenced by the Series 2017A Promissory Note and the Series 2017B Promissory Note (together, the "Series 2017 Promissory Notes"), executed by the Borrower in favor of the Issuer, which will be assigned without recourse against the Issuer but with recourse against the Borrower to the Trustee. Proceeds of the Series 2017 Bonds in the Project Fund will be disbursed pursuant to the Loan Agreement and the Indenture. Pursuant to the Loan Agreement, the Borrower will make certain representations and covenants related to maintaining the exclusion from gross income for federal income tax purposes of interest on the Series 2017A Bonds. Pursuant to the Indenture, the Issuer has pledged to the Trustee, for the benefit of the holders of the Series 2017 Bonds, all of its interest in the Loan Agreement and the Series 2017 Promissory Notes (other than the Issuer's Unassigned Rights (as defined in the Indenture), to secure payment of the principal of, premium, if any, and interest on the Series 2017 Bonds. The Borrower has executed a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of November 1, 2017 (the "Deed of Trust"), by the Borrower to Investors Title Insurance Company, for the benefit of the Trustee, as beneficiary, to secure the repayment of the Series 2017 Promissory Notes, which grants a lien on and security interest in the New Facility, subject to certain "Permitted Encumbrances" described in the Deed of Trust. There is no mortgage on or assignment of the leasehold interest of the Borrower in the Existing Facility. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement" and " – The Deed of Trust." Account Control Agreement In order to grant the Trustee a security interest in and "control" of the Borrower's depository account related to the School and the Facilities (the "Deposit Account"), the Borrower has entered into an Account Control Agreement dated November __, 2017 (the "Account Control Agreement"), by and among the Borrower, ("Depository Bank"), and the Trustee. The Deposit Account shall be under the control of Trustee; provided, that unless and until Depository Bank receives Trustee's written notice that the Borrower's access to the funds in the Deposit Account is terminated, Depository Bank shall honor the Borrower's instructions, notices and directions with respect to the transfer or withdrawal of funds from the Deposit Account, including paying or transferring the funds to the Borrower or any other person or entity. Upon receipt of a written notice from Trustee instructing Depository Bank to terminate the Borrower's access to funds in the Deposit Account, Depository Bank shall transfer all funds (subject to Depository Bank's funds availability policy) in the Deposit Account to a designated account in accordance with Trustee's written instructions and subject to the terms of the Parity Agreement, and the Trustee is authorized to withdraw funds from such designated account as necessary to make payments under the Loan Agreement, the Indenture, and the Parity Agreement. Debt Service Reserve Fund On the date of issuance of the Series 2017 Bonds, an amount equal to $______of Series 2017 Bond proceeds, which amount shall be equal to the Debt Service Reserve Fund Requirement for the Series 2017 Bonds, will be deposited in the account related to the Series 2017 Bonds in the Debt Service Reserve Fund created under the Indenture. Earnings on amounts in the Debt Service Reserve Fund will be deposited therein, so long as the balance therein is less than the Debt Service Reserve Fund Requirement. Amounts in the Debt Service Reserve Fund will secure only the Series 2017 Bonds and may be used by the Trustee to pay principal of, premium, if any, and interest on the Series 2017 Bonds in the event monies in the Bond Fund are insufficient for such purpose. There is no guarantee that the Debt Service Reserve Fund will be available to pay debt service on the Series 2017 Bonds. See "SECURITY FOR THE SERIES 2017 BONDS – Debt Service Reserve Fund" and APPENDIX D –

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"SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture – Debt Service Reserve Fund." Special Covenants of the Borrower The Loan Agreement places certain restrictions on the incurrence of additional indebtedness by the Borrower. The Borrower has agreed in the Loan Agreement to provide certain periodic financial reports. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement – Limitations on Incurrence of Additional Indebtedness" and "Audits; Financial Statements; Reports." Government Loan and Parity Agreement The Borrower used the proceeds of a $8,827,000 loan from the United States of America, acting through the United States Department of Agriculture Rural Housing Service (formerly the Farmers Home Administration) (the "Government") evidenced by a promissory note dated as of October 19, 2016 (the "Government Loan"), to finance the acquisition, construction, improvement, and equipping of the Government Loan Facilities. The Government Loan bears interest at 2.375% per annum and is payable in equal annual installments of principal and interest totaling $344,341 due on each October 19 up to its final maturity on October 19, 2056, on which a final payment of $339,845.15 is due. The Government Loan is secured by a pledge of the Borrower's revenue and a first mortgage lien on the Government Loan Facilities and the Athletic Facility (as defined herein). Pursuant to a parity agreement required, as a condition to the issuance of the Series 2017 Bonds, to be entered into concurrently with the delivery of the Series 2017 Bonds (the "Parity Agreement"), by and between the Government, the Trustee, and the Borrower, the Government and the Trustee share, on a parity basis, a pledge of the Borrower's revenues. The real property collateral for the Government Loan consists of the Government Loan Facilities and the Athletic Facility and the real property collateral for the Series 2017 Bonds consists of the New Facility; no such real property collateral is shared by or between the Government and the Trustee. In the event of a default under either the Government Loan or the Loan documents, the Parity Agreement provides that the Government and the Trustee will agree to cooperate with each other with respect to the repossession, collection and sale of the Pledged Revenues. The Parity Agreement also describes how any sales proceeds and/or amounts collected will be shared or allocated by or between the Government and the Trustee in the event of a default and/or acceleration. The Trustee has no rights in the Government Loan Facilities, the Athletic Facility, or the Assets (as defined in the Parity Agreement) financed by the Government Loan and the Government has no rights in any Assets that were financed with the proceeds of the Series 2017 Bonds. The Parity Agreement provides that the Government, the Trustee, and the Borrower also agree that any Assets separately financed by the Government Loan and the Loan shall not be subject to the Parity Agreement and any rights and remedies of the Government and the Trustee with respect to the applicable Assets shall be unaffected by the parity arrangement for the Pledged Revenues set forth therein. In addition, the Trustee has no rights in or to any reserves or escrows relating to the Government Loan or to any insurance or condemnation proceeds relating to the Government Loan Facilities and the Athletic Facility. The Government has no rights in or to any reserves or escrows relating to the Series 2017 Bonds or to any insurance or condemnation proceeds relating to the New Facility. An event of default under the Government Loan documents will be an Event of Default under the Loan Agreement and an Event of Default with respect to the Series 2017 Bonds will be an event of default under the Government Loan documents. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – Parity Agreement" and "SECURITY FOR THE SERIES 2017 BONDS."

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The USDA Documents (as defined in APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture") are available from the Borrower upon request. Certain Terms and Conditions of the Government Loan In addition to the foregoing, pursuant to a loan resolution security agreement the Borrower executed in connection with the Government Loan, the Borrower may not borrow money from any source or enter into any contract or agreement or incur any other liabilities in connection with making extensions or improvements to the Government Loan Facilities, exclusive of normal maintenance, without the prior written consent of the Government and may not modify or amend its organizational documents, including its articles of incorporation or bylaws, without the written consent of the Government Pursuant to such loan resolution security agreement, the Borrower is required to fund a reserve account for the Government Loan Facilities by setting aside $3,055.62 per month until $366,674.40 is held in such reserve account. Thereafter, the Borrower may withdraw funds with Government approval to repair or replace damage to the Government Loan Facilities caused by catastrophe or to extend or improve the Government Loan Facilities. After any withdrawal, the Borrower is required to set aside $3,055.62 per month until $366,674.40 is held in such reserve account. Further, in connection with the Government Loan, the Borrower executed a security agreement which requires, among other things, that the Borrower execute and deliver to the Government at any time, upon demand, such additional security instruments on such real and personal property as the Government may require and that, if at any time it shall appear to the Government that the Borrower may be able to obtain a loan from responsible or private credit sources at reasonable rates and terms for loans for similar purpose and periods of time, the Borrower will, upon the Government’s request, apply for and accept such loan in sufficient amount to pay the Government Loan. Forward-Looking Statements This Limited Offering Memorandum contains certain statements that are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended. All statements other than statements of historical facts included in this Limited Offering Memorandum, including without limitation statements that use terminology such as "estimate," "expect," "intend," "anticipate," "believe," "may," "will," "continue" and similar expressions, are forward-looking statements. These forward-looking statements include, among other things, the discussions related to the Borrower's charter school operations and expectations regarding student enrollment, future operations, revenues, capital resources and expenditures for capital projects. Although the Borrower believes that the assumptions upon which the forward-looking statements contained in this Limited Offering Memorandum are based are reasonable, any of the assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect, and such inaccuracy could be material. All phases of the operations of the Borrower, including the Borrower's operation of the School, involve risks and uncertainties, many of which are outside the control of the Borrower and any one of which, or a combination of which, could materially affect the results of the Borrower's operations and whether the forward-looking statements ultimately prove to be correct. Factors that could cause actual results to differ from those expected include, but are not limited to, general economic conditions such as inflation and interest rates, both nationally and in the area of the State of North Carolina ("North Carolina" or the "State of North Carolina") where the Campuses are located; changes in general business regulation that could adversely impact the Borrower's operations; unanticipated delays in completion of the Project and/or unanticipated cost overruns; the willingness of North Carolina to fund charter school operations at present or increased levels; competitive conditions within the School's market, including the acceptance of the education services offered by the School; lower enrollments than projected; unanticipated expenses; the capabilities of the Borrower's management; changes in government regulation of the education industry or in the North Carolina charter school statute; future claims for accidents or other torts at the School's sites and

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the extent of insurance coverage for such claims; and other risks discussed in this Limited Offering Memorandum. Important factors that could cause actual results to differ materially from the Borrower's expectations ("cautionary statements") are disclosed in this Limited Offering Memorandum including in conjunction with the forward-looking statements included in this Limited Offering Memorandum, under "BONDHOLDERS' RISKS" and in APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT" and APPENDIX B-1 –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ondholders' Risks Certain risks associated with an investment in the Series 2017 Bonds are discussed under "BONDHOLDERS' RISKS." Limited Offering; Transfer Restrictions EACH INITIAL BENEFICIAL OWNER OF THE SERIES 2017 BONDS SHALL BE EITHER (I) A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED); OR (II) AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED) THAT, IN THE CASE OF AN ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, HAS PROVIDED AN "INVESTOR LETTER" SUBSTANTIALLY IN THE FORM OF APPENDIX H-1 OR APPENDIX H-2 HERETO, AS APPLICABLE, OR SUCH OTHER FORM AS MAY BE APPROVED BY THE ISSUER, TO THE ISSUER AND THE TRUSTEE; THEREAFTER, NEITHER THE SERIES 2017 BONDS NOR ANY BENEFICIAL OWNERSHIP INTEREST THEREIN MAY BE TRANSFERRED BY THE BENEFICIAL OWNER THEREOF EXCEPT IN AUTHORIZED DENOMINATIONS TO A BENEFICIAL OWNER THAT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR. ANY ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY ONLY PURCHASE AND HOLD A MINIMUM $25,000 IN PRINCIPAL AMOUNT OF SERIES 2017 BONDS REGARDLESS OF ANY LOWER MINIMUM DENOMINATION PROVIDED HEREIN. IN ADDITION, ANY INITIAL PURCHASER THAT IS A QUALIFIED INSTITUTIONAL BUYER AND ANY SUBSEQUENT TRANSFEREE OF THE SERIES 2017 BONDS WILL BE DEEMED TO REPRESENT IN CONNECTION WITH ITS ACQUISITION OF THE SERIES 2017 BONDS THAT: (I) IT IS ABLE TO EVALUATE AND UNDERSTANDS THE RISKS AND THE MERITS OF INVESTING IN THE SERIES 2017 BONDS (AND IS ABLE TO BEAR THE RISKS OF SUCH INVESTMENT FOR AN INDEFINITE TIME), (II) IT IS CAPABLE OF AND HAS MADE ITS OWN INVESTIGATION OF THE BORROWER, THE FACILITIES AND THE PROJECT IN CONNECTION WITH ITS DECISION TO PURCHASE THE SERIES 2017 BONDS, (III) IT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR AND (IV) IT WILL ONLY TRANSFER THE SERIES 2017 BONDS IN AUTHORIZED DENOMINATIONS TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED INVESTOR WHO PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED

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INVESTOR IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OR EXEMPTIONS THEREFROM. THE ISSUER MAY REMOVE THE FOREGOING RESTRICTIONS WITHOUT NOTICE TO OR CONSENT OF ANY BENEFICIAL OWNER. AT SUCH TIME AS THE BORROWER SHALL PROVIDE TO THE ISSUER AND THE TRUSTEE WRITTEN EVIDENCE TO THE EFFECT THAT EACH RATING AGENCY THEN RATING THE SERIES 2017 BONDS HAVE RATED THE SERIES 2017 BONDS "BBB-" OR EQUIVALENT, OR HIGHER (WITHOUT REGARD FOR GRADATION WITHIN A RATING CATEGORY AND WITHOUT REGARD FOR CREDIT ENHANCEMENT UNLESS SUCH CREDIT ENHANCEMENT EXTENDS THROUGH THE FINAL MATURITY DATE OF THE SERIES 2017 BONDS), THESE RESTRICTIONS SHALL BE OF NO FURTHER FORCE OR EFFECT AND THE AUTHORIZED DENOMINATIONS OF THE SERIES 2017 BONDS SHALL BE CHANGED (IF NECESSARY) TO DENOMINATIONS OF $5,000 OR ANY INTEGRAL MULTIPLE OF $5,000 IN EXCESS THEREOF, IN EACH CASE, NOTWITHSTANDING WHETHER AT A FUTURE TIME THE SERIES 2017 BONDS ARE NO LONGER RATED IN SUCH RATING CATEGORY. SEE "BONDHOLDERS' RISKS – SECONDARY MARKET; TRANSFER RESTRICTIONS" HEREIN AND APPENDIX H-1 – "FORM OF INVESTOR LETTER (INVESTOR)" AND APPENDIX H-2 – "FORM OF INVESTOR LETTER (ADVISOR)" ATTACHED HERETO. Duties of the Trustee The duties of the Trustee are limited as set forth in the Indenture. In particular, the Trustee shall not be required to take notice or be deemed to have notice of any default under the Indenture except failure by the Borrower to cause to be made any of the payments to the Trustee required to be made thereunder, under the Loan Agreement or under any Deed of Trust, or the failure by the Borrower to file with it any of the periodic documentation required, or to deposit with it the insurance report required under the Indenture, under the Loan Agreement, or under any Deed of Trust. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture." Miscellaneous This Limited Offering Memorandum (including the Appendices hereto) contains descriptions of, among other matters, the Indenture, the Loan Agreement, the Deed of Trust, the Issuer, the Borrower, the Campuses, the Project and the Series 2017 Bonds. Such descriptions and information do not purport to be comprehensive or definitive. All references to documents described herein are qualified in their entirety by reference to such documents, copies of which are available for inspection at the designated corporate trust office of the Trustee. THE ISSUER Formation and Governance In early 2010, both houses of the Wisconsin Legislature passed 2009 Wisconsin Act 205 (the "Act"), which was signed into law by the Governor of the State of Wisconsin (the "State") on April 21, 2010. The Act added Section 66.0304 to the Wisconsin Statutes (the "Statute") authorizing two or more political subdivisions to create a commission to issue bonds under the Statute. Before an agreement for the creation of such a commission could take effect, the Act required that such agreement be submitted to the Attorney General of the State who shall determine whether the agreement is in proper form and compatible with the laws of the State. The Issuer was formed upon execution of a Joint Exercise of Powers Agreement Relating to the Public Finance Authority dated as of June 30, 2010, as amended by an Amended and Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority dated September 28, 2010 (as so amended and as may be further amended from time to time, the "Agreement") among Adams County, Wisconsin, Bayfield County, Wisconsin, Marathon County, Wisconsin, Waupaca County, Wisconsin and the City of Lancaster, Wisconsin (each a "Member" and, collectively, the "Members," which term shall include any political subdivision designated in the future as a "Member" of the Issuer pursuant to the Agreement). The Agreement was approved by the Attorney

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General on September 30, 2010. The Statute also provides that only one commission may be formed thereunder. Pursuant to the Statute, the Issuer is a unit of government and a body corporate and politic separate and distinct from, and independent of, the State and the Members. The Issuer was established by local governments, primarily for local governments, for the public purpose of providing local governments a means to efficiently, and reliably finance projects that benefit local governments, and nonprofit organizations and other eligible private borrowers in the State and throughout the country. Powers Under the Statute, the Issuer has all of the powers necessary or convenient to any of the purposes of the Act, including the power to issue bonds, notes or other obligations or refunding obligations to finance or refinance a project, make loans to, lease property from or to enter into agreements with a participant or other entity in connection with financing a project. The proceeds of bonds issued by the Issuer may be used for a project in the State or any other state or territory of the United States, or outside the United States if a participating borrower is incorporated and maintains its principal place of business in, the United States or its territories. The Statute defines "project" as any capital improvement, purchase of receivables, property, assets, , bonds or other revenue streams or related assets, working capital program, or liability or other insurance program, located within or outside of the State. Local and TEFRA Approvals Pursuant to Subsection (11)(a) of the Statute and Section 4 of the Agreement, financing for any "capital improvement projects" located outside the State requires approval from the governing body or highest-ranking executive or administrator of at least one political subdivision within whose boundaries the capital improvement project is located (the "Issuer Local Approval Requirement"). The issuance of the Series 2017 Bonds was approved (i) by the Board of Supervisors of Marathon County, Wisconsin, a Member of the Issuer duly authorized to give such approval on behalf of the Issuer, on August 7, 2017, and (ii) based upon information provided by the Borrower, by the Board of Commissioners of Randolph County, North Carolina, on August 7, 2017, in each case after public notice and hearing. Such approvals were given in satisfaction of and in accordance with the requirements of Section 147(f) of the Code and the Issuer Local Approval Requirement, as applicable. Governing Body The Agreement provides for a Board of Directors of the Issuer (the "Board") consisting of seven directors (each a "Director" and collectively, the "Directors"), a majority of whom are required to be public officials or current or former employees of a political subdivision located in the State. The Directors serve staggered three-year terms. The Directors are selected by majority vote of the Board based upon nominations from the organization that nominated the predecessor Director. Four Directors are nominated by the Wisconsin Counties Association, and one Director is nominated from each of the National League of Cities, the National Association of Counties and the League of Wisconsin Municipalities (collectively, the "Sponsors" and each a "Sponsor"). Each of the nominating organizations may also nominate an alternate Director for each Director it nominates to serve on the Board in the place of and in the absence or disability of a Director. Directors and alternate Directors may be removed and replaced at any time by the Board upon recommendation of the Sponsor that nominated such Director. The Directors as of the date of this Limited Offering Memorandum are identified in the table below. There is currently one vacant Board seat (representing the nominee of the National League of Cities) and one Alternate Director (nominated by the Wisconsin Counties Association).

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Name Title Position William Kacvinsky Chair Former Board Chair – Bayfield County, Wisconsin Jerome Wehrle Vice Chair Former Mayor – City of Lancaster, Wisconsin Heidi Dombrowski Treasurer Finance Director – Waupaca County, Wisconsin Allen Buechel Secretary County Executive – Fond du Lac County, Wisconsin Del Twidt Director Former Board Chair – Buffalo County, Wisconsin Michael Gillespie Director Former Chair – Madison County, Alabama Board of Commissioners John West1 Alternate Director Board Chair – Adams County, Wisconsin

1 Mr. West is an alternate for Directors Buechel, Dombrowski, and Twidt.

The Issuer has no employees and contracts with a full-service program management firm, GPM Municipal Advisors, LLC, to manage the day-to-day operations of the Issuer including but not limited to staff and administrative support and ongoing compliance matters. All of the services provided by GPM Municipal Advisors, LLC, are subject to review and approval by the Board. Resolution; Approval On August 9, 2017, the Board adopted the Resolution approving the issuance of the Series 2017 Bonds. Limited Obligations THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER (AS DEFINED HEREIN), ANY SPONSOR, ANY ISSUER INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER. Other Obligations The Issuer has issued, sold and delivered in the past, and expects to issue, sell and deliver in the future, obligations other than the Series 2017 Bonds, which other obligations are and will be secured by instruments separate and apart from the Indenture and the Series 2017 Bonds. The holders of such obligations of the Issuer will have no claim on the security for the Series 2017 Bonds, and the owners of the Series 2017 Bonds will have no claim on the security for such other obligations issued by the Issuer.

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Limited Involvement of the Issuer The Issuer has not participated in the preparation of or reviewed any appraisal for the Facilities or any feasibility study or other of the Facilities and has not undertaken to review or approve expenditures for the Facilities, to supervise the construction of the Facilities, or to review the financial statements of the Borrower. The Issuer has not participated in the preparation of or reviewed this Limited Offering Memorandum and is not responsible for any information contained herein, except for the information in this section and under the caption "ABSENCE OF MATERIAL LITIGATION – The Issuer" as such information applies to the Issuer. THE BORROWER, THE SCHOOL AND THE PROJECT The Borrower The Borrower is a North Carolina nonprofit corporation that incorporated on December 20, 2010, and has received a determination letter from the Internal Revenue Service to the effect that it is an organization exempt from federal income taxation pursuant to Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as a result of the application of Section 501(c)(3) of the Code. The Borrower receives its funding from a combination of payments from the State of North Carolina, via disbursements from the state to Randolph County and other counties in which the School's students reside (on a per pupil basis) under several State of North Carolina federal programs and limited local revenues. See APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT." The School The Borrower operates the School pursuant to the North Carolina Charter School Act, codified at N.C. Gen. Stat. § 115C-218, et seq., as amended (the "Charter Schools Act") and the charter contract by and between the Borrower and the North Carolina State Board of Education ("SBE"), effective July 1, 2013 (the "Charter"). The Charter will expire according to its terms on June 30, 2023, if not renewed prior to such date. The Charter permits the Borrower to operate the School for students in grades 5-12 and to expand annually within certain parameters set forth in the Charter and the Charter Schools Act. The Borrower commenced operations of the School for the 2013-14 school year, during which the School served approximately 181 students in grades 9-10. For the 2016-17 school year, the School served approximately 820 students in grades 6-12. As of the 20th day Average Daily Membership ("ADM") count for the 2017-18 school year, the School served approximately 1,019 students in grades 5- 12. Management of the Borrower ("Management") expects the School to expand to serve approximately 1,600 students in grades K-12 for the 2018-19 school year, with stabilized enrollment of approximately 1,680 students in grades K-12 being achieved for the 2021-22 school year. Such enrollment and grade level expansion is subject to risks described in this Limited Offering Memorandum, including those related to approval of the Charter Modification (as defined herein) by SBE and completion of the Construction Project (as defined herein). While Management expects to obtain approval of the Charter Modification, Management believes that the School could expand its enrollment and grade levels within the limitations of the Charter while still generating revenues sufficient to support the Construction Project and create cash reserves. The Borrower currently operates the School from two campuses, one of which it leases and one of which it owns: grades 5-8 are served at the Existing Facility and grades 9-12 are served at the Government Loan Facilities. In addition, the Borrower owns the approximately 30 acre site on which athletics facilities for the School are located at 843 Ludlum Lane, Asheboro, North Carolina 27205 (the "Athletic Facility").

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The Borrower acquired the New Facility from an unrelated third party for a purchase price of $136,000 on March 4, 2016. The Facilities, the Government Loan Facilities, and the Athletic Facility, collectively, are sometimes referred to herein as the "School Facilities." The Borrower will use the proceeds of the Series 2017 Bonds for the Project, a portion of which includes the construction of a single-story, 55,265 square foot building with 36 classrooms (the "New Facility Construction Project") and an approximately 19,260 square foot gymnasium (the "Gymnasium Construction Project" and, together with the New Facility Construction Project, the "Construction Project"). The New Facility Construction Project is expected to cost approximately $9,709,892.35 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017. The Gymnasium Construction Project is expected to cost approximately $2,745,436.40 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017. See "BONDHOLDERS' RISKS – Risks of Real Estate Investment – Completion of the Construction Project." Upon completion of the Construction Project, Management expects the School to serve students in grades K-4 from the Existing Facility, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Government Loan Facilities. See "THE BORROWER, THE SCHOOL AND THE PROJECT," "BONDHOLDERS' RISKS – Risks of Real Estate Investment," and "THE PROJECT." The Project The Borrower will use the proceeds of the Series 2017 Bonds for the Project, a portion of which includes the New Facility Construction Project and the Gymnasium Construction Project. The expected costs and completion dates for the New Facility Construction Project and the Gymnasium Construction and Management's expectations for operation of the School after completion of the Construction Project are set forth above under the heading "THE BORROWER, THE SCHOOL AND THE PROJECT – The School." See "BONDHOLDERS' RISKS – Risks of Real Estate Investment – Completion of the Construction Project." See "THE BORROWER, THE SCHOOL AND THE PROJECT," "BONDHOLDERS' RISKS – Risks of Real Estate Investment," and "THE PROJECT."

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SOURCES AND USES OF FUNDS*

The following table sets forth the expected sources and uses of the proceeds of the Series 2017 Bonds:

Sources of Funds: Series 2017A Series 2017B Total Series 2017 Bond Proceeds $14,660,000 $670,000 $15,330,000 Original Issue [Premium (Discount)] Total

Uses of Funds: Construction Project Refinancing of Taxable Indebtedness Debt Service Reserve Fund Bond Fund (capitalized interest) Costs of Issuance1 Total

1 Includes legal fees and expenses, Underwriter's discount, printing, Trustee's fees and Issuer's fees.

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* Preliminary, subject to change

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DEBT SERVICE SCHEDULE* The following table sets forth, for each year ended June 15 the amounts required to be paid with respect to the Government Loan and the Series 2017 Bonds, assuming no prepayment other than for mandatory sinking fund redemptions. Principal of the Series 2017 Bonds will be paid on June 15 of each year, commencing June 15, 20__, and interest will be paid semi-annually on June 15 and December 15, commencing June 15, 2018*. On the date of issuance of the Series 2017 Bonds, the Borrower will have certain outstanding debt other than the Series 2017 Bonds and the Government Loan, consisting of capital leases.†

Series 2017A Bonds Series 2017B Bonds

Year Ending Government Loan Total Debt Principal Interest Principal Interest June 15 Total Service 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 Total $14,660,000.00 $670,000.00

* Preliminary, subject to change † See Note 2 and Note 5 to the audited financial statements of the Borrower for the Fiscal Year ended June 30, 2016, included in this Limited Offering Memorandum in APPENDIX B-1 – "FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2014, 2015 AND 2016."

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THE SERIES 2017 BONDS Interest; Maturity; Payment The Series 2017 Bonds will be issued in the aggregate principal amounts and will bear interest at the rates set forth on page (i) hereof. Interest will be payable semiannually on June 15 and December 15 (each an "Interest Payment Date") of each year, commencing June 15, 2018*. Interest will be calculated on the basis of a 360-day year with twelve months of thirty days. The Series 2017 Bonds will be issued in the form of fully registered bonds without interest coupons in the denomination of $5,000 or any integral multiple of $5,000 in excess thereof; provided, however, in the case of any accredited investor who is not a qualified institutional buyer, the Series 2017 Bonds to be transferred must be in a minimum principal amount of $25,000. The principal of, interest on, and premium, if any, on the Series 2017 Bonds shall be payable when due by wire of the Trustee to The Depository Trust Company, New York, New York ("DTC"), which will in turn remit such principal, interest and premium, if any, to Participants (as defined below), which Participants will in turn remit such principal, interest and premium, if any, to the Beneficial Owners (as defined below) of the Series 2017 Bonds as described herein. See Appendix G – "BOOK- ENTRY ONLY SYSTEM" below. In the event the Series 2017 Bonds are not registered in the name of Cede & Co., as nominee of DTC, or another eligible depository as described below, the principal of and premium, if any, on each Series 2017 Bond will be payable only at the designated corporate trust office of the Trustee, as described in the Indenture. Payment of interest on the Series 2017 Bonds will be paid by check or draft mailed on each Interest Payment Date by the Trustee to the registered owners of record appearing on the registration books kept by the Trustee as of the applicable Regular Record Date preceding each Interest Payment Date, or upon written request, as provided in the Indenture, of any registered owner of at least $500,000 in aggregate principal amount of Bonds Outstanding, by wire transfer on each Interest Payment Date to the account designated by such registered owner to the Trustee in writing at least ten Business Days prior to the Regular Record Date for any interest payment. The registered owner of any Series 2017 Bond will be the person or persons in whose name or names a Series 2017 Bond is registered on the registration books kept for that purpose by the Trustee in accordance with the terms of the Indenture. Redemption Provisions Optional Redemption. The Series 2017A Bonds are subject to redemption at the option of the Issuer (which option shall be exercised upon the written direction of the Borrower to the Trustee from prepayment of the Series 2017A Promissory Note made by the Borrower pursuant to the Loan Agreement) in whole or in part in Authorized Denominations on any date commencing June 15, 20__, at a redemption price equal to the principal amount to be redeemed, together with accrued interest to the date fixed for redemption, without premium. In case of optional redemption of the Series 2017A Bonds, the Borrower shall, at least 45 days prior to the redemption date (unless a shorter notice shall be satisfactory to the Trustee), deliver a written request to the Issuer and the Trustee notifying the Issuer and the Trustee of such redemption date and of the principal amount of the Series 2017A Bonds to be redeemed and shall, prior to the redemption date, deliver to the Trustee funds sufficient to pay the redemption price of all Series 2017A Bonds subject to redemption. The Series 2017B Bonds are not subject to optional redemption prior to their maturity.

* Preliminary, subject to change

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Mandatory Sinking Fund Redemption. The Series 2017A Bonds maturing June 15, 20__, are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal (June 15) Amount (June 15) Amount

______†Maturity Date

The Series 2017A Bonds maturing June 15, 20__, are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal (June 15) Amount (June 15) Amount

______†Maturity Date

The Series 2017A Bonds maturing June 15, 20__, are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal (June 15) Amount (June 15) Amount

______†Maturity Date

The Series 2017B Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

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Date Principal Date Principal (June 15) Amount (June 15) Amount

______†Maturity Date

Extraordinary Mandatory Prepayment. The Loans and the Series 2017 Promissory Notes securing the Loans are subject to mandatory prepayment as a whole or in part at the principal amount thereof plus accrued interest thereon to the date of prepayment as provided in the Loan Agreement. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement – Extraordinary Mandatory Prepayment." If called pursuant to the Indenture, the Series 2017 Bonds are callable on any date, in whole or in part, from and to the extent of funds on deposit under the Indenture and available for this purpose, at a redemption price equal to the principal amount to be redeemed plus accrued interest to the redemption date, without premium. Mandatory Redemption Upon Determination of Taxability. The Series 2017A Bonds are subject to mandatory redemption as a whole, at their principal amount, plus accrued interest to the date of redemption, upon the occurrence of a Determination of Taxability. The redemption date shall be the earliest practicable date selected by the Trustee, after consultation with the Borrower, but in no event later than six months following the finalization of the Determination of Taxability. Notice of Redemption; Payment In every case of redemption, the Trustee shall cause notice of such redemption by mailing by first-class mail a copy of the redemption notice to the Registered Owners of the Series 2017 Bonds designated for redemption, in whole or in part, at their addresses as the same shall last appear upon the registration records (or by such other means as required by the DTC), in each case not more than 45 nor less than 20 days prior to the redemption date; provided, however, that failure to give such notice, or any defect therein, shall not affect the validity of any proceedings for the redemption of such Series 2017 Bonds. The Trustee may state that the redemption is conditioned upon receiving from the Borrower, prior to the redemption date, sufficient amounts to redeem such Series 2017 Bonds and that if such money is not so received, no Series 2017 Bonds shall be redeemed. Each notice of redemption shall specify the date fixed for redemption, the redemption price, the place or places of payment, that payment will be made upon presentation and surrender of the Series 2017 Bonds to be redeemed, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon will cease to accrue. If less than all the Outstanding Series 2017 Bonds are to be redeemed, the notice of redemption shall specify the numbers of the Series 2017 Bonds or portions thereof to be redeemed. Method of Selecting Bonds Unless otherwise specifically stated in the Indenture, any partial redemption of the Series 2017 Bonds shall be redeemed in such order of Series and maturity as the Borrower shall direct in writing, or if less than all of the Series 2017 Bonds in a single maturity shall be redeemed, the Series 2017 Bonds redeemed shall be selected by lot within such maturity. Incurrence of Additional Indebtedness The Loan Agreement permits the Borrower to incur additional Indebtedness upon compliance with the provisions thereof and the USDA Documents, including parity Long-Term Indebtedness based

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on tests set forth in APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – Limitations on Incurrence of Additional Indebtedness" including, as summarized and qualified in their entirety by the actual provisions of such items, a test based on historical Debt Service Coverage Ratio together with projected Maximum Annual Debt Service plus estimated Facility Lease Payments (each as defined in the Loan Agreement) as a percentage of estimated Pledged Revenues for the most recent Fiscal Year for which a budget has been adopted and a test based on historical Net Income Available for Debt Service (as defined in the Loan Agreement) as a product of 1.10 and Maximum Annual Debt Service for all parity Long-Term Indebtedness (as defined in the Loan Agreement) then Outstanding plus the proposed additional Long-Term Indebtedness immediately following the completion of the related project being financed. The Borrower may incur Short-Term Indebtedness, Non-Recourse Indebtedness, and Subordinated Indebtedness and enter into capital leases for any corporate purposes without limitation (subject to the terms of the USDA Documents).

The incurrence of such additional Indebtedness could increase the economic burden on the Borrower and thereby adversely affect the ability of the Borrower to pay debt service on the Series 2017 Bonds. In addition, in connection with the incurrence of additional Indebtedness, the Borrower may secure additional Indebtedness with a deed of trust on the New Facility that would be on parity with the Deed of Trust that secures the Series 2017 Bonds. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – Limitations on Incurrence of Additional Indebtedness." Additional Bonds Pursuant to the Indenture, the Issuer, at the request of the Borrower, may (but shall be under no obligation to) issue Additional Bonds, secured and payable on a parity basis with the Series 2017 Bonds, provided that, prior to the issuance of any such Additional Bonds, certain terms and conditions have been met. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture – Additional Bonds." In connection with the issuance of Additional Bonds, the Borrower may secure the payment of the principal of, premium, if any, and interest on the Additional Bonds by a deed of trust on and security interest in the New Facility on a parity with the Deed of Trust. Such deed of trust would be in addition to and on an equal priority with the Deed of Trust that secures the Series 2017 Bonds. The Loan Agreement provides limitations on the Borrower's ability to incur Indebtedness on parity with the Series 2017 Bonds, requiring certain tests to be satisfied. Ownership The person in whose name a Series 2017 Bond is registered may be treated for all purposes as the owner thereof. SECURITY FOR THE SERIES 2017 BONDS Limited Obligations THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE (AS DEFINED HEREIN) AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER (AS DEFINED HEREIN), ANY SPONSOR (AS DEFINED HEREIN), ANY ISSUER INDEMNIFIED PERSON (AS DEFINED IN THE INDENTURE), THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION

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APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PERSON, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER. Trust Indenture Trust Estate. Under the Indenture, the following are pledged to the Trustee as security for the Series 2017 Bonds (collectively, the "Trust Estate"): (i) the rights and interests of the Issuer under the Account Control Agreement and the Loan Agreement, as amended from time to time, by and between the Issuer and the Borrower, except the Issuer's Unassigned Rights. (ii) the rights, title and interests, if any, of the Issuer in the New Facility, subject to Permitted Encumbrances, except the Issuer's Unassigned Rights. (iii) the Revenues and all rights and interests of the Issuer in the Pledged Revenues, subject to Permitted Encumbrances, except the Issuer's Unassigned Rights. (iv) the rights and interests of the Issuer under the Series 2017 Promissory Notes. (v) all Funds created in the Indenture (other than the Cost of Issuance Fund and the Rebate Fund), except for (a) moneys or obligations deposited with or paid to the Trustee for the payment or redemption of Bonds that are no longer deemed to be Outstanding under the Indenture, (b) all trust accounts containing all insurance and condemnation proceeds, and (c) the Issuer's Unassigned Rights, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. (vi) any and all other interests in real or personal property of every name and nature from time to time after the date of issuance of the Series 2017 Bonds by delivery or by writing of any kind specifically mortgaged, pledged or hypothecated, as and for additional security under the Indenture by the Issuer or by anyone on its behalf or with its written consent in favor of the Trustee (including the Deed of Trust and proceeds of related title insurance), which is authorized by the Indenture to receive any and all such property at any and all times and to hold and apply the same, subject to the terms of the Indenture. Capitalized terms used but not defined herein have the meanings assigned thereto in APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – Definitions." Debt Service Reserve Fund. On the date of issuance of the Series 2017 Bonds, the Borrower will deposit an amount equal to $______from the Series 2017 Bond proceeds, which amount shall be equal to the Debt Service Reserve Fund Requirement for the Series 2017 Bonds, in the accounts for the Series 2017 Bonds created under the Indenture. Amounts in the Debt Service Reserve Fund will secure only the Series 2017 Bonds and may be used by the Trustee to pay principal of, premium, if any, and interest on the Series 2017 Bonds in the event monies in the Bond Fund are insufficient for such purpose. There is no guarantee that the Debt Service Reserve Fund will be available to pay debt service on the Series 2017 Bonds. Amounts in the Debt Service Reserve Fund are required to be valued semiannually as provided in the Indenture. The Borrower is required to cure any deficiency in the Debt Service Reserve Fund that occurs as a result of a valuation on the next monthly deposit date, and if the deficiency occurs as a result

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of a transfer to cure a shortfall in the Bond Fund, the Borrower is required to restore such withdrawal in not more than six substantially equal monthly installments beginning in the month following such deficiency. If amounts in the Debt Service Reserve Fund are in excess of the Debt Service Reserve Fund Requirement, such excess amount shall be transferred to the Bond Fund. See "SECURITY FOR THE SERIES 2017 BONDS – Debt Service Reserve Fund" and APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture – Debt Service Reserve Fund." Payments Under the Loan Agreement; Assignment of Loan Agreement Loan Payments. Monthly Loan Payments from the Borrower are required under the Loan Agreement and the Series 2017 Promissory Notes to be paid in amounts that will be sufficient, if paid promptly and in full, to pay when due all principal of, premium, if any, and interest on the Loan and certain ongoing costs. Under the Indenture, the Issuer has pledged its interest in the Loan Agreement (including the payments payable thereunder to the Issuer by the Borrower, but excluding the Issuer's Unassigned Rights) to the Trustee to secure the Series 2017 Bonds. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement." The Trustee is authorized to exercise the rights of the Issuer (other than the Issuer's Unassigned Rights) and enforce the obligations of the Borrower under the Loan Agreement. Financial Covenants. Debt Service Coverage Ratio; Independent Consultant. The Borrower is required by the Loan Agreement to deliver annually, upon completion of the Borrower's annual audit, to the Trustee a certificate stating the Debt Service Coverage Ratio for the Fiscal Year then ended and evidencing the calculation thereof on and as of June 30 of such year, commencing with the Fiscal Year ending June 30, 2018. The Debt Service Coverage Ratio as of the testing date is required to be at or above 1.10 to 1.00 for each Fiscal Year, commencing with the Fiscal Year ending June 30, 2018. If, for any Fiscal Year ending June 30, 2018, or after, such Debt Service Coverage Ratio is below 1.10 to 1.00, the Borrower shall retain, at its expense, an Independent Consultant to submit a written report and make recommendations within 45 days of being retained (a copy of such report and recommendations shall be filed with the Trustee) with respect to increasing income of the Borrower, decreasing Operating Expenses or other financial matters of the Borrower which are relevant to increasing the Debt Service Coverage Ratio to at least the required level. The Borrower agrees that promptly upon the receipt of such recommendations, subject to applicable requirements or restrictions imposed by law, it shall employ a best efforts approach to revise its methods of operation and take such other actions to comply with any reasonable recommendation of the Independent Consultant identified in the report of the Independent Consultant. Within five Business Days of receipt of the certificate to be delivered under this Section, the Trustee is required to notify Registered Owners of the Outstanding Bonds of the Debt Service Coverage Ratio if the Debt Service Coverage Ratio is below 1.00 to 1.00. So long as the Debt Service Coverage Ratio is not below 1.00 to 1.00, and so long as the Borrower shall retain an Independent Consultant and use its best efforts to comply with such Independent Consultant's reasonable recommendations (subject to applicable requirements or restrictions imposed by law), no default or Event of Default shall be declared solely by reason of a violation of the Debt Service Coverage Ratio covenant set forth in the Loan Agreement. Notwithstanding the foregoing provisions of the Debt Service Coverage Ratio covenant summarized above, the failure of the Borrower to have a Debt Service Coverage Ratio of at least 1.00 to 1.00 for any Fiscal Year ending June 30, 2018, or after, shall be an Event of Default under the Loan Agreement. The foregoing is subject to the qualification that if applicable State or federal laws or regulations, or the rules and regulations of the agencies having jurisdiction, shall not permit the Borrower to maintain such level of Debt Service Coverage Ratio, then the Borrower shall, in conformity with the then

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prevailing laws, rules or regulations, maintain its Debt Service Coverage Ratio equal to the maximum permissible level. "Debt Service Coverage Ratio" means, as of any date of determination, the ratio obtained by dividing the Net Income Available for Debt Service for the relevant Fiscal Year by the Annual Debt Service Requirements of the Borrower for the relevant Fiscal Year, as such ratio is certified to by an Authorized Representative of the Borrower. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – DEFINITIONS" for the definition of capitalized terms used but not defined in this description of the Debt Service Coverage Ratio covenant. Liquidity Requirement. In the Loan Agreement, the Borrower covenants and agrees that, commencing with the Fiscal Year ending June 30, 2018, it will maintain as of the relevant testing date at least twenty-five (25) Days Cash on Hand; commencing with the Fiscal Year ending June 30, 2019, it will maintain as of the relevant testing date at least thirty-five (35) Days Cash on Hand; and commencing with the Fiscal Year ending June 30, 2020 and for each Fiscal Year thereafter, it will maintain as of the relevant testing date at least forty (40) Days Cash on Hand. The covenant described above is to be tested on and as of June 30 of each year for the Fiscal Year then ended and evidenced by a certificate of the Borrower delivered to the Trustee and the Underwriter setting forth the calculation of such amount based on the results of the annual audit of the Borrower for such Fiscal Year upon release of such audit. If on any testing date the Borrower's minimum Days Cash on Hand is below that required as described above, the Borrower is required to retain, at its expense, an Independent Consultant to submit a written report and make recommendations within 45 days of being retained (a copy of such report and recommendations shall be filed with the Trustee) with respect to increasing income of the Borrower, decreasing Operating Expenses of the Borrower or other financial matters of the Borrower which are relevant to increasing the Borrower's Days Cash on Hand to at least the required level. The Borrower agrees that promptly upon the receipt of such recommendations, subject to applicable requirements or restrictions imposed by law, it shall employ a best efforts approach to revise its methods of operation and take such other actions to comply with any reasonable recommendation of the Independent Consultant identified in the report of the Independent Consultant. So long as the Borrower shall retain an Independent Consultant and use its best efforts to comply with such Independent Consultant's reasonable recommendations (subject to applicable requirements or restrictions imposed by law), no default or Event of Default shall be declared solely by reason of a violation of the requirements of the Liquidity Requirement set forth in the Loan Agreement. The foregoing is subject to the qualification that if applicable State or federal laws or regulations, or the rules and regulations of the agencies having jurisdiction, shall not permit the Borrower to maintain such level of Days Cash on Hand, then the Borrower shall, in conformity with the then prevailing laws, rules or regulations, maintain its Days Cash on Hand equal to the maximum permissible level. "Days Cash On Hand" means, as of any date of determination, the product of 365 times a fraction, (a) the numerator of which is the aggregate amount of all Unrestricted Cash and Investments and (b) the denominator of which is total Operating Expenses (but including in Operating Expenses only the interest portion of debt service on Indebtedness), in each case for the Fiscal Year ending on the date of determination and determined in accordance with Generally Accepted Accounting Principles. "Unrestricted Cash and Investments" means the sum of the Borrower's unrestricted cash, cash equivalents, marketable securities, including without limitation board-designated assets, but excluding any trustee-held or similar funds held under the Indenture or similar debt documents. For the purposes of calculations of the Liquidity Requirement, an unrestricted contribution from a third party or affiliate shall be treated as being made during the period of such calculation so long as the unrestricted contribution is

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made prior to the date the applicable certificate of the Borrower is required to be delivered with respect to such calculation. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture – Definitions" for the definition of capitalized terms used but not defined in this description of the liquidity requirement. Deed of Trust The Borrower will deliver the Deed of Trust, which creates a lien on the New Facility and all fixtures therein to secure the Borrower's obligation to make payment under the Series 2017 Promissory Notes to the Trustee. Under the Deed of Trust, the Borrower will also grant a security interest in the Pledged Revenues and all leases and rents with respect to the New Facility. The Deed of Trust will be subject to certain Permitted Encumbrances, as described in the Deed of Trust. There is no mortgage on or assignment of the leasehold interest of the Borrower in the Existing Facility. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Deed of Trust." Account Control Agreement In order to grant the Trustee a security interest in and "control" of the Deposit Account, the Borrower has entered into the Account Control Agreement. The Deposit Account shall be under the control of Trustee; provided, that unless and until Depository Bank receives Trustee's written notice that the Borrower's access to the funds in the Deposit Account is terminated, Depository Bank shall honor the Borrower's instructions, notices and directions with respect to the transfer or withdrawal of funds from the Deposit Account, including paying or transferring the funds to the Borrower or any other person or entity. Upon receipt of a written notice from Trustee instructing Depository Bank to terminate the Borrower's access to funds in the Deposit Account, Depository Bank shall transfer all funds (subject to Depository Bank's funds availability policy) in the Deposit Account to a designated account in accordance with Trustee's written instructions and subject to the terms of the Parity Agreement, and the Trustee is authorized to withdraw funds from such designated account as necessary to make payments under the Loan Agreement, the Indenture, and the Parity Agreement. Government Loan and Parity Agreement The Borrower used the proceeds of the Government Loan to finance the acquisition, construction, improvement, and equipping of the Government Loan Facilities. The Government Loan bears interest at 2.375% per annum and is payable in equal annual installments of principal and interest totaling $344,341 due on each October 19 up to its final maturity on October 19, 2056, on which a final payment of $339,845.15 is due. The Government Loan is secured by a pledge of the Borrower's revenue and a first mortgage lien on the Government Loan Facilities and the Athletic Facility. Pursuant to the Parity Agreement, the Government and the Trustee share, on a parity basis, a pledge of the Borrower's revenues. The real property collateral for the Government Loan consists of the Government Loan Facilities and the Athletic Facility and the real property collateral for the Series 2017 Bonds consists of the New Facility; no such real property collateral is shared by or between the Government and the Trustee. In the event of a default under either the Government Loan or the Loan documents, the Parity Agreement provides that the Government and the Trustee will agree to cooperate with each other with respect to the repossession, collection and sale of the Pledged Revenues. The Parity Agreement also describes how any sales proceeds and/or amounts collected will be shared or allocated by or between the Government and the Trustee in the event of a default and/or acceleration. The Trustee has no rights in the Government Loan Facilities, the Athletic Facility, or the Assets financed by the Government Loan and the Government has no rights in any Assets that were financed with the proceeds of the Series 2017 Bonds. The Parity Agreement provides that the Government, the

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Trustee, and the Borrower also agree that any Assets separately financed by the Government Loan and the Loan shall not be subject to the Parity Agreement and any rights and remedies of the Government and the Trustee with respect to the applicable Assets shall be unaffected by the parity arrangement for the Pledged Revenues set forth therein. In addition, the Trustee has no rights in or to any reserves or escrows relating to the Government Loan or to any insurance or condemnation proceeds relating to the Government Loan Facilities and the Athletic Facility. The Government has no rights in or to any reserves or escrows relating to the Series 2017 Bonds or to any insurance or condemnation proceeds relating to the New Facility. An event of default under the Government Loan documents will be an Event of Default under the Loan Agreement and an Event of Default with respect to the Series 2017 Bonds will be an event of default under the Government Loan documents. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – Parity Agreement." Defeasance Upon certain terms and conditions specified in the Indenture, including provision for the payment of the Series 2017 Bonds, the Series 2017 Bonds or portions thereof will be deemed to be paid and shall no longer be secured by or entitled to the benefits of the Indenture and the Deed of Trust. In that case, the Series 2017 Bonds will be secured solely by the cash and securities deposited with the Trustee for such purpose. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture – Discharge of Indenture." Duties of the Trustee The duties of the Trustee are limited as set forth in the Indenture. In particular, the Trustee shall not be required to take notice or be deemed to have notice of any default under the Indenture except failure by the Borrower to cause to be made any of the payments to the Trustee required to be made thereunder, under the Loan Agreement or under any Deed of Trust, or the failure by the Borrower to file with it any of the periodic documentation required, or to deposit with it the insurance report required under the Indenture, under the Loan Agreement, or under any Deed of Trust. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture." BONDHOLDERS' RISKS INVESTMENT IN THE SERIES 2017 BONDS SHOULD BE UNDERTAKEN ONLY BY INVESTORS WHOSE FINANCIAL RESOURCES ARE SUFFICIENT TO ENABLE THEM TO ASSUME SUCH RISK. THIS SECTION SETS FORTH A BRIEF SUMMARY OF SOME OF THE PRINCIPAL BONDHOLDERS' RISKS. PROSPECTIVE INVESTORS SHOULD FULLY UNDERSTAND AND EVALUATE THESE RISKS, IN ADDITION TO THE OTHER FACTORS SET FORTH IN THIS LIMITED OFFERING MEMORANDUM, BEFORE MAKING AN INVESTMENT DECISION. General Investment in the Series 2017 Bonds involves a significant degree of risk. Anyone considering investing in the Series 2017 Bonds should carefully examine this Limited Offering Memorandum, including the Appendices hereto. Any investor who, because of financial condition, is unable to bear the loss of an investment in the Series 2017 Bonds, or who, because of investment policies or otherwise, does not desire to assume, or have the ability to bear, the risks inherent with an investment in the Series 2017 Bonds, should not purchase the Series 2017 Bonds.

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The Series 2017 Bonds may experience price fluctuations due to changes in interest rates and yield levels. As a result, the value of the Series 2017 Bonds may fluctuate significantly in the short-term. Further, such securities generally have a less liquid resale market. As a result, potential investors may have difficulty selling or disposing of the Series 2017 Bonds quickly in certain markets or market conditions. No Indebtedness of the State of North Carolina No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions. Sufficiency of Revenues; Operating Risks The Series 2017 Bonds are special and limited obligations of the Issuer and are not a debt or liability of any Sponsor, any Member, the State, or any political subdivision thereof, or any subdivision approving the issuance of the Series 2017 Bonds; and shall be payable solely from the Trust Estate. The Series 2017 Bonds are secured by and payable from funds of the Borrower under the terms and conditions of the Loan Agreement and as otherwise described therein. The Borrower expects, based upon present circumstances (i.e., executed Charter, current and projected enrollment), that it will generate sufficient Pledged Revenues to meet its obligations under the Loan Agreement; however, the Charter may be terminated or not renewed, or the basis of the assumptions utilized by the Borrower to formulate this expectation may otherwise change. NO REPRESENTATION OR ASSURANCE CAN BE MADE THAT THE BORROWER WILL CONTINUE TO GENERATE SUFFICIENT PLEDGED REVENUES TO MEET ITS OBLIGATIONS UNDER THE LOAN AGREEMENT. Future revenues and expenses will generally be subject to, among other things, general economic conditions, demographics with respect to the available pool of students, termination or nonrenewal of the Charter, the capability of management in marketing and managing the School, the availability of funds to maintain and potentially expand the School, the availability of qualified teachers for the School, changes in the in general, increasing costs of complying with federal or State of North Carolina regulatory laws or regulations, including, without limitation, laws or regulations concerning environmental quality, work safety and accommodating persons with disabilities, any unionization of the School's workforce with consequent impact on wage scaled and operating costs, and other conditions which are unpredictable and which may adversely affect the ability of the Borrower to generate sufficient Pledged Revenues to meet its obligations under the Loan Agreement. In addition, failure to comply with federal legislation, including the Every Student Succeeds Act ("ESSA"), any successor legislation, or any waiver granted thereunder, could result in loss of grant funds, which may also adversely affect the ability of the Borrower to generate sufficient Pledged Revenues to meet its obligations under the Loan Agreement. No representation or assurance can be made that the Borrower will continue to generate sufficient revenues will generate sufficient Pledged Revenues to meet its obligations under the Loan Agreement. Economic and Other Factors Currently, SBE allocates funds to each charter school based on such school's ADM and the dollars per ADM of the local school administrative unit in which the school is located. Except with respect to allocations for children with disabilities and children with limited English proficiency, each charter school generally receives an allocation in an amount equal to the average per pupil allocation for ADM from the local school administrative unit allotments in which the charter school is located for each child attending the charter school. Each charter school receives an additional amount for each child with disabilities and each child with limited English proficiency. The local school administrative unit in which a child resides must transfer to the charter school an amount equal to the per pupil local current expense

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appropriation for that local school administrative unit for the fiscal year. The amount transferred that consists of revenue derived from supplemental taxes will be transferred only to a charter school located in the tax district for which these taxes are levied and in which the student resides. The charter school sends a bill to the county in which the student resides. For additional information, see APPENDIX C – "CHARTER SCHOOLS IN NORTH CAROLINA." Future economic and other factors may adversely affect the Borrower's revenues and expenses and, consequently, the Borrower's ability to make payments under the Loan Agreement. Among the factors that could have such adverse effects are: decreases in the number of students seeking to attend the School at optimum levels for each grade level; decreases in the level of payments from the State of North Carolina, or other student enrollment-based funding by the federal or state governments; decline in the ability of the Borrower and its management to provide education desired and accepted by the population served; general economic factors, including inflation and interest rates; economic developments in the affected service area, including loss of employment; diminishment of the standing of the Borrower in its field; revocation of the Charter; competition from other educational institutions, including other charter schools, private schools, and public schools in the areas from which the School draws students; the lessened ability of the Borrower to attract and retain qualified teachers and staff at salaries that permit payment of debt service and expenses; increased costs associated with technological advances; changes in government regulation of the education industry or in the North Carolina charter school statutes; future claims for accidents or other torts and the extent of insurance coverage for such claims; and the occurrence of natural disasters. Reliance on Financial Projections Payment by the Trustee of principal of and interest on the Series 2017 Bonds is dependent upon receipt of Loan Payments by the Trustee from the Borrower. The ability of the Borrower to make such Loan Payments when due is dependent on net operating income of the Borrower. The Borrower has operated the School since 2013. The Borrower's projections of revenues and expenses for the five Fiscal Years ending June 30, 2018 through 2022 contained in APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" (the "Projections") were prepared by Management in consultation with Specialized Public Finance, Inc. ("Specialized"). The Projections constitute "forward-looking" statements of the type described in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See "FINANCIAL INFORMATION" and "BONDHOLDERS' RISKS." In order to expand enrollment and grade levels as described herein in connection with the construction of the New Facility, the Borrower will need to obtain approval of a modification of the Charter (the "Charter Modification"). See " – Application for Charter Modification" herein. While Management expects that the Charter Modification will be approved, there can be no assurance that the Charter Modification will be approved. The Projections include one scenario in which the Charter Modification is approved and another scenario, as a sensitivity analysis, in which the Charter Modification is not approved. Refer to APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results. No feasibility studies have been conducted with respect to operations of the Borrower pertinent to the Series 2017 Bonds. The Projections are "forward-looking statements" and are subject to the general qualifications and limitations described under "BONDHOLDERS' RISKS – Forward-Looking Statements." The Underwriter has not independently verified the Projections, and makes no representations nor gives any assurances that such Projections, or the assumptions underlying them, are complete or correct. Further, the Projections relate only to a limited number of Fiscal Years, and consequently do not cover the entire period that the Series 2017 Bonds will be outstanding.

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Management prepared the Projections based on operating history with respect to the School and Management's assumptions about future State of North Carolina funding levels and future operations of the School, including student enrollment and expenses. There can be no assurance that actual enrollment revenues and expenses will be consistent with Management's assumptions underlying such Projections. Moreover, no guarantee can be made that the Projections of revenues and expenses included herein will correspond with the results actually achieved in the future because there can be no assurance that actual events will correspond with the Projections' underlying assumptions. Actual operating results may be affected by many factors, including, but not limited to, increased costs, lower than anticipated revenues (as a result of insufficient enrollment, reduced State of North Carolina or federal aid payments, or otherwise), employee relations, changes in taxes, changes in applicable government regulation, changes in demographic trends, changes in education competition and changes in local or general economic conditions. Refer to APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results. Refer to "BONDHOLDERS' RISKS – Forward-Looking Statements," above, for qualifications and limitations applicable to forward-looking statements. NO ASSURANCE CAN BE MADE THAT THE PROJECTIONS CONTAINED HEREIN WILL CORRESPOND WITH THE RESULTS ACTUALLY ACHIEVED IN THE FUTURE BECAUSE THERE CAN BE NO ASSURANCE THAT ACTUAL EVENTS WILL CORRESPOND WITH THE ASSUMPTIONS UNDERLYING SUCH PROJECTED INFORMATION. ACTUAL OPERATING RESULTS MAY BE AFFECTED BY MANY FACTORS, INCLUDING, BUT NOT LIMITED TO, INCREASED COSTS, LOWER THAN ANTICIPATED REVENUES (AS A RESULT OF INSUFFICIENT ENROLLMENT, REDUCED STATE OF NORTH CAROLINA OR FEDERAL AID PAYMENTS, OR OTHERWISE), DIFFICULTIES IN EXECUTING PLANS FOR AN ADDITIONAL SCHOOL OR OTHER EXPANSIONS, EMPLOYEE RELATIONS, CHANGES IN TAXES, CHANGES IN APPLICABLE GOVERNMENTAL REGULATION, CHANGES IN DEMOGRAPHIC TRENDS, CHANGES IN EDUCATION COMPETITION AND LOCAL OR GENERAL ECONOMIC CONDITIONS. Revocation, Non-Renewal or Expiration of Charter The Charter became effective on July 1, 2013, and will expire pursuant to its terms on June 30, 2023, unless renewed by the SBE prior to such date. The current expiration date of the Charter is prior to the final maturity date of the Series 2017 Bonds. In addition, the Charter may be terminated as a result of a material breach of the Charter, or the SBE may revoke the Charter if the School fails to meet academic standards. The North Carolina General Statutes provide that upon dissolution of a charter school, all net assets of the charter school purchased with public funds shall be deemed the property of the local school administrative unit in which the charter school is located. Although the Borrower believes it enjoys a good relationship with the SBE, does not anticipate any non-renewal or revocation of the Charter, and has covenanted in the Loan Agreement to seek renewals, there can be no assurance that the SBE will renew the Charter prior to or upon expiration. Application for Charter Modification In order to expand enrollment and grade levels as described herein in connection with the construction of the New Facility, the Borrower will need to obtain approval of the Charter Modification. While Management expects that the Charter Modification will be approved, application for the Charter Modification will not be made to SBE until November 2017. The application for the Charter Modification will be considered in stages, with each stage expected to be completed in one month: first, the application will be reviewed by the Charter School Advisory Board ("CSAB"); second, CSAB will recommend either approval or denial of the application to SBE; and third, SBE will either approve or deny the application. As such, assuming application for the Charter Modification is made to SBE in

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November 2017, the earliest date on which SBE could be expected to approve or deny the Charter Modification is March 2018. There can be no assurance that the Charter Modification will be approved. Charter Schools in General Nationally, charter schools in general have come under some criticism as having failed to meet certain objectives in educating students to a success level above students in traditional public school systems. Proponents of charter schools have indicated that comparisons used in such critiques often fail to measure performances between similarly situated schools, or fail to acknowledge the time that will be required for a charter school system to develop historically significant data. In any event, the politically sensitive issues surrounding the development of charter schools will continue to warrant public and media attention, and any development of a national sense that charter schools do not present a fiscally responsible alternative could adversely affect the willingness of states, including North Carolina, to fund charter school operations, or the willingness of local or North Carolina school officials to approve or renew school charters. Key Leadership The creation of, and the philosophy of teaching in, charter schools generally may reflect the vision and commitment of a few key persons on the board of directors and/or the upper management of a charter school. Loss of such key persons with respect to the School, and the Borrower's inability to find comparable qualified replacements, could adversely affect the Borrower's operations or financial results. State of North Carolina Budget; Change in State Budgeting Process Like many states, the State of North Carolina experienced financial stress due to declining revenues in connection with the economic that began in fiscal year 2008-09. In 2009-10, State of North Carolina appropriations to the Department of Public Instruction were reduced by $840 million to $7.35 billion. Since that time, the number of students in the State of North Carolina has increased but the funding level has only for the 2016-17 fiscal year surpassed the 2008-09 funding level. For fiscal years 2016-17 and 2017-18, the General Assembly appropriated $8.7 billion and $9.0 billion to the Department of Public Instruction, respectively. As described in APPENDIX C – "CHARTER SCHOOLS IN NORTH CAROLINA," for each recent historical fiscal year, a large percentage of State of North Carolina General Fund expenditures fund public education, so financial pressure on the General Fund may lead to reductions in spending on public schools, including charter schools. There can be no assurance that current levels of per pupil spending for public schools in North Carolina, including charter schools, will be maintained in future years. In 2014, the North Carolina General Assembly adopted "The Current Operations and Capital Improvements Appropriations Act of 2014." Among other items, this act replaced the concept of a Continuation Budget, which automatically included an enrollment adjustment for public school funding, with the concept of a Base Budget, which requires affirmative legislative action to adjust public school funding for increases or decreases in enrollment. The North Carolina General Assembly adopts a state budget on a biennial basis, with adjustments to such permitted on an annual basis. The impact of this act on the timing and amount of State of North Carolina funding for public schools, including charter schools, in North Carolina cannot be predicted at this time. Although State of North Carolina funding of charter schools is expected, under current law, to continue to be allocated based on Average Daily Membership as described in APPENDIX C – "CHARTER SCHOOLS IN NORTH CAROLINA – State of North Carolina and Local Funds," this act could result in a significant delay in receipt of funding, especially for charter schools with growing enrollments year over year, which delay could create cash flow difficulties for some charter schools.

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Changes in Law; Annual Appropriation; Inadequate State of North Carolina Payments The North Carolina General Assembly has amended the charter school laws a number of times since they were first enacted in 1996, including most recently in 2014. Past and future amendments to the law may adversely affect the Borrower by withholding a percentage of the state payments if a charter school is deemed not to be in compliance with contract or charter provisions or North Carolina and federal laws; by decreasing the charter term from ten years to some other shorter term; by requiring a State of North Carolina body to make an assessment of the School's effectiveness every year; by limiting the number of students for which North Carolina funds are available; by mandating new facilities or programs which may increase costs beyond projections; by reducing the maximum amount payable by North Carolina for students enrolled by the School; by revising the relative responsibilities between public schools and the State of North Carolina for financing schools (including charter schools); or by eliminating the authority for State of North Carolina-supported charter schools. In addition, the North Carolina General Assembly must appropriate funds for public education– including charter schools–each year, and it may not appropriate sufficient funds to enable the Borrower to pay debt service on the Series 2017 Bonds and meet budgeted expenses. Similarly, the State of North Carolina allocation per student may be reduced or may not keep pace with expenses such that the aggregate state payments to the Borrower are inadequate to allow the Borrower to pay debt service on the Series 2017 Bonds and its operating expenses. The Borrower has no taxing authority and is substantially dependent upon the State of North Carolina to continue to provide funding for public education. If the State of North Carolina payments are insufficient, the Borrower may be unable to make the Loan Payments as and when required. See APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT – Certain Financial Information – Historical Revenue and Expenditure Statements" and "– Financial Projections." The Loan Agreement requires the Borrower to make Loan Payments from the Pledged Revenues. Pledged Revenues include payments received from the State of North Carolina ("State Payments"), which comprise approximately 75.6% of the Borrower's operating budget for the Fiscal Year ending June 30, 2018. Pursuant to State of North Carolina policy, as set forth in the SBE's Department of Public Instruction's "Financial Guide For Charter Schools," revised May 2015, the Borrower must request disbursement of State Payments for the School's operating expenses and must spend any funds disbursed within three business days of such request. As such, State Payments may not be held by the Borrower for the purpose of building cash reserves. Instead, all State Payments received by the Borrower used to pay operating expenses within three business days of receipt and other Pledged Revenues of the Borrower are used, at the discretion of management, in part to build cash reserves. In light of the foregoing, while the Borrower has pledged its Pledged Revenues as security for its obligations under the Loan Agreement, there can be no assurance that the portion of such Pledged Revenues comprising State Payments may lawfully be the subject of a lien or will be available as security for such obligations of the Borrower as a practical matter. Disputes with Local School Administrative Units The local school administrative unit in which a child resides must transfer to the charter school an amount equal to the per pupil local current expense appropriation for that local school administrative unit for the fiscal year. Disputes between a charter school and the local school administrative unit(s) may arise. Although the North Carolina General Statutes allows for the use of mediation to resolve differences on calculation and transference of the per pupil share of the local current expense fund, there have been instances when such disputes have resulted in prolonged and costly litigation. Factors Associated with Education There are a number of factors affecting schools in general, including the Borrower, that could have an adverse effect on the Borrower's financial position and its ability to make the payments required

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under the Loan Agreement. These factors include, but are not limited to, increased costs of compliance with federal or North Carolina laws or regulations, including, without limitation, laws or regulations concerning environmental quality, work safety and accommodating persons with disabilities; any unionization of the Borrower's work force with consequent impact on wage scales and operating costs of the Borrower; the inability to attract a sufficient number of students; federal requirements to provide services to special education students; unfavorable changes to existing statutes pertaining to the powers of the Borrower and legislation or regulations which may affect program funding; and disruption of the Borrower's operations by real or perceived threats against the school, its employees or students. The Borrower cannot assess or predict the ultimate effect of these factors on its operations or financial results of operations. Other Schools/Competition for Students The Borrower receives state payments based on student enrollment. The Borrower competes for students with public schools (including charter schools) and private schools. There can be no assurance that the Borrower will attract and retain the number of students that are needed to produce Pledged Revenues sufficient to pay the debt service on the Series 2017 Bonds. Among other things, the number of charter schools in the State of North Carolina could increase substantially, and one or more new charter schools could be established in Randolph County or the other counties in the School's service area. See APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT – The School – Service Area" for information regarding other schools in the School's service area. School Choice Initiatives; Competition for Students States are increasingly considering and, in some states, enacting legislation that would expand the educational choices for its residents beyond the traditional public school system. Charter schools are one example of such options. As charter schools become more commonplace, and as existing charter schools demonstrate a track record of providing an attractive educational choice, the number of charter schools may increase, which could lead to increased competition for existing charter schools, such as the School. In addition, other education choice initiatives, including but not limited to a voucher system, whereby the state or local school district provides a voucher (typically for a fixed dollar amount) which a student's parents can use to pay tuition at private, independent (including faith-based) schools have been implemented or are being considered in a number of states. A voucher program has been implemented in North Carolina. Such voucher program or another voucher program could provide significant competition to charter schools because parents who may not have previously been able to afford tuition at a private, independent school would, under a voucher system, have financial resources available to cover all or a significant portion of the tuition cost at such schools. This additional choice is likely to increase demand for enrollment in private, independent schools and could adversely affect the Borrower cannot determine the specific impact the implementation of such education choice alternative in North Carolina would have on the operation or financial performance of the Borrower. Litigation Schools are often the subject of litigation. N.C. Gen. Stat. § 115C-218.20 specifically provides that "[t]he board of directors of a charter school may sue and be sued." Educator's professional liability and other actions alleging wrongful conduct and seeking punitive damages often are filed against education providers such as the Borrower. Litigation may also arise from the corporate and business activities of the Borrower, or from employee-related matters. As with educator's professional liability, many of these risks are covered by insurance, but some are not. For example, some business disputes and workers' compensation claims are not covered by insurance or other sources and, in whole or in part, may be a liability of the Borrower if determined or settled adversely. Although the Borrower maintains insurance policies covering educator's professional and general liability, Management is unable to predict the availability, cost or adequacy of such insurance in the future. Any inability of the Borrower in the future to secure affordable, adequate insurance may expose the Borrower to litigation risks which may

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adversely affect the Borrower's ability to generate adequate funds from its operation of the School to pay debt service on the Series 2017 Bonds. Risks Associated with the Existing Facility and Future Plans The Borrower currently operates the School from (i) the Existing Facility, which it leases pursuant to a Lease Agreement dated as of February 1, 2013, as extended by the option to renew and extend the lease agreement exercised by the Borrower on September 19, 2016 (collectively, the "Existing Facility Lease"), by and between Klausner Furniture Industries, Inc., and the Borrower, (ii) the Government Loan Facilities, which the Borrower owns, and (iii) the Athletic Facility, which the Borrower owns. The term of the Existing Facility Lease expires on June 30, 2022, and the Borrower is responsible for paying monthly rentals thereunder of $11,000 for the Fiscal Year ended June 30, 2017, subject to increase by the lesser of 5% and the annual increase in CPI for Fiscal Years thereafter. The Borrower may extend the Existing Facility Lease for five additional years by giving written notice of renewal at least 120 days prior to expiration of the then-current term. Upon completion of the Construction Project, Management expects the School to serve students in grades K-4 from the Existing Facility, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Government Loan Facilities. Thereafter, Management expects to undertake an additional expansion project, which is expected to include the construction of a new building located on the same site as the New Facility (the "Phase II Facility") from which students in grades 9-12 would be served beginning with the 2021-22 school year. Management expects to finance construction of the Phase II Facility, which Management expects to cost approximately $11,000,000, with the proceeds of one or more series of taxable or tax-exempt bonds, which are expected to be issued as Additional Bonds pursuant to the Indenture. Upon completion of the Phase II Facility, Management expects the School to serve students in grades K-4 from the Government Loan Facilities, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Phase II Facility. While the Borrower expects to shift operations of the School away from the Existing Facility prior to the end of the current term of the Existing Facility Lease, such scenario is dependent upon the successful financing and construction of the Phase II Facility. There can be no assurance that the Phase II Facility will be successfully financed or constructed, and the consequences of any such failure to successfully finance and construct the Phase II Facility cannot be determined at this time. If the Borrower decided to continue to operate the School from the Existing Facility beyond the term of the Existing Facility Lease, the Borrower could renew such Existing Facility Lease for five years as set forth above. If the Borrower decided to continue to operate the School from the Existing Facility thereafter, there can be no assurance that the Borrower would be able to continue to lease the Existing Facility, nor can there be any assurance that the Borrower would be able to do so on terms consistent with the Existing Facility Lease. Reputational Risk The Borrower is subject to financial and other risks, which risks may differ from those of other private, charter or public schools. For example, changes in the reputation of the Borrower; any third- party service providers; affiliates, and/or the Borrower's leadership, faculty or student body, either generally or with respect to certain academic or extra-curricular areas, may affect the Borrower's ability to attract students to projected enrollment levels, and may affect the Borrower's ability to attract quality teachers and staff at competitive salaries. In addition, litigation brought against the Borrower or any of the other parties listed above by parents, civil authorities, students or former or potential employees may have a materially adverse impact on the reputation of the Borrower. There can be no assurance that these

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or other factors will not adversely affect the Borrower's ability to generate adequate funds from its operation of the School to pay all Loan Payments when due. Risks of Real Estate Investment General Development, ownership and operation of real estate, such as the Facilities, involves certain risks, including the risk of adverse changes in general economic and local conditions, including population decreases; uninsured losses; operating deficits and mortgage foreclosure; lack of attractiveness of the property to students/parents; cyclical nature of the real estate market; adverse changes in neighborhood values; and adverse changes in zoning laws, other laws and regulations and real rates (to the extent such taxes are applicable to the Facilities). Such losses also include the possibility of fire or other casualty or condemnation. If the Facilities, or any portion thereof, were not available during the period of restoration, this could adversely affect the ability of the Facilities to generate sufficient Revenues to pay debt service on the Series 2017 Bonds. Changes in general or local economic conditions and changes in interest rates and the availability of mortgage funding may render the sale or refinancing of the Facilities difficult or unattractive. In addition, adverse events or conditions at the Government Loan Facilities, the Existing Facility, or the Athletic Facility could adversely impact the Facilities and the operations of the Borrower. Damage, Destruction or Condemnation Although the Borrower will be required to obtain certain insurance against damage or destruction as set forth in the Loan Agreement and the Deed of Trust, there can be no assurance that any portion of the Facilities 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 Facilities cannot generate Revenues, will not exceed the coverage of such insurance policies. If the Facilities, or any portion thereof, are damaged or destroyed, or are taken in a condemnation proceeding, the proceeds of insurance or any such condemnation award for the Facilities, or any portion thereof, must be applied as provided in the Loan Agreement to restore or rebuild the Facilities or to redeem Series 2017 Bonds. There can be no assurance that the amount of Revenues available to restore or rebuild the Facilities, or any portion thereof, or to redeem Series 2017 Bonds will be sufficient for that purpose, or that any remaining portion of the Facilities will generate Revenues sufficient to pay the expenses of the School Facilities and the debt service on the Series 2017 Bonds remaining outstanding. Completion of the Construction Project The Borrower will use the proceeds of the Series 2017 Bonds for the Project, a portion of which includes the New Facility Construction Project and the Gymnasium Construction Project. The New Facility Construction Project is expected to cost approximately $9,709,892.35 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017. The Gymnasium Construction Project is expected to cost approximately $2,745,436.40 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017. The Borrower expects to enter into an AIA Document A101-2007 Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum (the "Construction Contract") with Hubrich Contracting, Inc. (the "Contractor"), for the Construction Project. The Construction Contract is expected to set a stipulated sum of $12,455,328.75 (the "Stipulated Sum") for the Construction Project and to require the Construction Project to be completed within 281 days of the Closing Date (the "Completion Date"), subject to the provisions of the Construction Contract by which the Completion Date may be adjusted. The Construction Project is expected to provide that if

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the Construction Project is not completed by the Completion Date, the Contractor must pay to the Borrower $2,000 per day in liquidated damages. The Borrower and the Contractor have not yet obtained all permits required for the Construction Project, but expect that such permits will be obtained in due course. See APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT – THE PROJECT – The Construction Project – The Construction Budget and Timeline." There can be no assurance that the grading permit, building permit, road design approval, or certificate of occupancy dates set forth under the heading APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT – THE PROJECT – The Construction Project – The Construction Budget and Timeline" will be achieved by the dates set forth therein or at all, nor can there be any assurance that any conditions imposed on the Construction Project during the processes necessary to obtain the grading permit, building permit, or road design approval will be time- or cost-neutral to the Construction Project. Upon completion of the Construction Project, Management expects the School to serve students in grades K-4 from the Existing Facility, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Government Loan Facilities. See APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT – The Construction Project." Absence of Repair and Replacement Fund Neither the Loan Agreement nor the Indenture contain a repair and replacement fund or any other provision by which the Borrower is required to either assess or budget for capital needs. Pursuant to a loan resolution security agreement the Borrower executed in connection with the Government Loan, the Borrower is required to fund a reserve account for the Government Loan Facilities by setting aside $3,055.62 per month until $366,674.40 is held in such reserve account. Thereafter, the Borrower may withdraw funds with Government approval to repair or replace damage to the Government Loan Facilities caused by catastrophe or to extend or improve the Government Loan Facilities. After any withdrawal, the Borrower is required to set aside $3,055.62 per month until $366,674.40 is held in such reserve account. While the Borrower expects to assess and budget for capital needs, there is no requirement that the Borrower do so and there can be no assurance that the Borrower will be able to identify or fund repairs or maintenance necessary for the continued operation of the New Facility or any of the other School Facilities, other than the Government Loan Facilities to the extent of amounts on deposit in the reserve account described in the preceding paragraph, to their highest and best use. No Appraisal The Borrower has not obtained an appraisal of any of the School Facilities. Environmental Risks There are potential risks relating to liabilities for environmental hazards with respect to the ownership of any real property. If hazardous substances are found to be located on a property, owners of such property may be held liable for costs and other liabilities related to the removal of such substances, which costs and liabilities with respect to the New Facility could exceed the value of the New Facility or any portion thereof. Modulus, PLLC (the "Consultant") performed a Phase I Environmental Site Assessment (the "Phase I Environmental Site Assessment ") of the site on which the New Facility will be located, which identified no recognized environmental conditions and after which the Consultant recommended no additional environmental work. For additional information regarding the Phase I Report, see APPENDIX

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A - "THE BORROWER, THE SCHOOL AND THE PROJECT – THE PROJECT – Environmental Report." The intent of the Phase I Environmental Site Assessment was to identify the potential for recognized environmental conditions; however, no environmental assessment can completely eliminate the uncertainty regarding the potential for recognized environmental conditions. In addition, observations and conclusions pertaining to environmental conditions are necessarily limited to the conditions observed, and or materials reviewed at the time the assessment was performed. In the event environmental enforcement actions are initiated, the Borrower could be liable for the costs of removing or otherwise treating pollutants or contaminants located at the New Facility. Such obligations could adversely affect the Borrower's budget and cash flow and could adversely affect the Borrower's ability to generate Pledged Revenues sufficient to meet its obligations under the Loan Agreement, and the debt service requirements on the Series 2017 Bonds. In addition, under certain environmental statutes, in the event an enforcement action is initiated, a lien could be attached to the New Facility, or a portion thereof. In the event of a foreclosure on the Deed of Trust, the Borrower may be held liable for costs and other liabilities relating to Hazardous Materials, if any, on the site of the New Facility, or any portion thereof, on a strict-liability basis, and such costs might exceed the value of such property. Debt Service Reserve Fund

The Indenture has established the Debt Service Reserve Fund for payment of principal and interest due to the Owners of the Series 2017 Bonds to the extent Pledged Revenues are insufficient to make such payments. Although the Borrower believes such reserve to be reasonable, and anticipates that Pledged Revenues will be sufficient to cover the debt service on the Series 2017 Bonds, there is no assurance that funds reserved and future Pledged Revenues will be sufficient to cover debt service on the Series 2017 Bonds.

If there is a draw on the Debt Service Reserve Fund that is not replenished as required by the terms of the Indenture and the Loan Agreement, or if there is a loss on investments of funds in the Debt Service Reserve Fund, then the amount available in the Debt Service Reserve Fund, together with amounts provided by the Borrower under the Loan Agreement, may be insufficient to pay debt service on the Series 2017 Bonds when due.

Incurrence of Additional Indebtedness; Additional Bonds

The Loan Agreement permits the Borrower to incur additional Indebtedness upon compliance with the provisions thereof and the USDA Documents, including parity Long-Term Indebtedness based on incurrence tests set forth in APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement – Limitations on Incurrence of Additional Indebtedness," including a test based on historical Debt Service Coverage Ratio together with projected maximum annual debt service and estimated lease payments as a percentage of Pledged Revenues for the most recent Fiscal Year for which a budget has been adopted. The Borrower may incur Short-Term Indebtedness, Non-Recourse Indebtedness, and Subordinated Indebtedness (each as defined in the Loan Agreement) for any corporate purposes without limitation (subject to the terms of the USDA Documents).

Pursuant to the Indenture, the Issuer, at the request of the Borrower, may (but shall be under no obligation to) issue Additional Bonds, secured and payable on a parity basis with the Series 2017 Bonds, provided that, prior to the issuance of any such Additional Bonds, certain terms and conditions have been met. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Indenture – Additional Bonds."

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The incurrence of additional Indebtedness, including the issuance of Additional Bonds, could increase the economic burden on the Borrower and thereby adversely affect the ability of the Borrower to pay debt service on the Series 2017 Bonds.

In addition, in connection with the incurrence of additional Indebtedness, including the issuance of Additional Bonds, the Borrower may secure additional Indebtedness with a deed of trust on the New Facility that would be on parity with the Deed of Trust that secures the Series 2017 Bonds. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement – Limitations on Incurrence of Additional Indebtedness."

Taxation of the Series 2017A Bonds Purchasers of the Series 2017A Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property and casualty insurance companies, banks, thrifts 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 owning Series 2017A Bonds. The interest on the Series 2017A Bonds may be includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the Series 2017A Bonds for a variety of reasons. The exclusion from gross income is dependent upon, among other things, compliance with certain restrictions regarding investment of bond proceeds and continuing compliance by the Borrower with the Loan Agreement and the Tax Agreement under which enforcement remedies available to the Issuer and the Trustee are limited. See "TAX MATTERS" herein. If interest on the Series 2017A Bonds becomes includable in gross income for federal income tax purposes, the market for and value of the Series 2017A Bonds could be adversely affected. Moreover, there can be no assurance that the presently advantageous provisions of the Code, or the rules and regulations thereunder, will not be retroactively adversely amended or modified, thereby resulting in the inclusion in gross income of the interest on the Series 2017A Bonds for federal income tax purposes. While no such legislation has been proposed or adopted, there can be no assurance that Congress would not adopt legislation applicable to the Series 2017A Bonds or to the Borrower and that the Facilities would be able to comply with any such future legislation in a manner necessary to maintain the tax- exempt status of the Series 2017A Bonds. The Borrower is required to use best efforts to comply with federal income tax law requirements in order to maintain the tax-exempt status of the Series 2017A Bonds to the extent that any such other requirements are made applicable to the Facilities. There is no assurance, however, that the Borrower would be able to comply with any such other requirements. Income and Property Tax Exemption Under present federal and State of North Carolina law, regulations and rulings, the income and revenue of nonprofit, 501(c)(3) qualified exempt organizations are exempt from federal and state income tax, except for any unrelated business income as defined in the Code. The Borrower is a North Carolina nonprofit corporation, and the Borrower has received a determination letter from the Internal Revenue Service that the Borrower is a 501(c)(3) qualified tax-exempt organization. Under North Carolina General Statutes Section 105-275(46), real property that is occupied by a charter school and is wholly and exclusively used for educational purposes is exempt from real property tax regardless of the ownership of the property (although such property is subject to special assessments for local improvements to the property). Randolph County, North Carolina, the county in which the School is located, has indicated that it will recognize such exemption with respect to the School Facilities in part. The Projections contained herein have been prepared assuming that partial property taxes will be levied on the School Facilities.

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Unrelated Business Income The IRS, the State of North Carolina, county or local tax authorities may undertake audits and reviews of the operations of tax-exempt organizations with respect to the generation of unrelated business taxable income ("UBTI"). The Borrower may participate in activities that generate UBTI. An investigation or audit could lead to a challenge that could result in taxes, interest and penalties with respect to UBTI and, in some cases, ultimately could affect the tax-exempt status of the Borrower as well as the exclusion from gross income for federal income tax purposes of the interest payable on the Series 2017A Bonds. IRS Audits IRS officials have indicated that more resources will be invested in audits of tax-exempt bonds in the charitable organization sector. The Series 2017A Bonds may be, from time to time, subject to audits by the IRS. The Borrower believes that it is in compliance with tax laws relating to the Series 2017A Bonds. In addition, Bond Counsel will render an opinion with respect to the tax-exempt status of the Series 2017A Bonds, as described under the caption "TAX MATTERS" herein, which opinion speaks only as of its date. No ruling with respect to the tax-exempt status of the Series 2017A Bonds has been or will be sought from the IRS, however, and opinions of counsel are not binding on the IRS or the courts and are not guarantees. There can be no assurance that an audit of the Series 2017A Bonds will not adversely affect the tax status of the Series 2017A Bonds. Legal Opinions The various legal opinions to be delivered concurrently with the delivery of the Series 2017 Bonds will express the professional judgment of the attorneys rendering the opinions on the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. In addition, such opinions will be qualified as to the enforceability of the various legal instruments by, among others, limitations imposed by North Carolina, Wisconsin and federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws affecting the enforcement of creditors' rights generally. Inability or Delay in Liquidating the New Facility at an Adequate Sale Price An Event of Default gives the Trustee the right to possession of, and the right to sell, the New Facility pursuant to a foreclosure sale under the Deed of Trust. There is no mortgage on or assignment of the leasehold interest of the Borrower in the Existing Facility. The New Facility has been or will be specifically constructed or renovated for use as a school and may not be readily adaptable and marketable for other uses. Furthermore, while the Borrower considers the location of the New Facility to be desirable for its purposes, there can be no assurance that potential purchasers will consider the location desirable for their particular purposes. Any sale of the New Facility may require compliance with the laws of the State of North Carolina. Such compliance may be difficult, time-consuming and/or expensive. Any delays in the ability of the Trustee to foreclose under the Deed of Trust could result in delays in the payment of the Series 2017 Bonds. Further, attempts to foreclose under the Deed of Trust or to obtain other remedies under the Deed of Trust, the Indenture, the Loan Agreement or any other documents relating to the Series 2017 Bonds may be met with protracted litigation and/or bankruptcy proceedings, which could cause delays, and a court may decide not to order specific performance of covenants contained in such documents.

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Bankruptcy Bankruptcy or other insolvency or similar proceedings affecting the Borrower may delay and otherwise adversely affect the enforcement of rights in the property granted as security for the obligations related to Series 2017 Bonds, including those granted by the Indenture, the Loan Agreement, and the Deed of Trust. For example, if the Borrower became a debtor in bankruptcy proceedings under Federal bankruptcy law, those proceedings would stay any proceeding to foreclose the lien of the Deed of Trust pending further order of the bankruptcy court, and could affect the Trustee's ability to obtain direct payments pursuant to the Loan Agreement. If the Borrower's obligations in connection with the Series 2017 Bonds exceeded the value of the collateral security for the obligations, then in Federal bankruptcy proceedings, the recovery for the Series 2017 bondholders might be limited to the value of that collateral. In such a bankruptcy proceeding, a reorganization plan containing provisions, for example, backloading loan or bond payment amounts on the Series 2017 Bonds, could be confirmed and become effective even if the plan were not supported by some or all of the holders of the Series 2017 Bonds. Each of the legal opinions delivered in connection with the issuance of the Series 2017 Bonds will be qualified as to the effect of State and federal laws, rulings and decisions, including bankruptcy laws, affecting remedies and affecting the enforceability of remedies, creditors' rights generally, and the documents described herein. Enforcement of Remedies The remedies available to the Trustee or the bondholders of the Series 2017 Bonds upon an Event of Default under the Indenture, the Loan Agreement or the Deed of Trust are in many respects dependent upon judicial actions that are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, the remedies provided in the Indenture, the Loan Agreement, and the Deed of Trust may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2017 Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by the valid exercise of the sovereign powers of North Carolina and the constitutional powers of the United States of America, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. Further, the remedies available to the Trustee or the bondholders of the Series 2017 Bonds upon an Event of Default under the Indenture, the Loan Agreement or the Deed of Trust may be subject to or limited by the provisions of the Parity Agreement. Failure to Provide Ongoing Disclosure The Borrower has agreed for the benefit of the Registered Owners and Beneficial Owners of the Series 2017 Bonds to provide certain financial information, including certain annual financial information and notices of material events. The Borrower will enter into a Continuing Disclosure Agreement (the "Continuing Disclosure Agreement") with Digital Assurance Certification, LLC ("DAC"), as dissemination agent (the "Dissemination Agent"), for the purpose of ensuring ongoing compliance with its continuing disclosure filing requirements pursuant to the Continuing Disclosure Agreement only. In addition, the Borrower has covenanted in the Loan Agreement to provide certain financial information, including certain quarterly and annual financial information, other operating data, and notices. DAC has not been engaged to assist the Borrower in complying with any of its continuing disclosure filing requirements pursuant to the Loan Agreement. Failure to comply with the Continuing Disclosure Agreement or the continuing disclosure obligations set forth in the Loan Agreement in the future may adversely affect the liquidity of the Series 2017 Bonds and their market price in the secondary market. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement" and APPENDIX F – "FORM OF CONTINUING DISCLOSURE AGREEMENT." Secondary Market; Transfer Restrictions EACH INITIAL BENEFICIAL OWNER OF THE SERIES 2017 BONDS SHALL BE EITHER (I) A QUALIFIED INSTITUTIONAL BUYER OR (II) AN ACCREDITED INVESTOR WHO, IN THE

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CASE OF AN ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, HAS PROVIDED AN INVESTOR LETTER SUBSTANTIALLY IN THE FORM OF APPENDIX H-1 OR APPENDIX H-2 HERETO, AS APPLICABLE, OR SUCH OTHER FORM AS MAY BE APPROVED BY THE ISSUER, TO THE ISSUER AND THE TRUSTEE; THEREAFTER, NEITHER THE SERIES 2017 BONDS NOR ANY BENEFICIAL OWNERSHIP INTEREST THEREIN MAY BE TRANSFERRED BY THE BENEFICIAL OWNER THEREOF EXCEPT IN AUTHORIZED DENOMINATIONS TO A BENEFICIAL OWNER THAT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR. ANY ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY ONLY PURCHASE AND HOLD A MINIMUM $25,000 IN PRINCIPAL AMOUNT OF SERIES 2017 BONDS REGARDLESS OF ANY LOWER MINIMUM DENOMINATION PROVIDED HEREIN. IN ADDITION, ANY INITIAL PURCHASER THAT IS A QUALIFIED INSTITUTIONAL BUYER AND ANY SUBSEQUENT TRANSFEREE OF THE SERIES 2017 BONDS WILL BE DEEMED TO REPRESENT IN CONNECTION WITH ITS ACQUISITION OF THE SERIES 2017 BONDS THAT: (I) IT IS ABLE TO EVALUATE AND UNDERSTANDS THE RISKS AND THE MERITS OF INVESTING IN THE SERIES 2017 BONDS (AND IS ABLE TO BEAR THE RISKS OF SUCH INVESTMENT FOR AN INDEFINITE TIME), (II) IT IS CAPABLE OF AND HAS MADE ITS OWN INVESTIGATION OF THE BORROWER, THE FACILITIES AND THE PROJECT IN CONNECTION WITH ITS DECISION TO PURCHASE THE SERIES 2017 BONDS, (III) IT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR AND (IV) IT WILL ONLY TRANSFER THE SERIES 2017 BONDS IN AUTHORIZED DENOMINATIONS TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED INVESTOR WHO PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED INVESTOR IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OR EXEMPTIONS THEREFROM. THE ISSUER MAY REMOVE THE FOREGOING RESTRICTIONS WITHOUT NOTICE TO OR CONSENT OF ANY BENEFICIAL OWNER. AT SUCH TIME AS THE BORROWER SHALL PROVIDE TO THE ISSUER AND THE TRUSTEE WRITTEN EVIDENCE TO THE EFFECT THAT EACH RATING AGENCY THEN RATING THE SERIES 2017 BONDS HAVE RATED THE SERIES 2017 BONDS "BBB-" OR EQUIVALENT, OR HIGHER (WITHOUT REGARD FOR GRADATION WITHIN A RATING CATEGORY AND WITHOUT REGARD FOR CREDIT ENHANCEMENT UNLESS SUCH CREDIT ENHANCEMENT EXTENDS THROUGH THE FINAL MATURITY DATE OF THE SERIES 2017 BONDS), THESE RESTRICTIONS SHALL BE OF NO FURTHER FORCE OR EFFECT AND THE AUTHORIZED DENOMINATIONS OF THE SERIES 2017 BONDS SHALL BE CHANGED (IF NECESSARY) TO DENOMINATIONS OF $5,000 OR ANY INTEGRAL MULTIPLE OF $5,000 IN EXCESS THEREOF, IN EACH CASE, NOTWITHSTANDING WHETHER AT A FUTURE TIME THE SERIES 2017 BONDS ARE NO LONGER RATED IN SUCH RATING CATEGORY. SEE APPENDIX H-1 – "FORM OF INVESTOR LETTER (INVESTOR)" AND APPENDIX H-2 – "FORM OF INVESTOR LETTER (ADVISOR)" ATTACHED HERETO. There is no guarantee that a secondary trading market will develop for the Series 2017 Bonds. Consequently, prospective investors should be prepared to hold their Series 2017 Bonds to maturity or prior redemption. Subject to applicable securities laws and prevailing market conditions, the Underwriter intends, but is not obligated, to make a market in the Series 2017 Bonds. No Rating on the Series 2017 Bonds; Market for Series 2017 Bonds The Series 2017 Bonds are not rated by a rating agency. Neither the Borrower nor the Authority requested or applied for a rating on the Series 2017 Bonds from any rating agency. Typically, unrated bonds lack liquidity in the secondary market. Because of the lack of , bondholders may not be able to sell their Series 2017 Bonds in the secondary market and should therefore plan to hold the Series 2017 Bonds to maturity.

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Legislation Affecting Tax-Exempt Status of Interest on the Series 2017A Bonds Proposals for various amendments to the Code have been considered in connection with federal tax reform. No assurance can be given that amendments to the Code or other federal legislation will not be introduced or enacted which would cause the interest on the Series 2017A Bonds to be subject, directly or indirectly, to federal income taxation or adversely affect the market price of the Series 2017A Bonds or otherwise prevent the holders of the Series 2017A Bonds from realizing the full current benefit of the federal tax status of the interest thereon. Conclusion AN INVESTMENT IN THE SERIES 2017 BONDS INVOLVES A SIGNIFICANT DEGREE OF RISK AND IS SPECULATIVE IN NATURE. Each prospective investor should carefully examine this Limited Offering Memorandum, and the Appendices hereto, and such investor's own financial condition in order to make a judgment as to whether the Series 2017 Bonds are an appropriate investment for such investor. ENFORCEABILITY OF OBLIGATIONS On the date of delivery of the Series 2017 Bonds, Kutak Rock LLP, Atlanta, Georgia, Bond Counsel, will deliver its opinion, dated the delivery date that the Series 2017 Bonds, the Loan Agreement and the Indenture are valid and legally binding on the Issuer, and are enforceable in accordance with their respective terms. Lex-is School Law Services, Durham, North Carolina, as counsel to the Borrower, will deliver its opinion that the Loan Agreement, the Series 2017 Promissory Notes and the Deed of Trust are valid and legally binding agreements of the Borrower, each enforceable in accordance with its respective terms. The foregoing opinions will be generally qualified to the extent that the enforceability of the respective instruments may be limited by laws, decisions and equitable principles affecting remedies and by bankruptcy or insolvency or other laws, decisions and equitable principles affecting creditors' rights generally. While the Series 2017 Bonds are secured or payable pursuant to the Indenture, the Loan Agreement, the Series 2017 Promissory Notes and the Deed of Trust, the practical realization of payment from any security will depend upon the exercise of various remedies specified in the respective instruments. These and other remedies are dependent in many respects upon judicial action, which is subject to discretion and delay. Accordingly, the remedies specified in the above documents may not be readily available or may be limited. LEGAL MATTERS Legal matters incident to the issuance and sale of the Series 2017 Bonds and with regard to the tax-exempt status of interest on the Series 2017A Bonds under existing laws are subject to the legal opinion of Kutak Rock LLP, Atlanta, Georgia, as Bond Counsel. Certain legal matters will be passed on by von Briesen & Roper, s.c., Milwaukee, Wisconsin, as counsel to the Issuer, and by Lex-is School Law Services, Durham, North Carolina, as counsel to the Borrower. Ice Miller LLP, Columbus, Ohio, represents the Underwriter in this transaction. The legal fees paid to Bond Counsel, as well as any of the other foregoing firms, for services rendered in connection with the issuance of the Series 2017 Bonds are contingent upon the actual sale and delivery of the Series 2017 Bonds. The legal opinions express the professional judgment of counsel rendering them, but are not binding on any court or other governmental agency and are not guarantees of a particular result.

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TAX MATTERS Tax Exempt Series 2017A Bonds In General. In the opinion of Kutak Rock LLP, Bond Counsel, in reliance on the opinion of Lex- is School Law Services, Durham, North Carolina, that the Borrower is an organization described under Section 501(c)(3) of the Code, under existing laws, regulations, rulings and judicial decisions, interest on the Series 2017A Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of federal alternative minimum tax. The opinions described in the preceding sentence assume the accuracy of certain representations and compliance by the Issuer, the Trustee, and the Borrower with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Series 2017A Bonds. The inaccuracy of such representations or the failure to comply with such requirements could cause interest on the Series 2017A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2017A Bonds. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Series 2017A Bonds. In addition, Bond Counsel expresses no opinion as to the treatment of interest on the Series 2017A Bonds under the laws of any state. Notwithstanding Bond Counsel's opinion that interest on the Series 2017A Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporation's adjusted current earnings over their alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses). The accrual or receipt of interest on the Series 2017A Bonds may otherwise affect the federal income tax liability of the owners of the Series 2017A Bonds. The extent of these other tax consequences will depend upon such owner's particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Series 2017A 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, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, otherwise entitled to claim the earned income credit, taxpayers entitled to claim the refundable credit in Section 36B of the Code for coverage under a qualified health plan or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Series 2017A Bonds. Tax Treatment of Original Issue Discount. The Series 2017A Bonds that have an original yield above their respective interest rates, as shown on page (i) hereof (collectively, the "Tax-Exempt Discount Bonds") are being sold at an original issue discount. The difference between the initial public offering prices of such Tax-Exempt Discount Bonds and their stated amounts to be paid at maturity constitutes original issue discount treated in the same manner for federal income tax purposes as interest, as described above. The amount of original issue discount which is treated as having accrued with respect to such Tax-Exempt Discount Bond is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of such Tax-Exempt Discount Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of such Tax-Exempt Discount Bond which are attributable to accrued original issue discount will be treated as tax-exempt interest, rather than as taxable gain, for federal income tax purposes. Original issue discount is treated as compounding semiannually, at a rate determined by reference to the of each individual Tax-Exempt Discount Bond, on days which are determined by reference to the maturity date of such Tax-Exempt Discount Bond. The amount treated as original issue

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discount on such Tax-Exempt Discount Bond for a particular semiannual accrual period is equal to (a) the product of (i) the yield to maturity for such Tax-Exempt Discount Bond (determined by compounding at the close of each accrual period); and (ii) the amount which would have been the tax basis of such Tax- Exempt Discount Bond at the beginning of the particular accrual period if held by the original purchaser; (b) less the amount of any interest payable for such Tax-Exempt Discount Bond during the accrual period. The tax basis is determined by adding to the initial public offering price on such Tax-Exempt Discount Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior periods. If such Tax-Exempt Discount Bond is sold between semiannual compounding dates, original issue discount which would have been accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. Owners of Tax-Exempt Discount Bonds should consult their tax advisors with respect to the determination and treatment of original issue discount accrued as of any date and with respect to the state and local tax consequences of owning a Tax-Exempt Discount Bond. Tax Treatment of Original Issue Premium. The Series 2017A Bonds that have an original yield below their respective interest rates, as shown on page (i) hereof (collectively, the "Tax-Exempt Premium Bonds") are being sold at a premium. An amount equal to the excess of the issue price of a Tax-Exempt Premium Bond over its stated redemption price at maturity constitutes premium on such Tax-Exempt Premium Bond. An initial purchaser of a Tax-Exempt Premium Bond must amortize any premium over such Tax-Exempt Premium Bond's term using constant yield principles, based on the purchaser's yield to maturity (or, in the case of Tax-Exempt Premium Bonds callable prior to their maturity, by amortizing the premium to the call date, based on the purchaser's yield to the call date and giving effect to any call premium). As premium is amortized, the amount of the amortization offsets a corresponding amount of interest for the period and the purchaser's basis in such Tax-Exempt Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Tax-Exempt Premium Bond prior to its maturity. Even though the purchaser's basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Tax-Exempt Premium Bonds should consult with their tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Tax-Exempt Premium Bond. Backup Withholding. As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Series 2017A Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments made to any bondholder who fails to provide certain required information including an accurate identification number to any person required to collect such information pursuant to Section 6049 of the Code. The reporting requirement does not in and of itself affect or alter the excludability of interest on the Series 2017A Bonds from gross income for federal income tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations. Taxable Series 2017B Bonds The following is a summary of certain material federal income tax consequences of the purchase, ownership and disposition of the Series 2017B Bonds for the investors described below and is based on the advice of Kutak Rock LLP, as Bond Counsel. This summary is based upon laws, regulations, rulings and decisions currently in effect, all of which are subject to change. The discussion does not deal with all federal tax consequences applicable to all categories of investors, some of which may be subject to special rules, including but not limited to, or entities treated as partnerships for federal income tax purposes, plans and foreign investors, except as otherwise indicated. In addition, this summary is generally limited to investors that are "U.S. holders" (as defined below) who will hold the Series 2017B Bonds as "capital assets" (generally, property held for investment) within the meaning of

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Section 1221 of the Code. Investors should consult their own tax advisors to determine the federal, state, local and other tax consequences of the purchase, ownership and disposition of Series 2017B Bonds. Prospective investors should note that no rulings have been or will be sought from the Internal Revenue Service (the "Service") with respect to any of the federal income tax consequences discussed below, and no assurance can be given that the Service will not take contrary positions. As used herein, a "U.S. holder" is a "U.S. person" that is beneficial owner of a Series 2017B Bond. A "non U.S. holder" is a holder (or beneficial owner) of a Series 2017B Bond that is not a U.S. person. For these purposes, a "U.S. Person" is a citizen or resident of the United States, a corporation or partnership created or organized in or under the laws of the United States or any political subdivision thereof (except, in the case of a partnership, to the extent otherwise provided in the Treasury Regulations), an estate the income of which is subject to United States federal income taxation regardless of its source or a trust if (i) a United States court is able to exercise primary supervision over the trust's administration and (ii) one or more United States persons have the authority to control all of the trust's substantial decisions. In General. Although the Series 2017B Bonds are issued by the Issuer, interest on the Series 2017B Bonds is not excludable from gross income for federal income tax purposes under Section 103 of the Code. Interest on the Series 2017B Bonds will be fully subject to federal income taxation. Thus, owners of the Series 2017B Bonds generally must include interest on the Series 2017B Bonds in gross income for federal income tax purposes. Taxation of Interest Income of the Series 2017B Bonds. Payments of interest with regard to the Series 2017B Bonds will be includible as ordinary income when received or accrued by the holders thereof in accordance with their respective methods of accounting and applicable provisions of the Code. If the Series 2017B Bonds are deemed to be issued with original issue discount, Section 1272 of the Code requires the current ratable inclusion in income of original issue discount greater than a specified de minimis amount using a constant yield method of accounting. In general, original issue discount is calculated, with regard to any accrual period, by applying the instrument's yield to its adjusted issue price at the beginning of the accrual period, reduced by any qualified stated interest (as defined in the Code) allocable to the period. The aggregate original issue discount allocable to an accrual period is allocated to each day included in such period. The holder of a debt instrument must include in income the sum of the daily portions of original issue discount attributable to the number of days he owned the instrument. The legislative history of the original issue discount provisions indicates that the calculation and accrual of original issue discount should be based on the prepayment assumptions used by the parties in pricing the transaction. Payments of interest received with respect to the Series 2017B Bonds will also constitute investment income for purposes of certain limitations of the Code concerning the deductibility of investment interest expense. Potential holders of the Series 2017B Bonds should consult their own tax advisors concerning the treatment of interest payments with regard to the Series 2017B Bonds. A purchaser (other than a person who purchases a Series 2017B Bond upon issuance at the issue price) who buys a Series 2017B Bond at a discount from its principal amount (or its adjusted issue price if issued with original issue discount greater than a specified de minimis amount) will be subject to the market discount rules of the Code. In general, the market discount rules of the Code treat principal payments and gain on disposition of a debt instrument as ordinary income to the extent of accrued market discount. Each potential investor should consult his tax advisor concerning the application of the market discount rules to the Series 2017B Bonds. Sale or Exchange of the Series 2017B Bonds. If a bondholder sells a Series 2017B Bond, such person will recognize gain or loss equal to the difference between the amount realized on such sale and

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the bondholder's basis in such Series 2017B Bond. Ordinarily, such gain or loss will be treated as a capital gain or loss. However, if a Series 2017B Bond was subject to its initial issuance at a discount, a portion of such gain will be re-characterized as interest and therefore ordinary income. If the terms of a Series 2017B Bond were materially modified, in certain circumstances, a new debt obligation would be deemed created and exchanged for the prior obligation in a taxable transaction. Among the modifications which may be treated as material are those which relate to redemption provisions and, in the case of a nonrecourse obligation, those which involve the substitution of collateral. Each potential holder of a Series 2017B Bond should consult its own tax advisor concerning the circumstances in which the Series 2017B Bonds would be deemed reissued and the likely effects, if any, of such reissuance. The legal defeasance of the Series 2017B Bonds may result in a deemed sale or exchange of such Series 2017B Bonds under certain circumstances. Owners of such Series 2017B Bonds should consult their tax advisors as to the federal income tax consequences of such a defeasance. Tax Treatment of Original Issue Discount. The Series 2017B Bonds that have an original yield above their interest rate, as shown on the inside cover page of this Limited Offering Memorandum, are being sold at a discount (the "Taxable Discount Bonds"). The difference between the initial public offering prices, as set forth on the inside cover hereof, of the Taxable Discount Bonds and their stated amounts to be paid at maturity, constitutes original issue discount treated in the same manner for federal income tax purposes as interest, as described above. In the case of an owner of a Taxable Discount Bond, the amount of original issue discount which is treated as having accrued with respect to such Taxable Discount Bond is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of a Taxable Discount Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of a Taxable Discount Bond which are attributable to accrued original issue discount will be treated as taxable interest, rather than as taxable gain, for federal income tax purposes. Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual Taxable Discount Bond, on days which are determined by reference to the maturity date of such Taxable Discount Bond. The amount treated as original issue discount on a Taxable Discount Bond for a particular semiannual accrual period is equal to (a) the product of (i) the yield to maturity for such Taxable Discount Bond (determined by compounding at the close of each accrual period), and (ii) the amount which would have been the tax basis of such Taxable Discount Bond at the beginning of the particular accrual period if held by the original purchaser, (b) less the amount of any interest payable for such Taxable Discount Bond during the accrual period. The tax basis is determined by adding to the initial public offering price on such Taxable Discount Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior periods. If a Taxable Discount Bond is sold between semiannual compounding dates, original issue discount which would have been accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. The Code contains additional provisions relating to the accrual of original issue discount in the case of owners of a Taxable Discount Bond who purchase such Taxable Discount Bonds after the initial offering. Owners of Taxable Discount Bonds including purchasers of the Taxable Discount Bonds in the secondary market should consult their own tax advisors with respect to the determination for federal income tax purposes of original issue discount accrued with respect to such obligations as of any date and with respect to the state and local tax consequences of owning a Taxable Discount Bond. Tax Treatment of Bond Premium. The Series 2017B Bonds that have an original yield below their interest rate, as shown on the inside cover page of this Limited Offering Memorandum, are being sold at a premium (collectively, the "Taxable Premium Bonds"). An amount equal to the excess of the

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issue price of a Taxable Premium Bond over its stated redemption price at maturity constitutes premium on such Taxable Premium Bond. An initial purchaser of such Taxable Premium Bond must amortize any premium over such Taxable Premium Bond's term using constant yield principles, based on the purchaser's yield to maturity (or, in the case of Taxable Premium Bonds callable prior to their maturity, by amortizing the premium to the call date, based upon the purchaser's yield to the call date and giving effect to any call premium). As premium is amortized, it offsets the interest allocable to the corresponding payment period and the purchaser's basis in such Taxable Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Taxable Premium Bond prior to its maturity. Even though the purchaser's basis may be reduced, no federal income tax deduction is allowed. The same treatment is afforded to the Taxable Premium Bonds purchased at a premium in the secondary market. Purchasers of Taxable Premium Bonds should consult with their own tax advisors with respect to the determination and treatment of amortizable premium for federal income tax purposes and with respect to the state and local tax consequences of owning such Taxable Premium Bonds. State, Local or Foreign Taxation. No representations are made regarding the tax consequences of purchase, ownership or disposition of the Series 2017B Bonds under the tax laws of any state, locality or foreign jurisdiction. In connection therewith, Bond Counsel expresses no opinion as to the treatment of interest on the Series 2017B Bonds under the laws of any state. Investors considering an investment in the Series 2017B Bonds should consult their own tax advisors regarding such tax consequences. Certain ERISA Considerations. The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), imposes certain requirements on "employee benefit plans" (as defined in Section 3(3) of ERISA) subject to ERISA, including entities such as collective investment funds and separate accounts whose underlying assets include the assets of such plans (collectively, "ERISA Plans") and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that an ERISA Plan's investments be made in accordance with the documents governing the ERISA Plan. The prudence of any investment by an ERISA Plan in the Series 2017B Bonds must be determined by the responsible fiduciary of the ERISA Plan by taking into account the ERISA Plan's particular circumstances and all of the facts and circumstances of the investment. Government and non-electing church plans are generally not subject to ERISA. However, such plans may be subject to similar or other restrictions under state or local law. In addition, ERISA and the Code generally prohibit certain transactions between an ERISA Plan or a qualified employee benefit plan under the Code and persons who, with respect to that plan, are fiduciaries or other "parties in interest" within the meaning of ERISA or "disqualified persons" within the meaning of the Code. In the absence of an applicable statutory, class or administrative exemption, transactions between an ERISA Plan and a party in interest with respect to an ERISA Plan, including the acquisition by one from the other of the Series 2017B Bonds could be viewed as violating those prohibitions. In addition, Code Section 4975 prohibits transactions between certain tax-favored vehicles such as Individual Retirement Accounts and disqualified persons. Code Section 503 includes similar restrictions with respect to governmental and church plans. In this regard, the Issuer or any dealer of the Series 2017B Bonds might be considered or might become a "party in interest" within the meaning of ERISA or a "disqualified person" within the meaning of the Code, with respect to an ERISA Plan or a plan or arrangement subject to Code Sections 4975 or 503. Prohibited transactions within the meaning of ERISA and the Code may arise if the Series 2017B Bonds are acquired by such plans or arrangements with respect to which the Issuer or any dealer is a party in interest or disqualified person. In all events, fiduciaries of ERISA Plans and plans or arrangements subject to the above Code Sections, in consultation with their advisors, should carefully consider the impact of ERISA and the Code on an investment in the Series 2017B Bonds. The sale of the Series 2017B Bonds to a plan is in no respect a representation by the Issuer or the Underwriter that such an investment meets the relevant legal

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requirements with respect to benefit plans generally or any particular plan. Any plan proposing to invest in the Series 2017B Bonds should consult with its counsel to confirm that such investment is permitted under the plan documents and will not result in a non-exempt prohibited transaction and will satisfy the other requirements of ERISA, the Code and other applicable law. Backup Withholding. Certain purchasers may be subject to backup withholding at the application rate determined by statute with respect to interest paid with respect to the Series 2017B Bonds, if the purchasers fail to supply any applicable persons or their brokers with their taxpayer identification numbers, furnish incorrect taxpayer identification numbers, fail to report interest, dividends or other "reportable payments" (as defined in the Code) properly, or, under certain circumstances, fail to provide such persons with a certified statement, under penalty of perjury, that they are not subject to backup withholding. Unearned Income Medicare Contribution Tax. Pursuant to Section 1411 of the Code, as enacted by the Health Care and Education Reconciliation Act of 2010, an additional tax is imposed on individuals. Holders of the Series 2017B Bonds should consult with their tax advisor concerning this additional tax as it may apply to interest earned on the Series 2017B Bonds as well as gain on the sale of a Series 2017B Bond. Changes in Federal and State Tax Law From time to time, there are legislative proposals in the Congress and in the States that, if enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Series 2017 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Series 2017 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Series 2017 Bonds or the market value thereof would be impacted thereby. Purchasers of the Series 2017 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2017 Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation. UNDERWRITING; LIMITED OFFERING The Series 2017 Bonds will be purchased by BB&T Capital Markets, a division of BB&T Securities, LLC (the "Underwriter"). The Underwriter has agreed to purchase the Series 2017A Bonds at a purchase price of $______(equal to the par amount of the Series 2017A Bonds, [less/plus] original issue [discount/premium] of $______, less Underwriter's discount of $______) and the Series 2017B Bonds at a purchase price of $______(equal to the par amount of the Series 2017B Bonds, less Underwriter's discount of $______), subject to the terms of a Bond Purchase Agreement among the Issuer, the Borrower and the Underwriter. The Bond Purchase Agreement provides that the Underwriter shall purchase all Series 2017 Bonds if any are purchased, and that the obligation to make such purchase is subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. The initial offering prices set forth on page (i) hereof may be changed from time to time by the Underwriter. The Borrower has agreed under the Bond Purchase Agreement to indemnify the Underwriter and the Issuer against certain liabilities, including certain liabilities under federal and state securities laws. INVESTMENT IN THE SERIES 2017 BONDS INVOLVES A SIGNIFICANT DEGREE OF RISK AND EACH PROSPECTIVE INVESTOR SHOULD CONSIDER ITS FINANCIAL CONDITION

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AND THE RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE SERIES 2017 BONDS. EACH INITIAL BENEFICIAL OWNER OF THE SERIES 2017 BONDS SHALL BE EITHER (I) A QUALIFIED INSTITUTIONAL BUYER OR (II) AN ACCREDITED INVESTOR WHO, IN THE CASE OF AN ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, HAS PROVIDED AN INVESTOR LETTER SUBSTANTIALLY IN THE FORM OF APPENDIX H-1 OR APPENDIX H-2 HERETO, AS APPLICABLE, OR SUCH OTHER FORM AS MAY BE APPROVED BY THE ISSUER, TO THE ISSUER AND THE TRUSTEE; THEREAFTER, NEITHER THE SERIES 2017 BONDS NOR ANY BENEFICIAL OWNERSHIP INTEREST THEREIN MAY BE TRANSFERRED BY THE BENEFICIAL OWNER THEREOF EXCEPT IN AUTHORIZED DENOMINATIONS TO A BENEFICIAL OWNER THAT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR. ANY ACCREDITED INVESTOR WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY ONLY PURCHASE AND HOLD A MINIMUM $25,000 IN PRINCIPAL AMOUNT OF SERIES 2017 BONDS REGARDLESS OF ANY LOWER MINIMUM DENOMINATION PROVIDED HEREIN. IN ADDITION, ANY INITIAL PURCHASER THAT IS A QUALIFIED INSTITUTIONAL BUYER AND ANY SUBSEQUENT TRANSFEREE OF THE SERIES 2017 BONDS WILL BE DEEMED TO REPRESENT IN CONNECTION WITH ITS ACQUISITION OF THE SERIES 2017 BONDS THAT: (I) IT IS ABLE TO EVALUATE AND UNDERSTANDS THE RISKS AND THE MERITS OF INVESTING IN THE SERIES 2017 BONDS (AND IS ABLE TO BEAR THE RISKS OF SUCH INVESTMENT FOR AN INDEFINITE TIME), (II) IT IS CAPABLE OF AND HAS MADE ITS OWN INVESTIGATION OF THE BORROWER, THE FACILITIES AND THE PROJECT IN CONNECTION WITH ITS DECISION TO PURCHASE THE SERIES 2017 BONDS, (III) IT IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INVESTOR AND (IV) IT WILL ONLY TRANSFER THE SERIES 2017 BONDS IN AUTHORIZED DENOMINATIONS TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED INVESTOR WHO PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER OR ACCREDITED INVESTOR IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OR EXEMPTIONS THEREFROM. THE ISSUER MAY REMOVE THE FOREGOING RESTRICTIONS WITHOUT NOTICE TO OR CONSENT OF ANY BENEFICIAL OWNER. AT SUCH TIME AS THE BORROWER SHALL PROVIDE TO THE ISSUER AND THE TRUSTEE WRITTEN EVIDENCE TO THE EFFECT THAT EACH RATING AGENCY THEN RATING THE SERIES 2017 BONDS HAVE RATED THE SERIES 2017 BONDS "BBB-" OR EQUIVALENT, OR HIGHER (WITHOUT REGARD FOR GRADATION WITHIN A RATING CATEGORY AND WITHOUT REGARD FOR CREDIT ENHANCEMENT UNLESS SUCH CREDIT ENHANCEMENT EXTENDS THROUGH THE FINAL MATURITY DATE OF THE SERIES 2017 BONDS), THESE RESTRICTIONS SHALL BE OF NO FURTHER FORCE OR EFFECT AND THE AUTHORIZED DENOMINATIONS OF THE SERIES 2017 BONDS SHALL BE CHANGED (IF NECESSARY) TO DENOMINATIONS OF $5,000 OR ANY INTEGRAL MULTIPLE OF $5,000 IN EXCESS THEREOF, IN EACH CASE, NOTWITHSTANDING WHETHER AT A FUTURE TIME THE SERIES 2017 BONDS ARE NO LONGER RATED IN SUCH RATING CATEGORY. SEE "BONDHOLDERS' RISKS – SECONDARY MARKET" HEREIN AND APPENDIX H-1 – "FORM OF INVESTOR LETTER (INVESTOR)" AND APPENDIX H-2 – "FORM OF INVESTOR LETTER (ADVISOR)" ATTACHED HERETO. CONTINUING DISCLOSURE Rule 15c2-12 (the "Rule"), promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, imposes continuing disclosure obligations on the issuers of certain state and municipal securities to permit Underwriters to offer and sell the issuer's securities.

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The Borrower has agreed for the benefit of the Registered Owners and Beneficial Owners of the Series 2017 Bonds to provide certain financial information, including certain quarterly and annual financial information, other operating data, and notices of material events. The Borrower has not previously entered into any disclosure undertakings pursuant to the Rule. The Borrower will enter into the Continuing Disclosure Agreement with DAC, as dissemination agent, for the purpose of ensuring ongoing compliance with its continuing disclosure filing requirements pursuant to the Continuing Disclosure Agreement only. 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 10-15 NASBA certified CPE credits, as well as model secondary market compliance policies and procedures. See APPENDIX F – "FORM OF CONTINUING DISCLOSURE AGREEMENT." In addition, the Borrower has covenanted in the Loan Agreement to provide certain financial information, including certain quarterly and annual financial information, other operating data, and notices. DAC has not been engaged to assist the Borrower in complying with any of its continuing disclosure filing requirements pursuant to the Loan Agreement. Failure to comply with the Continuing Disclosure Agreement or the continuing disclosure obligations set forth in the Loan Agreement in the future may adversely affect the liquidity of the Series 2017 Bonds and their market price in the secondary market. See APPENDIX D – "SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement" and APPENDIX F – "FORM OF CONTINUING DISCLOSURE AGREEMENT." ABSENCE OF MATERIAL LITIGATION The Issuer From time to time the Issuer receives inquiries and requests for documents and information pertaining to unrelated bond issues from various regulatory agencies, including the Securities and Exchange Commission, and in connection with audits by the Internal Revenue Service. To the Issuer's knowledge, as of the date of this Limited Offering Memorandum, there is not pending or threatened, any litigation restraining or enjoining the issuance or delivery of the Series 2017 Bonds or questioning or affecting the validity of the Series 2017 Bonds or the proceedings or authority under which they are to be issued or which in any manner questions the right of the Issuer to enter into the Indenture or the Loan Agreement or to secure the Series 2017 Bonds in the manner provided in the Indenture. The Borrower There is no litigation pending or, to the knowledge of the Borrower, threatened, against the Borrower, which in any manner questions the right or ability of the Borrower to enter into the Loan Agreement or to fulfill the obligations imposed upon the Borrower thereby. The Borrower may, from time to time, be involved in various legal actions consistent with the general experience of entities of similar nature and size. FINANCIAL INFORMATION The audited financial statements of the Borrower for the Fiscal Years ended June 30, 2014, 2015, and 2016, included in this Limited Offering Memorandum in APPENDIX B-1 – "FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2014, 2015 AND 2016" have been audited by Maxton McDowell, Certified Public Accountant (the "Auditor"), to the extent and for the periods indicated in its reports thereon. Such financial statements have been included in reliance upon the reports of the Auditor. The Borrower is not aware of any facts that would make such financial statements

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misleading. These financial statements were prepared using the standards applicable to governmental entities. The audited financial statements included in Appendix B-1 are an integral part hereof and should be read in their entirety. Certain unaudited financial information of the Borrower for the Fiscal Year ended June 30, 2017, prepared by Management, is included in APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT" herein. Such unaudited financial information has been prepared by Management and has not been examined or reviewed by the Auditor or any other independent certified public accountant. See "BONDHOLDERS' RISKS." The Borrower has operated the School since 2013. The Borrower's Projections for the five Fiscal Years ending June 30, 2018 through 2022 contained in APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" were prepared by Management in consultation with Specialized. The Projections constitute "forward-looking" statements of the type described in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See "BONDHOLDERS' RISKS." In order to expand enrollment and grade levels as described herein in connection with the construction of the New Facility, the Borrower will need to obtain approval of the Charter Modification. While Management expects that the Charter Modification will be approved, there can be no assurance that the Charter Modification will be approved. The Projections include one scenario in which the Charter Modification is approved and another scenario, as a sensitivity analysis, in which the Charter Modification is not approved. Refer to APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results.

CERTAIN RELATIONSHIPS Ice Miller LLP has previously represented or currently represents the Issuer, the Underwriter and the Trustee in transactions unrelated to the issuance of the Series 2017 Bonds. FINANCIAL ADVISOR Specialized is employed as financial advisor ("Financial Advisor") to the Borrower in connection with the issuance of the Series 2017 Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Series 2017 Bonds is contingent upon the issuance and delivery of the Series 2017 Bonds. Specialized, in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Series 2017 Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. MISCELLANEOUS The Borrower has furnished the information in this Limited Offering Memorandum relating to itself and the Project and has reviewed the information related to the plan of financing and related documents and information. The Issuer has furnished only the information in this Limited Offering Memorandum under the captions "THE ISSUER" and "ABSENCE OF MATERIAL LITIGATION – Issuer." The Underwriter has furnished the information in this Limited Offering Memorandum with respect to the offering prices of the Series 2017 Bonds and the information under the caption "UNDERWRITING; LIMITED OFFERING." All quotations from, and summaries and explanations of, the Act, the Indenture, the Loan Agreement, the Deed of Trust, and other documents referred to herein do not purport to be complete, and reference is made to such law and documents for full and complete statements of their provisions. Such documents are on file and available for inspection at the office of the Trustee. All references herein to the

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Series 2017 Bonds are qualified by the definitive forms thereof and the information with respect thereto contained in the Indenture. This Limited Offering Memorandum shall not be construed as constituting an agreement with any purchaser of any Series 2017 Bonds. The cover page, introductory statement and the Appendices attached hereto are part of this Limited Offering Memorandum. ANY STATEMENTS MADE IN THIS LIMITED OFFERING MEMORANDUM INVOLVING MATTERS OF OPINION OR OF ESTIMATES, WHETHER OR NOT SO EXPRESSLY STATED, ARE SET FORTH AS SUCH AND NOT AS REPRESENTATIONS OF FACT, AND NO REPRESENTATION IS MADE THAT ANY OF THE ESTIMATES WILL BE REALIZED. OTHER THAN WITH RESPECT TO INFORMATION CONCERNING THE ISSUER CONTAINED UNDER THE CAPTIONS "THE ISSUER" AND "ABSENCE OF MATERIAL LITIGATION - ISSUER," AS SUCH INFORMATION RELATES TO THE ISSUER, NONE OF THE INFORMATION IN THIS LIMITED OFFERING MEMORANDUM HAS BEEN SUPPLIED OR VERIFIED BY THE ISSUER, AND THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION; (II) THE VALIDITY OF THE SERIES 2017 BONDS; OR (III) THE FEDERAL INCOME TAX STATUS OF THE INTEREST ON THE SERIES 2017A BONDS OR ANY STATE INCOME TAX STATUS OF THE SERIES 2017A BONDS.

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The Borrower has approved the information contained herein. UWHARRIE GREEN SCHOOL, INC., a North Carolina nonprofit corporation, as Borrower

By: Name: Title:

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APPENDIX A THE BORROWER, THE SCHOOL AND THE PROJECT [THIS PAGE INTENTIONALLY LEFT BLANK] THE BORROWER, THE SCHOOL AND THE PROJECT

General

Uwharrie Green School, Inc. (the "Borrower") is a North Carolina nonprofit corporation that incorporated on December 20, 2010, and has received a determination letter from the Internal Revenue Service to the effect that it is an organization exempt from federal income taxation pursuant to Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as a result of the application of Section 501(c)(3) of the Code.

The Borrower operates a North Carolina public charter school known as Uwharrie Charter Academy (the "School") pursuant to the North Carolina Charter School Act, codified at N.C. Gen. Stat. § 115C-218, et seq., as amended (the "Charter Schools Act") and the charter contract by and between the Borrower and the North Carolina State Board of Education ("SBE"), effective July 1, 2013 (the "Charter"). The Charter will expire according to its terms on June 30, 2023, if not renewed prior to such date. The Charter permits the Borrower to operate the School for students in grades 5-12 and to expand annually within certain parameters set forth in the Charter and the Charter Schools Act.

The Borrower commenced operations of the School for the 2013-14 school year, during which the School served approximately 181 students in grades 9-10. For the 2016-17 school year, the School served approximately 820 students in grades 6-12. As of the 20th day Average Daily Membership count for the 2017-18 school year, the School served approximately 1,019 students in grades 5-12. Management of the Borrower ("Management") expects the School to expand to serve approximately 1,600 students in grades K-12 for the 2018-19 school year, with stabilized enrollment of approximately 1,680 students in grades K-12 being achieved for the 2021-22 school year.

Such enrollment and grade level expansion is subject to risks described in this Limited Offering Memorandum, including those related to approval of the Charter Modification (as defined herein) by SBE and completion of the Construction Project (as defined herein). While Management expects to obtain approval of the Charter Modification, Management believes that the School could expand its enrollment and grade levels within the limitations of the Charter while still generating revenues sufficient to support the Construction Project and create cash reserves.

The Borrower currently operates the School from two campuses, one of which it leases and one of which it owns: grades 5-8 are served at an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 (the "Existing Facility") and grades 9-12 are served at 5326 US Highway 220 Business South, Asheboro, North Carolina (the "Government Loan Facilities"). In addition, the Borrower owns the approximately 30 acre site on which athletic facilities for the School are located at 843 Ludlum Lane, Asheboro, North Carolina 27205 (the "Athletic Facility").

The Borrower acquired the approximately 40 acre tract of land in Randolph County, North Carolina, at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect site on which an educational facility is to be located (the "New Facility" and, together with the Existing Facility, the "Facilities") from an unrelated third party for a purchase price of $136,000 on March 4, 2016.

The Facilities, the Government Loan Facilities, and the Athletic Facility, collectively, are sometimes referred to herein as the "School Facilities."

The Borrower will use the proceeds of the Series 2017 Bonds for the Project, a portion of which includes the construction of a single-story, 55,265 square foot building with 36 classrooms (the "New Facility Construction Project") and an approximately 19,260 square foot gymnasium (the "Gymnasium Construction Project" and, together with the New Facility Construction Project, the "Construction Project").

The New Facility Construction Project is expected to cost approximately $9,709,892.35 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017. The Gymnasium Construction Project is expected to cost approximately $2,745,436.40 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017.

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CO\5642586.6 See "BONDHOLDERS' RISKS – Risks of Real Estate Investment – Completion of the Construction Project."

Upon completion of the Construction Project, Management expects the School to serve students in grades K-4 from the Existing Facility, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Government Loan Facilities.

See "THE BORROWER, THE SCHOOL AND THE PROJECT," "BONDHOLDERS' RISKS – Risks of Real Estate Investment," and "THE PROJECT."

Governing Board

The functions and affairs of the Borrower are to be directed entirely by the Board of Directors (the "Board"), which is to consist of not less than five and not more than nine directors (each, a "Director").

There are three classes of Directors, with each class containing one-third of the total number of Directors, or as near as may be possible. Each Director serves a three year term, and a Director may serve a maximum of two consecutive terms.

Directors are elected at the annual meeting of the Board. A Director may be removed from the Board for cause by a majority vote. Officers of the Board are elected during the December meeting each year and serve a training period until they assume office upon the subsequent June meeting. The officers of the Board include the Chairman, Vice-Chairman, Treasurer, and Secretary. No Director may serve in the same office for more than three consecutive years.

Regular meetings of the Board are held monthly. The annual meeting of the Board is held each June for the purpose of electing Directors. Special meetings of the Board may be called by or at the request of any member of the Executive Committee.

Current Directors and officers of the Board are listed in the following table.

Year Term Name Position Profession Employer Joined Expires Mac Whatley Chairperson Attorney Self 2012 2018 Stacy Griffin Vice Chairperson City of Asheboro 2014 2020 Julia Del Grande Secretary Manager The Table Farmhouse Bakery 2013 2019 Mark Hensley Treasurer Banking Capital Bank 2012 2018 Ashley Duggins Director Pharmacist Self 2014 2020 David McRae Director CEO Blackstone Furniture 2014 2020 Angie Kern Director Education Pfeiffer University 2015 2018 Aaryn Slafky Director Consulting Pivot Group 2016 2019 Michael Strickland Director Education Elon University 2013 2019

Mac Whatley/Chairperson – Mac Whatley graduated from Harvard College with a Bachelor's of Arts in Library Science, holds a Master's degree in Library Sciences from the University of North Carolina ("UNC"), and earned a juris doctor from North Carolina Central University. Mr. Whatley is an attorney who is currently a sole practitioner. In addition, he is Director of Local History and Genealogy Resources for the Randolph County Public Library, Chair of the Randolph County Historic Landmarks Preservation Commission, and a Commissioner of the Town of Franklinville, North Carolina. Mr. Whatley has previously served as Mayor of the Town of Franklinville, North Carolina, and interim Executive Director of the Richard Petty Museum. He currently serves as a trustee of the American Textile History Museum. Mr. Whatley was a founding Director.

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Stacy Griffin/Vice Chairperson – Stacy Griffin holds a Bachelor of Arts in Communications from UNC. Ms. Griffin is the Human Resources Director for the City of Asheboro, North Carolina, and the former Human Resources Director for Randolph County Government. She has more than 15 years of experience in human resources, prior to which she was a manager and team leader in the mortgage lending industry.

Julia Del Grande/Secretary – Julia Del Grande holds a Bachelor's of Science in Business from Pfeiffer College in Misenheimer, North Carolina. Ms. Del Grande is currently the manager of a bakery and has previous professional experience in human resources, consulting, and accounting. She is also a volunteer in religious and community organizations. Ms. Del Grande has previously served as fundraising chair and on the Board recruitment committee for the Borrower.

On May 16, 2013, Ms. Del Grande and her husband loaned the Borrower $10,000 for tenant improvements to the Existing Facility, which loan is to be repaid in 60 consecutive monthly principal and interest payments of $250 each, beginning on July 1, 2013, with a final payment of all outstanding principal and unpaid interest due on June 30, 2018. Interest on such loan accrues at 16.75% per annum. The loan will be paid off using a portion of the proceeds of the Series 2017 Bonds. Ms. Del Grande did not participate in the Board's consideration of the foregoing transactions or vote thereon. The Board complied with its conflict of interest policies in all respects in connection with such transactions.

Mark Hensley/Treasurer – Mark Hensley holds a Bachelor's of Arts in Psychology from North Carolina State University ("NCSU") and completed the Executive Program at the Darden School of Business at the University of Virginia. Mr. Hensley has more than 35 years of experience in banking, including his current position as Senior Vice President/Mortgage Banking Executive at Capital Bank. He is treasurer and a current member of the United Way's Uwharrie Society Board, a member of the board of directors of Habitat for Humanity North Carolina, and a member of the board of directors of Hospice of Randolph County, and a past member of the board of directors of the Community Foundation of Randolph County.

Mr. Hensley was a Director and CommunityOne Bank, N.A. ("CommunityOne"), when the Borrower obtained and secured a from CommunityOne. The line of credit will be paid off using a portion of the proceeds of and terminated in connection with the issuance of the Series 2017 Bonds. Mr. Hensley did not participate in the Board's consideration of the foregoing transaction or vote thereon. The Board complied with its conflict of interest policies in all respects in connection with such transactions.

On May 16, 2013, Mr. Hensley and his wife loaned the Borrower $10,000 for tenant improvements to the Existing Facility, which loan is to be repaid in 60 consecutive monthly principal and interest payments of $250 each, beginning on July 1, 2013, with a final payment of all outstanding principal and unpaid interest due on June 30, 2018. Interest on such loan accrues at 16.75% per annum. The loan will be paid off using a portion of the proceeds of the Series 2017 Bonds. Mr. Hensley did not participate in the Board's consideration of the foregoing transactions or vote thereon. The Board complied with its conflict of interest policies in all respects in connection with such transactions.

Ashley Duggins/Director – Ashley Duggins holds a Doctorate of Pharmacy from UNC. Ms. Duggins is the owner and Chief Executive Officer of an independent pharmacy. She is a member of the board of directors of the YMCA of Asheboro.

David McRae/Director – David McRae graduated from Sandhills Community College in Pinehurst, North Carolina, with an Associate's of Arts for college transfer and completed his studies at NCSU with a Bachelor's of Arts in , and the University of North Carolina-Greensboro ("UNCG") with a Master's of Business Administration. Mr. McRae is the Chief Executive Officer and President of a closely held furniture production corporation for which he has worked in various capacities for more than 20 years. In addition, Mr. McRae is the founder and director of a nonprofit corporation created to assist families with children in Moore, Montgomery, and Randolph counties in North Carolina. He is currently the personnel director, finance director, and treasurer for his church and also serves on the Lloyd Robbins Scholarship Committee at the Center for Scholarship Administration.

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Angie Kern/Director – Dr. Angie Kern holds a Bachelor's of Arts in Psychology from NCSU, a Master's of Education in Elementary Education from UNCG, and a Doctorate of Education in Curriculum & Instruction from UNC. Dr. Kern is an Associate Professor of Education at Pfeiffer University at Misenheimer in Misenheimer, North Carolina, has more than 20 years of experience as an educator, including more than 10 years as an adjunct, assistant, or associate professor, 10 years as an elementary school teacher, and eight years as an academically and intellectually gifted education consultant. She holds North Carolina licenses in Elementary Education K-6 and Academically and Intellectually Gifted K-12 and is a North Carolina licensed Curriculum Instruction Specialist K- 12 and Reading Specialist K-12.

Aaryn Slafky/Director – Aaryn Slafky graduated from George Washington University with a Bachelor's of Arts in Anthropology. Ms. Slafky is a Senior Marketing Consultant for the Pivot Group, a national marketing agency. She also has nearly 20 years of experience as a director of communications and as a marketing and communications director. Ms. Slafky is a past Randolph Rotary President, Randolph County Economic Development Corporation Board Member, and Liberty Chamber of Commerce Board Member.

Michael Strickland/Director – Michael Strickland holds a Bachelor of Science in Environmental Studies from Clemson University and a Masters in Curriculum and Instruction from the University of Georgia. Mr. Strickland is a professor in both the Department of English and the Department of Environmental Studies at Elon University, where he teaches courses on a diverse list of topics from travel writing, science writing, media studies, and Beat Generation literature, to organic gardening and the relationship between humans and the natural world. He is the founding Director of the Elon University Community Garden, and former Director of Writing across the Curriculum at Elon. Mr. Strickland has written or co-authored papers on topics that range from writing across the curriculum, experiential project-based education, and rhetorical analysis of scientific discourse, to semiotics and popular culture. He has taught classes and workshops at large universities and small liberal arts colleges from Maine to Florida.

Fiscal Policies of the Corporation

Budget, Financial Management, and Financial Statements. The Principal and Chief Executive Officer (the "Principal") is responsible for properly accounting for all funds received and all expenses incurred in the operation of the Borrower. The Principal is expected to work with an administrative assistant and the contracted accounting firm to produce monthly financials made available to the Board through the Treasurer's report prior to each monthly meeting.

All funds and accounts of the Borrower are required to be audited annually after the close of each Fiscal Year in accordance with State law. The Board must appoint an independent auditor licensed to practice in North Carolina and approved by the Commission. The independent auditor is required to submit a report to the Board that includes the audited financial statements and an opinion regarding those financial statements. The Principal, administrative assistant, and a designee from the contracted accounting firm is required to provide the appropriate documentation to the auditors as requested.

The annual budget is the financial plan for the operation of the Borrower and must be approved by the Board with an accompanying resolution by July 1 of every year. The annual operating budget is based on a Fiscal Year that runs from July 1 to June 30, which provides the framework for both expenditures and revenues for the Fiscal Year and is fundamental in supporting educational programs and goals of the School. The operating budget should ultimately support the vision and mission of the Borrower. The Board assigns to the Principal the overall responsibility for the preparation and administration of the budget. The annual budget for the upcoming Fiscal Year is to be submitted for review and approval by the Board during the regular May meeting.

Conflicts of Interest. The Borrower has adopted a conflict of interest policy, which prohibits the Borrower from engaging in any transaction to which the Borrower is a party in which one or more of the Directors has a material financial interest, except as approved by the Board. The conflict of interest policy requires that any Director, officer, key employee, or committee member having an interest in a contract, other transaction or program presented to or discussed by the Board or Board committee for authorization, approval, or ratification shall make a prompt, full and frank disclosure of his or her interest to the Board or committee prior to its acting on such contract or transaction. Such disclosure is required to include all relevant and material facts know to such person about the

A-4 contract or transaction which might reasonably be construed to be adverse to the Borrower's interest. The body to which such disclosure is made shall thereupon determine, by majority vote, whether the disclosure shows that a conflict of interest exists or can reasonably be construed to exist. If a conflict is deemed to exist, such person shall not vote on, nor use his or her personal influence on, nor be present during the discussion or deliberations with respect to, such contract or transaction (other than to present factual information or to respond to questions prior to the discuss). The minutes of the meeting are required to reflect the disclosure made, the vote thereon and, where applicable, the abstention from voting and participation. For purposes of the conflict of interest policy, a person will be deemed to have an "interest" in a contract or other transaction if he or she is the party (or one of the parties) contracting or dealing with the corporation, or is a director, or officer of, or has a significant financial or influential interest in the entity contracting or dealing with the Borrower.

In addition, the Borrower is not permitted to hire employees, vendors, or other service providers for pay who are "close relatives" of any existing employee (faculty or administrative staff) or current Director, without prior approval of the Board. A "close relative" is a spouse, child or stepchild, parent or stepparent or parent-in-law, or grandchild or grandparent, regardless of whether the familial relationship is by blood, marriage, or adoption. The Board may only make rare exceptions to this policy when the employee or vendor candidate being considered is the best qualified to fill a position and other similarly qualified candidates are not available in the community.

In addition to the transactions between the Borrower and certain current Directors described under the heading "Governing Board," on May 16, 2013, a former Director and her husband loaned the Borrower $10,000 for tenant improvements to the Existing Facility, which loan is to be repaid in 60 consecutive monthly principal and interest payments of $250 each, beginning on July 1, 2013, with a final payment of all outstanding principal and unpaid interest due on June 30, 2018. Interest on such loan accrues at 16.75% per annum. The loan will be paid off using a portion of the proceeds of the Series 2017 Bonds. The former Director did not participate in the Board's consideration of the foregoing transactions or vote thereon. The Board complied with its conflict of interest policies in all respects in connection with such transactions.

THE PROJECT General

Proceeds of the Series 2017 Bonds will be used to (a) finance and/or refinance the acquisition, construction, improvement and/or equipping of (i) the Existing Facility and (ii) the New Facility; (b) fund any required reserve funds for the Series 2017 Bonds; (c) fund capitalized interest on the Series 2017 Bonds; (d) finance and/or refinance working capital loans of or to the Borrower; and (e) pay all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the "Project").

The Construction Project

General. The Borrower will use the proceeds of the Series 2017 Bonds for the Project, a portion of which includes the New Facility Construction Project and the Gymnasium Construction Project.

The New Facility Construction Project is expected to cost approximately $9,709,892.35 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017. The Gymnasium Construction Project is expected to cost approximately $2,745,436.40 and to be completed on or about August 7, 2018, assuming that construction thereof commences on or before October 30, 2017.

See "BONDHOLDERS' RISKS – Risks of Real Estate Investment – Completion of the Construction Project."

Upon completion of the Construction Project, Management expects the School to serve students in grades K-4 from the Existing Facility, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Government Loan Facilities.

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The Construction Contract. The Borrower expects to enter into an AIA Document A101-2007 Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum (the "Construction Contract") with Hubrich Contracting, Inc. (the "Contractor"), for the Construction Project.

The Construction Contract is expected to set a stipulated sum of $12,455,328.75 (the "Stipulated Sum") for the Construction Project and to require the Construction Project to be completed within 281 days of the Closing Date (the "Completion Date"), subject to the provisions of the Construction Contract by which the Completion Date may be adjusted. The Construction Project is expected to provide that if the Construction Project is not completed by the Completion Date, the Contractor must pay to the Borrower $2,000 per day in liquidated damages.

See "BONDHOLDERS' RISKS – Risks of Real Estate Investment – Completion of the Construction Project."

The Construction Budget and Timeline. The following table sets forth the budget for the Construction Project, which sums to the Stipulated Sum set forth above.

Budget Component Budgeted Amount New Facility Construction Project (Total Cost – Building) $9,564,392.35 Gymnasium Construction Project (Total Cost – Building) 2,705,176.40 New Facility Construction Project (Performance Bond) 145,500.00 Gymnasium Construction Project (Performance Bond) 40,260.00 TOTAL $12,455,328.75

The Borrower and the Contractor have not yet obtained all permits required for the Construction Project, but expect that such permits will be obtained in due course. On August 8, 2017, the Borrower obtained a Special Use Permit from the Randolph County Planning Board, which allows the School to expand to use the New Facility as contemplated in connection with the Construction Project.

The following table sets forth the timeline for the Construction Project.

Submission Date Receipt or Description (if applicable) Completion Date Special Use Permit July 7, 2017 August 8, 2017 Grading Permit August 9, 2017 September 8, 2017 Building Permit September 29, 2017 November 15, 20171 Road Design Approval November 27, 20171 February 28, 20181 Gymnasium Construction Project Certificate of Occupancy N/A August 7, 20181 New Facility Construction Project Certificate of Occupancy N/A August 7, 20181

There can be no assurance that the grading permit, building permit, road design approval, or certificate of occupancy dates set forth above will be achieved by the dates set forth above or at all, nor can there be any assurance that any conditions imposed on the Construction Project during the processes necessary to obtain the grading permit, building permit, or road design approval will be time- or cost-neutral to the Construction Project.

See "BONDHOLDERS' RISKS – Risks of Real Estate Investment – Completion of the Construction Project."

1 Anticipated.

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The Contractor and the Architect. The Contractor is a real estate development and construction company that specializes in full service facility development. Steve Hubrich, President of the Contractor, has been involved with real estate development and construction projects from planning at inception, through the completion and occupancy since 1994, and is personally involved with every building and facility constructed by the Contractor.

Brockwell Associates, Inc. (the "Architect") will serve as architect in connection with the Construction Project. Representative projects undertaken by the Architect include approximately $250 million in commercial, healthcare, educational, and other projects, including prior projects for the Borrower.

The Mortgaged Property

The Series 2017 Bonds will be secured in part by a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of November 1, 2017 (the "Deed of Trust"), by the Borrower to Investors Title Insurance Company, for the benefit of the Trustee, as beneficiary, to secure the repayment of the Series 2017 Promissory Notes, which grants a lien on and security interest in the New Facility, subject to certain "Permitted Encumbrances" described in the Deed of Trust. There is no mortgage on or assignment of the leasehold interest of the Borrower in the Existing Facility. See "BONDHOLDERS' RISKS – No Appraisal."

Only the New Facility is subject to the Deed of Trust. None of the Existing Facility, the Government Loan Facilities, or the Athletic Facility are subject to the Deed of Trust.

Environmental Report

Modulus, PLLC (the "Consultant") performed a Phase I Environmental Site Assessment dated June 29, 2017 (the "Phase I Environmental Site Assessment") of the site on which the New Facility will be located, which identified no recognized environmental conditions and after which the Consultant recommended no additional environmental work.

The Phase I Environmental Site Assessment speaks only as of its date, and the Consultant has not been asked to perform any additional assessment since the time of the assessment described in the Phase I Environmental Site Assessment. Further, the Phase I Environmental Site Assessment is subject to the limitations specified therein. More generally, no environmental assessment can completely eliminate uncertainty regarding the potential for recognized environmental conditions in connection with a subject property. Potential investors must refer to the complete Phase I Environmental Site Assessment for a full understanding of such limitations, and for additional information pertinent to the Phase I Environmental Site Assessment. Costs incurred by the Borrower with respect to environmental remediation or liability could adversely affect the financial condition thereof. See "BONDHOLDERS' RISKS – Environmental Risks."

Copies of the Phase I Environmental Site Assessment are available from the Underwriter during the offering period for the Series 2017 Bonds.

THE SCHOOL

The Charter

The Borrower operates the School pursuant to the Charter Schools Act and the Charter. The Charter will expire according to its terms on June 30, 2023, if not renewed prior to such date. The Charter permits the Borrower to operate the School for students in grades 5-12 and to expand annually within certain parameters set forth in the Charter and the Charter Schools Act. See "BONDHOLDERS' RISKS – Nonrenewal or Revocation of Charter."

Charter compliance is monitored by SBE, the North Carolina Department of Public Instruction ("DPI") and its Office of Charter Schools ("OCS"), which work together to manage charter schools in the State of North Carolina. SBE is the authorizer of all North Carolina charter schools, including the School. OCS is the communication liaison between SBE and the School. OCS makes annual visits to every North Carolina charter school, with more frequent visits required if operational issues arise.

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At least 60% of a charter school's students must meet Growth standards: if a charter school does not meet Growth standards in two years of each three-year period, such charter school is put on "notice" with SBE and receives a letter advising the charter school of its deficiency. Any such notice precipitates OCS visits to a charter school each semester, quarter or month, depending on the severity of the deficiency and requires the charter school provide a plan as to how it will correct the deficiency. OCS then provides feedback on such plan. Should the charter school fail to pass the proficiency evaluations for an additional year, SBE may terminate the charter school's charter.

In order to expand enrollment and grade levels as described herein in connection with the construction of the New Facility, the Borrower will need to obtain approval of a modification of the Charter (the "Charter Modification"). While Management expects that the Charter Modification will be approved, application for the Charter Modification will not be made to SBE until November 2017. The application for the Charter Modification will be considered in stages, with each stage expected to be completed in one month: first, the application will be reviewed by the Charter School Advisory Board ("CSAB"); second, CSAB will recommend either approval or denial of the application to SBE; and third, SBE will either approve or deny the application. As such, assuming application for the Charter Modification is made to SBE in November 2017, the earliest date on which SBE could be expected to approve or deny the Charter Modification is March 2018. There can be no assurance that the Charter Modification will be approved. See "BONDHOLDERS' RISKS – Application for Charter Modification."

Future Plans

As described herein, Management expects the School to expand to serve approximately 1,600 students in grades K-12 for the 2018-19 school year, with stabilized enrollment of approximately 1,680 students in grades K-12 being achieved for the 2021-22 school year.

Upon completion of the Construction Project, Management expects the School to serve students in grades K-4 from the Existing Facility, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Government Loan Facilities.

Thereafter, Management expects to undertake an additional expansion project, which is expected to include the construction of a new building located on the same site as the New Facility (the "Phase II Facility") from which students in grades 9-12 would be served beginning with the 2021-22 school year.

Management expects to finance construction of the Phase II Facility, which Management expects to cost approximately $11,000,000, with the proceeds of one or more series of taxable or tax-exempt bonds, which are expected to be issued as Additional Bonds pursuant to the Indenture.

Upon completion of the Phase II Facility, Management expects the School to serve students in grades K-4 from the Government Loan Facilities, students in grades 5-8 from the New Facility, and students in grades 9-12 from the Phase II Facility.

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The School Facilities

General. The Borrower currently operates the School from (i) the Existing Facility, which it leases pursuant to a Lease Agreement dated as of February 1, 2013, as extended by the option to renew and extend the lease agreement exercised by the Borrower on September 19, 2016 (collectively, the "Existing Facility Lease"), by and between Klausner Furniture Industries, Inc., and the Borrower, (ii) the Government Loan Facilities, which the Borrower owns, and (iii) the Athletic Facility, which the Borrower owns.

While the Borrower expects to continue to operate the School from the Existing Facility upon completion of the Construction Project, the Borrower eventually plans to cease operations of the School at the Existing Facility upon completion of the Phase II Facility.

The term of the Existing Facility Lease expires on June 30, 2022, and the Borrower is responsible for paying monthly rentals thereunder of $11,000 for the Fiscal Year ended June 30, 2017, subject to increase by the lesser of 5% and the annual increase in CPI for Fiscal Years thereafter. The Borrower may extend the Existing Facility Lease for five additional years by giving written notice of renewal at least 120 days prior to expiration of the then-current term.

Certain information regarding the School Facilities is set forth in the following chart.

Grades Served Real and Personal Defined Grades Served for for 2018-19 Ownership Property Pledged Revenues Pledged to Term Address or Property Location 2017-18 (Expected) Status to Secure Secure Series 2017 Bonds and Existing 301 Lewallen Road, Asheboro, North 5-8 K-4 Leased N/A Government Loan, on a Facility Carolina 27205 parity basis At the Southeast corner of where N/A (to be Series 2017 Bonds and New Pisgah Covered Bridge Road (State constructed for 5-8 Owned Series 2017 Bonds Government Loan, on a Facility Route 1114) and Interstate Highway 2018-19 school parity basis 73/74 intersect year) Government 5326 US Highway 220 Business Series 2017 Bonds and Loan South, Asheboro, North Carolina 9-12 9-12 Owned Government Loan Government Loan, on a Facilities 27205 parity basis Series 2017 Bonds and Athletic 843 Ludlum Lane, Asheboro, North N/A (athletics N/A (athletics only) Owned Government Loan Government Loan, on a Facility Carolina 27205 only) parity basis

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Map of the School Facilities. The map below shows the locations of the Existing Facility, the Government Loan Facilities, the New Facility, and the Athletic Facility.

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Service Area

General. The School is located in Asheboro, North Carolina, which is located in Randolph County, and primarily serves students who would otherwise attend Asheboro City Schools ("ACS") or Randolph County Schools ("RCS").

For the school years listed in the following table, the School drew students from the listed school district.

School District 2013-14 2014-15 2015-16 2016-17 ACS 61 88 172 197 Davidson County Schools 1 16 22 23 Chatham County Schools 0 0 2 1 Guilford County Schools 2 5 5 7 Montgomery County Schools 10 25 81 103 Moore County Schools 4 4 16 15 RCS 103 182 442 473 Rowan-Salisbury Schools 0 0 1 1 TOTAL 181 320 741 820

Randolph County and State of North Carolina Population and Demographic Information. The U.S. Census Bureau has estimated the following demographic statistics for Randolph County and the State of North Carolina.

Randolph County State of North Carolina Population estimate, 2015 143,416 10,146,788 Population estimate, 2010 141,779 9,535,688 Population change 1.2% 6.4% Persons under 5 years, 2015 5.7% 6.0% Persons under 5 years, 2010 6.3% 6.6% Persons under 18 years, 2015 23.1% 22.7% Persons under 18 years, 2010 24.5% 23.9%

The State of North Carolina Office of Budget and Management provides the following population estimates for the State of North Carolina, and Randolph County.

Geographic Area April 2010 July 2015 Growth (#) Growth (%) North Carolina 9,535,692 10,056,683 520,991 5.5% Randolph County 141,752 142,943 1,191 0.8%

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Income and Employment. The following tables show per capita personal income data for the State of North Carolina and Randolph County, respectively, for the years shown, each according the U.S. Department of Commerce Bureau of Economic Analysis.

State of North Carolina Per Capita Personal Income Description 2012 2013 2014 2015 2016 Personal Income (000s) $376,200,549 $372,140,736 $391,300,375 $409,338,338 $426,188,736 Population (# persons) 9,746,175 9,841,590 9,934,399 10,035,186 10,146,788 Per Capital Personal Income ($) 38,600 37,813 39,388 40,790 42,002

Randolph County Per Capita Personal Income Description 2012 2013 2014 2015 2016 Personal Income (000s) $4,452,612 $4,429,626 $4,666,813 $4,840,691 N/A Population (# persons) 142,268 142,336 142,617 142,799 N/A Per Capital Personal Income ($) 31,297 31,121 32,723 33,899 N/A

The following tables list the top ten employers in Randolph County, as reported by the State of North Carolina Department of Commerce.

Randolph County Rank Company Industry 1 Randolph County Schools Education & Health Services 2 United Furniture Industries Manufacturing 3 Randolph , Inc. Education & Health Services 4 Technimark, Inc. Manufacturing 5 Klaussner Furniture Industries, Inc. Manufacturing 6 Hughes Furniture Industries, Inc. Manufacturing 7 County of Randolph 8 Wal-Mart Associates Inc. Trade, Transportation & Utilities 9 Asheboro City Schools Education & Health Services 10 Energizer Manufacturing, Inc. Manufacturing

Competitive Schools.

Public Schools. The School is located in Asheboro, North Carolina, which is located in Randolph County, and primarily serves students who would otherwise attend ACS or RCS.

For the 2015-16 school year, the last year for which ACS has publicly reported such information, ACS served approximately 4,648 students in eight schools, including five elementary schools, two middle schools, and one high school.

For the 2015-16 school year, the last year for which RCS has publicly reported such information, ACS served approximately 17,185 students in eight schools, including five elementary schools, two middle schools, and one high school.

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Certain schools operated by ACS and RCS have been identified by Management as the School's direct competitors, including Southwestern Randolph Middle School, South Asheboro Middle School, North Asheboro Middle School, Uwharrie Middle School, Asheboro High School, and Southwestern Randolph High School. More information about these schools is provided below.

Charter Schools. Management has identified one charter school, Chatham Charter Academy, which is located in Chatham County, North Carolina, as a competitor of the School.

Private Schools. Management has identified two private schools as competitors of the School: Faith Christian School and Fayetteville Street Christian Academy.

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The table below shows certain basic information and academic performance data for traditional public schools, charter schools, and private schools Management has identified as competitors of the School for the 2015-16 school year. See "Academic Performance" for additional information regarding the School and its competitors, including comparative performance data for the School, ACS, RCS, and the State of North Carolina.

School School School Growth Achievement Name Grades Type Performance Performance District Score Score Grade Score The School N/A 6-12 Charter 66.2 63 C 64 Southwestern Randolph Middle School RCS 6-8 Traditional Public 82.1 54 C 59 South Asheboro Middle School ACS 6-8 Traditional Public 80.7 55 C 60 North Asheboro Middle School ACS 6-8 Traditional Public 92.3 57 C 64 Uwharrie Middle School RCS 6-8 Traditional Public 65.7 51 D 54 Asheboro High School ACS 9-12 Traditional Public 86.4 62 C 67 Southwestern Randolph High School RCS 9-12 Traditional Public 98.7 68 B 74 Chatham Charter School N/A K-12 Charter 84.4 76 B 78 Faith Christian School N/A 3K-12 Private N/A N/A N/A N/A Fayetteville Street Christian School N/A preK-12 Private N/A N/A N/A N/A Source: Education First North Carolina Report Cards

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School Administration

Heather Soja/Superintendent – Heather Soja is the Superintendent of the School. She earned a Bachelor of Arts in Biology from UNC-Wilmington and a Master of Education in Science Education from UNCG. Most recently she completed an add-on program in School Administration from High Point University. Ms. Soja spent 13 years in the classroom teaching various levels of science, including Advanced Placement Chemistry and Biology, and designed her own course that emphasized research integrated with field studies. Five of Ms. Soja's years in education were spent at the Asheboro High School Zoo School (which she designed and implemented) where she taught and lead other teachers in project-based, experiential learning applications for the classroom. Ms. Soja drew on her passion for seeking new ways to engage and inspire students outside of the traditional four walls that have come to squelch students' creativity through excessive testing and mediocrity in founding the School, which was the first charter school in Randolph County, North Carolina.

Van Hurley/Director of Operations – Van Hurley is the Director of Student Services/Athletic Director and Baseball Coach at the School. Mr. Hurley joined the School after a stint as the Baseball Coach at Randleman High School, where he compiled a record of 117-22 from 2008 to 2012, including coaching the team to a 2011 2A NCHSAA State Championship. For his efforts, Mr. Hurley was the 2011 2A NCHSAA Baseball Coach of the Year and the North Carolina Baseball Coaches Association Region 5 Coach of the Year. Mr. Hurley also coached football and served as an assistant athletic director at Randleman High School and previously served as an assistant football coach and assistant baseball coach at Trinity High School.

Casey Harris/Director of Academics – Casey Harris is the Director of Academics at the School. Mr. Harris has ten years of experience in education. He holds a Bachelor of Arts in History from High Point University and a Master's in Educational Administration from Western Carolina University. Mr. Harris taught history in middle and high schools and has served as an administrator for four years.

Lauren O'Brien/Middle School Administrator – Lauren O'Brien is the Middle Grade Administrator for the School. Ms. O'Brien received a Bachelor of Arts Degree in Elementary Education from High Point University, and subsequently took the Praxis for Middle Grades Social Studies. She is finishing a Master's Degree in Administration through Western Carolina University, which is anticipated in May 2017.

Sheral Vang/High School Administrator – Sheral Vang is the High School Administrator for the School. Ms. Vang holds a Master's Degree in School Administration from the University of North Carolina at Pembroke and a Bachelors of Arts in Business from Pfeiffer University. In addition, she obtained a National Board credential for Professional Teaching Standards in Career and Technical Education/Early Adolescence through Young Adulthood. During her 18 year career in education, Ms. Vang has taught technology at the elementary school level, taught business education at the high school level, and served in leadership and administration roles.

Faculty and Employees The following table sets forth the historical, current, and projected staffing of the School.

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Teacher 13 21 52 54 70 111 115 113 113 Support Staff 2 2 4 4 14 20 20 22 22 Administration 2 6 13 15 7 10 10 10 10 Bus Driver 1 2 5 5 6 10 11 12 13 TOTAL 18 31 74 78 97 151 156 157 158

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The following table sets forth the teacher retention rate for the School, which is not yet available for the 2017-18 school year.

2013-14 2014-15 2015-16 2016-17 Retention Rate 88% 93% 96% 91%

Educational Philosophy and Curriculum

Mission. The School's mission is to exist to:

• provide a truly rigorous pathway to college and career readiness; • afford students the benefit of a small learning community with a low teacher/student ratio in an effort to promote strong relationships with students and individualized support for learning; • imbed the curriculum with STEM focused content through problem-based learning, historical developments in technology, hands-on math, and inquiry science that requires engineering and ingenuity • promote hands-on, project-based learning in all courses; • support the development of 21st century skills integrating the use of technology; • partner with parents so that they understand their role in their child’s education; • build relationships with local institutions in order to provide real-world connections and opportunities for applied learning; and • promote environmental stewardship including the adoption of green practices in student’s everyday lives and the integration of the State's Environmental Literacy Plan in a cross curricular approach.

Vision. The School's vision is that it will graduate students who understand the importance of critical thinking, problem solving, responsible citizenship, and clear communication so that they are prepared for the world of work and/or higher education.

Academic Focus and Educational Culture. The School is founded upon three unique principles: hands-on experiential education, environmental literacy, and community service delivered through an extensive project-based learning lens. Students are also prepared in a college and career preparatory environment even though it evolves each year.

Experiential Learning. Management believes in learning by doing. One of the School's mottoes is that "Information without application is hallucination." Knowledge conveyed without context and application is knowledge that is not learned. The School uses project-based learning that is interdisciplinary, is problem-based learning that takes the learner deeper into the core subject, and uses the engineering and design process that walks the student through the design thinking process. The School's students are actively engaged and participating in an experiential environment.

Environmental Literacy. Management believes that environmental footprint matters. Environmental literacy is tied into every class offered at the School, including the School's Science, Technology, Engineering, Environmental Literacy, , Arts, and Math ("S.T.E3.A.M.") Model. Teaching students environmental literacy through each subject while also teaching the subject through the lens of environmental literacy is paramount to our mission and vision.

Community Service. Management believes that students need to understand how important it is to be a part of something bigger than themselves. During flex days, students have numerous opportunities to visit local , volunteer at local charities, or participate in environmental projects such as the "Big Sweep." Flex days are also used to offer workshops to students like woodworking, blacksmithing, welding, pottery, and glass blowing. Finally, Flex days are used to give back to the community by, for example, offering the Polar Express for community daycares or hosting local blood drives for the American Red Cross.

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Soaring Eagles Early College. The Soaring Eagles Early College is a partnership between the School and Randolph Community College. Soaring Eagles Early College offers four specific pathways: students can graduate from high school while also earning a full Associate’s Degree, obtain enough credits to obtain transfer student status, choose from specific certificate programs such as welding and nursing, or participate in an Advanced Placement Program for college credit. The School also provides transportation for students who do not currently have drivers licenses. Importantly, students are still able to participate in extracurricular activities, unlike the early college program offered by RCS.

S.T.E3.A.M. The S.T.E3.A.M. Model is unlike anything offered by surrounding school districts, with S.T.E3.A.M. integrated into all programs offered at the School. The Middle School offers a S.T.E3.A.M. block, wherein students choose from 19 different S.T.E3.A.M. classes that offer an immersive experience with each component of S.T.E3.A.M. Teachers incorporate entrepreneurial practices, while teaching 21st century life skills intended to serve students long after high school and college. The School uses a town model for its S.T.E3.A.M. classes to run shops to sell their products. Each shop allows for students to participate in the accounts payable, research & design, leadership, marketing, and production niches of the business. At the High School, S.T.E3.A.M. is integrated into elective blocks, with each elective taught through the S.T.E3.A.M. lens. S.T.E3.A.M. portfolio interactive notebooks are used to record what each student learns throughout the courses. The School has vertically aligned most of its Middle School S.T.E3.A.M. classes with the electives offered at the High School.

Internships. The School's students can be selected to work at an internship to receive high school credit, with internships offered in welding, blacksmithing, and StarWorks, as a veterinary technician at the local animal shelter and at the courthouse. Students log hours at their internship equal to that of a face-to-face class, with students required to demonstrate ahead of time what they will be learning and the educational benefit for their future.

Independent Studies. The School's students also have the option of participating in an independent study to receive class credit. Students must have an on-site teacher sponsor, and they must credit an approved syllabus outlining the course.

Extracurricular Activities and Athletics

The School offers after extracurricular and athletics programs for both middle school and high school students.

Middle School High School Sports Clubs Internships and Auxiliary Sports Programs Men's Soccer Men's Soccer Science Olympiad StarWorks Women's Volleyball Men's Cross Country Beta Club College Career Pathway Cheerleading Women's Cross Country Mock Trial Soaring Eagles Early College Men's Basketball Cheerleading Drum Line Technology Support Women's Basketball Women's Volleyball Fishing Team Flex Days Wrestling Men's Basketball Shooting Team Internship Randolph Men's Baseball Women's Basketball FFA Reality Redesigned Women's Softball Wrestling Wrestling Club Women's Soccer Women's Soccer Student Government Men's Baseball Key Club Women's Softball HOSA Golf Travel Club

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Application, Admission, and Waitlist Processes

The School is a public school and requires no application fee or tuition. The school follows student admissions and lottery requirements of State law, SBE policy, and the Charter. The School will admit any eligible student under State law who submits a completed application during the enrollment period, unless the number of applicants exceeds the limit for a program, classes, grade levels, or building capacity. As applications are submitted, each one is reviewed for completeness, age and grade of student, and validation that the parent or guardian has reviewed and accepted the School’s philosophy by way of a conversation with the School’s Director of Operations. In the event that the number of applicants exceeds the maximum, the School will use a lottery system to give all applicants an equal chance for admission. A lottery will not be held if the number of applicants does not exceed the maximum number possible. Once enrolled, students are not required to reapply in subsequent enrollment periods.

A lottery is meant to provide a fair and equitable way of admitting students to the School when the number of applicants exceeds any class, program, school, or building maximum capacity. Following an application period in which the number of applicants exceeds the maximum allowed, a lottery will be conducted within four weeks of the application deadline. Once a lottery is deemed necessary, the School follows procedures outlined in its lottery policy, pursuant to which the lottery is conducted by an independent certified public accountant. When the accepted number of applicants for a class, program, grade, or building has been reached, the certified public accountant continues to conduct the lottery for the purpose of creating a waitlist, which is then made available for review. As openings occur in a class, program, grade, or building, parents of students on the waitlist will be contacted in the order in which the names appear on the waitlist.

Exceptions to the admissions and lottery processes apply each year, including:

• If multiple birth siblings apply for and a lottery is needed, the School will enter one surname into the lottery to represent all of the multiple birth siblings. If that surname of the multiple birth siblings is selected, then all of the multiple birth siblings will be admitted. • Siblings of currently enrolled students will be given admission priority. • The children of Directors and the School's teachers and staff will be given admissions priority. If a new teacher is hired for the current year after the lottery date, his or her children will be given priority for any program, class, grade, or building, which is not already full. If the child of a Director, teacher, or staff member is put on the waitlist, the child will be given first priority and the chance for enrollment of any openings that occur in such grade, program, class, or building.

Demographics and Enrollment

Student Body. The following tables show the racial and ethnic diversity and other demographic information of the School's student population for the 2013-14 through 2017-18 school years.

2013-14 2014-15 2015-16 2016-17 2017-18 American Indian/Alaska Native 3 4 6 4 2 Asian 0 1 9 6 8 Black/African American 9 18 29 37 41 Hawaiian/Pacific Islander 0 0 0 0 0 White 147 321 640 719 887 Hispanic/Latino 24 30 40 43 42 Two or More Race Categories 10 9 19 18 20 Unspecified 0 0 0 0 0 TOTAL (End of school year) 193 383 743 827 1,000 Free and Reduced Lunch 30 81 223 193 212

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Historical and Projected Enrollment. The following table sets forth the School's historical and projected enrollment for the 2013-14 school year through the 2021-22 school year.

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 K N/A N/A N/A N/A N/A 103 105 108 110 1 N/A N/A N/A N/A N/A 103 105 108 110 2 N/A N/A N/A N/A N/A 103 105 108 110 3 N/A N/A N/A N/A N/A 103 105 108 110 4 N/A N/A N/A N/A N/A 105 105 108 110 5 N/A N/A N/A N/A 118 135 135 138 140 6 N/A N/A 100 100 113 135 135 138 140 7 N/A N/A 100 100 109 135 135 138 140 8 N/A N/A 100 100 110 135 135 138 140 9 114 120 130 135 140 140 140 145 145 10 67 131 120 135 140 139 140 140 145 11 N/A 70 131 120 135 132 134 132 140 12 N/A N/A 70 130 125 132 134 132 140 TOTAL 181 321 751 820 990 1,600 1,613 1,641 1,680

Waitlist. The following table sets forth the School's historical waitlists as of August of each listed school year. The waitlist is reset annually at the end of each school year.

2013-14 2014-15 2015-16 2016-17 2017-18 K N/A N/A N/A N/A N/A 1 N/A N/A N/A N/A N/A 2 N/A N/A N/A N/A N/A 3 N/A N/A N/A N/A N/A 4 N/A N/A N/A N/A N/A 5 N/A N/A N/A N/A 205 6 N/A N/A 190 212 210 7 N/A N/A 174 85 107 8 N/A N/A 123 60 88 9 0 53 81 30 112 10 0 10 25 20 49 11 N/A 0 10 12 17 12 N/A N/A 8 8 13 TOTAL 0 63 611 427 801

The following table sets forth the student attrition rate and student retention rate for the School for the listed school years. Attrition rate is the percentage of students who leave the School from the beginning to the end of one school year.

2013-14 2014-15 2015-16 2016-17 2017-18 Attrition Rate 10% 6% 5% 2% N/A

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Academic Performance

Achievement. Along with all other public schools in North Carolina, the School's students take End of Grade ("EOG") tests in Reading and Math, which are administered in grades 3-8, and Science, which are administered in grades 5 and 8, and End of Course ("EOC") tests in Biology, English II, and Math I. Schools are measured in two main areas of achievement: proficiency and growth.

Proficiency. This measure is the percentage of the School's students who demonstrate that they are proficient, at, or above their grade level. All schools will have a mix of student abilities and demographics. The goal is for every student to demonstrate proficiency, but for some this may take several years of growth and development. The measurement of the proficiency percentage is called the Performance Composite, which blends the achievement of all students across all tested grades and subjects.

Growth. This is a measure of how well the school has done in advancing student achievement during the year, regardless of each student's level of proficiency. Meeting or exceeding a school's growth targets indicates that students have demonstrated more than a year's worth of learning advancement during the school year. The rate of learning growth at a school is called the Growth Index. For the 2015-16 school year, the School's growth status was met.

Comparative Data. The following tables indicate the percentage of students who scored at or above grade level or college and career ready, as applicable, on EOG and EOC tests for the 2013-14, 2014-15, and 2015-16 school years for each of the School, ACS, RCS, and the State (percentages are shown only for school years and grade levels for which EOG and EOC testing data is available). All such data is as reported by the SBE.

North Carolina ABC's End-Of-Grade Tests - Overall End of Grade Scored At or Above Grade Level 2015-16 Overall 6 7 8 The School 65.8% 62.0% 62.0% ACS 53.4% 50.0% 57.4% RCS 48.7% 44.9% 51.2% State 55.3% 53.7% 57.3% Source: Education First North Carolina Report Cards

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North Carolina ABC's End-Of-Grade Tests - Math End of Grade Scored At or Above Grade Level 2015-16 Math 6 7 8 The School 51.5% 54.0% 30.7% ACS 54.0% 49.0% 46.3% RCS 46.9% 40.6% 36.2% State 52.0% 48.9% 44.7% Source: Education First North Carolina Report Cards

North Carolina ABC's End-Of-Grade Tests - Reading End of Grade Scored At or Above Grade Level 2015-16 Reading 6 7 8 The School 80.2% 70.0% 62.4% ACS 52.7% 51.0% 50.3% RCS 50.6% 49.2% 43.3% State 58.7% 58.5% 53.4% Source: Education First North Carolina Report Cards

North Carolina ABC's End-Of-Grade Tests - Science End of Grade Scored At or Above Grade Level 2015-16 Science 8 The School 93.1% ACS 75.6% RCS 74.1% State 73.9% Source: Education First North Carolina Report Cards

North Carolina ABC's End-Of-Grade Tests - Overall End of Grade Scored College or Career Ready 2015-16 Overall 6 7 8 The School 55.4% 51.0% 51.2% ACS 37.3% 47.1% 34.1% RCS 39.7% 35.8% 42.3% State 46.9% 44.6% 48.2% Source: Education First North Carolina Report Cards

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North Carolina ABC's End-Of-Grade Tests - Math End of Grade Scored College or Career Ready 2015-16 Math 6 7 8 The School 37.6% 43.0% 22.8% ACS 41.6% 39.6% 40.7% RCS 38.0% 32.8% 29.5% State 44.3% 42.0% 38.5% Source: Education First North Carolina Report Cards

North Carolina ABC's End-Of-Grade Tests - Reading End of Grade Scored College or Career Ready 2015-16 Reading 6 7 8 The School 73.3% 59.0% 51.5% ACS 39.9% 35.0% 34.7% RCS 41.3% 38.7% 32.9% State 49.5% 47.1% 41.5% Source: Education First North Carolina Report Cards

North Carolina ABC's End-Of-Grade Tests - Science End of Grade Scored College or Career Ready 2015-16 Science 8 The School 79.2% ACS 65.7% RCS 64.6% State 64.5% Source: Education First North Carolina Report Cards

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North Carolina ABC's End-of-Course Tests - End of Course Scored At or Above Grade Level 2015-16 Overall Biology English II Math I The School 54.0% 53.1% 64.9% 45.2% ACS 50.8% 41.1% 52.4% 56.8% RCS 54.8% 52.1% 51.8% 59.4% State 58.5% 55.5% 58.8% 60.5% 2014-15 Overall Biology English II Math I The School 49.3% 46.6% 60.3% 39.1% ACS 49.7% 42.2% 47.6% 56.3% RCS 54.6% 53.5% 52.9% 56.9% State 57.9% 53.7% 59.6% 59.8% 2013-14 Overall Biology English II Math I The School 52.9% N/A 62.5% 48.0% ACS 50.2% 45.1% 55.1% 49.9% RCS 54.9% 51.1% 58.0% 60.5% State 58.5% 53.9% 61.2% 60.0% Source: Education First North Carolina Report Cards

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North Carolina ABC's End-of-Course Tests - End of Course Scored College or Career Ready 2015-16 Overall Biology English II Math I The School 42.3% 41.6% 55.9% 31.0% ACS 39.3% 31.0% 39.3% 45.4% RCS 45.1% 43.2% 42.6% 48.5% State 49.0% 47.3% 49.6% 49.8% 2014-15 Overall Biology English II Math I The School 37.1% 32.8% 50.4% 25.2% ACS 38.7% 34.6% 38.9% 41.5% RCS 43.9% 44.3% 42.8% 44.3% State 47.9% 44.9% 50.0% 48.6% 2013-14 Overall Biology English II Math I The School 38.1% N/A 56.2% 28.8% ACS 40.1% 36.7% 54.6% 38.6% RCS 43.0% 41.3% 48.7% 45.2% State 47.8% 45.1% 51.7% 46.9% Source: Education First North Carolina Report Cards

In addition to EOC tests, schools serving students in grades 9-12 are evaluated on the basis of ACT scores and cohort graduation rates. The following table indicates the percentage of students who scored 17 or better on the ACT during the 2014-15 and 2015-16 school years for each of the School, ACS, RCS, and the State of North Carolina. All such data is as reported by the SBE.

ACT Scored 17 or Better 2014-15 2015-16 The School 55.9% 59.2% ACS 46.3% 50.4% RCS 55.0% 59.3% State 59.7% 52.9% Source: Education First North Carolina Report Cards

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The following table indicates the 4-year cohort graduation rate for the 2015-16 school year for each of the School, ACS, RCS, and the State of North Carolina. All such data is as reported by the SBE.

Cohort Graduation Rate 2015-16 The School 85.9% ACS 92.6% RCS 88.1% State 85.9% Source: Education First North Carolina Report Cards

Performance and Ranking. SBE assigns each public school an A through F School Performance Grade ("SPG"), based on standardized EOG tests in reading and math for grades 3-8 and science in grades 5 and 8 and EOC tests in English II, Math I, and Biology, among other measurements for students in grades 9-12.

School Performance Grades. For the 2013-14 through 2015-16 school years, SPGs were based on a 15- point scale with an A equal to 85 to 100, B equal to 70 to 84, a C equal to 55 to 69, a D equal to 40 to 54 and an F equal to less than 40. Schools that qualify for an A and do not have significant achievement gaps received an A+ grade. For the 2016-17 school year, the SPG scale changes to a 10-point scale.

School Performance Grade School Performance Metric 2013-14 2014-15 2015-16 School Performance Grade C D C School Performance Score 57 53 64 Growth Status Met Not Met Not Met Achievement Score 53 51 63 Growth Score 72.7 61.9 66.2 Math Achievement Score N/A N/A 45 Reading Achievement Score N/A N/A 71 Science Achievement Score N/A N/A 93 English II Achievement Score 63 60 65 Math I Achievement Score 48 39 45 Biology Achievement Score N/A 47 53 4 Year Graduation Rate Achievement Score N/A N/A 86 ACT Achievement Score N/A 55.9 59 Source: Education First North Carolina Report Cards

NO LITIGATION

As of the date of the Limited Offering Memorandum, the Borrower is not the subject of any litigation or administrative proceeding related to its operations. Litigation may arise in the normal course of business of the Borrower. See "BONDHOLDERS' RISKS – Litigation" for an explanation of risks associated with any potential litigation that may arise in the normal course of business for the Borrower.

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CERTAIN FINANCIAL INFORMATION Revenues The School's principal source of revenue is payments from the State of North Carolina based on current student enrollment. See "CHARTER SCHOOL LAWS IN NORTH CAROLINA" in Appendix C for a discussion of historical and projected levels of the State's allocation per pupil and other related matters. See also "BONDHOLDERS' RISKS – Changes in Law; Annual Appropriation; Inadequate State of North Carolina Payments" in the Limited Offering Memorandum. Financial Statements The audited financial statements of the Borrower for the Fiscal Years ended June 30, 2014, 2015, and 2016, included in this Limited Offering Memorandum in APPENDIX B-1 – "FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2014, 2015 AND 2016" have been audited by Maxton McDowell, Certified Public Accountant (the "Auditor"), to the extent and for the periods indicated in its reports thereon. Such financial statements have been included in reliance upon the reports of the Auditor. The Borrower is not aware of any facts that would make such financial statements misleading. These financial statements were prepared using the standards applicable to governmental entities. The audited financial statements included in Appendix B-1 are an integral part hereof and should be read in their entirety. Certain unaudited financial information of the Borrower for the Fiscal Year ended June 30, 2017, prepared by Management, is included below. Such unaudited financial information has been prepared by Management and has not been examined or reviewed by the Auditor or any other independent certified public accountant. See "BONDHOLDERS' RISKS." Indebtedness On the date of issuance of the Series 2017 Bonds, the Borrower will have certain outstanding debt other than the Series 2017 Bonds and the Government Loan, consisting of capital leases. Management currently intends to incur additional Indebtedness in the immediate future, in connection with the construction of the Phase II Facility. The Borrower is permitted to incur additional Indebtedness under certain circumstances. See SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS – The Loan Agreement – Limitations on Incurrence of Additional Indebtedness." Statement of Revenues and Expenses and Statement of Activities

The following Statement of Revenues and Expenses for the Borrower presents a summary of the revenues and expenses of the Borrower during the Fiscal Years ended June 30, 2014, 2015, 2016, and 2017. In addition, Days Cash on Hand is set forth as of June 30 of the Fiscal Years ended June 30, 2014, 2015, 2016, and 2017. The Statement of Activities for the Borrower presents a summary of the financial activities for the Borrower during the Fiscal Years ended June 30, 2014, 2015, 2016, and 2017. Such summary statements are based on the audited financial statements of the Borrower for the Fiscal Years ended June 30, 2014, 2015, and 2016, and on unaudited financial information of the Borrower for the Fiscal Year ended June 30, 2017.

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Statement of Revenues and Expenses.

Fiscal Year Ended June 30, 2017 (1) 2016 2015 2014 Revenues: State of North Carolina $ 4,606,524 $ 4,078,575 $ 1,618,432 $ 958,632 Alamance-Burlington Schools 1,625 - - - Asheboro City Schools 221,373 203,223 164,661 101,459 Davidson County 30,307 29,860 16,278 1,798 Chatham County 3,971 2,047 - - Guilford County 19,670 12,445 9,067 2,301 Montgomery County 118,923 108,543 26,036 9,726 Moore County 21,352 32,506 8,548 8,596 Randolph County 546,698 485,421 193,370 114,838 Rowan-Salisbury Schools 1,406 1,858 - - U.S. Government 133,234 146,028 49,809 30,433 Contributions and donations 12,762 15,204 20,645 21,423 Fundraising 101,851 58,958 - - Student Activities 92,274 41,022 - - Student Fees 83,832 35,511 - - Grant Funding 26,369 8,065 - - Club Dues 3,553 28,039 - - Concessions 27,329 20,514 - - Other 262,839 91,086 120,064 51,747 Total Revenues $ 6,315,892 $ 5,398,905 $ 2,226,910 $ 1,300,953

Expenditures: Instructional services $ 4,590,685 $ 4,003,674 $ 1,586,397 $ 1,008,071 System-wide support services 1,393,971 1,203,571 332,615 464,172 Capital outlay 58,226 221,770 35,310 93,850 Debt Service 379,685 167,836 163,719 103,129 Total Expenditures $ 6,422,567 $ 5,596,851 $ 2,118,041 $ 1,669,222

Excess (Deficiency) of Revenues and Other Resources Over (Under) Expenditures and Other Uses $ (106,675) $ (197,946) $ 108,869 $ (368,269)

Other Financing Sources (Uses): Transfers from other funds $ - $ - $ - $ - Transfers to other funds (55,514) (33,329) (19,428) (1,885) Note payable issued - 136,000 - 173,000 Capital lease obligations issued - 16,047 15,245 93,850 Capital contributions - 33,833 10,100 - Total other financing sources (uses) $ (55,514) $ 152,551 $ 5,917 $ 264,965

Net Change in Fund Balances $ (162,189) $ (45,395) $ 114,786 $ (103,304)

Beginning Fund Balance $ 93,778 $ 139,173 $ 24,387 $ 127,691

Ending Fund Balance $ (68,411) $ 93,778 $ 139,173 $ 24,387

(1) Unaudited.

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Statement of Activities. Governmental Activities Fiscal Year Ending June 30, 2016 2015 2014 Revenues: Charges for services$ 194,258 $ - $ - Operating Grants and Contributions 8,065 - - Capital Grants and Contributions 33,833 - - Unrestricted county appropriations 875,903 417,960 238,719 Unrestricted state appropriations 4,078,575 1,618,432 958,632 Unrestricted federal appropriations 146,028 49,809 30,433 Capital contributions not restricted to specfic programs - 10,100 - Donations-general 15,204 20,645 21,423 Miscellaneous-unrestricted 80,872 120,064 51,747 Total General Revenues:$ 5,432,738 $ 2,237,010 $ 1,300,954

Expenses: Instructional Activities$ 4,055,320 $ 1,685,611 $ 999,156 System-wide support services 1,209,575 339,184 223,127 Ancillary services - - - Non-programmed charges - - - Interest on long-term debt 56,057 66,831 33,859 Total Expenses:$ 5,320,952 $ 2,091,626 $ 1,256,142

Increase (Decrease) in Net Position$ 111,786 $ 145,384 $ 44,812 Internal Transfers (33,329) (19,428) (1,885) Other Contributed Capital - - -

Net Position-Beginning Balance 199,524 30,040 (12,887) Adjustments - 43,528 - Net Position-Ending Balance$ 277,981 $ 199,524 $ 30,040

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Financial Projections The Borrower has operated the School since 2013. The Borrower's projections of revenues and expenses for the five Fiscal Years ending June 30, 2018 through 2022 contained in APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" (the "Projections") were prepared by Management in consultation with Specialized Public Finance, Inc. The Projections constitute "forward-looking" statements of the type described in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See "FINANCIAL INFORMATION" and "BONDHOLDERS' RISKS."

In order to expand enrollment and grade levels as described herein in connection with the construction of the New Facility, the Borrower will need to obtain approval of the Charter Modification. While Management expects that the Charter Modification will be approved, there can be no assurance that the Charter Modification will be approved. The Projections include one scenario in which the Charter Modification is approved and another scenario, as a sensitivity analysis, in which the Charter Modification is not approved. Refer to APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results.

No feasibility studies have been conducted with respect to operations of the Borrower pertinent to the Series 2017 Bonds. The Projections are "forward-looking statements" and are subject to the general qualifications and limitations described under "BONDHOLDERS' RISKS – Forward-Looking Statements." The Underwriter has not independently verified the Projections, and makes no representations nor gives any assurances that such Projections, or the assumptions underlying them, are complete or correct. Further, the Projections relate only to a limited number of Fiscal Years, and consequently do not cover the entire period that the Series 2017 Bonds will be outstanding.

Management has prepared the Projections based on operating history with respect to the School and Management's assumptions about future State of North Carolina funding levels and future operations of the School, including student enrollment and expenses. There can be no assurance that actual enrollment revenues and expenses will be consistent with Management's assumptions underlying such Projections. Moreover, no guarantee can be made that the Projections of revenues and expenses included herein will correspond with the results actually achieved in the future because there can be no assurance that actual events will correspond with the Projections' underlying assumptions. Actual operating results may be affected by many factors, including, but not limited to, increased costs, lower than anticipated revenues (as a result of insufficient enrollment, reduced State of North Carolina or federal aid payments, or otherwise), employee relations, changes in taxes, changes in applicable government regulation, changes in demographic trends, changes in education competition and changes in local or general economic conditions. Refer to APPENDIX B-2 – "FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022" to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results. Refer to "BONDHOLDERS' RISKS – Forward-Looking Statements," above, for qualifications and limitations applicable to forward-looking statements.

NO ASSURANCE CAN BE MADE THAT THE PROJECTIONS CONTAINED HEREIN WILL CORRESPOND WITH THE RESULTS ACTUALLY ACHIEVED IN THE FUTURE BECAUSE THERE CAN BE NO ASSURANCE THAT ACTUAL EVENTS WILL CORRESPOND WITH THE ASSUMPTIONS UNDERLYING SUCH PROJECTED INFORMATION. ACTUAL OPERATING RESULTS MAY BE AFFECTED BY MANY FACTORS, INCLUDING, BUT NOT LIMITED TO, INCREASED COSTS, LOWER THAN ANTICIPATED REVENUES (AS A RESULT OF INSUFFICIENT ENROLLMENT, REDUCED STATE OF NORTH CAROLINA OR FEDERAL AID PAYMENTS, OR OTHERWISE), DIFFICULTIES IN EXECUTING PLANS FOR AN ADDITIONAL SCHOOL OR OTHER EXPANSIONS, EMPLOYEE RELATIONS, CHANGES IN TAXES, CHANGES IN APPLICABLE GOVERNMENTAL REGULATION, CHANGES IN DEMOGRAPHIC TRENDS, CHANGES IN EDUCATION COMPETITION AND LOCAL OR GENERAL ECONOMIC CONDITIONS.

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APPENDIX B-1 FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2014, 2015, AND 2016 [THIS PAGE INTENTIONALLY LEFT BLANK]

UWHARRIE CHARTER ACADEMY FINANCIAL STATEMENTS June 30, 2016 UWHARRIE CHARTER ACADEMY

TABLE OF CONTENTS

Exhibit Financial Section: Page

Independent Auditor's Report 1

Management's Discussion and Analysis 4

Basic Financial Statements:

Government-wide Financial Statements:

1 Statement of Net Position 15

2 Statement of Activities 16

Fund Financial Statements:

3 - Governmental Funds 17

3 Reconciliation of the Balance Sheet - Governmental Funds to the 17 Statement of Net Position

4 Statement of Revenues, Expenditures, and Changes in Fund Balances - 18 Governmental Funds

5 Reconciliation of the Statement of Revenues, Expenditures, and 19 Changes in Fund Balances of Governmental Funds to the Statement of Activities

6 State of Net Position - Proprietary Fund 20

7 Statement of Revenues, Expenses and Changes in Fund Net - 21 Position - Proprietary Fund

8 Statement of Cash Flows - Proprietary Fund 22

Notes to the Financial Statements 23

Required Supplementary Information: 44

Schedule of Proportionate Share of Net Pension Liability 45

Schedule of Contributions 46

Statement Combining and Individual Fund Financial Statements and Schedules

1 Combining Balance Sheet for Non-Major Governmental Funds 47

2 Combining Statement of Revenues, Expenditures, and Changes in Fund Fund Balances - Non-major Governmental Funds 48

Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual:

3 Government-wide Budget 49

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!(;!" .< INDEPENDENT AUDITOR’S REPORT

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

Report on the Financial Statements

I have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, North Carolina, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise Uwharrie Charter Academy’s basic financial statements as listed in the table of contents.

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

My responsibility is to express opinions on these financial statements based on my audit. I conducted my audit 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 I plan and perform the audit to obtain reasonable assurance about whether 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, I express no such opinion. An audit also includes evaluating the appropriateness of

Page 1 accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.

Opinions

In my opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, North Carolina as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 4 through 14, and the Schedule of the Proportionate Share of the Net Pension Liability and the Schedule of Board Contributions on pages 45 and 46, respectively be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information

My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Uwharrie Charter Academy, North Carolina’s basic financial statements. The combining and individual non-major fund , budgetary schedules, other schedules, as well as the accompanying Schedule of Expenditures of Federal and State Awards, as required by the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and the State Single Audit Implementation Act are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual non-major fund financial statements, budgetary schedules, other schedules, as well as the accompanying Schedule of Expenditures of Federal and State Awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In

Page 2 my opinion, the combining and individual non-major fund financial statements, budgetary schedules, other schedules, and the accompanying Schedule of Expenditures of Federal and State Awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, I have also issued my report dated December 31, 2016 on my consideration of Uwharrie Charter Academy’s internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of the report is to describe the scope of my 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 Uwharrie Charter Academy’s internal control over financial reporting and compliance.

Certified Public Accountant Asheboro, North Carolina December 31, 2016

Page 3 Management’s Discussion and Analysis Uwharrie Charter Academy June 30, 2016

As management of Uwharrie Charter Academy, we offer readers of Uwharrie Charter Academy’s financial statements this overview and analysis of the financial activities of Uwharrie Charter Academy for the fiscal year ended June 30, 2016. We encourage readers to read the information presented here in conjunction with additional information that we have furnished in UCA’s financial statements which follow this narrative.

Financial Highlights

 The assets of Uwharrie Charter Academy exceeded it liabilities and deferred inflows at the close of the fiscal year by $282,052 (net position).  The school’s total net position increased by $82,528, primarily due to an increase in student enrollment.  As of the close of the current fiscal year, Uwharrie Charter Academy’s governmental funds reported combined ending fund balances of $93,778.  Enrollment continues to increase each year at UCA as planned in the initial charter with the twenty day ADM for its first year at 186, in the prior year 320, but current year-end enrollment is at 753.  Uwharrie Charter Academy’s total debt increased by $326,218 during the current fiscal year. The key factors in this increase was the financing related to the acquisition of a large amount of land. significant amount of payments made on outstanding debt while adding only a minimal amount of new long-term debt to support the Academy’s operational activities.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to Uwharrie Charter Academy’s basic financial statements. The Academy’s basic financial statements consist of three components; 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements (see figure 1). The basic financial statements present two different views of the Academy through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader’s understanding of the financial condition of Uwharrie Charter Academy.

Page 4 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Required Components of Annual Financial Reports

Figure 1

Management’s Basic Financial Discussion and Statements Analysis

Government-wide Notes to the Fund Financial Financial Financial Statements Statements Statements

Summary Detail

Basic Financial Statements

The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government-wide Financial Statements. They provide both the short and long-term information about the Academy’s financial status.

The next statements (Exhibits 3 through 7) are Fund Financial Statements. These statements focus on the activities of the individual parts of the School’s government. These statements provide more detail than the government-wide statements. There are two parts to the Fund Financial Statements: 1) the governmental funds statements; and 2) the proprietary fund statements.

Page 5 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. After the notes, supplemental information is provided to show details about the School’s individual funds. Budgetary information for the School also can be found in this section of the statements.

Government-wide Financial Statements

The government-wide financial statements are designed to provide the reader with a broad overview of the School’s , similar in format to a financial statement of a private-sector business. The government- wide statements provide short and long-term information about the School’s financial status as a whole.

The two government-wide statements report the School’s net position and how they have changed. Net position is the difference between the School’s total assets and total liabilities and deferred inflows of resources. Measuring net position is one way to gauge the School’s financial condition.

The government-wide statements are divided into two categories: 1) governmental activities; and 2) business-type activities. The governmental activities include most of the School’s basic functions such as instructional services and business services. State, county, and federal funds provide virtually all of the funding for these functions. The business-type activities are those services for which the School charges its students and other customers to provide. This includes the Food Service offered by Uwharrie Charter Academy.

The government-wide financial statements are Exhibits 1 and 2 of this report.

Fund Financial Statements

The fund financial statements provide a more detailed look at the School’s most significant activities. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Uwharrie Charter Academy, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the North Carolina General Statutes or the School’s budget ordinance. All of the funds of Uwharrie Charter Academy can be divided into two categories: governmental funds and proprietary funds.

Governmental Funds – Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. Most of the School’s basic services are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year-end that will be available for spending in the next year. Governmental funds are reported using in accounting method called modified accrual accounting that provides a short-term spending focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to finance the School’s programs. The relationship between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in a reconciliation that is a part of the fund financial statements.

Page 6 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Uwharrie Charter Academy adopts an annual budget for each of its funds, although it is not required to do so by General Statutes. Because the budget is not legally required by the Statutes, the budgetary comparison statements are not included in the basic financial statements, but are part of the supplemental statements and schedules that follow the notes. The budget is a legally adopted document that incorporates input from faculty, management, and the Board of Directors of the School in determining what activities will be pursued and what services will be provided by the School during the year. It also authorizes the School to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for each of the funds demonstrates how well Uwharrie Charter Academy has complied with the budget ordinance and whether or not the School has succeeded in providing the services as planned when the budget was adopted.

Proprietary Funds – Uwharrie Charter Academy has one proprietary fund, which is an enterprise fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Uwharrie Charter Academy uses its enterprise fund to account for its food service function.

Notes to the Financial Statements – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements begin on page 23 of this report.

Government-Wide Financial Analysis

As noted earlier, net position may, over time, serve as one useful indicator of a school’s financial condition. The assets and deferred outflows of Uwharrie Charter Academy exceeded liabilities and deferred inflows of resources by $282,052 as of June 30, 2016. As of June 30, 2015, the net position of Uwharrie Charter Academy stood at $199,524. The School’s net position increased by $82,528 for the fiscal year ended June 30, 2016, compared to an increase of $125,956 in 2015. Total net position is comprised of three components. The first portion (approximately 27%) reflects the School’s investment in capital assets (e.g. leasehold improvements, furniture and fixtures, textbooks, electronic equipment, vehicles, and equipment), less any related debt still outstanding that was issued to acquire those items. Uwharrie Charter Academy uses these capital assets to provide services to its students; consequently, these assets are not available for

(continued on next page)

Page 7 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016 future spending. Although Uwharrie Charter Academy’s net investment in capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources, since the capital assets cannot be used to liquidate these liabilities. An additional portion of Uwharrie Charter Academy’s net position, $36,782, represents resources that are subject to external restrictions on how they may be used. The remaining portion of $167,924 is unrestricted. In 2015, the amount of net investment in capital assets was $1,691, with unrestricted net position standing at $187,733.

(continued on next page)

Page 8 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Uwharrie Charter Academy’s Net Position

Figure 2

Governmental Business-Type Activities Activities Total 2016 2015 2016 2015 2016 2015

Current and other assets $ 368,648 $ 240,847 $ 4,071 $ - $ 372,719 $ 240,847 Capital assets 483,971 368,047 - - 483,971 368,047 Deferred outflows of resources 509,688 108,018 - - 509,688 108,018 Total assets and deferred outflows of resources 1,362,307 716,912 4,071 - 1,366,378 608,894

Long-term liabilities outstanding 741,949 415,715 - - 741,949 415,715 Other liabilities 274,870 101,673 - - 274,870 101,673 Deferred inflows of resources 67,507 - - - 67,507 - Total liabilities and deferred inflows of resources 1,084,326 517,388 - - 1,084,326 517,388

Net position: Net investment in capital assets 77,346 1,691 - - 77,346 1,691 Restricted 36,782 10,100 - - 36,782 10,100 Unrestricted 163,853 187,733 4,071 - 167,924 187,733 Total net position$ 277,981 $ 199,524 $ 4,071 $ - $ 282,052 $ 199,524

Several particular aspects of the School’s financial operations positively influenced the total unrestricted governmental net position:

 The School adopted an annual budget for all funds supported by its Board of Directors. The School’s performance was measured using this budget on a monthly basis, allowing changes in spending as needed to stay within the budget.  The School applied for and was awarded several federal grants to assist with the expenses of meeting education needs of special needs students.  The School utilized an administrator as part-time faculty which resulted in decreasing the liabilities in salaries and benefits.  With its strategic location, the School targeted a multi-county area for recruiting students resulting in meeting its first-year enrollment projections and maintaining a waiting list.

Page 9 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Uwharrie Charter Academy Changes in Net Position

Figure 3

Governmental Activities Business-Type Activities Total 2016 2015 2016 2015 2016 2015

Revenues: Program revenues: Charges for services$ 194,258 $ - $ 99,393 $ 17,629 $ 293,651 $ 17,629 Operating grants and contributions 8,065 30,745 - - 8,065 30,745 Capital grants and contributions 33,833 - - - 33,833 - General revenues: County, State, and Federal funds 5,100,506 2,086,201 - - 5,100,506 2,086,201 Grants and contributions not restricted to specific programs 15,204 - - - 15,204 - Other 80,872 120,064 - - 80,872 120,064 Total revenues 5,432,738 2,237,010 99,393 17,629 5,532,131 2,254,639

Expenses: Instructional services 4,055,320 1,685,611 - - 4,055,320 1,685,611 System-wide support services 1,209,575 339,184 - - 1,209,575 339,184 Non-programmed charges ------School food service - - 128,651 37,057 128,651 37,057 Interest on long-term debt 56,057 66,831 - - 56,057 66,831 Total expenses 5,320,952 2,091,626 128,651 37,057 5,449,603 2,128,683

Increase in net position before transfers 111,786 145,384 (29,258) (19,428) 82,528 125,956

Transfers (33,329) (19,428) 33,329 19,428 - -

Extraordinary item: Gain on insurance recovery ------Increase in net position 78,457 125,956 4,071 - 82,528 125,956 Net position, July 1 (consolidated) - 30,040 - - - 30,040 Net position, beginning, restated 199,524 73,568 - - 199,524 73,568 Net position, June 30$ 277,981 $ 199,524 $ 4,071 $ - $ 282,052 $ 199,524

Governmental activities: Governmental activities increased the School’s net position by $78,457.

Business-type activities: Business-type activities did not increase or decrease the School’s net position.

Page 10 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Financial Analysis of Uwharrie Charter Academy’s Funds

As noted earlier, Uwharrie Charter Academy uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds. The focus of the Uwharrie Charter Academy’s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Uwharrie Charter Academy’s financing requirements. Specifically, unassigned fund balance can be a useful measure of a government’s net resources available for spending at the end of the fiscal year.

The general fund is the chief operating fund of the Uwharrie Charter Academy. At the end of the current fiscal year, unassigned fund balance of the General Fund was $47,121 while total fund balance reached $47,121.

At June 30, 2016, the governmental funds of Uwharrie Charter Academy reported a combined fund balance of $93,778, a 33% percent decrease over last year.

Proprietary Funds. The School’s proprietary funds provide the same type of information found in the government-wide statements but in more detail. Unrestricted net position of the School Food Service Fund at the end of the fiscal year amounted to $4,071. The total growth in net position for the Food Service Fund was $4,071. Other factors concerning the finances of this fund have already been addressed in the discussion of the School’s business-type activities.

Capital Asset and Debt Administration

Capital assets. Uwharrie Charter Academy’s investment in capital assets for its governmental and business-type activities as of June 30, 2016, totals $483,971 (net of accumulated depreciation). These assets include a lease-hold improvements, furniture & office equipment, vehicles, technology/electronic equipment, and land.

The major capital asset transactions during the year includes the following addition:

 The School put Leasehold Improvements in place for $7,101  The School put Equipment in place for $26,476  The School put Furniture & Office Equipment in place for $6,243  The School put Vehicles in place for $29,260  The School put Land in place for $152,691

Page 11 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Uwharrie Charter Academy’s Capital Assets (Net of Depreciation)

Figure 4

Governmental Business-type Activities Activities Total 2016 2015 2016 2015 2016 2015

Land$ 152,691 $ - $ - $ - $ 152,691 $ -

Buildings and ------system

Leasehold 218,746 247,047 - - 218,746 247,047 Improvements

Textbooks 557 7,245 557 7,245

Furniture & 23,428 25,760 Fixtures 23,428 25,760 - -

Electronic 10,120 51,741 Equipment 10,120 51,741 - -

40,405 20,062 Vehicles 40,405 20,062 - -

Equipment 38,024 16,192 - - 38,024 16,192

Total $ 483,971 $ 368,047 $ - $ - $ 483,971 $ 368,047

Additional information on the School’s capital assets can be found in Note 2 of the Basic Financial Statements.

Long-term Debt. As of June 30, 2016, Uwharrie Charter Academy had a total debt outstanding of $741,938. The debt consists of Note Payables to individuals of $93,983, a Note Payable established for the purchase of land of $125,475, $44,573 of capital lease debt, Compensated Absences balance of $31,297, and a line of credit balance of $142,582. The remaining $304,028 relates to net pension liability related to the Teachers’ and State Employees’ Retirement System (TSERS).

Page 12 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Uwharrie Charter Academy’s Outstanding Debt Note Payable and Capital Leases

Figure 5

Governmental Business-type Activities Activities Total 2016 2015 2016 2015 2016 2015 Note payable - bank $142,582 $- 162,582 $ $ - $ 142,582 $ 162,582

Note payable - individuals 93,983 134,474 - - 93,983 134,474 -- Note payable - land 125,475 - 125,475 - -- Capital leases 44,573 69,305 - - 44,573 69,305 -- Net pension liability 304,028 49,359 304,028 49,359 -- Compensated Absences 31,297 - - - 31,297 -

Total$ 741,938 $ 415,720 $ - $ - $ 741,938 $ 415,720

The Uwharrie Charter School’s total debt increased by $326,218 during the past fiscal year bringing the total balance to $741,938, with 41% due to net pension liability, 19% due to a line of credit balance, 17% due to the note payable associated with a land purchase, 13% due to notes payable to individuals, 6% due to capital leases, and 4% due to compensated absences balance.

Page 13 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2016

Economic Factors

The following key economic indicators reflect the growth and prosperity of the School.

 The strategic location of Uwharrie Charter Academy has provided school choice that is easily accessible from four surrounding counties especially considering the three highways that pass within a 5 mile area near the school.

 By meeting the needs of families through our mission, Uwharrie Charter has met its enrollment projections during its first and second year of operation. Currently, UCA has a waiting list in all grade levels that it offers should a spot become available which enables the school to purchase the necessary instructional supplies and resources to support student learning.

 Uwharrie Charter continues to grow and expand due to the continued demand from area families. Uwharrie Charter ended the 15-16 school year with 753 students. It currently enrolls 832 students and will add the 5th grade in the 17-18 school year with 960 students expected to be enrolled. A strong emphasis on Project-based learning and an integrated STEAM curriculum have become the trademarks of Uwharrie Charter and contributed to its branding within the community and beyond. Programs such as photography, graphic design, glass blowing, metal works, engineering and pathways to our community college partner for college courses will continue to strengthen its place in the education landscape and secure the future as it looks to expand to a K-12 school by 2018- 2019.

Requests for Information

This report is designed to provide an overview of the Academy’s finances for those with an interest in this area. Questions concerning any of the information in this report or requests for additional information should be directed to Heather Soja, Uwharrie Charter Academy, 5326 Hwy 220 Bus South, Asheboro, NC 27205, telephone (336) 610-0813.

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'† Page 22 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS For The Fiscal Year Ended June 30, 2016

Note 1 - Summary of Significant Accounting Policies

The accounting policies of the Uwharrie Charter Academy, North Carolina (School) conform to generally accepted accounting principles (GAAP) as applicable to governments. Charter schools are established by non-profit entities. Because of the authority of the State Board of Education (SBE) to unilaterally abolish a school with all the assets reverting to a local education agency, the charter schools in North Carolina follow the governmental reporting model, as used by local education agencies. The following is a summary of the more significant accounting policies.

Reporting Entity

The Uwharrie Charter Academy is a public school operated by a local non-profit corporation, serving approximately 320 students. The School operates under an approved charter received from the SBE and applied for under the provisions of General Statute (G.S.) 115C-238.29B. G.S. 115C- 238.29F(f)(1) states that a charter school shall be subject to the audit requirements adopted by the SBE, which includes the audit requirements established by G.S. 115C-447 of the School Budget and Fiscal Control Act (SBFCA). G.S. 115C-447 also requires financial statements to be prepared in accordance with GAAP.

Basis of Presentation

Government-wide Statements: The statement of net position and the statement of activities display information about the School. These statements include the financial activities of the overall government. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the School. Governmental activities generally are financed through intergovernmental revenues and other non- exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the School and for each function of the School’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.

Fund Financial Statements: The fund financial statements provide information about the School’s funds. Separate statements for each fund category - governmental and proprietary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds.

Page 23 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Basis of Presentation (Concluded)

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities.

The School reports the following major governmental funds:

General Fund. The General Fund is the general operating fund of the School. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund.

State Public School Fund. The State Public School Fund includes appropriations from the Department of Public Instruction for specific operating needs of the public school system and is reported as a special revenue fund.

The School reports the following non-major governmental funds:

Federal Grant Fund. The Federal Grants Fund is used to account for financial transactions pertaining to salaries allocated for special needs education assistance.

Capital Outlay Fund. The Capital Outlay Fund includes appropriations for The acquisition of real property for school purposes, including but not limited to school sites, playgrounds, athletic fields, administrative headquarters, and garages; The acquisition or replacement of furniture and furnishings, instructional apparatus, data processing equipment, business machines, and similar items of furnishings and equipment; The acquisition of school buses as additions to the fleet; Such other objects of expenditures as may be assigned to the Capital Outlay Fund by the uniform budget format.

Athletics Activities Fund. The Athletics Fund is used to account for financial transactions pertaining to school athletics.

The School reports the following non-major enterprise fund:

School Food Service Fund. The School Food Service Fund is used is used to account for the food service program within the school system.

Page 24 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Measurement Focus and

Government-wide and Proprietary Fund Financial Statements. The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the School gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. These could include federal, State, and county grants, and some charges for services. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

Under the terms of grant agreements, the School funds certain programs by a combination of specific cost-reimbursement grants and general revenues. Thus, when program expenses are incurred, there is both restricted and unrestricted net position available to finance the program. It is the School’s policy to first apply cost-reimbursement grant resources to such programs and then general revenues.

Budgetary Data

Annual budgets are adopted for all funds, except for the Uwharrie athletics fund, and school food service funds. All budgets are prepared using the modified accrual basis of accounting.

The budget presented in the supplemental data represents the budget of the School at June 30, 2016. All appropriations lapse at year end.

Page 25 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 – Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity

Deposits and Investments

All deposits of the School are made in a local bank, whose accounts are FDIC insured.

Cash and Cash Equivalents

The School pools money from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents.

Capital Assets

The School’s capital assets are recorded at original cost. Donated assets are listed at their estimated fair value at the date of donation. The total of these estimates is not considered large enough that any errors would be material when capital assets are considered as a whole.

It is the policy of the School to capitalize all capital assets costing more than $200 with an estimated useful life of one or more years. In addition, other items which are purchased and used in large quantities such as student desks and office furniture are capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. All depreciable assets are depreciated using the straight-line method of depreciation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Capital assets are depreciated over the following estimated useful lives:

Estimated Asset Class Useful Lives Leasehold Improvements 9 Furniture and office equipment 5 Textbooks 3 Vehicles 5 Electronic/Computer equipment 3

Page 26 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows of Resources, represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The School has only one item that meets the criterion for this category – deferred outflows related to . In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, Deferred Inflows of Resources, represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The School has no items that meet this criterion.

Long-Term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position.

In the fund financial statements, governmental fund types report the face amount of debt issued as other financing sources.

Compensated Absences

The liability for compensated absences reported in the government-wide statements consists of unpaid, accumulated annual leave balances. Administrative staff, who work the entire fiscal year, may accumulate up to fifteen (15) days earned paid vacation leave with such leave being fully vested when earned. Unused vacation leave days may carry over into subsequent years and may accrue toward retirement, in accordance with the laws of North Carolina, the State Retirement System, and any applicable limitations determined by the Board. The School accounts for its leave on a first-in, first-out basis, such that the oldest available leave is used first. The current portion of the liability is recorded as such in the government-wide financial statements.

The School’s sick leave policy provides for an accumulation of up to 20 days earned sick leave. Sick leave does not vest, but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes. Since the School does not have any obligation for the accumulated sick leave until it is actually taken, no accrual for sick leave has been made.

Page 27 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Net Position/Fund Balances

Net Position

Net position in government-wide and proprietary fund financial statements are classified as net investment in capital assets, restricted, and unrestricted. Restricted net position represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through State statute.

Fund Balances

In the governmental fund financial statements, fund balance is comprised of five classifications designed to disclose the hierarchy of constraints placed on how fund balance can be spent.

The governmental fund types classify fund balances as follows:

Nonspendable Fund Balance – This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted Fund Balance – This classification includes amounts that are restricted to specific purposes externally imposed by creditors or imposed by law.

Committed Fund Balance – portion of fund balance that can only be used for specific purposes imposed by majority vote of School’s governing body (highest level of decision-making authority). Any changes or removal of specific purpose requires majority action by the governing bodies that approved the original action.

Assigned Fund Balance – portion of fund balance that the Uwharrie Charter Academy intends to use for specific purposes.

Assigned for Clubs and Activities funds – revenue sources restricted for expenditures for the various clubs and organizations, athletic events, and various fund raising activities for which they were collected.

Unassigned Fund Balance – the portion of fund balance that has not been assigned to another fund or restricted, committed, or assigned to specific purposes within the General Fund.

Page 28 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Net Position/Fund Balances (Concluded)

Uwharrie Charter Academy has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, Federal funds, State funds, board of education funds, local non-board of education funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the School.

The governmental fund balance sheet includes a reconciliation between the governmental funds’ total fund balance and governmental activities’ net position as reported in the government-wide statement of net position. The net adjustment of $184,203 consists of several elements as follows:

DESCRIPTION AMOUNT

Capital assets used in governmental activities are not financial resources and are therefore not reported in the funds (total capital $ 769,767 assets on government-wide statement in governmental activities column).

Less accumulated depreciation (285,796)

Deferred outflows of resources related to pensions 509,688 Deferred inflows of resources related to pensions (67,507)

Liabilities that, because they are not due and payable in the current period, do not require current resources to pay and are therefore not reported in the fund statements: Bonds, leases, and installment financing (406,624) Compensated Absences (31,297) Net pension liability (304,028)

Total adjustment $ 184,203

Page 29 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Revenues, Expenditures, and Expenses

Funding

The Uwharrie Charter Academy is funded by the State Board of Education, receiving (i) an amount equal to the average per pupil allocation for the average daily membership (ADM) from the local school administrative unit allotments in which the school is located (i.e. Asheboro City Board of Education) for each child attending the School except for the allocation for children with special needs and (ii) an additional amount for each child attending the School who is a child with special needs [G.S. 115C-238.29H(a)]. Additionally, the School receives, for each student who resides in the local administrative unit and attends the charter school, an amount equal to the per local current expense appropriation to the respective local school administrative unit for the fiscal year which is transferred by the appropriate local school administrative unit(s). [G.S. 115C- 238.29H(b)]. For the fiscal year ended June 30, 2016, the Uwharrie Charter Academy received funding from the Boards of Education for Asheboro City, Davidson County, Guilford County, Montgomery County, Moore County, Randolph County, and Rowan-Salisbury Schools.

Furthermore, Uwharrie Charter Academy has received donations of cash and/or equipment from private organizations. The cash has been used for the purchase of new equipment for the School’s facilities.

(continued on next page)

Page 30 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Concluded)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Concluded)

Revenues, Expenditures, and Expenses (Concluded)

Reconciliation between government-wide and fund statements

The governmental fund statement of revenues, expenditures, and changes in fund balance is followed by a reconciliation between the change in governmental funds’ fund balance and the change in governmental activities’ net position as reported on the government-wide statement of activities. The net difference of $123,852 between the two amounts consists of the following elements:

DESCRIPTION AMOUNT

Capital outlay expenditures recorded in the fund statements but capitalized as assets on the statement of activities $ 221,771

Depreciation expense that is recorded on the statement of activities but not in the fund statements. (105,847)

Contributions to the pension plan in the current fiscal year not included in the Statement of Activities. 205,212

New debt issued during the year is recorded as a source of funds on the fund statements but has no effect on the statement of activities, only the statement of net position. (152,047)

Principal payments on debt owed are recorded as a use of funds on the fund statements but again affect only the statement of net position in the government-wide statements. 111,779

Expenses reported on the statement of activities that do not require the use of current resources to pay are not recorded as expenditures in the fund statements. Difference in interest expense between fund statements (modified accrual) and government-wide statements (full accrual). 0 Pension expense (125,719) Compensated absences are accrued in the government-wide statements but not in the fund statements, as they do not use current resources. (31,297) Total $ 123,852

Page 31 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds

Assets

Deposits

At June 30, 2016, the School had deposits with banks and savings and loans with a carrying amount of $368,573. The bank balance with the financial institutions was $231,276, which was covered by federal depository insurance. The School does not have a deposit policy for custodial credit risk.

Capital Assets Beginning Ending Balances Increases Decreases Balances Governmental activities: Capital assets not being depreciated: Land$ - $ 152,691 $ - $ 152,691 Total capital assets not being depreciated - 152,691 - 152,691 Capital assets being depreciated: Leasehold Improvements 316,246 7,101 - 323,347 Furniture and Office Equipment 37,151 6,243 - 43,394 Electronic/Computer Equipment 124,863 - - 124,863 Textbooks 20,063 - - 20,063 Vehicles 27,538 29,260 - 56,798 Equipment 22,135 26,476 - 48,611 Total capital assets being depreciated 547,996 69,080 - 617,076 Less accumulated depreciation for: Leasehold Improvements 69,199 35,401 - 104,600 Furniture and equipment 11,392 8,575 - 19,967 Electronic/Computer Equipment 73,122 41,621 - 114,743 Textbooks 12,818 6,688 - 19,506 Vehicles 7,475 8,918 - 16,393 Equipment 5,943 4,644 - 10,587 Total accumulated depreciation 179,949 105,847 - 285,796 Total capital assets being depreciated, net 368,047 331,280 Governmental activity capital assets, net $368,047 $ 483,971

Depreciation expense was charged to governmental functions as follows:

Instructional programs $ 95,262 Supporting services 10,585 Total depreciation expense $ 105,847

Page 32 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities

Pension Plan Obligations

Plan Description. The Board is a participating employer in the statewide Teachers’ and State Employees’ Retirement System (TSERS), a cost-sharing multiple-employer defined benefit pension plan administered by the State of North Carolina. TSERS membership is comprised of employees of the State (state agencies and institutions), universities, community colleges, and certain proprietary component units along with the employees of Local Education Agencies and charter schools. Article 1 of G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. Management of the plan is vested in the TSERS Board of Trustees, which consists of 13 members – nine appointed by the Governor, one appointed by the state Senate, one appointed by the state House of Representatives, and the State Treasurer and State Superintendent, who serve as ex-officio members. The Teachers’ and State Employees’ Retirement System is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State’s CAFR includes financial statements and required supplementary information for TSERS. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, by calling (919) 981-5454, or at www.osc.nc.gov.

Benefits Provided. TSERS provides retirement and survivor benefits. Retirement benefits are determined as 1.82% of the member’s average final compensation times the member’s years of creditable service. A member’s average final compensation is calculated as the average of a member’s four highest consecutive years of compensation. General employee plan members are eligible to retire with full retirement benefits at age 65 with five years of creditable service (or 10 years of creditable service for members joining TSERS on or after August 1, 2011), at age 60 with 25 years of creditable service, or at any age with 30 years of creditable service. General employee plan members are eligible to retire with partial retirement benefits at age 50 with 20 years of creditable service or at age 60 with five years of creditable service (or 10 years of creditable service for members joining TSERS on or after August 1, 2011). Survivor benefits are available to eligible beneficiaries of members who die while in active service or within 180 days of their last day of service and who have either completed 20 years of creditable service regardless of age or have completed five years of service and have reached age 60 (10 years for members joining on or after August 1, 2011). Eligible beneficiaries may elect to receive a monthly Survivor’s Alternate Benefit for life or a return of the member’s contributions. The plan does not provide for automatic post-retirement benefit increases. Increases are contingent upon actuarial gains of the plan.

Page 33 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

TSERS plan members who are LEOs are eligible to retire with full retirement benefits at age 55 with five years of creditable service as an officer (or 10 years of creditable service for members joining TSERS on or after August 1, 2011), or at any age with 30 years of creditable service. LEO plan members are eligible to retire with partial retirement benefits at age 50 with 15 years of creditable service as an officer. Survivor benefits are available to eligible beneficiaries of LEO members who die while in active service or within 180 days of their last day of service and who also have either completed 20 years of creditable service regardless of age, or have completed 15 years of service as a LEO and have reached age 50, or have completed five years of creditable service as a LEO and have reached age 55, or have completed 15 years of creditable service as a LEO if killed in the line of duty. Eligible beneficiaries may elect to receive a monthly Survivor’s Alternate Benefit for life or a return of the member’s contributions.

Contributions. Contribution provisions are established by General Statute 135-8 and may be amended only by the North Carolina General Assembly. School employees are required to contribute 6% of their compensation. Employer contributions are actuarially determined and set annually by the TSERS Board of Trustees. The School’s contractually required contribution rate for the year ended June 30, 2016, was 9.15% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year. Contributions to the pension plan from the School were $205,212 for the year ended June 30, 2016.

Refunds of Contributions – School employees who have terminated service as a contributing member of TSERS, may file an application for a refund of their contributions. By state law, refunds to members with at least five years of service include 4% interest. State law requires a 60 day waiting period after service termination before the refund may be paid. The acceptance of a refund payment cancels the individual’s right to employer contributions or any other benefit provided by TSERS.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2016, the School reported a liability of $304,028 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of December 31, 2014. The total pension liability was then rolled forward to the measurement date of June 30, 2014 utilizing update procedures incorporating the actuarial assumptions. The School’s proportion of the net pension liability was based on a projection of the School’s long- term share of future payroll covered by the pension plan, relative to the projected future payroll covered by the pension plan of all participating TSERS employers, actuarially determined. At June 30, 2014, Uwharrie Charter Academy’s proportion was .008%.

Page 34 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

For the year ended June 30, 2015, the School recognized pension expense of $73,326. At June 30, 2015, the School reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience$ - $ 34,568 Changes of assumptions - - Net difference between projected and actual earnings on pension plan investments - 32,939 Changes in proportion and differences between Board contributions and proportionate share of contributions 304,476 - Board contributions subsequent to the measurement date 205,212 - Total$ 509,688 $ 67,507

$88,458 reported as deferred outflows of resources related to pensions resulting from School contributions subsequent to the measurement date will be recognized as a decrease of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended June 30: 2017 56,613 2018 56,613 2019 46,900 2020 76,844 2021 - Thereafter -

Page 35 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

Actuarial Assumptions. The total pension liability in the December 31, 2014 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 3.0 percent Salary increases 4.25 to 9.10 percent, including inflation and productivity factor Investment rate of return 7.25 percent, net of pension plan investment expense, including inflation

The plan currently uses mortality tables that vary by age, gender, employee group (i.e. general, law enforcement officer) and health status (i.e. disabled and healthy). The current mortality rates are based on published tables and based on studies that cover significant portions of the U.S. population. The healthy mortality rates also contain a provision to reflect future mortality improvements.

The actuarial assumptions used in the December 31, 2014 valuation were based on the results of an actuarial experience study for the period January 1, 2005 through December 31, 2009.

Future ad hoc COLA amounts are not considered to be substantively automatic and are therefore not included in the measurement.

(continued on next page)

Page 36 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

The projected long-term investment returns and inflation assumptions are developed through review of current and historical capital markets data, sell-side investment research, consultant whitepapers, and historical performance of investment strategies. return projections reflect current yields across the U.S. Treasury yield curve and market expectations of forward yields projected and interpolated for multiple tenors and over multiple year horizons. Global public equity return projections are established through analysis of the equity risk premium and the fixed income return projections. Other asset categories and strategies’ return projections reflect the foregoing and historical data analysis. These projections are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class as of June 30, 2014 are summarized in the following table:

Long-Term Expected Asset Class Target Allocation Real Rate of Return Fixed Income 29.0% 2.2% Global Equity 42.0% 5.8% Real Estate 8.0% 5.2% Alternatives 8.0% 9.8% Credit 7.0% 6.8% Inflation Protection 6.0% 3.4% Total 100%

The information above is based on 30 year expectations developed with the consulting actuary for the 2014 asset liability and study for the North Carolina Retirement Systems, including TSERS. The long-term nominal rates of return underlying the real rates of return are arithmetic annualized figures. The real rates of return are calculated from nominal rates by multiplicatively subtracting a long-term inflation assumption of 3.19%. All rates of return and inflation are annualized.

Page 37 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Concluded)

Pension Plan Obligations (Concluded)

Discount rate. The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the County’s proportionate share of the net pension asset to changes in the discount rate. The following presents the Board’s proportionate share of the net pension liability calculated using the discount rate of 7.25 percent, as well as what the Board’s proportionate share of the net pension asset or net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25 percent) or 1-percentage-point higher (8.25 percent) than the current rate:

1% Decrease Discount 1% Increase (6.25%) Rate (7.25%) (8.25%) Board's proportionate share of the net pension liability (asset) $915,043 $ 304,029 $ (214,487)

Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued Comprehensive Annual Financial Report (CAFR) for the State of North Carolina.

Risk Management

The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The School maintains general liability insurance coverage of $1 million per occurrence with a commercial carrier.

The School also participates in the Teachers’ and State Employees’ Comprehensive Major Medical Plan, a self-funded risk financing pool of the State administered by Blue Cross and Blue Shield of North Carolina. Through the Plan, permanent full-time employees of the School are eligible to receive health care benefits up to a $2 million lifetime limit.

Page 38 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Risk Management (Concluded)

The school pays the full cost of coverage for employees enrolled in the Comprehensive Major Medical Plan.

The school carries commercial coverage for all other risks of loss. There have been no significant reductions in insurance coverage in the prior year and claims have not exceeded coverage in any of the past two fiscal years. The School is not located in a flood plane.

Claims, Judgments, and Contingent Liabilities

At June 30, 2016, the School was not involved in any . In the opinion of the School’s management and the School’s attorney, the ultimate effect of any legal matter will not have a material adverse effect on the School’s financial position.

Long-Term Obligations

Notes Payables

On November 12, 2013 a note was obtained from a bank for a line of credit at an interest rate at prime. The amount of the loan is not to exceed $200,000 and is due and has an annual maturity date of December 12, 2016 with the option to renew the note at that time. The line of credit was obtained for working capital. As of June 30, 2016, the line of credit has a balance of $142,623.

In May 2013, promissory notes were obtained from eight individuals, in varying amounts, totaling $150,000 to be used for modification of school facilities. The loans carried an interest rate of 16.75% to be paid in installments of $250 to $1,000 per month, for a period of sixty consecutive months. At June 30, 2016, the loans had a collective balance due of $70,487.

Related Party Notes

In May 2013, notes were obtained from four individuals, in varying amounts, totaling $50,000 to be used for modification of school facilities. These individuals were members of the board of directors at the time the loans were made. The loans carried an interest rate of 16.75% to be paid in installments of $250 to $500 per month, for a period of sixty consecutive months. At June 30, 2016, the loans had a collective balance due of $23,496.

Page 39 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Long-Term Obligations (Continued)

Capital Leases

The School has entered into various lease agreements for certain equipment. At the conclusion of each of the leases, ownership is transferred to the School. The lease agreements qualify as capital leases for accounting purposes and, therefore, the obligations have been recorded at the of the future minimum lease payments as of the date of their inception.

The School entered into one new capital lease in May 2016 for the purchase of equipment. This capital lease was for a period of 44 months.

At June 30, 2016, assets recorded under the capital leases were as follows:

Accumulated Net Book Classes of Property Cost Depreciation Value Electronic Equipment$ 110,210 $ 101,156 $ 9,054 Equipment 29,382 5,615 23,767

Total$ 139,592 $ 106,771 $ 32,821

The following is a schedule of the future minimum lease payments and the net present value of the minimum lease payments as of June 30, 2015:

Year Ending June 30 2017$ 36,074 2018 5,559 2019 4,667 2020 2,333 2021 - 2022-2026 - 2027-2031 - 2032-2036 - Total minimum lease payments 48,634 Less: amount representing interest 4,508 Present value of the minimum lease payments$ 44,126

Page 40 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Long-Term Obligations (Concluded)

Changes in General Long-Term Obligations

The following is a summary of changes in the School’s long-term obligations for the fiscal year ended June 30, 2016:

Beginning Ending Current Governmental activities: Balance Increases Decreases Balance Portion Note payable - bank$- 162,582 $$ 20,000 $ 142,582 $ 142,582 Note payable - Ind.$- 134,474 $$ 40,491 $ 93,983 $ 47,819 Note payable - Land$ - $ 136,000 $ 10,525 $ 125,475 $ 43,167 Capitalized leases$ 69,305 $ 16,047 $ 40,779 $ 44,573 $ 32,907 Net pension liability$ 49,359 $ 381,775 $ 127,106 $- 304,028 $ Compensated Absences$ - $- 31,297 $$- 31,297 $

Total$ 415,720 $ 565,119 $ 238,901 $ 741,938 $ 266,474

Interfund Balances and Activity

Transfers to/from other funds at June 30, 2016, consist of the following:

From the General Fund to the School Food Service Fund $33,329

Transfers are used to move unrestricted revenues to finance School Food Service programs that the School must account for in specific funds.

Fund Balance

Uwharrie Charter Academy has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, Federal funds, State funds, board of education funds, local non-board of education funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the School.

Page 41 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONCLUDED)

Note 2 - Detail Notes on All Funds (Concluded)

Fund Balance (Concluded)

The following schedule provides management and citizens with information on the portion of General Fund balance that is available for appropriation:

Total Fund Balance – General Fund $ 47,121 Less: Inventories - Prepaid Items - Appropriated Fund Balance in 2016 budget - Remaining Fund Balance $ 47,121

Note 3 – Operating Leases

The School has entered a lease agreement for a mobile classroom. The non-cancelable agreement requires minimum monthly fees for periods ranging 60 months. Future lease obligations for the remaining years are as follows:

Year Ending June 30 2017 $ 20,556 2018 20,556 2019 20,556 2020 20,556 2021 20,556 Total $ 102,780

The total amount of lease payments made for the year ended June 30, 2016 was $11,199.

The School has entered a lease rental agreement for involving the building and land presently occupied by the School’s High School grades. The non-cancelable agreement requires minimum monthly fees for periods ranging 25 years or until sooner terminated. Future lease obligations for the remaining years are as follows:

Year Ending June 30 2017 $ 651,996 2018 651,996 2019 651,996 2020 651,996 2021 651,996 2022-2026 3,259,980 2027-2031 3,259,980 2032-2036 3,259,980 2037-2041 3,259,980

Total $ 16,299,900

The total amount of lease payments made for the year ended June 30, 2016 was $631,180.

Page 42 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONCLUDED)

Note 3 – Operating Leases (Concluded)

The School has entered a lease agreement for various electronic equipment. The non-cancelable agreement requires minimum monthly fees for periods ranging 36 months. Future lease obligations for the remaining years are as follows:

Year Ending June 30 2017 $ 55,884 2018 55,884 2019 9,314 2020 - 2021 - Total $ 121,082

The total amount of lease payments for the year ended June 30, 2016 was $51,227.

The School has entered a lease agreement for various electronic equipment. The non-cancelable agreement requires minimum monthly fees for periods ranging 60 months. Future lease obligations for the remaining years are as follows:

Year Ending June 30 2017 $ 31,812 2018 31,812 2019 31,812 2020 31,812 2021 2,651 Total $ 121,082

The total amount of lease payments for the year ended June 30, 2016 was $29,161.

Note 4 - Summary Disclosure of Significant Contingencies

Federal and State Assisted Programs

The School has received proceeds from federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant monies to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant monies.

Note 5 – Significant Effects of Subsequent Events

The School has evaluated all subsequent events through December 31, 2016, the date the financial statements were available to be issued.

On October 19, 2016, Uwharrie Charter Academy purchased the land and facilities they are currently were leasing with a USDA note payable for $8,827,000 at an interest rate of 2.375% per annum. Annual payments of $344,341 are due for 40 years.

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Page 50 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

INDEPENDENT AUDITOR’S REPORT

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

I have audited, 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, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, North Carolina, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprises the Uwharrie Charter Academy’s basic financial statements, and have issued my report thereon dated December 31, 2016.

Internal Control Over Financial Reporting

In planning and performing my audit of the financial statements, I considered the Uwharrie Charter Academy’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Uwharrie Charter Academy’s internal control. Accordingly, I do not express an opinion on the effectiveness of the School’s internal control.

My consideration of internal control was for limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, I identified certain deficiencies in internal control that I consider to be material weaknesses and significant deficiencies.

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 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. I consider the

Page 51 deficiencies described in the accompanying schedule of findings and questioned costs to be material weaknesses. 2016-1

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Uwharrie Charter Academy’s financial statements are free of material misstatement, I 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 my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items 2016-1.

Uwharrie Charter Academy’s Response to Findings

The Uwharrie Charter Academy’s response to the findings identified in my audit are described in the accompanying schedule of findings and questioned costs. The School’s response was not subjected to the auditing procedures applied in the audit of the financial statements and accordingly, I express no opinion on it.

Purpose of this Report

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

Certified Public Accountant Asheboro, North Carolina December 31, 2016

Page 52 Report On Compliance With Requirements Applicable To Each Major State Program And Internal Control Over Compliance; In Accordance With OMB Circular the Uniform Guidance and the State Single Audit Implementation Act

INDEPENDENT AUDITOR’S REPORT

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

Report on Compliance for Each Major State Program

I have audited the Uwharrie Charter Academy, North Carolina, compliance with the types of compliance requirements described in the Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government Commission, that could have a direct and material effect on each of the Uwharrie Charter Academy’s major state programs for the year ended June 30, 2016. The Uwharrie Charter Academy’s major state 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 the requirements of laws, regulations, contracts, and grants applicable to its state programs.

Auditor’s Responsibility

My responsibility is to express an opinion on compliance for each of the Uwharrie Charter Academy’s major state programs based on my audit of the types of compliance requirements referred to above. I conducted my 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 applicable sections of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) as described in the Audit Manual for Governmental Auditors in North Carolina, and the State Single Audit Implementation Act. Those standards, Uniform Guidance, Audits of States, Local Governments, and Non-Profit Organizations, and the State Single Audit Implementation Act require that I 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 state program occurred. An audit includes examining, on a test basis, evidence about the Uwharrie Charter Academy’s compliance with those requirements and performing such other procedures, as I considered necessary in the circumstances.

Page 53 I believe that my audit provides a reasonable basis for my opinion on compliance for each major state program. However, my audit does not provide a legal determination of the Uwharrie Charter Academy’s compliance.

Opinion on Each Major State Program

In my opinion, the City of Dogwood complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major state programs for the year ended June 30, 2016.

Report on Internal Control Over Compliance

Management of the Uwharrie Charter Academy is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing my audit of compliance, I considered the Uwharrie Charter Academy’s internal control over compliance with the types of requirements that could have a direct and material effect on a major state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing my opinion on compliance for each major state 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 internal control over compliance. Accordingly, I do not express an opinion on the effectiveness of the School’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 state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a 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 state 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 combination of deficiencies, in internal control over compliance with a type of compliance requirement of a state 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.

My 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. I did not identify any deficiencies in internal control over compliance that I consider to be material weaknesses. However, I identified certain deficiencies in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as items 2016-2 that I consider to be significant deficiency.

The Uwharrie Charter Academy’s response to the internal control over compliance finding identified in my audit is described in the accompanying schedule of findings and questioned costs. The Uwharrie Charter Academy’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, I express no opinion on the response.

Page 54 The purpose of this report on internal control over compliance is solely to describe the scope of my 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.

Certified Public Accountant Asheboro, North Carolina December 31, 2016

Page 55

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Page 56 UWHARRIE CHARTER ACADEMY

SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)

Section II. Findings Related to the Audit of the Basic Financial Statements

Finding: 2016-1

MATERIAL WEAKNESS

Criteria: In accordance with N.C. General Statute 143C-6A-5(a), each Local Government Unit (which includes Charter Schools) must obtain simple certification from each bidder or vendor, for new and new, renewed, or assigned contracts over $1,000, affirming that they are not listed on the State Treasurer’s Final Divestment List.

Condition: As of June 30, 2016, Uwharrie Charter Academy has not obtained certifications from any vendors affirming that said vendors are not listed on the State Treasurer’s Final Divestment List.

Effect: The School was in violation of the statute which could result in the ineligible contracting with individuals or companies, thus potentially creating unallowable costs at a material level.

Cause: Personnel responsible for obtaining the certification were not informed of the requirements and no internal controls were in place to ensure compliance.

Recommendation: The finance officer should implement a and internal control procedures that will satisfy the new contracting and procurement compliance requirements created by the Iran Divestment Act of 2015.

Views of responsible officials and planned corrective actions: Uwharrie Charter Academy’s Board and management agree with the finding and will use the tools and resources provided by the North Carolina Department of State Treasurer to implement new policy and related internal controls to satisfy compliance requirements. Please refer to the corrective action plan on page 59.

Page 57 UWHARRIE CHARTER ACADEMY

SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONCLUDED)

Section III. Findings and Questioned Costs Related to the Audit of State Awards

N.C. Department of Public Instruction Program Name: State Public School Fund

Finding: 2016-2

SIGNIFICANT DEFICIENCY Activities Allowed or Unallowed

Criteria: In accordance with N.C. General Statute 115C-218.105(b), funds allocated by the State Board of Education may be used to enter into operational and financing leases for real property or mobile classroom units for use as school facilities for charter schools and may be used for payments on loans made to charter schools for facilities, equipment, or operations. However, State funds shall not be used to obtain any other interest in real property or mobile classroom units.

Condition: The School spent funds allocated by the State Board of Education to purchase real property.

Effect: The School was in violation of N.C. General Statute 115C-218.105(b), thereby constituting an unallowable activity.

Cause: Personnel responsible for oversight of the spending of State funds were not in clear understanding of the N.C. General Statute pertaining to the acquisition of real property.

Recommendation: The finance officer and board members should gain a clear understanding of what costs are allowed to be reimbursed by the State Public School Funds.

Views of responsible officials and planned corrective actions: Uwharrie Charter Academy’s Board and management agree with the finding and will use the tools and resources provided by the North Carolina Department of State Treasurer to implement new policy and related internal controls to satisfy compliance requirements. Please refer to the corrective action plan on page 59.

Page 58 UWHARRIE CHARTER ACADEMY

CORRECTIVE ACTION PLAN For the Year Ended June 30, 2016

Finding: 2016-1

A. Name of Contact Person: Heather Soja

B. Corrective Action:

Uwharrie Charter Academy’s Board and management will use the tools and resources provided by the North Carolina Department of State Treasurer to implement new policy and related internal controls to satisfy compliance requirements.

C. Proposed Completion Date: Immediately

Finding: 2016-2

A. Name of Contact Person: Heather Soja

B. Corrective Action:

Uwharrie Charter Academy’s Board and management will use the tools and resources provided by the North Carolina Department of State Treasurer to gain a better understanding of what costs are allowed to be reimbursed by the State Public Schools Funds, implement new policy, and implement related internal controls to satisfy compliance requirements.

C. Proposed Completion Date: Immediately

Page 59

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Page 60

UWHARRIE CHARTER ACADEMY FINANCIAL STATEMENTS June 30, 2015

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!(;!" . INDEPENDENT AUDITOR’S REPORT

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

Report on the Financial Statements

I have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, North Carolina, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise Uwharrie Charter Academy’s basic financial statements as listed in the table of contents.

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

My responsibility is to express opinions on these financial statements based on my audit. I conducted my audit 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 I plan and perform the audit to obtain reasonable assurance about whether 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, I express no such opinion. An audit also includes evaluating the appropriateness of

Page 1 accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.

Opinions

In my opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, North Carolina as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 4 through 14, and the Schedule of the Proportionate Share of the Net Pension Liability and the Schedule of Board Contributions on pages 44 and 45, respectively be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information

My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Uwharrie Charter Academy, North Carolina’s basic financial statements. The combining and individual non-major fund financial statement, budgetary schedules, other schedules, as well as the accompanying Schedule of Expenditures of Federal and State Awards, as required by the Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the State Single Audit Implementation Act are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual non-major fund financial statements, budgetary schedules, other schedules, as well as the accompanying Schedule of Expenditures of Federal and State Awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In

Page 2 my opinion, the combining and individual non-major fund financial statements, budgetary schedules, other schedules, and the accompanying Schedule of Expenditures of Federal and State Awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, I have also issued my report dated December 31, 2015 on my consideration of Uwharrie Charter Academy’s internal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of the report is to describe the scope of my 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 Uwharrie Charter Academy’s internal control over financial reporting and compliance.

Certified Public Accountant Asheboro, North Carolina December 31, 2015

Page 3 Management’s Discussion and Analysis Uwharrie Charter Academy June 30, 2015

As management of Uwharrie Charter Academy, we offer readers of Uwharrie Charter Academy’s financial statements this overview and analysis of the financial activities of Uwharrie Charter Academy for the fiscal year ended June 30, 2015. We encourage readers to read the information presented here in conjunction with additional information that we have furnished in UCA’s financial statements which follow this narrative.

Financial Highlights

 The assets of Uwharrie Charter Academy exceeded it liabilities and deferred inflows at the close of the fiscal year by $199,524 (net position).  The school’s total net position increased by $125,956, primarily due to an increase in student enrollment.  As of the close of the current fiscal year, Uwharrie Charter Academy’s governmental funds reported combined ending fund balances of $199,524.  Enrollment continues to increase each year at UCA as planned in the initial charter with the twenty day ADM for its first year at 186, in the prior year 200, but current year-end enrollment at 320.  Uwharrie Charter Academy’s total debt decreased by $10,580 during the current fiscal year. The key factor in this decrease was the significant amount of payments made on outstanding debt while adding only a minimal amount of new long-term debt to support the Academy’s operational activities.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to Uwharrie Charter Academy’s basic financial statements. The Academy’s basic financial statements consist of three components; 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements (see figure 1). The basic financial statements present two different views of the Academy through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader’s understanding of the financial condition of Uwharrie Charter Academy.

Page 4 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

Required Components of Annual Financial Reports

Figure 1

Management’s Basic Financial Discussion and Statements Analysis

Government-wide Notes to the Fund Financial Financial Financial Statements Statements Statements

Summary Detail

Basic Financial Statements

The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government-wide Financial Statements. They provide both the short and long-term information about the Academy’s financial status.

The next statements (Exhibits 3 through 7) are Fund Financial Statements. These statements focus on the activities of the individual parts of the School’s government. These statements provide more detail than the government-wide statements. There are two parts to the Fund Financial Statements: 1) the governmental funds statements; and 2) the proprietary fund statements.

Page 5 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. After the notes, supplemental information is provided to show details about the School’s individual funds. Budgetary information for the School also can be found in this section of the statements.

Government-wide Financial Statements

The government-wide financial statements are designed to provide the reader with a broad overview of the School’s finances, similar in format to a financial statement of a private-sector business. The government- wide statements provide short and long-term information about the School’s financial status as a whole.

The two government-wide statements report the School’s net position and how they have changed. Net position is the difference between the School’s total assets and total liabilities and deferred inflows of resources. Measuring net position is one way to gauge the School’s financial condition.

The government-wide statements are divided into two categories: 1) governmental activities; and 2) business-type activities. The governmental activities include most of the School’s basic functions such as instructional services and business services. State, county, and federal funds provide virtually all of the funding for these functions. The business-type activities are those services for which the School charges its students and other customers to provide. This includes the Food Service offered by Uwharrie Charter Academy.

The government-wide financial statements are Exhibits 1 and 2 of this report.

Fund Financial Statements

The fund financial statements provide a more detailed look at the School’s most significant activities. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Uwharrie Charter Academy, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the North Carolina General Statutes or the School’s budget ordinance. All of the funds of Uwharrie Charter Academy can be divided into two categories: governmental funds and proprietary funds.

Governmental Funds – Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. Most of the School’s basic services are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year-end that will be available for spending in the next year. Governmental funds are reported using in accounting

Page 6 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015 method called modified accrual accounting that provides a short-term spending focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to finance the School’s programs. The relationship between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in a reconciliation that is a part of the fund financial statements.

Uwharrie Charter Academy adopts an annual budget for each of its funds, although it is not required to do so by General Statutes. Because the budget is not legally required by the Statutes, the budgetary comparison statements are not included in the basic financial statements, but are part of the supplemental statements and schedules that follow the notes. The budget is a legally adopted document that incorporates input from faculty, management, and the Board of Directors of the School in determining what activities will be pursued and what services will be provided by the School during the year. It also authorizes the School to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for each of the funds demonstrates how well Uwharrie Charter Academy has complied with the budget ordinance and whether or not the School has succeeded in providing the services as planned when the budget was adopted.

Proprietary Funds – Uwharrie Charter Academy has one proprietary fund, which is an enterprise fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Uwharrie Charter Academy uses enterprise funds to account for its food service function.

Notes to the Financial Statements – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements begin on page 23 of this report.

Government-Wide Financial Analysis

As noted earlier, net position may, over time, serve as one useful indicator of a school’s financial condition. The assets of Uwharrie Charter Academy exceeded liabilities and deferred inflows of resources by $199,524 as of June 30, 2015. The School’s net position increased by $125,956 for the fiscal year ended June 30, 2015. As of June 30, 2015, the net position of Uwharrie Charter Academy stood at $199,524. As of June 30, 2014, the net position of Uwharrie Charter Academy stood at $30,040. The School’s net position increased by $125,956 for the fiscal year ended June 30, 2015. Total net position is comprised of two components. One of the portions (less than 1%) reflects the School’s investment in capital assets (e.g. leasehold improvements, furniture and fixtures, textbooks, electronic equipment, vehicles, and equipment), less any related debt still outstanding that was issued to acquire those items. Uwharrie Charter Academy uses these capital assets to provide services to its students; consequently, these assets are not available for

Page 7 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015 future spending. Although Uwharrie Charter Academy’s net investment in capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources, since the capital assets cannot be used to liquidate these liabilities. The remaining portion of $197,833 is unrestricted. Also, Uwharrie Charter Academy implemented GASB Statement 68 this year. With the new reporting change, the School is allocated its proportionate share of the Local Government Employees’ Retirement System’s net pension asset, deferred outflows of resources, deferred inflows of resources, and pension expense. A restatement to record the effects of the new reporting guidance increased beginning net position by $43,528. Decisions regarding the allocations are made by the administrators of the pension plan, not by Uwharrie Charter Academy’s management.

(continued on next page)

Page 8 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

Uwharrie Charter Academy’s Net Position

Figure 2

Governmental Business-Type Activities Activities Total 2015 2014 2015 2014 2015 2014

Current and other assets $ 240,847 $ 73,505 $ - $ - $ 240,847 $ 73,505 Capital assets 368,047 431,952 - - 368,047 431,952 Deferred outflows of resources 108,018 - - - 108,018 - Total assets and deferred outflows of resources 716,912 505,457 - - 716,912 505,457

Long-term liabilities outstanding 415,715 426,300 - - 415,715 426,300 Other liabilities 101,673 49,117 - - 101,673 49,117 Deferred inflows of resources ------Total liabilities and deferred inflows of resources 517,388 475,417 - - 517,388 475,417

Net position: Net investment in capital assets 1,691 5,652 - - 1,691 5,652 Restricted ------Unrestricted 197,833 24,388 - - 197,833 24,388 Total net position$ 199,524 $ 30,040 $ - $ - $ 199,524 $ 30,040

Several particular aspects of the School’s financial operations positively influenced the total unrestricted governmental net position:

 The School adopted an annual budget for all funds supported by its Board of Directors. The School’s performance was measured using this budget on a monthly basis, allowing changes in spending as needed to stay within the budget.  The School applied for and was awarded several federal grants to assist with the expenses of meeting education needs of special needs students.  The School utilized an administrator as part-time faculty which resulted in decreasing the liabilities in salaries and benefits.  With its strategic location, the School targeted a multi-county area for recruiting students resulting in meeting its first-year enrollment projections and maintaining a waiting list.

Page 9 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

Uwharrie Charter Academy Changes in Net Position

Figure 3

Operating grants and contributions 30,745 21,423 - - 30,745 21,423 General revenues: County, State, and Federal funds 2,086,201 1,227,783 - - 2,086,201 1,227,783 Grants and contributions not restricted to specific programs ------Other 120,064 51,747 - - 120,064 51,747 Total revenues 2,237,010 1,300,953 17,629 10,836 2,254,639 1,311,789

Expenses: Instructional services 1,685,611 999,155 - - 1,685,611 999,155 System-wide support services 339,184 223,127 - - 339,184 223,127 Non-programmed charges ------School food service - - 37,057 12,721 37,057 12,721 Interest on long-term debt 66,831 33,859 - - 66,831 33,859 Total expenses 2,091,626 1,256,141 37,057 12,721 2,128,683 1,268,862

Increase in net position before transfers 145,384 44,812 (19,428) (1,885) 125,956 42,927

Transfers (19,428) (1,885) 19,428 1,885 - -

Extraordinary item: Gain on insurance recovery ------Increase in net position 125,956 42,927 - - 125,956 42,927 Net position, July 1 (consolidated) 30,040 (12,887) - - 30,040 (12,887) Net position, beginning, restated 73,568 - - - 73,568 - Net position, June 30$ 199,524 $ 30,040 $ - $ - $ 199,524 $ 30,040

Governmental activities: Governmental activities increased the School’s net position by $125,956.

Business-type activities: Business-type activities did not increase or decrease the School’s net position.

Page 10 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

Financial Analysis of Uwharrie Charter Academy’s Funds

As noted earlier, Uwharrie Charter Academy uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds. The focus of the Uwharrie Charter Academy’s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Uwharrie Charter Academy’s financing requirements. Specifically, unassigned fund balance can be a useful measure of a government’s net resources available for spending at the end of the fiscal year.

The general fund is the chief operating fund of the Uwharrie Charter Academy. At the end of the current fiscal year, unassigned fund balance of the General Fund was $125,582 while total fund balance reached $139,174.

At June 30, 2015, the governmental funds of Uwharrie Charter Academy reported a combined fund balance of $139,174, a 471% percent increase over last year.

Proprietary Funds. The School’s proprietary funds provide the same type of information found in the government-wide statements but in more detail. Unrestricted net position of the School Food Service Fund at the end of the fiscal year amounted to $0. The total growth in net position for the Food Service Fund was $0. Other factors concerning the finances of this fund have already been addressed in the discussion of the School’s business-type activities.

Capital Asset and Debt Administration

Capital assets. Uwharrie Charter Academy’s investment in capital assets for its governmental and business-type activities as of June 30, 2015, totals $368,047 (net of accumulated depreciation). These assets include a lease-hold improvements, equipment and furniture, vehicles, and technology/electronic equipment.

The major capital asset transaction during the year includes the following addition:

 The School put Leasehold Improvements in place for $2,550  The School put Computer/Electronic Equipment in place for $15,245  The School put Equipment in place for $2,050  The School put Furniture in place for $15,465

Page 11 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

Uwharrie Charter Academy’s Capital Assets (Net of Depreciation)

Figure 4

Governmental Business-type Activities Activities Total 2015 2014 2015 2014 2015 2014

Land$ - $ - $ - $ - $ - $ -

Buildings and ------system

Leasehold 247,047 279,423 - - 247,047 279,423 Improvements

Textbooks 7,245 13,933 7,245 13,933

Furniture & 25,760 17,444 Fixtures 25,760 17,444 - -

Electronic 51,741 78,117 Equipment 51,741 78,117 - -

20,062 25,570 Vehicles 20,062 25,570 - -

Equipment 16,192 17,465 - - 16,192 17,465

Total $ 368,047 $ 431,952 $ - $ - $ 368,047 $ 431,952

Additional information on the School’s capital assets can be found in Note 2 of the Basic Financial Statements.

Long-term Debt. As of June 30, 2015, Uwharrie Charter Academy had a total debt outstanding of $415,720. The debt consists of Note Payables to individuals of $134,474, $69,305 of capital lease debt, and a line of credit balance of $162,582. The remaining $49,359 relates to net pension liability related to the Teachers’ and State Employees’ Retirement System (TSERS).

Page 12 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

Uwharrie Charter Academy’s Outstanding Debt Note Payable and Capital Leases

Figure 5

Governmental Business-type Activities Activities Total 2015 2014 2015 2014 2015 2014 Note payable - bank $162,582 $- 173,000 $ $ - $ 162,582 $ 173,000

Note payable - individuals 134,474 168,760 - - 134,474 168,760

Revenue bonds ------Capital leases 69,305 84,540 - - 69,305 84,540

Net pension liability 49,359 - - - 49,359 -

Total$ 415,720 $ 426,300 $ - $ - $ 415,720 $ 426,300

The Uwharrie Charter School’s total debt decreased by $10,580 during the past fiscal year bringing the total balance to $415,720, with 39% due to a line of credit balance, 32% due to notes payable to individuals, 17% due to capital leases, and 12% due to net pension liability.

Page 13 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2015

Economic Factors

The following key economic indicators reflect the growth and prosperity of the School.

 The strategic location of Uwharrie Charter Academy has provided school choice that is easily accessible from four surrounding counties especially considering the three highways that pass within a .5 mile area around the school.

 By meeting the needs of families through our mission, Uwharrie Charter has met its enrollment projections during its first and second year of operation. Currently, UCA has a waiting list in all grade levels that it offers should a spot become available which enables the school to purchase the necessary instructional supplies and resources to support student learning.

 Uwharrie Charter Academy is continuing to grow. In February 2014, the NC State Board of Education granted approval for Uwharrie Charter Academy to expand from 9th through 11th grades in the 14-15 school year to grades 6th through 12th for the 15-16 school year. This approval would increase student enrollment at the school from 320 students to 745 students, respectively.

Requests for Information

This report is designed to provide an overview of the Academy’s finances for those with an interest in this area. Questions concerning any of the information in this report or requests for additional information should be directed to Heather Soja, Uwharrie Charter Academy, 301 Lewallen Rd., Asheboro, NC 27203, telephone (336) 610-0813.

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'† Page 22 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS For The Fiscal Year Ended June 30, 2015

Note 1 - Summary of Significant Accounting Policies

The accounting policies of the Uwharrie Charter Academy, North Carolina (School) conform to generally accepted accounting principles (GAAP) as applicable to governments. Charter schools are established by non-profit entities. Because of the authority of the State Board of Education (SBE) to unilaterally abolish a school with all the assets reverting to a local education agency, the charter schools in North Carolina follow the governmental reporting model, as used by local education agencies. The following is a summary of the more significant accounting policies.

Reporting Entity

The Uwharrie Charter Academy is a public school operated by a local non-profit corporation, serving approximately 320 students. The School operates under an approved charter received from the SBE and applied for under the provisions of General Statute (G.S.) 115C-238.29B. G.S. 115C- 238.29F(f)(1) states that a charter school shall be subject to the audit requirements adopted by the SBE, which includes the audit requirements established by G.S. 115C-447 of the School Budget and Fiscal Control Act (SBFCA). G.S. 115C-447 also requires financial statements to be prepared in accordance with GAAP.

Basis of Presentation

Government-wide Statements: The statement of net position and the statement of activities display information about the School. These statements include the financial activities of the overall government. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the School. Governmental activities generally are financed through intergovernmental revenues and other non- exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the School and for each function of the School’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.

Fund Financial Statements: The fund financial statements provide information about the School’s funds. Separate statements for each fund category - governmental and proprietary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds.

Page 23 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Basis of Presentation (Concluded)

Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities.

The School reports the following major governmental funds:

General Fund. The General Fund is the general operating fund of the School. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund.

State Public School Fund. The State Public School Fund includes appropriations from the Department of Public Instruction for specific operating needs of the public school system and is reported as a special revenue fund.

The School reports the following non-major governmental funds:

Federal Grant Fund. The Federal Grants Fund is used to account for financial transactions pertaining to salaries allocated for special needs education assistance.

Capital Outlay Fund. The Capital Outlay Fund includes appropriations for The acquisition of real property for school purposes, including but not limited to school sites, playgrounds, athletic fields, administrative headquarters, and garages; The acquisition or replacement of furniture and furnishings, instructional apparatus, data processing equipment, business machines, and similar items of furnishings and equipment; The acquisition of school buses as additions to the fleet; Such other objects of expenditures as may be assigned to the Capital Outlay Fund by the uniform budget format.

Athletics Activities Fund. The Athletics Fund is used to account for financial transactions pertaining to school athletics.

The School reports the following non-major enterprise fund:

School Food Service Fund. The School Food Service Fund is used is used to account for the food service program within the school system.

Page 24 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Measurement Focus and Basis of Accounting

Government-wide and Proprietary Fund Financial Statements. The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the School gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The School considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. These could include federal, State, and county grants, and some charges for services. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

Under the terms of grant agreements, the School funds certain programs by a combination of specific cost-reimbursement grants and general revenues. Thus, when program expenses are incurred, there is both restricted and unrestricted net position available to finance the program. It is the School’s policy to first apply cost-reimbursement grant resources to such programs and then general revenues.

Budgetary Data

Annual budgets are adopted for all funds, except for the Uwharrie athletics fund, and school food service funds. All budgets are prepared using the modified accrual basis of accounting.

The budget presented in the supplemental data represents the budget of the School at June 30, 2015. All appropriations lapse at year end.

Page 25 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 – Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity

Deposits and Investments

All deposits of the School are made in a local bank, whose accounts are FDIC insured.

Cash and Cash Equivalents

The School pools money from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents.

Capital Assets

The School’s capital assets are recorded at original cost. Donated assets are listed at their estimated fair value at the date of donation. The total of these estimates is not considered large enough that any errors would be material when capital assets are considered as a whole.

It is the policy of the School to capitalize all capital assets costing more than $200 with an estimated useful life of one or more years. In addition, other items which are purchased and used in large quantities such as student desks and office furniture are capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. All depreciable assets are depreciated using the straight-line method of depreciation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Capital assets are depreciated over the following estimated useful lives:

Estimated Asset Class Useful Lives Leasehold Improvements 9 Furniture and office equipment 5 Textbooks 3 Vehicles 5 Electronic/Computer equipment 3

Page 26 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows of Resources, represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The School has only one item that meets the criterion for this category – deferred outflows related to pensions. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, Deferred Inflows of Resources, represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The School has no items that meet this criterion.

Long-Term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position.

In the fund financial statements, governmental fund types report the face amount of debt issued as other financing sources.

Compensated Absences

The liability for compensated absences reported in the government-wide statements consists of unpaid, accumulated annual leave balances. Administrative staff, who work the entire fiscal year, may accumulate up to fifteen (15) days earned paid vacation leave with such leave being fully vested when earned. Unused vacation leave days may carry over into subsequent years and may accrue toward retirement, in accordance with the laws of North Carolina, the State Retirement System, and any applicable limitations determined by the Board. The School accounts for its leave on a first-in, first-out basis, such that the oldest available leave is used first. The current portion of the liability is recorded as such in the government-wide financial statements.

The School’s sick leave policy provides for an accumulation of up to 20 days earned sick leave. Sick leave does not vest, but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes. Since the School does not have any obligation for the accumulated sick leave until it is actually taken, no accrual for sick leave has been made.

Page 27 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Net Position/Fund Balances

Net Position

Net position in government-wide and proprietary fund financial statements are classified as net investment in capital assets, restricted, and unrestricted. Restricted net position represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through State statute.

Fund Balances

In the governmental fund financial statements, fund balance is comprised of five classifications designed to disclose the hierarchy of constraints placed on how fund balance can be spent.

The governmental fund types classify fund balances as follows:

Nonspendable Fund Balance – This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted Fund Balance – This classification includes amounts that are restricted to specific purposes externally imposed by creditors or imposed by law.

Committed Fund Balance – portion of fund balance that can only be used for specific purposes imposed by majority vote of School’s governing body (highest level of decision-making authority). Any changes or removal of specific purpose requires majority action by the governing bodies that approved the original action.

Assigned Fund Balance – portion of fund balance that the Uwharrie Charter Academy intends to use for specific purposes.

Assigned for Clubs and Activities funds – revenue sources restricted for expenditures for the various clubs and organizations, athletic events, and various fund raising activities for which they were collected.

Unassigned Fund Balance – the portion of fund balance that has not been assigned to another fund or restricted, committed, or assigned to specific purposes within the General Fund.

Page 28 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Net Position/Fund Balances (Concluded)

Uwharrie Charter Academy has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, Federal funds, State funds, board of education funds, local non-board of education funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the School.

The governmental fund balance sheet includes a reconciliation between the governmental funds’ total fund balance and governmental activities’ net position as reported in the government-wide statement of net position. The net adjustment of $60,350 consists of several elements as follows:

DESCRIPTION AMOUNT

Capital assets used in governmental activities are not financial resources and are therefore not reported in the funds (total capital $ 547,996 assets on government-wide statement in governmental activities column).

Less accumulated depreciation (179,949)

Deferred outflows of resources related to pensions 108,018

Liabilities that, because they are not due and payable in the current period, do not require current resources to pay and are therefore not reported in the fund statements: Bonds, leases, and installment financing (366,357) Net pension liability (49,358) Total adjustment $ 60,350

Page 29 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Revenues, Expenditures, and Expenses

Funding

The Uwharrie Charter Academy is funded by the State Board of Education, receiving (i) an amount equal to the average per pupil allocation for the average daily membership (ADM) from the local school administrative unit allotments in which the school is located (i.e. Asheboro City Board of Education) for each child attending the School except for the allocation for children with special needs and (ii) an additional amount for each child attending the School who is a child with special needs [G.S. 115C-238.29H(a)]. Additionally, the School receives, for each student who resides in the local administrative unit and attends the charter school, an amount equal to the per local current expense appropriation to the respective local school administrative unit for the fiscal year which is transferred by the appropriate local school administrative unit(s). [G.S. 115C- 238.29H(b)]. For the fiscal year ended June 30, 2015, the Uwharrie Charter Academy received funding from the Boards of Education for Asheboro City, Davidson County, Guilford County, Montgomery County, Moore County, and Randolph County.

Furthermore, Uwharrie Charter Academy has received donations of cash and/or equipment from private organizations. The cash has been used for the purchase of new equipment for the School’s facilities.

(continued on next page)

Page 30 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Concluded)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Concluded)

Revenues, Expenditures, and Expenses (Concluded)

Reconciliation between government-wide and fund statements

The governmental fund statement of revenues, expenditures, and changes in fund balance is followed by a reconciliation between the change in governmental funds’ fund balance and the change in governmental activities’ net position as reported on the government-wide statement of activities. The net difference of $11,170 between the two amounts consists of the following elements:

DESCRIPTION AMOUNT

Capital outlay expenditures recorded in the fund statements but capitalized as assets on the statement of activities $ 35,310

Depreciation expense that is recorded on the statement of activities but not in the fund statements. (99,215)

Contributions to the pension plan in the current fiscal year not included in the Statement of Activities. 88,458

New debt issued during the year is recorded as a source of funds on the fund statements but has no effect on the statement of activities, only the statement of net position. (15,245)

Principal payments on debt owed are recorded as a use of funds on the fund statements but again affect only the statement of net position in the government-wide statements. 96,888

Expenses reported on the statement of activities that do not require the use of current resources to pay are not recorded as expenditures in the fund statements. Difference in interest expense between fund statements (modified accrual) and government-wide statements (full accrual). 0 Pension expense (73,326) Compensated absences are accrued in the government-wide statements but not in the fund statements, as they do not use current resources. (21,700) Total $ (11,170)

Page 31 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds

Assets

Deposits

At June 30, 2015, the School had deposits with banks and savings and loans with a carrying amount of $222,473. The bank balance with the financial institutions was $231,276, which was covered by federal depository insurance. The School does not have a deposit policy for custodial credit risk.

Capital Assets Beginning Ending Balances Increases Decreases Balances Governmental activities: Capital assets not being depreciated: Land$ - $ - $ - $ - Total capital assets not being depreciated - - -- Capital assets being depreciated: Leasehold Improvements 313,696 2,550 - 316,246 Furniture and equipment 21,686 15,465 - 37,151 Electronic/Computer Equipment 109,618 15,245 - 124,863 Textbooks 20,063 - - 20,063 Vehicles 27,538 - - 27,538 Equipment 20,085 2,050 - 22,135 Total capital assets being depreciated 512,686 35,310 - 547,996 Less accumulated depreciation for: Leasehold Improvements 34,273 34,926 - 69,199 Furniture and equipment 4,242 7,150 - 11,392 Electronic/Computer Equipment 31,501 41,621 - 73,122 Textbooks 6,130 6,688 - 12,818 Vehicles 1,968 5,507 - 7,475 Equipment 2,620 3,323 - 5,943 Total accumulated depreciation 80,734 99,215 - 179,949 Total capital assets being depreciated, net 431,952 368,047 Governmental activity capital assets, net $431,952 $ 368,047

Depreciation expense was charged to governmental functions as follows:

Instructional programs $ 91,734 Supporting services 7,481 Total depreciation expense $ 99,215

Page 32 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities

Pension Plan Obligations

Plan Description. The Board is a participating employer in the statewide Teachers’ and State Employees’ Retirement System (TSERS), a cost-sharing multiple-employer defined benefit pension plan administered by the State of North Carolina. TSERS membership is comprised of employees of the State (state agencies and institutions), universities, community colleges, and certain proprietary component units along with the employees of Local Education Agencies and charter schools. Article 1 of G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. Management of the plan is vested in the TSERS Board of Trustees, which consists of 13 members – nine appointed by the Governor, one appointed by the state Senate, one appointed by the state House of Representatives, and the State Treasurer and State Superintendent, who serve as ex-officio members. The Teachers’ and State Employees’ Retirement System is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State’s CAFR includes financial statements and required supplementary information for TSERS. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, by calling (919) 981-5454, or at www.osc.nc.gov.

Benefits Provided. TSERS provides retirement and survivor benefits. Retirement benefits are determined as 1.82% of the member’s average final compensation times the member’s years of creditable service. A member’s average final compensation is calculated as the average of a member’s four highest consecutive years of compensation. General employee plan members are eligible to retire with full retirement benefits at age 65 with five years of creditable service (or 10 years of creditable service for members joining TSERS on or after August 1, 2011), at age 60 with 25 years of creditable service, or at any age with 30 years of creditable service. General employee plan members are eligible to retire with partial retirement benefits at age 50 with 20 years of creditable service or at age 60 with five years of creditable service (or 10 years of creditable service for members joining TSERS on or after August 1, 2011). Survivor benefits are available to eligible beneficiaries of members who die while in active service or within 180 days of their last day of service and who have either completed 20 years of creditable service regardless of age or have completed five years of service and have reached age 60 (10 years for members joining on or after August 1, 2011). Eligible beneficiaries may elect to receive a monthly Survivor’s Alternate Benefit for life or a return of the member’s contributions. The plan does not provide for automatic post-retirement benefit increases. Increases are contingent upon actuarial gains of the plan.

Page 33 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

TSERS plan members who are LEOs are eligible to retire with full retirement benefits at age 55 with five years of creditable service as an officer (or 10 years of creditable service for members joining TSERS on or after August 1, 2011), or at any age with 30 years of creditable service. LEO plan members are eligible to retire with partial retirement benefits at age 50 with 15 years of creditable service as an officer. Survivor benefits are available to eligible beneficiaries of LEO members who die while in active service or within 180 days of their last day of service and who also have either completed 20 years of creditable service regardless of age, or have completed 15 years of service as a LEO and have reached age 50, or have completed five years of creditable service as a LEO and have reached age 55, or have completed 15 years of creditable service as a LEO if killed in the line of duty. Eligible beneficiaries may elect to receive a monthly Survivor’s Alternate Benefit for life or a return of the member’s contributions.

Contributions. Contribution provisions are established by General Statute 135-8 and may be amended only by the North Carolina General Assembly. School employees are required to contribute 6% of their compensation. Employer contributions are actuarially determined and set annually by the TSERS Board of Trustees. The School’s contractually required contribution rate for the year ended June 30, 2015, was 9.15% of covered payroll, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs of benefits earned by employees during the year. Contributions to the pension plan from the School were $88,458 for the year ended June 30, 2015.

Refunds of Contributions – School employees who have terminated service as a contributing member of TSERS, may file an application for a refund of their contributions. By state law, refunds to members with at least five years of service include 4% interest. State law requires a 60 day waiting period after service termination before the refund may be paid. The acceptance of a refund payment cancels the individual’s right to employer contributions or any other benefit provided by TSERS.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 30, 2015, the School reported a liability of $49,358 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of December 31, 2013. The total pension liability was then rolled forward to the measurement date of June 30, 2014 utilizing update procedures incorporating the actuarial assumptions. The School’s proportion of the net pension liability was based on a projection of the School’s long- term share of future payroll covered by the pension plan, relative to the projected future payroll covered by the pension plan of all participating TSERS employers, actuarially determined. At June 30, 2014, Uwharrie Charter Academy’s proportion was .004%.

Page 34 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

For the year ended June 30, 2015, the School recognized pension expense of $73,326. At June 30, 2015, the School reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ - $ 11,505 Changes of assumptions - - Net difference between projected and actual earnings on pension plan investments - 166,766

Changes in proportion and differences between Board contributions and proportionate share of contributions 197,832 - Board contributions subsequent to the measurement date 88,458 - Total$ 286,290 $ 178,271

$88,458 reported as deferred outflows of resources related to pensions resulting from School contributions subsequent to the measurement date will be recognized as a decrease of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ended June 30: 2016 7,471 2017 7,471 2018 7,471 2019 (2,853) 2020 - Thereafter -

Page 35 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

Actuarial Assumptions. The total pension liability in the December 31, 2013 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 3.0 percent Salary increases 4.25 to 9.10 percent, including inflation and productivity factor Investment rate of return 7.25 percent, net of pension plan investment expense, including inflation

The plan currently uses mortality tables that vary by age, gender, employee group (i.e. general, law enforcement officer) and health status (i.e. disabled and healthy). The current mortality rates are based on published tables and based on studies that cover significant portions of the U.S. population. The healthy mortality rates also contain a provision to reflect future mortality improvements.

The actuarial assumptions used in the December 31, 2013 valuation were based on the results of an actuarial experience study for the period January 1, 2005 through December 31, 2009.

Future ad hoc COLA amounts are not considered to be substantively automatic and are therefore not included in the measurement.

(continued on next page)

Page 36 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Continued)

Pension Plan Obligations (Continued)

The projected long-term investment returns and inflation assumptions are developed through review of current and historical capital markets data, sell-side investment research, consultant whitepapers, and historical performance of investment strategies. Fixed income return projections reflect current yields across the U.S. Treasury yield curve and market expectations of forward yields projected and interpolated for multiple tenors and over multiple year horizons. Global public equity return projections are established through analysis of the equity risk premium and the fixed income return projections. Other asset categories and strategies’ return projections reflect the foregoing and historical data analysis. These projections are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class as of June 30, 2014 are summarized in the following table:

Long-Term Expected Asset Class Target Allocation Real Rate of Return Fixed Income 36.0% 2.5% Global Equity 40.5% 6.1% Real Estate 8.0% 5.7% Alternatives 6.5% 10.5% Credit 4.5% 6.8% Inflation Protection 4.5% 3.7% Total 100%

The information above is based on 30 year expectations developed with the consulting actuary for the 2013 asset liability and investment policy study for the North Carolina Retirement Systems, including TSERS. The long-term nominal rates of return underlying the real rates of return are arithmetic annualized figures. The real rates of return are calculated from nominal rates by multiplicatively subtracting a long-term inflation assumption of 3.19%. All rates of return and inflation are annualized.

A new asset allocation policy was finalized during the fiscal year ended June 30, 2014 to be effective July 1, 2014. The new asset allocation policy utilizes different asset classes, changes in the structure of certain asset classes, and adopts new benchmarks. Using the asset class categories in the preceding table, the new long-term expected arithmetic real rates of return are: Fixed Income 2.2%, Global Equity 5.8%, Real Estate 5.2%, Alternatives 9.8%, Credit 6.8% and Inflation Protection 3.4%.

Page 37 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Liabilities (Concluded)

Pension Plan Obligations (Concluded)

Discount rate. The discount rate used to measure the total pension liability was 7.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the County’s proportionate share of the net pension asset to changes in the discount rate. The following presents the Board’s proportionate share of the net pension liability calculated using the discount rate of 7.25 percent, as well as what the Board’s proportionate share of the net pension asset or net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25 percent) or 1-percentage-point higher (8.25 percent) than the current rate:

1% Decrease Discount 1% Increase (6.25%) Rate (7.25%) (8.25%) Board's proportionate share of the net pension liability (asset) $ 354,333 $ 49,359 $ 208,147

Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued Comprehensive Annual Financial Report (CAFR) for the State of North Carolina.

Risk Management

The School is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The School maintains general liability insurance coverage of $1 million per occurrence with a commercial carrier.

The School also participates in the Teachers’ and State Employees’ Comprehensive Major Medical Plan, a self-funded risk financing pool of the State administered by Blue Cross and Blue Shield of North Carolina. Through the Plan, permanent full-time employees of the School are eligible to receive health care benefits up to a $2 million lifetime limit. The

Page 38 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Risk Management (Concluded)

School pays the full cost of coverage for employees enrolled in the Comprehensive Major Medical Plan.

The school carries commercial coverage for all other risks of loss. There have been no significant reductions in insurance coverage in the prior year and claims have not exceeded coverage in any of the past two fiscal years. The School is not located in a flood plane.

Claims, Judgments, and Contingent Liabilities

At June 30, 2014, the School was not involved in any lawsuits. In the opinion of the School’s management and the School’s attorney, the ultimate effect of any legal matter will not have a material adverse effect on the School’s financial position.

Long-Term Obligations

Notes Payables

On November 12, 2013 a note was obtained from a bank for a line of credit at an interest rate at prime. The amount of the loan is not to exceed $200,000 and is due and has an annual maturity date of December 12, 2015 with the option to renew the note at that time. The line of credit was obtained for working capital. As of June 30, 2015, the line of credit has a balance of $162,582.

In May 2013, promissory notes were obtained from eight individuals, in varying amounts, totaling $150,000 to be used for modification of school facilities. The loans carried an interest rate of 16.75% to be paid in installments of $250 to $1,000 per month, for a period of sixty consecutive months. At June 30, 2015, the loans had a collective balance due of $100,856.

Related Party Notes

In May 2013, notes were obtained from four individuals, in varying amounts, totaling $50,000 to be used for modification of school facilities. These individuals were members of the board of directors at the time the loans were made. The loans carried an interest rate of 16.75% to be paid in installments of $250 to $500 per month, for a period of sixty consecutive months. At June 30, 2015, the loans had a collective balance due of $33,618.

Page 39 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Long-Term Obligations (Continued)

Capital Leases

The School has entered into various lease agreements for certain equipment. At the conclusion of each of the leases, ownership is transferred to the School. The lease agreements qualify as capital leases for accounting purposes and, therefore, the obligations have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The School entered into one new capital lease in July 2014 for the purchase of electronic equipment. This capital lease was for a period of 36 months.

At June 30, 2015, assets recorded under the capital leases were as follows:

Accumulated Net Book Classes of Property Cost Depreciation Value Electronic Equipment$ 110,210 $ 64,420 $ 45,790 Equipment 13,335 3,175 10,160

Total$ 123,545 $ 67,595 $ 55,950

The following is a schedule of the future minimum lease payments and the net present value of the minimum lease payments as of June 30, 2015:

Year Ending June 30 2016$ 47,093 2017 31,408 2018 892 2019 - 2020 - 2021-2025 - 2026-2030 - 2031-2035 - Total minimum lease payments 79,393 Less: amount representing interest 10,088 Present value of the minimum lease payments$ 69,305

Page 40 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds (Continued)

Long-Term Obligations (Concluded)

Changes in General Long-Term Obligations

The following is a summary of changes in the School’s long-term obligations for the fiscal year ended June 30, 2015:

Beginning Ending Current Governmental activities: Balance Increases Decreases Balance Portion Note payable - bank$ 173,000 $ 20,000 $ 30,418 $ 162,582 $ 162,582 Note payable - Ind.$ 168,760 $ - $ 34,286 $ 134,474 $ 40,491 Capitalized leases$ 84,540 $ 15,692 $ 30,927 $ 69,305 $ 38,560 Net pension liability$ - $ 49,359 $ - $ 49,359 $ -

Total$ 426,300 $ 35,692 $ 95,631 $ 415,720 $ 241,633

Interfund Balances and Activity

Transfers to/from other funds at June 30, 2015, consist of the following:

From the General Fund to the School Food Service Fund $19,428

Transfers are used to move unrestricted revenues to finance School Food Service programs that the School must account for in specific funds.

Fund Balance

Uwharrie Charter Academy has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, Federal funds, State funds, board of education funds, local non-board of education funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the School.

Page 41 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

NOTES TO THE FINANCIAL STATEMENTS (CONCLUDED)

Note 2 - Detail Notes on All Funds (Concluded)

Fund Balance (Concluded)

The following schedule provides management and citizens with information on the portion of General Fund balance that is available for appropriation:

Total Fund Balance – General Fund $ 125,582 Less: Inventories - Prepaid Items - Appropriated Fund Balance in 2016 budget - Remaining Fund Balance $ 125,582

Note 3 - Summary Disclosure of Significant Contingencies

Federal and State Assisted Programs

The School has received proceeds from federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant monies to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant monies.

Note 4 – Significant Effects of Subsequent Events

The School has evaluated all subsequent events through December 31, 2015, the date the financial statements were available to be issued.

In February 2014, the NC State Board of Education granted approval for Uwharrie Charter Academy to expand from 9th through 11th grades in the 14-15 school year to grades 6th through 12th for the 15-16 school year. This approval would increase student enrollment at the school from 320 students to 745 students, respectively.

The School entered into a lease arrangement in August 2014, in order to occupy a new high school facility for a term of twenty-five years, or until sooner terminated. The monthly base rent, beginning on the commencement date, August 2015, and continuing for a period of three years shall be $54,451.

The Board of Directors have approved the acquisition of additional real property for purposes of expansion of school grounds.

Page 42 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

REQUIRED SUPPLEMENTAL FINANCIAL DATA

This section contains additional information required by generally accepted accounting principles.

 Schedule of Proportionate Share of Net Position Liability for Teachers’ and State Employees’ Retirement System

 Schedule of Contributions to Teachers’ and State Employees’ Retirement System

Page 43 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

SCHEDULE OF THE SYSTEM’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Teachers’ and State Employees’ Retirement System

2015

System’s proportion of the net pension liability (asset) 0.004% System’s proportionate share of the net pension liability (asset) $ 49,359 System’s covered-employee payroll $ 969,099 System’s proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 5.09% Plan fiduciary net position as a percentage of the total pension liability 98.24%

Page 44 UWHARRIE CHARTER ACADEMY, NORTH CAROLINA

SCHEDULE OF THE SYSTEM’S CONTRIBUTIONS Teachers’ and State Employees’ Retirement System

2015

Contractually required contribution $ 88,458 Contributions in relation to the contractually required contribution 88,458 Contribution deficiency (excess) $ -

System’s covered-employee payroll $ 969,099 Contributions as a percentage of covered-employee payroll 9.13%

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Page 49 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

INDEPENDENT AUDITOR’S REPORT

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

I have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to the financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, North Carolina, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprises the Uwharrie Charter Academy’s basic financial statements, and have issued our report thereon dated December 31, 2015.

Internal Control Over Financial Reporting

In planning and performing my audit of the financial statements, I considered Uwharrie Charter Academy’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Uwharrie Charter Academy’s internal control. Accordingly, I do not express an opinion on the effectiveness of Uwharrie Charter Academy’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.

Page 50 My 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 my audit I did not identify any deficiencies in internal control that I consider material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Uwharrie Charter Academy’s financial statements are free from material misstatement, I 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 my audit, and accordingly, I do not express such an opinion. The results of my 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 my testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Certified Public Accountant Asheboro, North Carolina December 31, 2015

Page 51 Report On Compliance For Each Major State Program; Report on Internal Control Over Compliance; In accordance with OMB Circular A-133; and the State Single Audit Implementation Act

INDEPENDENT AUDITOR’S REPORT

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

Report on Compliance for Each Major State Program

I have audited the Uwharrie Charter Academy, North Carolina, compliance with the types of compliance requirements described in the Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government Commission, that could have a direct and material effect on each of the Uwharrie Charter Academy’s major state programs for the year ended June 30, 2015. The Uwharrie Charter Academy’s major state 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 the requirements of laws, regulations, contracts, and grants applicable to its state programs.

Auditor’s Responsibility

My responsibility is to express an opinion on compliance for each of the Uwharrie Charter Academy’s major state programs based on my audit of the types of compliance requirements referred to above. I conducted my 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 applicable sections of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, as described in the Audit Manual for Governmental Auditors in North Carolina, and the State Single Audit Implementation Act. Those standards, OMB Circular A-133, and the State Single Audit Implementation Act require that I 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 state program occurred. An audit includes examining, on a test basis, evidence about the Uwharrie Charter Academy’s compliance with those requirements and performing such other procedures, as I considered necessary in the circumstances.

Page 52 I believe that my audit provides a reasonable basis for my opinion on compliance for each major state program. However, my audit does not provide a legal determination of the Uwharrie Charter Academy’s compliance.

Opinion on Each Major State Program

In my opinion, the Uwharrie Charter Academy complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major state programs for the year ended June 30, 2015.

Report on Internal Control Over Compliance

Management of the Uwharrie Charter Academy is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing my audit of compliance, I considered the Uwharrie Charter Academy’s internal control over compliance with the types of requirements that could have a direct and material effect on a major state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing my opinion on compliance for each major state program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, I do not express an opinion on the effectiveness of the City’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 state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a 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 state 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 combination of deficiencies, in internal control over compliance with a type of compliance requirement of a state 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.

My 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 significant deficiencies or material weaknesses. I did not identify any deficiencies in internal control over compliance that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of my testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Certified Public Accountant Asheboro, North Carolina December 31, 2015

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Page 56 UWHARRIE CHARTER ACADEMY FINANCIAL STATEMENTS June 30, 2014 UWHARRIE CHARTER ACADEMY

TABLE OF CONTENTS

Exhibit Financial Section: Page Independent Auditor's Report Management's Discussion and Analysis 4

Basic Financial Statements: Government-wide Financial Statements:

Statement of Net Position 14 2 Statement of Activities 15

Fund Financial Statements: 3 Balance Sheet - Governmental Funds 16 3 Reconciliation ofthe Balance Sheet - Governmental Funds to the 16 StatementofNet Position 4 Statement of Revenues, Expenditures, and Changes in Fund 17 Balances - Governmental Funds 5 Reconciliation of the Statement of Revenues, Expenditures, and 18 Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 Statement of Net Position - Proprietary Funds 19 7 Statement of Revenues, Expenses, and Changes in Fund Net 20 Position - Proprietary Funds

8 Statement of Cash Flows - Proprietary Funds 21 Notes to the Financial Statements 22

Statement Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet - Non-major Governmental Funds 36

2 Combining Statement of Revenues, Expenditures, and Changes in 37 Fund Balances - Non-major Govenmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual

3 Government-wide Budget 38 UWHARRIE CHARTER ACADEMY

TABLE OF CONTENTS (CONCLUDED)

Compliance Section: Page RepOit on Internal Control Over Financial RepOiting and on 40 Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance with Requirements Applicable 42 To Each Major State Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 and the State Single Audit Implementation Act

Other Schedule: Schedule of Expenditures of Federal and State Awards 45 379 South Cox Street Member 126 North Second Street Asheboro, North Carolina 27203 Albemarle, North Carolina 28001 American Institute of Certified Phone: (336) 626-9970 Pilon.: (704) 983-5012 Fax: (336) 626-5981 Public Accountants Fax: (704) 983-5109 North Carolina Associalion or Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Honorable Chairman And Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

Report on the Financial Statements

I have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, NOlth Carolina as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Uwharrie Charter Academy's basic financial statements as listed in the table of contents.

Management's Responsibility fOJ' tlte Financial Statements

Management is responsible for the preparation and fair presentation of the 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

My responsibility is to express opinions on these financial statements based on my audit. conducted Illy audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Governmental Auditing Standards, issued by the Comptroller of the United States. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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

Page 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, I express no such opinion. An audit also includes evaluating the appropriateness of accounting polices used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.

Opinions

In my opinion, based upon my audit, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Uwharrie Charter Academy, North Carolina as of June 30, 2014, and the respective changes ill financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other matters

Required Supplementary In/ormation

Accounting principles generally accepted in the United States of America require that Management's Discussion and Analysis on pages 4 through 13 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting standards Board who considers it to be an essential pmt of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consist of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other In/ormation

My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Uwharrie Charter Academy, North Carolina's basic financial statements. The combining and individual non-major fund financial statement, budgetary schedules, other schedules, as well as the Accompanying Schedule of Expenditures of Federal and State Awards, as required by the Office of Management and Budget Circular A-133, Audits o/States, Local Govemments, and Non-Profit Organizations, and the State Single Audit Implementation Ac(are presented for purposes of additional analysis and are not a required part of the basic financial statements.

Page 2 The combining and individual non-major fund financial statements, budgetary schedules, other schedules, as well as the accompanying Schedule of Expenditures of Federal and State Awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the aUditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the combining and individual fund financial statements, budgetary schedules, other schedules, and the accompanying Schedule of Expenditures of Federal and State Awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Govel'llment Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated December 31, 2014 on my consideration of the Uwharrie Chm1er Academy's intemal control over financial reporting and on my tests of its compliance with celiain provisions oflaws, regulations, contracts, and grant agreements and other matters. The purpose of the report is to describe the scope of my testing of intemal control over financial repo11ing and compliance and the results of that testing, and not to provide an opinion on intemal control over financial reporting 01' on compliance. That report is an integral pa11 of an audit performed in accordance with Government Auditing Standards in considering Uwharrie Charter Academy's intemal control over financial reporting and compliance. fl1~~- /Ut~tI( Certified Public Accountant Asheboro, NOl1h Carolina December 31, 2014

Page 3 Management's Discussion and Analysis Uwharrie Charter Academy June 30, 2014

As management of Uwharrie Charter Academy, we offer readers of Uwharrie Charter Academy's financial statements this overview and analysis of the financial activities of Uwharrie Charter Academy for the fiscal year ended June 30, 2014. We encourage readers to read the information presented here in conjunction with additional information that we have furnished in UCA's financial statements which follow this narrative.

Financial Highlights

• The assets of Uwharrie Charter Academy exceeded it liabilities and deferred inflows at the close of the fiscal year by $30,040 (net position). • The school's total net position increased by $42,927, primarily due to an increase in student e111'ollment. • As of the close of the current fiscal year, Uwharrie Chatter Academy's governmental funds reported combined ending fund balances of $30,040. • E111'ollment continues to increase each year at UCA as planned in the initial charter with the twenty day ADM for its first year at 186 but year-end e111'ollment at 200. • Uwharrie Charter Academy's total debt increased by $266,850 during the current fiscal year. The key factor in this increase were lease-hold improvements needed for upcoming grade expansion at its existing facility.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to Uwharrie Charter Academy's basic financial statements. The Academy's basic financial statements consist of tlu'ee components; 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements (see figure I). The basic financial statements present two different views of the Academy through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader's understanding of the financial condition of Uwharrie Charter Academy.

Page 4 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2014

Required Components of Annual Financial Reports

Figurc 1

\

Management's Basic Fi nancial Discussion and State ments Analysis

I I

Government-wide Notes to the Fund Financial Financial Financial Statements Statements Statements

Summary ------.. Detail

Basic Financial Statements

The first two statements (Exhibits I and 2) in the basic financial statements are the Government-wide Financial Statement. They provide both the short and long-term information about the School's financial status.

The next statements (Exhibits 3 through 7) are Fund Financial Statements. These statements focus on the activities of the individual parts of the School's gove1'11ment. These statements provide more detail than the gove1'11ment-wide statements. There are two patis to the Fund Financial Statements: I) the gove1'11mental funds statements; and 2) the proprietary fund statements.

Page 5 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2014

The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. After the notes, supplemental information is provided to show details about the School's individual funds. Budgetary information for the School also can be found in this section of the statements.

Government-wide Financial Statements

The government-wide financial statements are designed to provide the reader with a broad overview of the School's finances, similar in format to a financial statement of a private-sector business. The government-wide statements provide short and long-term information about the School's financial status as a whole.

The two government-wide statements report the School's net position and how they have changed. Net position is the difference between the School's total assets and total liabilities and deferred inflows of resources. Measuring net position is one way to gauge the School's financial condition.

The government-wide statements are divided into two categories: I) governmental activities; and 2) business-type activities. The governmental activities include most of the School's basic functions such as instructional services and business services. State, county, and federal funds provide virtually all of the funding for these functions. The business-type activities are those services for which the School charges its students and other customers to provide. This includes the Food Service offered by Uwharrie Charter Academy.

The government-wide financial statements are Exhibits I and 2 of this repOli.

Fund Financial Statements

The fund financial statements provide a more detailed look at the School's most significant activities. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Uwharrie Chmier Academy, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the North Carolina General Statutes or the School's budget ordinance. All of the funds of Uwharrie Charter Academy can be divided into two categories: governmental funds and proprietary funds.

Govel'llmental Funds - Governruental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. Most of the School's basic services are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year-end that will be available for spending in the next year. Governmental funds are reported using in accounting

Page 6 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2014 method called modified accrual accounting that provides a sholt-term spending focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to fin ance the School's programs. The relationship between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in a reconciliation that is a part of the fund financial statements.

Uwharrie Charter Academy adopts an annual budget for each of its funds, although it is not required to do so by General Statutes. Because the budget is not legally required by the Statutes, the budgetary comparison statements are not included in the basic financial statements, but are part of the supplemental statements and schedules that follow the notes. The budget is a legally adopted document that incorporates input from faculty, management, and the Board of Directors of the School in determining what activities will be pursued and what services will be provided by the School during the year. It also authorizes the School to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for each of the funds demonstrates how well Uwharrie Charter Academy has complied with the budget ordinance and whether or not the School has succeeded in providing the services as planned when the budget was adopted.

Pl'opl'ietal'Y Funds - Uwharrie Charter Academy has one pl'Oprietary fund, which is an enterprise fund. Enterprise funds are used to report the same functions presented as business­ type activities in the government-wide financial statements. Uwharrie Charter Academy uses enterprise funds to account for its food service function.

Notes to the Financial Statements - The notes provide additional information that is essential to a full understanding of the data pl'Ovided in the government-wide and fund financial statements. The notes to the financial statements begin on page 22 of this rep01i.

Govcmmcnt-Wide Financial Analysis

As noted earlier, net position may, over time, serve as one useful indicator of a school's financial condition. The assets of Uwharrie Charter Academy exceeded liabilities and deferred inflows of resources by $30,040 as of June 30, 2014. As of June 30, 2014, the net position of Uwharrie Charter Academy stood at $30,040. The School's net position increased by $42,927 for the fiscal year ended June 30, 2014. One of the largest p01iions (17%) reflects the School's investment in capital assets (e.g. leasehold improvements, furniture and fixtures, textbooks, electronic equipment, vehicles, and equipment), less any related debt still outstanding that was issued to acquire those items. Uwharrie Charter Academy uses these capital assets to provide services to its students; consequently, these assets are not available for future spending. Although Uwharrie Charter Academy's net investment in capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources, since the capital assets cannot be used to liquidate these liabilities.

Page 7 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2014

Uwharrie Charter Academy's Net Position

Figure 2

Governmental Business-type Activities Activities Total 2014 2014 2014

Current and other assets $ 73,505 $ $ 73,505 Capital assets 431,952 431,952 Total assets $ 505,457 $ $ 505,457

Long-term liabilities outstanding $ 426,300 $ $ 426,300 Other liabilities 49,117 49,1l7 Total liabilities $ 475,417 $ $ 475,417

Net position: Net investments in capital assets $ 5,652 $ $ 5,652 Unrestricted 24,388 24,388 Total Net Position $ 30,040 $ $ 30,040

Several particular aspects ofthe School's financial operations positively influenced the total unrestricted governmental net position:

• The School adopted an annual budget for all funds supported by its Board of Directors. The School's performance was measured using this budget on a monthly basis, allowing changes in spending as needed to stay within the budget. • The School applied for and was awarded several federal grants to assist with the expenses of meeting education needs of special needs students. • The School utilized an administrator as part-time faculty which resulted in decreasing the liabilities in salaries and benefits. • With its strategic location, the School targeted a multi-county area for recruiting students resulting in meeting its first-year enrollment projections and maintaining a waiting list.

Page 8 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2014

Uwharrie Charter Academy Changes in Net Position

Figure 3

Governmental Business-type Activities Activities Total 2014 2014 2014

Revenues: Program revenues: Charges for services $ $ 10,836 $ 10,836 Operating grants and contributions 21,423 21,423 General revenues: County, State, and Federal funds 1,227,783 1,227,783 Grants and contributions not restricted to specific programs Other 51,747 51,747 Total revenues 1,300,953 10,836 1,311,789

Expenses: Instructional services 999,155 999,155 System-wide support services 223,127 223,127 Ancillary services Non-programmed charges School food service 12,721 12,721 Interest on long-term debt 33,859 33,859 Total expenditures 1,256,141 12,721 1,268,862

Increase in net position before transfers 44,812 (1,885) 42,927

Transfers (1,885) 1,885

Increase in net position 42,927 42,927 Net position, July 1 (12,887) (12,887)

Net position, June 30 $ 30,040 $ $ 30,040

Page 9 Managcmcnt Discussion and Analysis Uwharde Chal'ter Academy June 30, 2014

GoveJ'l\mcntal activities: Governmental activities increased the School's net position by $42,927.

Busincss-typc activities: Business-type activities did not increase or decrease the School's net position.

Financial Analysis of Uwhal'l'ie Chal'ter Academy's Funds

As noted earlier, Uwharrie Charter Academy uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds. The focus of the Uwharrie Chmter Academy'S governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Uwharrie Charter Academy'S financing requirements. Specifically, unassigned fund balance can be a useful measure of a government's net resources available for spending at the end of the fiscal year.

The general fund is the chief operating fund of the Uwharrie Charter Academy. At the end of the current fiscal year, unassigned fund balance of the General Fund was $20,471 while total fund balance reached $20,471.

At June 30, 2014, the governmental funds of Uwharrie Chatter Academy repOlted a combined fund balance of $24,388, a 65% percent increase over last year.

Pl'opl'ietal'Y Funds. The School's proprietary funds provide the same type of information found in the government-wide statements but in more detail. Unrestricted net position of the School Food Service Fund at the end of the fiscal year amounted to $0. The total growth in net position for the Food Service Fund was $0. Other factors concerning the finances of this fund have already been addressed in the discussion of the School's business-type activities.

Capital Asset and Debt Administl'ation

Capital assets. Uwharrie Charter Academy's investment in capital assets for its goverrunental and business-type activities as of June 30, 2014, totals $431,952 (net of accumulated depreciation). These assets include a lease-hold improvements, equipment and furniture, vehicles, and technology/electronic equipment.

The major capital asset transaction during the year includes the following addition:

• The School put Leasehold Improvements in place for $244,925 • The School put Furniture & Fixtures in place for $1,478 • The School put Electronic Equipment in place for $78,117

Page 10 Management Discussion and Analysis Uwharrie Charter Academy June 30, 2014

• The School put Textbooks in place for $13,933 • The School P\lt Vehicles in place for $25,570 • The School put Equipment in place for $10,715

Uwharrie Charter Academy's Capital Assets (Net of Depreciation)

Figure 4

Governmental Business-type Activities Activities Total 2014 2014 2014

Leasehold Improvements $ 279,423 $ $ 279,423

Furniture & Fixtures 17,444 17,444

Electronic Equipment 78,117 78,117

Textbooks 13,933 13,933

Vehicles 25,570 25,570

Equipment 17,465 17,465

Total $ 431,952 $ $ 431,952

Additional information on the School's capital assets can be found in Note 2 of the Basic Financial Statements.

Long-term Debt. As of June 30, 2014, Uwharrie Charter Academy had a total debt outstanding of$426,300. The debt consists of Note Payables (to the bank and individuals) of$341,760 and $84,540 of capital lease debt.

Page II Management Discussion and Analysis Uwharrie Charter Academy June 30, 2014

Uwharrie Charter Academy's Outstanding Debt Note Payable and Capital Leases

Figure 5

Governmental Business-type Activities Activities Total 2014 2014 2014

Note payable - bank $ 173,000 $ $ 173,000

Note payable - individuals 168,760 168,760

Capital leases 84,540 84,540

Total long term obligations $ 426,300 $ $ 426,300

The Uwharrie Charter School's total debt increased by $266,850 during the past fiscal year, with 65% due to notes payable to the bank, and 35% due to capital leases.

Economic Factors

The following key economic indicators reflect the growth and prosperity of the School.

• The strategic location of Uwharrie Charter Academy has provided school choice that is easily accessible from four surrounding counties especially considering the three highways that pass within a .5 mile area around the school. • By meeting the needs of families through our mission, Uwharrie Charter has met its emollment projections during its first and second year of operation. Currently, UCA has a waiting list in all gradc lcvels that it offcrs should a spot become available which enables the school to purchase the necessary instructional supplies and resources to support student learning. • Per its charter, Uwharrie Charter will continue to grow until reaching 500 students in the high school and has recently asked for approval from the State Board of Education to

Page 12 Management Discussion and Analysis Uwhal'l'ie Chal'te.· Academy June 30, 2014

• expand down to middle grades. This expansion would provide increased enrollment of up to 300 more students which would provide funding for additional resources.

Requests for Information

This repOli is designed to provide an overview ofthe Academy's finances for those with an interest in tlus area. Questions concerning any of the information in this repOlt or requests for additional information should be directed to Heather Soja, Uwharrie Charter Academy, 301 Lewallen Rd., Asheboro, NC 27203, telephone (336) 610-0813.

Page l3 Exhibit 1 UWHARRIE CHARTER ACADEMY

STATEMENT OF NET POSITION June 30, 2014

Primary Government Governmental Business-ty~e Total Assets: Cash and cash equivalents $ 56,075 $ $ 56,075 Due from other governments 17,430 17,430 Receivables (net) Internal balances Inventories Prepaid items Capital assets (Note I): Land Other capital assets, net of depreciation 431,952 431,952 Total capital assets 431,952 431,952 Total Assets 505,457 505,457

Liabilities: Accounts payable and accrued expenses 8,469 8,469 Accrued salaries and wages payable 40,648 40,648 Due to other governments Accrued interest payable Long-term liabilities: Due within one year 234,157 234,157 Due in more than one year 192,143 192,143 Total Liabilities 475,417 475,417

Deferred Inflows of Resources:

Net Position: Net investment in capital assets 5,652 5,652 Unrestricted 24,388 24,388 Total Net Position $ 30,040 $ $ 30,040

The notes to the financial statements are an integral part oftheis statement. Page 14 Exhibit 2 UWHARRIE CHARTER ACADEMY

STATEMENT OF ACTIVITIES For the Year Ended June 30, 2014

ProgramRevenues Net (Expense) Revenue and Changes in Net Position Primary Government Charges for OperatingGrants Capital Grants Governmental Business-type FunctionsiPrograms Expenses Services and Contributions and Contributions Activities Activities Total Primary Government GovernmentalActivities: Instructionalservices $ 999,156 $ $ $ $ (999,156) $ $ (999,156) System-wide support services 223,127 (223,127) (223,127) Ancillruy services Non-programmedcharges Interest on long-tenn debt 33,859 (33.859) (33.859) Total governmentalactivities 1256,141 (1.256.141) 0.256.141)

Business-type activities: School food service 12,721 10.836 (1.885) (1.885) Total business-type activities l2,721 10.836 (1,885) (1.885) Total Primary Government $ 1,268,862 $ 10,836 $ - $ ====~ (1,256,141) (1,885) (1,258,026) General Revenues: Umestricted county appropriations 238,719 238,719 Umestricted state appropriations 958,632 958,632 Unrestrictedfederal appropriations 30.433 30,433 Donations - general 21,423 21,423 Investmentearnings, unrestricted Miscellaneous, unrestricted 51,747 51,747 Transfers (1.885) 1.885 Total General Revenues, Special Teams, and Transfers t299.068 1.885 1,300,953 Change In Net Position 42,927 42,927 Net PositionMBeginning (12,887) (12,887)

Net Position-Ending $ 30,040 $ ======$ 30,040

"tl

~

Iv;

The notes to the fmancial statementsare an integral part of this statement. Exhibit 3

UWHARRIE CHARTER ACADEMY

BALAN(;E SHEET GQVERNMENTALFUNDS June 30, 2014

Maior Funds Total State Public Total Non-Maior Governmental General School Funds Funds Assets: Cash and cash equivalents $ 52,158 $ $ 3,917 $ 56,075 Due from other funds Due from other governments 17,430 17,430 Prepaid items Inventories Total Assets $ 62,588 $ $ 3,917 $ 73,505

Liabilities and Fund Balances: Liabilities: Accounts payable and accrued liabilities $ 8,469 $ $ $ 8,469 Accrued salaries and wages payable 40,648 40,648 Note payable Due to other governments Due to other fund Total Liabilites 49,117 49,117

Deferred Inflows of Resources:

Fund Balances: Nonspendable Assigned: Athletic ativities 3,917 3,917 Unassigned 20,471 20,471 Total Fund Balances 20,471 3,917 24,388 Total Liabilities, Dcfcncd Inflows of Resources, and Fund Balances $ 69,588 $ $ 3,917

Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Capital assets used in governmental activities arc not financial resources and therefore are not reported in the funds. 431,952 Liabilities for earned but unavailable revenues in fund statements. Some liabilities, including bonds payable and accrued interest, are not due and payable in the current period and therefore are not reported in the funds (Note 5). (426,300) Net position of governmental activities: $ 30,040

The notes to the financial statements are an integral part of this statement. Page 16 Exhibit 4 UWHARRIE CHARTER ACADEMY

STATEMENT OF REVENUES, EXPENDlTlIRES, AND CHANGES IN FUND NET POSlTlON GOVERNMENTAL FUNDS For the Year Ended June 30,2014

Major Funds State Public Total General School Total Non-Maior Governmental Fund Fund Funds Funds Revenues: State of North Carolina $ 3,105 $ 955,527 $ $ 958,632 Asheboro City Schools 101,459 101,459 Chatham County Randolph County 114,838 114,838 Montgomery County 9,726 9,726 Moore County 8,596 8,596 Davidson County 1,798 1,798 Guilford County 2,301 2,301 U.S. Government 30,433 30,433 Contributions and donations 21,423 21,423 Other 39,875 11,872 51,747 Total Revenues $ 303,121 $ 255527 $ 42,305 $ 1,300953 Expenditures: Current: Instructional services $ 208,562 $ 769,077 $ 30,433 $ 1,008,071 System-wide support services 278,919 177,298 7,955 464,172 Non-programmed charges Cal)itai outlay 93,850 93,850 Debt service: Principal 29,032 29,032 Interest and other charges 33,859 33,859 Building rentals & Leases 31,085 9,153 40,238 Total Expenditures 675,307 955,527 38,388 1,669,222

Excess (Deficiency) of Revenues Over Expenditures (372,185) 3,917 (368,268)

OTHER FINANCING SOURCES (USES): Transfers to other funds (1,885) Note payable issued 173,000 Capital lease obligations issued 93,850 Total Other Financing Sources (Uses) 264,965 Net Change in Fund Balance (107,220) 3,917 (103,303) Fund Balances-Beginning 127,691 127,691 Fund Balances-Ending $ 20,471 $ $ 3,917 $ 24,388

The notes to the financial statements are an integral part of this statement. Page 17 Exhibit 5 UWHARRIE CHARTER ACADEMY

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENT FUNDS For the Yea!' Ended June 30, 2014

Amounts reported for governmental activities in the statement of activities are different because:

Net changes in fund balances - total governmental funds $ (I03,303) Change in fund balance due to change in reserve for inventory

Governmental funds repOlt capital outlays as expenditures, However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense, This is the amount by which capital outlays exceeded depreciation in the current period 374,738

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Amount of donated assets

Difference in accrued investment income and income reported in fund statements

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction has any effect on net position. Also, governmental funds report the effect of premiums, discounts and prepaid insurance when debt is first issued, whereas these amounts are deferred and amOltized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. (228,508)

Difference in accrued interest payable and interest expensed on fund statements

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences Loss on disposal of assets

Total Changes in Net Position of Governmental Activities $ ===4,;;;2;s,9=27==

The notes to financial statements are an integral part of this statement. Page 18 Exhibit 6 UWHARRIE CHARTER ACADEMY

STATEMENT OF NET POSITION PROPRIETARY FUNDS June 30, 2014

Enterprise Funds Non-Major Fund School Food Assets: Current assets: Cash and cash equivalents $ Due from other governments Receivables (net) Inventories Total current assets

Noncurrent assets: Capital assets: Furniture and office equipment, net Food service equipment Computer equipment, net Total noncurrent assets Total Assets $====~ Liabilities: Current liabilities: Accounts payable and accrued expenses $ Due to other funds Total current liabilities

Long-term liabilities: Due within one year Due in more than one year Total long-term liabilities Total Liabilities

Net Position: Net investment in capital assets Unrestricted Total Net Position $=====~

The notes to the financial statements are an integral part of this statement. Page 19 Exhibit 7 UWHARRIE CHARTER ACADEMY

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended June 30, 2014

Enterprise Funds Non-Major Fund School Food Service Operating Revenues: Food sales $ ___--,1;.;;0'-;;,8~36;- Total Operating Revenues 10,836

Operating Expenses: Food cost: Purchase of food 12,721 Donated commodities Salaries and benefits Indirect costs Materials and supplies Depreciation Contracted services Other Total Operating Expenses 12,721

Operating Income (Loss) (1,885)

Nonoperating Revenues (Expenses): Federal reimbursements Total nonoperating revenue (expenses) Income (loss) before contributions and transfer (1,885)

Capital contributions Transfers from other funds 1,885 Change in Net Position Total Net Position-Beginning Total Net Position-Ending $====~

The notes to the financial statements are an integral part of this statement. Page 20 Exhibit 8 UWHARRIE CHARTER ACADEMY

STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2014

Enterprise Funds Non-Major Fund School Food Service Cash Flows From Operating Activities: Cash received from customers $ 10,836 Cash paid for 12,721 Net Cash Provilled (Used) by Operating Activities (1,885)

Cash Flows From Noncapital Financing Activites: Transfers from other funds 1,885

Cash Flows From Capital and Related Financing Activites: Capital contributions Net Cash (Used) by Capital and Related Financing Activites

Net Increase (Decrease) in Cash and Cash Equivalents: Balances-Beginning Balances-Ending $======Reconciliaion of operating income to net cash provided by operating activities: Operating income $ ___.-l..(1!£,8~8=5)

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Total adjustments Net Cash Provided by Operating Activities $ ====,(l~,8;;;;8:d:5)

The notes to the financial statements are an integral part of this statement. Page 21 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS For The Fiscal Year Ended June 30, 2014

Note I - Summary of Significant Accounting Policies

The accounting policies of the Uwhall'ie Chartcr Academy, North Carolina (School) conform to generally accepted accounting principles (GAAP) as applicable to governments. Charter schools are establish by non-profit entities. Because of the authority of the State Board of Education (SBE) to unilaterally abolish a school with all assets revelting to a local education agency, the chmter schools in North Carolina follow the goverrunental repOlting model, as used by local education agencies. The following is a summary of the more significant accounting policies.

Reporting Entity

The Uwharrie Charter Academy is a public school operated by a local non-profit cOtporation, serving approximately 200 students. The School operates under an approved chatter received from the SBE and applied for under the provisions of General Statute (G.S) IISC-238.29B. G.S. IISC-238.29F(t)(I) states that a chalter school shall be subject to audit requirements adopted by the SBE, which includes the audit requirements established by G.S. 11SC-447 of the School Budget and Fiscal Control Act (SBFCA). G.S. IISC-447 also requires financial statements to be prepared in accordance with GAAP.

Basis of Presentation

Government-wide Statements: The statement of net position and the statement of activities display information about the School. These statements include the financial activities of the overall government. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the School. Govemmental activities generally are financed through intergovenunental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to extemal patties.

The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the School and for each nmclion of the School's goverrunental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a patticular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that m'e restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, are presented as general revenues.

Page 22 UWHARruE CHARTER ACADEMY

NOTES TO TIfE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Basis of Presentation (Concluded)

Fund Financial Statements: The fund financial statements provide information about the School's nlllds. Separate statements for each category - governemntal and proprietwy- are presented. The emphasis offund financial statements is on major govemmental and enterprise nmds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major nlllds.

Proprietary nllld operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earni ngs, result from non-exchange transactions or ancillary activities.

The School reports the following major govemmental funds:

General Fund. The General Fund is the general operating fund of the School. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund.

State Public School Fund. The State Public School Fund includes appropriations from the Depm1ment of Public Instruction for specific operating needs of the public school system and is reported as a special revenue fund.

The School reports the following non-major governmental funds:

Federal Grant Fund. The Federal Grants Fund is used to account for financial transactions pertaining to salaries allocated for special needs education assistance.

Athletics Activities Fund. The Athletics Fund is used to account for financial transactions peltaining to school athletics.

The School reports the following non-major enterprise fund:

School Food Service Fund. The School Food Service Fund is used to account for the food service program within the school system.

Page 23 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Measurement l'ocus and Basis of Accounting

Government-wide and Proprietmy Fund Financial Statements. The go'velmnent-wide and proprietary fund financial statements are reported using the economic resources measw'ement focus. The govenunent-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non­ exchange transactions, in which the School gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.

Govel'l1l11ental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting: Under this method, revenues are recognized when measurable and available. The School considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. These could include federal, state, and county grants, and some charges for services. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in govelmnental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Under the terms of grant agreements, the School funds certain programs by a combination of specific cost-reimbursement grants and general revenues. Thus, when pIOgram expenses are inclU1'ed, there is both restricted and unrestricted net position available to finance the program. It is the School's policy to first apply cost-reimbursement grant resources to such programs and then general revenues.

Budgetary Data

An annual budget is adopted for all funds, except for the athletics, and school food service funds. All budgets are prepared using the modified accrual basis of accounting.

The governing board has voluntarily established the policy, as a sound business practice, that expenditures may not exceed appIOpriations, for all the School's funds, based on the adopted budget and subsequent amendments. During the year, amendments to the original budget were necessary, the effects of which were not material. The budget presented in the supplemental data represents the budget of the School at June 30, 2014. All appropriations lapse at year end.

Page 24 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred OutflowslInflows of Resources, and Fund Equity

Deposits and Investments

All deposits of the School are made in a local bank, whose accounts are FDIC insured.

Cash and Cash Equivalents

The School pools money from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents.

Capital Assets

The School's capital assets are recorded at original cost. Donated assets are listed at their estimated fair value at the date of donation. The total of these estimates is not considered large enough that any errors would be material when capital assets are considered as a whole.

It is the policy of the School to capitalize all capital assets costing more than $5,000 with an estimated useful life of two or more years. In addition, other items which are purchased and used in large quantities such as student desks and office furniture are capitalized. Improvements are capitalized and depreciation over the remaining useful lives of the related capital assets. All depreciable using the straight-line method of depreciation. The cost of normal maintenance and repairs that do not add to the value of the asset or materiality extend asset lives are not capitalized.

Capital assets are depreciated over the following estimated useful lives:

Estimated Asset Class UsefiJl Lives Leasehold Improvements 9 Furniture and equipment 5 Textbooks 3 Vehicles 5 Computer equipment 3

Page 25 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTlNUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets. Liabilities. Deferred Outflows/Inflows of Resources. and Fund Equity (Continued)

Defened Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes i'e a separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows ofResources, represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. The School has no items that meet this criterion. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, Deferred Inflows ofResources, represents an acquisition of net position that applies to a future period and so will not be recognized as revenue until then. The School has no item that meet this criterion.

Long-Tetro Oligations

In the govelmnent-wide fmancial statements, long-term debt and other long-teon obligations are reported as liahilities in the applicable governmental activities.

In the fill1d financial statements, govemmental fill1d types report the face amount of debt issued as other financing sources.

Net Position/Fund Balances

Net Position

Net position in goverrunent-wide and proprietary fill1d financial statements are classified as net investment in capital assets, restricted, and unrestricted. Restricted net position represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through state statute.

Fund Balances

In the govel111llental fill1d financial statements, fund balance is composed offive classifications designed to disclose the hierarchy of constraints placed on how fund balances can be spent.

Page 26 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATHvIENTS (CONTINUED)

Note I - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Net PositionlFund Balances (Continued)

The governmental fund types classify fund balances as follows:

Restricted Fund Balance - This classification includes amounts that are restricted to specific purposes extemally imposed by creditors or imposed by law.

Committed Fund Balance - portion of fund balance that can only be used for specific purposes imposed by a majority vote of School's governing body (highest level of decision-making authority). Any changes or removal of specific purpose requires majority action by the governing bodies that approved the original action.

Assigned fund balance - pOJiion of fund balance that Uwharrie Charter Academy intends to use for specific purposes.

Assigned for Clubs and Activities funds - revenue sources restricted for expenditures for the various clubs and organizations, athletic events, and various fund raising activities for which they were collected.

Unassigned fund balance - the portion of fund balance that has not been assigned to another fund, or restricted, committed, or assigned to specific purposes within the general fund.

Uwhanie Charter Academy has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, federal funds, State funds, local non-board of education funds, board of education funds. For purposes offund balance classification expenditures are to be spent from restricted fund balance first, followed in order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the School.

Page 27 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATElvlENTS (CONTINUED)

Note 1 - Summary of Significant Accounting Policies (Continued)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Continued)

Net PositionlFund Balances (Continued)

The governmental fund balance sheet includes a reconciliation between for governmental funds' total fund balance and governmental activities' net position as reported in the govenmwnt-wide statement of net position, The net adjustment of$5,652 consists of several elements as follows:

DESCRIPTION AMOUNT

Capital assets used in governmental activities are 1I0t financial resources and are therefore not reported in the funds (total capital assets ongovemment-wide statement in governmental activities column) $ 512,686

Less accumulated depreciation (80,734)

Liabilities that, because they are not due and payable in the current period, do not require current resources to pay and are therefore not - reported in the fund statements: Bonds, leases, and installment financing (426,300) Total adjustment $ 5,652

Revenues, Expenditures, and Expenses

Funding

The Uwharrie Charter Academy is funded by the State Board of Education, receiving (i) au amount equal to the average per pupil allocation for the average daily membership (ADM) from the local school administrative unit allotments in which the school is located for each child attending the School except for the allocation for children with special needs and (ii) an additional amount for each child attending the School who is a child with special needs [G.S. 115C-238.29H(a)]. Additionally, the School receives for each student who resides in the local admiuistrative unit and attends the chatter school, an amount equal to the pel' pupil current expense appropriation to the respective local school administrative unit for the fiscal year which is transferred by the appropriate local school administrative units. [G.S. 115C-238.29H(b)]. For the fiscal year ended June 30, 2014, the Uwhanie Charter Academy received funding from the Board of Education for Randolph County, City of Asheboro, Montgomery County, Moore County, and Guilford County.

Page 28 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTlNUED)

Note 1 -Summary of Significant Accounting Policies (Concluded)

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity (Concluded)

Net PositionlFund Balances (Concluded)

Revenues, Expenditures, and Expenses (Concluded)

Funding (Concluded)

Furthermore, Uwharrie Charter Academy has received donations of cash and/or equipment from private organizations and individuals. The cash has been used for the purchase of new equipment for the School's facilities.

Reconciliation Between Government-Wide and Fund Statements

The governmental fund statement of revenues, expenditures, and changes in fund balance is followed by a reconciliation between the change in governmental funds' fund balance and the change in governmental activities' net position as repOlted on the government­ wide statement of activitie~. The net difference of $146,230 between the two amounts consists of the following elements:

DESCRIPTION AMOUNT Capital outlay expendiulI'es recorded ill the fund statements but capitalized as assets on the statement of activ ities. $ 455,472

Depreciation expense that is recorded on the statement of ac tivities but not in the fund statements. (80,734)

New debt issued during the year is recorded as a source offunds on the fund statements but has no effect on the statement of activities, only the statement of net position. (266,850)

Principal payments on debt owed are recorded as a use of funds on the fund statements but again affect only the statement of net position in the . government-wide statements. 38,342

Expenses repOIted on the statement of activities that do not require the use of current resources to pay are not recorded as expenditures in the fund statements. - Difference in interest expense between fund statements (modified accrual) and government-wide statements (full accrual). -

Total $ 146,230

Page 29 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 2 - Detail Notes on All Funds

Deposits

At June 30, 2014, the School has deposits with financial institutions with a carrying amount of$55,875. The bank balance with the financial institutions was $74,700, which was covered by federal depository insurance. The School does not have a deposit policy for custodial credit risk. The School holds $200 in petty cash.

Capi tal Assets

Beginni ng Ending Balances Incrctlse Dccrcilscs Balances GOl'crnPl cntal activi ties:

Capital assets not being depreciated:

land S S S $

Tolal capital assets nol being deprccinlcd

Capital assets being depreciated:

Leasehold Improvements 34,498 279.198 313,696

Fumilure & Fixtures 15,966 5,720 21,686

Electronic Equipment 109,618 109,618

Textbooks 20,063 20,063

Vehicles 27,538 27,538

Equipment 6,750 13,335 20,085

Total capital assets being depreciated 57,214 455,472 512,686

Less accumulR1NJ depreciation for:

Leasehold Improvements 34,273 34,273

Furniture & Fixnlrcs 4,242 4,242

Electronic Equipment 31,501 31,501

Textbooks 6,130 6,130

Vehicles 1,968 1,968

Equipment 2,620 2,620

Total accumulntcd depreciation 80,734 80,734

Total capilal assets being depreciated, Het 57,2 14 374,738 431,952

Go\'ernmcntal aclivlty capital assets, nct $ 57,214 S 374,738 $ $ 431,952

Page 30 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTlNUED)

Note 2 - Detail Notes on All Funds (Concluded)

Assets (Concluded)

Capital Assets (Concluded)

Depreciation expense was charged to governmental nmction as follows:

Instructional programs $ 77,496 Supporting services 3,238 $ 80,734 Liabilities

Pension Plan Obligations

Local Government Employees' Retirement System

Plan Description. The Uwharrie Chalter Academy contributes to the statewide Local Governmental Employees' Retirement System (LGERS), a cost-sharing multiple-employer defined benefit pension plan administered by the State ofNolth Carolina. LGERS provides retirement and disability benefits to plan members and beneficiaries. Article 3 of G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to the NOlth Carolina General Assembly. The Local Governmental Employees' Retirement System is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State's CAFR includes financial statements and required supplementary information to LGERS. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, NC 27699-1410, or by calling (919) 981- 5454.

Funding Policy, Plan members are required to contribute six percent of their annual covered salary. The School is required to contribute at an actuarially determined rate. For the School, the current rate for employees is 14.18% of annual covered payroll. The contributions requirements of members and of the School are established and may be amended by the NOlth Carolina General Assembly. The School's contributions to LGERS for the year ended June 30, 2014, was $78,256. The contributions made by the School equaled the required contributions for each year.

Note 3 - Risk Management

The School is exposed to various risks of loss related to tOlts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The School maintains general liability and errors and omissions insurance coverage $1 million pel' occurance with a commercial carrier.

Page 31 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 3 - Risk Management (Concluded)

The School also participates in the Teachers' and State Employees' Comprehensive Major Medical Plan, a self-funded risk financing pool of the State administered by Blue Cross and Blue Shield of North Carolina. Through the Plan, pelmanent full-time employees of the School are eligible to receive health care benefits up to a $2 million lifetime limit. The School pays the full cost of coverage for employees emolled in the Comprehensive Major Medical Plan.

The School carries commercial coverage for all other risks ofloss. There have been no significant reductions in insurance and claims have not exceeded coverage. The School does not have flood insurance coverage. The School is not located in a flood plane.

Claims, Judgments, and Contingent Liabilities

At June 30, 2014, the School was not involved in any lawsuits. In the opinion of the School's management and the School's attorney, the ultimate effect of any legal matter will not have a material adverse effect on the School's financial position.

Note 4 - Long-Ternl Obligations

Notes Payable

On November 12, 2013 a note was obtained from a bank for a line of credit at an interest rate at prime. The amount of the loan is not to exceed $200,000 and is due and has a maturity date of November 12,2014. The note was obtained for working capital. As ofJune 30, 2014, the . School has drawn down $173,000 of the available line of credit.

In May 2013, notes were obtained from eight individuals, in varying amounts, totaling $150,000 to be used for modification of school facilities. The loans carried an interest rate of 16.75% to be paid in installments of$250 to $1,000 per month, for a period of sixty consecutive months. At June 30, 2014, the loans had a collective balance due of$126,570.

Related Party Notes

In May 2013, notes were obtained from four individuals, in varying amounts, totaling $50,000 to be used for modification of school facilities. These individuals were members of the board of directors at the time the loans were made. The loans carried an interest rate of 16.75% to be paid in installments of $250 to $500 per month, for a period of sixty consecutive months. At June 30, 2014, the loans had a collective balance due of$42,190.

Page 32 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 5 - Capital Leases

The School entered into various lease agreements for celiain equipment. At the conclusion of each of the leases, ownership is transfelTed to the School. The lease agreements qualify as capital leases for accounting purposes and, therefore, the obligations have been recorded at the present value of the future minimum lease payments as of the date of their inception.

The School entered into two capital leases, in August of2013 and June of2014, for the purchase of electronic equipment. Both capital leases were for a period of three years.

In November 2013, the School entered into a capital lease to purchase equipment. The capital lease is for a period of forty-four months.

At June 30, 2014, assets recorded under the capital leases were as follows:

Accumulated Net Book Classes of Property Cost Depreciation Value Electronic Equipment $ 100,515 $ 29,255 $ 71,260 Equipment 13,335 1,270 12,065

Total $ 11385Q $ 3Q,525 $ 83 ,325

The following is a schedule of the future minimum lease payments and the net present value of the minimum lease payments as of June 30, 2014:

Year Ending June 30

2015 $ 41,739 2016 41 ,739 2017 29,172 Total minimum lease payments 112,650 Less: amount representing interest 34,136 Present value of the minimum lease payments $ 78,514

Page 33 UWHARRJE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Note 5 - Capital Leases (Concluded)

Changes in General Long-Term Obligations

The following is a summary of changes in the School's long-telm obligations for the fiscal year ended June 30, 2014:

Beginning Ending CutTent Governmental activities: Balance Increases Decreases Balance POltion

Note payable - bank $ $ 173,000 $ $ j 73,000 $ 173,000

Note payable - individuals $ 197,792 $ $ 29,032 $ 168,760 $ 34,286

Capitalized leases $ $ 93,850 $ 9,310 $ 84.540 $ 26,871

Total $ 122,722 $ 266,85Q $ 38,342 $ 126 3QQ $ 231,15.7

Note 6 - Interfund Balances and Activity

Transfers to/from other funds at June 30,2014, consist of the following:

From the General Fund to the School Food Service Fund $1.885

Transfel'sare used to move unrestricted revenues to finance School Food Service programs that the School must account for in specific funds.

Note 7 - Fund Balance

Uwharrie Charter Academy has a revenue spending policy that provides policy for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: federal funds, State funds, local non-School funds, Chatter School funds. For purposes of fund balance classification expenditures are to be spent from restricted fund balance first, followed in order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the Schoo!.

Page 34 UWHARRIE CHARTER ACADEMY

NOTES TO THE FINANCIAL STATEMENTS (CONCLUDED)

Note 7 - Fund Balance (Concluded)

The following schedule provides management and citizens with information on the portion of General fund balance that is available for appropriation:

Total fUnd balance - General Fund $ 20.471

Less:

Remaining Fund Balance ...... $ 20.471

Note 8 - Summary Disclosure of Significant Contingencies

Federal and State Assisted Programs

The School has received proceeds from several federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the reftmd of grant moneys to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant moneys.

Note 9 - Subsequent Events

The School has evaluated all subsequent events through January 6, 2015, the date the financial statements were available to be issued.

On August 15, 2014, the School entered into an unsecured promissory note in the amount of $301,103 to renovate classrooms in the School facilities. The note is due with interest only payments, of7 percent, at the earlier of the closing of the sale of the premises or July 31,2019, whichever is earliest.

The School entered into a lease arrangement in August 2014, in order to occupy a new high school facility for a term oftwenty-five years, or until sooner terminated. The monthly base rent, beginning on the commencement date, and continuing tor a period of three years shall be $54,333.

Page 35 Statement I UWHARRIE CHARTER ACADEMY

NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET For the Fiscal Year Ended June 30, 2014

SEecial Revenue Funds Federal Athletics Grants Fund Activities Fund Total Assets: Cash and cash equivalents $ $ 3,917 $ 3,917 Due from other governments Total Assets $ $ 3,917 $ 3,917

Liabilities and Fund Balances: Liabilities: Accrued salaries and wages payable $ $ $ Total Liabilities

Fund Balances: Assigned - Clubs and Activities 3,917 3,917 Total Liabilities, DefelTed Inflows of Resources, and Fund Equity $ - $ 3,917 $ 3,917

Page 36 Statement 2 UWHARRIE CHARTER ACADEMY

NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES For the Fiscal Year Ended June 30, 2014

Special Revenue Funds Federal Athletics Grants Fund Activities Fund Totals Revenues: U.S. Government Title I, Grant to Local Education Agencies - educationally deprived $ $ $ Title VI - Innovative education program 29,133 29,133 Special need targeted assistance 1,300 1,300 Total 30,433 30,433

Donations Other 11,872 11,872 Total 11,872 11,872

Total Revenues 30,433 11,872 42,305

Expenditures: CUI'fcnt: Instructional services: Regular curricular services Special populations services 30,433 30,433 Co-curricular services 363 363 School-based support services 7,518 7,518 Total 30,433 7,881 38,314

System-wide support services: Suppmt and development services Special population support and development services Operational support 74 74 Financial and human resource services Total 74 74

Total Expenditures 30,433 7,955 38,388

Revenues Over Expenditures 3,917 3,917 Fund Balance-Beginning Fund Balance-Ending $ $ 3,917 $ 3,917

Page 37 Statement 3 (Page 1 of2) UWHARRIE CHARTER ACADEMY

ALL FUND TYPES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2014

Favorable Final (Unfavorable) Budget Actual Variance Revenues: State of North Carolina $ 958,632 $ 958,632 $ Board(s) of Education: Asheboro City Schools 107,730 101,459 (6,271) Chatham County 3,207 (3,207) Randolph County 110,830 114,838 4,009 Montgomery County 13,134 9,726 (3,408) Moore County 12,378 8,596 (3,782) Davidson County 1,217 1,798 582 Guilford County 2,459 2,301 (158) U.S. Government 28,547 30,433 1,886 Fines and forfeitmes Donations 21,423 21,423 Others 978 39,875 38,897 Operating revenues, food sales 10,836 10,836 Operating revenues, athletics 11,872 11,872 Total Revenues 1,239,111 1,311,789 72,679

Expenditures: Current: Instructional services: Regular curricular services 535,927 624,684 (88,757) Special populations services 40,643 38,381 2,262 School leadership services 222,397 259,891 (37,494) Co·cUl'l'icular services 38,924 70,379 (31,455) Other 14,736 (14,736) Total instructional programs 837,891 1,008,071 (170,180)

System-wide support services: Support and development services 7,283 20,967 (13,684) Operational support 92,606 381,805 (289,199) Financial and human resource services 34,688 40,925 (6,237) Policy, leadership and public relations services 8,659 (8,659) Other 3,861 (3,861) Total support services 134,577 456,217 (321,640)

Non-programmed charges: Other Total non-programmed charges

Athletic activities expenditures: Materials and supplies 363 (363) Student services 2,210 (2,210) Other 5,382 (5,382) Total athletic activities 7,955 (7,955)

Food service expenditures: Food purchases 12,721 (12,721) Total food service $ $ 12,721 $ (12,721)

Page 38 Statement 3 (Page 2 of2) UWHARRIE CHARTER ACADEMY

ALL FUND TYPES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2014

Favorable Final (Unfavorable) Budget Actual Variance Expenditures (Concluded):

Capital outlay $ - $ 93,850 $ (93,850)

Debt service: Principal 30,000 29,032 968 Interest and other charges 30,000 33,859 (3,859) Building rentals & leases 42,000 40,238 1,762 Total debt service 102,000 103,130 (l,130)

Total Expenditures 1,074,468 1,681,944 (607,476)

Othe,' Financing Sources (Uses): Transfers out (1,885) (1,885) Transfers in 1,885 1,885 Federal reimbursements Capital lease obligations issued 93,850 93,850 Note payable proceeds 173,000 173,000 Total Other Financing Sources and (Uses) 266,850 266,850

Capital contributions

Excess (Deficiency) of Revenue Over Expenditures $ 164,643 $ (I 03,304) $ ==:?,(2~6~7,~94,;;7,f,)

Page 39 ID _M=A;.;.X:..:....::T-=O-=N....:....-:..:.M.::..c:..:D:..:.O=-..:.W:....;E::..:L::..:L=--- III CeAtI!led CPub~1C cAccountant

379 Soulh Cox Sireel Member 126 North Second Street Asheboro, North Carolina 27203 Albemarle, North Carolina 28001 American Institute of Certified Phone: (336) 626-9970 Phone: (704) 983-5012 Public Accountants Fax: (336) 626-5981 Fax: (704) 983-5109 North Carolina Association of Certified Public Accountants

Report on InteJ'Jlal Control Over FinRncial Reporting And On Compliance and Other Matters Based On An Audit of Financial Statements PCl'fol'me(1 in Acconhlllce With Govel'llmelll Auditillg SI(//u/un/s

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, North Carolina

I hove oudited, in accordance with the Auditing standards generally accepted in the United States of America and the standards applicable to the financial audits contained in Governlllent Auditing Standards issued by the Comptroller General of the United States, the financial Statements ofthe governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Uwharrie CharIer Academy, North Carolina, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprises the Uwharrie Charter Academy's basic financial statements, and have issued my report thereon dated December 31, 2014.

InteJ'Jlal Control Over Financial Rcporting

In planning and performing my audit of the financial statements, I considered the Uwharrie Charter Academy's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Uwharrie Charter Academy's internal control. Accordingly, I do not express an opinion on the effectiveness of the Uwharrie Charter Academy'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

Page 40 deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the charter schools 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.

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

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Uwharrie Charter Academy 's financial statements are free from material misstatement, I 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 my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matiers 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 my testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Academy's internal control or on compliance. This report is an integral pmt of an audit perfoi'med in accordance with Government Auditing Standards in considering the Academy's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Certified Public Accountant Asheboro, North Carolina December 31, 2014

Page 41 _M=A;,;;,x:..:....:::T....;:O:...:N...:....-M::..:..::..:c:..:D~O=-..:..w:..:E=..:L=..:L::....­ II Ce~tI!led CPubQIC tAccountant 379 South Cox Street Member 126 North Second Street Asheboro, North Carolina 27203 Albemarle, North Carolina 28001 Phone: (336) 626-9970 American Institute of Certified Phone: (704) 983-5012 Fax: (336) 626-5981 Public Accountants Fax: (704) 983-5109 North Carolina Association of Certified Public Accountants

Report on Compliance With Requirements Applicable To Each Major State Program And Intel'llal Control Over Compliance; In AccOl'dance With OMB Circular A-133 and the State Single Audit Implementation Act

To the Honorable Chairman and Board Members of the Uwharrie Charter Academy Asheboro, NOlih Carolina

Report on Compliance for Each Major State Program

I have audited the Uwharrie Charter Academy, North Carolina, compliance with the types of compliance requirements described in the Audit Manual/or Governmental Auditors in North Carolina, issued by the Local Govel'llment Commission, that could have a direct and material effect on each ofthe Uwharrie Charter Academy's major state programs for the year ended June 30,2014. The Uwharrie Charter Academy's major state 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 the requirements of laws, regulations, contracts, and grants applicable to its state programs.

Auditol"s Responsibility

My responsibility is to express an opinion on compliance for each of the Uwharrie Charter Academy's major state programs based on my audit of the types of compliance requirements referred to above. I conducted my 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 applicable sections of OMB Circular A-133, Audits o.fStates, Local Governments, and Non-Profit Organizations, as described in the Audit Manual/or Governmental Auditors in

Page 42 North Carolina, and the State Single Audit Implementation Act. Those standards, OMB Circular A-I33, Audits o/States, Local Governments, and Non-Profit Organizations, and the State Single Audit Implementation Act require that I 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 state program occurred. An audit includes examining, on a test basis, evidence about the Uwharrie Chmter Academy's compliance with those requirements and performing such other procedures, as I considered necessary in the circumstances.

I believe that my audit provides a reasonable basis for my opinion on compliance for each major state program. However, my audit does not provide a legal determination of the Uwharrie Chatter Academy's compliance.

Opinion on Each MajOl' State P"ogram

In my opinion, the Uwharrie Charter Academy complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major state programs for the year ended June 30, 2014.

Report on Internal Contl'ol Over Compliance

Management of the Uwharrie Charter Academy is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing my audit of compliance, I considered the Uwharrie Charter Academy'S internal control over compliance with the types of requirements that could have a direct and material effect on a major state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing my opinion on compliance for each major state program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, I do not express an opinion 011 the effectiveness of the Uwharrie Chatter Academy'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 state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in inte\'llal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a state program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in inte\'llal control over compliance is a deficiency, or combination of deficiencies, ill internal control over compliance with a type of compliance requirement of a state program that is less severe than a material weakness in internal control over compliance, yet impoltant enough to merit attention by those charged with governance.

Page 43 My 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, therefore, deficiencies in internal control over compliance that I consider to be material weaknesses. Therefore, material weaknesses or significant deficiencies may exist that have not been idcntified.

The purpose of this report on internal control over compliance is solely to describe the scope of my testing of internal control over compliance and the results of that testing based on the requirements ofOMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

JJ1~c.rJ1~ Certified Public Accountant Asheboro, North Carolina December 31, 2014

Page 44 UWHARRIE CHARTER ACADEMY SCHEDULE OF EXPENDIT URilS OF FEDERAL AND STATE A WARDS Fol' the Yeal' Ended June 30, 2014 Slalel Federal Pass-through Grantor/Pass-through CFDA Grantor's GcamorlVrogram Title Number Number Expenditures I(a) I(b) I (c)(d).2 Federal Grants: U.S. Department of Education Cash Assistance Special Education Cluster: Special Educalion - Grants to States (JDEA, Part B) - 84.027 PRC 060 29, 133 Education of the Handicapped Special Education - Grants to Slates (IDEA, Pari B)­ 84.027A PRC 11 8 1,300 Special Needs Targeted Assistance Total Special Education Cluster: 30,433

Total fedel1ll assistance 30,433 State Grants: Cash Assistance N.C. Department of Public Instruction: State Public School Fund - Charter Schoo l PRC 036 $ 955,527 Total State assistance 955,527 Total federa1 and State assistance $ =~98~5~,9~60;" Notes to the Schedule of Expenditures of Federal and State Fina ncial Awards: 1. Basis of Presentation

The accompanying schedule of expenditures offederal and State awards includes the federal and State grant activity of Uwharrie Charter Academy and is from amounts presented in , or used in the preparation of the basic financial statements. Organi zations and the State Single Audit Implementation Act. Therefore some amounts presented in thi s schedule may differ presented on the modified accrual basis of accounting. The information in this sc hedule is presented in accordance with the requ irements ofO!vfB Circu lar A-DJ, Audits of States, Local Governments, and Non-ProH I

2 The fo llowi ng are clustered by the NC Department of Public Instruction and are treated separately for stale audit requirement purposes: School Improvement Cluster

Page 45

APPENDIX B-2 FINANCIAL PROJECTIONS FOR THE YEARS ENDING JUNE 30, 2018 THROUGH 2022

The Borrower has operated the School since 2013.* The Borrower's projections of revenues and expenses for the five Fiscal Years ending June 30, 2018 through 2022 contained in this Appendix B-2 (the "Projections") were prepared by Management in consultation with Specialized Public Finance, Inc. The Projections constitute "forward- looking" statements of the type described in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See "FINANCIAL INFORMATION" and "BONDHOLDERS' RISKS."

In order to expand enrollment and grade levels as described herein in connection with the construction of the New Facility, the Borrower will need to obtain approval of the Charter Modification. While Management expects that the Charter Modification will be approved, there can be no assurance that the Charter Modification will be approved. The Projections include one scenario in which the Charter Modification is approved and another scenario, as a sensitivity analysis, in which the Charter Modification is not approved. See below to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results.

No feasibility studies have been conducted with respect to operations of the Borrower pertinent to the Series 2017 Bonds. The Projections are "forward-looking statements" and are subject to the general qualifications and limitations described under "BONDHOLDERS' RISKS – Forward-Looking Statements." The Underwriter has not independently verified the Projections, and makes no representations nor gives any assurances that such Projections, or the assumptions underlying them, are complete or correct. Further, the Projections relate only to a limited number of Fiscal Years, and consequently do not cover the entire period that the Series 2017 Bonds will be outstanding.

Management has prepared the Projections based on operating history with respect to the School and Management's assumptions about future State of North Carolina funding levels and future operations of the School, including student enrollment and expenses. There can be no assurance that actual enrollment revenues and expenses will be consistent with Management's assumptions underlying such Projections. Moreover, no guarantee can be made that the Projections of revenues and expenses included herein will correspond with the results actually achieved in the future because there can be no assurance that actual events will correspond with the Projections' underlying assumptions. Actual operating results may be affected by many factors, including, but not limited to, increased costs, lower than anticipated revenues (as a result of insufficient enrollment, reduced State of North Carolina or federal aid payments, or otherwise), employee relations, changes in taxes, changes in applicable government regulation, changes in demographic trends, changes in education competition and changes in local or general economic conditions. See below to review the Projections, their underlying assumptions, and the other factors that could cause actual results to differ significantly from projected results. Refer to "BONDHOLDERS' RISKS – Forward-Looking Statements," above, for qualifications and limitations applicable to forward-looking statements.

NO ASSURANCE CAN BE MADE THAT THE PROJECTIONS CONTAINED HEREIN WILL CORRESPOND WITH THE RESULTS ACTUALLY ACHIEVED IN THE FUTURE BECAUSE THERE CAN BE NO ASSURANCE THAT ACTUAL EVENTS WILL CORRESPOND WITH THE ASSUMPTIONS UNDERLYING SUCH PROJECTED INFORMATION. ACTUAL OPERATING RESULTS MAY BE AFFECTED BY MANY FACTORS, INCLUDING, BUT NOT LIMITED TO, INCREASED COSTS, LOWER THAN ANTICIPATED REVENUES (AS A RESULT OF INSUFFICIENT ENROLLMENT, REDUCED STATE OF NORTH CAROLINA OR FEDERAL AID PAYMENTS, OR OTHERWISE), DIFFICULTIES IN EXECUTING PLANS FOR AN ADDITIONAL SCHOOL OR OTHER EXPANSIONS, EMPLOYEE RELATIONS, CHANGES IN TAXES, CHANGES IN APPLICABLE GOVERNMENTAL REGULATION, CHANGES IN DEMOGRAPHIC TRENDS, CHANGES IN EDUCATION COMPETITION AND LOCAL OR GENERAL ECONOMIC CONDITIONS.

* Capitalized terms used but not defined in this Appendix B-2 have the meanings ascribed to them in the forepart or Appendix A of this Limited Offering Memorandum, as applicable.

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Each of the two following pro forma cash flow statements assumes that the Series 2017A Bonds are issued in an aggregate principal amount of $14,660,000, bear interest at interest rates of 4.875% to 5.875% and have a final maturity of June 15, 2047 and that the Series 2017B Bonds are issued in an aggregate principal amount of $670,000, bear interest at interest rate of 6.250% and have a final maturity of June 15, 2021.

The immediately following pro forma is based on the assumption that the Charter Modification is approved, as well as the assumptions listed in the footnotes thereto.

Uwharrie Charter Academy Proforma Cash Flows

Projected Projected Projected Projected Projected FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 Total Enrollment 990 1,600 1,613 1,641 1,680 Revenues State Revenues 5,389,150 8,845,184 9,045,898 9,340,966 9,706,402 County Revenues 1,072,500 1,760,066 1,774,300 1,805,100 1,848,000 Other Revenues 663,830 882,955 1,048,310 1,072,560 1,221,170 Total Revenues 7,125,480 11,488,205 11,868,508 12,218,626 12,775,572 Expenses Salaries & Bonuses 3,659,490 5,221,407 5,413,325 5,565,125 5,834,500 Benefits 1,376,378 1,910,991 1,934,000 1,956,000 2,007,500 Instructional Supplies & Technology 233,750 304,500 278,750 307,700 324,700 Non-Cap Equipment & Leases 142,576 109,000 124,000 90,000 120,000 Contracted Student Services 96,000 100,100 100,100 106,000 109,500 Athletics 75,000 75,000 75,000 85,500 94,000 Administrative Services & Insurance 102,200 132,700 142,200 155,450 182,550 Facilities and Utilities 177,500 241,000 244,000 270,000 310,000 Middle/Elementary School Rent 140,400 145,000 146,000 147,000 148,000 Nutrition 77,500 88,500 99,500 118,000 137,000 Transportation & Travel 68,000 72,000 77,000 81,000 91,500 1 Outstanding Debt Service 31,2500000 Total Expenses 6,180,044 8,400,198 8,633,875 8,881,775 9,359,250

Revenue Available for Debt Service 945,436 3,088,007 3,234,633 3,336,851 3,416,322

2 USDA Debt Service 344,341 344,341 344,341 344,341 344,341 3 Series 2017 Debt Service 500,925 1,052,838 1,085,963 1,081,275 1,090,963 Less: Capitalized Interest (260,000) 0 0 0 0 4,8 Debt Service Coverage 1.62 x 2.21 x 2.26 x 2.34 x 2.38 x Beginning Cash 5 452,337 812,507 2,503,336 4,307,665 6,218,900 Plus Adjusted Surplus6 360,170 1,690,829 1,804,329 1,911,235 1,981,018 Ending Cash 812,507 2,503,336 4,307,665 6,218,900 8,199,918 Operating Expenses 6,890,610 9,469,478 9,688,005 9,917,864 10,376,594

7 Days Cash on Hand 43 96 162 229 288

Notes:

1) Outstanding loans and line of credit to be defeased by Series 2017 Bonds. 2) USDA loan first payment due 10/19/2017 and each 10/19 thereafter per USDA Promissory Note. 3) Assumes 30 year amortization. Preliminary and subject to change. 4) Debt Service Coverage includes USDA Loan. 5) Unaudited. Cash on Hand as of June 30, 2017 per the Academy. 6) Reflects Revenue Available for Debt Service less USDA debt service and Series 2017 Debt Service less Capitalized Interest 7) Operating Expenses used in Days Cash Calculation include Total Expenses, plus Interest on the Series 2017 Bonds and USDA Loan, less depreciation. 8) Outstanding capital leases will be included in the debt service coverage ratio per the bond documents. The capital leases outstanding are $6K or less a year. The projections reflected above include the capital lease expense in the projected expenses but not in the debt service coverage calculation.

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The immediately following pro forma cash flow statement is based on the assumption that the Charter Modification is not approved, as well as the assumptions listed in the footnotes thereto.

Uwharrie Charter Academy Proforma Cash Flows - One Grade Down

Projected Projected Projected Projected Projected FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 Total Enrollment 990 1,245 1,613 1,641 1,680 Revenues State Revenues 5,389,150 6,882,617 9,045,898 9,340,966 9,706,402 County Revenues 1,072,500 1,369,500 1,774,300 1,805,100 1,848,000 Other Revenues 663,830 785,500 1,048,310 1,072,560 1,221,170 Total Revenues 7,125,480 9,037,617 11,868,508 12,218,626 12,775,572

Expenses Salaries & Bonuses 3,659,490 4,258,677 5,413,325 5,565,125 5,834,500 Benefits 1,376,378 1,598,924 1,934,000 1,956,000 2,007,500 Instructional Supplies & Technology 233,750 261,000 278,750 307,700 324,700 Non-Cap Equipment & Leases 142,576 109,000 124,000 90,000 120,000 Contracted Student Services 96,000 98,600 100,100 106,000 109,500 Athletics 75,000 75,000 75,000 85,500 94,000 Administrative Services & Insurance 102,200 132,700 142,200 155,450 182,550 Facilities and Utilities 177,500 241,000 244,000 270,000 310,000 Middle/Elementary School Rent 140,400 145,000 146,000 147,000 148,000 Nutrition 77,500 88,500 99,500 118,000 137,000 Transportation & Travel 68,000 72,000 77,000 81,000 91,500 1 Outstanding Debt Service 31,2500000 Total Expenses 6,180,044 7,080,401 8,633,875 8,881,775 9,359,250

Revenue Available for Debt Service 945,436 1,957,216 3,234,633 3,336,851 3,416,322

2 USDA Debt Service 344,341 344,341 344,341 344,341 344,341 3 Series 2017 Debt Service 500,925 1,052,838 1,085,963 1,081,275 1,090,963 Less: Capitalized Interest (260,000) 0 0 0 0 4 Debt Service Coverage 1.62 x 1.40 x 2.26 x 2.34 x 2.38 x

Beginning Cash 5 452,337 812,507 1,372,545 3,176,874 5,088,109 Plus Adjusted Surplus6 360,170 560,038 1,804,329 1,911,235 1,981,018 Ending Cash 812,507 1,372,545 3,176,874 5,088,109 7,069,127 Operating Expenses 6,890,610 8,149,681 9,688,005 9,917,864 10,376,594

7 Days Cash on Hand 43 61 120 187 249

Notes:

1) Outstanding loans and line of credit to be defeased by Series 2017 Bonds. 2) USDA loan first payment due 10/19/2017 and each 10/19 thereafter per USDA Promissory Note. 3) Assumes 30 year amortization. Preliminary and subject to change. 4) Debt Service Coverage includes USDA Loan. 5) Unaudited. Cash on Hand as of June 30, 2017 per the Academy. 6) Reflects Revenue Available for Debt Service less USDA debt service and Series 2017 Debt Service less Capitalized Interest 7) Operating Expenses used in Days Cash Calculation include Total Expenses, plus Interest on the Series 2017 Bonds and USDA Loan, less depreciation. 8) Outstanding capital leases will be included in the debt service coverage ratio per the bond documents. The capital leases outstanding are $6K or less a year. The projections reflected above include the capital lease expense in the projected expenses but not in the debt service coverage calculation.

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APPENDIX C CHARTER SCHOOLS IN NORTH CAROLINA

This APPENDIX C briefly summarizes certain North Carolina statutes affecting charter schools in North Carolina, primarily with respect to funding and administration thereof. This APPENDIX C is not intended to be a complete statement of such law, and reference is made to the Charter School Act (N.C. Gen. Stat. § 115C-218 et. seq.) in its entirety, along with the North Carolina General Statutes, for a complete understanding of such provisions, charter school law generally, and other statutes in effect in North Carolina.

Charter School Finance

General

In 1996, the North Carolina General Assembly enacted the Charter School Act, (previously codified at N.C. Gen. Stat. § 115C-238.29A et. seq.), as a means of authorizing teachers, parents, pupils and community members to establish and maintain charter schools. The Charter School Act has since been amended on various occasions, and recodified as N.C. Gen. Stat. §115C-218 et. seq. on August 6, 2014. Charter schools are public schools that are operated independently of existing public schools pursuant to a charter granted by the North Carolina State Board of Education ("SBE"). As of July 13, 2017, there were 173 charter schools in North Carolina and the total enrollment for charter schools in the State of North Carolina for the 2016-17 school year was approximately 91,160.*

State of North Carolina and Local Funds

In North Carolina, the state is primarily responsible for the supervision, administration and funding of the public school system. The general cost of operating the system of public schools is paid from the North Carolina General Fund rather than locally levied ad valorem property taxes. State of North Carolina appropriations are allotted in accordance with various formulae, primarily based upon Average Daily Membership ("ADM")†. The State of North Carolina pays a substantial portion of current operating expenses such as salaries of teachers, and other staff, instructional supplies, textbooks and transportation. Counties typically supplement these current operating expenditures by modest amounts. Under the Charter School Act, North Carolina public charter schools, unlike traditional public schools, are ot entitled to any state or local funding for school or other facility purchases; instead, charter schools may lease space using state funding or, alternatively, raise or secure funds from other non-state sources to build or purchase facilities.

Because school funding is a large part of the General Fund spending, it is affected by significant changes in General Fund revenues. The following table shows the amount of and non-tax revenue (excluding federal, departmental, securities lending, and tobacco settlement revenues) reported in the General Fund in each fiscal year 2011-2012 through 2015-2016, with annual percentage increases/decreases for each such fiscal year:

*Source: "Charter School Membership 2016-17," by Office of Charter Schools, North Carolina Department of Public Instruction. †Average Daily Membership is the sum of the number of days in membership for all non-violating students in individual local school administrative units and charter schools, divided by the number of school days in the month.

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North Carolina Tax and Non-Tax Revenue (Expressed in Millions)* Percent Increase (Decrease) Fiscal Year Tax and Non-Tax Revenue From Previous Year 2011-12 $19,724 (0.4)% 2012-13 20,622 4.6 2013-14 20,505 (0.6) 2014-15 21,796 6.3 2015-16 22,663 4.0

Charter schools receive funding based on the average per pupil allocation in the local school administrative unit from which a student comes.

The following shows expenditure figures for North Carolina public schools for the five most recent years for which data are available:

EXPENDITURES† 2015-16 2014-15 2013-14 2012-13 2011-12 Current Expense Expenditures North Carolina $8,199,959,317 $8,083,147,923 $7,730,383,931 $7,706,801,545 $7,559,573,456 Federal 1,440,865,436 1,449,542,854 1,421,857,482 1,470,124,139 1,675,408,103 Local 3,090,665,396 3,060,463,614 3,005,281,644 2,975,235,140 2,683,319,423 Total $12,731,490,149 $12,593,154,391 $12,157,523,057 $12,152,160,824 $11,958,300,982

Per Pupil Expenditure in Average Daily Membership North Carolina $5,724.21 $5,638 $5,390 $5,400 $5,361 Federal 1,005.63 1,011 991 1,030 1,182 Local 2,157.52 2,135 2,095 2,085 1,893 Total $8,887.56 $8,784 $8,477 $8,514 $8,436

The SBE allocates funds to each charter school based on the school's ADM and the dollars per ADM of the local school administrative unit in which the school is located. With limited exception, each charter school generally receives an allocation in an amount equal to the average per pupil allocation for ADM from the local school administrative unit allotments in which the charter school is located for each child attending the charter school. Each charter school receives an additional amount for each child with disabilities and each child with limited English proficiency.‡

A charter school's allotment of State of North Carolina funds, calculated based on an initial ADM estimate,§ is received by the charter school in three installments. The first installment, equal to 34% of the State of North Carolina allotment, is normally received in July of each year. After the first month of school, the charter school must report actual ADM for the month. A charter school's State of North Carolina allotment will be recalculated based on the actual ADM. If the charter school's actual ADM is lower than the ADM estimate, the charter school's State of North Carolina allotments will be decreased.

* Source: "North Carolina Comprehensive Annual Financial Report" for the fiscal year ended June 30, 2016. † Source: "Statistical Profile," Public Schools of North Carolina, State Board of Education, Department of Public Instruction. Totals may not equal the sum of line items due to rounding. ‡ N.C. Gen. Stat. § 115C-218.105 § The initial ADM estimate is based on the higher of the prior year's actual first two months of ADM or the current year's projected first two months of ADM. A new charter school's estimated ADM will be calculated based on projected enrollment information submitted by the charter school. The North Carolina State Board of Education will use this information to calculate a Planning Allotment (preliminary allotment for tentative allocation purposes only). Funding for existing charter schools is based on the dollars per ADM of the local school administrative unit in which the school is located. Funding for new charter schools is based on the dollars per ADM of the local school administrative unit in which the student is or would be currently enrolled. Source: North Carolina Department of Public Instruction "Financial Guide for Charter Schools" revised July 2014.

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If the charter school's ADM is increased, within the permitted limit, after the first month, the allotments will be increased. The second installment is received after the first month ADM is reported by the charter school. If the State of North Carolina allocation is recalculated due to an increased ADM, the second installment will be in an amount so that, together with the first installment, the charter school has received 68% of the revised State of North Carolina allotment. The final 32% of the State of North Carolina allotment is received in the third installment at the end of February of each year.*

The local school administrative unit in which a child resides must transfer to the charter school an amount equal to the per pupil local current expense appropriation for that local school administrative unit for the fiscal year. The amount transferred that consists of revenue derived from supplemental taxes will be transferred only to a charter school located in the tax district for which these taxes are levied and in which the student resides.† The charter school sends a bill to the county in which the student resides.

Change in State Budgeting Process

In 2014, the North Carolina General Assembly adopted "The Current Operations and Capital Improvements Appropriations Act of 2014." Among other items, this act replaced the concept of a Continuation Budget, which automatically included an enrollment adjustment for public school funding, with the concept of a Base Budget, which requires affirmative legislative action to adjust public school funding for increases or decreases in enrollment. The North Carolina General Assembly adopts a state budget on a biennial basis, with adjustments to such budgets permitted on an annual basis.

Federal Funds

The SBE receives funds from many federal grants from the United States Department of Education (USDOE) and disburses them to individual schools and districts. Many of these grants are allotted according to prescribed formulas established by law and require the charter schools to submit relevant information in order to receive funds (e.g., the number of students eligible for free lunch). Examples of such federal grants include the Child Nutrition Program, Language Acquisition, IDEA Title VI-B Handicapped and ESEA Title I. Charter schools may also apply for competitive federal grants.

Key Elements in the Charter School Act

The following is intended as a summary of certain provisions of the North Carolina General Statutes. This summary is not intended to be definitive and is qualified in its entirety by reference to each of the relevant statutes.

Purpose of Charter Schools (N.C. Gen. Stat. § 115C-218)

Charter schools are public schools that operate independently of existing schools as a means to (1) improve student learning; (2) increase learning opportunities for all students, with special emphasis on expanded learning experiences for students who are identified as at risk of academic failure or academically gifted; (3) encourage the use of different and innovative teaching methods; (4) create new professional opportunities for teachers, including the opportunities to be responsible for the learning program at the school site; (5) provide parents and students with expanded choices in the types of educational opportunities that are available within the public school system; and (6) hold such schools

* Source: North Carolina Department of Public Instruction "Financial Guide for Charter Schools" revised July 2014. † Source: North Carolina Department of Public Instruction "Financial Guide for Charter Schools" revised May 2015; N.C. Gen. Stat. §115C-218.105.

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accountable for meeting measurable student achievement results, and provide the schools with a method to change from rule-based to performance-based accountability systems.

Effective July 2013, the North Carolina Charter Schools Advisory Board (the "Advisory Board") was directed by legislation (1) to report directly and make recommendations to the SBE on the adoption of rules regarding all aspects of charter school operation, (2) review applications and make recommendations to the SBE regarding approval, (3) recommend actions to the SBE regarding charter schools, including charter renewal, nonrenewal and revocation, and (4) assume any other duties and responsibilities assigned by the SBE.

Effective September 2015, the North Carolina Office of Charter Schools was created by legislation that charged it with (1) serving as staff to the Advisory Board and fulfilling duties assigned to it by the Advisory Board, (2) providing technical assistance and guidance to charter schools operating in North Carolina, (3) providing technical assistance and guidance to nonprofit corporations seeking to operate charter schools in North Carolina, (4) providing or arranging for training for charter schools that have received preliminary approval from the SBE, (5) assisting approved charter schools and charter schools seeking approval from the SBE in coordinating services with DPI, and (6) other duties as assigned by the SBE.

Establishing a Charter School (N.C. Gen. Stat. § 115C-218.1)

Any nonprofit corporation may apply to establish a charter school.

A charter school application must contain at least the following information:

A. A description of a program that implements one or more of the purposes in the Charter Act

B. A description of student achievement goals for the school's educational program and the method of demonstrating that students have attained the skills and knowledge specified for those student achievement goals

C. The governance structure of the school including the names of the initial members of the board of directors of the nonprofit, tax-exempt corporation and the process to be followed by the school to ensure parental involvement

D. The local school administrative unit in which the school will be located

E. Admission policies and procedures

F. A proposed budget for the school and evidence that the financial plan for the school is economically sound

G. Requirements and procedures for program and financial audits

H. A description of how the school will comply with specified State of North Carolina charter school statutes

I. Types and amounts of insurance coverage, including bonding insurance for the principal officers of the school, to be obtained by the charter school

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J. The term of the charter

K. The qualifications required for individuals employed by the school

L. The procedures by which students can be excluded from the charter school and returned to a public school

M. The number of students to be served, which number shall be at least 80, and the minimum number of teachers to be employed at the school, which number shall be at least three. The charter school, however, may serve fewer than 80 students or employ fewer than three teachers if the application contains a compelling reason, such as the school would serve a geographically remote and small student population

N. Information regarding the facilities to be used by the school and the manner in which administrative services of the school are to be provided

O. The process for conducting a weighted lottery that reflects the mission of the school if the school desires to use a weighted lottery

Approval Limitations, Charter Term and Reviews (N.C. Gen. Stat. § 115C-218.5)

The SBE decides on final approval of charter school applications. The SBE may approve a charter application if it finds the following: (1) the application meets the requirements stated above and any additional SBE requirements, (2) the applicant has the ability to operate the school and would be likely to operate the school in an educationally and economically sound manner and (3) granting the application would achieve one or more goals of the Charter School Act.

The SBE may grant initial charters for a period not to exceed 10 years. The SBE will renew the charter upon request of the chartering entity for subsequent periods of 10 years, unless one of the following applies:

(a) The charter school has not provided financially sounds audits for the prior three years.

(b) The charter school's student academic outcomes for the past three years have not been comparable to the academic outcomes of students in the local school administrative unit in which the charter school is located.

(c) The charter school is not, at the time of the request for renewal of the charter, substantially in compliance with State of North Carolina law, federal law, the school's own bylaws, or the provisions set forth in its charter granted by the SBE.

The SBE will review the operations of each charter school at least once prior to the expiration of its charter to ensure the school is meeting its expected academic, financial and governance standards. N.C. Gen. Stat. §115C-218.6.

Material Revision of Charter Application and Enrollment Growth (N.C. Gen. Stat. § 115C-218.7)

(a) A material revision of the provisions of a charter shall be made only upon the approval of the SBE

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(b) Enrollment growth of greater than twenty percent (20%) shall be considered a material revision of the charter if the charter is currently identified as low-performing. The State Board shall not approve a material revision for enrollment growth of greater than twenty percent (20%) for a charter that is currently identified as low-performing. Enrollment growth of greater than twenty-five percent (25%) shall be considered a material revision of the charter for any charter school that is not identified as low- performing. The State Board may approve such additional enrollment growth of greater twenty-five percent (25%) and starting July 1, 2018, thirty percent (30%) only if it finds all the following:

(1) The actual enrollment of the charter school is within ten percent (10%) of its maximum authorized enrollment.

(2) The charter school has commitments for ninety percent (90%) of the requested maximum growth.

(3) The charter school is not currently identified as low-performing.

(4) The charter school meets generally accepted standards of fiscal management.

(5) The charter school is, at the time of the request for the enrollment increase, substantially in compliance with State law, federal law, the charter school's own bylaws, and the provisions set forth in its charter granted by the State Board.

(c) For the purposes of calculating actual enrollment and maximum authorized enrollment under subdivision (1) of subsection (b) of this section, if a charter school is pursuing a material revision of enrollment growth based on a proposed capital expansion of the charter school, but fails to meet the requirements of subdivision (a) of subsection (b) of this section, the State Board shall have the discretion to investigate and determine whether subdivision (1) of subsection (b) of this section may be waived to grant the school's material revision request to allow the capital expansion to move forward. In making such a determination, the charter school shall provide the State Board with documentation to show evidence that demonstrates sufficiently in the State Board's discretion all of the following:

(1) The requested increase in enrollment growth is within a reasonable margin of the threshold necessary to support the requested material revision.

(2) The charter school has secured financing for its proposed capital expansion conditioned on its obtaining the requested material revision of enrollment growth.

(d) If a charter school presents evidence of a proposed capital expansion as part of a request for a material revision of enrollment growth under this section that is granted by the State Board, and the charter school is not able to realize that capital expansion within two years of the grant of the material revision, the charter shall reflect the maximum authorized enrollment immediately preceding that material revision.

Nonmaterial Revision of Charters (N.C. Gen. Stat. § 115C-218.8)

It shall not be considered a material revision of a charter application and shall not require prior approval of the SBE for a charter school to do any of the following:

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a) Increase its enrollment during the charter school's second year of operation and annually thereafter in accordance with G.S. 115C-218.7(b). b) Increase its enrollment during the charter school's second year of operation and annually thereafter in accordance with planned growth as authorized in its charter. c) Expand to offer one grade higher or lower than the charter school currently offers if the charter school (i) has operated for at least three years, (ii) has not been identified as having inadequate performance as provided in the Charter School Act, and (iii) has been in financial compliance as required by the SBE.

Charter School Operation (N.C. Gen. Stat. § 115C-218.15)

A charter school approved by the State of North Carolina will be a public school within the local school administrative unit in which it is located and will be accountable to the SBE for ensuring compliance with applicable laws and the provisions of its charter.

A charter school must be operated by a private nonprofit corporation that must have received federal tax-exempt status no later than 24 months following final approval of the charter application. The board of directors of the charter school must adopt a conflict of interest and anti-nepotism policy that satisfies the requirements set forth in the Charter School Act.

A charter school must operate under the written charter signed by the SBE. The charter will incorporate the information provided in the application, as modified during the charter approval process, and any terms and conditions imposed on the charter school by the SBE. No other terms may be imposed on the charter school as a condition for receipt of local funds and the charter school is not required to enter into any other contract.

The board of directors of a charter school will decide matters related to the operation of the school, including budgeting, curriculum and operating procedures. The board of directors of the private nonprofit corporation operating the charter school may have members who reside outside of the State of North Carolina. However, the SBE may require by policy that a majority of the board of directors and all officers of the board of directors reside within the State of North Carolina.

Charter School Exemptions (N.C. Gen. Stat. §115C-218.10)

Except as otherwise provided in Article 14A of Chapter 115C of the North Carolina General Statutes, or pursuant to the terms of its charter, a charter school is exempt from statutes and rules applicable to a local board of education or local school administrative unit.

Teacher Qualifications (N.C. Gen. Stat. § 115C-218.90)

The charter school's board of directors will employ and contract with teachers or contract with an education management organization or charter management organization to employ and provide teachers. At least 50% of these teachers must hold teacher licenses. All teachers who are teaching in the core subject areas of mathematics, science, social studies and language arts must be college graduates.

Instructional Program (N.C. Gen. Stat. § 115C-218.85)

A charter school must provide instruction each year for at least 185 days or 1,025 hours over nine calendar months. The school must design its programs to at least meet the student performance standards adopted by the SBE and the student performance standards contained in the charter. The school must conduct the student assessments required for charter schools by the SBE. The school must comply with

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policies adopted by the SBE for charter schools relating to the education of children with disabilities specifically Article 9 of Chapter 115C of the General Statutes and The Individuals with Disabilities Education Improvements Act, 20 U.S.C. § 1400, et seq., (2004).

Student Discipline (N.C. Gen. Stat. §115C-218.60)

A charter school is subject to and must comply with Article 27 of Chapter 115C of the North Carolina General Statutes, concerning management and placement of disruptive students, except that a charter school may also exclude a student from the charter school and return that student to another school in the local school administrative unit in accordance with the terms of its charter after due process.

Admission Requirements (N.C. Gen. Stat. § 115C-218.45)

Any child who is qualified under the laws of the State of North Carolina for admission to a public school is qualified for admission to a charter school. No local board of education may require any student enrolled in the local school administrative unit to attend a charter school. Admission to a charter school may not be determined according to the school attendance area in which a student resides, except that any local school administrative unit in which a public school converts to a charter school must give admission preference to students who reside within the former attendance area of that school. A charter school may not discriminate against any student on the basis of ethnicity, national origin, gender or disability. Except as otherwise provided by law or the mission of the school as set out in the charter, the school may not limit admission to students on the basis of intellectual ability, measures of achievement or aptitude, athletic ability, gender, or disability. A charter school may not limit admission to students on the basis of race, creed, national origin, religion or ancestry. Enrollment preferences may be given in limited circumstances; e.g., to siblings of currently enrolled students, children of full-time school employees and board members (up to 15% of total enrollment), and to a student who was enrolled in another charter school in the State or attended a Pre-K program operated by the school in the previous school year.

During each period of enrollment, the charter school must enroll an eligible student who submits a timely application, unless the number of applications exceeds the capacity of a program, class, grade level or building. In this case, students must be accepted by lot. Once enrolled, students are not required to reapply in subsequent enrollment periods.

Open Meetings and Public Records (N.C. Gen. Stat. § 115C-218.25)

The charter school and board of directors of the private nonprofit corporation that operates the charter school are subject to the Public Records Act, Chapter 132 of the North Carolina General Statutes, and the Open Meetings Law, Article 33C of Chapter 143 of the North Carolina General Statutes. Notwithstanding the requirements of Chapter 132 of the North Carolina General Statutes, inspection of charter school personnel records for those employees directly employed by the board of directors of the charter school shall be subject to the requirements of Article 21A of Chapter 115C of the North Carolina General Statutes, relating to school employee personnel records. The charter school and board of directors of the private nonprofit corporation that operates the charter school shall use the same schedule established by the North Carolina Department of Cultural Resources for retention and disposition of records of local school administrative units.

General Operating Requirements

A charter school must be nonsectarian in its programs, admission policies, employment practices and all other operations. A charter school may not be affiliated with a nonpublic sectarian school or a religious institution. A charter school may not charge tuition or fees except as follows: (i) a charter

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school may charge any fees that are charged by the local school administrative unit in which the charter school is located, (ii) a charter school, upon approval by the board of directors of the charter school, may establish fees for extracurricular activities, except those fees may not exceed the fees for the same extracurricular activities charged by a local school administrative unit in which forty percent (40%) or more of the students enrolled in the charter school reside. N.C. Gen. Stat. §115C-218.50.

A charter school must meet the same health and safety requirements required of a local school administrative unit. N.C. Gen. Stat. §115C-218.75.

The board of directors of a charter school must obtain at least the amount of and types of liability insurance required by the SBE in its charter. N.C. Gen. Stat. §115C-218.20.

A charter school is subject to the financial audits, the audit procedures and the audit requirements adopted by the SBE for charter schools. The charter school must comply with the reporting requirements established by the SBE in the Uniform Education Reporting System. The charter school must report at least annually to the chartering entity and the SBE the information required by the chartering entity or the SBE. N.C. Gen. Stat. §115C-218.30.

A charter school must develop a transportation plan so that transportation is not a barrier to any student who resides in the local school administrative unit in which the school is located. N.C. Gen. Stat. §115C-218.40.

A charter school must report annually on its website and in writing to the State of North Carolina by September 1 of each year, statistics by number and percentage of third grade students demonstrating and not demonstrating proficiency in various areas related to reading. N.C. Gen. Stat. §115C-218.85.

If the local board of education of the local school administrative unit in which a charter school is located has adopted a policy requiring criminal history checks, the charter school shall adopt a policy mirroring that policy. N.C. Gen. Stat. §115C-218.90.

State and local funds for a charter school (N.C. Gen. Stat. § 115C-218.105)

The SBE shall allocate to each charter school:

a) An amount equal to the average per pupil allocation for average daily membership from the local school administrative unit allotments in which the charter school is located for each child attending the charter school except for the allocation for children with disabilities and for the allocation for children with limited English proficiency; b) An additional amount for each child attending the charter school who is a child with disabilities; c) An additional amount for children with limited English proficiency attending the charter school, based on a formula adopted by the SBE; and

Funds allocated by the SBE may be used to enter into operational and financing leases for real property or mobile classroom units for use as school facilities for charter schools and may be used for payments on loans made to charter schools for facilities, equipment, or operations. However, State of North Carolina funds shall not be used to obtain any other interest in real property or mobile classroom units. A charter school, however, may own land and buildings it obtains through non-State funding sources.

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No indebtedness of any kind incurred or created by the charter school shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the charter school shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions. Every contract or lease into which a charter school enters shall include the previous sentence.

If a student attends a charter school, the local school administrative unit in which the child resides shall transfer to the charter school an amount equal to the per pupil share of the local current expense fund of the local school administrative unit for the fiscal year. The per pupil share of the local current expense fund shall be transferred to the charter school within 30 days of the receipt of monies into the local current expense fund. The local school administrative unit and charter school may use the process for mediation of differences between the SBE and a charter school provided in the Charter School Act to resolve differences on calculation and transference of the per pupil share of the local current expense fund. The amount transferred as described in this paragraph that consists of revenue derived from supplemental taxes shall be transferred only to a charter school located in the tax district for which these taxes are levied and in which the student resides.

The local school administrative unit shall also provide each charter school to which it transfers a per pupil share of its local current expense fund with all of the following information within the 30-day time period described in the preceding paragraph:

a) The total amount of monies the local school administrative unit has in each of the funds listed in Section 115C-426(c) of the North Carolina General Statutes. b) The student membership numbers used to calculate the per pupil share of the local current expense fund. c) How the per pupil share of the local current expense fund was calculated. d) Any additional records requested by a charter school from the local school administrative unit in order for the charter school to audit and verify the calculation and transfer of the per pupil share of the local current expense fund.

Dissolution of a charter school (N.C. Gen. Stat. § 115C-218.100)

A charter school that has elected to participate in the North Carolina Retirement System pursuant to the North Carolina General Statutes shall for as long as the charter school continues to participate in the North Carolina Retirement System, maintain, for the purposes of ensuring payment of expenses related to closure proceedings in the event of a voluntary or involuntary dissolution of the charter school, one or more of the options set forth in this subsection. The minimum aggregate value of the options chosen by the charter school shall be fifty thousand dollars ($50,000). The SBE shall not allocate any funds under Section 115C-218.105 of the North Carolina General Statutes to a charter school unless the charter school has provided documentation to the SBE that the charter school has met the requirements of this subsection. Permissible options to satisfy the requirements of this subsection include one or more of the following:

a) An account. b) A letter of credit. c) A bond. d) A deed of trust.

Upon dissolution of the charter school or upon the nonrenewal of the charter, all net assets of the charter school purchased with public funds will be deemed the property of the local school administrative unit in which the charter school is located.

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Causes for nonrenewal or termination (N.C. Gen. Stat. § 115C-218.95)

The SBE may terminate, not renew a charter, or seek applicants to assume a charter through a competitive bid process established by the SBE upon any of the following grounds: (1) failure to meet the requirements for student performance contained in the charter; (2) failure to meet generally accepted standards of fiscal management; (3) violations of law; (4) material violation of any of the conditions, standards or procedures set forth in the charter; (5) two-thirds of the faculty and instructional support personnel at the school request that the charter be terminated or not renewed; or (6) other good cause identified.

SBE Policy CHTR-010

(a) A continually low-performing charter school is a charter school that has been designated by the State Board as low-performing for at least two of three consecutive years.

(b) If a charter school is continually low-performing, the State Board is authorized to terminate, not renew, or seek applicants to assume the charter through the competitive bid process established by the State Boartd in CHTR-017.

(c) The State Board shall not terminate or not renew the charter of a continually low- performing charter school solely for its continually low-performing status if the charter school has met growth in each of the immediately preceding three school years or if the charter school has implemented a strategic improvement plan approved by the State Board and is making measureable progress toward student performance goals.

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APPENDIX D SUBSTANTIALLY FINAL FORMS OF THE PRINCIPAL DOCUMENTS

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Page

ARTICLE I INDENTURE OF TRUST DEFINITIONS; INDENTURE TO CONSTITUTE CONTRACT Section 1.01. Definitions...... 5 Section 1.02. Indenture To Constitute Contract ...... 18 by and between ARTICLE II AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF BONDS

PUBLIC FINANCE AUTHORITY, Section 2.01. Authorized Amount of Bonds ...... 18 as Issuer Section 2.02. All Bonds Equally and Ratably Secured by Trust Estate; Special Limited Obligation of Bonds and Pledges Securing the Same ...... 18 Section 2.03. Authorization of Series 2017 Bonds; Payment of Bonds ...... 19 Section 2.04. Execution of Bonds ...... 20 and Section 2.05. Registration, Transfer and Exchange of Bonds; Persons Treated As Registered Owners ...... 21 Section 2.06. Lost, Stolen, Destroyed and Mutilated Bonds ...... 23 Section 2.07. Delivery of Series 2017 Bonds ...... 23 U.S. BANK NATIONAL ASSOCIATION, Section 2.08. Authentication Certificate ...... 24 as Trustee Section 2.09. Cancellation and Destruction of Bonds ...... 24 Section 2.10. Temporary Bonds ...... 24 Section 2.11. Additional Bonds ...... 25 relating to Section 2.12. Book-Entry System ...... 27

$[PRINCIPALA] ARTICLE III Public Finance Authority REVENUES AND FUNDS Education Revenue Bonds Section 3.01. Pledge of Trust Estate ...... 29 (Uwharrie Charter Academy Project) Section 3.02. Establishment of Funds; Closing Deposits and Disbursements ...... 29 Series 2017A Section 3.03. Payments Into the Bond Fund ...... 30 Section 3.04. Use of Moneys in the Bond Fund ...... 30 and Section 3.05. Custody of the Bond Fund ...... 30 Section 3.06. Payments Into the Debt Service Reserve Fund ...... 31 $[PRINCIPALB] Section 3.07. Use of Moneys in the Debt Service Reserve Fund ...... 31 Public Finance Authority Section 3.08. Custody of the Debt Service Reserve Fund ...... 32 Taxable Education Revenue Bonds Section 3.09. Payments Into and Use of Moneys in the Project Fund; Disbursements ...... 32 (Uwharrie Charter Academy Project) Section 3.10. Completion of the Project ...... 33 Series 2017B Section 3.11. Custody of the Project Fund ...... 33 Section 3.12. Payments Into and Use of Moneys in the Cost of Issuance Fund ...... 33 Section 3.13. Termination of Cost of Issuance Fund ...... 33 Section 3.14. Custody of the Cost of Issuance Fund ...... 34 Dated as of November 1, 2017 Section 3.15. [Reserved] ...... 34 Section 3.16. Nonpresentment of Bonds...... 34 Section 3.17. Moneys To Be Held in Trust ...... 34 Section 3.18. Insurance and Condemnation Proceeds ...... 34

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Table of Contents Table of Contents (continued) (continued) Page Page

Section 3.19. Repayment to the Borrower From the Funds ...... 35 Section 8.03. Direction of Remedies ...... 49 Section 3.20. Rebate Fund ...... 35 Section 8.04. Rights and Remedies of Beneficial Owners ...... 49 Section 3.21. Custody of the Rebate Fund ...... 35 Section 8.05. Application of Moneys ...... 50 Section 8.06. Trustee May Enforce Rights Without Bonds ...... 51 ARTICLE IV Section 8.07. Proofs of Claim ...... 51 COVENANTS OF THE ISSUER Section 8.08. Delay or Omission No Waiver ...... 52 Section 4.01. Performance of Covenants ...... 35 Section 8.09. No Waiver of One Default To Affect Another ...... 52 Section 4.02. Instruments of Further Assurance ...... 36 Section 8.10. Discontinuance of Proceedings on Default; Position of Parties Section 4.03. Payment of Principal, Premium, if Any, and Interest ...... 36 Restored ...... 53 Section 4.04. Unrelated Bond Issues ...... 37 Section 8.11. Waivers of Events of Default ...... 53 Section 4.05. Rights Under the Loan Agreement ...... 37 Section 8.12. No Obligation To Enforce Assigned Rights ...... 53 Section 4.06. Performance of Obligations ...... 37 Section 8.13. No Impairment of Ability To Enforce Issuer’s Unassigned Rights ...... 53 Section 4.07. Tax Status of the Interest on the Bonds ...... 38 ARTICLE IX ARTICLE V CONCERNING THE TRUSTEE REDEMPTION OF BONDS PRIOR TO MATURITY Section 9.01. Duties of the Trustee ...... 54 Section 5.01. Optional Redemption of Bonds ...... 39 Section 9.02. Fees and Expenses of Trustee ...... 56 Section 5.02. Redemption of Bonds Upon Occurrence of Certain Events ...... 39 Section 9.03. Resignation or Replacement of Trustee ...... 57 Section 5.03. Mandatory Sinking Fund Redemption ...... 39 Section 9.04. Conversion, Consolidation or Merger of Trustee ...... 58 Section 5.04. Mandatory Redemption Upon Determination of Taxability ...... 41 ARTICLE X Section 5.05. Method of Selecting Bonds ...... 41 SUPPLEMENTAL INDENTURES AND AMENDMENTS OF THE LOAN AGREEMENT Section 5.06. Notices of Redemption ...... 41 AND THE DEED OF TRUST Section 5.07. Bonds Due and Payable on Redemption Date; Interest Ceases To Accrue ...... 42 Section 10.01. Supplemental Indentures Not Requiring Consent of Registered Owners ...... 58 Section 5.08. Cancellation ...... 43 Section 10.02. Supplemental Indentures Requiring Consent of Registered Owners ...... 59 Section 5.09. Partial Redemption of Bonds ...... 43 Section 10.03. Execution of Supplemental Indentures ...... 59 Section 5.10. No Partial Optional Redemption in Event of Default ...... 43 Section 10.04. Amendments, etc., of the Loan Agreement Not Requiring Consent of Section 5.11. Purchase in Lieu of Redemption ...... 43 Registered Owners ...... 60 Section 10.05. Amendments, etc., of the Loan Agreement Requiring Consent of ARTICLE VI Registered Owners ...... 60 INVESTMENTS Section 10.06. Execution of Amended Loan Agreement ...... 60 Section 6.01...... 43 Section 10.07. Amendments, etc., of the Deed(s) of Trust Not Requiring Consent of Registered Owners ...... 61 ARTICLE VII Section 10.08. Amendments, etc., of the Deed(s) of Trust Requiring Consent of DISCHARGE OF INDENTURE Registered Owners ...... 61 Section 10.09. Execution of Amended Deed of Trust ...... 61 Section 7.01. Discharge of This Indenture...... 44 Section 10.10. Consent of Original Purchaser, Underwriter or Remarketing Agent ...... 62 Section 7.02. Survival ...... 46 ARTICLE XI ARTICLE VIII MISCELLANEOUS DEFAULTS AND REMEDIES Section 11.01. Evidence of Signature of Registered Owners and Ownership of Bonds ...... 62 Section 8.01. Events of Default ...... 47 Section 11.02. Parties Interested Herein ...... 63 Section 8.02. Remedies for Events of Default Under This Indenture ...... 47

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Table of Contents (continued) INDENTURE OF TRUST Page THIS INDENTURE OF TRUST, dated as of November 1, 2017 (as the same may be

amended and supplemented, including by Supplemental Indentures, the “Indenture”), is by and Section 11.03. Titles, Headings, Etc ...... 63 between the PUBLIC FINANCE AUTHORITY, a joint powers commission and a unit of Section 11.04. Severability ...... 63 government and a body corporate and politic under the laws of the State of Wisconsin (together Section 11.05. Third-Party Beneficiaries ...... 63 with its successors and assigns, the “Issuer”) and U.S. BANK NATIONAL ASSOCIATION, a Section 11.06. Governing Law ...... 63 national banking association as trustee (the “Trustee”), being duly organized and existing under Section 11.07. Execution in Counterparts ...... 63 the laws of the United States of America with authority to act as trustee and accept trusts of the Section 11.08. Non-Liability of the Issuer ...... 64 character set out herein. Section 11.09. Notices ...... 64 Section 11.10. Payments Due on Holidays ...... 65 W I T N E S S E T H : Section 11.11. No Personal Liability of the Indemnified Parties ...... 65 Section 11.12. Bonds Owned by the Issuer or the Borrower ...... 65 WHEREAS, the Issuer was organized as a commission under and pursuant to Sections Section 11.13. Undertaking To Provide Ongoing Disclosure ...... 66 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as amended (the “Act”), commonly Section 11.14. Right To Inspect ...... 66 known as the “Joint Exercise of Powers Law,” and exists by virtue of that certain Joint Exercise Section 11.15. Incorporation of Terms of Loan Agreement ...... 66 of Powers Agreement Relating to the Public Finance Authority dated June 30, 2010, as amended Section 11.16. E-Verify ...... 66 by that certain Amended and Restated Joint Exercise of Powers Agreement Relating to the Section 11.17. Iran Divestment Certification: ...... 66 Public Finance Authority, dated September 28, 2010, by and among Adams County, Wisconsin; Section 11.18. No Obligation of the State of North Carolina ...... 67 Bayfield County, Wisconsin; Marathon County, Wisconsin; Waupaca County, Wisconsin; and EXHIBIT A FORM OF SERIES 2017A BOND the City of Lancaster, Wisconsin, as such agreement may be amended from time to time (the EXHIBIT B FORM OF SERIES 2017B BOND “Joint Exercise Agreement”); and EXHIBIT C-1 FORM OF INVESTOR LETTER (INVESTOR) EXHIBIT C-2 FORM OF INVESTOR LETTER (ADVISOR) WHEREAS, the Issuer is authorized and empowered under the Act and by the Joint EXHIBIT D CLOSING MEMORANDUM Exercise Agreement to, among other things, issue bonds, notes or other evidences of indebtedness in connection with, and to make loans to assist in the financing and refinancing of, “projects” (as defined in the Act) located inside and outside of the State (as defined herein); and

WHEREAS, Uwharrie Green School, Inc., a North Carolina nonprofit corporation (the “Borrower”), has applied for the financial assistance of the Issuer in (a) financing and/or refinancing the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” and, together with the Existing Facility, the “Facilities”); (b) funding any required reserve funds for the Series 2017 Bonds; (c) funding capitalized interest on the Series 2017 Bonds; (d) financing and/or refinancing working capital loans of or to the Borrower; and (e) paying all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the “Project”); and

WHEREAS, the Facilities are to be located within the territorial limits of the County of Randolph, State of North Carolina (the “Project Jurisdiction”), and the Issuer, based on representations of the Borrower, but without independent investigation, has found and determined that the financing and refinancing of the Facilities will promote significant economic, cultural and community development opportunities, including the creation or retention of

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employment, the stimulation of economic activity and the promotion of improvements in the That the Issuer, in consideration of the premises and of the mutual covenants contained health, safety and welfare of persons in the Project Jurisdiction; and herein and of the purchase and acceptance of the Bonds by the Registered Owners (as defined herein) thereof and of the sum of One Dollar to it duly paid by the Trustee at or before the WHEREAS, the Issuer has determined to issue its bonds to finance and refinance the execution and delivery of these presents, and for other good and valuable consideration, the Facilities and has determined to enter into this Indenture and such supplements to this Indenture receipt and sufficiency of which is hereby acknowledged, in order to secure the payment of the as may be required to secure all such bonds on a parity basis and to provide a reserve for the principal of, premium, if any, and interest on all Bonds at any time Outstanding (as defined payment of debt service on such bonds; and herein) under this Indenture, according to their tenor and effect, to secure the performance and observance of all the covenants and conditions in the Bonds and herein contained, and to declare WHEREAS, the Issuer has found and determined: (a) that the Project is a qualified the terms and conditions upon and subject to which the Bonds are issued and secured, has project under the Act; (b) that the Borrower is a qualified participant under the Act; and (c) that executed and delivered this Indenture and has granted, bargained, sold, alienated, assigned, the financing and refinancing of the Project will, based on representations of the Borrower, but pledged, set over and confirmed, and by these presents does grant, bargain, sell, assign, pledge, without independent investigation, serve a public purpose and will in all respects conform to the set over and confirm unto the Trustee, to the extent provided herein, and to its successors and provisions and requirements of the Act; and assigns forever, a security interest in the following described property, franchises and income (collectively, the “Trust Estate”): WHEREAS, the Borrower requested that the Issuer issue the Series 2017 Bonds and loan the proceeds thereof to the Borrower under that certain Loan Agreement, dated as of November (a) the rights and interests of the Issuer under the Account Control Agreement 1, 2017 (the “Loan Agreement”) specifying the terms and conditions of such loan and the and the Loan Agreement, as amended from time to time, by and between the Issuer and payment by the Borrower to the Issuer of amounts sufficient for the payment of the principal of, the Borrower, except the Issuer’s Unassigned Rights (as defined herein); premium, if any, or interest on such Series 2017 Bonds and certain costs incidental thereto, which loan will assist the Borrower in financing and refinancing the Project, which is used or to (b) the rights, title and interests, if any, of the Issuer in the New Facility, be used by the Borrower in connection with its charter school operations; and subject to Permitted Encumbrances (as defined herein), except the Issuer’s Unassigned Rights; WHEREAS, in order to finance and/or refinance the Project, the Issuer has agreed to issue $[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie Charter (c) the Revenues (as defined herein) and all rights and interests of the Issuer Academy Project) Series 2017A (the “Series 2017A Bonds”) pursuant to and secured by this in the Pledged Revenues (as defined herein), subject to Permitted Encumbrances, except Indenture; and the Issuer’s Unassigned Rights;

WHEREAS, in order to finance and/or refinance the Project, the Issuer has agreed to (d) the rights and interests of the Issuer under the Promissory Notes (as issue $[PRINCIPALB] Public Finance Authority Taxable Education Revenue Series 2017 Bonds defined herein); (Uwharrie Charter Academy Project) Series 2017B (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the “Series 2017 Bonds”) pursuant to and secured by this Indenture; (e) all Funds created in this Indenture (other than the Cost of Issuance Fund and and the Rebate Fund), except for (i) moneys or obligations deposited with or paid to the Trustee for the payment or redemption of Bonds that are no longer deemed to be WHEREAS, the Series 2017A Bonds and Series 2017B Bonds are to be substantially in Outstanding hereunder, (ii) all trust accounts containing all insurance and condemnation the forms thereof set forth in Exhibits A and B hereto, respectively, with such necessary or proceeds, and (iii) Issuer’s Unassigned Rights, subject only to the provisions of this appropriate variations, omissions and insertions as permitted or required by this Indenture; and Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in this Indenture; and WHEREAS, in order to secure the obligations of the Borrower under the Loan Agreement and the USDA Documents, the Borrower has entered into the Account Control (f) any and all other interests in real or personal property of every name and Agreement (as defined in the Loan Agreement) for the benefit of the Trustee; and nature from time to time hereafter by delivery or by writing of any kind specifically mortgaged, pledged or hypothecated, as and for additional security hereunder by the WHEREAS, all things necessary (a) to make the Series 2017 Bonds, when authenticated Issuer or by anyone on its behalf or with its written consent in favor of the Trustee by the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations (including the Deed of Trust and proceeds of related title insurance), which is hereby of the Issuer; and (b) to constitute this Indenture a valid, binding and legal instrument for the authorized to receive any and all such property at any and all times and to hold and apply security of the Bonds (as defined herein) in accordance with its terms, have been done and the same, subject to the terms hereof. performed;

NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH:

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TO HAVE AND TO HOLD the same with all privileges and appurtenances hereby property, rights, interests, and revenues and funds hereby pledged, assigned and mortgaged are to conveyed and assigned, or agreed or intended to be, to the Trustee and its successors in said trust be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, and assigns forever, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant with the Trustee for the benefit of IN TRUST, NEVERTHELESS, upon the terms herein set forth in this Indenture, except the Registered Owners from time to time of the Bonds as follows: as herein provided for the equal and proportionate benefit, security and protection of all Registered Owners of the Bonds issued under and secured by this Indenture without privilege, ARTICLE I priority or distinction as to the lien or otherwise of any of the Bonds over any other of the Bonds except as otherwise provided in Article VII hereof or with respect to moneys otherwise held to DEFINITIONS; INDENTURE TO CONSTITUTE CONTRACT redeem or pay particular Bonds hereunder; Section 1.01. Definitions. All words and phrases defined in Article I of the Loan SUBJECT ONLY TO THE RIGHTS OF THE ISSUER TO APPLY AMOUNTS Agreement and elsewhere in the Loan Agreement and not otherwise defined herein shall have the UNDER THE PROVISIONS OF THIS INDENTURE, THE PLEDGE AND ASSIGNMENT OF same meaning in this Indenture. In addition, the following terms, except where the context THE TRUST ESTATE HEREBY MADE SHALL IMMEDIATELY ATTACH THERETO indicates otherwise, shall have the respective meanings set forth below: AND SHALL BE EFFECTIVE, BINDING AND ENFORCEABLE FROM AND AFTER THE TIME OF THE DELIVERY BY THE TRUSTEE OF THE FIRST BONDS AUTHENTICATED “Accredited Investor” means an “accredited investor” as defined in Rule 501(a) of AND DELIVERED UNDER THIS INDENTURE. THE SECURITY SO PLEDGED AND Regulation D under the Securities Act of 1933, as amended. ANY ASSIGNMENT THEN OR THEREAFTER RECEIVED BY TRUSTEE FROM THE ISSUER AS SECURITY FOR THE BONDS SHALL IMMEDIATELY BE SUBJECT TO THE “Act” means Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as LIEN OF SUCH PLEDGE AND ASSIGNMENT AND THE LIEN OF SUCH PLEDGE AND amended from time to time. ASSIGNMENT SHALL BE VALID AND BINDING AGAINST THE ISSUER, PURCHASERS THEREOF, CREDITORS AND ALL OTHER PARTIES HAVING CLAIMS “Act of Bankruptcy” means the filing of a petition in bankruptcy under the United States AGAINST THE ISSUER IRRESPECTIVE OF WHETHER SUCH PARTIES HAVE NOTICE Bankruptcy Code, or the institution of proceedings under state insolvency or other laws affecting THEREOF AND WITHOUT THE NEED FOR ANY PHYSICAL DELIVERY, creditors’ rights generally, by or against the Issuer or Borrower as debtor; provided that such RECORDATION, FILING, OR FURTHER ACT. filings or proceedings have not been dismissed or, if dismissed, are subject to appeal.

PROVIDED, HOWEVER, that if the Issuer shall well and truly pay, or cause to be paid, “Additional Bonds” means Bonds that may be issued under Section 2.11 of this the principal of the Bonds and the premium, if any, and the interest due or to become due Indenture. thereon, at the times and in the manner mentioned in the Bonds according to the true intent and “Additional Promissory Notes” means any nonnegotiable promissory note or notes, in meaning thereof, and shall cause the payments to be made into the Bond Fund as hereinafter addition to the Series 2017 Promissory Notes, executed and delivered by the Borrower to the required or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee in connection with the issuance of Additional Bonds, as provided in the Loan Trustee the entire amount due or to become due thereon, or certain securities as herein permitted Agreement. and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be “Athletic Facility” means the facility used by the Borrower for sports and recreation paid to the Trustee, the Issuer and the United States of America all sums of money due or to activities of the School and located on approximately 30 acres of property at the intersection of become due to them in accordance with the terms and provisions hereof, then upon such final Mack Road and Ludlum Lane in the Project Jurisdiction. payments this Indenture and the rights hereby granted shall cease, terminate, and be void (except those provisions which specifically provide for their survival); otherwise this Indenture to be and “Authorized Denominations” means (a) with respect to the Series 2017 Bonds, $5,000 remain in full force and effect. and any integral multiple thereof (subject to the restrictions set forth in Section 2.05(b) hereof); and (b) in the case of Additional Bonds, the amount specified in the Supplemental Indenture IT IS HEREBY EXPRESSLY ACKNOWLEDGED that the Issuer has entered into this authorizing the issuance thereof. Indenture and issued the Bonds to fulfill the public purposes of the Act, and the Trustee hereby accepts such trust and covenants to enforce the provisions of this Indenture and the Loan “Authorized Representative” means in the case of the Borrower, the Chairman of the Agreement so as to effect the public purposes of the Act. Board of Directors, the Vice-Chairman of the Board of Directors, the Secretary of the Board of Directors, the Treasurer of the Board of Directors and the Executive Director and, when used THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all with reference to the performance of any act, the discharge of any duty or the execution of any Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all said

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certificate or other document, any officer, employee or other person authorized to perform such “Completion Date” means the date specified by the Borrower in a certificate delivered to act, discharge such duty or execute such certificate or other document. the Trustee stating that the acquisition, construction, improvement and/or equipping of the New Facility is complete in accordance with Section 4.03 of the Loan Agreement. “Beneficial Owner(s)” means the person or entity for whom the Bonds were deposited with DTC in the name of its nominee, Cede & Co. “Continuing Disclosure Agreement” means, with respect to the Series 2017 Bonds, the Continuing Disclosure Agreement, dated as of November 1, 2017, entered into by the Borrower “Bond Closing” means, as to any Series of Additional Bonds, the date upon which such and Digital Assurance Certification, LLC, as dissemination agent, and, as to any Series of Series of Additional Bonds are delivered for due consideration, and, as to the Series 2017 Bonds, Additional Bonds, the Continuing Disclosure Agreement executed by the Borrower in [November __, 2017]. connection with the issuance of such Series of Additional Bonds.

“Bond Counsel” means Kutak Rock LLP, Atlanta, Georgia, or such other firm of “Cost of Issuance Fund” means the fund by that name created pursuant to Section 3.02 nationally recognized attorneys with a proven reputation in the field of municipal finance and herein. experienced in the financing of facilities for non-exempt persons through the issuance of tax- exempt revenue bonds under the exemption provided under Section 103 of the Code, and “Costs of the Project” means Costs of the Project as defined in the Loan Agreement. approved by the Issuer and the Borrower. “Debt Service Reserve Fund” means the fund by that name created pursuant to Section “Bond Fund” means the Fund by that name created pursuant to Section 3.02 herein. 3.02 herein.

“Bond Purchase Agreement” means as to any Series of Additional Bonds, the bond “Debt Service Reserve Fund Requirement” means, as of any date, the aggregate of the purchase agreement related to such Series of Additional Bonds and, as to the Series 2017 Bonds, Series Debt Service Reserve Fund Requirement for all Series of Bonds for which any Bonds of means the Bond Purchase Agreement related to the Series 2017 Bonds. such Series are at the time Outstanding.

“Bonds” means the Series 2017 Bonds and any Additional Bonds. “Deed of Trust” means a Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, from the Borrower to Investors Title Insurance Company (or “Borrower” means Uwharrie Green School, Inc., a North Carolina nonprofit corporation, another deed of trust trustee) for the benefit of the Trustee, relating to Bonds issued under this or any surviving, resulting or transferee corporation, as provided in Section 8.02 of the Loan Indenture, as the same may be supplemented or amended from time to time in accordance with Agreement. its terms.

“Business Day” means any day other than a Saturday or Sunday or a day on which the “Determination of Taxability” means, with respect to a Series of Tax-Exempt Bonds, Federal Reserve System or the Trustee is closed. (i) the enactment of legislation or the adoption of final regulations or a final decision, ruling or technical advice by any federal judicial or administrative authority which has the effect of “Capitalized Interest Account” means the account by that name created pursuant to requiring interest on a Tax-Exempt Bond to be included in the gross income of the Owner for Section 3.02 herein. federal income tax purposes or (ii) the receipt by the Trustee of a written opinion of nationally recognized bond counsel selected by the Borrower and approved by the Trustee to the effect that “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of interest on a Tax-Exempt Bond must be included in the gross income of the Owner for federal DTC. income tax purposes. A Determination of Taxability will not result from the inclusion of interest on any Tax-Exempt Bond in the computation of the alternative minimum tax imposed by Section “Charter School Act” means the North Carolina Charter School Act, codified at N.C. 55 of the Code, the branch profits tax on foreign corporations imposed by Section 884 of the Gen. Stat. § 115C-218, et seq., as amended. Code or the tax imposed on the net passive income of certain S corporations under Section 1375 “Code” means the Internal Revenue Code of 1986, as amended. References to the Code of the Code. and sections of the Code include relevant applicable regulations thereunder, and any successor “DTC” means The Depository Trust Company, New York, New York, and its successors provisions to those sections or regulations and, in addition, all revenue rulings, announcements, and assigns. notices, procedures and judicial determinations under the foregoing applicable to the Tax- Exempt Bonds, including the Series 2017 Bonds. “Fiscal Year” means each 12-month period commencing on July 1 and ending on June 30.

“Fitch” means Fitch Ratings.

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“Funds” means, collectively, the Bond Fund, the Debt Service Reserve Fund, the Cost of (a) Government Obligations; Issuance Fund, the Rebate Fund, the Project Fund, and any other funds, accounts or sub-accounts held by the Trustee hereunder. (b) direct and general obligations of any state of the United States of America or any municipality or political subdivision of such state, or obligations of any “Generally Accepted Accounting Principles” means those accounting principles corporations, if such obligations are rated in one of the two highest rating categories by applicable in the preparation of financial statements of the Borrower, as promulgated by the S&P or Moody’s, or upon the discontinuance of either or both of such rating services, Financial Accounting Standards Board or such other body recognized as authoritative by the any other nationally recognized rating service; American Institute of Certified Public Accountants. (c) negotiable or nonnegotiable certificates of deposit, time deposits, or other “Government” means the United States of America, acting through the United States similar banking arrangements, issued by any nationally or state-chartered bank or trust Department of Agriculture Rural Housing Service (formerly the Farmers Home Administration). company (including the Trustee) or any savings and loan association, domiciled in the State of North Carolina, if either (i) the long-term obligations of such bank or trust “Government Loan Facility” means the facility housing grades 9 through 12 of the company are rated in one of the two highest rating categories by S&P or Moody’s, or, Borrower located at 5326 U.S. Highway 220 Business South, Asheboro, North Carolina 27205. upon the discontinuance of either or both of such rating services, any other nationally recognized rating service; or (ii) the deposits are continuously secured as to principal, but “Government Obligations” means bills, certificates of indebtedness, notes, bonds or only to the extent not insured by the Federal Deposit Insurance Corporation, or similar similar securities that are direct obligations of, or the principal and interest of which are corporation chartered by the United States of America, (A) by lodging with a bank or unconditionally guaranteed by, the United States of America. trust company, as collateral security, obligations described in clause (a) or (b) above or, with the approval of the Trustee, other marketable securities eligible as security for the “Indebtedness” means (a) any indebtedness or guarantees of the Borrower which has deposit of trust funds under applicable regulations of the Comptroller of the Currency of been incurred or assumed, including in connection with the acquisition, construction, the United States of America or applicable state law or regulations, having a market value improvement, and/or equipping of the Facilities or property related thereto other than goods that (exclusive of accrued interest) not less than the amount of such deposit; or (B) if the are acquired in the ordinary course of business of the Borrower, including indebtedness furnishing of security as provided in clause (A) of this paragraph is not permitted by subordinate as to security and payment to other Indebtedness; (b) all indebtedness, no matter applicable law, in such manner as may then be required or permitted by applicable state how created, secured by the Government Loan Facility, whether or not such indebtedness is or federal laws and regulations regarding the security for the deposit of trust funds; assumed by the Borrower; (c) any leases required to be capitalized in accordance with Generally Accepted Accounting Principles; and (d) all indebtedness secured by any mortgage, lien, charge, (d) repurchase agreements with respect to obligations listed in clause (a) or encumbrance, pledge or other security interest upon the Facilities or property related thereto (b) above if entered into with a nationally or state-chartered bank, trust company or a owned by the Borrower whether or not the Borrower has assumed or become liable for the “broker” or “dealer” (as defined by the Securities Exchange Act of 1934 as amended) payment thereof. For the purpose of “Indebtedness,” there shall be excluded any particular which is a member of the Securities Investors Protection Corporation if (i) such Indebtedness if, upon or prior to the maturity thereof, there shall have been irrevocably deposited obligations that are the subject of such repurchase agreement are delivered to the Trustee with the property depository in trust the necessary funds (or evidences of such Indebtedness or or are supported by a safekeeping receipt issued by depository satisfactory to the Trustee; investments that will provide sufficient funds, if permitted by the instrument creating such provided that such repurchase agreement must provide that the value of the underlying Indebtedness) for the payment, redemption or satisfaction of such Indebtedness; and thereafter obligations shall be maintained at current market value, calculated no less frequently than such funds, evidences of Indebtedness and investments so deposited shall not be included in any monthly, of not less than the repurchase price; (ii) a prior perfected security interest in the computation of the assets of the Borrower, and the income from any such deposits shall not be obligations which are the subject of such repurchase agreement has been granted to the included in the calculation of Net Income Available for Debt Service. Trustee; and (iii) such obligations are free and clear of any adverse third-party claims;

“Interest Payment Date” means, as to a Series of Additional Bonds, the Interest Payment (e) commercial paper maturing in 270 days or less and rated in the highest Date established in the related Supplemental Indenture and, as to the Series 2017 Bonds, means rating category by two nationally recognized rating services; each [June 15] and [December 15], commencing [June 15, 2018]. (f) money market mutual funds invested solely in obligations listed in “Investment Obligations” means the Investment Obligations for any Series of Additional clause (a), (b) or (c) above; Bonds as set forth in the related Supplemental Indenture and, as to the Series 2017 Bonds, any of the following that at the time are lawful investments under the laws of the State of North (g) investment agreements with any nationally or state-chartered bank, Carolina (such legality to be determined by an Authorized Representative of the Borrower and financial institution, insurance company or trust company which has long-term debt not the Trustee) for the money held under this Indenture: obligations rated in one of the three highest categories by a nationally recognized rating

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agency. Should the issuer’s or guarantor’s credit quality be downgraded below “A,” the certificate, contract, or instrument to be executed by the Issuer in connection with the issuance of Trustee must have withdrawal rights; the Bonds or the financing of a portion of the expenses associated with the related Project.

(h) certificates or receipts issued by any nationally or state-chartered bank, “Issuer Indemnified Party” or “Issuer Indemnified Parties” means, collectively, (a) each trust company or “broker” or “dealer” (as defined by the Securities Exchange Act of Sponsor; (b) each Member; and (c) each of the Issuer’s, the Sponsors’ and the Members’ 1934, as amended) which is a member of the Securities Investors Protection Corporation, respective past, present, and future directors, board members, governing members, trustees, organized and existing under the laws of the United States of America or any state commissioners, officers, elected or appointed officials, counsel, contractors, subcontractors, thereof, the outstanding unsecured long-term debt of which is rated in either of the two advisors (including counsel and financial advisors), agents, authorized signatories and highest rating categories by S&P or Moody’s, or, upon the discontinuance of either rating employees, and each of their respective heirs, successors and assigns, individually and service, any other nationally recognized ratings service, in the capacity of custodian, collectively. which certificates or receipts evidence ownership or a portion of the principal of or interest on Government Obligations held (which may be in book entry form) by such “Issuer’s Unassigned Rights” means the rights of the Issuer under Sections 5.01(j), (k) bank, trust company or broker or dealer (as defined by the Securities Exchange Act of and (l), 6.06, 8.05(j), 8.06, 8.10, 10.04 and 12.13 of the Loan Agreement and the Issuer’s rights 1934, as amended) as custodian; and thereunder or under this Indenture to (a) inspect books and records; (b) give or receive notices, approvals, consents, requests, and other communications; (c) receive payment or reimbursement (i) tax-exempt obligations (as defined in Section 150(a)(6) of the Code and for expenses, including without limitation “Additional Payments” as defined in the Loan which are not “investment property” as defined in Section 148(b)(2) of the Code) rated in Agreement and the “Issuer’s Annual Fee” as defined in the Loan Agreement; (d) immunity from one of the two highest rating categories by S&P or Moody’s, or upon the discontinuance and limitation of liability; and (e) indemnification by the Borrower or any other Person; and (f) of such ratings service, any other nationally recognized ratings service; to enforce, in its own name and on its own behalf, those provisions hereof and of the Loan Agreement and any other document, instrument or agreement entered into with respect to the provided that “Investment Obligations” shall not include a financial instrument, commonly Bonds that provides generally for the foregoing enumerated rights or any similar rights of the known as a “derivative,” whose performance is derived, at least in part, from the performance of Issuer or any Issuer Indemnified Party. For avoidance of doubt, the “Issuer’s Unassigned any underlying asset, including, without limitations, futures, options on securities, options on Rights” referenced in clauses (d), (e) and (f), above, shall be interpreted broadly to encompass futures, forward contracts, swap agreements, structured notes and participations in pools of (but not be limited to) the rights of the Issuer and the Issuer Indemnified Parties to immunity mortgages or other assets. All ratings shall be determined at the time of initial investment; the from and limitation of liability and indemnification by the Borrower as provided in the Loan Trustee has no obligation to monitor any changes in such ratings. Agreement and the right of any such Issuer Indemnified Party to enforce such right in his, her or its name. “Irrevocable Deposit” means the irrevocable deposit in trust of cash in an amount (or Government Obligations, the principal of and interest on which will be in an amount) and under “Joint Exercise Agreement” means that certain Amended and Restated Joint Exercise of terms sufficient to pay all or a specified portion of the principal of, premium, if any, and/or the Power Agreement Relating to the Public Finance Authority, dated as of September 28, 2010 by interest on, as the same shall become due, any Indebtedness which would otherwise be and among Marathon County, Wisconsin, Waupaca County, Wisconsin, Bayfield County, considered Outstanding. The trustee of such deposit shall have possession of any cash and Wisconsin Adams County, Wisconsin and the City of Lancaster, Wisconsin, as may be amended securities (other than book-entry securities) and may be the Trustee or any other trustee from time to time. authorized to act in such capacity. “Letter of Representations” means the Letter of Representations from the Issuer to DTC. “Issuer” means the Public Finance Authority, its successors and assigns. “Loan Agreement” means the Loan Agreement dated as of November 1, 2017 by and “Issuer Authorized Signatory” means any officer, director, or other person designated by between the Borrower and the Issuer and any amendments and supplements thereto made in resolution of the Board of Directors of the Issuer (whether such resolution is adopted in conformity with the requirements thereto and hereto. connection with the issuance of the Bonds or otherwise) or by the Issuer’s Bylaws as an “Authorized Signatory” empowered to, among other things, execute and deliver on behalf of the “Loan Payments” means any and all payments made by the Borrower pursuant to Issuer this Indenture, the other Issuer Documents and the Bonds; provided, that the Trustee has Section 5.01 of the Loan Agreement. been furnished with a certified copy of any such resolution of the Issuer and a certified specimen signature of such officer, director or other person. “Maximum Annual Debt Service” means, as of any date of calculation, the highest Annual Debt Service Requirements of the Borrower (excluding all or a portion of the final “Issuer Documents” means, with respect to a Series of Bonds, the Loan Agreement, this maturity payment for any Indebtedness in an amount equal to funds in a debt service reserve Indenture, the Tax Certificate, the Bond Purchase Agreement, and any other agreement, fund that are permitted and available to be applied to the payment of such final maturity at the

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time of such final maturity) with respect to all outstanding Indebtedness for any succeeding such Liens in the aggregate have no reasonable likelihood of causing a Material Adverse Fiscal Year. Effect;

“Member” means the parties to the Joint Exercise Agreement and any political (b) the liens created by the Loan Agreement, the Deed of Trust, the other subdivision that has been designated in the past, or from time to time in the future is designated, Borrower Documents or this Indenture; as a member of the Issuer pursuant to the Joint Exercise Agreement. (c) purchase money security interests with respect to any item of equipment “Moody’s” means Moody’s Investors Service. related to the School;

“Net Proceeds” means, when used with respect to any insurance payment or (d) utility, access, and other easements and rights-of-way, mineral rights and condemnation award, the gross proceeds thereof less the expenses (including attorneys’ fees) reservations, restrictions and exceptions which would not in the aggregate (i) materially incurred in the collection of such gross proceeds. interfere with or impair any present use of the Premises or any reasonably probable future use of the Premises, or (ii) materially reduce the value which would be reasonably “Outstanding” or “outstanding” means, when used with respect to the Bonds, as of any expected to be received for the Premises upon any sale (including any foreclosure of the particular time, all Bonds which have been duly authenticated and delivered by the Trustee under mortgage granted by the Deed of Trust); this Indenture, except: (e) landlord’s, warehouseman’s, carrier’s, worker’s, vendor’s, mechanic’s and (a) Bonds theretofore cancelled by the Trustee or delivered to the Trustee for materialmen’s Liens and similar Liens incurred in the ordinary course of business cancellation after purchase in the open market or because of payment at, or redemption remaining undischarged for not longer than 60 days from the filing thereof or being prior to, maturity; contested in good faith by appropriate proceedings effectively staying any action or proceeding to foreclose any such Lien; (b) Bonds for the payment or redemption of which cash funds (or securities to the extent permitted in Section 7.01 hereof) shall have been theretofore deposited with (f) judgment Liens against the Borrower so long as such judgment is being the Trustee (whether upon or prior to the maturity or redemption date of any such contested and execution thereon is stayed or while the period for responsive pleading has Bonds); provided that if such Bonds are to be redeemed prior to the maturity thereof, not lapsed; notice of such redemption shall have been given or arrangements satisfactory to the Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the (g) Liens in respect of judgments or awards that have become final and Trustee, shall have been filed with the Trustee; unappealable and remain undischarged for not longer than 60 days from the making thereof, to the extent that any such Lien does not constitute an Event of Default under (c) Bonds in lieu of which other Bonds have been authenticated under Section 10.01(a)(ix); Section 2.05, 2.06 or 2.10 hereof; (h) Liens in respect of pledges or deposits under worker’s compensation laws, (d) Bonds for which the conditions enumerated in Section 5.07 hereof have unemployment insurance or similar legislation and in respect of pledges or deposits to been met; and secure bids, tenders, contracts (other than contracts for the payment of money), leases or statutory obligations, or in connection with surety, appeal and similar bonds incidental to (e) Bonds owned by the Borrower. the conduct of litigation;

“Participants” means those broker-dealers, banks and other financial institutions from (i) rights reserved to or vested in any municipality or public authority by the time to time for which DTC holds Bonds as a securities depository. terms of any right, power, franchise, grant, license or permit, or provision of law, affecting the Premises, to (i) terminate such right, power, franchise, grant, license or “Permitted Encumbrances” means, as of any particular time, those items described on permit; provided that the exercise of such right would not materially impair the use of the Exhibit B attached to the Deed of Trust relating to the Series 2017 Bonds and any of the Premises or materially and adversely affect the value thereof; or (ii) purchase, condemn, following affecting the Premises, any Project or the Pledged Revenues: appropriate, or recapture, or designate a purchaser of, the Premises;

(a) Liens for taxes, assessments and other governmental charges due but not (j) rights reserved to or vested in any municipality or public authority to yet payable or being actively contested in good faith by appropriate proceedings control or regulate the Premises or to use the Premises in any manner, which rights do not effectively staying any action or proceeding to foreclose any such Lien; provided that all materially impair the use of the Premises or materially and adversely affect the value thereof;

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(k) Liens and any other restrictions, exceptions, leases, easements or “Project” means, with respect to the Series 2017 Bonds, the Project described in the Loan encumbrances which are existing on the date of initial issuance and delivery of the Agreement, and, as to any Series of Additional Bonds, the Project described in the related Series 2017 Bonds; provided that no such Lien (or the amount of Indebtedness secured amendment to the Loan Agreement. thereby), restriction, exception, lease, easement or encumbrance may be increased, extended, renewed or modified to apply to the Premises not subject to such Lien on such “Project Fund” means the fund by that name created pursuant to Section 3.02 herein and date, unless such Lien as so extended, renewed or modified or otherwise qualified as a includes the subaccounts contained therein. Permitted Encumbrance hereunder or is otherwise permitted pursuant to Section 8.13 of the Loan Agreement; “Promissory Note(s)” or “Note(s)” means the Series 2017 Promissory Notes and any Additional Promissory Notes. (l) Liens allowed to secure other additional Indebtedness pursuant to Section 8.13 of the Loan Agreement; “Qualified Institutional Buyer” means a qualified institutional buyer as defined in Rule 144A promulgated pursuant to the Securities Act of 1933, as amended. (m) restrictions imposed by donors to the Borrower upon the uses of gifts provided by such donors; “Rating Agency” means Fitch, Moody’s, S&P, or any other nationally recognized rating agency. (n) Liens arising by reason of an Irrevocable Deposit; “Rebate Analyst” means an independent certified public accountant, financial analyst or (o) Liens on the Premises and the Pledged Revenues (subordinate to the Deed bond counsel, or any firm of the foregoing, or financial institution, experienced in making the of Trust) to secure payment of Indebtedness subordinate to the obligations of the arbitrage and rebate calculations required pursuant to Section 148(f) of the Code, retained by the Borrower under Section 8.13 of the Loan Agreement; Borrower to facilitate compliance with Section 148(f) of the Code as it pertains to the Bonds.

(p) With respect to Premises acquired by the Borrower after the Bond Closing “Rebate Analyst Fee” means the fees and expenses of the Rebate Analyst. for the Series 2017 Bonds, any Lien on or any lease of the Premises existing on the date such Premises are acquired by the Borrower, whether by gift, grant bequest, or purchase; “Rebate Fund” means the Fund by that name created pursuant to Section 3.02 herein. and “Registered Owner” or “Owner” means the Person or Persons in whose name or names a (q) Liens in favor of the Government evidenced by the USDA Documents particular Bond is registered on the registration records maintained for that purpose pursuant to relating to the Government Loan Facility. Section 2.05 hereof.

“Person” includes an individual, association, corporation, partnership, limited liability “Regular Record Date” means the first day of the month of each Interest Payment Date company, joint venture or a government or an agency or a political subdivision thereof. (whether or not a Business Day).

“Pledged Revenues” means, to the extent permitted by law, all revenues, rentals, fees, “Regulations” means the temporary or final Income Tax Regulations applicable to the third-party payments, receipts, accounts, or other income of the Borrower, including the rights to Bonds issued pursuant to sections 141 through 150 of the Code or section 103 of the Internal receive such revenues (each subject to Permitted Encumbrances), all as calculated in accordance Revenue Code of 1954. Any reference to a section of the Regulations shall also refer to any with Generally Accepted Accounting Principles, including, without limitation, proceeds derived successor provision to such section hereafter promulgated by the Internal Revenue Service from insurance, condemnation proceeds, accounts, contract rights and other rights and assets, pursuant to sections 141 through 150 of the Code and applicable to the Tax-Exempt Bonds, whether now or hereafter owned, held or possessed by the Borrower; and all gifts, grants, including the Series 2017 Bonds. bequests, donations and contributions (including income and profits therefrom) to the extent permitted by the terms thereof and by law. “Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any Vice President, assistant Vice “Premises” means the “Premises” as defined in the Deed of Trust relating to the Series President, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee 2017 Bonds and any other property encumbered by any other Deed of Trust. who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of “Principal Payment Date” or “sinking fund payment date” means, as to a Series of such person’s knowledge of and familiarity with the particular subject and who shall have direct Additional Bonds, the Principal Payment Date or sinking fund payment date established for that responsibility for the administration of this Indenture. Series of Bonds in the related Supplemental Indenture and, as to the Series 2017 Bonds, means each [June 15], commencing [June 15, 2019].

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“Revenues” means, to the extent permitted by law, all payments received by the Trustee securities rating agency, any other nationally recognized securities rating agency designated by for the account of the Issuer pursuant to the Loan Agreement, the Account Control Agreement the Borrower by notice to the Issuer and the Trustee. and this Indenture. “State” means the State of Wisconsin. “Series” means a Series of Bonds issued pursuant to this Indenture. “Supplemental Indenture” means any indenture supplemental to this Indenture entered “Series Debt Service Reserve Fund Requirement” means, for the Series 2017 Bonds, an into by and between the Issuer and the Trustee in accordance with Article X hereof. amount equal to 100% of the Maximum Annual Debt Service of the Series 2017 Bonds. “Tax-Exempt Bonds” means those Bonds the interest on which, in the opinion of Bond “Series 2017 Bonds” means the Series 2017A Bonds and the Series 2017B Bonds. Counsel delivered at the time of issuance thereof, is excludable from gross income of the Beneficial Owner thereof for federal income tax purposes, including the Series 2017A Bonds. “Series 2017 Bonds Account” means the account by that name created pursuant to Section 3.02 herein. “Title Company” means the title company selected by the Borrower as grantor under a Deed of Trust and, with respect to the Series 2017 Bonds, means First American Title Insurance “Series 2017 Project Account” means the account by that name created pursuant to Company, or its successors, affiliates or assigns. Section 3.02 herein. “Trust Estate” means the property pledged, assigned and mortgaged to the Trustee “Series 2017 Promissory Notes” means the Series 2017A Promissory Note and the pursuant to the granting clauses hereof. Series 2017B Promissory Note. “Trustee” means U.S. Bank National Association, a national banking association, and its “Series 2017A Bonds” means the Public Finance Authority Education Revenue Bonds successors and assigns. (Uwharrie Charter Academy Project) Series 2017A, issued pursuant to Section 2.03 hereof and substantially in the form of Exhibit A, in the original principal amount of $[PRINCIPALA]. “Trustee’s Annual Fees” means the annual fee of the Trustee payable to the Trustee as Trustee, Registrar and Paying Agent under this Indenture; provided that such fee does not “Series 2017A Promissory Note” means the Series 2017A Promissory Note, executed by include amounts due, if any, for extraordinary services and expenses of the Trustee. the Borrower in the aggregate principal amount of $[PRINCIPALA] and made payable to the order of the Issuer, a form of which is attached to the Loan Agreement as Exhibit A thereto. “Trustee’s Expenses” means the reasonable expenses incurred by the Trustee under this Indenture, including reasonable counsel fees and expenses (including fees and expenses at trial “Series 2017B Bonds” means the Public Finance Authority Taxable Education Revenue or appellate proceedings), including amounts due, if any, for extraordinary services and expenses Bonds (Uwharrie Charter Academy Project) Series 2017B, issued pursuant to Section 2.03 of the Trustee. hereof and substantially in the form of Exhibit B, in the original principal amount of $[PRINCIPALB]. “Underwriter” means BB&T Capital Markets, a division of BB&T Securities, LLC.

“Series 2017B Promissory Note” means the Series 2017B Promissory Note, executed by “USDA Documents” means, collectively, the USDA Parity Agreement; that certain the Borrower in the aggregate principal amount of $[PRINCIPALB] and made payable to the Promissory Note, dated October 19, 2016, by the Borrower to the United States Department of order of the Issuer, a form of which is attached to the Loan Agreement as Exhibit B thereto. Agriculture; that certain Real Estate Deed of Trust for North Carolina, dated October 19, 2016, by and between the Borrower, William Kenney, as trustee thereunder, and the United States “Special Record Date” means a special record date, which shall be a Business Day, fixed Department of Agriculture; and that certain United States Department of Agriculture Rural to determine the names and addresses of owners for purposes of paying interest on a special Development Security Agreement, dated October 19, 2016, between the Rural Development and Interest Payment Date for the payment of defaulted interest, all as further provided in Section the Borrower. 2.03 hereof. “USDA Parity Agreement” means that certain Parity Agreement, dated as of “Sponsor” means the National League of Cities, the National Association of Counties, the [______, 2017], by and among the Government, the Trustee and the Borrower. Wisconsin Counties Association, the League of Wisconsin Municipalities, and any other Person that holds itself out, or is identified by the Issuer, as an organization sponsoring the Issuer. Section 1.02. Indenture To Constitute Contract. In consideration of the purchase and acceptance of any or all of the Bonds by those who shall own the same from time to time, the “S&P” means S&P Global Ratings, its successors and their assigns, or, if such provisions of this Indenture shall be part of the contract of the Issuer with the Registered Owners corporation shall be dissolved or liquidated or shall no longer perform the functions of a of the Bonds, and shall be deemed to be and shall constitute contracts among the Issuer, the

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Trustee and the Registered Owners from time to time of the Bonds. The pledge made in this INDEMNIFIED PARTY SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL Indenture and the provisions, covenants and agreements herein set forth to be performed by or on OF, PREMIUM, IF ANY, OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS behalf of the Issuer shall be for the equal benefit, protection and security of the Registered INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER. Owners of any and all of the Bonds except as otherwise provided in Article VII hereof or with respect to moneys otherwise held to redeem or pay particular Bonds hereunder. All of the NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, Bonds, regardless of the time or times of their issuance or maturity, shall be of equal rank PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS, OR ANY COSTS without preference, priority or distinction of any of the Bonds over any other thereof, except as INCIDENTAL THERETO, AGAINST ANY ISSUER INDEMNIFIED PARTY, UNDER ANY expressly provided in or pursuant to this Indenture. RULE OF LAW OR EQUITY, STATUTE, OR CONSTITUTION OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, AND ALL ARTICLE II SUCH LIABILITY OF ANY ISSUER INDEMNIFIED PARTY IS HEREBY EXPRESSLY WAIVED AND RELEASED AS A CONDITION OF AND CONSIDERATION FOR THE AUTHORIZATION, TERMS, EXECUTION AND ISSUANCE OF BONDS EXECUTION AND ISSUANCE OF THE SERIES 2017 BONDS.

Section 2.01. Authorized Amount of Bonds. No Bonds may be issued under this Section 2.03. Authorization of Series 2017 Bonds; Payment of Bonds. The Issuer Indenture except in accordance with this Article. The total principal amount of Series 2017A may issue, sell and deliver the Series 2017 Bonds for the purpose of providing for the financing Bonds that may be issued hereunder is hereby expressly limited to $[PRINCIPALA], except as and/or refinancing of the Project, upon the satisfaction of the conditions, and in the manner, provided in Sections 2.05, 2.06 and 2.10 herein. The total principal amount of Series 2017B provided for in this Indenture. Bonds that may be issued hereunder is hereby expressly limited to $[PRINCIPALB], except as provided in Sections 2.05, 2.06 and 2.10 herein. (a) There is hereby authorized to be issued hereunder and secured hereby an issue of bonds designated as “Public Finance Authority Education Revenue Bonds Section 2.02. All Bonds Equally and Ratably Secured by Trust Estate; Special (Uwharrie Charter Academy Project) Series 2017A.” There is hereby authorized to be Limited Obligation of Bonds and Pledges Securing the Same. Except as hereinafter provided, issued hereunder and secured hereby an issue of bonds designated as “Public Finance all Bonds issued under this Indenture and at any time Outstanding shall in all respects be equally Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) and ratably secured hereby, without preference, priority or distinction on account of the date or Series 2017B.” The Series 2017 Bonds shall be issuable as fully registered bonds in dates or the actual time or times of the issue or maturity of the Bonds, so that all Bonds at any Authorized Denominations and shall be numbered separately and lettered, if at all, in time issued and Outstanding hereunder shall have the same right, lien and preference under and such manner as set forth in the Issuer’s resolution required by Section 2.07(a). by virtue of this Indenture, and shall all be equally and ratably secured hereby. (b) The Series 2017 Bonds shall be dated as of the date of initial The Bonds have been issued pursuant to and in full compliance with the laws of the State, authentication and delivery thereof. The Series 2017 Bonds shall bear interest on the particularly Section 66.0304, and by authority of resolutions adopted by the Issuer’s governing basis of a 360-day year, consisting of twelve 30-day months, from their date until body. THE SERIES 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE payment of principal has been made or provided for, payable on each [June 15] and ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE, AND EXCEPT FROM SUCH [December 15], commencing [June 15, 2018], except that Series 2017 Bonds which are SOURCE, NONE OF THE ISSUER, ANY SPONSOR, ANY MEMBER, ANY ISSUER delivered upon transfer, exchange or other replacement shall bear interest from the most INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY recent Interest Payment Date to which interest has been paid or duly provided for, or if no THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE interest has been paid, from the date of the Bonds. The maximum interest rate to be SERIES 2017 BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, borne by the Series 2017 Bonds (including any “taxable,” “default,” or “penalty” rate) IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE shall not exceed 18% per annum. SERIES 2017 BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, The Series 2017A Bonds shall mature in the principal amounts, on the dates and ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY shall bear interest at the rates set forth below. THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR Maturity Date Principal Amount Interest Rate PAYMENT OF THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, [June 15, 20__] THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY [June 15, 20__] POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS [June 15, 20__] NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER

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Authorized Signatory, such signature or the facsimile thereof shall nevertheless be valid The Series 2017B Bonds shall mature in the principal amount, on the date and and sufficient for all purposes as if he or she had remained an Issuer Authorized shall bear interest at the rate set forth below. Signatory until authentication; and any Bond may be signed on behalf of the Issuer by such persons as are at the time of execution of such Bond an Issuer Authorized Signatory, Maturity Date Principal Amount Interest Rate even though at the date of this Indenture, such person was not a director or an officer.

[June 15, 20__] Section 2.05. Registration, Transfer and Exchange of Bonds; Persons Treated As Registered Owners. (c) The Series 2017 Bonds are subject to the sinking fund provisions of Section 5.03 hereof. The Series 2017 Bonds are otherwise subject to prior redemption as (a) The Issuer shall cause books for the registration and for the transfer of the herein set forth. The Series 2017A Bonds shall be substantially in the form and tenor set Bonds as provided in this Indenture to be kept by the Trustee. Upon surrender for forth in Exhibit A hereto with such appropriate variations, omissions and insertions as are transfer of any Bond at the designated corporate trust office of the Trustee duly endorsed permitted or required by this Indenture. The Series 2017B Bonds shall be substantially in for transfer or accompanied by an assignment, in form and with guarantee of signature the form and tenor set forth in Exhibit B hereto with such appropriate variations, satisfactory to the Trustee, duly executed by the Registered Owner or his attorney duly omissions and insertions as are permitted or required by this Indenture. authorized in writing, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds for a like Series (d) The principal of and premium, if any, on the Bonds shall be payable in and aggregate principal amount of the same maturity. Notwithstanding any other lawful money of the United States of America at the designated corporate trust office of provision hereof, including Section 2.05(b) below, the Trustee shall not be responsible the Trustee or at the designated office of its successor in trust. Payment of principal of for ensuring that any transfer restrictions binding on a beneficial owner other than a and any premium on the Bonds shall be payable upon presentation and surrender of the Registered Owner of such Bond have been complied with in connection with the transfer Bonds at the designated corporate trust office of the Trustee. Payment of interest on any of Bonds. Bond shall be made to the Registered Owner thereof by check or draft mailed on each Interest Payment Date by the Trustee to the Registered Owner at his or her address as it (b) Notwithstanding any other provision hereof, each initial Beneficial Owner last appears on the registration records kept by the Trustee at the close of business on the of the Bonds shall be either (i) a “Qualified Institutional Buyer” (as defined in Rule 144A Regular Record Date for such Interest Payment Date (except that the Registered Owners under the Securities Act of 1933, as amended); or (ii) an “accredited investor” (as defined of at least $500,000 in aggregate principal amount of Bonds Outstanding may, by written in Rule 501 of Regulation D under the Securities Act of 1933, as amended) that, in the request received at least 10 Business Days prior to the Regular Record Date, receive case of an accredited investor who is not a Qualified Institutional Buyer, has provided an payment of interest by wire transfer at the address specified in such request, which “Investor Letter” substantially in the form of Exhibit C-1 or C-2 hereto, as applicable, or address must be in the United States of America), but any such interest not so timely paid such other form as may be approved by the Issuer, to the Issuer and the Trustee; or duly provided for shall cease to be payable to the Registered Owner thereof at the thereafter, neither the Bonds nor any beneficial ownership interest therein may be close of business on the Regular Record Date and shall be payable to the Registered transferred by the Beneficial Owner thereof except in Authorized Denominations to a Owner thereof at the close of business on a Special Record Date for the payment of any Beneficial Owner that is a Qualified Institutional Buyer or an accredited investor. Any such defaulted interest. Such Special Record Date shall be fixed by the Trustee whenever accredited investor who is not a Qualified Institutional Buyer may only purchase and moneys become available for payment of the defaulted interest, and notice of such hold a minimum $25,000 in principal amount of Bonds regardless of any lower minimum Special Record Date shall be given to the Registered Owners of the Bonds not less than denomination provided herein. In addition, any initial purchaser who is a Qualified 10 days prior thereto by first-class mail to each such owner as shown on the registration Institutional Buyer and any subsequent transferee of the Bonds will be deemed to records on the date selected by the Trustee stating the date of the Special Record Date represent in connection with its acquisition of the Bonds that: (i) it is able to evaluate and and the date fixed for the payment of such defaulted interest. All such payments shall be understands the risks and the merits of investing in the Bonds (and is able to bear the made in lawful money of the United States of America. risks of such investment for an indefinite time), (ii) it is capable of and has made its own investigation of the Borrower, the Facilities and the Project in connection with its Section 2.04. Execution of Bonds. decision to purchase the Bonds, (iii) it is a Qualified Institutional Buyer or an accredited investor and (iv) it will only transfer the Bonds in Authorized Denominations to a person (a) The Bonds shall be executed in the name and on behalf of the Issuer by it reasonably believes is a Qualified Institutional Buyer or accredited investor that the manual or facsimile signature of an Issuer Authorized Signatory. purchases for its own account or for the account of another Qualified Institutional Buyer or accredited investor in accordance with applicable securities laws or exemptions (b) In case any Issuer Authorized Signatory whose signature or whose therefrom. The Issuer may remove the foregoing restrictions without notice to or consent facsimile or electronic signature shall appear on the Bonds shall cease to be an Issuer of any Beneficial Owner. At such time as the Borrower shall provide to the Issuer and

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the Trustee written evidence to the effect that each Rating Agency then rating the Bonds mutilation of any Bond and, in the case of a lost, stolen or destroyed Bond, of indemnity have rated the Bonds “BBB-” or equivalent, or higher (without regard for gradation satisfactory to them, and upon surrender and cancellation of the Bond, if mutilated, (a) the Issuer within a rating category and without regard for credit enhancement unless such credit shall execute, and the Trustee shall authenticate and deliver, a new Bond of the same Series, enhancement extends through the final maturity date of the Bonds), this Section 2.05(b) date, maturity and Authorized Denomination in lieu of such lost, stolen, destroyed or mutilated shall be of no further force or effect and the Authorized Denominations of the Bonds Bond; or (b) if such lost, stolen, destroyed or mutilated Bond shall have matured or have been shall be changed (if necessary) to denominations of $5,000 or any integral multiple called for redemption, in lieu of executing and delivering a new Bond as aforesaid, the Trustee thereof, in each case, notwithstanding whether at a future time the Bonds are no longer may pay such Bond. Any such new Bond shall bear a number not contemporaneously rated in such rating category. The Trustee shall not be responsible for determining that Outstanding. The applicant for any such new Bond may be required to pay all expenses and each Beneficial Owner meets the specifications set forth in this Section 2.05(b). charges of the Issuer and of the Trustee in connection with the issuance of such Bond. All Bonds shall be held and owned upon the express condition that, to the extent permitted by law, the (c) Bonds may be exchanged at the designated corporate trust office of the foregoing conditions are exclusive with respect to the replacement and payment of mutilated, Trustee for a like Series and aggregate principal amount of Bonds of the same maturity in destroyed, lost or stolen Bonds, negotiable instruments or other securities. Authorized Denominations. The Issuer shall execute and the Trustee shall authenticate and deliver Bonds which the Registered Owner making the exchange is entitled to Section 2.07. Delivery of Series 2017 Bonds. Upon the execution and delivery of this receive, bearing numbers not contemporaneously Outstanding. The execution by the Indenture, the Issuer shall execute and deliver to the Trustee and the Trustee shall authenticate Issuer of any Bond of any Authorized Denomination shall constitute full and due the Series 2017 Bonds and deliver them to the initial purchaser thereof as directed by the Issuer authorization of such denomination and the Trustee shall thereby be authorized to and as hereinafter in this Section provided. authenticate and deliver such Bond. Prior to the delivery by the Trustee of any of the Series 2017 Bonds, there shall have been (d) The Trustee shall not be required to transfer or exchange any Bond during filed with or delivered to the Trustee the following: any period beginning on a Regular Record Date or Special Record Date with respect to such Bond and ending at the close of business on the Business Day immediately (a) a resolution duly adopted by the Issuer, authorizing the issuance of the preceding the next Interest Payment Date or Principal Payment Date, as applicable. The Series 2017 Bonds and the execution and delivery of the Loan Agreement, the Bond Trustee shall not be required to transfer or exchange any Bond subject to redemption Purchase Agreement related to the Series 2017 Bonds and this Indenture; during the period of five days before the mailing of notice of redemption as herein provided; except that Bonds not subject to mandatory sinking fund redemption in (b) a duly executed copy of this Indenture, the Loan Agreement, the Tax accordance with Section 5.03 hereof with respect to the Series 2017 Bonds and in Certificate, the Account Control Agreement, the Deed of Trust and the USDA Parity accordance with the related Supplemental Indenture with respect to any Additional Bonds Agreement; may be transferred or exchanged during such period in the event of a mandatory sinking fund redemption. After the giving of such notice the Trustee shall not be required to (c) the Series 2017 Promissory Notes duly executed by the Borrower and duly transfer or exchange any Bond, which Bond or portion thereof has been called for endorsed by the Issuer to the order of the Trustee without recourse or warranty; redemption. (d) the written order of the Issuer as to the delivery of the Series 2017 Bonds, (e) As to any Bond, the person in whose name the same shall be registered signed by an Issuer Authorized Signatory; shall be deemed and regarded as the absolute owner thereof for all purposes, except to the (e) an opinion of Bond Counsel substantially to the effect that the Series 2017 extent otherwise provided herein with respect to Regular Record Dates and Special Bonds constitute legal, valid and binding obligations of the Issuer and that the interest on Record Dates for the payment of interest, and payment of either principal or interest on the Series 2017A Bonds will be excluded from gross income for federal income tax any Bond shall be made only to or upon the written order of the Registered Owner purposes, in form and substance acceptable to the Issuer; thereof or his legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums paid. (f) a binding commitment to issue a lender’s policy of title insurance as required by Section 4.08 of the Loan Agreement; (f) The Trustee shall require the payment by any Registered Owner requesting exchange or transfer of any tax or other generally imposed governmental (g) Opinion of Counsel with respect to the Borrower in form and substance charge required to be paid with respect to such exchange or transfer. acceptable to the Issuer, the Trustee, the Underwriter and Bond Counsel, to the effect that (i) the Borrower is a “501(c)(3) organization” within the meaning of Section 145 of the Section 2.06. Lost, Stolen, Destroyed and Mutilated Bonds. Upon receipt by the Code, and not a private foundation within the meaning of Section 509(a) of the Code; and Trustee of evidence satisfactory to it of the ownership of and the loss, theft, destruction or (ii) the Loan Agreement, the Note and the Deed of Trust have been duly authorized,

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executed and delivered by the Borrower and are enforceable against the Borrower, so exchanged the temporary Bonds shall be entitled to the same benefits under this Indenture as subject to bankruptcy and equitable principles; definitive Bonds.

(h) Internal Revenue Service form 8038 completed by the Issuer with respect Section 2.11. Additional Bonds. to the Series 2017A Bonds together with a certificate of the Borrower with respect to the information contained therein; (a) The Issuer may (but shall not be obligated to) issue Additional Bonds from time to time only with respect to the Project, pursuant to the terms and conditions of this (i) investor letter(s) regarding the Series 2017 Bonds substantially in the form Indenture. attached hereto as Exhibits C-1 and C-2, as applicable, or such other form as may be approved by the Issuer, acceptable to the Issuer and executed by each purchaser of the (b) Any Additional Bonds shall, to the extent provided for herein and subject Series 2017 Bonds that is an accredited investor but not a Qualified Institutional Buyer; to the terms of the USDA Documents, be on a parity with the Series 2017 Bonds and any and Additional Bonds theretofore or thereafter issued and Outstanding as to the assignment to the Trustee of the Issuer’s right, title and interest in the Trust Estate for the payment of (j) such other documents, certificates (including certificates issued by public debt service on the Bonds; provided, that nothing herein shall prevent the payment of officials) and opinions of counsel as the Issuer, the Underwriter, the Trustee or Bond debt service on any series of Additional Bonds from (i) being otherwise secured and Counsel may reasonably request. protected from sources or by property or instruments not applicable to the Series 2017 Bonds and any one or more Series of Additional Bonds, or (ii) not being secured and Section 2.08. Authentication Certificate. The authentication certificate upon each of protected from sources or by property or instruments not applicable to the Series 2017 the Series 2017 Bonds shall be substantially in the form appended to the form of the Series Bonds and any one or more Series of Additional Bonds. 2017A Bonds and the Series 2017B Bonds attached hereto as Exhibits A and B, respectively. No Bond shall be secured hereby or entitled to the benefit hereof, or shall be valid or obligatory for (c) Before the Trustee shall authenticate and deliver any Additional Bonds, any purpose, unless the certificate of authentication, substantially in such form, has been duly the Trustee shall receive the following items: executed by the Trustee; and such certificate of the Trustee upon any Bond shall be conclusive evidence and the only competent evidence that such Bond has been authenticated and delivered (i) unless the Trustee is provided with a letter from the Rating Agency hereunder. The certificate of authentication shall be deemed to have been duly executed if then rating the Series 2017 Bonds that upon issuance of the Additional Bonds the manually signed by an authorized signatory of the Trustee, but it shall not be necessary that the rating on the Outstanding Bonds (including the Additional Bonds) will not be same authorized signatory sign the certificate of authentication on all of the Bonds issued lower than an investment grade rating, an investor letter, in form satisfactory to hereunder. the Issuer, from each of the purchasers that is not a Qualified Institutional Buyer of the Additional Bonds as may be required by the Issuer; Section 2.09. Cancellation and Destruction of Bonds. Whenever any Outstanding Bonds shall be delivered to the Trustee for the cancellation thereof pursuant to this Indenture, (ii) duly executed counterparts of (A) the amendment to the Loan upon payment of the principal amount thereof or for replacement pursuant to Section 2.06 Agreement relating to the Project to be financed or refinanced from the proceeds hereof, such Bonds shall be promptly cancelled and destroyed by the Trustee and evidence of of the Additional Bonds then to be issued and which amendment provides for such destruction shall be furnished by the Trustee to the Issuer and the Borrower, if requested. payments sufficient to pay the debt service charges on the related Additional Bonds, and (B) the supplement to this Indenture providing for the issuance of and Section 2.10. Temporary Bonds. Pending the preparation of definitive Bonds, the the terms and conditions of the Additional Bonds; Issuer may execute and the Trustee shall authenticate and deliver temporary Bonds. Temporary Bonds shall be issuable as registered Bonds without coupons, of any Authorized Denomination, (iii) one or more Additional Promissory Notes in an aggregate principal and substantially in the form of the definitive Bonds but with such omissions, insertions and amount equal to the aggregate principal amount of the related Additional Bonds variations as may be appropriate for temporary Bonds, all as may be determined by the Issuer. and duly endorsed by the Issuer to the order of the Trustee without recourse or Every temporary Bond shall be executed by the Issuer and be authenticated by the Trustee upon warranty; the same conditions and in substantially the same manner, and with like effect, as the definitive Bonds. As promptly as practicable the Issuer shall execute and shall furnish definitive Bonds (iv) a written order of the Issuer as to the delivery of the Additional and thereupon temporary Bonds may be surrendered in exchange therefor without charge at the Bonds, signed by an Issuer Authorized Signatory; designated corporate trust office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds a like aggregate principal amount of definitive Bonds. Until (v) a copy of the resolution duly adopted by the Issuer authorizing (A) the execution and delivery of a bond purchase agreement, if any, with the underwriter, if any, of such Additional Bonds, the amendment to the Loan

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Agreement and supplement to this Indenture, each relating to the Additional (if there is only one such policy) or increases the amount of all such policies in the Bonds; and (B) the issuance of the Additional Bonds; aggregate (if there is more than one such policy) to an amount equal to the principal amount of all Bonds then Outstanding; and (C) continues to insure that (vi) an opinion of Bond Counsel: (A) to the effect that the Additional such Deed of Trust, as amended, is a first priority Lien on New Facility described Bonds to be delivered will be valid and legal special obligations of the Issuer in therein, subject to Permitted Encumbrances; and accordance with their terms and will be secured hereunder equally and on a parity (except as otherwise permitted herein) with all other Bonds at the time (xi) such other documents, certificates (including certificates issued by outstanding hereunder as to the assignment to the Trustee of the Trust Estate; and public officials) and opinions of counsel as the Issuer, the Underwriter, the (B) the issuance of the Additional Bonds will not result in the interest of any Trustee or Bond Counsel may reasonably request. Outstanding Bonds that are Tax-Exempt Bonds becoming included in gross income for federal income tax purposes and that the issuance of the Additional (d) When (i) the documents listed above have been received by the Trustee; Bonds will not result in the loss of exemption from the registration requirements and (ii) the Additional Bonds have been executed and authenticated, the Trustee shall under the Securities Act of 1933, as amended, of the Tax-Exempt Bonds and this deliver the Additional Bonds to or on the order of the underwriter of such Additional Indenture; Bonds, but only upon payment to the Trustee of the specified amount (including, without limitation, any accrued interest) set forth in the order to which reference is made in (vii) a written opinion of counsel to the Borrower, to the effect that the Section 2.11(c)(iv) above. Satisfaction of the requirements set forth in this Section shall Loan Agreement or the amendment to the Loan Agreement, the Deed of Trust or be conclusively evidenced by the delivery of such Additional Bonds by the Issuer and the the amendment to the Deed of Trust and Additional Promissory Notes have been delivery of the opinion of Bond Counsel referred to in Section 2.11(c)(vi). duly authorized, executed and delivered by the Borrower, and that the Loan Agreement or the amendment to the Loan Agreement, the Deed of Trust or the Section 2.12. Book-Entry System. amendment to the Deed of Trust and Additional Promissory Notes constitute legal, valid and binding obligations of the Borrower, enforceable in accordance (a) Notwithstanding any other provision hereof, each Series of Bonds shall be with their respective terms, subject to exceptions reasonably satisfactory to the initially issued in the form of a separate single certificated fully registered Bond for each Issuer and the Trustee for bankruptcy, insolvency and similar laws and the of the maturities of that Series of Bonds. Upon initial issuance, the ownership of each application of equitable principles; Bond shall be registered in the registration records kept by the Trustee in the name of Cede & Co., as nominee of DTC. Except as provided in Section 2.12(d) hereof, all of the (viii) evidence satisfactory to the Trustee that on delivery of the Outstanding Bonds shall be registered in the registration records kept by the Trustee in Additional Bonds then to be delivered there will be or has been paid into or the name of Cede & Co., as nominee of DTC. provided for the Debt Service Reserve Fund any amounts required by this Indenture or the supplement to this Indenture relating to such Additional Bonds; (b) With respect to Bonds registered in the registration records kept by the Trustee in the name of Cede & Co., as nominee of DTC, the Issuer and the Trustee shall (ix) the Trustee has received a certification from Bond Counsel that the have no responsibility or obligation to any Participant or to any person on behalf of issuance of such Additional Bonds complies with the requirements of Section which a Participant holds an interest in the Bonds. Without limiting the immediately 8.13 of the Loan Agreement; preceding sentence, none of the Issuer, the Borrower, or the Trustee shall have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede (x) if required by law to secure future advances or if requested by the & Co. or any Participant with respect to any ownership interest in the Bonds; (ii) the Trustee, (A) a modification or amendment to the Deed of Trust, in form and delivery to any Participant or any other person, other than a Registered Owner, as shown substance satisfactory to the Trustee, describing the terms of issuance of such in the registration records kept by the Trustee, of any notice with respect to the Bonds, Additional Bonds and increasing the present amount of Bonds secured by such including any notice of redemption; or (iii) the payment to any Participant or any other Deed of Trust, and such amendment shall be recorded with the appropriate person, other than a Registered Owner, as shown in the registration records kept by the governmental authority; and (B) an endorsement, meeting the requirements set Trustee, of any amount with respect to principal of, premium, if any, or interest on the forth below, to the mortgagee title insurance policy issued to the Trustee insuring Bonds. The Issuer, the Borrower and the Trustee may treat and consider the Person in such modified Deed of Trust (or if more than one mortgagee title insurance whose name each Bond is registered in the registration records kept by the Trustee as the policy, together with tie-in endorsements, has been issued to the Trustee insuring absolute owner of such Bond for the purpose of payment of principal, premium and such Deed of Trust, an endorsement to each such policy) that (1) amends the interest with respect to such Bond, for the purpose of giving notices of redemption and effective date and time of such policy to be the date and time of the recording of other matters with respect to such Bond, for the purpose of registering transfers with the amendment to such Deed of Trust; and (2) increases the amount of such policy respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all

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principal of, premium, if any, and interest on the Bonds only to or upon the order of the Registered Owners transferring or exchanging Bonds shall designate, in respective Registered Owners, as shown in the registration records kept by the Trustee, or accordance with the provisions of this Indenture. their respective attorneys duly authorized in writing, as provided in Section 2.05 hereof, and all such payments shall be valid and effective to fully satisfy and discharge the (e) Notwithstanding any other provision of this Indenture to the contrary, so obligations with respect to payment of principal of, premium, if any, and interest on the long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all Bonds to the extent of the sum or sums so paid. No Person other than a Registered payments with respect to principal of, premium, if any, and interest on such Bond and all Owner, as shown in the registration records kept by the Trustee, shall receive a notices with respect to such Bond shall be made and given, respectively, in the manner certificated Bond evidencing the obligation to make payments of principal, premium, if provided in the Letter of Representations. any, and interest pursuant to this Indenture. Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place ARTICLE III of Cede & Co., and subject to the provisions herein with respect to Regular Record Dates and Special Record Dates, the words “Cede & Co.” in this Indenture shall refer to such REVENUES AND FUNDS new nominee of DTC. Section 3.01. Pledge of Trust Estate. Subject only to the rights of the Issuer to apply (c) The Trustee shall take all action necessary for all representations of the amounts under the provisions of this Article, a pledge and assignment of the Trust Estate to the Issuer in the Letter of Representations with respect to the paying agents and the bond extent provided herein is hereby made, and the same is pledged and assigned to secure the registrar, respectively, to at all times to be complied with. payment of the principal of, premium, if any, and interest on the Bonds. The pledge and assignment hereby made shall be valid and binding from and after the time of the delivery by the (d) (i) DTC may determine to discontinue providing its services with Trustee of the first Bonds authenticated and delivered under this Indenture. The security so respect to the Bonds at any time by giving notice to the Issuer, the Borrower and pledged and any assignment then or thereafter received by the Issuer shall immediately be the Trustee and discharging its responsibilities with respect thereto under subject to the lien of such pledge and assignment and the obligation to perform the contractual applicable law. provisions hereby made shall have priority over any or all other obligations and liabilities of the Issuer with respect to the Trust Estate and the lien of such pledge and assignment shall be valid (ii) The Trustee, in its sole discretion and without the consent of any and binding against the Issuer, purchasers thereof, and creditors of the Issuer irrespective of other person, may terminate the services of DTC with respect to the Bonds if the whether such parties have notice thereof and without the need for any physical delivery, Trustee determines that: recordation, filing, or further act.

(A) DTC is unable to discharge its responsibilities with respect Section 3.02. Establishment of Funds; Closing Deposits and Disbursements. to the Bonds; or (a) The Issuer hereby establishes and creates the following funds, which shall (B) a continuation of the requirement that all of the be special trust funds held by the Trustee: Outstanding Bonds be registered in the registration records kept by the Trustee in the name of Cede & Co. or any other nominee of DTC, is not in (i) Bond Fund, including a Capitalized Interest Account therein; the best interest of the Beneficial Owners of the Bonds. (ii) Debt Service Reserve Fund, including a Series 2017 Bonds (iii) Upon the termination of the services of DTC with respect to the Account therein; Bonds pursuant to Section 2.12(d)(ii)(B) hereof, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to (iii) Project Fund, including the Series 2017 Project Account therein; Section 2.12(d)(i) or (d)(ii)(A) hereof after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found (iv) Cost of Issuance Fund; and which, in the opinion of the Trustee, is willing and able to undertake such (v) Rebate Fund. functions upon reasonable and customary terms, the Trustee is obligated to deliver Bond certificates at the expense of the Beneficial Owners of the Bonds, as (b) [On the date of the Bond Closing for the Series 2017 Bonds, the following described in this Indenture, and the Bonds shall no longer be restricted to being amounts shall be deposited to the following Funds: (i) from Series 2017A Bond Proceeds, registered in the registration records kept by the Trustee in the name of Cede & $[______] (representing $[PRINCIPALA] principal amount of the Series 2017A Co. as nominee of DTC, but may be registered in whatever name or names Bonds [less/plus original issue discount/premium] of $[______] and less underwriter’s discount of $[______]), $[______] to the Series 2017 Bonds

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Account of the Debt Service Reserve Fund, $[______] to the Series 2017 Project Section 3.06. Payments Into the Debt Service Reserve Fund. With respect to each Account of the Project Fund, $[______] to the Capitalized Interest Account and Series of Bonds, there shall be established in the Debt Service Reserve Fund an account related $[______] to the Cost of Issuance Fund; and (ii) from Series 2017B Bond Proceeds, to such Series of Bonds. The amounts in such accounts shall secure only the Series of Bonds $[______] (representing $[PRINCIPALB] principal amount of the Series 2017B related to such account. With respect to the Series 2017 Bonds (which shall be treated as one Bonds less underwriter’s discount of $[______]), $[______] to the Series 2017 Series for this purpose), there shall be deposited in the account of the Debt Service Reserve Fund Project Account of the Project Fund, $[______] to the Series 2017 Bonds Account of related to the Series 2017 Bonds an amount equal to the Series Debt Service Reserve Fund the Debt Service Reserve Fund and $[______] to the Cost of Issuance Fund.] Requirement for the Series 2017 Bonds. Upon the issuance of each Series of Additional Bonds, there shall be deposited into the respective account of the Debt Service Reserve Fund, an amount Section 3.03. Payments Into the Bond Fund. With respect to each Series of Additional specified in the related Supplemental Indenture equal to the related Series Debt Service Reserve Bonds, there shall be deposited into the Bond Fund on the date of the Bond Closing of a Series of Fund Requirement. There shall also be deposited into the Debt Service Reserve Fund (a) all Additional Bonds, accrued interest on such Series of Additional Bonds and an amount to pay moneys transferred to the Debt Service Reserve Fund from the Bond Fund, (b) all other moneys capitalized interest, if any, all as specified in the Supplemental Indenture related to such Series of required to be deposited therein pursuant to the Loan Agreement or this Indenture, and (c) all Additional Bonds. There shall be deposited into the Bond Fund as and when received (a) all other moneys received by the Trustee when accompanied by directions from an Authorized moneys received from the Borrower pursuant to Section 5.01(a) of the Loan Agreement; (b) all Representative of the Borrower not inconsistent with the Loan Agreement or this Indenture that moneys transferred to the Bond Fund pursuant to Section 3.07 or 6.01 hereof; (c) all other such moneys are to be paid into the Debt Service Reserve Fund. In the event amounts on deposit moneys deposited into the Bond Fund pursuant to the Loan Agreement or this Indenture; and (d) in any account of the Debt Service Reserve Fund are less than the applicable Series Debt Service all other moneys received by the Trustee when accompanied by directions from an Authorized Reserve Fund Requirement, the Trustee shall notify by written notice, within five Business Days Representative of the Borrower, not inconsistent with the Loan Agreement or this Indenture, that of when a Responsible Officer of the Trustee has knowledge of such deficiency, the Issuer and such moneys are to be paid into the Bond Fund. There also will be retained in the Bond Fund, the Borrower of such deficiency and that such deficiency must be replenished in accordance with interest and other income received on investment of moneys in the Bond Fund as provided in Section 5.01 of the Loan Agreement and Section 3.07 herein. Interest and other income received Section 6.01 hereof. on investments of moneys in the Debt Service Reserve Fund shall be transferred to the Bond Fund so long as the Debt Service Reserve Fund is funded to an amount equal to the Debt Service Section 3.04. Use of Moneys in the Bond Fund. Except as provided in this Section and Reserve Fund Requirement for the Series 2017 Bonds. in Sections 3.19, 3.20, 6.01 and 8.05 hereof, moneys in the Bond Fund shall be used solely for the payment of the principal of, premium, if any, and interest on the Bonds on each Principal Section 3.07. Use of Moneys in the Debt Service Reserve Fund. Payment Date and each Interest Payment Date, respectively. Moneys in the Capitalized Interest Account shall be used solely for the payment of interest on the appropriate Series of Bonds on (a) Except as provided in Section 3.19 hereof, moneys in the accounts of the each Interest Payment Date. Debt Service Reserve Fund shall be used solely for the payment of the principal of, premium, if any, and interest on the Series of Bonds (on a pro rata basis with respect to Section 3.05. Custody of the Bond Fund. the Series 2017A Bonds and the Series 2017B Bonds) related to such accounts in the event moneys in the Bond Fund are insufficient to make such payments when due, (a) The Bond Fund shall be in the custody of the Trustee, and the Issuer whether on an Interest Payment Date, sinking fund redemption date, maturity date or authorizes and directs the Trustee to withdraw sufficient funds from the Bond Fund to otherwise. Upon the occurrence of an Event of Default hereunder and the exercise by the pay the principal of, premium, if any, and interest on the Bonds as the same become due Trustee of the remedy specified in Section 10.02(a) of the Loan Agreement and Section and payable, and to withdraw sufficient funds from the Bond Fund for other purposes 8.02(a) hereof, any moneys in the Debt Service Reserve Fund shall be transferred by the authorized in Section 3.04 hereof. Trustee to the Bond Fund. On the final maturity date of a Series of Bonds, any moneys in the account of the Debt Service Reserve Fund related to such Series of Bonds shall be (b) Amounts on deposit in the Bond Fund shall be: (i) held in trust solely for used to pay the principal of and interest on such Bonds on such final maturity date. In the the benefit of the Registered Owners and the Beneficial Owners of the Bonds, and event of the redemption of a Series of Bonds in whole, any moneys in the account of the (ii) applied only in accordance with the provisions of this Indenture. The Borrower shall Debt Service Reserve Fund related to such Series of Bonds shall be transferred to the have no legal, equitable nor reversionary interest in, or right to, such amounts. In the Bond Fund and applied to the payment of the principal of and premium, if any, on such event of any Act of Bankruptcy by the Borrower, the Borrower has, in the Loan Bonds. In the event of a prepayment in whole of amounts due under the Loan Agreement Agreement, waived any right it might otherwise have to assert, claim or contend that any and the defeasance pursuant to Section 7.01 herein of all of the Outstanding Bonds of the portion of the Bond Fund is property of its bankruptcy estate as defined by 11 U.S.C. § related Series, any moneys in the account of the Debt Service Reserve Fund related to 541. such Series of Bonds shall be applied to the defeasance of such Series of Bonds. The Trustee shall value the Investment Obligations in the accounts of the Debt Service Reserve Fund semiannually on [June 15] and [December 15] of each year at the lesser of

30 31 4836-5936-5195.17 D-9 4836-5936-5195.17

their market value or cost. If on any valuation date the amount in an account of the Debt the Loan Agreement and the related Supplemental Indenture and to issue its checks or wire Service Reserve Fund (determined pursuant to this Section) is greater than the related transfers therefor against the related subaccount of the Project Fund; provided that the Trustee Series Debt Service Reserve Fund Requirement, such excess shall be transferred by the will not disburse any amounts from the Project Fund (except for costs that are not Costs of the Trustee to the Bond Fund in accordance with Section 3.06 hereof. If on any valuation Project) until it has received the items set forth in Section 4.02 of the Loan Agreement. The date the amount in an account of the Debt Service Reserve Fund (determined pursuant to Trustee shall keep and maintain adequate records pertaining to the Project Fund and all this Section) is less than the related Series Debt Service Reserve Fund Requirement and disbursements therefrom and shall provide monthly statements of transactions to the Borrower. the deficiency is caused solely by a decreased value of the Investment Obligations therein The Trustee shall have no duty to confirm that the use of any disbursed funds by the Borrower and not due to a transfer to cure a shortfall in the Bond Fund, the Borrower has agreed complies with the provisions of this Indenture or the Loan Agreement. pursuant to Section 5.01 of the Loan Agreement that it shall pay to the Trustee, for deposit into the Series Debt Service Reserve Fund, an amount equal to the amount by Section 3.10. Completion of the Project. The completion of the Construction Project which the account of Debt Service Reserve Fund amount is less than the Series Debt and payment or provision made for payment of the full cost of such Construction Project shall be Service Reserve Fund Requirement with the next monthly deposit following that evidenced by the filing with the Trustee the certificate required by the provisions of Section 4.03 valuation date. If the amount in the account of the Debt Service Reserve Fund is less of the Loan Agreement. Any balance remaining in the related subaccount of the Project Fund on than the Series Debt Service Reserve Fund Requirement and the deficiency is caused by a the date such certificate is received shall be used in accordance with Section 4.03 of the Loan transfer to cure a shortfall in the Bond Fund resulting from the failure of the Borrower to Agreement. make the payments due on its Promissory Note(s), the Borrower has agreed pursuant to Section 5.01 of the Loan Agreement to pay to the Trustee all amounts transferred to the Section 3.11. Custody of the Project Fund. The Project Fund shall be in the custody of Bond Fund to make up for any amounts not paid on the Promissory Note(s) in not more the Trustee but in the name of the Issuer, and the Issuer authorizes and directs the Trustee to than six substantially equal monthly installments beginning in the month following such withdraw sufficient funds from the appropriate subaccount of the Project Fund for Costs of the deficiency, and provided that no such installment shall be less than $5,000. Project as requisitioned by the Borrower in the form attached to the Loan Agreement as Exhibit C thereto, which authorization and direction the Trustee hereby accepts. (b) Amounts on deposit in accounts of the Debt Service Reserve Fund shall be: (i) held in trust solely for the benefit of the Registered Owners and the Beneficial Notwithstanding the foregoing, on the date of the Bond Closing, moneys held in the Owners of the related Series of Bonds, and (ii) applied only in accordance with the Project Fund representing proceeds of the Series 2017 Bonds shall initially be disbursed on the provisions of this Indenture. The Borrower has no legal, equitable or reversionary date of the Bond Closing by the Trustee as provided in Exhibit D attached hereto (including as interest in, or right to, such amounts. In the event of any Act of Bankruptcy, the set forth in the closing memorandum attached to such Exhibit D) without need for further Borrower in no event shall assert, claim or contend that any portion of the Debt Service requisition. Reserve Fund is property of its bankruptcy estate as defined by 11 U.S.C. § 541. Section 3.12. Payments Into and Use of Moneys in the Cost of Issuance Fund. Section 3.08. Custody of the Debt Service Reserve Fund. The Debt Service Reserve Fund shall be in the custody of the Trustee but in the name of the Issuer, and the Issuer hereby (a) With respect to the Series 2017 Bonds, there shall be deposited into the authorizes and directs the Trustee to withdraw sufficient funds from the applicable accounts of Cost of Issuance Fund on the Bond Closing for the Series 2017 Bonds the amounts set the Debt Service Reserve Fund to pay the principal of, premium, if any, and interest on the Series forth in Section 3.02(b) hereof. With respect to each Series of Additional Bonds, there 2017 Bonds and for the purposes described in Section 3.19 hereof, which authorization and shall be deposited into the Cost of Issuance Fund that amount as provided in the related direction the Trustee hereby accepts. In the event there shall be a deficiency in the Bond Fund Supplemental Indenture. Such moneys shall be expended to pay issuance expenses in on any payment date for the Series 2017 Bonds because of a default by a Borrower under the accordance with a written direction from the Borrower. Loan Agreement, the Trustee shall promptly make up such deficiency from the Debt Service (b) The Trustee shall keep and maintain adequate records pertaining to the Reserve Fund. Cost of Issuance Fund and all payments therefrom, which shall be open to inspection by Section 3.09. Payments Into and Use of Moneys in the Project Fund; the Borrower, the Issuer or their duly authorized agents during normal business hours of Disbursements. With respect to the Series 2017 Bonds, there shall be deposited into the Series the Trustee. 2017 Project Account of the Project Fund from the proceeds of the Series 2017 Bonds, an Section 3.13. Termination of Cost of Issuance Fund. With respect to the Series 2017 aggregate amount of Series 2017A Bond proceeds equal to $[______] and an aggregate Bonds, any amounts remaining on deposit in the Cost of Issuance Fund 90 days after their amount of Series 2017B Bond proceeds equal to $[______]. With respect to each Series of delivery shall be transferred to the related subaccount of the Project Fund and disbursed pursuant Additional Bonds, the amount of proceeds to be deposited in the related subaccount of the to Sections 3.09 and 3.10 herein. With respect to each Series of Additional Bonds, any amounts Project Fund shall be provided for in the related Supplemental Indenture. The Trustee is hereby remaining on deposit in the Cost of Issuance Fund on the date 90 days after the Bond Closing of authorized and directed to make each disbursement required by the provisions of Section 4.02 of

32 33 4836-5936-5195.17 4836-5936-5195.17

the related Series of Bonds shall be transferred to the related subaccount of the Project Fund and out as therein provided. The Trustee hereby accepts and agrees to perform such duties and disbursed pursuant to Sections 3.09 and 3.10 herein. obligations specified in the Loan Agreement. The Trustee shall fully cooperate with the Borrower in the handling and conduct of any prospective or pending insurable event or Section 3.14. Custody of the Cost of Issuance Fund. The Cost of Issuance Fund shall condemnation proceeding with respect to any facilities or properties of the Borrower or any part be in the custody of the Trustee but in the name of the Issuer and the Issuer authorizes and thereof. directs the Trustee to withdraw sufficient funds from the Cost of Issuance Fund for the purposes set forth in Section 4.04 of the Loan Agreement and Section 3.12 hereof, which authorization Section 3.19. Repayment to the Borrower From the Funds. Any amounts remaining and direction the Trustee hereby accepts. in the Funds after payment in full of the Bonds (or making provision for such payment), the fees and expenses of the Trustee, the Issuer’s Annual Fee and all other amounts required to be paid Section 3.15. [Reserved]. hereunder and under the Loan Agreement to the Issuer and the Trustee and others (including payments into the Rebate Fund and to the United States Treasury, and payments in respect of the Section 3.16. Nonpresentment of Bonds. In the event any Bonds, or portions thereof, Issuer’s Unassigned Rights) shall be paid to the Borrower upon the expiration of the term of this shall not be presented for payment when the principal thereof becomes due, either at maturity, Indenture. the date fixed for redemption thereof, or otherwise, if funds sufficient for the payment thereof, including accrued interest thereon, shall have been deposited into the Bond Fund or otherwise Section 3.20. Rebate Fund. There shall be deposited into the Rebate Fund investment made available to the Trustee for deposit therein, then on and after the date said principal income on moneys in the Funds to the extent provided in the written direction of the Borrower becomes due, all interest thereon shall cease to accrue and all liability of the Issuer to the pursuant to Section 4.06 of the Loan Agreement and subject to the limitations in Section 6.01(c) Registered Owner or Registered Owners thereof for the payment of such Bonds, shall forthwith hereof, moneys received from the Borrower pursuant to Section 5.01(f) of the Loan Agreement, cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee moneys transferred to the Rebate Fund from the Cost of Issuance Fund, the Debt Service Reserve to hold such fund or funds in a separate trust account for the benefit of the Registered Owner or Fund, the Project Fund or the Bond Fund pursuant to the provisions of this Section and all other Registered Owners of such Bonds, who shall thereafter be restricted exclusively to such fund or moneys received by the Trustee when accompanied by written directions not inconsistent with funds for any claim of whatever nature on his, her or their part under this Indenture with respect the Loan Agreement or this Indenture that such moneys are to be paid into the Rebate Fund. The to said Bond. Such moneys shall not be required to be invested during such period by the Trustee shall cause amounts on deposit in the Rebate Fund to be forwarded to the United States Trustee. If any Bond shall not be presented for payment within the period of four years Treasury (at the address provided in the Tax Certificate) at the times and in the amounts set forth following the date when such Bond becomes due, whether by maturity or otherwise, the Trustee in the Borrower’s written direction pursuant to Section 4.06 of the Loan Agreement. shall return to the Issuer such funds theretofore held by it for payment of such Bonds. Thereafter, the Registered Owner of that Bond shall look only to the Issuer for payment and then If, upon receipt of the certification pursuant to Section 4.06 of the Loan Agreement, the only to amounts so received by the Issuer. The obligations of the Trustee under this Section shall moneys on deposit in the Rebate Fund are insufficient for the purposes thereof, notwithstanding be subject, however, to any law applicable to the unclaimed funds or the Trustee providing other Section 6.01(c) hereof, the Trustee shall transfer moneys to the Rebate Fund from the following requirements for the disposition of unclaimed property. Funds in the following order of priority: the Cost of Issuance Fund, the Debt Service Reserve Fund, the Project Fund and the Bond Fund. The Trustee shall provide notice to the Issuer if the Section 3.17. Moneys To Be Held in Trust. All moneys required to be deposited with certificate referred to in Section 4.06 of the Loan Agreement is not received by the Trustee as or paid to the Trustee under any provision of this Indenture shall be held by the Trustee in trust provided in Section 4.06 of the Loan Agreement to the effect that the amount in the Rebate Fund for the purposes specified in this Indenture, and, except for moneys deposited with or paid to the is in excess of the amount required to be therein, such excess shall be transferred to the Bond Trustee in the Rebate Fund or by or for the account of the Issuer pursuant to the Loan Agreement Fund. and this Indenture or for the payment or redemption of specific Bonds and moneys held by the Trustee in the Cost of Issuance Fund, and in the separate trust accounts pursuant to Sections 3.16 Section 3.21. Custody of the Rebate Fund. The Rebate Fund shall be in the custody of and 3.18 hereof (to the extent, in the case of moneys held pursuant to Section 3.18 hereof, such the Trustee, but in the name of the Issuer, and the Issuer authorizes and directs the Trustee to moneys are held pending disbursement for repair or replacement of any facilities or properties of withdraw funds from the Rebate Fund for the purposes set forth in Section 3.20 hereof, which the Borrower), shall, while held by the Trustee, constitute part of the Trust Estate and be subject authorization and direction the Trustee hereby accepts. to the lien hereof. Moneys held in the Rebate Fund shall be held in trust by the Trustee and shall be applied as provided in Section 3.20 hereof.

Section 3.18. Insurance and Condemnation Proceeds. Reference is hereby made to the provisions of the Loan Agreement wherein it is provided that under certain circumstances the Net Proceeds of insurance payments and condemnation awards are to be paid to the Trustee to be deposited in a segregated trust account established for such purpose and to be disbursed and paid

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ARTICLE IV proceeds, and receipts pledged hereby to the payment of the principal of, premium, if any, and interest on the Bonds in the manner and to the extent contemplated herein. The Issuer shall be COVENANTS OF THE ISSUER under no obligation to prepare, record, or file any such instruments or transfers.

Section 4.01. Performance of Covenants. Section 4.03. Payment of Principal, Premium, if Any, and Interest. The Issuer will promptly pay or cause to be paid the principal of, premium, if any, and interest on all Bonds (a) The Issuer represents that it is duly authorized under the laws of the State, issued hereunder according to the terms hereof; provided, however, that the principal, premium, particularly the Act, to issue the Series 2017 Bonds and to execute this Indenture, to if any, and interest payments are payable solely from the Trust Estate, which is hereby pledge the Trust Estate in the manner and to the extent herein set forth, that all actions on specifically pledged to the payment thereof in the manner and to the extent herein specified; and its part required for the issuance of the Series 2017 Bonds and the execution and delivery provided, further, that this covenant is subject to Section 11.08 hereof. Nothing in the Bonds or of this Indenture have been duly and effectively taken or will be duly taken as provided in this Indenture shall be considered or construed as pledging any funds or assets of the Issuer herein, and that this Indenture is a valid and enforceable instrument of the Issuer and that other than the Trust Estate or creating any liability of the Issuer Indemnified Parties. the Series 2017 Bonds in the hands of the Registered Owners thereof are and will be valid and enforceable obligations of the Issuer according to the terms thereof, except as the Section 4.04. Unrelated Bond Issues. The Issuer has, prior to the issuance of the enforceability thereof may be limited by insolvency, bankruptcy, reorganization, Bonds, issued, and subsequent to the issuance of the Bonds, the Issuer expects to issue, various arrangement, fraudulent conveyance, moratorium or other laws affecting the enforcement series of bonds in connection with the financing of other projects (said bonds together with any of creditors’ rights generally, to the exercise of judicial discretion in appropriate cases, to bonds issued by the Issuer between the date hereof and issuance of the Bonds shall be referred to the limitation on legal remedies against joint powers commissions or governmental units herein as the “Other Bonds”). Any pledge, mortgage, or assignment made in connection with of the State, such as the Issuer, and by the application of general principles of equity. any Other Bonds shall be protected, and any funds pledged or assigned for the payment of principal, premium, if any, or interest on the Other Bonds shall not be used for the payment of (b) The Issuer covenants that it will not knowingly take any action reasonably principal, premium, if any, or interest on the Bonds. Correspondingly, any pledge, mortgage, or within its control which will permit an investment or other use of the proceeds of Tax- assignment made in connection with the Bonds shall be protected, and any funds pledged or Exempt Bonds, and will not knowingly take any action with respect to the amounts assigned for the payment of the Bonds shall not be used for the payment of principal, premium, payable under the Loan Agreement which, in either case, would cause the Tax-Exempt if any, or interest on the Other Bonds. Bonds to be arbitrage bonds under Section 148(a) of the Code and the Regulations thereunder or “federally guaranteed” within the meaning of Section 149(b) of the Code Section 4.05. Rights Under the Loan Agreement. and the Regulations thereunder, and it further covenants that it will comply with the requirements of such Sections and Regulations. The foregoing covenants shall extend (a) The Issuer will observe all of the obligations, terms and conditions throughout the term of the Tax-Exempt Bonds, to all Funds and accounts created under required on its part to be observed or performed under the Loan Agreement. The Issuer this Indenture and all money on deposit to the credit of any such Fund or account, and to agrees that to the extent the Loan Agreement gives the Trustee some right or privilege, or any other amounts which are Tax-Exempt Bond proceeds for purposes of Section 148 of in any way attempts to confer upon the Trustee the ability for the Trustee to protect the the Code and the Regulations thereunder. security for payment of the Bonds, that such parts of the Loan Agreement shall be as though they were set out in this Indenture in full. (c) The Issuer covenants that it will not knowingly take any action or permit any action within its control to be taken which would adversely affect the exemption (b) The Issuer agrees that the Trustee as assignee of certain of its rights under from federal income tax of interest on the Tax-Exempt Bonds; that all action on its part the Loan Agreement may enforce, in its name or in the name of the Issuer, all rights of for the issuance of the Series 2017 Bonds and the execution and delivery of this Indenture the Issuer (except the Issuer’s Unassigned Rights) and all obligations of the Borrower has been duly and effectively taken; and that the Series 2017 Bonds in the hands of the under and pursuant to the Loan Agreement for and on behalf of the Registered Owners, owners thereof are and will be valid and enforceable limited and special obligations of whether or not the Issuer is in default hereunder. the Issuer according to the terms thereof and hereof. Section 4.06. Performance of Obligations. Section 4.02. Instruments of Further Assurance. Subject to Section 4.06(b) hereof, the Issuer covenants that it will do, execute, acknowledge, and deliver or cause to be done, (a) Any performance by the Issuer of all duties and obligations imposed upon executed, acknowledged, and delivered by the parties within its control, such instruments it hereby, the exercise by it of all powers granted to it hereunder, the carrying out of all supplemental hereto and such further acts, instruments, and transfers as the Trustee may covenants, agreements and promises made by it hereunder, and the liability of the Issuer reasonably require for the better assuring, transferring, mortgaging, conveying, pledging, for all covenants hereunder, shall be limited solely to the Trust Estate, including revenues assigning, and confirming unto the Trustee, the Issuer’s interest in and to all interests, revenues,

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and receipts derived from the Loan Agreement, the Promissory Notes and the Deed of Section 4.07. Tax Status of the Interest on the Bonds. The Issuer hereby Trust. acknowledges that in order to ensure that the tax status of the interest on any outstanding series of Tax-Exempt Bonds is not adversely affected, it has secured from the Borrower the covenants (b) The Issuer shall have no obligation to pay the principal of, premium, if set forth in Sections 4.06 and 4.07 of the Loan Agreement. any, or interest on the Bonds, except from the Trust Estate. None of the provisions of this Indenture shall require the Issuer to expend or risk its own funds or to otherwise incur ARTICLE V financial liability in the performance of any of its duties or in the exercise of any of its rights or powers hereunder, unless payable from the Trust Estate, or unless the Issuer REDEMPTION OF BONDS PRIOR TO MATURITY shall first have been adequately indemnified to its satisfaction against the cost, expense, and liability which may be incurred thereby. The Issuer shall not be under any obligation Section 5.01. Optional Redemption of Bonds. hereunder to perform any administrative service with respect to the Bonds or the Project (including, without limitation, record keeping and legal services), it being understood that (a) The Series 2017A Bonds are subject to redemption at the option of the such services shall be performed or provided by the Trustee or the Borrower. The Issuer Issuer (which option shall be exercised upon the written direction of the Borrower to the covenants that it will faithfully perform at all times any and all covenants, undertakings, Trustee from prepayment of the Series 2017A Promissory Note made by the Borrower stipulations, and provisions expressly contained in this Indenture, in every Bond pursuant to Section 11.01 of the Loan Agreement) in whole or in part in Authorized executed, authenticated, and delivered hereunder, in the Loan Agreement and in all of its Denominations on any date commencing [June 15, 20__], at a redemption price equal to proceedings pertaining thereto; provided, however, that the Issuer shall not be obligated the principal amount to be redeemed, together with accrued interest to the date fixed for to take any action or execute any instrument pursuant to any provision hereof unless and redemption, without premium. Upon the delivery of such written direction by the until it shall have (i) been directed to do so by the Borrower or the Trustee; (ii) received Borrower to the Trustee, the Issuer shall be deemed, without any action on the Issuer’s from the party requesting such action or execution assurance satisfactory to the Issuer part, to have exercised its option to redeem the Series 2017A Bonds under this Section. that the Issuer’s reasonable expenses incurred or to be incurred in connection with taking such action or executing such instrument have been or will be paid or reimbursed to the (b) The Series 2017B Bonds are not subject to optional redemption prior to Issuer; and (iii) if applicable, received in a timely manner the instrument or document to their maturity. be executed, in form and substance satisfactory to the Issuer. In complying with any (c) Additional Bonds shall be subject to optional redemption at such times provision herein or in the Loan Agreement requiring the Issuer to “cause” another Person and upon such terms as shall be fixed by the related Supplemental Indenture. to take or omit any action, the Issuer shall be entitled to rely conclusively (and without independent investigation or verification) (i) on the faithful performance by the Trustee (d) In case of optional redemption of the Series 2017A Bonds, the Borrower or the Borrower, as the case may be, of their respective obligations hereunder and under shall, at least 45 days prior to the redemption date (unless a shorter notice shall be the Loan Agreement and (ii) upon any written certification or opinion furnished to the satisfactory to the Trustee), deliver a written request to the Issuer and the Trustee Issuer by the Trustee or the Borrower, as the case may be. In acting, or in refraining from notifying the Issuer and the Trustee of such redemption date and of the principal amount acting, under this Indenture and the Loan Agreement, the Issuer may conclusively rely on of the Series 2017A Bonds to be redeemed and shall, prior to the redemption date, deliver the advice of its counsel. The Issuer shall not be required to take any action hereunder or to the Trustee funds sufficient to pay the redemption price of all Series 2017A Bonds under the Loan Agreement that it reasonably believes to be unlawful or in contravention subject to redemption. hereof of thereof. Section 5.02. Redemption of Bonds Upon Occurrence of Certain Events. The Bonds (c) The Loan Agreement sets forth covenants and obligations of the Issuer of a Series are also subject to extraordinary redemption at the expense of the Borrower, from the and the Borrower, and reference is hereby made to the same for a detailed statement of Net Proceeds, as applicable, of any insurance policy or condemnation award and in the event the said covenants and obligations. Notwithstanding anything to the contrary in this New Facility or any portion thereof is damaged or destroyed or taken in condemnation Indenture, the Issuer shall have no obligation to and instead the Trustee, in accordance proceedings as provided in Section 7.02 of the Loan Agreement. If called pursuant to this with this Indenture, shall have the right, without further direction from or action by the Section 5.02, such Bonds are callable on any date in whole or in part from and to the extent of Issuer, take any and all steps, actions and proceedings, to enforce any or all rights of the funds on deposit under this Indenture and available for this purpose at a redemption price equal Issuer under this Indenture and the Loan Agreement (other than the Issuer’s Unassigned to the principal amount of each Bond redeemed plus accrued interest to the redemption date, Rights), including, without limitation, the rights to enforce the remedies upon the without premium. occurrence and continuation of an Event of Default and the obligations of the Borrower under the Loan Agreement.

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Section 5.03. Mandatory Sinking Fund Redemption. Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount (a) The Series 2017A Bonds maturing [June 15, 20__], are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal $ $ amount thereof plus accrued interest to the redemption date from amounts on deposit in * the Bond Fund on the redemption dates and in the principal amounts as follows: ______*Maturity Date.

The Series 2017A Bonds maturing [June 15, 20__], are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount

$ $ * ______*Maturity Date.

The Series 2017A Bonds maturing [June 15, 20__], are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount

$ $ * ______*Maturity Date.

The Series 2017B Bonds are subject to mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as follows:

Date Principal Date Principal ([June 15]) Amount ([June 15]) Amount

$ $ * ______*Maturity Date.

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(b) Additional Bonds of a Series may be subject to mandatory sinking fund Borrower’s certificate, including but not limited to a condition that, on or prior to the redemption at such times and upon such terms as shall be fixed by the related redemption date, (i) sufficient moneys to redeem such Bonds have been received by the Supplemental Indenture relating to such Bonds. Trustee and that if such money is not so received, no Bonds shall be redeemed; or (ii) a written notice rescinding the redemption notice has not been received by the Trustee from Section 5.04. Mandatory Redemption Upon Determination of Taxability. The Tax- the Borrower, and that if such written notice rescinding the redemption notice is received, Exempt Bonds of a Series are subject to mandatory redemption as a whole at the principal no Bonds shall be redeemed. Upon receipt of any such written notice of rescission, the amount thereof, plus accrued interest thereon to the date of redemption, upon the occurrence of a Trustee shall promptly notify the Registered Owners of such rescission. Any such Determination of Taxability related to such Tax-Exempt Bonds. The redemption date shall be rescission shall not constitute an Event of Default hereunder, and any Bonds called for the earliest practicable date selected by the Trustee, after consultation with the Borrower, but in redemption will remain Outstanding and will continue to bear interest until their maturity no event later than six months following the finalization of the Determination of Taxability. or subsequent call for redemption, at the same rate as they would have borne had they not been called for redemption. Section 5.05. Method of Selecting Bonds. Unless otherwise specifically stated herein, any partial redemption of Bonds shall be redeemed in such order of Series and maturity as the Section 5.07. Bonds Due and Payable on Redemption Date; Interest Ceases To Borrower shall direct in writing, or if less than all of the Bonds in a single maturity shall be Accrue. On or before the redemption date specified in any notice of redemption of the Borrower redeemed, the Bonds redeemed shall be selected by lot within such maturity. Redemptions of delivered pursuant to Section 5.06 hereof, moneys sufficient to redeem all the Bonds called for term Bonds shall be credited against the latest scheduled mandatory sinking fund payment for redemption at the appropriate redemption price, including accrued interest to the date fixed for such Bonds. redemption, shall be deposited with the Trustee by the Borrower. On the redemption date, the principal amount of each Bond to be redeemed, together with the accrued interest thereon to such Section 5.06. Notices of Redemption. date and redemption premium, if any, shall become due and payable; and from and after such date, notice having been given and deposit having been made in accordance with the provisions (a) All or a portion of the Bonds shall be called for optional redemption by the of this Article, then, notwithstanding that any Bonds called for redemption shall not have been Trustee as herein provided upon receipt by the Trustee at least 45 days prior to the surrendered, no further interest shall accrue on any of such Bonds. From and after such date of redemption date of a certificate of the Borrower specifying the principal amount of the redemption (such notice having been given and such deposit having been made) the Bonds to be Bonds to be called for redemption, the applicable redemption price or prices, and the redeemed shall not be deemed to be Outstanding hereunder, and the Issuer shall be under no provision or provisions of this Indenture pursuant to which such Bonds are to be called further liability in respect thereof, except as provided in Section 3.16 hereof. for redemption and whether such redemption will be conditional. In the case of every redemption, the Trustee shall cause notice of such redemption by mailing by first-class Section 5.08. Cancellation. All Bonds which have been redeemed and all Bonds mail a copy of the redemption notice to the Registered Owners of the Bonds designated delivered to the Trustee by the Borrower for cancellation shall be cancelled by the Trustee and for redemption in whole or in part, at their addresses as the same shall last appear upon destroyed as provided in Section 2.09 hereof. the registration records (or by such other means as required by the Depository Trust Company), in each case not more than 45 nor less than 20 days prior to the redemption Section 5.09. Partial Redemption of Bonds. Upon surrender of any Bond for date; provided, however, that failure to give such notice, or any defect therein, shall not redemption in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to affect the validity of any proceedings for the redemption of such Bonds. The Trustee the Registered Owner thereof, the cost of which shall be paid by the Borrower, a new Bond or shall furnish the Borrower with a copy of each notice of redemption, as soon as Bonds of the same maturity and of Authorized Denominations, in an aggregate principal amount practicable after the delivery of notice to the Registered Owners of the Bonds. equal to that portion of the Bond not redeemed.

(b) Each notice of redemption shall specify the date fixed for redemption, the Section 5.10. No Partial Optional Redemption in Event of Default. Notwithstanding redemption price, the place or places of payment, that payment will be made upon any provisions of this Article, the Bonds shall not be subject to partial optional redemption presentation and surrender of the Bonds to be redeemed, that interest accrued to the date pursuant to Section 5.01 hereof if an Event of Default has occurred hereunder and has not been fixed for redemption will be paid as specified in said notice, and that on and after said cured or otherwise waived by the Trustee for the purpose of making any such redemption date interest thereon will cease to accrue. If less than all the Outstanding Bonds are to be payment. redeemed, the notice of redemption shall specify the numbers of the Bonds or portions thereof to be redeemed. Section 5.11. Purchase in Lieu of Redemption. At any time the Bonds are subject to redemption, the Borrower may direct the Trustee to purchase the Bonds which would otherwise (c) If the Borrower’s certificate delivered to Section 5.06(a) above indicates be subject to redemption from money available for such redemption under this Indenture or other that the redemption shall be conditional, the notice of redemption shall state that the money provided to the Trustee by the Borrower and deposited by the Trustee in a separate redemption is conditioned upon satisfaction of such condition(s) identified in the account hereunder to be established by the Trustee at such time, and such Bonds shall be

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cancelled upon purchase. The purchase price and maturities of such Bonds shall be determined (c) Notwithstanding the provisions of this Section, any interest or other gain by the Borrower, but the purchase price may not exceed par. The principal amount of Bonds from any Fund shall be transferred to the Rebate Fund to the extent required by the purchased pursuant to this Section shall be credited against the latest scheduled mandatory written direction of the Borrower pursuant to Section 4.06 of the Loan Agreement, except sinking fund payment or payments for such Bonds unless otherwise directed by the Borrower. that no such transfer shall be made from any Fund if such transfer would cause the Written notice of such election must be given to the Trustee not less than five Business Days amount then on deposit in such Fund to be less than required by the provisions of this prior to the date the Trustee must send notice of redemption. If only a portion of a Bond is Indenture. Any interest or other gain realized as a result of any investments or purchased pursuant to this section, the Trustee shall issue a new Bond with respect to the reinvestments of moneys in the Rebate Fund shall be retained in the Rebate Fund. unpurchased portion of such Bond, in accordance with Section 5.09 hereof. ARTICLE VII ARTICLE VI DISCHARGE OF INDENTURE INVESTMENTS Section 7.01. Discharge of This Indenture. Section 6.01. (a) Moneys in all Funds hereunder shall be invested and reinvested by the Trustee in Investment Obligations, at the written direction of the Authorized (a) If the Bonds are paid in accordance with their terms (or payment of the Representative of the Borrower, which direction shall include a certification that such Bonds is provided for in the manner set forth in the following paragraph), together with investment is then a lawful investment under the laws of the State of North Carolina and all other sums payable hereunder, all amounts payable to the Issuer and the Trustee under an Investment Obligation hereunder. If no such direction is received, the Trustee shall the Loan Agreement and all amounts payable to the United States Treasury pursuant to hold such amounts in cash. The Borrower covenants that at no time shall any funds Section 148 of Code, or provision made for the payment of the same, then this Indenture constituting gross proceeds of the Tax-Exempt Bonds be used in any manner to cause or and the Trust Estate and all rights granted hereunder will thereupon cease, terminate and result in a prohibited payment under applicable regulations pertaining to, or in any other become void and be discharged and satisfied (except for those provisions which expressly fashion as would constitute failure of compliance with, Section 148 of the Code. provide for their survival). Also if all Outstanding Bonds are purchased by the Borrower Investments of moneys in the Bond Fund shall mature or be redeemable without penalty and delivered to the Trustee for cancellation, and all other sums payable hereunder, all at the option of the Trustee at the times and in the amounts necessary to provide moneys amounts payable to the Issuer and the Trustee under the Loan Agreement, and all to pay the principal of, premium, if any, and interest on the Bonds as they become due at amounts payable to the United States Treasury pursuant to Section 148 of the Code paid, stated maturity or by redemption. Each investment of moneys in funds other than the or provision made for the payment of the same, then this Indenture and the Trust Estate Bond Fund shall mature or be redeemable without penalty at such time as may be and all rights granted hereunder will thereupon cease, terminate and become void and be necessary to make payments from such fund. discharged and satisfied (except for those provisions which expressly provide for their survival). In such events, upon the request of the Borrower, the Trustee shall assign and (b) Upon receipt of written directions from the Authorized Representative of transfer to the Borrower all property then held by the Trustee hereunder with respect to the Borrower with respect thereto, which shall be in compliance with any restrictions the Borrower and shall execute such documents as may be reasonably required by the contained in the Tax Certificate, the Trustee shall sell those investments and reinvest the Borrower and shall turn over to the Borrower the appropriate amount of any surplus in proceeds therefrom in Investment Obligations maturing or redeemable as aforesaid. Any any Fund pursuant to Section 3.19 hereof. of those investments may be purchased from or sold to the Trustee or any bank, trust company or savings and loan association affiliated with the Trustee. The Trustee shall (b) Payment of any Outstanding Bond shall, prior to the maturity or sell or redeem investments credited to the Bond Fund to produce sufficient moneys redemption date thereof, be deemed to have been provided for within the meaning and applicable hereunder to and at the times required for the purposes of paying the principal with the effect expressed in this Section if: (i) in the case that said Bond is to be of, premium and interest on the Bonds when due as aforesaid, and shall do so without redeemed on any date prior to its maturity, the Borrower shall have given to the Trustee necessity for any order on behalf of the Issuer and without restriction by reason of any in form satisfactory to it irrevocable instructions to give, on a date in accordance with the order. An investment made from moneys credited to the Project Fund, the Bond Fund or provisions of Section 5.06 hereof, notice of redemption of such Bond on said redemption the Cost of Issuance Fund shall constitute part of that respective fund. Proceeds of the date, such notice to be given in accordance with the provisions of Section 5.06 hereof; (ii) sale of and income on investments in the funds shall be credited to such funds. For there shall have been deposited with the Trustee either moneys in an amount which shall purposes of this Indenture, the Investment Obligations shall be valued by the Trustee on be sufficient, or Government Obligations which shall not contain provisions permitting each [June 15] and [December 15] at face amount or market value, whichever is less, the redemption thereof at the option of the issuer, the principal of and the interest on except as otherwise provided in Article III. The Trustee shall not be responsible for any which when due, and without any reinvestment thereof, will provide moneys which, losses resulting from an investment made in accordance with this Section. together with the moneys, if any, deposited with or held by the Trustee at the same time, shall be sufficient to pay when due the principal of and premium, if any, and interest due

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and to become due on said Bond on and prior to the redemption date or maturity date expiration of the Loan Agreement and the Deed of Trust, all provisions in this Indenture, the thereof, as the case may be; (iii) there shall have been delivered to the Trustee a Loan Agreement or any other document in connection with the issuance of the Bonds concerning certificate from a firm of certified public accountants certifying as to the sufficiency of (a) the tax-exempt status of the Tax-Exempt Bonds; (b) the interpretation of this Indenture; (c) the deposit made pursuant to the preceding clause (ii); (iv) there shall have been delivered the governing law; (d) jurisdiction and the forum for resolving disputes; (e) the Issuer’s right to to the Trustee an opinion of Bond Counsel satisfactory to the Trustee and the Issuer that rely on written representations of others contained herein or in any other document or instrument such payment does not adversely affect the exclusion from gross income of interest on issued or entered into in respect of the Bonds, regardless of whether the Issuer is a party thereto; the Tax-Exempt Bonds; and (v) in the event said Bond is not by its terms subject to (f) the indemnity of the Issuer and the Issuer Indemnified Parties from liability; (g) the Issuer’s redemption within the next 45 days, the Borrower shall have given the Trustee in form and the Issuer Indemnified Parties’ lack of pecuniary liability; (h) the indemnity of the Trustee satisfactory to it irrevocable instructions to give, as soon as practicable in the same Indemnified Parties; (i) the rights, powers and duties of the Trustee as may be necessary and manner as the notice of redemption is given pursuant to Section 5.06 hereof, a notice to convenient for the payment of amounts due or to become due on the Bonds and the registration, the Registered Owner of such Bond that the deposit required by clause (ii) above has transfer, exchange and replacement of Bonds; and (j) any other provision of this Indenture that been made with the Trustee and that payment of said Bond has been provided for in expressly provides for its survival, shall survive and remain in full force and effect. accordance with this Section and stating such maturity or redemption date upon which moneys are to be available for the payment of the principal of and premium, if any, and ARTICLE VIII interest on said Bond. Neither such securities nor moneys deposited with the Trustee pursuant to this Section or principal or interest payments on any such securities shall be DEFAULTS AND REMEDIES withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and premium, if any, and interest on said Bond; provided any cash Section 8.01. Events of Default. received from such principal or interest payments on such securities deposited with the Trustee, if not then needed for such purpose, shall, to the extent practicable, be reinvested (a) Each of the following is hereby defined as and shall be deemed an “Event in securities of the type described in clause (ii) of this paragraph maturing at times and in of Default” under this Indenture: amounts sufficient to pay when due the principal of and premium, if any, and interest to (i) failure in the payment by the Issuer of the principal of or premium, become due on said Bond on or prior to such redemption date or maturity date thereof, as if any, on any Bond when the same shall become due and payable, whether at the the case may be. At such time as payment of a Bond has been provided for as aforesaid, stated maturity thereof, on a sinking fund payment date or upon proceedings for such Bond shall no longer be secured by or entitled to the benefits of this Indenture, redemption; except for the purpose of any payment from such moneys or securities deposited with the Trustee. (ii) failure in the payment by the Issuer of any installment of interest on any Bond when the same shall become due and payable; (c) The release of the obligations of the Issuer and Borrower under this Section shall be without prejudice to the right of the Trustee or the Issuer to be paid (iii) failure by the Issuer to observe or perform any other covenant, reasonable compensation for all services rendered by it hereunder, on its Liabilities under agreement, contract or other provision of the Bonds or this Indenture (other than Section 8.06 of the Loan Agreement and all its reasonable expenses, charges and other as referred to in Section 8.01(a)(i) or (ii) above) and such default shall continue disbursements incurred on or about the administration of the trust hereby created and the for a period of 30 days after written notice to the Issuer and the Borrower by the performance of its powers and duties hereunder. Trustee specifying such default and requiring the same to be remedied, provided, with respect to any such failure described by this clause (iii), no Event of Default (d) Notwithstanding anything contained herein to the contrary, provision shall will be deemed to have occurred so long as a course of action adequate to remedy not be made for the payment of any Bonds if such provision would constitute an advance such failure shall have been commenced within such 30-day period and shall refunding under the Code, unless simultaneously with such provision for payment, the thereafter be diligently prosecuted to completion and the failure shall be remedied Borrower delivers to the Issuer and the Trustee an opinion of Bond Counsel to the effect thereby within 90 days of such notification. The Borrower shall deliver a written that such provision will not adversely affect the exclusion from gross income of the report to the Trustee at least once every 30 days setting forth the status of all interest on the Tax-Exempt Bonds. attempts to cure such default(s); and (e) The provisions contained in this Section 7.01 apply equally to the (iv) the occurrence of an “Event of Default” under the Loan discharge of the lien of this Indenture for all of the Bonds or any portion thereof. Agreement, the Account Control Agreement or any Deed of Trust. Section 7.02. Survival. Notwithstanding the payment in full or defeasance of the (b) Upon the occurrence of an Event of Default under this Indenture as to Bonds, the discharge of this Indenture as set forth in Section 7.01 above, and the termination or which the Trustee is deemed to have notice or has received notice as provided in Section

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9.01(h) herein, the Trustee shall promptly notify the Issuer and the Borrower by (iv) Suit for Judgment on the Bonds. The Trustee shall be entitled to electronic mail, confirmed by overnight mail or courier, of such occurrence. Each sue for and recover judgment, either before or after or during the pendency of any notification of the occurrence of an Event of Default shall set forth the specific nature of proceedings for the enforcement of the lien of this Indenture, for the enforcement the Event of Default or Events of Default. With respect to the occurrence of any Event of of any of its rights, or the rights of the Beneficial Owners, but any such judgment Default set forth in Section 8.01(a)(iii) and (iv) above, the Trustee shall be permitted to against the Issuer shall be enforceable only against the Trust Estate. No recovery rely solely on the No Default Certificate delivered by the Borrower pursuant to Section of any judgment by the Trustee shall in any manner or to any extent affect the lien 8.05(e) of the Loan Agreement. of this Indenture or any rights, powers or remedies of the Trustee hereunder, or any lien, rights, powers or remedies of the Beneficial Owners of the Bonds, but (c) The time periods for cure set forth in Section 8.01(a)(iii) above shall not such lien, rights, powers and remedies of the Trustee and of the Beneficial be applicable to any events or actions which cause or might cause a Determination of Owners shall continue unimpaired as before. Taxability. (v) Activation of Account Control Agreement. Notify the Primary Section 8.02. Remedies for Events of Default Under This Indenture. Depository Bank under the Account Control Agreement of an Event of Default and take such actions permitted thereunder to activate the block on the deposit (a) Upon the occurrence of an Event of Default, with respect to Bonds issued account held thereunder, and the Trustee is authorized to withdraw funds from hereunder, the Trustee shall have the following rights and remedies: such deposit account as necessary to make payments under the Loan Agreement, this Indenture and the Parity Agreement. (i) Acceleration. The Trustee (A) may by notice in writing given to the Issuer and the Borrower; or (B) shall, upon the written request of the (vi) Additional Remedies. Subject to State of North Carolina law, Beneficial Owners of not less than a majority in aggregate principal amount of the including without limitation the Charter School Act, and subject to any available Bonds then Outstanding, declare the principal amount of all Bonds then cure periods, the Trustee, at the direction of the Beneficial Owners of not less than Outstanding and the interest accrued thereon to be immediately due and payable a majority in aggregate principal amount of the Bonds then Outstanding, shall and said principal and interest shall thereupon become immediately due and have the right to enter into the New Facility and market the New Facility for sale. payable. Upon any declaration of acceleration hereunder, the Issuer and the Trustee shall immediately declare all Loan Payments under the Loan Agreement (b) No right or remedy is intended to be exclusive of any other right or to be immediately due and payable, as provided in Section 10.02 of the Loan remedy, but each and every such right or remedy shall be cumulative and in addition to Agreement. any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. (ii) Receivership. Upon the filing of a bill in equity or other commencement of judicial proceedings to enforce the rights of the Trustee and of (c) If any Event of Default hereunder shall have occurred, the Beneficial the Registered Owners, the Trustee shall be entitled as a matter of right to the Owners of not less than a majority in aggregate principal amount of the Bonds then appointment of a receiver or receivers, with respect to the Borrower, of the rents, Outstanding, shall direct the Trustee as to the preferred remedy of such Beneficial revenues, income, products and profits related to the Borrower and the Facilities, Owners. The Trustee, after being indemnified or receiving other assurances as provided pending such proceedings, but, notwithstanding the appointment of any receiver, in Section 9.01 hereof, shall be obligated to exercise such one or more of the rights and trustee or other custodian, the Trustee shall be entitled to the possession and powers conferred by this Section as directed by such Beneficial Owners of such Bonds. control of any cash, securities or other instruments at the time held by, or payable or deliverable under the provisions of this Indenture to, the Trustee. Section 8.03. Direction of Remedies. Anything in this Indenture to the contrary notwithstanding, the Beneficial Owners of a majority in aggregate principal amount of the Bonds (iii) Foreclosure. The Trustee shall have the right of foreclosure on all then Outstanding shall have the right, at any time, to the extent permitted by law, by an or any portion of any real and/or personal property described in a Deed of Trust, instrument or instruments in writing executed and delivered to the Trustee, to direct the time, or any interest of the Issuer or the Borrower therein including pursuant to the method, and place of conducting all proceedings to be taken in connection with the enforcement power of sale under a Deed of Trust, and may realize upon the security interest in of the terms and conditions of this Indenture, or for the appointment of a receiver, or any other the Pledged Revenues (subject to the terms of the Parity Agreement) and exercise proceedings or remedies hereunder; provided that such direction shall not be otherwise than in all of the rights and remedies of a secured party under the Uniform Commercial accordance with the provisions hereof and applicable law; provided, however, that the Trustee Code of the State of North Carolina with respect thereto. may take any other action deemed proper by the Trustee that is not inconsistent with such directions. The Trustee shall not be required to act on any direction given to it pursuant to this Section unless indemnified or receiving other assurances as provided in Section 9.01 hereof.

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Section 8.04. Rights and Remedies of Beneficial Owners. No Beneficial Owner of and, if the amount available shall not be sufficient to pay in full any any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the particular installment, then to the payment ratably, according to the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a amounts due on such installment, to the Persons entitled thereto, without receiver or any other remedy hereunder, unless a default has occurred of which the Trustee has any discrimination or privilege; and been notified as provided in Section 9.01 hereof, or of which by Section 9.01 hereof it is deemed to have notice, nor unless such default shall have become an Event of Default and the Beneficial SECOND, to the payment to the Persons entitled thereto of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding unpaid principal of and premium, if any, on any of the Bonds which shall shall have made written request to the Trustee at the Notice Address provided herein and shall have become due (other than Bonds called for redemption for the payment have offered reasonable opportunity either to proceed to exercise the powers hereinbefore of which moneys are held pursuant to the provisions of this Indenture), in granted or to institute such action, suit or proceeding in its own name, or unless they have also the order of their due dates and, if the amount available shall not be offered to the Trustee indemnity or other assurances as provided in Section 9.01 hereof or unless sufficient to pay in full Bonds due on any particular date, together with the Trustee shall thereafter fail or refuse to exercise within a reasonable period of time (not to such interest, then to the payment ratably, according to the amount of exceed 30 days) the powers hereinbefore granted, or to institute such action, suit or proceeding in principal due on such date, to the persons entitled thereto, without any its own name; and such notification, request, and offer of indemnity or other assurances are discrimination or privilege. hereby declared in every case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the (ii) If the principal of all the Bonds shall have become due or shall enforcement of this Indenture, or for the appointment of a receiver or for any other remedy have been declared due and payable, all such moneys shall be applied first to the hereunder; it being understood and intended that no one or more Beneficial Owners of the Bonds payment of the interest then due and unpaid upon all of the Bonds, and then to the shall have the right in any manner whatsoever to affect, disturb or prejudice the lien of this principal then due and payable on the Bonds without preference or priority of any Indenture by his, her or their action or to enforce any right hereunder except in the manner herein Bond over any other Bond, ratably, according to the amounts due respectively for provided and that all proceedings at law or in equity shall be instituted, had, and maintained in principal and interest, to the Persons entitled thereto without any discrimination or the manner herein provided and for the equal benefit of the Beneficial Owners of the Bonds then privilege. Outstanding. Nothing in this Indenture contained shall, however, affect or impair the right of any Beneficial Owner of Bonds to enforce the payment, by the institution of any suit, action or (iii) If the principal of all the Bonds shall have been declared due and proceeding in equity or at law, of the principal of, premium, if any or interest on any Bond at and payable, and if such declaration shall thereafter have been rescinded and annulled after the maturity thereof, or the obligation of the Issuer to pay the principal of, premium, if any, under the provisions of this Article then, subject to the provisions of and interest on each of the Bonds to the respective Beneficial Owners of the Bonds at the time Section 8.05(a)(ii) in the event that the principal of all the Bonds shall later and place, from the Trust Estate and in the manner herein and in the Bonds expressed. become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of Section 8.05(a)(i). Section 8.05. Application of Moneys. (b) Whenever moneys are to be applied pursuant to the provisions of this (a) Subject to the terms of the Parity Agreement, all moneys received by the Section, such moneys shall be applied at such times, and from time to time, as the Trustee Trustee pursuant to any right given or action taken under the provisions of this Article shall determine, having due regard to the amount of such moneys available for shall, after payment of the costs and expenses of the proceedings resulting in the application and the likelihood of additional moneys becoming available for such collection of such moneys, including the costs and expenses of the Registered Owners, application in the future. Whenever the Trustee shall apply such funds; it shall fix the the Trustee’s Annual Fees, the Trustee’s Expenses, and the expenses, liabilities and date (which shall be an Interest Payment Date unless it shall deem another date more advances incurred or made by the Trustee, and after payment of all sums due to the suitable) upon which such application is to be made and upon such date interest on the Trustee and to the Issuer (including payments in respect of the Issuer’s Unassigned amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall Rights) hereunder and under the Loan Agreement, as applicable, be held or deposited into give such notice as it may deem appropriate of the deposit of any such moneys and of the the Bond Fund during the continuance of an Event of Default and shall be applied as fixing of any such date, and shall not be required to make payment to the Registered follows: Owner of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. (i) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied: (c) Whenever all of the Bonds, the premium, if any, and interest thereon have been paid under the provisions of this Section and all Trustee’s Annual Fees, all Trustee’s FIRST, to the payment to the Persons entitled thereto of all of the Expenses, and the Issuer’s Annual Fee and all other amounts to be paid to the Issuer or interest then due on the Bonds, in the order of the maturity of such interest the Trustee or the United States Treasury hereunder or under the Loan Agreement have

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been paid, or provision made for the payment thereof in accordance herewith, any the Bonds as a class, as may be necessary or advisable in the opinion of the Trustee, in balance remaining in the Funds shall be applied as provided in Section 3.19 hereof. order to have the respective claim of the Registered Owners of the Bonds against the Issuer, the Borrower or any other obligor allowed in receivership, insolvency, liquidation, Section 8.06. Trustee May Enforce Rights Without Bonds. All rights of action and bankruptcy or other proceeding, to which the Issuer, the Borrower or any other obligor, claims under this Indenture (except for the Issuer’s Unassigned Rights) or any of the Bonds as the case may be, shall be a party. The Trustee shall have full power of substitution and Outstanding may be enforced by the Trustee without the possession of any of the Bonds or the delegation in respect of any such powers. production thereof in any trial or proceedings relative thereto; and any suit or proceeding instituted by the Trustee shall be brought in its name as Trustee, without the necessity of joining Section 8.08. Delay or Omission No Waiver. No delay or omission of the Trustee or of as plaintiffs or defendants any Registered Owners of the Bonds. any Registered Owner to exercise any right or power accruing upon any default shall exhaust or impair any such right or power or shall be construed to be a waiver of any such default, or Section 8.07. Proofs of Claim. acquiescence therein; and every power and remedy given by this Indenture may be exercised from time to time and as often as may be deemed expedient. (a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial Section 8.09. No Waiver of One Default To Affect Another. No waiver of any default proceeding relative to the Issuer or the Borrower or any other obligor upon the Bonds or hereunder, whether by the Trustee, the Beneficial Owners or the Registered Owners, shall extend the property of the Issuer, the Trustee (irrespective of whether the principal of the Bonds to or affect any subsequent or any other then existing default or shall impair any rights or shall then be due and payable, from prepayment on the Promissory Notes, as therein remedies consequent thereon. expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuer and/or the Borrower for the payment of overdue Section 8.10. Discontinuance of Proceedings on Default; Position of Parties principal or interest) shall be entitled and empowered, by intervention of such proceeding Restored. In case the Issuer, the Trustee, the Beneficial Owners or the Registered Owners shall or otherwise: have proceeded to enforce any rights under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the (i) to file and prove a claim for the whole amount of principal, Trustee or the Registered Owners, then and in every such case the Issuer, the Trustee, the premium, if any, and interest owing and unpaid in respect of the Bonds then Beneficial Owners and the Registered Owners shall be restored to their former position and Outstanding and to file such other papers or documents as may be necessary or rights hereunder and with respect to the Trust Estate, and all rights, remedies, and powers of the advisable in order to have the claims of the Trustee (including any claim for the Issuer, the Trustee, the Beneficial Owners and the Registered Owners shall continue as if no such reasonable compensation, expenses, disbursements and advances of the Trustee, proceedings had been taken. its agents and counsel) and of the Registered Owners allowed in such judicial proceeding; and to collect and receive any moneys or other property payable or Section 8.11. Waivers of Events of Default. The Trustee may in its discretion waive deliverable on any such claims and to distribute the same; and any Event of Default hereunder and its consequences and rescind any declaration of acceleration of maturity of principal of and interest on the Bonds, and shall be required to do so upon the (ii) any receiver, assignee, trustee, liquidator, sequestrator (or other written request of the Beneficial Owners of a majority in aggregate principal amount of the similar official) in any such judicial proceeding is hereby authorized by each Bonds then Outstanding; provided, however, that there shall not be waived (a) any Event of Registered Owner to make such payments to the Trustee, and, in the event that the Default in the payment of the principal of or premium, if any, on any Outstanding Bonds at the Trustee shall consent to the making of such payments directly to the Registered date of maturity or redemption thereof or any default in the payment when due of the interest on Owners, to pay to the Trustee any amount due to it for the reasonable any such Bonds, unless prior to such waiver or rescission, all arrears of interest or all arrears of compensation, expenses, disbursements and advances of the Trustee, its agent and payments of the principal and premium, if any, and all expenses of the Trustee and the Issuer, counsel. and all amounts to be paid to the Issuer and the Trustee hereunder and under the Loan Agreement, in connection with such default shall have been paid or provided for; (b) any default (b) So long as Bonds are Outstanding the Trustee is hereby appointed, and the in the payment of amounts set forth in Section 5.01(f) of the Loan Agreement; or (c) any default successive respective Registered Owners of the Bonds, by taking and holding the same, or Event of Default in respect of the Issuer’s Unassigned Rights, which may only be waived with shall be conclusively deemed to have so appointed the Trustee, the true and lawful the Issuer’s written consent. In case of any such waiver or rescission, or in case any proceedings attorney in fact of the respective Registered Owners of the Bonds, with authority to make taken by the Trustee on account of any such default shall have been discontinued or abandoned or file, in the respective names of the Registered Owners of the Bonds or on behalf of all or determined adversely to the Trustee, then and in every such case the Issuer, the Trustee and Registered Owners of the Bonds, as a class, any proof of debt, amendment to proof of the Beneficial Owners shall be restored to their former positions and rights hereunder debt, petition or other documents and to execute any other papers and documents and to respectively, but no such waiver or rescission shall extend to or affect any subsequent or other do and perform any and all acts and things for and on behalf of all Registered Owners of default, or impair any rights or remedies consequent thereon.

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Section 8.12. No Obligation To Enforce Assigned Rights. Notwithstanding anything (c) The Trustee shall not be responsible for any recital herein or in the Bonds to the contrary in this Indenture or the Loan Agreement, the Issuer shall have no obligation to (except in respect to the certificate of authentication of the Trustee endorsed on the and instead the Trustee, in accordance with this Indenture and the Loan Agreement, shall have Bonds), or for insuring the Facilities or collecting any insurance moneys or for the the right, without further direction from or notice to the Issuer, to take any and all steps, actions validity of the execution by the Issuer of this Indenture or of any supplements hereto or and proceedings, to enforce any or all rights of the Issuer under this Indenture and the Loan instruments of further assurance, or for the sufficiency of the security for the Bonds Agreement (other than the Issuer’s Unassigned Rights), including, without limitation, the rights issued hereunder or intended to be secured hereby, or for the value of or title to the to enforce the remedies upon the occurrence and continuation of an Event of Default and the Facilities, and the Trustee shall not be bound to ascertain or inquire as to the performance obligations of the Borrower under the Loan Agreement. or observance of any covenants, conditions or agreements on the part of the Issuer, or on the part of the Borrower, except as specifically herein set forth; but the Trustee may Section 8.13. No Impairment of Ability To Enforce Issuer’s Unassigned Rights. No require of the Borrower full information and advice as to the performance of the provision of this Indenture or the Loan Agreement shall be deemed or construed as limiting, covenants, conditions, and agreements as to the condition of the Facilities contained affecting or impairing in any way the Issuer’s or any Issuer Indemnified Party’s right to enforce herein or in the Loan Agreement. The Trustee shall not be responsible or liable for any the Issuer’s Unassigned Rights, notwithstanding the existence or continuance of a default or loss suffered in connection with any investment of funds made by it in accordance with Event of Default, or any action based thereon or occasioned by an Event of Default or an alleged Section 6.01 hereof. Event of Default, and notwithstanding any waiver or forbearance by the Trustee, the Registered Owners or the Beneficial Owners of any default or Event of Default hereunder or thereunder. (d) The Trustee shall not be accountable for the use of any Bonds Any default or Event of Default in respect of the Issuer’s Unassigned Rights may only be waived authenticated or delivered hereunder. The Trustee may become the Registered Owner of with the Issuer’s written consent. the Bonds with the same rights which it would have if not Trustee.

ARTICLE IX (e) The Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it to CONCERNING THE TRUSTEE 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 the Section 9.01. Duties of the Trustee. The Trustee hereby accepts the trusts imposed consent of the Issuer or any person who at the time of making such request or giving such upon it by this Indenture and agrees to perform said trusts, but only upon and subject to the consent is the Registered Owner of any Bonds shall be conclusive and binding upon all following express terms and conditions, and no implied covenants or obligations shall be read future owners of the same Bond and upon Bonds issued in place thereof. into this Indenture against the Trustee: (f) As to the existence or nonexistence of any fact or as to the sufficiency or (a) The Trustee, prior to the occurrence of an Event of Default and after the validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon curing of all Events of Default which may have occurred, undertakes to perform such a certificate signed on behalf of the Issuer by an Issuer Authorized Signatory or on behalf duties and only such duties as are specifically set forth in this Indenture. In case an Event of the Borrower by an Authorized Representative of the Borrower or such other person as of Default has occurred (which has not been cured or waived), the Trustee shall exercise may be designated for such purpose by the Issuer or Borrower as sufficient evidence of such of the rights and powers vested in it by this Indenture, and use the same degree of the facts therein contained, and prior to the occurrence of a default of which the Trustee care and skill in their exercise, as a prudent person would exercise or use under similar has been notified as provided in Section 9.01(h), or of which by said section it is deemed circumstances. to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its (b) The Trustee may execute any of the trusts hereof or powers hereunder and discretion secure such further evidence deemed necessary or advisable, but shall in no perform any of its duties by or through attorneys, agents, receivers or employees but shall case be bound to secure the same. be answerable for the conduct of the same in accordance with the standards specified above and in Section 9.01(g), and shall be entitled to act upon an opinion of counsel (g) The permissive rights of the Trustee to do things enumerated in this concerning all matters of the trust hereof and its duties hereunder, and may in all cases Indenture shall not be construed as a duty, and the Trustee shall not be answerable for pay such reasonable compensation to all such attorneys, agents, receivers and employees other than its gross negligence or willful misconduct and shall not be answerable for any as may reasonably be employed in connection with the trusts hereof. The Trustee may negligent act of its attorneys, agents or receivers which have been selected by the Trustee act upon an opinion of counsel and shall not be responsible for any loss or damage with due care, subject to Section 9.01(a) hereof. resulting from any action or non-action taken by or omitted to be taken in good faith in reliance upon such opinion of counsel. (h) The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder except failure by the Borrower to cause to be made any of

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the payments to the Trustee required to be made hereunder, under the Loan Agreement or Section 8.06 of the Loan Agreement and to reimbursement of its fees and expenses under any Deed of Trust, or the failure by the Borrower to file with it any of the periodic pursuant to Section 9.02 hereof. documentation required, or to deposit with it the insurance report required hereunder, under the Loan Agreement (including Section 6.03 thereof) or under any Deed of Trust, (n) The Trustee shall have no responsibility with respect to any information, unless a Responsible Officer of the Trustee has actual notice thereof or unless the Trustee statement or recital in any official statement, offering memorandum or other disclosure shall be specifically notified in writing of such default by the Borrower, the Issuer or a prepared or distributed in connection with the Bonds. The Trustee will take all necessary Registered Owner and all notices or other instruments required by this Indenture to be actions including filing continuation statements, if necessary, to preserve the Lien and delivered to the Trustee, must, in order to be effective, be delivered at the address of the security interest created by the Deed of Trust; provided however, that the Borrower has Trustee provided for in Section 11.09 hereof, and, in the absence of such notice so accepted the primary obligation to file continuation statements pursuant to the terms of delivered, the Trustee may conclusively assume that there is no default except as the Loan Agreement and shall pay all fees and expenses of the Trustee in connection aforesaid. The voluntary giving of any periodic reminder or notices to the Borrower by therewith as set forth in Section 9.02 below. Such fees shall be considered “extraordinary the Trustee shall not be construed as a duty to do so or to monitor compliance by the fees.” Borrower or as notice of any defaults by the Borrower. Section 9.02. Fees and Expenses of Trustee. The Trustee shall be entitled to payment (i) All moneys received by the Trustee shall, until used or applied or invested and reimbursement for its reasonable fees for its services rendered hereunder as and when the as herein provided, be held in trust in the manner and for the purposes for which they same become due and all expenses reasonably and necessarily made or incurred by the Trustee in were received but need not be segregated from other funds except to the extent required connection with such services, including any extraordinary fees of the Trustee and reasonable by this Indenture or law. The Trustee shall not be under any liability for interest on any legal fees and expenses, as and when the same become due as provided in Section 5.01 of the moneys received hereunder except such as may be agreed upon. Loan Agreement.

(j) At any and all reasonable times the Trustee, and its duly authorized agents, Section 9.03. Resignation or Replacement of Trustee. attorneys, experts, engineers, accountants and representatives, shall have the right, but shall not be required, to inspect any and all of the Trust Estate, including all books, (a) The present or any future Trustee may resign by giving to the Issuer, the papers and records of the Issuer or the Borrower pertaining to the Borrower, the Facilities Borrower and the Registered Owners 60 days’ notice of such resignation. Such and the Bonds. resignation shall take effect immediately on the appointment of a successor. The present or any future Trustee may be removed at any time by an instrument or concurrent (k) The Trustee shall not be required to give any bond or surety in respect of instruments in writing signed by the Issuer or by the Registered Owners of a majority in the execution of the said trusts and powers or otherwise in respect of the premises. aggregate principal amount of the Bonds and such removal shall take effect immediately on the appointment of a successor. The Trustee may also be removed at any time for any (l) Notwithstanding anything in this Indenture contained, the Trustee shall breach of the trust set forth herein. have the right, but shall not be required, to demand in respect of the authentication of any Bonds, the withdrawal of any cash, the release of any property or any action whatsoever (b) In case the present or any future Trustee shall at any time resign or be within the purview of this Indenture, any showings, certificates, opinions, appraisals or removed or otherwise become incapable of acting, a successor may be appointed by the other information or corporate action or evidence thereof, in addition to that by the terms Registered Owners of a majority in aggregate principal amount of the Bonds Outstanding hereof required, as a condition of such action by the Trustee deemed desirable for the by an instrument or concurrent instruments signed by such Registered Owners, or their purpose of establishing the right of the Issuer or the Borrower to the authentication of any attorneys-in-fact duly appointed; provided that the Borrower if not then in default under Bonds, the withdrawal of any cash, the release of any property, or the taking of any other the Loan Agreement, with the consent of the Issuer, may appoint a successor until action by the Trustee. ratified, or a new successor shall be appointed, by the Registered Owners as herein authorized. The Borrower, upon making such appointment, shall forthwith give notice (m) Before taking any action under this Indenture, the Trustee may require that thereof to the Registered Owners and the Issuer, which notice may be given concurrently reasonable indemnity or other assurances be furnished to it for the reimbursement of all with the notice of resignation given by any resigning Trustee. Any successor so expenses which it may incur and to protect it against all risk and liability by reason of any appointed by the Borrower shall immediately and without further act be superseded by a action so taken, including without limitation any and all environmental liability, and successor appointed in the manner above provided by the Registered Owners of a except only any liability which may result from its negligence or willful misconduct. The majority in aggregate principal amount of the Bonds then Outstanding. In the event that Trustee may take action without requiring such indemnification or other assurances and the Borrower or the Registered Owners fail to appoint a successor (within 60 days, in the in such event, the Trustee shall be entitled to indemnification by the Borrower pursuant to case of a resignation), the Trustee may petition a court of competent jurisdiction for appointment of a successor trustee.

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(c) Every successor trustee shall always be a bank or trust company in good indentures supplemental hereto (which supplemental indentures shall thereafter form a part standing, be qualified to act hereunder, be subject to examination by a federal or state hereof) for any one or more or all of the following purposes: authority and have capital and surplus of not less than $75,000,000. Any successor appointed hereunder shall execute, acknowledge and deliver to the Issuer an instrument (a) to add to the covenants and agreements of the Issuer contained in this accepting such appointment hereunder, and thereupon such successor shall, without any Indenture for the protection or benefit of the Registered Owners, other covenants and further act, deed or conveyance, become vested with all the estates, properties, rights, agreements thereafter to be observed for the protection or benefit of the Registered powers and trusts of its predecessor in the trust hereunder with like effect as if originally Owners, or to surrender or limit any right or power herein reserved or conferred upon the named as Trustee herein; but the Trustee retiring shall, nevertheless, on the written Issuer; demand of its successor, execute and deliver an instrument conveying and transferring to such successor, upon the trusts herein expressed, all the estates, properties, rights, powers (b) to cure any ambiguity, or to cure, correct or supplement any defect or and trusts of the predecessor (subject, however, to the terms and conditions herein set inconsistent provision contained in this Indenture, or to make any provisions with respect forth, including, without limitation, the right of the predecessor Trustee to be paid and to matters arising under this Indenture or for any other purpose if such provisions are reimbursed in full for its fees and expenses pursuant to Section 9.02 hereof and to be necessary or desirable and do not materially adversely affect the interests of the indemnified pursuant to Section 8.06 of the Loan Agreement), and shall duly assign, Registered Owners of the Bonds; transfer and deliver to the successor all properties and moneys held by it under this Indenture. Should any instrument in writing from the Issuer be reasonably required by (c) to subject to the lien of this Indenture additional revenues, properties or any successor for such vesting and confirming, the Issuer shall execute, acknowledge and collateral; deliver the said deeds, conveyances and instruments on the request of such successor, (d) to modify, alter, amend or supplement this Indenture in such a manner as subject to Section 4.06(b) hereof. shall permit the qualification hereof under the Trust Indenture Act of 1939, as from time (d) The instruments evidencing the resignation or removal of the Trustee and to time amended; or the appointment of a successor hereunder, together with all other instruments provided (e) to provide for the issuance of Additional Bonds, unless consent is required for in this Section (other than notices), shall be filed and/or recorded by the successor pursuant to Section 2.11 hereof. Trustee in each recording office where this Indenture shall have been filed and/or recorded. Section 10.02. Supplemental Indentures Requiring Consent of Registered Owners.

Section 9.04. Conversion, Consolidation or Merger of Trustee. Any bank or trust (a) Exclusive of supplemental indentures covered by Section 10.01 hereof, the company into which the Trustee or its successor may be converted, merged or with which it may Registered Owners of not less than a majority in aggregate principal amount of the Bonds be consolidated, or to which it may sell or transfer its trust business as a whole shall be the then Outstanding shall have the right, from time to time, to consent to and approve the successor of the Trustee under this Indenture with the same rights, powers, duties and obligations execution by the Issuer and the Trustee of such indenture or indentures supplemental and subject to the same restrictions, limitations and liabilities as its predecessor, all without the hereto as shall be deemed necessary or desirable by the Issuer for the purpose of execution or filing of any papers or any further act on the part of any of the parties hereto, modifying, altering, amending, adding to, or rescinding, in any particular, any of the anything herein to the contrary notwithstanding. In case any of the Bonds to be issued hereunder terms or provisions contained in this Indenture. shall have been authenticated, but not delivered, any successor Trustee may adopt the certificate of any predecessor Trustee, and deliver the same as authenticated; and, in case any of such (b) If at any time the Issuer shall request the Trustee to enter into such Bonds shall not have been authenticated, any successor Trustee may authenticate such Bonds in supplemental indenture for any of the purposes set forth in this Section, the Trustee shall, the name of such successor Trustee. upon being reasonably indemnified by the Borrower (to the extent reasonably required by the Trustee) with respect to expenses, mail by first-class mail notice of the proposed ARTICLE X execution of such supplemental indenture to the Registered Owners of the Bonds at their addresses as the same shall last appear upon the registration records. The Borrower shall SUPPLEMENTAL INDENTURES AND AMENDMENTS be responsible for such expenses. Such notice shall briefly set forth the nature of the OF THE LOAN AGREEMENT AND THE DEED OF TRUST proposed supplemental indenture and shall state that copies thereof are on file at the designated corporate trust office of the Trustee for inspection by all Registered Owners. Section 10.01. Supplemental Indentures Not Requiring Consent of Registered If, within 60 days following the mailing of such notice, the Registered Owners of the Owners. At the request of the Borrower, the Trustee or the Issuer may (but shall not be requisite principal amount of the Bonds Outstanding at the time of the execution of any obligated to), without the consent of, or notice to, the Registered Owners, enter into such such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no Registered Owner of any Bond shall have any right to object to

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any of the terms and provisions contained therein, or the operation thereof, or in any Owners of the requisite principal amount of the Bonds Outstanding at the time of the execution manner to question the propriety of the execution thereof, or to enjoin or restrain the of any such amendment, change or modification shall have consented to and approved the Trustee or the Issuer from executing the same or from taking any action pursuant to the execution of the agreement reflecting such amendment, change or modification thereof as herein provisions thereof. provided, no Registered Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the Section 10.03. Execution of Supplemental Indentures. The Trustee is authorized to propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from join with the Issuer in the execution of any such supplemental indenture and to make further executing the same or from taking any action pursuant to the provisions thereof. agreements and stipulations which may be contained therein, but the Trustee shall not be obligated to enter into any such supplemental indenture which materially adversely affects its Section 10.06. Execution of Amended Loan Agreement. The Trustee shall, prior to its rights, duties, or immunities under this Indenture. The Trustee shall require delivery of an consent to any supplemental amendment or change to the Loan Agreement, require delivery of opinion of Bond Counsel acceptable to the Trustee to the effect that each such supplemental an opinion of Bond Counsel or counsel to the Borrower, as applicable, acceptable to the Trustee indenture (a) has been validly authorized and duly executed by the Issuer and is enforceable to the effect that such supplemental amendment or change to the Loan Agreement (a) has been against the Issuer in accordance with its terms, (b) will not adversely affect the qualification of validly authorized and duly executed by the Issuer and the Borrower and is enforceable against the Bonds as obligations which may be issued pursuant to the Act, (c) will not adversely affect the Issuer and the Borrower in accordance with its terms, (b) will not adversely affect the the exclusion from gross income of interest on the Tax-Exempt Bonds for federal income tax qualification of the Bonds as obligations which may be issued pursuant to the Act, (c) will not purposes, and (d) is permitted pursuant to the terms of this Indenture. Any supplemental adversely affect the exclusion from gross income of interest on the Tax-Exempt Bonds for indenture executed in accordance with the provisions of this Article shall thereafter form a part federal income tax purposes, and (d) is permitted pursuant to the terms of this Indenture. After of this Indenture and all the terms and conditions contained in any such supplemental indenture execution thereof, any supplemental amendment, modification or change to the Loan Agreement as to any provision authorized to be contained therein shall be deemed to be part of this executed in accordance with the provisions of this Article shall thereafter form a part of the Loan Indenture for any and all purposes. In case of the execution and delivery of any supplemental Agreement and all the terms and conditions contained in any such amendment, modification or indenture, express reference may be made thereto in the text of the Bonds issued thereafter, if change to the Loan Agreement as to any provision authorized to be contained therein shall be any. deemed to be part of the Loan Agreement for any and all purposes.

Section 10.04. Amendments, etc., of the Loan Agreement Not Requiring Consent of Section 10.07. Amendments, etc., of the Deed(s) of Trust Not Requiring Consent of Registered Owners. The Issuer and the Trustee may (but shall not be obligated to), without the Registered Owners. The Issuer and the Trustee may (but shall not be obligated to), without the consent of or notice to the Registered Owners, consent to any amendment, change or consent of or notice to the Registered Owners, consent to any amendment, change or modification of the Loan Agreement as may be required (a) by the provisions of the Loan modification of a Deed of Trust as may be required (a) by the provisions of the Deed of Trust or Agreement or this Indenture, (b) for the purpose of curing any ambiguity or formal defect or this Indenture, (b) for the purpose of curing any ambiguity or formal defect or omission, or (c) in omission, (c) to conform the Loan Agreement to any Supplemental Indenture, or (d) in connection with any other change therein which is not to the adverse prejudice of the Trustee nor connection with any other change therein which is not to the adverse prejudice of the Trustee nor materially adversely affects the interests of the Registered Owners of the Bonds. materially adversely affects the interests of the Registered Owners of the Bonds. Section 10.08. Amendments, etc., of the Deed(s) of Trust Requiring Consent of Section 10.05. Amendments, etc., of the Loan Agreement Requiring Consent of Registered Owners. Except for the amendments, changes or modifications referred to in Registered Owners. Except for the amendments, changes or modifications referred to in Section 10.07 hereof, neither the Issuer nor the Trustee shall consent to any other amendment, Section 10.04 hereof, neither the Issuer nor the Trustee shall consent to any other amendment, change or modification of a Deed of Trust without the giving of notice and the written approval change or modification of the Loan Agreement without the giving of notice to and receiving the or consent of the Registered Owners of not less than a majority in aggregate principal amount of written approval or consent of the Registered Owners of not less than a majority in aggregate the Bonds at the time Outstanding, subject to the same limitations set forth in Section 10.02 principal amount of the Bonds at the time Outstanding, subject to the same limitations set forth hereof. Such notice and consent shall be given and procured as provided in Section 10.02 in Section 10.02 hereof. Such notice and consent shall be given and procured as provided in hereof. If at any time the Borrower shall request the consent of the Trustee to any such proposed Section 10.02 hereof. If at any time the Issuer and the Borrower shall request the consent of the amendment, change or modification of a Deed of Trust, the Trustee shall, upon being reasonably Trustee to any such proposed amendment, change or modification of the Loan Agreement, the indemnified by the Borrower with respect to expenses, cause notice of such proposed Trustee shall, upon being reasonably indemnified by the Borrower with respect to expenses, amendment, change or modification to be given in the same manner as provided in Section 10.02 cause notice of such proposed amendment, change or modification to be given in the same hereof. Such notice shall briefly set forth the nature of such proposed amendment, change or manner as provided in Section 10.02 hereof. Such notice shall briefly set forth the nature of such modification and shall state that copies of the instrument embodying the same are on file at the proposed amendment, change or modification and shall state that copies of the instrument designated office of the Trustee for inspection by all Registered Owners. If, within 60 days embodying the same are on file at the designated office of the Trustee for inspection by all following the mailing of such notice, the Registered Owners of the requisite principal amount of Registered Owners. If, within 60 days following the mailing of such notice, the Registered the Bonds Outstanding at the time of the execution of any such amendment, change or

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modification shall have consented to and approved the execution of the agreement reflecting (i) The fact and date of the execution by any Registered Owner or his such amendment, change or modification thereof as herein provided, no Registered Owner of or her attorney of such instrument may be proved by the certificate of any officer any Bond shall have any right to object to any of the terms and provisions contained therein, or authorized to take acknowledgments in the jurisdiction in which he purports to act the operation thereof, or in any manner to question the propriety of the execution thereof, or to that the person signing such request or other instrument acknowledged to him the enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action execution thereof, or by an affidavit of a witness of such execution, duly sworn to pursuant to the provisions thereof. before a notary public.

Section 10.09. Execution of Amended Deed of Trust. The Trustee shall, prior to its (ii) The Registered Owner of any Bond and the amount and numbers consent to any supplemental amendment or change to a Deed of Trust, require delivery of an of such Bonds and the date of owning the same shall be proved by the registration opinion of Bond Counsel or counsel to the Borrower, as applicable, acceptable to the Trustee to records of the Issuer kept by the Trustee. the effect that such supplemental amendment or change to such Deed of Trust (a) has been (b) Any request or consent of the Registered Owner of any Bond shall bind all validly authorized and duly executed by the Borrower and the trustor thereunder and is future owners of such Bond in respect of anything done or suffered to be done by the enforceable against the Borrower and the trustor thereunder in accordance with its terms, (b) will Issuer or the Trustee in accordance therewith. not adversely affect the qualification of the Bonds as obligations which may be issued pursuant to the Act, (c) will not adversely affect the exclusion from gross income of interest on the Tax- Section 11.02. Parties Interested Herein. With the exception of rights herein expressly Exempt Bonds for federal income tax purposes, and (d) is permitted pursuant to the terms of this conferred on the Borrower and the Issuer Indemnified Parties, and except as set forth in Indenture. After execution thereof, any supplemental amendment, modification or change to a Section 11.05 hereof, nothing in this Indenture expressed or implied is intended or shall be Deed of Trust executed in accordance with the provisions of this Article shall thereafter form a construed to confer upon or to give to, any person other than the Issuer, the Trustee and the part of such Deed of Trust and all the terms and conditions contained in any such amendment, Registered Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture modification or change to a Deed of Trust as to any provision authorized to be contained therein or any covenant, condition or stipulation hereof; and all the covenants, stipulations, promises and shall be deemed to be part of such Deed of Trust for any and all purposes. agreements in this Indenture contained by and on behalf of the Issuer, the Trustee and the Registered Owners shall be for the sole and exclusive benefit of the Issuer, the Trustee and the Section 10.10. Consent of Original Purchaser, Underwriter or Remarketing Agent. Registered Owners of the Bonds. Notwithstanding anything in this Indenture to the contrary, (a) any original purchaser, underwriter or remarketing agent holding any Bonds may, regardless of its intent to sell or Section 11.03. Titles, Headings, Etc. The titles and headings of the articles, sections, distribute such Bonds in the future, consent as the Registered Owner of such Bonds to any and subsections of this Indenture have been inserted for convenience of reference only and shall supplemental agreement pursuant to this Article X, including any supplemental agreement that in no way modify or restrict any of the terms or provisions hereof. adversely affects the interests of other Registered Owners; and (b) any such holder providing its Section 11.04. Severability. In the event any provision of this Indenture shall be held consent under this Section 10.10 shall not be entitled to receive, nor shall the Trustee be required invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate to provide, to such holder, any prior notice or other documentation regarding such supplemental or render unenforceable any other provision hereof. agreement. Section 11.05. Third-Party Beneficiaries. Each of the Issuer Indemnified Parties and ARTICLE XI the Borrower, to the extent of the rights expressly conferred on the Issuer Indemnified Parties (including, without limitation, their rights to immunity and exculpation from liability) and the MISCELLANEOUS Borrower herein, shall be considered to be intended Third-Party Beneficiaries of this Indenture entitled to enforce such right in his, her, its or their own name. Nothing in this Indenture shall Section 11.01. Evidence of Signature of Registered Owners and Ownership of confer any right upon any person other than the parties hereto and the specifically designated Bonds. Third-Party Beneficiaries of this Indenture.

(a) Any request, consent or other instrument which this Indenture may require Section 11.06. Governing Law. This Indenture shall be governed by and construed in or permit to be signed and executed by the Registered Owners may be in one or more accordance with the laws and judicial decisions of the State, excluding conflicts of law instruments of similar tenor, and shall be signed or executed by such Registered Owners principles. All claims of whatever character arising out of this Indenture, or under any statute or in person or by their attorneys appointed in writing. Proof of the execution of any such common law relating in any way, directly or indirectly, to the subject matter hereof or to the instrument or of an instrument appointing any such attorney, or the Registered Owners of dealings between the Issuer and any other party hereto, if and to the extent that such claim Bonds shall be sufficient (except as otherwise herein expressly provided) if made in the potentially could or actually does involve the Issuer, shall be brought in any state or federal court following manner, but the Trustee may, nevertheless, in its discretion require further or of competent jurisdiction located in the Dane County, Wisconsin. By executing and delivering other proof in cases where it deems the same desirable: this Indenture, each party hereto irrevocably: (a) accepts generally and unconditionally the

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exclusive jurisdiction and venue of such courts; (b) waives any defense of forum non to the Borrower: Uwharrie Green School, Inc. conveniens; and (c) agrees not to seek removal of such proceedings to any court or forum other 5326 U.S. Highway 220 South than as specified above. The foregoing shall not be deemed or construed to constitute a waiver Asheboro, NC 27205 by the Issuer of any prior notice or procedural requirements applicable to actions or claims E-mail: [email protected] against or involving political subdivisions of the State that may exist at the time of and in Attention: Heather Soja connection with such matter. to the Trustee: U.S. Bank National Association Section 11.07. Execution in Counterparts. This Indenture may be executed in several 214 N. Tryon Street, 27th Floor counterparts, each of which shall be an original and all of which shall constitute but one and the CN-NC-H27A same instrument. The exchange of copies of this Indenture and of signatures by facsimile or Charlotte, North Carolina 28202 PDF transmission shall constitute effective execution and delivery of this Indenture as to the Email: [email protected] parties hereto and may be used in lieu of the original indentures and signature pages for all Attention: Global Corporate Trust Services purposes. Section 11.10. Payments Due on Holidays. If the date for making any payment or the Section 11.08. Non-Liability of the Issuer. The Issuer shall not be obligated to pay the principal of, premium, if any, or interest on the Bonds, or any costs incidental thereto, except last day for performance of any act or the exercise of any right, as provided in this Indenture, is from the Trust Estate. The Issuer shall not be liable for any costs, expenses, losses, damages, not a Business Day, such payment may be made or act performed or right exercised on the next claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in succeeding Business Day unless otherwise provided herein with the same force and effect as if connection with this Indenture, the Bonds or the Loan Agreement, except only to the extent done on the nominal date provided in this Indenture. amounts are received for the payment thereof from the Borrower under the Loan Agreement, and except as may result solely from the Issuer’s own willful misconduct. Section 11.11. No Personal Liability of the Indemnified Parties. No Issuer Indemnified Party shall be individually or personally liable for the payment of any principal of, The Trustee hereby acknowledges that the Issuer’s sole source of moneys to repay the premium, if any, or interest on the Bonds or any costs incidental thereto or any sum hereunder or Bonds will be provided by the Trust Estate, and hereby agrees that if such amounts shall ever under the Loan Agreement or any claim based thereon or be subject to any personal liability or prove insufficient to pay all principal, premium, if any, and interest on the Bonds as the same accountability by reason of the execution and delivery of this Indenture or the Loan Agreement. shall become due (whether by maturity, redemption, acceleration or otherwise) or any costs No covenant or agreement contained in the Bonds or in this Indenture shall be deemed to be the incidental thereto, then the Trustee shall give notice to the Borrower in accordance with Section covenant or agreement of any Trustee Indemnified Party (as defined in the Loan Agreement) or 8.01(b) of this Indenture to pay such amounts as are required from time to time to prevent any of any Issuer Indemnified Party in his, her, or its individual capacity, and no Trustee Indemnified deficiency or default in the payment of such principal, premium, if any, or interest on the Bonds, Party or Issuer Indemnified Party shall be liable personally on the Bonds or be subject to any or costs incidental thereto including, but not limited to, any deficiency or default caused by acts, personal liability or accountability by reason of the issuance thereof. omissions, nonfeasance or malfeasance on the part of the Trustee, the Borrower, the Issuer or any third party, subject to any right of reimbursement from the Trustee, the Issuer or any such third Section 11.12. Bonds Owned by the Issuer or the Borrower. In determining whether party, as the case may be, therefor. Registered Owners of Bonds in the requisite aggregate principal amount have concurred in any direction, consent or waiver under this Indenture, Bonds which are owned by the Issuer or the Section 11.09. Notices. Except as otherwise provided in Section 8.01, all notices, Borrower or by any person directly or indirectly controlling or controlled by or under direct or certificates or other communications hereunder shall be sufficiently given and shall be deemed indirect common control with the Borrower (unless the Issuer, the Borrower or such person owns given when mailed by certified mail, return receipt requested, postage prepaid, or overnight all the Bonds which are then Outstanding) shall be disregarded and deemed not to be courier, or given by electronic mail, addressed as follows: Outstanding for the purpose of any such determination, except that, for the purpose of to the Issuer: Public Finance Authority determining whether the Trustee shall be protected in relying on any such direction, consent or 22 East Mifflin Street waiver, only the Bonds which the Trustee knows are so owned shall be so disregarded. The Suite 900 Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the Madison, WI 53703 pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to Facsimile: (608) 237-2368 such Bonds and that the pledgee is not the Issuer, the Borrower or any person directly or E-mail: [email protected] and indirectly controlling or controlled by or under direct or indirect common control with the [email protected] Borrower. In case of a dispute as to such right, any decision by the Trustee taken in good faith Attention: Scott Carper and Michael LaPierre upon the advice of counsel shall be full protection to the Trustee.

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Section 11.13. Undertaking To Provide Ongoing Disclosure. Pursuant to Section 2.05 Section 11.18. No Obligation of the State of North Carolina. No indebtedness of any of the Loan Agreement, the Borrower has undertaken all responsibility for compliance with kind incurred or created by the Borrower shall constitute an indebtedness of the State of North continuing disclosure requirements, and neither the Trustee nor the Issuer shall have no liability Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be to the Registered Owners of the Bonds or any other person with respect to Securities Exchange secured by the faith, credit, or taxing power of the State of North Carolina or its political Commission Rule 15c2-12, as amended. Notwithstanding any other provision of this Indenture, subdivisions. failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder or under the Loan Agreement; however, a bondholder [Remainder of page intentionally left blank] or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the noncompliant Borrower to comply with its obligations under Section 2.05 of the Loan Agreement.

Section 11.14. Right To Inspect.

(a) Following reasonable notice to the Borrower, at any and all reasonable times, the Trustee and the Issuer and their duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right during regular business hours fully to inspect the Facilities, including all books and records of the Borrower (excluding records the confidentiality of which may be protected by law), and to make such copies and memoranda from and with regard thereto as may be desired; provided however, that any disclosure to any third party of the results of any such inspection shall be made only if required by law and then only with proper respect and due regard for the confidentiality requests of the Borrower and of donors to the Borrower.

(b) Additionally, at the direction of the Borrower, the Issuer hereby appoints the Trustee to keep or cause to be kept proper books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts and disbursements received or disbursed according to this Indenture, and such books shall be available for inspections by the Registered Owner of any of the Bonds and by the Borrower during normal business hours of the Trustee and under reasonable conditions.

Section 11.15. Incorporation of Terms of Loan Agreement. The parties hereto acknowledge and agree that to the extent applicable, the terms and provisions of the Loan Agreement are incorporated herein as if they were contained in this Indenture.

Section 11.16. E-Verify: The Trustee understands that "E-Verify" is a federal program operated by the United States Department of Homeland Security and other federal agencies, or any successor or equivalent program used to verify the work authorization of newly hired employees pursuant to federal law in accordance with Section 64-25(5) of the General Statues of North Carolina, as amended. The Trustee uses E-Verify to verify the work authorization of its employees in accordance with Section 64-26(a) of the General Statues of North Carolina, as amended. The Trustee will not use any subcontractors in connection with this Indenture.

Section 11.17. Iran Divestment Certification: As of the date of this Indenture, the Trustee is not on any list created and maintained by the North Carolina Department of State Treasurer pursuant to the Iran Divestment Act of 2015, Article 6E, Chapter 147 of the General Statues of North Carolina.

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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture to be EXHIBIT A executed in their respective corporate names by their duly authorized officers, all as of the date first above written. FORM OF SERIES 2017A BOND

PUBLIC FINANCE AUTHORITY $[PRINCIPALA] PUBLIC FINANCE AUTHORITY EDUCATION REVENUE BONDS By (UWHARRIE CHARTER ACADEMY PROJECT) Name: SERIES 2017A Title: Assistant Secretary No. ______$______

U.S. BANK NATIONAL ASSOCIATION, as Interest Rate Maturity Date Issue Date CUSIP Trustee ___% per annum [June 15, 20__] [November __, 2017] ______

By REGISTERED OWNER: CEDE & CO. Name Title PRINCIPAL AMOUNT: DOLLARS THIS SERIES 2017A BOND HAS BEEN AUTHORIZED AND ISSUED PURSUANT TO THE LAWS OF THE STATE, INCLUDING PARTICULARLY SECTION 66.0304 OF THE WISCONSIN STATUTES, AS AMENDED. BONDS ISSUED UNDER SECTION 66.0304 SHALL NOT BE INVALID FOR ANY IRREGULARITY OR DEFECT IN THE PROCEEDINGS FOR THEIR SALE OR ISSUANCE.

UNLESS THIS SERIES 2017A BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SERIES 2017A BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE (DEFINED BELOW), THIS SERIES 2017A BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. THIS SERIES 2017A BOND MAY NOT BE TRANSFERRED BY THE BENEFICIAL OWNER HEREOF TO ANY PERSON OTHER THAN (I) TO A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED); OR (II) TO AN “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES

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ACT OF 1933, AS AMENDED) AND, IN THE CASE OF ANY ACCREDITED INVESTOR refinance working capital loans of or to the Borrower; and (e) pay all or a portion of the costs of WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, IN A MINIMUM PRINCIPAL issuance of the Series 2017 Bonds (collectively, the “Project”). AMOUNT OF $25,000, REGARDLESS OF ANY LOWER DENOMINATION AUTHORIZED BY THE INDENTURE. Simultaneously with the issuance of the Series 2017A Bonds, the Issuer will issue its Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy PUBLIC FINANCE AUTHORITY (the “Issuer”), a unit of government and a body Project) Series 2017B (the “Series 2017B Bonds” and together with the Series 2017A Bonds, the corporate and politic of the State of Wisconsin (the “State”), pursuant to Sections 66.0301, “Series 2017 Bonds”). In accordance with the Act, the Issuer issued the Series 2017B Bonds to 66.0303 and 66.0304 Wisconsin Statutes, as amended (the “Act”), for value received, hereby make a loan to the Borrower to finance and/or refinance the Project. The Series 2017 Bonds, promises to pay, from the sources hereinafter described, the principal amount stated above in together with any “Additional Bonds” (as defined in the Indenture) issued under the Indenture, lawful money of the United States of America to the Registered Owner named above, or are referred to collectively as the “Bonds.” registered assigns, on the maturity date stated above (unless this bond shall have been called for prior redemption, in which case on such redemption date), upon the presentation and surrender As provided in the Indenture, Additional Bonds of the Issuer may be issued at the Issuer’s hereof at the designated corporate trust office of U.S. Bank National Association, as trustee (the sole and exclusive discretion and may be secured on a parity basis with the Series 2017 Bonds. “Trustee”) under an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and Such Additional Bonds may be issued from time to time in one or more series, in various between the Issuer and the Trustee, and to pay, from like sources, to the person who is the principal amounts and for the benefit of the Borrower, may mature at different times, may bear Registered Owner hereof on the first day of the month of any Interest Payment Date (the interest at different rates and may otherwise vary as provided in the Indenture, and the aggregate “Regular Record Date”) by check or draft mailed to such Registered Owner (except that principal amount of such Additional Bonds issued and to be issued under the Indenture is not registered owners of at least $500,000 in aggregate principal amount of the Series 2017 Bonds limited. (as defined below) Outstanding (as defined in the Indenture) may, by written request received by the Trustee at least 10 Business Days (as defined in the Indenture) prior to the Regular Record The Series 2017 Bonds have been authorized and issued pursuant to and in full Date, receive payment of interest by wire transfer at the address specified in such request, which compliance with the laws of the State, particularly Section 66.0304 of the Wisconsin Statutes, as address must be in the continental United States) at his or her address as it last appears on the amended, and by authority of resolutions adopted by the Issuer. THE SERIES 2017 BONDS registration books kept for that purpose at the offices of the Trustee, interest on said sum in like ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM coin or currency from the date hereof at the interest rate set forth above, payable semiannually on THE TRUST ESTATE (AS DEFINED IN THE INDENTURE), AND EXCEPT FROM SUCH [June 15] and [December 15] of each year, commencing [June 15, 2018], until payment of the SOURCE, NONE OF THE ISSUER, ANY SPONSOR (AS DEFINED IN THE INDENTURE), principal hereof has been made or provided for. Any such interest not so timely paid or duly ANY MEMBER (AS DEFINED IN THE INDENTURE), ANY ISSUER INDEMNIFIED provided for shall cease to be payable to the Registered Owner hereof at the close of business on PARTY (AS DEFINED IN THE INDENTURE), THE STATE OR ANY POLITICAL the Regular Record Date and shall be payable to the Registered Owner hereof at the close of SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION business on a Special Record Date for the payment of any defaulted interest. Such Special APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE OBLIGATED TO Record Date shall be fixed by the Trustee whenever moneys become available for payment of PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY the defaulted interest, and notice of the Special Record Date shall be given to the Registered COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE NOT A DEBT OF THE Owners of the Series 2017 Bonds not less than 10 days prior thereto. STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, THE STATE OR ANY This bond is one of the Public Finance Authority Education Revenue Bonds (Uwharrie POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION Charter Academy Project) Series 2017A (the “Series 2017A Bonds”) duly authorized by the APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS TO LEVY ANY TAX OR TO Issuer in the aggregate principal amount of $[PRINCIPALA], issued under and equally and MAKE ANY APPROPRIATION FOR PAYMENT OF THE SERIES 2017 BONDS OR ANY ratably secured by the Indenture. In accordance with the Act, the Issuer issued the Series 2017A COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE Bonds to make a loan to Uwharrie Green School, Inc., a North Carolina nonprofit corporation TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION (the “Borrower”), to (a) finance and/or refinance the acquisition, construction, improvement OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, ISSUANCE OF THE SERIES 2017 BONDS NOR THE FAITH AND CREDIT OF THE North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) an educational ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY SHALL BE facility to be located on an approximately 40 acre tract of land in Randolph County, North PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” and, together THE ISSUER HAS NO TAXING POWER. with the Existing Facility, the “Facilities”); (b) fund any required reserve funds for the Series 2017 Bonds; (c) fund capitalized interest on the Series 2017 Bonds, if any; (d) finance and/or NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS OR ANY COSTS

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INCIDENTAL THERETO, AGAINST ANY ISSUER INDEMNIFIED PARTY, UNDER ANY In the case of every redemption, the Trustee shall cause notice of such redemption by RULE OF LAW OR EQUITY, STATUTE, OR CONSTITUTION OR BY THE mailing by first-class mail a copy of the redemption notice to the Registered Owners of the ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, AND ALL Series 2017 Bonds designated for redemption in whole or in part, at their addresses as the same SUCH LIABILITY OF ANY ISSUER INDEMNIFIED PARTY, IS HEREBY EXPRESSLY shall last appear upon the registration records, in each case not more than 45 nor less than 20 WAIVED AND RELEASED AS A CONDITION OF AND CONSIDERATION FOR THE days prior to the redemption date; provided, however, that failure to give such notice, or any EXECUTION AND ISSUANCE OF THE SERIES 2017 BONDS. defect therein, shall not affect the validity of any proceedings for the redemption of such Series 2017 Bonds. The Trustee may state that the redemption is conditioned upon receiving from the Redemption Provisions Borrower, prior to the redemption date, sufficient amounts to redeem such Series 2017 Bonds and that if such money is not so received, no Series 2017 Bonds shall be redeemed. Optional Redemption. The Series 2017A Bonds are subject to redemption at the option of the Issuer (which option shall be exercised upon the written direction of the Borrower to the Each notice of redemption shall specify the date fixed for redemption, the redemption Trustee from prepayment of the Series 2017A Promissory Note made by the Borrower pursuant price, the place or places of payment, that payment will be made upon presentation and surrender to Section 11.01 of the Loan Agreement) in whole or in part in Authorized Denominations on of the Series 2017 Bonds to be redeemed, that interest accrued to the date fixed for redemption any date commencing [June 15, 20__], at a redemption price equal to the principal amount to be will be paid as specified in said notice, and that on and after said date interest thereon will cease redeemed, together with accrued interest to the date fixed for redemption, without premium. to accrue. If less than all the Outstanding Series 2017 Bonds are to be redeemed, the notice of Upon the delivery of such written direction by the Borrower to the Trustee, the Issuer shall be redemption shall specify the numbers of the Series 2017 Bonds or portions thereof to be deemed, without any action on the Issuer’s part, to have exercised its option to redeem the Series redeemed. 2017A Bonds under this Section. Series 2017 Bonds which are delivered upon transfer, exchange or other replacement Redemption of Series 2017 Bonds Upon Occurrence of Certain Events. The Series shall bear interest from the most recent Interest Payment Date to which interest has been paid or 2017 Bonds are also subject to extraordinary redemption at the expense of the Borrower from the duly provided for, or if no interest has been paid, from the date of the Series 2017 Bonds. The Net Proceeds of any insurance policy or condemnation award and in the event the New Facility Series 2017 Bonds of each Series shall initially be issued as a single fully registered bond for or any portion thereof is damaged or destroyed or taken in condemnation proceedings as each maturity. provided in Section 7.02 of the Loan Agreement. If called pursuant to Section 5.02 of the Indenture, the Series 2017 Bonds are callable on any date in whole or in part from and to the This Series 2017A Bond is fully transferable by the Registered Owner hereof in person or extent of funds on deposit under the Indenture and available for this purpose at a redemption by his or her duly authorized attorney on the registration books kept by the Trustee, upon price equal to the principal amount of each Bond redeemed plus accrued interest to the surrender of this Series 2017A Bond together with a duly executed written instrument of transfer redemption date, without premium. satisfactory to the Trustee; subject, however, to the terms of the Indenture which limit the transfer and exchange of Series 2017 Bonds during certain periods. Upon such transfer a new Mandatory Sinking Fund Redemption. The Series 2017A Bonds are subject to fully registered Series 2017A Bond or Series 2017A Bonds of Authorized Denominations for the mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount same aggregate principal amount will be issued to the transferee in exchange therefor, all subject thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund to the terms, limitations and conditions set forth in the Indenture. The Trustee and the Issuer on the redemption dates and in the principal amounts as set forth in the Indenture. shall require the payment by any Registered Owner of this Series 2017A Bond requesting exchange or transfer of the reasonable expenses of the Issuer, if any, of a reasonable transfer or Mandatory Redemption Upon Determination of Taxability. The Series 2017A Bonds exchange fee and of any tax or other governmental charge required to be paid with respect to are subject to mandatory redemption as a whole at the principal amount thereof, plus accrued such exchange or transfer. The Issuer and the Trustee may deem and treat the person in whose interest thereon to the date of redemption, upon the occurrence of a Determination of Taxability name this Series 2017A Bond is registered as the absolute owner hereof, whether or not this related to the Series 2017A Bonds as provided in the Indenture. Series 2017A Bond shall be overdue, for the purpose of receiving payment and for all other purposes, except to the extent otherwise provided herein and in the Indenture with respect to Method of Selecting Series 2017 Bonds; Notices. Unless otherwise specifically stated Regular Record Dates and Special Record Dates for the payment of interest, and neither the herein, any partial redemption of Bonds shall be redeemed in such order of Series and maturity Issuer nor the Trustee shall be affected by any notice to the contrary. as the Borrower shall direct in writing, or if less than all of the Bonds in a single maturity shall be redeemed, the Bonds redeemed shall be selected by lot within such maturity. Redemptions of Notwithstanding the foregoing, so long as the ownership of the Series 2017 Bonds is term Bonds shall be credited against the latest scheduled mandatory sinking fund payment for maintained in book-entry form by The Depository Trust Company (the “Securities Depository”) such Bonds. or a nominee thereof, this Series 2017A Bond may be transferred in whole but not in part only to the Securities Depository or a nominee thereof or to a successor Securities Depository or its nominee.

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To the extent permitted by, and as provided in, the Indenture, modifications or No covenant or agreement contained in the Loan Agreement shall be deemed to be the amendments of the Indenture, or of any indenture supplemental thereto, and of the rights and covenant or agreement of any appointed official, officer, agent, servant or employee of the obligations of the Issuer and of the Registered Owners of the Bonds may be made by the Issuer Borrower in his or her individual capacity, and the members of the governing body of the and the Trustee but without the consent of the Registered Owners of the Bonds in certain cases Borrower shall not be liable personally or be subject to any personal liability or accountability by described in the Indenture, including any change which does not materially adversely affect the reason of the execution and delivery thereof. interests of the Registered Owners of the Bonds. Certain other amendments may be made by the Issuer and the Trustee with the consent of the Registered Owners of not less than a majority in It is hereby certified, recited and declared that all conditions, acts and things required by aggregate principal amount of the Bonds then Outstanding; provided, however, that no such the Constitution or statutes of the State or by the Act or the Indenture to exist, to have happened modification or amendment shall be made which will constitute an extension of the maturity of, or to have been performed precedent to the issuance of this Series 2017A Bond exist, have or a reduction in the principal amount of, or a reduction of the rate of interest on or extension of happened and have been performed. the time of payment of interest on, or a reduction of any premium payable upon redemption of, any Bond, which are unconditional unless consented to by all Registered Owners adversely Copies of the Indenture, the Loan Agreement, the Account Control Agreement, the Deed affected by such change. Any such consent by the Registered Owner of this Series 2017A Bond of Trust and other documents relating to the Series 2017 Bonds are on file at the designated shall be conclusive and binding upon such Registered Owner and upon all future Registered office of the Trustee, and reference is made to those instruments for the provisions relating, Owners of this Series 2017A Bond and of any Series 2017A Bond issued upon the transfer or among other things, to the limited liability of the Borrower, the terms of and security for the exchange of this Series 2017A Bond whether or not notation of such consent is made upon this Series 2017 Bonds, the custody and application of the proceeds of the Series 2017 Bonds, the Series 2017A Bond. rights and remedies of the Registered Owners of the Series 2017 Bonds, amendments, and the rights, duties and obligations of the Issuer and the Trustee to all of which the Registered Owner The Registered Owner of this Series 2017A Bond shall have no right to enforce the hereof, by acceptance of this Series 2017A Bond, assents. provisions of the Indenture or to institute action to enforce the pledge, assignment or covenants made therein or to take any action with respect to an event of default under the Indenture or to COPIES OF THE USDA DOCUMENTS, INCLUDING THE PARITY institute, appear in, or defend any suit, action or other proceeding at law or in equity with respect AGREEMENT WITH RESPECT TO THE BORROWER’S “PLEDGED REVENUES”, thereto, except as provided in the Indenture. In case an event of default under the Indenture shall ALSO MAY BE OBTAINED FROM THE TRUSTEE. occur, the principal of all of the Bonds at any such time Outstanding may be declared or may become due and payable, upon the conditions and in the manner and with the effect provided in This Series 2017A Bond shall not be entitled to any benefit under the Indenture or any the Indenture. The Indenture provides that such declaration may in certain events be rescinded indenture supplemental thereto, or become valid or obligatory for any propose until the Trustee by the Trustee, with the consent of the Registered Owners of a requisite principal amount of the shall have signed the certificate of authentication hereon. Bonds then Outstanding.

None of the members of the board of directors of the Borrower, the board of directors of the Issuer or any person executing the Series 2017 Bonds shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

The liability and obligations of the Issuer under the Loan Agreement and the Indenture with respect to all or any portion of the Series 2017 Bonds may be discharged at or prior to the maturity or redemption of the Series 2017 Bonds upon the making of provision for the payment thereof on the terms and conditions set forth in the Loan Agreement and the Indenture.

No covenant or agreement contained in the Series 2017 Bonds or in the Indenture shall be deemed to be the covenant or agreement of any appointed official, officer, agent, servant or employee of the Issuer in his or her individual capacity or of any officer, agent, servant or employee of the Trustee in his or her individual capacity, and neither the members of the governing body of the Issuer nor any official executing the Series 2017 Bonds, including any officer or employee of the Trustee, shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

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IN WITNESS WHEREOF, Public Finance Authority has caused this Series 2017A Bond [FORM OF CERTIFICATE OF AUTHENTICATION] to be signed in its name and on its behalf by the manual or facsimile signature of an Issuer Authorized Signatory. Date of Authentication:

PUBLIC FINANCE AUTHORITY This is one of the Series 2017A Bonds described in the within mentioned Indenture of Trust.

U.S. BANK NATIONAL ASSOCIATION, as By Trustee Name: Title: Assistant Secretary

By Authorized Signatory

[END OF FORM OF CERTIFICATE OF AUTHENTICATION]

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[FORM OF ASSIGNMENT] EXHIBIT B

ASSIGNMENT FORM OF SERIES 2017B BOND

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto $[PRINCIPALB] PUBLIC FINANCE AUTHORITY TAXABLE EDUCATION REVENUE BONDS (Please print or typewrite name and address of Transferee) (UWHARRIE CHARTER ACADEMY PROJECT) (Tax Identification or Social Security No.) SERIES 2017B the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) the Trustee under No. ______$______the Indenture as registrar and attorney, to register the transfer of the within Series 2017A Bond on the books kept for registration thereof, with full power of substitution in the premises. Interest Rate Maturity Date Issue Date CUSIP

Dated: ___% per annum [June 15, 20__] [November __, 2017] ______

Signature guaranteed by: REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: DOLLARS

THIS SERIES 2017B BOND HAS BEEN AUTHORIZED AND ISSUED PURSUANT NOTICE: Signature of the registered owner NOTICE: The signature(s) of the registered TO THE LAWS OF THE STATE, INCLUDING PARTICULARLY SECTION 66.0304 OF must be guaranteed by an eligible guarantor owner to this assignment must correspond with THE WISCONSIN STATUTES, AS AMENDED. BONDS ISSUED UNDER SECTION institution pursuant to Securities and Exchange the name as it appears on the face of the within 66.0304 SHALL NOT BE INVALID FOR ANY IRREGULARITY OR DEFECT IN THE Rule 17Ad-15. Series 2017A Bond in every particular, without PROCEEDINGS FOR THEIR SALE OR ISSUANCE. alteration or enlargement or any change UNLESS THIS SERIES 2017B BOND IS PRESENTED BY AN AUTHORIZED whatsoever. REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK

CORPORATION (“DTC”), TO U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, [END OF FORM OF SERIES 2017A BOND] FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SERIES 2017B BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE (DEFINED BELOW), THIS SERIES 2017B BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY. THIS SERIES 2017B BOND MAY NOT BE TRANSFERRED BY THE BENEFICIAL OWNER HEREOF TO ANY PERSON OTHER THAN (I) TO A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT OF 1933, AS AMENDED); OR (II) TO AN “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED) AND, IN THE CASE OF ANY ACCREDITED INVESTOR

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WHO IS NOT A QUALIFIED INSTITUTIONAL BUYER, IN A MINIMUM PRINCIPAL Simultaneously with the issuance of the Series 2017B Bonds, the Issuer will issue its AMOUNT OF $25,000, REGARDLESS OF ANY LOWER DENOMINATION AUTHORIZED Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series BY THE INDENTURE. 2017A (the “Series 2017A Bonds” and together with the Series 2017B Bonds, the “Series 2017 Bonds”). In accordance with the Act, the Issuer issued the Series 2017A Bonds to finance and/or PUBLIC FINANCE AUTHORITY (the “Issuer”), a unit of government and a body refinance the Project. corporate and politic of the State of Wisconsin (the “State”), pursuant to Sections 66.0301, 66.0303 and 66.0304 Wisconsin Statutes, as amended (the “Act”), for value received, hereby As provided in the Indenture, Additional Bonds of the Issuer may be issued at the Issuer’s promises to pay, from the sources hereinafter described, the principal amount stated above in discretion and may be secured on a parity basis with the Series 2017 Bonds. Such Additional lawful money of the United States of America to the Registered Owner named above, or Bonds may be issued from time to time in one or more series, in various principal amounts and registered assigns, on the maturity date stated above (unless this bond shall have been called for for the benefit of the Borrower, may mature at different times, may bear interest at different rates prior redemption, in which case on such redemption date), upon the presentation and surrender and may otherwise vary as provided in the Indenture, and the aggregate principal amount of such hereof at the designated corporate trust office of U.S. Bank National Association, as trustee (the bonds and other obligations issued and to be issued under the Indenture is not limited. “Trustee”) under an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and the Trustee, and to pay, from like sources, to the person who is the The Series 2017 Bonds have been authorized and issued pursuant to and in full Registered Owner hereof on the first day of the month of any Interest Payment Date (the compliance with the laws of the State, particularly Section 66.0304 of the Wisconsin Statutes, as “Regular Record Date”) by check or draft mailed to such Registered Owner (except that amended, and by authority of resolutions adopted by the Issuer’s governing body. THE SERIES registered owners of at least $500,000 in aggregate principal amount of the Series 2017 Bonds 2017 BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE (as defined below) Outstanding (as defined in the Indenture) may, by written request received by SOLELY FROM THE TRUST ESTATE (AS DEFINED IN THE INDENTURE), AND the Trustee at least 10 Business Days (as defined in the Indenture) prior to the Regular Record EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY SPONSOR (AS DEFINED Date, receive payment of interest by wire transfer at the address specified in such request, which IN THE INDENTURE), ANY MEMBER (AS DEFINED IN THE INDENTURE), ANY address must be in the continental United States) at his or her address as it last appears on the ISSUER INDEMNIFIED PARTY (AS DEFINED IN THE INDENTURE), THE STATE OR registration books kept for that purpose at the offices of the Trustee, interest on said sum in like ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL coin or currency from the date hereof at the interest rate set forth above, payable semiannually on SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS SHALL BE [June 15] and [December 15] of each year, commencing [June 15, 2018], until payment of the OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST principal hereof has been made or provided for. Any such interest not so timely paid or duly THEREON OR ANY COSTS INCIDENTAL THERETO. THE SERIES 2017 BONDS ARE provided for shall cease to be payable to the Registered Owner hereof at the close of business on NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, the Regular Record Date and shall be payable to the Registered Owner hereof at the close of INDIRECTLY OR CONTINGENTLY, OBLIGATE, IN ANY MANNER, ANY MEMBER, business on a Special Record Date for the payment of any defaulted interest. Such Special THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY Record Date shall be fixed by the Trustee whenever moneys become available for payment of POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS the defaulted interest, and notice of the Special Record Date shall be given to the Registered TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE Owners of the Series 2017 Bonds not less than 10 days prior thereto. SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY This bond is one of the Public Finance Authority Taxable Education Revenue Bonds POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION (Uwharrie Charter Academy Project) Series 2017B (the “Series 2017B Bonds”) duly authorized APPROVING THE ISSUANCE OF THE SERIES 2017 BONDS NOR THE FAITH AND by the Issuer in the aggregate principal amount of $[PRINCIPALB], issued under and equally CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY and ratably secured by the Indenture. In accordance with the Act, the Issuer issued the Series SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, 2017B Bonds to make a loan to Uwharrie Green School, Inc., a North Carolina nonprofit OR INTEREST ON, THE SERIES 2017 BONDS OR ANY COSTS INCIDENTAL THERETO. corporation (the “Borrower”), to (a) finance and/or refinance the acquisition, construction, THE ISSUER HAS NO TAXING POWER. improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF, an educational facility to be located on an approximately 40 acre tract of land in Randolph PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2017 BONDS OR ANY COSTS County, North Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State INCIDENTAL THERETO, AGAINST ANY ISSUER INDEMNIFIED PARTY, UNDER ANY Route 1114) and Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” RULE OF LAW OR EQUITY, STATUTE, OR CONSTITUTION OR BY THE and, together with the Existing Facility, the “Facilities”); (b) fund any required reserve funds for ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE, AND ALL the Series 2017 Bonds; (c) fund capitalized interest on the Series 2017 Bonds, if any; (d) finance SUCH LIABILITY OF ANY ISSUER INDEMNIFIED PARTY, IS HEREBY EXPRESSLY and/or refinance working capital loans of or to the Borrower; and (e) pay all or a portion of the WAIVED AND RELEASED AS A CONDITION OF AND CONSIDERATION FOR THE costs of issuance of the Series 2017 Bonds (collectively, the “Project”). EXECUTION AND ISSUANCE OF THE SERIES 2017 BONDS.

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Redemption Provisions satisfactory to the Trustee; subject, however, to the terms of the Indenture which limit the transfer and exchange of Series 2017B Bonds during certain periods. Upon such transfer a new Redemption of Series 2017 Bonds Upon Occurrence of Certain Events. The Series fully registered Series 2017B Bond or Series 2017B Bonds of Authorized Denominations for the 2017 Bonds are subject to extraordinary redemption at the expense of the Borrower from the Net same aggregate principal amount will be issued to the transferee in exchange therefor, all subject Proceeds of any insurance policy or condemnation award and in the event the New Facility or to the terms, limitations and conditions set forth in the Indenture. The Trustee and the Issuer any portion thereof is damaged or destroyed or taken in condemnation proceedings as provided shall require the payment by any Registered Owner of this Series 2017B Bond requesting in Section 7.02 of the Loan Agreement. If called pursuant to Section 5.02 of the Indenture, the exchange or transfer of the reasonable expenses of the Issuer, if any, of a reasonable transfer or Series 2017 Bonds are callable on any date in whole or in part from and to the extent of funds on exchange fee and of any tax or other governmental charge required to be paid with respect to deposit under the Indenture and available for this purpose at a redemption price equal to the such exchange or transfer. The Issuer and the Trustee may deem and treat the person in whose principal amount of each Series 2017 Bond redeemed plus accrued interest to the redemption name this Series 2017B Bond is registered as the absolute owner hereof, whether or not this date, without premium. Series 2017B Bond shall be overdue, for the purpose of receiving payment and for all other purposes, except to the extent otherwise provided herein and in the Indenture with respect to Mandatory Sinking Fund Redemption. The Series 2017B Bonds are subject to Regular Record Dates and Special Record Dates for the payment of interest, and neither the mandatory sinking fund redemption at a redemption price equal to 100% of the principal amount Issuer nor the Trustee shall be affected by any notice to the contrary. thereof plus accrued interest to the redemption date from amounts on deposit in the Bond Fund on the redemption dates and in the principal amounts as set forth in the Indenture. Notwithstanding the foregoing, so long as the ownership of the Series 2017 Bonds is maintained in book-entry form by The Depository Trust Company (the “Securities Depository”) Method of Selecting Bond; Notices. Unless otherwise specifically stated in the or a nominee thereof, this Series 2017B Bond may be transferred in whole but not in part only to Indenture, any partial redemption of the Bonds shall be redeemed in such order of series and the Securities Depository or a nominee thereof or to a successor Securities Depository or its maturity as the Borrower shall direct, or if less than all of the Bonds in a single maturity shall be nominee. redeemed, the Bonds redeemed shall be selected by lot within such maturity. To the extent permitted by, and as provided in, the Indenture, modifications or In the case of every redemption, the Trustee shall cause notice of such redemption by amendments of the Indenture, or of any indenture supplemental thereto, and of the rights and mailing by first-class mail a copy of the redemption notice to the Registered Owners of the obligations of the Issuer and of the Registered Owners of the Bonds may be made by the Issuer Bonds designated for redemption in whole or in part, at their addresses as the same shall last and the Trustee but without the consent of the Registered Owners of the Bonds in certain cases appear upon the registration records, in each case not more than 45 nor less than 20 days prior to described in the Indenture, including any change which does not materially adversely affect the the redemption date; provided, however, that failure to give such notice, or any defect therein, interests of the Registered Owners of the Bonds. Certain other amendments may be made by the shall not affect the validity of any proceedings for the redemption of such Bonds. The Trustee Issuer and the Trustee with the consent of the Registered Owners of not less than a majority in may state that the redemption is conditioned upon receiving from the Borrower, prior to the aggregate principal amount of the Bonds then Outstanding; provided, however, that no such redemption date, sufficient amounts to redeem such Bonds and that if such money is not so modification or amendment shall be made which will constitute an extension of the maturity of, received, no Bonds shall be redeemed. or a reduction in the principal amount of, or a reduction of the rate of interest on or extension of the time of payment of interest on, or a reduction of any premium payable upon redemption of, Each notice of redemption shall specify the date fixed for redemption, the redemption any Bond, which are unconditional unless consented to by all Registered Owners adversely price, the place or places of payment, that payment will be made upon presentation and surrender affected by such change. Any such consent by the Registered Owner of this Series 2017B Bond of the Bonds to be redeemed, that interest accrued to the date fixed for redemption will be paid shall be conclusive and binding upon such Registered Owner and upon all future Registered as specified in said notice, and that on and after said date interest thereon will cease to accrue. If Owners of this Series 2017B Bond and of any Series 2017B Bond issued upon the transfer or less than all the Outstanding Bonds are to be redeemed, the notice of redemption shall specify exchange of this Series 2017B Bond whether or not notation of such consent is made upon this the numbers of the Bonds or portions thereof to be redeemed. Series 2017B Bond.

Bonds which are delivered upon transfer, exchange or other replacement shall bear The Registered Owner of this Series 2017B Bond shall have no right to enforce the interest from the most recent Interest Payment Date to which interest has been paid or duly provisions of the Indenture or to institute action to enforce the pledge, assignment or covenants provided for, or if no interest has been paid, from the date of the Bonds. The Bonds of each made therein or to take any action with respect to an event of default under the Indenture or to Series shall initially be issued as a single fully registered bond for each maturity. institute, appear in, or defend any suit, action or other proceeding at law or in equity with respect thereto, except as provided in the Indenture. In case an event of default under the Indenture shall This Series 2017B Bond is fully transferable by the Registered Owner hereof in person or occur, the principal of all of the Bonds at any such time Outstanding may be declared or may by his or her duly authorized attorney on the registration books kept by the Trustee, upon become due and payable, upon the conditions and in the manner and with the effect provided in surrender of this Series 2017B Bond together with a duly executed written instrument of transfer the Indenture. The Indenture provides that such declaration may in certain events be rescinded

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by the Trustee, with the consent of the Registered Owners of a requisite principal amount of the This Series 2017B Bond shall not be entitled to any benefit under the Indenture or any Bonds then Outstanding. indenture supplemental thereto, or become valid or obligatory for any propose until the Trustee shall have signed the certificate of authentication hereon. None of the members of the board of directors of the Borrower, the board of directors of the Issuer or any person executing the Series 2017 Bonds shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

The liability and obligations of the Issuer under the Loan Agreement and the Indenture with respect to all or any portion of the Series 2017 Bonds may be discharged at or prior to the maturity or redemption of the Series 2017 Bonds upon the making of provision for the payment thereof on the terms and conditions set forth in the Loan Agreement and the Indenture.

No covenant or agreement contained in the Series 2017 Bonds or in the Indenture shall be deemed to be the covenant or agreement of any appointed official, officer, agent, servant or employee of the Issuer in his or her individual capacity or of any officer, agent, servant or employee of the Trustee in his or her individual capacity, and neither the members of the governing body of the Issuer nor any official executing the Series 2017 Bonds, including any officer or employee of the Trustee, shall be liable personally on the Series 2017 Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

No covenant or agreement contained in the Loan Agreement shall be deemed to be the covenant or agreement of any appointed official, officer, agent, servant or employee of the Borrower in his or her individual capacity, and the members of the governing body of the Borrower shall not be liable personally or be subject to any personal liability or accountability by reason of the execution and delivery thereof.

It is hereby certified, recited and declared that all conditions, acts and things required by the Constitution or statutes of the State or by the Act or the Indenture to exist, to have happened or to have been performed precedent to the issuance of this Series 2017B Bond exist, have happened and have been performed.

Copies of the Indenture, the Loan Agreement, the Account Control Agreement, the Deed of Trust and other documents relating to the Series 2017 Bonds are on file at the designated office of the Trustee, and reference is made to those instruments for the provisions relating, among other things, to the limited liability of the Borrower, the terms of and security for the Series 2017 Bonds, the custody and application of the proceeds of the Series 2017 Bonds, the rights and remedies of the Registered Owners of the Series 2017 Bonds, amendments, and the rights, duties and obligations of the Issuer and the Trustee to all of which the Registered Owner hereof, by acceptance of this Series 2017B Bond, assents.

COPIES OF THE USDA DOCUMENTS, INCLUDING THE PARITY AGREEMENT WITH RESPECT TO THE BORROWER’S “PLEDGED REVENUES”, ALSO MAY BE OBTAINED FROM THE TRUSTEE.

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IN WITNESS WHEREOF, Public Finance Authority has caused this Series 2017B Bond [FORM OF CERTIFICATE OF AUTHENTICATION] to be signed in its name and on its behalf by the manual or facsimile signature of an Issuer Authorized Signatory. Date of Authentication:

PUBLIC FINANCE AUTHORITY This is one of the Series 2017B Bonds described in the within mentioned Indenture of Trust.

U.S. BANK NATIONAL ASSOCIATION, as By Trustee Name: Title: Assistant Secretary

By Authorized Signatory

[END OF FORM OF CERTIFICATE OF AUTHENTICATION]

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[FORM OF ASSIGNMENT] EXHIBIT C-1

ASSIGNMENT FORM OF INVESTOR LETTER (INVESTOR)

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto Public Finance Authority Kutak Rock LLP Madison, Wisconsin Atlanta, Georgia

(Please print or typewrite name and address of Transferee) U.S. Bank National Association (Tax Identification or Social Security No.) Atlanta, Georgia the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) the Trustee under the Indenture as registrar and attorney, to register the transfer of the within Series 2017B Bond Re: $[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie on the books kept for registration thereof, with full power of substitution in the premises. Charter Academy Project) Series 2017A and $[PRINCIPALB] Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Dated: Project) Series 2017B

Signature guaranteed by: Ladies and Gentlemen:

The undersigned (“Investor”) is the purchaser of $[______] principal amount of the [check the applicable series]:

NOTICE: Signature of the registered owner NOTICE: The signature(s) of the registered ___ Public Finance Authority Education Revenue Bonds (Uwharrie Charter must be guaranteed by an eligible guarantor owner to this assignment must correspond with Academy Project) Series 2017A institution pursuant to Securities and Exchange the name as it appears on the face of the within Rule 17Ad-15. Series 2017B Bond in every particular, without ___ Public Finance Authority Taxable Education Revenue Bonds (Uwharrie alteration or enlargement or any change Charter Academy Project) Series 2017B whatsoever. (the “Bonds”) issued by the Public Finance Authority (the “Issuer”) pursuant to that certain [END OF FORM OF SERIES 2017B BOND] Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”).

Capitalized terms not defined herein shall be given the meaning ascribed thereto in the Indenture.

Investor has been informed that the Issuer will not sell or permit any Bonds to be sold to Investor unless Investor makes the representations, warranties and covenants herein and authorizes the Issuer and the Trustee to rely thereon and such representations, warranties and covenants are made by the Investor AS AN INDUCEMENT to the sale of the Bonds to Investor.

In connection with the sale of the Bonds to Investor, Investor hereby makes the following covenants and representations upon which you may rely:

1. Investor has received and reviewed a copy of (a) the Limited Offering Memorandum relating to the Bonds, dated [______, 2017]; and (b) such other documents, agreements, certificates and instruments referenced therein or pertaining thereto or to the Bonds to which Investor is a party or deems necessary and appropriate in its evaluation of the Bonds, and hereby represents and warrants that the information contained therein, along with all other additional information supplied by the Borrower to the Investor, is sufficient for the Investor to

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decide to purchase the Bonds. The Investor acknowledges that the issuance and sale of the and copies of the Indenture, the Loan Agreement and the Tax Certificate (as defined in the Bonds and the execution, delivery and performance of the Loan Agreement, the Account Control Indenture)), to which a reasonable investor would attach significance in making investment Agreement, the Note, the Bond Purchase Agreement, the Continuing Disclosure Agreement, the decisions, and Investor has had the opportunity to ask questions and receive answers from Deed of Trust, the Tax Certificate, the Bonds or the Indenture will be governed by and construed knowledgeable individuals concerning the Borrower, the Facilities, the Project and the Bonds in accordance with the applicable laws of the State, the State of North Carolina and the United and the security therefor so that, as a reasonable investor, the Investor has been able to make its States of America, each as set forth therein. own independent decision to purchase the Bonds and to whether the Bonds are appropriate or proper for investment by the Investor. Investor acknowledges that it has not relied upon the 2. Investor has sufficient knowledge and experience in financial and investment Issuer or the Trustee for any information in connection with the Investor’s purchase of the matters, including the purchase and ownership of municipal and other tax-exempt or taxable Bonds. obligations, to be able to evaluate and understand the risks and merits of an investment in the Bonds (and is able to bear the risks of such investment for an indefinite time). 9. INVESTOR ACKNOWLEDGES THAT THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST 3. Investor is acquiring the Bonds solely for its own account for investment ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER, purposes, and does not presently intend to make a public distribution of, or to resell or transfer, ANY SPONSOR, ANY ISSUER INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL all or any part of the Bonds, provided however, Investor reserves the right to sell or transfer the SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION Bonds in the future in accordance with the transfer restrictions set forth in the Indenture and APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE paragraph 7 below. PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR ANY 4. Investor understands that it may be required to bear the risks of this investment in MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE the Bonds for an indefinite time, since any sale prior to maturity may not be possible. IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE 5. The Bonds are a financially suitable investment for Investor consistent with OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR Investor’s investment needs and objectives. PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT 6. Investor is either (a) an “accredited investor” within the meaning of Rule 501(a) NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL of Regulation D under the Securities Act of 1933, as amended (the “1933 Act”); or (b) a SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION “Qualified Institutional Buyer” as defined in Rule 144A under the 1933 Act; Investor APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE understands that the Bonds are not registered under the 1933 Act and that such registration is not ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY, SHALL BE legally required as of the date hereof; and further understands that the Bonds (i) are not being PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER (ii) may not be resold, transferred, pledged or hypothecated, in whole or in part, unless they are HAS NO TAXING POWER. registered under the 1933 Act, and applicable state securities laws or unless an exemption from registration is available; (iii) will not be listed in any stock or other securities exchange, (iv) will 10. Investor has made its own inquiry and analysis with respect to the Bonds and the be delivered in a form which may not be readily marketable, [and (v) will not carry a rating from security therefor (including, without limitation, a credit evaluation of the Borrower, to the extent any rating service]. Investor deemed it necessary or appropriate), and other material factors affecting the security and payment of the Bonds. Investor is aware that the business of the Borrower involves certain 7. Investor acknowledges that (a) the Bonds are not transferable except to (i) an economic variables and risks that could adversely affect the security for the Bonds. “accredited investor,” or (ii) a “Qualified Institutional Buyer”; and (b) if the Bonds are transferred to an “accredited investor” who is not also a Qualified Institutional Buyer, such 11. The Investor hereby certifies that it is not now and has never been controlled by, transferee must purchase and hold a minimum $25,000 in principal amount of Bonds regardless or under common control, with the Borrower. The Borrower has been and is now not controlled of any lower denomination provided in the Indenture; and Investor agrees to abide by such by the Investor. transfer restrictions. Investor shall be solely and exclusively responsible for compliance with such transfer restrictions, including having a reasonable belief that its transferee is an accredited 12. The Issuer and the Trustee have not undertaken and will not undertake steps to investor or a Qualified Institutional Buyer, as the case may be. ascertain the accuracy or completeness of the information furnished to the Investor with respect to the Borrower, the Facilities, the Bonds or the Project. The Investor has not relied and will not 8. Investor acknowledges that it has either been supplied with or been given access rely upon the Issuer or its officers, directors, employees or agents or the Trustee in any way with to information (including, without limitation, financial statements and other financial information regard to the accuracy or completeness of the information regarding the Borrower, the Facilities

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or the Project furnished to the Investor in connection with its purchase of the Bonds, nor have EXHIBIT C-2 any such parties made any representation to the Investor with respect to that information. FORM OF INVESTOR LETTER (ADVISOR) Dated [______] Public Finance Authority Kutak Rock LLP Madison, Wisconsin Atlanta, Georgia

U.S. Bank National Association Atlanta, Georgia

By Re: $[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie Name Charter Academy Project) Series 2017A and $[PRINCIPALB] Public Finance Title Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Ladies and Gentlemen:

In connection with the purchase on behalf of Investors (defined below) of $[______] principal amount of the [check the applicable series]:

___ Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

___ Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

(the “Bonds”) issued by the Public Finance Authority (the “Issuer”) pursuant to that certain Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee”), the undersigned ______(“Advisor”) does hereby make the representations, warranties, and covenants set forth in paragraphs 1 through 14 hereof, on its own behalf and on behalf of Investors, as applicable, upon which representations, warranties, and covenants you are authorized to rely. Capitalized terms not defined herein shall be given the meaning ascribed thereto in the Indenture.

1. Advisor is registered with the Securities and Exchange Commission as an investment advisor under the Investment Advisers Act of 1940 and is 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.

2. Advisor is the duly appointed representative of the purchasers of the above- referenced principal amount of the Bonds (“Investor”), which have been issued and delivered on this date. Investors have executed [ agreements] with Advisor pursuant to which, among other things, Advisor is authorized to make investment decisions and to deliver this letter on such Investors’ behalf.

3. Advisor acknowledges and each Investor has been or will be informed that the Issuer will not sell or permit any Bonds to be sold to Investors unless Advisor, on its own behalf

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and on behalf of Investors, as applicable, makes the representations, warranties and covenants other securities exchange, (iv) will be delivered in a form which may not be readily marketable, herein and authorizes the Issuer and the Trustee to rely thereon and such representations, [and (v) will not carry a rating from any rating service]. warranties and covenants are made by the Advisor AS AN INDUCEMENT to the sale of the Bonds to Investor. 10. Advisor acknowledges and each Investor has been or will be informed that the Bonds are not transferable except in Authorized Denominations to (a) an “accredited investor” 4. Advisor has received and reviewed a copy of (a) the Limited Offering (in minimum principal amount of $25,000 regardless of any lower minimum Authorized Memorandum relating to the Bonds, dated [______, 2017]; and (b) such other documents, Denomination provided for by the Indenture); or (b) a “Qualified Institutional Buyer”; and agreements, certificates and instruments referenced therein or pertaining thereto or to the Bonds Investor agrees to abide by such transfer restrictions. Investors shall be solely and exclusively to which Advisor deems necessary and appropriate in its evaluation on behalf of the Investors of responsible for compliance with such transfer restrictions, including having a reasonable belief the merits and risks of an investment in the Bonds, and hereby represents and warrants that the that their transferees are accredited investors or Qualified Institutional Buyers, as the case may information contained therein, along with all other additional information supplied by the be, and compliance with all federal and state securities laws in connection with any such transfer. Borrower to the Advisor, is sufficient for the Advisor to decide to purchase the Bonds on behalf of the Investors. The Advisor acknowledges that the issuance and sale of the Bonds and the 11. Advisor acknowledges that it has either been supplied with or been given access execution, delivery and performance of the Loan Agreement, the Account Control Agreement, to information (including, without limitation, financial statements and other financial information the Note, the Bond Purchase Agreement, the Continuing Disclosure Agreement, the Deed of and copies of the Indenture, the Loan Agreement and the Tax Certificate (as defined in the Trust, the Tax Certificate, the Bonds or the Indenture will be governed by and construed in Indenture)), to which a reasonable investor would attach significance in making investment accordance with the applicable laws of the State, the State of North Carolina and the United decisions, and Advisor has had the opportunity to ask questions and receive answers from States of America, each as set forth therein. knowledgeable individuals concerning the Borrower, the Facilities, the Project and the Bonds and the security therefor so that, as a reasonable investor, Advisor has been able to make its own 5. Each Investor has sufficient knowledge and experience in financial and independent investigation and investigation and decision to purchase the Bonds on behalf of investment matters, including the purchase and ownership of municipal and other tax-exempt or Investors and to whether the Bonds are appropriate or proper for investment. Advisor taxable obligations, to be able to evaluate and understand the risks and merits of an investment in acknowledges that it has not relied upon the Issuer or the Trustee for any information in the Bonds (and is able to bear the risks of such investment for an indefinite time). connection with the purchase of the Bonds on behalf of any Investor.

6. The Bonds are being purchased by Advisor for the account of Investors for 12. ADVISOR ACKNOWLEDGES AND EACH INVESTOR HAS BEEN OR investment purposes, and no Investor presently intends to make a public distribution of, or to WILL BE INFORMED THAT THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF resell or transfer, all or any part of the Bonds; provided that each Investor reserves the right to THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM sell or transfer the Bonds in the future in accordance with the transfer restrictions set forth in the SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER, ANY SPONSOR, ANY ISSUER Indenture and described in the Indenture and paragraph 10 below. INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE 7. Each Investor has been or will be informed that he, she, or it may be required to BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR bear the risks of this investment in the Bonds for an indefinite time, since any sale prior to INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE maturity may not be possible. NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE 8. The Bonds are a financially suitable investment for each Investor consistent with STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY such Investor’s investment needs and objectives. POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL 9. Each Investor is either (a) an “accredited investor” within the meaning of Rule OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL 501(a) of Regulation D under the Securities Act of 1933, as amended (the “1933 Act”); or (b) a THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY “Qualified Institutional Buyer” as defined in Rule 144A under the 1933 Act; each Investor has MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR been or will be informed that the Bonds are not registered under the 1933 Act and that such ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR registration is not legally required as of the date hereof; and further has been or will be informed THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER that the Bonds ((i) are not being registered or otherwise qualified for sale under the “Blue Sky” INDEMNIFIED PARTY, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL laws and regulations of any state, (ii) may not be resold, transferred, pledged or hypothecated, in OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL whole or in part, unless they are registered under the 1933 Act, and applicable state securities THERETO. THE ISSUER HAS NO TAXING POWER. laws or unless an exemption from registration is available; (iii) will not be listed in any stock or

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13. Advisor has made its own inquiry and analysis with respect to the Bonds and the EXHIBIT D security therefor (including, without limitation, a credit evaluation of the Borrower, to the extent Advisor deemed it necessary or appropriate), and other material factors affecting the security and CLOSING MEMORANDUM payment of the Bonds. Advisor acknowledges and each Investor has been informed or will be informed that the business of the Borrower involves certain economic variables and risks that See attached. could adversely affect the security for the Bonds.

14. The Advisor hereby certifies that it is not now and has never been controlled by, or under common control, with the Borrower. The Borrower has been and is now not controlled by the Advisor.

15. The Issuer and the Trustee have not undertaken and will not undertake steps to ascertain the accuracy or completeness of the information furnished to the Advisor with respect to the Borrower, the Facilities, the Bonds or the Project. The Advisor has not relied and will not rely upon the Issuer or its officers, directors, employees or agents or the Trustee in any way with regard to the accuracy or completeness of the information regarding the Borrower, the Facilities or the Project furnished to the Advisor in connection with its purchase of the Bonds, nor have any such parties made any representation to the Advisor with respect to that information.

Dated [______]

By Name Title

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D-26 Table of Contents

Page

LOAN AGREEMENT ARTICLE I DEFINITIONS by and between Section 1.01. Indenture Definitions ...... 2 Section 1.02. Additional Definitions ...... 2

ARTICLE II PUBLIC FINANCE AUTHORITY, REPRESENTATIONS as Issuer Section 2.01. Representations by the Issuer...... 13 Section 2.02. Representations by the Borrower ...... 14 Section 2.03. Tax Covenants ...... 16 and Section 2.04. Borrower’s Covenant To Comply With Charter School Laws ...... 19 Section 2.05. Borrower’s Covenant To Provide Continuing Disclosure ...... 20 Section 2.06. Environmental Representations ...... 20 Section 2.07. Modification of the USDA Documents ...... 21 UWHARRIE GREEN SCHOOL, INC., as Borrower ARTICLE III

TERM OF THE LOAN AGREEMENT ...... 21

$[PRINCIPALA] ARTICLE IV PUBLIC FINANCE AUTHORITY THE PROJECT; ISSUANCE OF THE SERIES 2017 BONDS Education Revenue Bonds (Uwharrie Charter Academy Project) Section 4.01. Agreement to Issue Series 2017 Bonds; Application of Series 2017 Series 2017A Bond Proceeds and Other Moneys ...... 22 Section 4.02. Disbursements From the Project Fund ...... 22 Section 4.03. Establishment of Completion Date ...... 22 and Section 4.04. Disbursements From the Cost of Issuance Fund...... 22 Section 4.05. Obligation of the Borrower To Furnish Documents to Trustee ...... 23 Section 4.06. Investment of Moneys and Rebate Fund ...... 23 $[PRINCIPALB] Section 4.07. Tax Covenant ...... 23 PUBLIC FINANCE AUTHORITY Section 4.08. Title Insurance ...... 23 Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) ARTICLE V Series 2017B PAYMENT PROVISIONS Section 5.01. Loan Payments and Other Amounts Payable ...... 24 Section 5.02. Pledge by Borrower ...... 27 Section 5.03. Payees of Payments...... 27 Dated as of November 1, 2017 Section 5.04. Obligations of Borrower Hereunder Absolute and Unconditional ...... 27

ARTICLE VI MAINTENANCE, TAXES AND INSURANCE Pursuant to the Indenture, the Issuer has granted, bargained, sold, alienated, pledged, set over and confirmed to the Trustee for the benefit of the Registered Owners, all rights and interests of the Issuer in Section 6.01. Maintenance and Modifications of Facilities, the Athletic Facility and this Loan Agreement, as amended from time to time, except for the Issuer's Unassigned Rights. the Government Loan Facility by Borrower ...... 28 Section 6.02. Taxes, Other Governmental Charges and Utility Charges ...... 29

4848-1712-4171.15 4848-1712-4171.15

Table of Contents Table of Contents (continued) (continued) Page Page

Section 6.03. Insurance Required ...... 30 ARTICLE IX Section 6.04. Application of Net Proceeds of Insurance ...... 32 ASSIGNMENT AND PLEDGING; REDEMPTION OF SERIES 2017 BONDS Section 6.05. Advances by Issuer ...... 32 Section 9.01. Assignment and Pledge by Issuer ...... 50 Section 6.06. Environmental Indemnity ...... 32 Section 9.02. Redemption of Series 2017 Bonds ...... 50 Section 6.07. Environmental Covenants ...... 34 Section 6.08. Additional Environmental Provisions ...... 35 ARTICLE X EVENTS OF DEFAULT AND REMEDIES ARTICLE VII DAMAGE, DESTRUCTION AND CONDEMNATION Section 10.01. Events of Default ...... 50 Section 10.02. Remedies on Default ...... 53 Section 7.01. Damage, Destruction and Condemnation ...... 36 Section 10.03. No Remedy Exclusive...... 55 Section 7.02. Extraordinary Mandatory Prepayment ...... 38 Section 10.04. Agreement To Pay Attorneys’ Fees and Expenses ...... 55 Section 7.03. Borrower Entitled to Certain Net Proceeds ...... 38 Section 10.05. Waiver ...... 55 Section 7.04. No Change in Loan Payments; No Liens ...... 38 Section 10.06. Proofs of Claim ...... 55 Section 7.05. Investment of Net Proceeds ...... 38 Section 10.07. Treatment of Funds in Bankruptcy ...... 56

ARTICLE VIII ARTICLE XI SPECIAL COVENANTS PREPAYMENT OF THE LOANS Section 8.01. No Warranty of Condition or Suitability by the Issuer ...... 39 Section 11.01. General Option To Prepay the Loans ...... 57 Section 8.02. Consolidation, Merger, Sale or Conveyance ...... 39 Section 11.02. Prepayment Credits ...... 57 Section 8.03. Further Assurances...... 40 Section 11.03. Notice of Prepayment ...... 57 Section 8.04. Audits ...... 40 Section 11.04. Use of Prepayment Moneys ...... 58 Section 8.05. Financial Statements; Reports; Annual Certificate; Financial Covenants; Investor Calls ...... 40 ARTICLE XII Section 8.06. Indemnification Covenants ...... 43 MISCELLANEOUS Section 8.07. Authority of Authorized Representative of the Borrower ...... 46 Section 8.08. Authority of Issuer Authorized Signatory ...... 46 Section 12.01. Notices ...... 58 Section 8.09. Licenses and Qualifications ...... 46 Section 12.02. Binding Effect ...... 58 Section 8.10. Right To Inspect ...... 46 Section 12.03. Severability ...... 59 Section 8.11. Lease or Other Disposition of the Facilities ...... 47 Section 12.04. Third-Party Beneficiaries ...... 59 Section 8.12. Nonsectarian Use ...... 47 Section 12.05. Amounts Remaining in Funds ...... 59 Section 8.13. Limitations on Incurrence of Additional Indebtedness ...... 48 Section 12.06. Amendments, Changes and Modifications ...... 59 Section 8.14. Covenant To Comply With Indenture ...... 49 Section 12.07. Execution in Counterparts ...... 59 Section 8.15. [Reserved] ...... 49 Section 12.08. Governing Law ...... 59 Section 8.16. Continuation of Operation in Event of Casualty ...... 49 Section 12.09. Filing ...... 60 Section 8.17. Transfer of Assets ...... 49 Section 12.10. Cancellation at Expiration of Term of Loan Agreement ...... 60 Section 8.18. [Reserved] ...... 50 Section 12.11. [Reserved] ...... 60 Section 8.19. [Reserved] ...... 50 Section 12.12. No Personal Liability of Officials of the Borrower, Issuer or the Section 8.20. [Reserved] ...... 50 Trustee...... 60 Section 8.21. Operation of the Facilities As a Project ...... 50 Section 12.13. Limitation of Liability of Issuer ...... 60 Section 8.22. Maintenance of 501(c)(3) Status; Prohibited Activities ...... 50 Section 12.14. No Obligation of the State of North Carolina ...... 62 Section 12.15. Covenant by the Borrower With Respect to Statements, Representations and Warranties ...... 62 Section 12.16. Captions ...... 63 Section 12.17. Payments Due on Holidays ...... 63

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Section 12.18. Provision of General Application ...... 63 LOAN AGREEMENT Section 12.19. Survival ...... 63 Section 12.20. Notice of Change in Fact ...... 63 THIS LOAN AGREEMENT, dated as of November 1, 2017 (this “Loan Agreement”), EXHIBIT A FORM OF SERIES 2017A PROMISSORY NOTE is by and between PUBLIC FINANCE AUTHORITY, a joint powers commission and a unit of EXHIBIT B FORM OF SERIES 2017B PROMISSORY NOTE government and a body corporate and politic under the laws of the State of Wisconsin (together EXHIBIT C FORM OF PROJECT FUND REQUISITION CERTIFICATE with its successors and assigns, the “Issuer”) and UWHARRIE GREEN SCHOOL, INC., a EXHIBIT D FORM OF COSTS OF ISSUANCE FUND REQUISITION CERTIFICATE North Carolina nonprofit corporation (the “Borrower”). EXHIBIT E FORM OF COMPLETION CERTIFICATE EXHIBIT F FORM OF BORROWER CERTIFICATE W I T N E S S E T H :

WHEREAS, the Issuer was organized as a commission under and pursuant to Sections

66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as amended (the “Act”), commonly

known as the “Joint Exercise of Powers Law,” and exists by virtue of that certain Amended and

Restated Joint Exercise of Powers Agreement Relating to the Public Finance Authority, dated

September 28, 2010, by and among Adams County, Wisconsin; Bayfield County, Wisconsin;

Marathon County, Wisconsin; Waupaca County, Wisconsin; and the City of Lancaster,

Wisconsin, as such agreement may be amended from time to time (the “Joint Exercise

Agreement”); and

WHEREAS, the Issuer is authorized and empowered under the Act and by the Joint Exercise Agreement to, among other things, issue bonds, notes or other evidences of indebtedness in connection with, and to make loans to assist in the financing and refinancing of, “projects” (as defined in the Act) located inside and outside of the State of Wisconsin (the “State”); and

WHEREAS, the Borrower has applied for the financial assistance of the Issuer in (a) financing and/or refinancing the acquisition, construction, improvement and/or equipping of (i) an existing educational facility located at 301 Lewallen Road, Asheboro, North Carolina 27205 leased by the Borrower (the “Existing Facility”) and (ii) an educational facility to be located on an approximately 40 acre tract of land in Randolph County, North Carolina at the Southeast corner of where Pisgah Covered Bridge Road (State Route 1114) and Interstate Highway 73/74 intersect owned by the Borrower (the “New Facility” and, together with the Existing Facility, the “Facilities”); (b) funding any required reserve funds for the Series 2017 Bonds; (c) funding capitalized interest on the Series 2017 Bonds; (d) financing and/or refinancing working capital loans of or to the Borrower; and (e) paying all or a portion of the costs of issuance of the Series 2017 Bonds (collectively, the “Project”); and

WHEREAS, the Facilities are to be located within the territorial limits of the County of Randolph, State of North Carolina (the “Project Jurisdiction”), and the Issuer, based on representations of the Borrower, but without independent investigation, has found and determined that the financing and refinancing of the Facilities will promote significant economic, cultural and community development opportunities, including the creation or retention of employment, the stimulation of economic activity and the promotion of improvements in the health, safety and welfare of persons in the Project Jurisdiction; and

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WHEREAS, pursuant to and in accordance with the Act, the Issuer proposes to make a delivered as of [November __, 2017], by and among the Borrower, the Primary Depository Bank loan (the “Series 2017A Loan”) to the Borrower pursuant to this Loan Agreement for the and the Trustee. purposes of financing and/or refinancing the Project; and “Accountant” means any independent certified public accounting firm licensed to practice WHEREAS, the Issuer has authorized the issuance of the Public Finance Authority in the State or in the State of North Carolina (which may be the firm of accountants that regularly Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A in the aggregate prepares or audits the books and accounts of the Borrower) from time to time selected by the principal amount of $[PRINCIPALA] (the “Series 2017A Bonds”), pursuant to an Indenture of Borrower. Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”), in order to fund the Series 2017A Loan; and “Additional Payments” means payments to be made by the Borrower to the Issuer and the Trustee pursuant to Sections 5.01(h), (j), (k) and (l) hereof. WHEREAS, pursuant to and in accordance with the Act, the Issuer proposes to make a loan (the “Series 2017B Loan”) to the Borrower pursuant to this Loan Agreement for the “Annual Debt Service Requirements” of any specified Person means, for any Fiscal Year, purposes of financing and/or refinance the Project; and the principal of (and premium, if any) and interest and other debt service charges (which include for purposes hereof, any fees or premiums for any letter of credit, surety bond, policy of WHEREAS, the Issuer has authorized the issuance of the Public Finance Authority insurance, bond purchase agreement, or any similar credit or liquidity support secured in Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B in the connection therewith payable in such Fiscal Year) on all Long-Term Indebtedness of such aggregate principal amount of $[PRINCIPALB] (the “Series 2017B Bonds” and together with Person coming due at Maturity or Stated Maturity, and, for such purposes (except with respect to the Series 2017A Bonds, the “Series 2017 Bonds”), pursuant to the Indenture, in order to fund the calculation of the Debt Service Reserve Fund Requirement), any one or more of the the Series 2017B Loan; and following rules shall apply:

WHEREAS, the Issuer proposes to loan to the Borrower and the Borrower desires to (a) Committed Take Out. If such Person has received a binding commitment, borrow from the Issuer the proceeds of the Series 2017 Bonds for the purposes described above within normal commercial practice, from any bank, savings and loan association, upon the terms and conditions hereinafter set forth in this Loan Agreement; insurance company, or similar institution to refund or purchase any of its Long-Term Indebtedness at its Stated Maturity (or, if due on demand, or payable in respect of any NOW, THEREFORE, for and in consideration of the premises and the mutual covenants required purchase of such Long-Term Indebtedness by such Person, at any date on which hereinafter contained, the parties hereto formally covenant, agree and bind themselves as demand may be made), then the portion of the Long-Term Indebtedness committed to be follows: refunded or purchased shall be excluded from such calculation and the principal of (and premium, if any) and interest on the Long-Term Indebtedness incurred for such refunding or purchase that would be due in the Fiscal Year for which the calculation is being made, if incurred at the Maturity or purchase date of the Long-Term Indebtedness to be DEFINITIONS refunded or purchased, shall be added;

Section 1.01. Indenture Definitions. All terms defined in Article I of the Indenture and (b) Pro Forma Refunding. In the case of Balloon Indebtedness, if the Person elsewhere in the Indenture and not otherwise defined herein shall have the same meaning in this obligated thereon shall deliver to the Trustee a certificate of a nationally recognized firm Loan Agreement. of investment bankers or financial consultants dated within ninety (90) days of the date of delivery of such certificate to the Trustee stating that financing at a stated interest rate Section 1.02. Additional Definitions. The following terms shall have the respective (which shall not be less than the Bond Buyer Revenue Bond Index or, if the Bond Buyer meanings set forth below: Revenue Bond Index is unavailable, a comparable index chosen by the Borrower) with a Stated Maturity of not greater than 30 years is reasonably attainable on the date of such “Account Control Agreement” means any and all agreements, whether there be one or certificate to refund any of such Balloon Indebtedness, then for the purpose of calculating more, among the Borrower, as “Debtor,” the Primary Depository Bank and the Trustee, as what future Annual Debt Service Requirements will be, any installment of principal of “Secured Party,” pursuant to which the Borrower agrees to grant the Trustee a security interest in (and premium, if any) and interest and other debt service charges on such Balloon and “control” of one or more of the Borrower's depository accounts related to the School in order Indebtedness that could so be refunded shall be excluded from such calculation and the to secure its obligations under this Loan Agreement and the USDA Documents; the initial principal plus interest of the refunding debt shall be evenly allocated over the life of the Account Control Agreement being, that certain Account Control Agreement, executed and refunding debt with equal principal payments plus interest deemed due each year but solely for the purpose of spreading the principal requirements for calculation of coverage;

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(c) Prefunded Payments. Principal of (and premium, if any) and interest and “Architect” means Brockwell Associates, Inc., or any other architect employed by the other debt service charges on Long-Term Indebtedness, or portions thereof, shall not be Borrower in connection with the design of the New Facility. included in the computation of the Annual Debt Service Requirements for any Fiscal Year for which such principal, premium, interest, or other debt service charges are “Balloon Indebtedness” means Long-Term Indebtedness where the principal of (and payable from funds irrevocably deposited or set aside in trust for the payment thereof premium, if any) and interest and other debt service charges on such Long-Term Indebtedness (including any bonds which have been defeased) at the time of such calculations due (or payable in respect of any required purchase of such Long-Term Indebtedness by such (including without limitation capitalized interest and accrued interest so deposited or set person on demand) in any Fiscal Year either are equal to at least 25% of the total principal of aside in trust or escrowed with the Trustee or any Independent Person approved by the (any premium, if any) and interest and other debt service charges on such Long-Term Trustee); Indebtedness or exceed by more than 50% the greatest amount of principal of (and premium, if any) and interest and other debt service charges on such Long-Term Indebtedness due in any (d) Variable Rate Debt. As to any Indebtedness that bears interest at a preceding or succeeding Fiscal Year. variable interest rate which cannot be ascertained at the time of calculation, an interest rate equal to the lesser of an annual interest rate equal to the Bond Buyer Revenue Bond “Borrower Documents” means this Loan Agreement, the Deed of Trust, the Series 2017 Index (or, if the Bond Buyer Revenue Bond Index is unavailable, a comparable index Promissory Notes, the Account Control Agreement, the USDA Parity Agreement, the Bond chosen by the Borrower) and the weighted average rate of interest borne by such Purchase Agreement, the Tax Certificate, the Continuing Disclosure Agreement and each of the Indebtedness (or other indebtedness of comparable credit quality, maturity and purchase other agreements, certificates, contracts or instruments to be executed by the Borrower in terms in the event that such Indebtedness was not outstanding) during the preceding connection with the issuance of the Series 2017 Bonds or the financing of a portion of the Fiscal Year (or any period of comparable length ending within 180 days) prior to the date expenses associated with the Project. of calculation shall be presumed to apply for all future dates and the principal shall be evenly allocated over the life of the Indebtedness issue with an equal amount of principal “Building” means that certain building or buildings and all other structures and facilities deemed due each year but solely for the purpose of spreading the principal requirements now owned or hereafter acquired (including all fixtures, heating and air conditioning equipment for calculation of coverage; and all other equipment and machinery affixed to the Land or Building) which are located on the Land, as they may from time to time exist. (e) Contingent Obligations. In the case of any guarantees described in the definition of Indebtedness, the principal of (and premium, if any) and interest and other “Capital Improvements” means the acquisition of land, easements, facilities, and debt service charges on such Indebtedness for any Fiscal Year shall be deemed to be 25% equipment (other than ordinary repairs and replacements), and the construction or reconstruction of the principal of (and premium, if any) and interest and other debt service charges on of improvements, betterments, and extensions which, under Generally Accepted Accounting the Indebtedness guaranteed due in such Fiscal Year; provided, however, that if the Principles as prescribed by the Governmental Accounting Standards Board, are properly Borrower is actually required to make any payment in respect of such Indebtedness, the chargeable as capital items. total amount payable by the Borrower in respect of such guarantee or other obligation in such Fiscal Year shall be included in any computation of the Annual Debt Service "Construction Administrator" means, with respect to the New Facility, Hubrich Requirements of the Borrower for such Fiscal Year and the amount payable by the Contracting Inc., or such other entity appointed as such by the Borrower. Borrower in respect of such guarantee or other obligation in any future Fiscal Year shall “Consulting Architect” means an individual or an independent engineering or be included in any computation of the estimated Annual Debt Service Requirements for architectural firm (which may be an individual or an engineering or architectural firm retained by such Fiscal Year; and the Borrower for other purposes) selected by the Borrower. (f) Financial Products. In the event there shall have been issued or entered “Construction Project” means the construction of a single-story, 55,265 square foot into in respect of all or a portion of any Long-Term Indebtedness a Financial Products building with 36 classrooms and an approximately 19,260 square foot gymnasium located at the Agreement, interest on such Long-Term Indebtedness shall be included in the calculation New Facility. of Annual Debt Service Requirements by including for such period an amount equal to the amount payable on such Long-Term Indebtedness in such period at the rate or rates “Costs of the Project” means the sum total of all reasonable or necessary costs incidental stated in such Long-Term Indebtedness plus any payments payable by the Borrower in to the Project which may be financed pursuant to the Act and the Code. respect of such Financial Products Agreement minus any payments receivable by the Borrower in respect of such Financial Products Agreement. “Days Cash On Hand” means, as of any date of determination, the product of 365 times a fraction, (a) the numerator of which is the aggregate amount of all Unrestricted Cash and

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Investments and (b) the denominator of which is total Operating Expenses (but including in Substances Control Act of 1976, 15 U.S.C. § 2601, et seq.; the Emergency Planning and Operating Expenses only the interest portion of debt service on Indebtedness), in each case for Community Right-To-Know Act of 1986, 42 U.S.C. § 11001, et seq.; the Clean Air Act of 1966, the Fiscal Year ending on the date of determination and determined in accordance with Generally as amended, 42 U.S.C. § 7401, et seq.; the National Environmental Policy Act of 1975, 42 Accepted Accounting Principles. U.S.C. § 4321, et seq.; the Rivers and Harbors Act of 1899, 33 U.S.C. § 401 et seq.; the Safe Drinking Water Act of 1974, as amended 42 U.S.C. § 300(f), et seq.; and all rules, regulations, “Debt Service Coverage Ratio” means, as of any date of determination, the ratio obtained policies and guidance documents promulgated or published thereunder, and any State of North by dividing the Net Income Available for Debt Service for the relevant Fiscal Year by the Carolina, regional, parish or local statute, law, rule, regulation or ordinance relating to public Annual Debt Service Requirements of the Borrower for the relevant Fiscal Year, as such ratio is health, or the environment, including, without limitation those relating to: certified to by an Authorized Representative of the Borrower. (a) releases, discharges, emissions or disposals to air, water, land or “Eliminated Expenses” means for the purposes of Section 8.13 hereof, any Operating groundwater; Expenses that the Borrower certifies will be eliminated as a result of the issuance or incurrence of any Long-Term Indebtedness. (b) the withdrawal or use of groundwater;

“Environmental Damages” means all judgments, losses, penalties, fines, liabilities (c) the use, handling, or disposal of polychlorinated biphenyls (“PCBs”), (including strict liability), encumbrances, liens, costs, and expenses of investigation and defense asbestos or urea formaldehyde; of any claim, whether or not such claim is ultimately defeated, and of any good faith settlement or judgment, of whatever kind or nature, including without limitation reasonable attorneys’ fees (d) the transportation, treatment, storage, disposal, release or management of and expert consultants’ fees and disbursements, any of which are incurred at any time as a result Hazardous Materials (including, without limitation, petroleum, its derivatives, by- of the existence of Regulated Chemicals upon, about, beneath or migrating, or threatening to products or other hydrocarbons), and any other solid, liquid, or gaseous substance, migrate, onto or from the Facilities, or the violation of Environmental Requirements pertaining exposure to which is prohibited, limited or regulated, or may or could pose a hazard to to the Facilities, regardless of whether or not such Environmental Damages were caused by or the health and safety of the occupants of any facilities or properties of the Borrower or within the control of the Borrower. any property adjacent to or surrounding any facilities or properties of the Borrower;

“Environmental Law” means the Comprehensive Environmental Response, (e) the exposure of persons to toxic, hazardous, or other controlled, prohibited Compensation and Liability Act of 1980, as amended by the Superfund Amendments and or regulated substances; and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the federal Hazardous Materials Transportation Law, 49 U.S.C. §§ 5101 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ (f) any Regulated Chemical. 2601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. §§ 1251 et seq. and the Clean Air Act, 42 U.S.C. §§ 7401 et “Event of Default” means those defaults specified in Section 10.01 hereof and in seq.; and any other applicable federal or state laws pertaining to the protection of the Section 8.01 of the Indenture. environment, as any such laws may be amended, modified or supplemented and any regulations “Existing Facility” has the meaning assigned thereto in the recitals of this Loan promulgated pursuant to any of the foregoing. Agreement. “Environmental Report” means any Environmental Assessment (as defined in “Facility Lease Payments” means, for any period of calculation, the total of all rental Section 6.08 herein), or other environmental report or audit conducted at the New Facility for payments under operating leases for any school facilities of the Borrower. any reason. “Facilities” means, collectively, the Existing Facility and the New Facility. “Environmental Requirements” means all applicable federal, State of North Carolina regional or local laws, statutes, rules, regulations or ordinances, concerning public health, or the “Financial Products Agreement” means any type of financial management instrument or environment, including, but not limited to, the Comprehensive Environmental Response, contract, which shall include, but not be limited to, (i) any contract known or referred to or which Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and performs the function of an interest rate swap agreement, currency swap agreement, forward Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq.; the Solid Waste Disposal Act, as payment conversion agreements or futures contract; (ii) any contract providing for payments amended by the Resource Conservation and Recovery Act of 1976, as amended by the Solid and based on levels of, or changes or differences in, interest rates, currency exchange rates, or stock Hazardous Waste Amendments of 1984, 42 U.S.C. § 6901, et seq.; the Federal Water Pollution or other indices; (iii) any contract to exchange cash flows or payments or a series of payments; Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. § 1251, et seq.; the Toxic (iv) any type of contract called, or designed to perform the function of, interest rate floors or

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caps, options, puts or calls, to hedge or minimize any type of financial risk, including, without “Insurance Consultant” means an independent insurance consultant and/or risk limitations, payment, currency, rate or other financial risk forward supply agreements; and (v) management firm or an insurance broker or an insurance agent (which may be a consultant, firm, any other type of contract or arrangement that the governing board of the Borrower determines is broker or agent with whom the Borrower or the Issuer regularly transacts business) selected by to be used, or is intended to be used, to manage or reduce the cost of debt (including but not the Borrower. limited to be bond insurance policy), to convert any element of debt from one form to another, to maximum or increase investment return, to minimize investment return risk or to protect against “Investment” has the meaning set forth in Section 1.148-1(b) of the Regulations. any type of financial risk or uncertainty. “Investment Grade Rating” means a rating by Standard & Poor’s or Fitch of “BBB-” or “Government Loan” means the loan to the Borrower from the Government evidenced by higher, by Moody’s of “Baa3” or higher, or by another Rating Agency of the equivalent rating or a certain note executed and delivered by the Borrower to the Government dated October 19, higher. 2016. “Issuer’s Annual Fee” has the meaning set forth in Section 5.01(k) hereof. “Hazardous Material” means: (a) any substances defined as “hazardous substances,” “pollutants,” “contaminants,” “hazardous materials,” “hazardous wastes,” or “hazardous or toxic “Land” means, collectively, the real estate, interests in real estate, and other real property substances” or related materials as now or hereafter defined in any Environmental Law; (b) those rights described in Exhibit A to the Deed of Trust relating to the Series 2017 Bonds or any other substances listed or otherwise identified as substances of the type referred to in the preceding Deed of Trust relating to the Bonds issued under the Indenture, together with all real estate, clause (a) in the regulations adopted and publications issued pursuant to any Environmental Law, interests in real estate and other real property rights made a part of the Land in connection with as the same may be amended, modified or supplemented; (c) any friable asbestos, airborne the substitution of such real estate and other real property rights pursuant to Section 8.11 hereof asbestos in excess of that generally found in the atmosphere where the applicable facility is or as the result of replacement of property taken in condemnation, or otherwise, less such real located, or any substance or material containing asbestos, excluding any such materials located estate, interests in real estate and other real property rights released under the provisions of on the applicable facility prior to the date hereof so long as such materials are contained, Section 8.11 hereof or taken by the exercise of the power of eminent domain as provided in maintained, abated or removed in compliance with all applicable Environmental Laws; and (d) Section 7.02 hereof. any substance the presence of which on the applicable facilities are prohibited by any applicable Environmental Law; provided that Hazardous Material shall not include any such substances “Liabilities” means any causes of action (whether in contract, tort or otherwise), claims, used in or resulting from the ordinary operation of the applicable facilities or for the cleaning of fees, costs, charges, damages, demands (including Environmental Damages), judgments, the applicable facilities; provided that such substances are stored, handled and disposed of in liabilities, losses, suits and expenses (including, without limitation, reasonable costs of substantial compliance with all applicable Environmental Laws and other applicable laws and investigation, and fees and expenses of attorneys, accountants, consultants and other experts, regulations. litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) of every kind, character and nature whatsoever. “Indenture” means the Indenture of Trust, dated as of November 1, 2017, by and between the Issuer and the Trustee, including any indentures supplemental thereto made in conformity “Lien” means any mortgage or pledge of, security interest in, or lien or encumbrance on, therewith, pursuant to which the Bonds are authorized to be issued and secured. any property of the Borrower which secures any Indebtedness or other obligation of the Borrower excluding liens applicable to property in which the Borrower has only a leasehold “Independent” when used with respect to any specified Person, means such a Person who interest unless the lien secures Indebtedness. (i) is in fact independent, (ii) does not have any direct financial interest or any material indirect financial interest in the Borrower, and (iii) is not connected with the Borrower as an officer, “Loan(s)” means the Series 2017A Loan and the Series 2017B Loan. employee, promoter, trustee, partner, director or person performing similar function. Whenever “Loan Agreement” means this Loan Agreement and any amendments and supplements it is provided that any Independent Person’s opinion or certificate shall be furnished to the hereto made in conformity with the requirements hereof and of the Indenture. Trustee, such Person shall be appointed by an Order and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning “Loan Payment(s)” means those payments required to be paid by the Borrower pursuant hereof. to Section 5.01 hereof.

“Independent Consultant” means a management consultant or certified public accountant “Long-Term Indebtedness” means any Indebtedness incurred, assumed or guaranteed by selected by the Borrower and experienced in the management and financing of charter schools in the Borrower maturing on or after the expiration of the one year period after it is initially North Carolina. incurred.

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“Material Adverse Effect” or “Material Adverse Change” means a material adverse effect “Operating Expenses” means fees and expenses of the Borrower, including maintenance, upon, or a material adverse change in, any of (a) the financial condition, operations, business, repair expenses, utility expenses, administrative and legal expenses, miscellaneous operating properties or prospects of the Borrower taken as a whole; (b) the ability of the Borrower to expenses, debt service paid on Indebtedness, advertising costs, payroll expenses (including perform under this Loan Agreement or any Borrower Document in any material respect or any taxes), the cost of materials and supplies used for current operations of the Borrower, the cost of other material contract to which any one or more of them is a party in any material respect; (c) vehicles, equipment leases and service contracts, taxes upon the operations of the Borrower, the legality, validity or enforceability of this Loan Agreement, any Borrower Document or the charges for the accumulation of appropriate reserves for current expenses not annually recurrent, Indenture; (d) the perfection or priority of any Liens of granted under this Loan Agreement or but which are such as may reasonably be expected to be incurred in accordance with Generally any Borrower Document; (e) the status of the Borrower as an organization described in Accepted Accounting Principles, all in such amounts as reasonably determined by the Borrower; Section 501(c)(3) of the Code or the tax-exempt status of the interest on any Tax-Exempt Bonds; provided, however, “Operating Expenses” shall not include depreciation, amortization or other or (f) the status or effectiveness of the Borrower’s charter from the State of North Carolina to non-cash expenses nor those expenses which are actually paid from any revenues of the operate a charter school. Borrower which are not Pledged Revenues, nor payment for Capital Improvements.

“Maturity” when used with respect to any Indebtedness (or any Note), means the date on “Opinion of Counsel” means an opinion in writing of legal counsel, who may be counsel which the principal of such Indebtedness (or Note) becomes due and payable as therein or herein to the Issuer, the Trustee or the Borrower. provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for redemption or otherwise. “Order” of any specified Person means a written order signed in the name of such Person and delivered to the Trustee by an Authorized Representative of the Borrower. “Maximum Annual Debt Service" means, as of any date of calculation, the highest Annual Debt Service Requirements (excluding required payments from the Capitalized Interest Account “Phase I Report” means the Phase I Environmental Site Assessment Reports prepared by on any year and all or a portion of the final maturity payment for any Indebtedness in an amount Modulus, PLLC, dated June 29, 2017. equal to funds on deposit in a debt service reserve fund that are permitted and available to be applied to the payment of such final maturity at the time of such final maturity) with respect to “Primary Depository Bank” means the financial institution where the Borrower maintains all outstanding Indebtedness for any succeeding Fiscal Year. its depository account related to the School, such financial institution being the same financial institution identified by the Borrower to the State Compliance Office as the financial institution “Net Income Available for Debt Service” means, for any period of determination thereof, with which to deposit the Pledged Revenues from the State Compliance Office. the Pledged Revenues of the Borrower for such period, plus the interest earnings on moneys held in the Debt Service Reserve Fund established under the Indenture (but only to the extent that “Private Business Use” means use, directly or indirectly, by any Private Person other such interest earnings are transferred to the Bond Fund), plus required payments from the than use as a member of, and on the same basis as, the general public. Capitalized Interest Account, minus the total Operating Expenses of the Borrower for such period but excluding from Operating Expenses (a) debt service paid on Indebtedness; (b) any “Private Person” means any person other than a “governmental unit” within the meaning profits or losses which would be regarded as extraordinary items under Generally Accepted of Section 150(a)(2) of the Code. Accounting Principles; (c) gain or loss in the extinguishment of Indebtedness of the Borrower; “Project” has the meaning assigned thereto in the recitals of this Loan Agreement. (d) proceeds of the Series 2017 Bonds and any other Indebtedness permitted by this Loan Agreement; and (e) proceeds of insurance policies, other than policies for business interruption “Regulated Chemicals” means any substance, including Hazardous Material, the presence insurance, maintained by or for the benefit of the Borrower, the proceeds of any sale, transfer or of which requires investigation, permitting, control or remediation under Environmental Laws. other disposition of the Facilities or any other of the Borrower’s assets by the Borrower, and any condemnation or any other damage award received by or owing to the Borrower. “School” means the charter school known as Uwharrie Charter Academy operated by the Borrower pursuant to a charter contract with the North Carolina State Board of Education. “New Facility” has the meaning assigned thereto in the recitals of this Loan Agreement. “Series 2017 Bond Proceeds” mean the Series 2017A Bond Proceeds and the “Non-Recourse Indebtedness” means Indebtedness incurred for the purpose of financing Series 2017B Bond Proceeds. Capital Improvements or tangible personal property secured by a lien on, or security interest in, the property being financed upon default in the payment of the principal thereof or interest “Series 2017A Bond Proceeds” mean $[PRINCIPALA] proceeds from the sale of the thereon the obligee thereof may look only to the property securing the same and not to the credit Series 2017A Bonds. of the Borrower nor to any other assets of the Borrower.

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“Series 2017A Loan” means the loan by the Issuer to the Borrower of the proceeds from period of such calculation so long as the unrestricted contribution is made prior to the date the the sale of the Series 2017A Bonds pursuant to this Loan Agreement. applicable certificate of Borrower is required to be delivered with respect to such calculation.

“Series 2017B Bond Proceeds” mean $[PRINCIPALB] proceeds from the sale of the Series 2017B Bonds. REPRESENTATIONS “Series 2017B Loan” means the loan by the Issuer to the Borrower of the proceeds from the sale of the Series 2017B Bonds pursuant to this Loan Agreement. Section 2.01. Representations by the Issuer. As of the date hereof, the Issuer represents as set forth in this Section; provided, however, that as to information furnished by the “Short-Term Indebtedness” means Indebtedness having an original maturity less than one Borrower pursuant to this Loan Agreement, the Issuer is relying solely on such information in year and not renewable at the option of the Borrower for a term greater than one year beyond the making the Issuer’s representations, and as to all matters of law, the Issuer is relying upon the date of original incurrence. advice of Bond Counsel; and, provided, further, that no Issuer Indemnified Party shall be individually liable for the breach of any representation, warranty, or agreement contained herein. “State Compliance Office” means the North Carolina State Board of Education, the State of North Carolina Department of Public Instruction, the State of North Carolina Office of (a) The Issuer is a unit of government and a body corporate and politic duly Charter Schools, or any other body subsequently authorized by the State of North Carolina to organized and validly existing under the laws of the State. grant, revoke, or suspend charters. (b) By official action of the Issuer prior to or concurrently herewith, the Issuer “Stated Maturity” when used with respect to any Indebtedness or any Note or any has authorized and approved the execution and delivery of the Issuer Documents and the installment of interest thereon, means the date specified in such Indebtedness or Note as the fixed consummation by the Issuer of the transactions contemplated thereby. date on which the principal of such Indebtedness or Note installment of interest is due and payable. (c) The execution and delivery of this Loan Agreement and the other Issuer Documents, and the consummation of the transactions contemplated hereby and thereby, “Subordinated Indebtedness” means Indebtedness which, with respect to any issue and the fulfillment of the terms hereof and thereof, do not and will not conflict with, or thereof, is evidenced by instruments, or issued under an indenture or other document, containing constitute on the part of the Issuer a material breach of or a default under, any existing provisions for the subordination of such Indebtedness to the Bonds (to which appropriate (i) law; or (ii) other legislative act, constitution or other proceeding establishing or reference shall be made in the instrument evidencing such Indebtedness). relating to the establishment of the Issuer or its affairs or its resolutions; or (iii) agreement, indenture, mortgage, lease, applicable court or administrative decree or order “Tax Certificate” means the Tax Certificate as to Arbitrage and the provisions of or other contract or instrument to which the Issuer is subject or is a party or by which it is Sections 103, 141 and 150 of the Internal Revenue Code of 1986, dated as of [November __, bound, except as provided in the Issuer Documents. 2017], between the Issuer and the Borrower executed in connection with the initial issuance and delivery of the Series 2017 Bonds, as amended or supplemented from time to time pursuant to its (d) No officer or director of the Issuer has a personal financial interest in or terms, including without limitation in connection with the issuance and delivery of any has personally and financially benefited from this Loan Agreement or the Indenture or Additional Bonds. any such contract.

“Title Policy” means an ALTA extended coverage lender’s policy of title insurance in a (e) The Issuer makes no representation or warranty that the amount of the form acceptable to the Underwriter. Loan will be adequate or sufficient to finance or refinance the Project or that the Project will be adequate or sufficient for the purposes of the Borrower. “Trustee Indemnified Parties” means the Trustee, its officers, directors, employees and agents. (f) To the knowledge of the Issuer, there is not pending or threatened any suit, action or proceeding against or affecting the Issuer before or by any court, administrative “Unrestricted Cash and Investments” means the sum of the Borrower’s unrestricted cash, agency or other governmental authority contesting the validity, as to the Issuer, of this cash equivalents, marketable securities, including without limitation board-designated assets, but Loan Agreement or the Indenture, any of its obligations hereunder or thereunder or any excluding any trustee-held or similar funds held under the Indenture or similar debt documents. of the transactions contemplated hereby or thereby. For the purposes of calculations of the liquidity requirements of Section 8.05(g) hereof, an unrestricted contribution from a third party or affiliate shall be treated as being made during the

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(g) The Issuer has not pledged, assigned or granted, and will not pledge, bound, or result in the creation or imposition of any lien, charge or encumbrance of any assign or grant, any of its rights or interest under this Loan Agreement for any purpose nature whatsoever upon any of the property or assets of the Borrower, which conflict, other than as provided in the Indenture. violation, breach, default, lien, charge or encumbrance might have consequences that would have a Material Adverse Effect; Section 2.02. Representations by the Borrower. The Borrower represents on its own behalf and on behalf of its successors and assigns that as of the date of execution of this Loan (f) no consent or approval of any trustee or holder of any indebtedness of the Agreement and as of the date of delivery of the Bonds to the initial purchasers thereof (and such Borrower or any guarantor of indebtedness of or other provider of credit or liquidity to representations and warranties shall survive the issuance of the Bonds and are to remain the Borrower, and no consent, permission, authorization, order or license of, or filing or operative and in full force and effect regardless of the issuance of the Bonds or any registration with, any governmental authority (except with respect to any state securities investigations by or on behalf of the Issuer or the results thereof): or “blue sky” laws) is necessary in connection with the execution and delivery of the Borrower Documents, or the consummation of any transaction herein or therein (a) the Borrower is a nonprofit corporation duly incorporated and in good contemplated, or the fulfillment of or compliance with the terms and conditions thereof, standing under the laws of the State of North Carolina, has full legal right, power and except as have been obtained or made and as are in full force and effect or as the authority to enter into this Loan Agreement and the other Borrower Documents, and to Borrower has covenanted to obtain or make in connection with the Project; carry out and consummate all transactions contemplated by the Borrower Documents, and by proper corporate action has duly authorized the execution, delivery and (g) there is no action, suit, proceeding, inquiry or investigation, before or by performance of the other Borrower Documents; any court or federal, state, municipal or other governmental authority, or to the knowledge of the Borrower, after reasonable investigation, pending or threatened, against (b) the officers of the Borrower executing the Borrower Documents are duly or affecting the Borrower or the assets, properties or operations of the Borrower which, if and properly in office and fully authorized to execute the same; determined adversely to the Borrower or its interests, would have a Material Adverse Effect. All tax returns (federal, state and local) required to be filed by or on behalf of the (c) the Borrower Documents have been duly executed and delivered by the Borrower have been filed, and all taxes shown thereon to be due, including interest and Borrower; penalties, except such, if any, as are being actively contested by the Borrower in good faith, have been paid or adequate reserves have been made for the payment thereof which (d) (i) the Borrower Documents, when assigned to the Trustee pursuant to the reserves, if any, are reflected in the audited financial statements of the Borrower; Indenture, will constitute the legal, valid and binding agreements of the Borrower enforceable against the Borrower by the Trustee (except for the Issuer’s Unassigned (h) no written information, exhibit or report furnished to the Issuer by the Rights) in accordance with their terms for the benefit of the Registered Owners of the Borrower in its application for financing or by the Borrower or its representative in Bonds; and (ii) the Issuer’s Unassigned Rights constitute the legal, valid, and binding connection with the negotiation of the Borrower Documents, regardless of whether the agreements of the Borrower enforceable against the Borrower (A) by the Issuer in its own Issuer is a party thereto (including, without limitation, any financial statements, whether right or (B) in the case of the rights of any Issuer Indemnified Party (including, without audited or unaudited, and any other financial information provided in connection limitation, the right of any Issuer Indemnified Party to indemnification and immunity therewith) contains any untrue statement of a material fact or omits to state a material fact from liability), by such Issuer Indemnified Party in his, her or its own right in accordance required to be stated therein or necessary to make the statements therein, in the light of with their respective terms; except in each case as enforcement may be limited by the circumstances under which they were made, not misleading; provided, however, that bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights the representation in this clause (h) is made only to the Issuer and may not be relied upon generally, by the application of equitable principles regardless of whether enforcement is by any other Person; sought in a proceeding at law or in equity and by public policy; (i) The Borrower is, and shall maintain its status as, an organization described (e) the execution and delivery of the Borrower Documents, the consummation in Section 501(c)(3) of the Code, is exempt from federal income tax under Section 501(a) of the transactions therein contemplated and the fulfillment of or compliance with the of the Code, and is not a private foundation as described in Section 509(a) of the Code. terms and conditions thereof, will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under the articles of (j) the Borrower has or, upon consummation of the transactions contemplated incorporation of the Borrower, its bylaws, any applicable law or administrative rule or by the Borrower Documents, will have, good and marketable title to the New Facility free regulation, or any applicable court or administrative decree or order, or any indenture, and clear from all encumbrances other than Permitted Encumbrances; mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Borrower is a party or by which it or its properties are otherwise subject or

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(k) since the Borrower’s audited consolidated balance sheets at June 30, 2016, defined in Section 509(a) of the Code. The Borrower shall comply with all of the terms, and the related consolidated statements of income and consolidated statements of cash conditions and limitations, if any, contained in the determination letter. flows for the year ended June 30, 2016 (copies of which have been furnished to the Underwriter) there has been no material adverse change in the financial condition or (d) With the intent not to limit the generality of the foregoing, the Borrower results of operations of the Borrower; and covenants and agrees that:

(l) no officer or director of the Issuer has a personal financial interest in or (i) the Borrower shall spend not less than 95% of the proceeds of any has personally and financially benefited from this Loan Agreement or the Indenture or Tax-Exempt Bonds plus earnings thereon for capital Costs of the Project being any such contract. financed or refinanced and all of such project will be used by the Borrower for its exempt purposes under Section 501(c)(3) of the Code. Capital costs are defined Section 2.03. Tax Covenants. The Borrower covenants for the benefit of the Issuer and as costs of land or property of a character subject to allowance for depreciation the Beneficial Owners, and their respective successors and assigns, that: under Section 167 of the Code and do not include inventory or working capital, costs of issuance or interest following completion of construction; (a) the Borrower will not take any action or omit to take any action, which action or omission will adversely affect the excludability from gross income of the (ii) the Borrower (A) will take whatever actions are necessary for it to interest on any Tax-Exempt Bonds for federal income tax purposes or cause the interest continue to be organized and operated in a manner which will preserve and on any Tax-Exempt Bonds, or any portion thereof, to become an item of tax preference maintain its status as an organization which is (1) described in Section 501(c)(3) for purposes of the alternative minimum tax imposed on individuals and corporations of the Code, (2) exempt from federal income taxes under Section 501(a) of the under the Code, and in the event of such action or omission, it will, promptly upon Code (except as to unrelated trade or business income); and (B) will not having such brought to its attention, take such reasonable actions based upon an opinion intentionally perform any acts nor enter into any agreements which would cause of Bond Counsel, and in all cases at the sole expense of the Borrower, as may be any revocation or adverse modification of such federal income tax status; necessary to rescind or otherwise negate such action or omission. The Borrower will not directly or indirectly use or permit the use of any proceeds of any Tax-Exempt Bonds or (iii) except as permitted by Section 149(b)(3) of the Code, the any other funds of the Borrower, or take or omit to take any action that would cause any Borrower will not permit any Tax-Exempt Bonds to be federally guaranteed Tax-Exempt Bonds to be or become “arbitrage bonds” within the meaning of Section within the meaning of Section 149(b) of the Code; 148(a) of the Code (or their statutory predecessor), or to fail to meet any other applicable requirements of the Code (or their statutory predecessor). To that end, the Borrower will (iv) the weighted average maturity of any Tax-Exempt Bonds does not comply with all applicable requirements of the Code (or their statutory predecessor) to or will not exceed 120% of the weighted average reasonably expected economic the extent applicable to any Tax-Exempt Bonds. In the event that at any time the life of the property financed with such Bonds, determined in accordance with Borrower is of the opinion that, for purposes of this Section 2.03, it is necessary to Section 147(b) of the Code. For purposes of the preceding sentence, the restrict or limit the yield on the investment of any moneys held by the Trustee or reasonably expected economic life of property shall be determined as of the date otherwise, the Borrower shall so instruct the Trustee in writing; such property was placed in service or, if later, the date of issuance of such Bonds; (b) the Borrower hereby covenants and agrees that it shall not, and the Issuer hereby covenants and agrees that it shall not knowingly, enter into any arrangement, (v) the statements concerning any Tax-Exempt Bonds and the formal or informal, pursuant to which the Borrower (or any “related party,” as defined in application of the proceeds of such Bonds required by Section 149(e) of the Code, Section 1.150-1(b) of the Treasury Regulations) shall purchase any Tax-Exempt Bonds, and approved by the Borrower on behalf of the Issuer, are true and complete for other than a purchase in lieu of redemption. This covenant shall not prevent the the purposes for which intended. The Borrower shall prepare and submit, or Borrower from purchasing Bonds in the open market for the purpose of tendering them to cause to be submitted, true and complete amendments of, or supplements to, those the Trustee for purchase and retirement; statements if by an opinion of Bond Counsel such amendments or supplements are deemed to be necessary or advisable; (c) The Borrower has received a determination letter from the Internal Revenue Service classifying the Borrower as an organization (i) described in Section (vi) no changes will be made in any Tax-Exempt Bond-financed 501(c)(3) of the Code that is exempt from federal income taxation under Section 501(a) property or in the use of such facilities which will adversely affect the of the Code (except with respect to “unrelated business taxable income” within the excludability from gross income for federal income tax purposes of the interest on meaning of Section 512(a) of the Code); and (ii) which is not a “private foundation” as any Tax-Exempt Bonds or will cause the interest on any Tax-Exempt Bonds, or

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any portion thereof, to constitute an item of tax preference for purposes of the the Trustee may rely conclusively on such opinion in complying with the provisions alternative minimum tax imposed on individuals and corporations under the Code. hereof and the Tax Certificate and Section 3.20 of the Indenture, and the covenants The Borrower will use any Tax-Exempt Bond-financed property or cause such hereunder shall be deemed to be modified to that extent. property to be used so long as the Bonds remain unpaid so as to constitute a “project” within the meaning of the Act; (h) The Borrower agrees that it will not take any action or omit to take any action or cause or permit any circumstance to arise or continue if such action or (vii) no net Tax-Exempt Bond proceeds will be used to reimburse the circumstance or omission would cause any revocation or adverse modification of the Borrower for any expenditure made by the Borrower more than 60 days prior to a federal income tax status of any Tax-Exempt Bonds, unless it obtains, at the Borrower’s qualifying declaration of intent (adopted April 25, 2017), which is approved by expense, an opinion of Bond Counsel, addressed to the Trustee that such revocation or Bond Counsel, except for planning costs and other preliminary expenditures modification will not adversely affect the excludability from gross income under within the meaning of Section 1.150-2(0(2) of the Treasury Regulations not in Section 103(a) of the Code of interest paid on any Tax-Exempt Bonds or cause the excess of 20% of the issue price of any Tax-Exempt Bonds and de minimis interest on the Tax-Exempt Bonds, or any portion thereof, to become an item of tax expenses within the meaning of Section 1.150-2(0(1) of the Treasury Regulations. preference for purposes of the alternative minimum tax imposed on individuals and Borrowers under the Code. (viii) the Borrower will not make any investment or deposit in Investment Obligations or which involves the payment or agreement to pay to a (i) The Borrower shall make the following payments: party other than the United States an amount that is required to be paid to the United States by entering into a transaction that reduces the amount required to be (i) To Correct Underpayments. If the Borrower shall have failed to rebated to the United States pursuant Section 148 of the Code or results in a satisfy any requirement of Section 1.148-3 of the Treasury Regulations (whether smaller profit or a larger loss than would have resulted if the transaction had been or not such failure shall be due to any default by the Borrower with respect to at arm’s length and had the yield on the related Series of Bonds not been relevant Rebate Amounts), the Borrower shall (A) pay any amount required to correct such to either party to the transaction; and failure and any penalty imposed under Section 1.148-3(h) of the Treasury Regulations; and (B) in the event that the Borrower has any knowledge of the (ix) the costs of issuance financed with proceeds of any Tax-Exempt reason for such failure, deliver to the Issuer and the Trustee a brief written Bonds, including any bond discount on the sale of any Tax-Exempt Bonds, will explanation of such failure and any basis for concluding that such failure was not not exceed 2% of the proceeds of such Tax-Exempt Bonds. due to willful neglect.

(e) The Borrower covenants to assume and comply with all requirements of (ii) Preservation of Accounting Records. The Borrower shall retain the Code to determine and timely pay all amounts required to be rebated to the United accounting records relating to the accounts and subaccounts in the funds States pursuant Section 148 of the Code with respect to any Tax-Exempt Bonds. established under the Indenture, for at least six years after the first date on which no Tax-Exempt Bonds are outstanding. (f) All covenants and obligations of the Borrower contained in this Section 2.03 shall remain in effect and be binding upon the Borrower until the expiration (j) The Borrower further covenants, represents and warrants that the of statutes of limitations applicable to the liability of the Beneficial Owners for federal procedures set forth in the Tax Certificate implementing the above covenants shall be and state income taxes with respect to interest on any Tax-Exempt Bonds, complied with to the extent necessary under the Code to maintain the exclusion from notwithstanding the payment in full or defeasance of any Tax-Exempt Bonds, any earlier gross income of interest on any Tax-Exempt Bonds for federal income tax purposes termination of this Loan Agreement or any provision for payment of principal of, and (except to the extent noted in the preceding paragraph) or to avoid the application of any premium, if any, and interest on, the outstanding Tax-Exempt Bonds, the Note and Loan penalties under the Code, subject to any applicable statute of limitations. The Borrower Payments and release and discharge of the Indenture. shall appoint a Rebate Analyst reasonably acceptable to the Issuer and any successor Rebate Analyst for any Tax-Exempt Bonds, subject to the conditions set forth in the Tax (g) Notwithstanding any provision of this Section 2.03, if the Borrower Certificate. provides, at the Borrower’s expense, to the Trustee and to the Issuer an opinion of Bond Counsel to the effect that any action required under the Tax Certificate, this Section or Section 2.04. Borrower’s Covenant To Comply With Charter School Laws. The Section 3.20 of the Indenture is no longer required, or to the effect that some further Borrower covenants to comply fully and in all respects with the provisions of the Charter School action is required, to maintain the excludability from gross income of interest on any Act so long as any Series 2017 Bonds remain Outstanding. Tax-Exempt Bonds pursuant to Section 103(a) of the Code, the Borrower, the Issuer and

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Section 2.05. Borrower’s Covenant To Provide Continuing Disclosure. The alleged violation or requiring compliance of Environmental Requirements, whether or not Borrower hereby covenants to execute and deliver the Continuing Disclosure Agreement, corrected to the satisfaction of the appropriate authority, or notice or other required by Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 under the communication concerning alleged liability for Environmental Damages in connection Securities Exchange Act of 1934, as amended (17 CFR Part 240, § 240.15c2-12) (the “Rule”), with the New Facility, and to the Borrower’s knowledge there exists no investigation, contemporaneously with the issuance of the Series 2017 Bonds. The Continuing Disclosure administrative order, consent order and agreement, litigation, settlement or judgment, Agreement shall be for the benefit of the Registered Owners and each Registered Owner shall be whether proposed, threatened, anticipated or in existence with respect to the New a beneficiary of this Section 2.05 and such Continuing Disclosure Agreement with the right to Facility. enforce this Section 2.05 and the Continuing Disclosure Agreement directly against the Borrower. (f) No Borrower Knowledge. The Borrower does hereby specifically represent and warrant that it has no affirmative knowledge or reason to believe that any Section 2.06. Environmental Representations. The Borrower, on behalf of itself and condition, previous use, compliance or violation of Environmental Requirements are its successors and assigns, represents, warrants and covenants that: contrary to the description in Sections 2.06(a), (b), (c), (d) and (e).

(a) Condition of New Facility. To its knowledge, after due inquiry, except as Section 2.07. Modification of the USDA Documents. The Borrower hereby covenants set forth in the Phase I Report, the New Facility, including all personal property, is free that it will not modify, supplement or amend any USDA Document if such modification, from contamination by Regulated Chemicals, including, but not limited to, friable supplement or amendment could reasonably be expected to have a Material Adverse Effect. asbestos, and there has not been thereon a release, discharge or emission, or a threat of release, discharge or emission, of any Regulated Chemical on, under, in, or about the New Facility, nor has any such Regulated Chemical migrated or threatened to migrate from other properties upon, about or beneath the New Facility. TERM OF THE LOAN AGREEMENT

(b) Previous Use of New Facility. To the Borrower’s knowledge, after due This Loan Agreement shall remain in full force and effect from the date of delivery inquiry, except as set forth in the Phase I Report, neither the Borrower nor any previous hereof until such time as all of the payments on the Series 2017 Promissory Notes shall have owner, tenant, occupant or user of the New Facility, nor any other Person has engaged in been fully paid or provision is made for such payment pursuant to Section 11.01 hereof and the or permitted any operations or activities upon, or any use or occupancy of the New Indenture and all reasonable and necessary fees and expenses of the Trustee accrued and to Facility, or any portion thereof, whether legal or illegal, accidental or intentional, for the accrue through final payment of the Series 2017 Promissory Notes, all fees and expenses of the purpose of or in any way involving the handling, manufacture, treatment, storage, use, Issuer accrued and to accrue through final payment of the Series 2017 Promissory Notes and all generation, release, discharge, refining, dumping or disposal of any Regulated Chemical, other liabilities of the Borrower accrued and to accrue through final payment of the Series 2017 on, under, in or about the New Facility. Promissory Notes under this Loan Agreement and the Indenture have been paid or provision is made for such payments pursuant to Section 11.01 hereof and the Indenture; provided, however, (c) Property Adjoining New Facility. To the Borrower’s knowledge, after notwithstanding any other provision hereof, but nevertheless subject to Section 12.19 of this due inquiry, except as set forth in the Phase I Report, any adjoining property has not been Loan Agreement, (a) the indemnification provisions of Sections 6.06 and 8.06 hereof, the used as a manufacturing, storage or disposal site for Regulated Chemicals nor is any agreements contained in Section 10.04 hereof and any other agreements contained herein which other property adjoining the New Facility in violation of Environmental Requirements. expressly provide for their survival shall survive the termination of this Loan Agreement; (b) all agreements, representations and certifications by the Borrower as to the exclusion from gross (d) Compliance With Environmental Requirements. To the Borrower’s income of interest on the Series 2017A Bonds shall survive termination of the term hereof until knowledge after due inquiry, except as set forth in the Phase I Report, the New Facility is the expiration of statutes of limitation applicable to the liability of the Registered Owners of the in compliance with and has at all times been in compliance with all applicable Series 2017A Bonds for federal and state income taxes with respect to interest on the Series Environmental Requirements and the Borrower has all permits and licenses required to be 2017A Bonds; and (c) upon the defeasance of the Indenture, all such indemnification provisions issued under the Environmental Requirements, if any, and is in full compliance with the shall be enforceable by the Issuer, the Issuer Indemnified Parties and the Trustee Indemnified terms and conditions of such permits and licenses, if any; such permits and licenses, if Parties, and all such agreements, representations and certifications regarding the exclusion from any, are in full force and effect; and no changes exist in the facts or circumstances gross income of the interest on the Series 2017A Bonds shall be enforceable by the Registered reported or assumed in the application for or granting of such permits or licenses, if any. Owners of the Series 2017A Bonds, directly against the Borrower. (e) No Notice of Violations of Environmental Requirements. The Borrower has not received any notice, whether written or oral, concerning the New Facility, of any

20 21 4848-1712-4171.15 4848-1712-4171.15

moneys in the Cost of Issuance Fund available for payment of the foregoing costs will be sufficient to pay such costs in full, and the Borrower agrees to pay such costs in excess of the THE PROJECT; ISSUANCE OF THE SERIES 2017 BONDS amount in the Cost of Issuance Fund from any moneys legally available for such purpose. The Borrower shall not be entitled, as a result of paying the issuance expenses pursuant to this Section 4.01. Agreement to Issue Series 2017 Bonds; Application of Series 2017 Section, to any reimbursement therefor from the Issuer, the Trustee, the Registered Owners of Bond Proceeds and Other Moneys. In order to provide funds to make the Loans, the Issuer the Series 2017 Bonds or the Beneficial Owners of the Series 2017 Bonds, nor shall it be entitled will sell and cause to be delivered to the initial purchasers thereof the Series 2017 Bonds and will to any diminution in or postponement of the Loan Payments or other amounts required to be paid make such Loans. under this Loan Agreement. Each payment out of the Cost of Issuance Fund shall be made only upon receipt by the Trustee of an invoice from each payee in amounts not to exceed those as set Section 4.02. Disbursements From the Project Fund. The Issuer has, in the Indenture, forth in the requisition submitted by the Borrower in the form attached hereto as Exhibit D. authorized and directed the Trustee to disburse the moneys in the appropriate subaccount of the Project Fund to pay the Costs of the Project. On the Bond Closing for each series of Bonds, the Section 4.05. Obligation of the Borrower To Furnish Documents to Trustee. The Trustee shall disburse amounts as set forth on Exhibit D of the Indenture (as such exhibit may be Borrower agrees that the requisitions referred to in Sections 4.02 and 4.04 hereof must be amended from time to time) to the parties listed on such exhibit from the Fund indicated on such furnished to the Trustee before the Trustee will disburse funds held under the Indenture. exhibit. In addition, the Trustee shall transfer moneys in the subaccount of the Project Fund to the payees identified in a requisition to pay Costs of the Project, in the form attached hereto as Section 4.06. Investment of Moneys and Rebate Fund. Any moneys held as a part of Exhibit C, no more often than twice per month within five Business Days of receipt by the the Funds shall be invested, reinvested and transferred to other Funds by the Trustee at the Trustee of such completed and executed requisition. To the extent required by applicable law, written direction of the Authorized Representative of the Borrower as provided in Article VI of the Borrower shall submit all requests for disbursements within sixty (60) days of incurring the the Indenture. In addition, the Borrower covenants that any money held as a part of the Funds applicable Costs of the Project. shall be invested in compliance with the procedures established by the Tax Certificate and the Indenture to the extent required to comply with the covenants contained in Section 2.03 hereof. Section 4.03. Establishment of Completion Date. The Borrower shall provide to the Trustee at least every five years from the date of issuance of the Bonds, as provided in the Tax Certificate, a certificate of an Authorized Representative of the (a) The Completion Date shall be evidenced to the Trustee by the furnishing Borrower to the effect that (a) all requirements of this Loan Agreement, the Indenture and the of a certificate signed by the Authorized Representative of the Borrower, substantially in Tax Certificate with respect to the Rebate Fund have been met on a continuing basis; (b) the the form attached hereto as Exhibit E, stating the Completion Date (as defined in such proper amounts have been and are on deposit in the Rebate Fund; and (c) timely payment of all certificate) (which date shall not be later than the third anniversary of the date of issuance amounts due and owing to the United States Treasury have been made. If the certifications of the Series 2017 Bonds) and that the New Facility has been acquired, constructed, required by either clause (b) or (c) above cannot be made, the certificate shall so state and shall improved and/or equipped by the Borrower in substantial compliance with the plans and be accompanied by either money of the Borrower together with a direction to the Trustee to specifications relating thereto. either deposit such money to the Rebate Fund or to pay such money over to the United States Treasury, as appropriate, or written directions to the Trustee to transfer investment income (b) Any moneys (including investment proceeds) on deposit in the Project available in any Fund to the Rebate Fund or to the United States Treasury, as appropriate. The Fund on the date of the Trustee’s receipt of the certificate described in paragraph (a) Borrower acknowledges the provisions of Section 6.01 of the Indenture which limit the amount above may be used, at the direction of the Authorized Representative of the Borrower, to of money to be so transferred from the Funds at its direction. The Borrower acknowledges that the extent indicated, for the payment of remaining Costs of the Project. Any moneys regulations of the Comptroller of the Currency grant it the right to receive brokerage (including investment proceeds) not so used and remaining in the Project Fund on the confirmations of the security transactions as they occur. The Borrower specifically waives such earlier of the Completion Date and the date that is the third anniversary of the date of notification to the extent permitted by law and will receive periodic cash transaction statements issuance of the Series 2017 Bonds shall be deposited by the Trustee in the Bond Fund. that will detail all investment transactions.

Section 4.04. Disbursements From the Cost of Issuance Fund. The Issuer has, in the Section 4.07. Tax Covenant. The Borrower covenants, represents and warrants that the Indenture, authorized and directed the Trustee to make payments from the Cost of Issuance Fund procedures set forth in the Tax Certificate implementing the covenants in Section 2.03 shall be for the payment of issuance expenses as provided in this Section. Payments shall be made from complied with to the extent necessary under the Code to maintain the exclusion from gross the Cost of Issuance Fund only for paying the costs of legal, accounting, organization, marketing, income of interest on the Series 2017A Bonds for federal income tax purposes or to avoid the issuer, trustee or other special services and other fees and expenses, incurred or to be incurred by application of any penalties under the Code, subject to any applicable statute of limitations. or on behalf of the Trustee, the Issuer or the Borrower in connection with the issuance of the Series 2017 Bonds. The Issuer does not make any warranty either express or implied that the

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Section 4.08. Title Insurance. any valuation date permitted by Sections 3.06 and 3.07 of the Indenture that the amount in an account of the Debt Service Reserve Fund is less than the related Series Debt (a) On the date of recordation of the Deed of Trust, the Trustee will be Service Reserve Fund Requirement and the deficiency is caused solely by a decreased provided with an irrevocable, binding commitment to issue a standard owner’s title value of the Investment Obligations therein and not due to a transfer to cure a shortfall in insurance policy insuring the Borrower’s interest in and an irrevocable, binding the Bond Fund, the Borrower agrees to pay to the Trustee, for deposit into the account of commitment to issue an extended form lender’s title insurance policy or policies insuring the Debt Service Reserve Fund, an amount equal to the amount by which the amount in the Trustee’s interest in and Lien against the real estate described in Exhibit A to the the account of the Debt Service Reserve Fund is less than the related Series Debt Service Deed of Trust relating to the Series 2017 Bonds subject to Permitted Encumbrances, in an Fund Requirement in the next month following that valuation date. If the amount in the amount not less than the outstanding principal amount of the Series 2017 Bonds. Each account of the Debt Service Reserve Fund is less than the related Series Debt Service such policy shall be in the form of a standard or extended American Land Title Reserve Fund Requirement and the deficiency is caused by a transfer to cure a shortfall in Association Policy, as applicable, and may not permit the title insurer to purchase any the Bond Fund resulting from the failure of the Borrower to make the payments due Bonds in lieu of providing payment under the policy unless, upon purchase, such Bonds hereunder, the Borrower agrees pursuant to this Section 5.01 to pay to the Trustee all are cancelled. The Deed of Trust shall be recorded in the real property records of amounts transferred to the Bond Fund to make up for any amounts not paid on the Series Randolph County, North Carolina, and provide the Trustee with a perfected first priority 2017 Promissory Notes in not more than six substantially equal monthly installments Lien interest in the Premises, subject to any Permitted Encumbrances. beginning in the month following such deficiency; and provided that no such installment shall be less than $5,000. (b) Upon the execution by the Borrower of the Deed of Trust, and its subsequent recording, and upon the filing of Uniform Commercial Code financing (c) [Reserved]. statements or amendments thereto, the Trustee will have a valid Lien on the Premises and a valid security interest in the personal property subject to no Liens, charges or (d) During the term of this Loan Agreement, the Borrower shall pay or encumbrances other than the Permitted Encumbrances, and the Borrower will take all provide for the payment of all taxes and assessments, general or special, concerning or in necessary actions including filing continuation statements to preserve such Lien and any way related to the Facilities, the Athletic Facility or the Government Loan Facility or security interest. any part thereof, and any other governmental charges and impositions whatsoever related to the Facilities, the Athletic Facility or the Government Loan Facility, and premiums for insurance policies maintained on the Facilities, the Athletic Facility or the Government Loan Facility as required by this Loan Agreement. PAYMENT PROVISIONS (e) [Reserved]. Section 5.01. Loan Payments and Other Amounts Payable. (f) The Borrower shall pay or cause to be paid to the Trustee for deposit to (a) The Borrower shall pay as repayment of the Loans, until the principal of, the Rebate Fund all amounts required to be paid pursuant to this Loan Agreement, the premium, if any, and interest on the Series 2017 Promissory Notes have been paid or Indenture, and the Tax Certificate at the times and in the manner specified herein and provision for the payment thereof otherwise made in accordance with this Loan therein. Agreement, into the Bond Fund, on the first day of each month commencing [January, 2018], one-twelfth of the principal due on each Principal Payment Date; and commencing (g) In the event of a Determination of Taxability and mandatory redemption [July, 2018], one-sixth of the interest due on the Series 2017 Bonds on each subsequent resulting therefrom as set forth in Section 5.04 of the Indenture, the Borrower agrees to Interest Payment Date; provided, however, that the Borrower shall receive a credit prepay to the Trustee the Series 2017A Promissory Note. against such payments of interest to the extent funds are on deposit in the Capitalized Interest Account or otherwise on deposit in the Bond Fund in addition to funds deposited (h) The Borrower agrees to pay all taxes and assessments of any type or pursuant to this Section 5.01(a) and available to pay interest on the Series 2017 Bonds on character charged to the Issuer or to the Trustee affecting the amount available to the the next Interest Payment Date or principal on the Series 2017 Bonds on the next Issuer or the Trustee from payments to be received hereunder or in any way arising due to Principal Payment Date, as applicable. the transactions contemplated hereby (including taxes and assessments assessed or levied by any public agency or governmental authority of whatsoever character having power to (b) The Borrower shall pay or provide for the payment of the required amount levy taxes or assessments) but excluding franchise taxes based upon the capital and/or into accounts of the Debt Service Reserve Fund upon notice of any deficiency therein in income of the Trustee and taxes based upon or measured by the net income of the accordance with Sections 3.06 and 3.07 of the Indenture. If the Trustee determines on Trustee; provided, however, that the Borrower shall have the right to protest any such

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taxes or assessments and to require the Issuer or the Trustee, at the Borrower’s expense, Any invoice furnished to the Borrower by the Issuer or the Trustee pursuant to this to protest and contest any such taxes or assessments levied upon them and that the Section 5.01 shall be deemed to constitute a written notice under Section 10.01(a)(ii) Borrower shall have the right to withhold payment of any such taxes or assessments sufficient to cause the 45-day period specified in said Section 10.01(a)(ii) to commence. pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the Issuer or the Trustee. (m) In the event the Borrower should fail to make or fail to cause to be made any of the payments required by this Section, the item or installment in default shall (i) The Borrower agrees to pay all reasonable fees, charges and expenses of continue as an obligation of the Borrower until the amount in default shall have been the Trustee for services rendered under the Indenture, including its reasonable attorneys’ fully paid, and the Borrower agrees to pay the same and interest at the highest rate of fees and expenses, any extraordinary fees, and all amounts referred to in Section 9.02 of interest borne by any of the Series 2017 Bonds, or the maximum rate permitted by law if the Indenture, as and when the same become due and payable, and, subsequent to default, less than such rate. the Borrower shall pay such fees and expenses in accordance with the Trustee’s then current fee schedule for default administration and all counsel fees and expenses, Section 5.02. Pledge by Borrower. In fulfillment of its obligations hereunder, the advances and other expenses made or incurred by the Trustee in connection with such Borrower hereby pledges to the payment of the Loans and the Series 2017 Promissory Notes services. securing such Loans, the following (subject to Permitted Encumbrances):

(j) The Borrower agrees to pay the reasonable fees and expenses of such (a) all of the Borrower’s right, title and interest in and to the New Facility, accountants, consultants, attorneys and other experts as may be engaged by the Issuer or including all related additions, replacements, substitutions and proceeds for the purposes the Trustee to prepare audits, financial statements, reports, opinions or provide such other of securing such Loans; services required under the Borrower Documents or the Indenture, including, but not limited to, any audit or inquiry by the Internal Revenue Service or any other (b) all Pledged Revenues; and governmental body. (c) any and all other interests in real or personal property of every name and (k) The Borrower agrees to pay the Issuer’s Annual Fee and the reasonable nature from time to time hereafter, by delivery or by writing of any kind, specifically fees and expenses of the Issuer or any agent or attorney selected by the Issuer to act on its mortgaged, pledged or hypothecated, as and for additional security by the Borrower or by behalf in connection with the Borrower Documents, the Bonds or the Indenture, anyone on its behalf. including, without limitation, any and all reasonable expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or in connection Section 5.03. Payees of Payments. The Loan Payments provided for in Section 5.01(a) with any litigation, investigation, inquiry or other proceeding which may at any time be hereof shall be paid in immediately available funds to the Trustee for the account of the Issuer instituted involving the Borrower Documents, the Bonds or the Indenture or any of the and shall be deposited into the Bond Fund. The payments provided for in Section 5.01(b) hereof other documents contemplated thereby, or in connection with the reasonable supervision shall be paid to the Trustee as provided in Section 3.06 and 3.07 of the Indenture. The rebate or inspection of the Borrower, its properties, assets or operations or otherwise in payments provided for in Section 5.01(f) hereof shall be paid to the Trustee and deposited into connection with the administration of the Borrower Documents. the Rebate Fund pursuant to Section 3.20 of the Indenture and, with respect to the Rebate Analyst Fee, be paid to the Rebate Analyst. The payments provided for in Sections 5.01(d), (g), (l) The Additional Payments in subsections (h), (j) and (k) shall be billed to (h), (i), (j), (k) and (l) shall be paid to the parties identified therein or otherwise to whom such the Borrower by the Issuer or the Trustee from time to time, together with a statement payments are due. certifying that the amount billed has been incurred or paid by the Issuer or the Trustee for one or more of the above items. After such a demand, amounts so billed shall be paid by Section 5.04. Obligations of Borrower Hereunder Absolute and Unconditional. the Borrower within 30 days after receipt of the bill by the Borrower. Notwithstanding Except as may be otherwise provided herein, the obligations of the Borrower to make the the foregoing, the Issuer may, but shall not be required to, submit a bill to the Borrower payments required hereunder and to perform and observe the other agreements on its part for payment of the Issuer’s Annual Fee. The “Issuer’s Annual Fee” shall be calculated, contained herein shall be absolute and unconditional, and the Borrower agrees that it will make and shall be due and payable by the Borrower to the Issuer in semi-annual installments payments directly to the Trustee without defense or set off by reason of any dispute between the due and payable on the six-month anniversary of the Bond Closing for the Series 2017 Borrower and the Issuer or the Trustee. The Borrower (a) will not suspend or discontinue, or Bonds and subsequently on the same day each sixth month thereafter. The amount of permit the suspension or discontinuance of, any payments provided for herein; (b) will perform each semiannual payment shall be in an amount determined by multiplying (i) the and observe all of its other agreements contained in this Loan Agreement, the Deed of Trust and principal amount of the Series 2017 Bonds Outstanding as of the last day of the calendar the Series 2017 Promissory Notes; and (c) except as provided in Article XI hereof, will not month preceding such payment due date by (ii) 0.03% (3 basis points) by (iii) one-half. terminate this Loan Agreement for any cause including, without limiting the generality of the

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foregoing, any acts or circumstances that may constitute failure to complete the Project, failure deem desirable for its purposes that do not substantially reduce its value; provided that all such of consideration, eviction or constructive eviction, destruction of or damage to the New Facility, additions, modifications and improvements made by the Borrower which are affixed to the commercial frustration of purpose, or change in the tax or other laws or administrative rulings of Premises shall become a part of the Premises and subject to the Deed of Trust. The Borrower or administrative actions by the United States of America or the State of North Carolina or any will not permit the removal of any personal property owned by the Borrower from the Facilities, political subdivision of either, any failure of the Issuer to perform and observe any agreement, or the Athletic Facility and the Government Loan Facility unless such personal property is obsolete, any duty, liability, or obligation arising out of or connected with this Loan Agreement, or any sold for fair market value or will be replaced with personal property of an equal or greater value. failure of the Trustee to perform and observe any agreement, whether express or implied, or any In the event that the Borrower shall fail to pay any of the foregoing items required by this duty, liability or obligation arising out of or connected with the Indenture, whether express or Section 6.01 to be paid by the Borrower, the Issuer or the Trustee may (but shall be under no implied. The Borrower may at its own cost and expense and in its own name, prosecute or obligation to) pay the same, and any amounts so advanced therefor by the Issuer or the Trustee defend any action or proceeding or take any other action involving third persons which the shall become an additional obligation of the Borrower under this Loan Agreement, which Borrower deems reasonably necessary in order to secure or protect its or its lessees’ rights of amount the Borrower agrees to pay on demand together with interest thereon at a rate which shall possession, occupancy and use of the Facilities. be 3% per annum above the highest rate of interest borne by any of the Series 2017 Bonds or the maximum rate permitted by law if less than such rate. In addition to and without in any way limiting its obligations to pay and indemnify the Issuer and the Issuer Indemnified Parties against fees, costs and charges arising out of or in Section 6.02. Taxes, Other Governmental Charges and Utility Charges. connection with the Borrower Documents, the Series 2017 Bonds or the Indenture the Borrower shall pay, upon the closing of the issuance of the Series 2017 Bonds and as a condition thereto: (a) The Borrower will pay or cause to be paid, as applicable, as the same (a) to the Issuer the Issuer’s issuance fee of 0.20% (20 basis points) of the par amount of the become due, (i) all taxes and governmental charges of any kind whatsoever or payments Bonds, minimum of $15,000, less, if applicable, any application fee heretofore paid by the in lieu of taxes that may at any time be lawfully assessed or levied against or with respect Borrower to the Issuer; and (b) attorneys’ fees incurred by the Issuer in connection with the to the Facilities, the Athletic Facility and the Government Loan Facility or any interest issuance of the Series 2017 Bonds. therein, or any machinery, equipment, or other property installed or brought by the Borrower therein or thereon which, if not paid, will become a Lien on the Facilities, the Athletic Facility and the Government Loan Facility (other than a Permitted Encumbrance) or a charge on the Pledged Revenues prior to or on a parity with the MAINTENANCE, TAXES AND INSURANCE charge thereon under this Loan Agreement; (ii) all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Facilities, the Athletic Section 6.01. Maintenance and Modifications of Facilities, the Athletic Facility and Facility and the Government Loan Facility; and (iii) all assessments and charges lawfully the Government Loan Facility by Borrower. The Borrower agrees that during the term of this made by any governmental body for public improvements that may be secured by a Lien Loan Agreement the Facilities, the Athletic Facility and the Government Loan Facility shall be on the Facilities, the Athletic Facility and the Government Loan Facility provided that operated and maintained, in compliance with all governmental laws, building codes, ordinances, with respect to special assessments or other governmental charges that may lawfully be and regulations and zoning laws as shall be applicable to such Facilities, the Athletic Facility and paid in installments over a period of years, the Borrower shall be obligated to pay only the Government Loan Facility, unless the same are being contested in good faith by appropriate such installments as may have become due during the term of this Loan Agreement or proceedings. The Borrower agrees that during the term of this Loan Agreement it will, at its own that may be necessary to prevent the imposition of a Lien (other than a Lien that is a expense, (a) keep the Facilities, the Athletic Facility and the Government Loan Facility in as safe Permitted Encumbrance). of a condition as required by law; and (b) except to the extent the Borrower has determined that any portion of the Facilities, the Athletic Facility or the Government Loan Facility is obsolete or (b) In the event that the Borrower shall fail to pay any of the items required by not useful in its operations, keep the Facilities, the Athletic Facility and the Government Loan this Section 6.02 to be paid or caused to be paid by the Borrower, the Issuer or the Facility in good repair and in good operating condition, making, from time to time, all necessary Trustee may (but shall be under no obligation to) pay the same and any amounts so repairs thereto (including external and structural repairs) and renewals and replacements thereof advanced therefor by the Issuer or the Trustee shall become an additional obligation of all of which shall be accomplished in a workmanlike manner in accordance with all applicable the Borrower payable to the one making the advance, which amount the Borrower agrees laws. The Borrower may dispose of portions of the Facilities, the Athletic Facility and the to pay on demand together with interest thereon at a rate which shall be 3% per annum Government Loan Facility that the Borrower determines to be obsolete or not useful to above the highest rate of interest borne by the Series 2017 Bonds or the maximum rate operations of the Facilities, the Athletic Facility and the Government Loan Facility. The permitted by law if less than such rate. Borrower may also, at its own expense, make, from time to time, any additions, modifications or improvements to the Facilities, the Athletic Facility and the Government Loan Facility it may

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Section 6.03. Insurance Required. recommendations, if any, for adjustments thereto. The insurance coverage required by this Section 6.03 may be reduced or otherwise adjusted by the Borrower without the (a) Beginning on the date of execution hereof and thereafter throughout the consent of the Trustee or the Issuer, provided that all coverages after such reduction or term of this Loan Agreement, the Borrower shall provide, maintain and keep in force or other adjustment are certified by the Insurance Consultant to be adequate and customary cause to be provided, maintained and kept in force, the following insurance coverages, for facilities of like size, type and character, taking into account the availability of such paying as the same become due and payable all premiums with respect thereto: insurance, the terms upon which such insurance is available, the cost of such available insurance and the effect of such terms and such cost upon the Borrower’s fees, rentals (i) a lender’s title insurance policy or policies in an aggregate amount and charges for the use of the Facilities, the Athletic Facility and the Government Loan as required by Section 4.08 herein; Facility.

(ii) insurance against loss or damage to the Facilities, the Athletic (c) The insurance coverage required by this Section 6.03 shall be increased or Facility and the Government Loan Facility and all improvements therein otherwise adjusted by the Borrower if, as a result of such review, the Insurance (including, during any period of time when the Borrower is making alterations, Consultant finds that the existing coverage is inadequate. The insurance coverage repairs or improvements to the Facilities, the Athletic Facility and the required by this Section 6.03, and modification thereof permitted or required by this Government Loan Facility; improvements and betterments coverage), all subject paragraph, shall at all times be adequate and customary for facilities of like size, type and to standard form exclusions, with uniform standard extended coverage character, and the Borrower shall request that the Insurance Consultant so certify in the endorsement limited only as may be provided in the standard form of extended report required by this Section. The Borrower shall pay any fees charged by such coverage endorsement at the time in use in the State of North Carolina, in an Insurance Consultant and any expenses incurred by the Issuer and the Trustee. amount equal to the greater of the full replacement value of the Facilities, the Athletic Facility and the Government Loan Facility or the aggregate principal (d) All policies maintained (or caused to be maintained) by the Borrower amount of the Promissory Notes then outstanding (unless the Insurance pursuant to this Section 6.03 shall be taken out and maintained with generally recognized, Consultant confirms that the latter is not available); responsible insurance companies rated not less than “A” by A.M. Best (or any successor), authorized to write insurance in the State of North Carolina, which may include “captive” (iii) commercial comprehensive general liability and automobile insurance companies or governmental insurance pools, selected by the Borrower. The liability insurance against claims arising in, on or about the Facilities, the Athletic insurance policies required by Sections 6.03(a)(i) and (a)(ii) above, shall name the Facility and the Government Loan Facility, including in, on or about the Trustee, the Issuer and the Borrower as insureds as their respective interests may appear sidewalks or premises adjacent to the Facilities, the Athletic Facility and the (provided that with respect to insurance maintained pursuant to Section 6.03(a)(i), the Government Loan Facility, providing coverage limits not less than $1,000,000 per Trustee shall also be named as a mortgagee, and the Trustee shall also be named as an occurrence and $2,000,000 in aggregate; additional insured on the policies required by Sections 6.03(a)(iii) and (a)(iv), and, provided further that all insurance proceeds for losses, and except for worker’s (iv) business interruption or rent loss insurance (or a combination of compensation and liability insurance and as provided for in the Parity Agreement, shall the two) equal to 12 months’ debt service on the Bonds and six months’ Operating be paid directly to the Trustee). Such policies or certificates of insurance shall (i) provide Expenses; and that the insurer will endeavor to mail not less than 30 nor more than 60 days’ written notice to the Issuer and the Trustee of any amendment or cancellation prior to expiration (v) such other forms of insurance as are customary in the industry or of such policy, and (ii) be satisfactory in all other respects to the Issuer. as the Borrower is required by law or written agreement to provide with respect to the Facilities, the Athletic Facility and the Government Loan Facility, including, (e) The Borrower shall deliver to the Trustee (i) upon the date of issuance of without limitation, any legally required workers’ compensation insurance and the Series 2017 Bonds, the certificate(s) of insurance which the Borrower is then required disability benefits insurance. to maintain pursuant to this Section 6.03, together with evidence as to the payment of all premiums then due thereon; (ii) at least 15 days prior to the expiration of any such (b) All the insurance coverage required by this Section 6.03 may be subject to policies evidence as to the renewal thereof, if then required by this Section 6.03, and the deductible clauses in such amounts as are customary for facilities of similar size, type and payment of all premiums then due with respect thereto; and (iii) promptly upon request character within the State of North Carolina. At least every three years from November by the Issuer or the Trustee, but in any case within 90 days after the end of each fiscal 1, 2017, the Borrower shall employ, at the Borrower’s expense, an Insurance Consultant year, a certificate of an Authorized Representative of the Borrower setting forth the to review the insurance coverage required by this Section 6.03 and to render to the Issuer particulars as to all insurance policies maintained by the Borrower pursuant to this and the Trustee a report as to the adequacy of such coverage and as to its

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Section 6.03 and certifying that such insurance policies are in full force and effect, that (ii) actually or allegedly arises out of the use of any Regulated such policies comply with the provisions of this Section 6.03 and that all premiums then Chemical, the existence or failure to detect the existence or proportion of any due thereon have been paid. Regulated Chemical in the soil, air, surface water or groundwater, or the performance or failure to perform the abatement or removal of any Regulated (f) The Trustee shall have no duty to review or analyze documents, including Chemical or of any soil, water, surface water or groundwater containing any any reports, financial statements, insurance policies or certificates, or other material Regulated Chemical on, in, under, or affecting all or a portion of the Facilities; or delivered to the Trustee under the terms of this Agreement and shall only be required to act on such information if it creates an Event of Default hereunder. The Trustee shall not (iii) arises out of any misrepresentations of the Borrower concerning be deemed to have notice of any information contained therein or Event of Default which any matter involving Regulated Chemicals or Environmental Requirements; or may be disclosed in any manner therein, and shall only be required to act on such information as specifically directed pursuant to the terms of this Loan Agreement. (iv) arises out of the Borrower’s failure to provide all information, make all submissions and filings, and take all steps required by appropriate Section 6.04. Application of Net Proceeds of Insurance. The Net Proceeds of the government authority under any Environmental Requirement, whether currently insurance carried pursuant to Sections 6.03(a)(i) and (a)(ii) hereof shall be applied as provided in existing or hereinafter enacted. Article VII hereof. The Net Proceeds of insurance carried pursuant to Sections 6.03(a)(iii), (a)(iv) and (a)(v) hereof shall be applied toward extinguishment or satisfaction of the liability (b) Without prejudice to the survival of any other agreements of the Borrower with respect to which such insurance proceeds have been paid. hereunder, this indemnification shall survive any termination, payment, or satisfaction of the indebtedness and the termination of this Loan Agreement, and any foreclosure or any Section 6.05. Advances by Issuer. In the event the Borrower shall fail to maintain or other transfer of any kind of the Facilities and shall continue and survive ad infinitum. cause to be maintained the full insurance coverage required by this Loan Agreement or shall fail to keep the Facilities, the Athletic Facility and the Government Loan Facility in the condition (c) Nothing contained herein shall be deemed to provide indemnification to required hereby (except as otherwise herein permitted), the Issuer may (but shall be under no any Trustee Indemnified Party with respect to any Liabilities arising from the gross obligation to) take out the required policies of insurance and pay the premiums on the same, or negligence or willful misconduct of such Trustee Indemnified Party; or to the Issuer or make the required repairs, renewals and replacements; and all amounts advanced therefor by the any Issuer Indemnified Party with respect to any Liabilities arising from the willful Issuer shall become an additional obligation of the Borrower under this Loan Agreement to the misconduct of the Issuer or Issuer Indemnified Party. one making the advance, which amounts the Borrower agrees to pay immediately upon demand together with interest thereon at a rate which shall be 3% per annum above the highest interest (d) The Borrower’s indemnification contained herein shall be effective not rate borne by any of the Series 2017 Bonds or the maximum rate permitted by law if less than only with any existing Environmental Requirements affecting the Borrower, Indemnified such rate. Parties and/or the Facilities, but also for any hereinafter enacted Environmental Law, regulation, statute or program, whether federal, state or local affecting the Borrower, the Section 6.06. Environmental Indemnity. Indemnified Parties and/or the Facilities.

(a) In addition to, and not in limitation of, the indemnification set forth in (e) The Borrower’s indemnification contained herein shall extend to any and Section 8.06 hereof, Borrower and its successors and assigns, shall and do hereby all like claims which arise from the acts or omissions of any user, tenant, lessee, agent or indemnify and hold harmless the Registered Owners, the Beneficial Owners, their invitee of the Borrower. respective successors, assigns, trustees, directors, officers, employees and agents, the Trustee Indemnified Parties, the Issuer and the Issuer Indemnified Parties (as defined in (f) The obligations under this Section shall not be affected by any the Indenture) (collectively referred to in this Section 6.06 as “Indemnified Parties”), for, investigation by or on behalf of Indemnified Parties, or by any information which from and against any and all Liabilities that Indemnified Parties may incur as a result of Indemnified Parties may have or obtain with respect thereto. or in connection with the assertion against Indemnified Parties, or against all or a portion of the Facilities, of any claim, civil, criminal or administrative, which: (g) The Borrower’s indemnification contained herein shall include the duty to defend any and all claims, and Indemnified Parties may participate in the defense of any (i) arises out of the actual, alleged or threatened discharge, dispersal, claim without relieving the Borrower of any obligation hereunder. This duty to defend release, storage, treatment, generation, disposal or escape of any Regulated shall apply and constitute an obligation of the Borrower regardless of any challenge by Chemical on or from the Facilities; or the Borrower to this provision, the indemnification contained herein, or any other provision of this Loan Agreement. This duty to defend shall apply regardless of the

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validity of the Borrower’s indemnification, as may ultimately be determined by a court of Facility and the Government Loan Facility free from, and unaffected by, Regulated competent jurisdiction. Chemicals.

Section 6.07. Environmental Covenants. (d) No Liens or Encumbrances. The Borrower shall prevent the imposition of any Liens or encumbrances against the Facilities, the Athletic Facility and the (a) Use of Facilities, the Athletic Facility and the Government Loan Government Loan Facility for the costs of any Response Action. Facility. The Borrower will not conduct, or allow to be conducted, any business, operation, or activity on, under, or in the Facilities, the Athletic Facility and the (e) Additional Environmental Reports. As long as there are any Series 2017 Government Loan Facility, or employ or use the Facilities, the Athletic Facility and the Bonds Outstanding, the Borrower shall provide the Trustee with a copy of any Government Loan Facility or allow for it to be employed or used, to manufacture, Environmental Report performed during that time. transport, treat, store, or dispose of any Regulated Chemical which would violate Environmental Requirements. Section 6.08. Additional Environmental Provisions.

(b) Notice of Environmental Problem. The Borrower (provided that the (a) Right To Notify Agencies. To the extent the Trustee receives written Borrower shall only forward to the Trustee those notices, letters, citations, orders, notice, whether from the Borrower or any other party, stating that the Borrower is in warnings, complaints, inquiries, claims or demands actually received by the Borrower) violation of any Environmental Requirement, and the Trustee determines that such notice shall promptly provide a copy to Trustee, and in no event later than 15 days from requires notification to the respective governmental agency(ies), the Trustee retains the Borrower’s receipt or submission, of any notice, letter, citation, order, warning, right to so notify the respective agency(ies). The Trustee agrees to make written demand complaint, inquiry, claim or demand (other than any such notice, letter, citation, order, upon the Borrower, as circumstances may require, to notify the respective agency(ies), warning, complaint, inquiry, claim or demand that could not reasonably be expected to however, the Trustee retains the right to separately notify the respective agency(ies), and have a Material Adverse Effect) that: the Borrower shall have no cause of action against the Trustee as a result of any such notification. (i) the Borrower or any lessee has violated any Environmental Requirement related to the Facilities, the Athletic Facility and the Government (b) Right of Inspection. Loan Facility; (i) The Trustee at any time and from time to time, with reasonable (ii) there has been a release, or there is a threat of release, of any cause and notice, either prior to or after the occurrence of any Event of Default Regulated Chemical from the Facilities, the Athletic Facility and the Government hereunder may require the Borrower to submit to the Trustee within 90 days of Loan Facility; either the notice required under Section 6.07(b) hereof or a written request from the Trustee, a written environmental site assessment (“Environmental (iii) the Borrower may be or is liable, in whole or in part, for the costs Assessment”), in scope, form and substance, and prepared by an independent, of cleaning up, remediating, removing or responding to a release of any Regulated competent and qualified engineer, satisfactory to the Trustee, showing that the Chemical; and engineer made all appropriate inquiry consistent with good commercial and customary practice, such that consistent with generally accepted engineering (iv) any portion of the Facilities, the Athletic Facility and the practice and procedure, no evidence or indication came to light which would Government Loan Facility is subject to a Lien in favor of any governmental entity suggest there was a release of Regulated Chemicals on, under, in, or about the for any liability, costs or damages, under Environmental Requirements arising Facilities which could necessitate Response Action, and which demonstrates that from, or costs incurred by such governmental entity in response to, a release of the Facilities comply with all applicable Environmental Requirements, and that any Regulated Chemical. the Borrower is in compliance with the representations and warranties set forth in Section 2.06 hereof in all material respects. (c) Response Action. The Borrower shall take all appropriate responsive action, including any removal and remedial action (“Response Action”), in the event of a (ii) The Borrower will cooperate with the consultants and supply to the release, emission, discharge or disposal of any Regulated Chemical in, on, under or about consultants such historical and operational information as may be reasonably the Facilities, the Athletic Facility and the Government Loan Facility, required to remain requested by the consultants, together with any notices, permits or other written in compliance with Environmental Requirements, and to keep the Facilities, the Athletic communications pertaining to violations of Environmental Requirements and any and all necessary information and make available personnel having knowledge of

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such matters as may be required by the Trustee, Trustee’s agents, consultants and to be applied to repair, replace or restore the Facilities unless the Loan is to be prepaid as engineers to complete an Environmental Assessment. provided in Section 7.02; and

(iii) Should the Borrower fail to perform an Environmental Assessment (c) if the Borrower directs the Trustee in writing that the proceeds held by the within the time period set forth in Section 6.08(b)(i) hereof, the Trustee shall have Trustee are to be used to repair, replace or restore the Facilities, the proceeds in such the right but not the obligation to retain an environmental consultant to perform special trust account shall be disbursed by the Trustee for the repair, restoration or said Environmental Assessment. replacement of the Facilities upon the receipt by the Trustee from the Borrower of (i) a certificate of an Authorized Representative of the Borrower which substantially states (iv) The cost of performing any Environmental Assessment shall be that such repairs, replacements or restorations will restore the Facilities to substantially paid by the Borrower upon demand of Trustee and any such obligations shall be its original condition, will be completed in accordance with plans and specifications included in the Indebtedness. previously provided to the Trustee and that such repairs, replacements or restorations when completed in accordance with the plans and specifications previously furnished to (c) Event of Default. If an Environmental Assessment reveals any violations the Trustee will comply with all applicable statutes, codes and regulations; (ii) a of Environmental Requirements or the Borrower receives a notice of a violation of certificate of an Authorized Representative of the Borrower stating that sufficient moneys Environmental Requirements, and the Borrower fails to immediately notify the Trustee are available in such special trust account to pay for such repair, restoration or and the Issuer and to cure the violation in the time period and the manner specified in replacements to be completed and together with available business interruption insurance Section 10.01(a)(ii) hereof (except that notice from the Issuer or the Trustee to the and other available Pledged Revenues, to pay debt service on the Bonds and Operating Borrower otherwise required under said Section 10.01(a)(ii) shall not be required), such Expenses during the restoration period and if at any time during the restoration, the action will constitute an Event of Default. insurance or casualty proceeds are less than the estimated costs to restore, repair or replace the Facilities, the Borrower shall provide the Trustee with cash or cash (d) No Assumption of Risk. The Trustee’s rights under this Section 6.08 shall equivalents in an amount equal to the shortfall; (iii) disbursement requisitions from the be exercised by it in its discretion and not for the benefit of the Borrower. The Trustee Borrower; (iv) applicable Lien waivers; (v) a guaranteed maximum price construction shall have no obligation (unless directed and indemnified as provided in the Indenture) to contract; (vi) evidence that the Borrower has acquired all permits and licenses necessary enter into the Facilities or to take any other action which is authorized by this Section for for such construction; and (vii) an opinion of Bond Counsel to the effect that neither such the protection of its security interest. The Borrower specifically agrees and repairs, replacements nor restorations nor such use of such casualty or condemnation acknowledges that any action permitted under this Section 6.08 shall not be construed to proceeds adversely affects the exclusion from gross income for federal income tax be the management or control of the Facilities by the Trustee. purposes of interest on the Tax-Exempt Bonds. If such Net Proceeds are in excess of $250,000, in addition to those requirements listed in clauses (i) through (vi) above, the

Borrower shall also deliver to the Trustee: (A) evidence of the existence of performance

and payment bonds therefore, and (B) an endorsement to the applicable title insurance DAMAGE, DESTRUCTION AND CONDEMNATION policy insuring the continued priority of the Lien of the Deed of Trust. The Trustee shall Section 7.01. Damage, Destruction and Condemnation. In the event of a casualty or retain 10% of the requested disbursements until the repairs, replacements, restorations or condemnation with respect to the Facilities, and so long as no Event of Default exists and is improvements are 50% complete, as certified by an Authorized Representative of the continuing, the Net Proceeds from any insurance policy or the Net Proceeds of any Borrower, and 5% thereafter, and until receipt of certificates of occupancy, waivers of condemnation award resulting from such casualty or condemnation shall be used as follows: Liens and, if such Net Proceeds are in excess of $250,000, an endorsement to the title policy for the Premises insuring the continued priority of the Deed of Trust. If at any (a) whenever such Net Proceeds from any insurance policy or condemnation time during the restoration, the insurance or casualty proceeds are less than the estimated award are less than or equal to $125,000, such Net Proceeds shall be paid directly to the costs to restore, repair or replace the Facilities, the Borrower will provide the Trustee Borrower and used for the repair, replacement or restoration of the Facilities to with cash or cash equivalents in an amount equal to the shortfall. If after completion of substantially the same condition as existed prior to such damage, destruction or any such repairs, replacements, or improvements any funds remain in said special trust condemnation; fund, the remaining funds shall be transferred by the Trustee to the Debt Service Reserve Fund to the extent the balance therein is less than the Debt Service Reserve Fund (b) whenever such Net Proceeds from any insurance policy or condemnation Requirement, with any excess being transferred to the Bond Fund. award are greater than $125,000, such Net Proceeds shall be paid to the Trustee and held in a special, segregated trust account established pursuant to Section 3.18 of the Indenture

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Section 7.02. Extraordinary Mandatory Prepayment. The Loans and Series 2017 restoration, repair or rebuilding shall be invested in Investment Obligations in the same manner Promissory Notes securing the Loans are subject to mandatory prepayment as a whole or in part as provided in Section 6.01 of the Indenture. Any earnings or profits on such investments shall at the principal amount thereof plus accrued interest thereon to the date of prepayment, but be considered part of the Net Proceeds. without premium, from Net Proceeds in the case of clause (a) or (b) below, if any of the events set forth below shall occur:

(a) if the Net Proceeds of any insurance policy or condemnation award with SPECIAL COVENANTS respect to the New Facility are in excess of $125,000, and the New Facility shall have been damaged or destroyed in whole or in part to such extent that, as expressed in a Section 8.01. No Warranty of Condition or Suitability by the Issuer. The Issuer certificate of an Authorized Representative of the Borrower filed with the Trustee, (i) the makes no warranty, either express or implied, as to the Facilities or that it will be suitable for the New Facility cannot reasonably be restored within a period of six consecutive months to Borrower’s purposes or needs or that the proceeds of the Series 2017 Bonds will be sufficient to the condition thereof immediately preceding such damage or destruction, (ii) the pay the Costs of the Project. Borrower is prevented from carrying on its normal operations for a period of six consecutive months, or (iii) the cost of restoration thereof would exceed the Net Proceeds Section 8.02. Consolidation, Merger, Sale or Conveyance. The Borrower agrees that of insurance carried thereon pursuant to the requirements of Section 6.03 hereof; during the term of this Loan Agreement it will maintain its corporate existence, will continue to be a nonprofit corporation duly qualified to do business in the State of North Carolina, will not (b) if the Net Proceeds of any insurance policy or condemnation award with merge or consolidate with, or sell or convey, except as provided in Section 8.11 hereof, all or respect to the New Facility are in excess of $125,000, and title to, or the temporary use substantially all of its interest in the New Facility to, any Person unless (a) no Event of Default for a period of six months or more of, all or substantially all of the New Facility shall has occurred and is continuing; (b) it first acquires the consent of the Owners to such transaction; have been taken under the exercise of the power of eminent domain by any governmental (c) it provides to the Trustee notice of its intent at least 90 days in advance of such consolidation, authority, or person, firm or corporation acting under governmental authority or because merger, sale or conveyance; and (d) the acquirer of the interest in the Facilities or the corporation of a defect in title; and with which it shall be consolidated or the resulting corporation in the case of a merger:

(c) as a result of any changes in the constitution of the State, or the State of (a) shall assume in writing the performance and observance of all covenants North Carolina, or the Constitution of the United States of America or of legislative or and conditions of this Loan Agreement; administrative action (whether state or federal) or by final decree, judgment or order of any court or administrative body (whether state or federal) entered after the contest (b) shall provide the Trustee with an opinion of Bond Counsel to the effect thereof by the Borrower in good faith, this Loan Agreement shall have become void or that such merger, consolidation, sale or conveyance, would not adversely affect the unenforceable or impossible of performance in accordance with the intent and purposes validity of any of the Outstanding Bonds or the exclusion from gross income for federal of the parties as expressed in this Loan Agreement. income tax purposes of interest on the Outstanding Tax-Exempt Bonds;

Section 7.03. Borrower Entitled to Certain Net Proceeds. The Borrower shall be (c) shall provide the Issuer and the Trustee with an Opinion of Counsel to the entitled to the Net Proceeds of any insurance payment or condemnation award or portion thereof Borrower (which may be rendered in reliance upon the Opinion of Counsel to such other attributable to damage or destruction or takings of its property not included under the Deed of corporation), stating that none of the other corporations which are a party to such Trust. consolidation, merger or transfer has any pending litigation other than that arising in the ordinary course of business, or has any pending litigation which might reasonably result Section 7.04. No Change in Loan Payments; No Liens. All buildings, improvements in a substantial adverse judgment. For the purposes of the preceding sentence, the term and equipment acquired in the repair, rebuilding or restoration of the Facilities shall be deemed a “substantial adverse judgment” shall mean a judgment in an amount which exceeds the part of the Facilities and shall be available for use and occupancy by the Borrower, without the insurance or reserves therefor by a sum which is more than 2% of the aggregate net worth payment of any payments hereunder other than the Loan Payments and other payments required of the resulting, surviving or transferee corporation immediately after the consummation to be made under this Loan Agreement, to the same extent as if they were specifically described of such consolidation, merger or transfer and after giving effect thereto; herein; provided that no buildings, improvements or equipment shall be acquired subject to any Lien or encumbrance other than Permitted Encumbrances. (d) shall deliver to the Trustee within 30 days of the close of such transaction, copies of all documents executed in connection therewith, one document of which shall Section 7.05. Investment of Net Proceeds. Any Net Proceeds of any insurance include an Opinion of Counsel that all conditions herein have been satisfied and that all payments or condemnation awards with respect to the Facilities held by the Trustee pending liabilities and obligations of the Borrower under the Borrower Documents shall become

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obligations of the new entity; provided, however, the Borrower shall not be released from ten days of receiving such complaint notifications and responding thereto; (vi) notices of same; and any meetings in which the Borrower is before the State Compliance Office for issues of non-compliance along with the minutes of such meetings and any responses provided by (e) in the case of a consolidation, merger, sale or conveyance, shall provide the Borrower; (vii) the School’s School Improvement Plan, as and when required to be evidence to the Trustee that (i) the entity can continue to operate the School as a charter submitted to the State Compliance Office; and (viii) within ten days of the Borrower’s school in accordance with the Charter School Act; and (ii) on an historical pro forma receipt thereof, notice of approval or denial of any application by the Borrower for any basis for the preceding Fiscal Year for which audited financial statements are available, modification to the Borrower’s charter from the State of North Carolina to operate the the entity would have complied with the Debt Service Coverage Ratio requirements of School. Section 8.05(f) and the liquidity requirements of Section 8.05(g). (c) Other Reporting. The Borrower will provide to the Dissemination Agent Section 8.03. Further Assurances. The Issuer (subject to Section 12.13(e)) and the for filing with EMMA no later than May 15, August 15, November 15 and February 15, Borrower agree that they will, from time to time, execute, acknowledge and deliver, or cause to as applicable, after the close of each Fiscal Year quarter (March 31, June 30, September be executed, acknowledged and delivered, such supplements hereto and such further instruments 30 and December 31) commencing with the Fiscal Quarter ending December 31, 2017, as may reasonably be required for carrying out the intention of or facilitating the performance of unaudited financial statements for the previous quarter reflecting year-to-date revenues this Loan Agreement, subject, however, to the terms and conditions of Article X of the and expenses in comparative form with the Borrower’s operating budget as submitted by Indenture. the Borrower to its governing board (the “Quarterly Reports” and, each a “Quarterly Report”). Section 8.04. Audits. The Borrower agrees that it will have its books and records audited annually commencing with the Fiscal Year ending June 30, 2017, by an Accountant as (d) Notice of Charter Noncompliance. Unless previously disseminated, the soon as practicable after the close of such Fiscal Year, and shall furnish such report to the next Quarterly Report to be disseminated shall contain a copy or complete description of Trustee and the Underwriter. The audit report shall include a demonstration of compliance with any notice, report or communication with respect to charter noncompliance that would all financial covenants herein and shall be furnished to the Trustee no later than December 31 allow the State Compliance Office to begin any process or proceedings toward charter after the end of each Fiscal Year. If the audit report is not available by December 31 of any revocation or which indicate an intent to renew any such charter. Fiscal Year, the Borrower shall furnish to the Trustee unaudited financial statements in a format similar to the audit report, and the audit report shall be furnished to the Trustee as soon as (e) Borrower Reports. The Borrower will deliver to the Trustee within six practical, but in no event later than March 30th of any Fiscal Year. The Trustee shall have no weeks after the end of each of the Borrower’s Fiscal Years, and within three Business duty to review such report and shall not be deemed to have notice of any information contained Days of the occurrence of any Event of Default under Sections 8.01(a)(iii) and (iv) of the therein or event of default which may be disclosed in any manner therein. Indenture, a certificate in the form attached hereto as Exhibit F, executed by an Authorized Representative. Section 8.05. Financial Statements; Reports; Annual Certificate; Financial Covenants; Investor Calls. (f) Debt Service Coverage Ratio. The Borrower is required to deliver annually, upon completion of the Borrower’s annual audit, to the Trustee a certificate (a) Maintenance of Books and Accounts. The Borrower agrees that it will stating the Debt Service Coverage Ratio for the Fiscal Year then ended and evidencing maintain proper books of records and accounts with full, true and correct entries of all of the calculation thereof on and as of June 30 of such year, commencing with the Fiscal its dealings substantially in accordance with practices generally used for public charter Year ending June 30, 2018. The Debt Service Coverage Ratio as of the testing date is school accounting. required to be at or above 1.10 to 1.00 for each Fiscal Year, commencing with the Fiscal Year ending June 30, 2018. If, for any Fiscal Year ending June 30, 2018, or after, such (b) Financial Reports, Enrollment Reports and Charter Compliance Debt Service Coverage Ratio is below 1.10 to 1.00, the Borrower shall retain, at its Reporting. The Borrower shall file with the Municipal Securities Rulemaking Board’s expense, an Independent Consultant to submit a written report and make Electronic Municipal Market Access (“EMMA”), as soon as is practicable, if not recommendations within 45 days of being retained (a copy of such report and otherwise stated herein, the following information: (i) the amount of money that the recommendations shall be filed with the Trustee) with respect to increasing income of the Borrower will receive each year from the State of North Carolina; (ii) a copy of the Borrower, decreasing Operating Expenses or other financial matters of the Borrower Borrower’s annual budget, certified by the Borrower, on or before July 15 of each Fiscal which are relevant to increasing the Debt Service Coverage Ratio to at least the required Year, commencing July 15, 2018; (iii) the Borrower’s Average Daily Membership, as level. The Borrower agrees that promptly upon the receipt of such recommendations, reported to the State Compliance Office; (iv) copies of written complaint notifications subject to applicable requirements or restrictions imposed by law, it shall employ a best from the State Compliance Office, along with the Borrower’s responses thereto, within efforts approach to revise its methods of operation and take such other actions to comply

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with any reasonable recommendation of the Independent Consultant identified in the reasonable recommendations (subject to applicable requirements or restrictions imposed report of the Independent Consultant. Within five Business Days of receipt of the by law), no default or Event of Default shall be declared solely by reason of a violation of certificate to be delivered under this Section, the Trustee is required to notify Registered the requirements of this Section 8.05(g). Owners of the Outstanding Bonds of the Debt Service Coverage Ratio if the Debt Service Coverage Ratio is below 1.00 to 1.00. So long as the Debt Service Coverage Ratio is not The foregoing is subject to the qualification that if applicable State or federal laws below 1.00 to 1.00, and so long as the Borrower shall retain an Independent Consultant or regulations, or the rules and regulations of the agencies having jurisdiction, shall not and use its best efforts to comply with such Independent Consultant’s reasonable permit the Borrower to maintain such level of Days Cash on Hand, then the Borrower recommendations (subject to applicable requirements or restrictions imposed by law), no shall, in conformity with the then prevailing laws, rules or regulations, maintain its Days default or Event of Default shall be declared solely by reason of a violation of the Cash on Hand equal to the maximum permissible level. requirements of this Section. (h) Investor Calls. Within thirty (30) days following receipt by the Notwithstanding the foregoing provisions in this Section, the failure of the Dissemination Agent of the audited financial statements of the Borrower for the Fiscal Year Borrower to have a Debt Service Coverage Ratio of at least 1.00 to 1.00 for any Fiscal ending June 30, 2018 and within thirty (30) days following receipt by the Dissemination Year ending June 30, 2018, or after, shall be an Event of Default hereunder. Agent of the audited financial statements for each Fiscal Year thereafter, the Borrower shall organize and schedule a conference call for the benefit of the Beneficial Owners of the The foregoing is subject to the qualification that if applicable State or federal laws Bonds. The Borrower shall cause notice of such conference call setting forth the date, or regulations, or the rules and regulations of the agencies having jurisdiction, shall not time and call-in information of such conference call to be given to the Dissemination permit the Borrower to maintain such level of Debt Service Coverage Ratio, then the Agent, the Issuer, the then current Beneficial Owners of the Bonds and to the public in Borrower shall, in conformity with the then prevailing laws, rules or regulations, general and shall provide or cause the Dissemination Agent to provide notice of such maintain its Debt Service Coverage Ratio equal to the maximum permissible level. conference call to be posted on EMMA in a timely manner but in no event less than five (5) business days prior to the date set for such conference call. (g) Liquidity Requirement. The Borrower hereby covenants and agrees that, commencing with the Fiscal Year ending June 30, 2018, it will maintain as of the (i) Contracts To Comply With Tax Covenants. Any contract entered into relevant testing date at least twenty-five (25) Days Cash on Hand; commencing with the between the Borrower and any Independent Consultant engaged by the Borrower Fiscal Year ending June 30, 2019, it will maintain as of the relevant testing date at least pursuant to this Section 8.05 must meet the requirements of this Loan Agreement. thirty-five (35) Days Cash on Hand; and commencing with the Fiscal Year ending June 30, 2020 and for each Fiscal Year thereafter, it will maintain as of the relevant testing (j) Additional Documents Upon Request. The Borrower will provide the date at least forty (40) Days Cash on Hand. Issuer with any of the documents specified in this Section 8.05 upon request by the Issuer. The covenant described above is to be tested on and as of June 30 of each year for the Fiscal Year then ended and evidenced by a certificate of the Borrower delivered to the The Trustee shall not be required to ensure compliance by the Borrower with the Trustee and the Underwriter setting forth the calculation of such amount based on the provisions of this Section. results of the annual audit of the Borrower for such Fiscal Year upon release of such audit. If on any testing date the Borrower’s minimum Days Cash on Hand is below that Section 8.06. Indemnification Covenants. required as described above, the Borrower is required to retain, at its expense, an Independent Consultant to submit a written report and make recommendations within 45 (a) To the fullest extent permitted by law, the Borrower agrees to fully and days of being retained (a copy of such report and recommendations shall be filed with the forever and irrevocably release and to the fullest extent permitted by law indemnify, hold Trustee) with respect to increasing income of the Borrower, decreasing Operating harmless and defend (i) the Trustee Indemnified Parties; (ii) the Issuer; and (iii) the Issuer Expenses of the Borrower or other financial matters of the Borrower which are relevant Indemnified Parties (as defined in the Indenture) (collectively, the “Indemnified Parties”), to increasing the Borrower’s Days Cash on Hand to at least the required level. The against any and all Liabilities to which the Indemnified Parties, or any of them, may Borrower agrees that promptly upon the receipt of such recommendations, subject to become subject under any statutory law or regulation (including federal or state securities applicable requirements or restrictions imposed by law, it shall employ a best efforts laws and regulations and federal tax laws and regulations) or at common law or approach to revise its methods of operation and take such other actions to comply with otherwise, arising out of or based upon or in any way relating to: any reasonable recommendation of the Independent Consultant identified in the report of (i) the Bonds, the Indenture, the Borrower Documents or the Tax the Independent Consultant. So long as the Borrower shall retain an Independent Certificate (no provision of which shall be deemed to limit, restrict, or impair in Consultant and use its best efforts to comply with such Independent Consultant’s

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any way the rights of the Indemnified Parties under this Section 8.06) or the (ix) the Trustee’s acceptance or administration of the trust of the execution or amendment hereof or thereof or in connection with transactions Indenture, or the exercise or performance of any of its powers or duties thereunder contemplated hereby or thereby, including the issuance, sale or resale of the or under any of the documents relating to the Bonds to which it is a party; and Bonds; (x) any injury to or death of any person or damage to property in or (ii) the performance and observance by or on behalf of the Issuer of upon the Facilities or growing out of or connected with the use, nonuse, condition those things on the part of the Issuer agreed to be performed or observed or occupancy of the Facilities; hereunder or under the Indenture and the documents identified in Subsection (i) above; except (A) in the case of the foregoing indemnification of the Trustee Indemnified Parties, to the extent such damages are caused by the gross negligence or willful misconduct of such Trustee (iii) any act or omission of the Borrower or any of its affiliates or Indemnified Party; or (B) in the case of the foregoing indemnification of the Issuer or the Issuer affiliated persons, agents, contractors, employees, tenants or licensees in Indemnified Parties, to the extent such damages are caused by the willful misconduct of the connection with the Facilities, the operation of the Facilities, or the condition, Person seeking indemnification. environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or THE BORROWER ACKNOWLEDGES AND AGREES THAT THE ISSUER AND construction of, the Facilities or any part thereof; THE ISSUER INDEMNIFIED PARTIES SHALL BE INDEMNIFIED HEREUNDER AGAINST LIABILITIES ARISING FROM THE ISSUER’S OR ANY ISSUER (iv) any lien or charge upon payments by the Borrower to the Issuer INDEMNIFIED PARTY’S OWN NEGLIGENCE OF ANY KIND, DESCRIPTION OR and the Trustee hereunder, or any taxes (including, without limitation, all ad DEGREE (EXPRESSLY WAIVING THE PROVISIONS OF SECTION 895.045 OF THE valorem taxes and sales taxes), assessments, impositions and other charges WISCONSIN STATUTES AND THE STATUTORY AND COMMON-LAW imposed on the Issuer or the Trustee in respect of any portion of the Facilities; COMPARATIVE OR CONTRIBUTORY NEGLIGENCE LAWS OF ANY OTHER JURISDICTION), OR BREACH OF CONTRACTUAL DUTY, WITHOUT REGARD TO (v) any violation of any Environmental Law or Environmental OR THE NECESSITY OF ANY BREACH OR FAULT ON THE PART OF THE Requirements with respect to, or the release of any Regulated Chemicals from, the BORROWER, EXCEPT INSOFAR AS AND TO THE EXTENT THAT ANY SUCH Facilities or any part thereof; LIABILITIES ARISE FROM THE WILLFUL MISCONDUCT OF THE PERSON SEEKING INDEMNIFICATION. (vi) the defeasance and/or redemption, in whole or in part, of the Bonds; In the event that any action or proceeding is brought against any Indemnified Party with respect to which indemnity may be sought hereunder, the Borrower, upon written notice from the (vii) any untrue statement or misleading statement or alleged untrue Indemnified Party, shall assume the investigation and defense thereof, including the employment statement or alleged misleading statement of a material fact contained in any of counsel selected by the Indemnified Party, and shall assume the payment of all expenses offering or disclosure document or disclosure or continuing disclosure document related thereto, with full power to litigate, compromise or settle the same in its sole discretion; for the Bonds or any of the documents relating to the Bonds, or any omission or provided that the Indemnified Party shall have the right to review and approve or disapprove any alleged omission from any offering or disclosure document or disclosure or such compromise or settlement. Each Indemnified Party shall have the right to employ separate continuing disclosure document for the Bonds of any material fact necessary to be counsel in any such action or proceeding and participate in the investigation and defense thereof, stated therein in order to make the statements made therein, in the light of the and the Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, circumstances under which they were made, not misleading (excepting only any however, that such Indemnified Party may only employ separate counsel at the expense of the statements, omissions or alleged omissions specifically identified in any such Borrower if in the judgment of such Indemnified Party a conflict of interest exists by reason of offering or disclosure document as having been provided by the applicable common representation or if all parties commonly represented do not agree as to the action (or Indemnified Party(ies)); inaction) of counsel.

(viii) any declaration of taxability of interest on the Tax-Exempt Bonds, The rights of any persons to indemnity hereunder and rights to payment of fees and or allegations that interest on the Tax-Exempt Bonds is taxable or any regulatory reimbursement of expenses shall survive the final payment or defeasance of the Bonds and in the audit or inquiry regarding whether interest in the Tax-Exempt Bonds is taxable; case of the Trustee any resignation or removal. The provisions of this Section shall remain valid and in effect notwithstanding repayment of the Loans hereunder or payment, redemption defeasance of the Bonds or termination of this Loan Agreement or the Indenture.

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Insofar as any other document or instrument issued or delivered in connection with the right fully to inspect the Facilities, including all books and records of the Borrower (excluding Series 2017 Bonds (including, without limitation, the documents referred to in Subsection (i) records the confidentiality of which may be protected by law), and to make such copies and above) purports to constitute an undertaking by or impose an obligation upon the Borrower to memoranda from and with regard thereto as may be desired; provided, however, that they shall provide indemnification to the Issuer or the Issuer Indemnified Parties, the indemnification maintain these books and records in confidence unless required by applicable law to do provision or provisions of such document shall not be deemed, interpreted or construed in any otherwise and it is necessary to distribute the information to some other third party under way as a modification of or limitation upon the Borrower’s obligations or the rights of the Issuer applicable law. or the Issuer Indemnified Parties under this Section 8.06, and the provisions of this Section 8.06 shall in every respect supersede the indemnification provisions of any such other document and Section 8.11. Lease or Other Disposition of the Facilities. The Borrower shall have shall apply thereto as if fully set forth therein. the right to lease all or any part of the Facilities; provided, however, that the terms and provisions of any future leases will allow the Borrower to comply with the provisions of this Section 8.07. Authority of Authorized Representative of the Borrower. Whenever Loan Agreement (including but not limited to those in Section 2.03 hereof) and contain the under the provisions of this Loan Agreement or the Indenture the approval of the Borrower is restrictions upon the use of the Facilities contained in Section 8.12 of this Loan Agreement; and required, or the Issuer or the Trustee is required to take some action at the request of the provided further that any future leases will provide for rental payments to be made directly to the Borrower, such approval or such request shall be made by the Authorized Representative of the Trustee to the extent of then current payments required under Section 5.01(a) hereof. In Borrower unless otherwise specified in this Loan Agreement or the Indenture. The Issuer or the addition: (a) no assignment or lease will relieve the Borrower from primary liability for any Trustee shall be authorized to act on any such approval or request and the Borrower shall have obligations under this Loan Agreement, and in the event of any such assignment or lease the no complaint against the Issuer or the Trustee as a result of any such action taken in accordance Borrower will continue to remain primarily liable for payment of the amounts specified in this with such approval or request. The execution of any document or certificate required under the Loan Agreement and for performance and observance of the other agreements on its part provisions of this Loan Agreement or the Indenture by an Authorized Representative of the provided to be performed and observed by the Borrower to the same extent as though no Borrower shall be on behalf of the Borrower and shall not result in any personal liability of such assignment or lease had been made; (b) the assignee or lessee must assume the obligations of the Authorized Representative. Borrower under this Loan Agreement to the extent of the interest assigned or leased; (c) the assignee or lessee must receive no greater interest in the Facilities than that held by the Section 8.08. Authority of Issuer Authorized Signatory. Whenever under the Borrower; in particular, any assignment or lease must be granted only subject to the rights of the provisions of this Loan Agreement or the Indenture the approval of the Issuer is required, or the Issuer and the Trustee under this Loan Agreement and the Indenture, and must terminate upon Borrower or the Trustee is required to take some action at the request of the Issuer, such approval any foreclosure of the Borrower’s rights under this Loan Agreement or under the Deed of Trust; or such request shall be executed by an Issuer Authorized Signatory (and in no event and (d) the Borrower must, at least 10 days prior to the execution of such assignment or lease, individually) and may be based (i) insofar as it relates to factual matters, upon a certificate of or furnish or cause to be furnished to the Issuer and the Trustee a true and complete draft copy of representation by the Trustee or the Borrower; and (ii) insofar as it related to legal or accounting each assignment, assumption of obligation or lease, as the case may be, in form and substance matters, upon a certificate or opinion or representation by counsel or an accountant, in each case acceptable to the Issuer and a form of opinion from Bond Counsel to the effect that the under clause (i) and (ii) without further investigation or inquiry by such Issuer Authorized assignment or lease does not affect the tax-exempt status of the outstanding Tax-Exempt Bonds, Signatory or otherwise on behalf of the Issuer. The Borrower or the Trustee shall be authorized and a form of opinion from independent counsel that the assignment or lease has been to act on any approval or request made by the Issuer, and the Issuer shall have no complaint accomplished in accordance with State of North Carolina law and this Loan Agreement and is against the Borrower or the Trustee as a result of any such action taken in accordance with such enforceable against the assignee or transferee. Other than leases permitted by this Section 8.11 approval or request. The execution of any document or certificate required under the provisions or as provided in Section 8.02 hereof, the Borrower agrees that it will not sell or otherwise of this Loan Agreement or the Indenture by an Issuer Authorized Signatory shall be on behalf of dispose of the New Facility. the Issuer and shall not result in any personal liability of such Issuer Authorized Signatory. Section 8.12. Nonsectarian Use. The Borrower agrees that it will be nonsectarian in its Section 8.09. Licenses and Qualifications. The Borrower will do, or cause to be done, programs, admission policies and employment practices and all other operations. The Borrower all things necessary to obtain, renew and secure all permits, licenses and other governmental will comply with all applicable state and federal laws concerning discrimination on the basis of approvals and to comply, or cause its lessees to comply, with such permits, licenses and other race, creed, color, sex, national origin, or religious belief and will respect, permit, and not governmental approvals necessary for operation of the School as a charter school (as defined in interfere with the religious beliefs of persons working for the Borrower. The Borrower further the Charter School Act) (subject, however, to Section 8.11 hereof). agrees that it will not use or permit any portion of the Facilities, the Athletic Facility and the Government Loan Facility to be used for sectarian instruction or study or as a place for Section 8.10. Right To Inspect. Following reasonable written notice to the Borrower, devotional activities or religious worship as part of its chartered educational activities. at any and all reasonable times during business hours, the Trustee, the Issuer and their duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the

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Section 8.13. Limitations on Incurrence of Additional Indebtedness. The Borrower (c) Short-Term Indebtedness, Non-Recourse Indebtedness, and shall not incur additional Indebtedness except pursuant to this Section 8.13. Subordinated Indebtedness. The Borrower may incur Short-Term Indebtedness, Non- Recourse Indebtedness, and Subordinated Indebtedness for any corporate purpose(s). (a) Senior Indebtedness. The Borrower shall not incur additional Indebtedness secured by Liens on the Premises or the security interest in the Pledged Indebtedness may be incurred under any of Sections 8.13(b) and (c) even though Revenues that are senior to the Lien of the Deed of Trust on the Premises or the security other Indebtedness is simultaneously being incurred under a different clause of this interest in the Pledged Revenues granted by this Loan Agreement and the Deed of Trust. Section 8.13, but subject to the terms of the USDA Documents.

(b) Long-Term Parity Indebtedness. The Borrower may incur additional In connection with the Borrower’s incurrence of additional Indebtedness pursuant Long-Term Indebtedness secured on a parity basis by the Liens on the Premises and the to this Section, the Borrower and the Trustee will enter into such amendments to the security interest in the Pledged Revenues (subject to the terms of the USDA Documents) Borrower Documents and the Parity Agreement and any other documents and take such if any of the following tests is met: further actions as in each case are necessary and appropriate to reflect and implement the parity position of such Indebtedness. (i) (A) Historical Coverage on Outstanding Debt. Delivery to the Trustee of a certificate of an Authorized Representative of the Borrower Section 8.14. Covenant To Comply With Indenture. The Borrower hereby stating that, for the Borrower’s most recently completed Fiscal Year acknowledges its receipt and approval of the Indenture, agrees to be bound by its terms and immediately preceding the issuance of the Long-Term Indebtedness, the accepts all obligations and duties imposed thereby. Borrower achieved a Debt Service Coverage Ratio equal to at least 1.1 to 1.0; and Section 8.15. [Reserved].

(B) Projected Coverage for Long-Term Indebtedness. Delivery Section 8.16. Continuation of Operation in Event of Casualty. In the event of any to the Trustee of a report of a certified public accountant selected by the damage to or destruction of the Facilities, the Athletic Facility and the Government Loan or any Borrower stating that (i) the sum of (X) estimated Maximum Annual Debt part thereof by fire, lightning, vandalism, malicious mischief and extended coverage perils, the Service for all then Long-Term Indebtedness Outstanding (taking into Borrower shall make all diligent and reasonable efforts to continue operation of the School in account Eliminated Expenses), including the proposed Long-Term such a manner that will ensure continuation of Loan Payments or shall obtain or use other Indebtedness to be incurred, plus (Y) estimated Facility Lease Payments financing resources to continue operation of the School and ensure due and timely payment of (taking into account Eliminated Expenses), in each case of (X) and (Y) for the Loan Payments. the Fiscal Year immediately following the completion of the related project being financed, is less than (ii) twenty percent (20%) of estimated Section 8.17. Transfer of Assets. Except as permitted by Section 6.01 hereof and this Pledged Revenues for the most recent Fiscal Year for which a budget has Article VIII, the Borrower agrees that it will not further transfer Pledged Revenues or other been adopted. The report shall take into account (i) the audited results of assets related to the New Facility without complying with the terms of the USDA Documents operations and verified enrollment of the related project for the most and obtaining the consent of the holders or Beneficial Owners of at least a majority of the recently completed Fiscal Year and (ii) the projected enrollment for the aggregate principal amount of the Bonds Outstanding, provided it represents the owners of Fiscal Year immediately following the completion of the new related Bonds Outstanding of such percentage, except for transfers of assets: project, and shall assume that the proposed additional Long-Term Indebtedness shall have been outstanding for the entire year. (a) with respect to any transfer of assets to any Person in the ordinary course of such Borrower’s business and for fair market value as determined by an appraiser or (ii) Alternate Coverage for Additional Debt. In lieu of the other qualified professional; or requirements described above, the Borrower may deliver to the Trustee a certificate of an Authorized Representative of the Borrower stating that, based on (b) to any Person if the aggregate net book value of the assets transferred the audited results of the operations for the most recently completed Fiscal Year, pursuant to this clause in any Fiscal Year does not exceed $10,000; or the Net Income Available for Debt Service (taking into account Eliminated Expenses) equals at least 1.10 times Maximum Annual Debt Service for all parity (c) to any Person if prior to the sale, lease or other disposition there is Long-Term Indebtedness then Outstanding plus the proposed additional Long- delivered to the Trustee (i) a certificate of the Borrower’s accountant demonstrating that Term Indebtedness immediately following the completion of the related project the liquidity requirement of Section 8.05(g) hereof would have been satisfied if the action being financed. had occurred on the first day of the then-current Fiscal Year, or (ii) a report of an

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Independent Consultant demonstrating projected liquidity (as determined in accordance with Section 8.05(g)) for the following two Fiscal Years to be at least 10% of Operating Expenses. EVENTS OF DEFAULT AND REMEDIES

Section 8.18. [Reserved]. Section 10.01. Events of Default.

Section 8.19. [Reserved]. (a) The following shall be Events of Default under this Loan Agreement and the term Event of Default shall mean, whenever it is used in this Loan Agreement, any Section 8.20. [Reserved]. one or more of the following events:

Section 8.21. Operation of the Facilities As a Project. So long as Bonds are (i) Failure by the Borrower to pay the Loan Payments required to be outstanding, the Borrower shall operate, or cause to be operated, the Facilities as a “Project” paid under Section 5.01(a) hereof on the fifteenth day of any [June or December] within the meaning of the Act. or the twentieth day of any other month, excluding [June and December].

Section 8.22. Maintenance of 501(c)(3) Status; Prohibited Activities. The Borrower (ii) Failure by the Borrower to observe or perform any other covenant, shall file all required reports, returns and documents with the Internal Revenue Service so as to condition or agreement on its part to be observed or performed herein other than maintain its status as an organization described in Section 501(c)(3) of the Code, and shall not as referred to in this Section, for a period of 45 days’ after written notice use or operate the Facilities, the Athletic Facility or the Government Loan Facility in any manner specifying such failure and requesting that it be remedied, shall have been given and shall not engage in any activities or take any action that might reasonably be expected to to the Borrower by the Issuer or the Trustee; provided, with respect to any such result in the Borrower ceasing to be a “501(c)(3) organization” within the meaning of Section failure covered by this clause, no Event of Default shall be deemed to have 145 of the Code. The Borrower shall promptly notify the Trustee and the Authority of any loss occurred so long as a course of action adequate in the judgment of the Trustee to of its status as a “501(c)(3) organization” or of any investigation, proceeding or ruling that might remedy such failure shall have been commenced within such 45-day period and result in such loss of status. shall thereafter be diligently pursued to completion and the failure shall be remedied within 90 days’ of such notification, unless said remedy cannot be performed within 90 days and the Borrower is actively working toward a remedy.

ASSIGNMENT AND PLEDGING; REDEMPTION OF SERIES 2017 BONDS (iii) The dissolution or liquidation of the Borrower. The phrase “dissolution or liquidation of the Borrower,” as used in this subsection, shall not Section 9.01. Assignment and Pledge by Issuer. The Issuer shall assign its rights and be construed to include the cessation of the corporate existence of the Borrower interests (other than the Issuer’s Unassigned Rights) in and under this Loan Agreement, resulting either from a merger or consolidation of the Borrower into or with including the Pledged Revenues, to the Trustee pursuant to the Indenture as security for payment another domestic corporation or a dissolution or liquidation of the Borrower of the principal of, or premium, if any, and interest on the Series 2017 Bonds. The Borrower following a transfer of all or substantially all of its assets under the conditions hereby consents to such assignment. permitting such actions contained in Section 8.02 hereof.

Section 9.02. Redemption of Series 2017 Bonds. Upon the agreement of the Borrower (iv) The entry of a decree or order for relief by a court having to deposit moneys into the Bond Fund in an amount sufficient to redeem Series 2017 Bonds jurisdiction in the premises in respect of the Borrower in an involuntary case subject to redemption, the Trustee, at the written request of the Borrower, shall forthwith take all under the federal bankruptcy laws, as now or hereafter constituted, or any other steps (other than the payment of the money required for such redemption) permitted and applicable federal or state bankruptcy, insolvency or other similar law, or necessary under the applicable redemption provisions of the Indenture to effect such redemption appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or of the Series 2017 Bonds on the redemption date. other similar official) of the Borrower or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.

(v) The commencement by the Borrower of a voluntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by it to

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the appointment of or taking possession by a receiver, liquidator, assignee, (b) The foregoing provisions of Section 10.01(a)(ii) hereof are subject to the trustee, custodian, sequestrator (or other similar official) of the Borrower or for following limitations: if by reason of force majeure the Borrower is unable in whole or in any substantial part of its property, or the making by it of any assignment for the part to carry out its agreements herein contained, other than the obligations on the part of benefit of creditors, or the failure of the Borrower generally to pay its debts as the Borrower contained in Article V and in Sections 6.02, 6.03, 6.06 and 8.06 hereof, the such debts become due, or the taking of corporate action by the Borrower in Borrower shall not be deemed in default during the continuance of such inability. The furtherance of any of the foregoing. term “force majeure” as used herein shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of (vi) Failure of the Borrower to comply with any covenants contained in any kind of the government of the United States of America, the State or of the State of the Tax Certificate. North Carolina or any of their departments, agencies, or officials, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquake; fire; (vii) The occurrence of an Event of Default under the Indenture and the hurricane; tornadoes; storms; floods; washouts; droughts; arrests; restraint of government Loan Agreement or an event of default under the USDA Documents or any and people; explosions; breakage or accident to machinery, transmission pipes or canals; Borrower Document. partial or entire failure of utilities; or any other cause or event not reasonably within the control of the Borrower. The Borrower agrees, however, if possible, to remedy with all (viii) Any representation or warranty made by the Borrower herein or reasonable dispatch the cause or causes preventing it from carrying out its agreements; made by the Borrower in any statement or certificate furnished by the Borrower provided, that the settlement of strikes, lockouts and other industrial disturbances shall be either required hereby or in connection with the execution and delivery of this entirely within the discretion of the Borrower, and the Borrower shall not be required to Loan Agreement and the sale and the issuance of the Series 2017 Bonds, shall make settlement of strikes, lockouts or other industrial disturbances by acceding to the prove to have been untrue in any material respect as of the date of the issuance or demands of the opposing party or parties when such course is in the judgment of the making thereof. Borrower unfavorable to the Borrower.

(ix) Judgment for the payment of money in excess of $100,000 (which Section 10.02. Remedies on Default. is not covered by insurance) is rendered by any court or other governmental body against the Borrower, and the Borrower does not discharge same or provide for its (a) Whenever an Event of Default referred to in Section 10.01 hereof shall discharge in accordance with its terms, or procure a stay of execution thereof have occurred and is continuing, the Issuer, or the Trustee where so provided herein, may within 60 days from the date of entry thereof, and within said 60-day period or take any one or more of the following remedial steps: such longer period during which execution of such judgment shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such (i) the Trustee (acting as assignee of the Issuer) or the Issuer (in the appeal while providing such reserves therefor as may be required under Generally event of a failure of the Trustee to act under this subsection), as and to the extent Accepted Accounting Principles. provided in the Indenture, may declare the Loan Payments payable hereunder for the remainder of the term of this Loan Agreement to be immediately due and (x) A writ or warrant of attachment or any similar process shall be payable, whereupon the same shall become due and payable; issued by any court against the New Facility, and such writ or warrant of attachment or any similar process is not released or bonded within 60 days after (ii) the Trustee (acting as assignee of the Issuer) or the Issuer (in the its entry. event of a failure of the Trustee to act under this subsection), as and to the extent provided in the Indenture, may exercise the power of sale or foreclose under the (xi) Any of Borrower’s representations and warranties in the Borrower Deed of Trust on the Premises and may realize upon the security interest in the Documents with respect to environmental matters are false in any material Pledged Revenues (subject to the terms of the Parity Agreement) and may respect. exercise all the rights and remedies of a secured party under the North Carolina Uniform Commercial Code with respect thereto; and (xii) The Borrower ceases to operate as a charter school (as defined in the Charter School Act) or the Borrower’s charter contract is terminated, revoked, (iii) the Trustee (acting as assignee of the Issuer) or the Issuer (in the expires or is not renewed. event of a failure of the Trustee to act under this subsection or with regard to the Issuer’s Unassigned Rights), as and to the extent provided in the Indenture, may (xiii) The Debt Service Coverage Ratio is less than 1.00 to 1.00 in any take whatever action at law or in equity as may appear necessary or desirable to Fiscal Year ending on or after June 30, 2018. collect the amounts then due and thereafter to become due, or to enforce

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performance or observance of any obligations, agreements, or covenants of the Issuer, to take any and all steps, actions and proceedings, to enforce any or all rights of Borrower under the Borrower Documents. the Issuer (other than the Issuer’s Unassigned Rights) under the Indenture or this Loan Agreement, including, without limitation, the rights to enforce the remedies upon the (b) Notwithstanding the foregoing, prior to the exercise by the Issuer or the occurrence and continuation of an Event of Default and the obligations of the Borrower Trustee of any remedy that would prevent the application of this paragraph, the Borrower hereunder. may, at any time, pay all accrued payments hereunder (exclusive of any such payments accrued solely by virtue of declaration pursuant to Section 10.02 (a)(i) above and fully (h) No provision of this Loan Agreement or the Indenture shall be deemed or cure all defaults, and in such event, the Borrower shall be fully reinstated to its position construed as limiting, affecting or impairing in any way the Issuer’s or any Issuer hereunder as if such Event of Default had never occurred, provided, that the right to cure Indemnified Party’s right to enforce the Issuer’s Unassigned Rights, notwithstanding the and extinguish such Event of Default as hereinbefore provided shall not be available if existence or continuance of a default or Event of Default, or any action based thereon or the Trustee or the Issuer exercised any such remedy at the direction of a majority in occasioned by an Event of Default or an alleged Event of Default, and notwithstanding principal amount of the Bonds then Outstanding, as provided in the Indenture, unless the any waiver or forbearance by the Trustee, the Registered Owners or the Beneficial holders of a majority in principal amount of the Bonds then Outstanding consent to such Owners of any default or Event of Default hereunder or thereunder. Any default or Event cure and extinguishment. of Default in respect of the Issuer’s Unassigned Rights may only be waived with the Issuer’s written consent. (c) In the event that the Borrower fails to make any payment required hereby, the payment so in default shall continue as an obligation of the Borrower until the amount Section 10.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to in default shall have been fully paid. the Issuer or the Trustee 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 (d) Whenever any Event of Default has occurred and is continuing under this remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by Loan Agreement, the Trustee may, but except as otherwise provided in the Indenture statute. No delay or omission to exercise any right or power accruing upon any default shall shall not be obligated to, exercise any or all of the rights of the Issuer under this Article impair any such right or power or shall be construed to be a waiver thereof, but any such right or (other than the Issuer’s Unassigned Rights), upon notice as required to the Issuer. In power may be exercised from time to time and as often as may be deemed expedient. In order to addition, the Trustee shall have available to it all of the remedies prescribed in the entitle the Issuer to exercise any remedy reserved to it in this Article, it shall not be necessary to Indenture. The Issuer may, without the consent of the Trustee, take whatever action at give any notice, other than notice required herein or by applicable law. Such rights and remedies law or in equity may appear necessary or appropriate to enforce the Issuer’s Unassigned as are given the Issuer hereunder shall also extend to the Trustee, the Beneficial Owners and the Rights and to collect all sums then due and thereafter to become due to the Issuer under Registered Owners of the Series 2017 Bonds, subject to the Indenture. this Loan Agreement. Section 10.04. Agreement To Pay Attorneys’ Fees and Expenses. If an Event of (e) Any amounts collected pursuant to action taken under the immediately Default has occurred and is continuing hereunder and the Issuer or the Trustee employ attorneys preceding paragraph (other than sums collected for the Issuer on account of the Issuer’s or incur other expenses for the collection of Loan Payments or the enforcement of performance Unassigned Rights, which sums shall be paid directly to the Issuer), after reimbursement or observance of any obligation or agreement on the part of the Borrower herein contained, the of any reasonable costs incurred by the Issuer or the Trustee in connection therewith shall Borrower agrees that it will, on demand therefore, pay to the Issuer or the Trustee, as the case be applied in accordance with the provisions of the Indenture. may be, the reasonable fees of such attorneys and such other reasonable expenses incurred by the Issuer or the Trustee. The obligations of the Borrower arising under this Section shall continue (f) If the Issuer or the Trustee (or the Trustee on behalf of the Issuer), shall in full force and effect notwithstanding the final payment of the Bonds or the termination of this have proceeded to enforce their respective rights under this Loan Agreement and such Loan Agreement. proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Issuer or the Trustee, then and in every such case, the Section 10.05. Waiver. In the event any agreement contained in this Loan Agreement Borrower, the Issuer and the Trustee shall be restored to their respective positions and should be breached by any party and thereafter waived by any other party, such waiver shall be rights hereunder, and all rights, remedies and powers of the Borrower, the Issuer and the limited to the particular breach waived and shall not be deemed to waive any other breach Trustee shall continue as though no such proceedings had been taken. hereunder. In view of the assignment of the Issuer’s rights in and under this Loan Agreement (except for the Issuer’s Unassigned Rights) to the Trustee under the Indenture, the Trustee shall (g) Notwithstanding anything to the contrary in this Loan Agreement or the have no power to waive any Event of Default hereunder without the consent of the Issuer. Indenture, the Issuer shall have no obligation to and instead the Trustee, in accordance Notwithstanding the foregoing, a waiver of an Event of Default under the Indenture or a with the Indenture, shall have the right, without further direction from or action by the rescission of a declaration of acceleration of the Bonds and a rescission and annulment of its

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consequences shall constitute a waiver of the corresponding Event of Default under this Loan Section 10.07. Treatment of Funds in Bankruptcy. The Borrower acknowledges and Agreement and a rescission and annulment of its consequences; provided, that no such waiver or agrees that in the event Borrower commences a case under the United States Bankruptcy Code rescission shall extend to or affect any subsequent or other default hereunder or impair any right located at 11 U.S.C. § 101 et. seq. (the “Bankruptcy Code”) or is the subject of an involuntary consequent thereon. case that results in an order for relief under the Bankruptcy Code: (a) amounts on deposit in any of the Funds are not, nor shall they be deemed to be, property of Borrower’s bankruptcy estate as Section 10.06. Proofs of Claim. defined by § 541 of the Bankruptcy Code; (b) that in no event shall Borrower assert, claim or contend that amounts on deposit in any of the Funds are property of Borrower’s bankruptcy (a) In case of the pendency of any receivership, insolvency, liquidation, estate; and (c) that amounts on deposit in any of the Funds are held in trust solely for the benefit bankruptcy, reorganization, arrangement, adjustment, composition or other judicial of the Registered Owners and the Beneficial Owners, shall be applied only in accordance with proceeding relative to the Issuer or the Borrower or any other obligor upon the Bonds or the provisions of the Indenture and the Borrower has no legal, equitable nor reversionary interest the property of the Issuer, the Trustee (irrespective of whether the principal of the Bonds in, or right to, such amounts. shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuer and/or the Borrower for the payment of overdue principal or interest) shall be entitled and empowered, by intervention of such proceeding or otherwise; PREPAYMENT OF THE LOANS

(i) to file and prove a claim for the whole amount of principal, Section 11.01. General Option To Prepay the Loans. So long as no Event of Default premium, if any, and interest owing and unpaid in respect of the Bonds then pursuant to Section 10.01 hereof exists, the Borrower shall have and is hereby granted the option outstanding and to file such other papers or documents as may be necessary or exercisable at any time to prepay all or any portion of the Loans by depositing with the Trustee advisable in order to have the claims of the Trustee (including any claim for the an amount of money or securities, to the extent permitted by Section 7.01 of the Indenture, reasonable compensation, expenses, disbursements and advances of the Trustee, representing the principal amount, the premium, if any, and interest on the Loans to be paid at its agents and counsel) and of the Owners allowed in such judicial proceeding; maturity, with respect to the Series 2017 Bonds, or prepaid to the date a corresponding amount of and to collect and receive any moneys or other property payable or deliverable on Series 2017 Bonds are redeemed. The exercise of the option granted by this Section shall not be any such claims and to distribute the same; and cause for redemption of Series 2017 Bonds unless such redemption is permitted at that time under the provisions of the Indenture and the Borrower specifies the date for such redemption. (ii) any receiver, assignee, trustee, liquidator, sequestrator (or other Prior to the date the related Series 2017 Bonds are subject to redemption, the Series 2017 similar official) in any such judicial proceeding is hereby authorized by each Promissory Notes are prepayable at any time in an amount sufficient to defease a related amount Owner to make such payments to the Trustee, and, in the event that the Trustee of respective Series 2017 Bonds in accordance with Article VII of the Indenture. In the event the shall consent to the making of such payments directly to the Beneficial Owners, to Borrower prepays all of the Loans pursuant to this Section, pays all reasonable and necessary pay to the Trustee any amount due to it for the reasonable compensation, fees and expenses of the Trustee accrued and to accrue through final payment of the Series 2017 expenses, disbursements and advances of the Trustee, its agent and counsel. Bonds as a result of such prepayment, and all of its liabilities accrued and to accrue hereunder to the Issuer through final payment of the Series 2017 Bonds as a result of such prepayment, and all (b) So long as Bonds are outstanding, the Trustee is appointed under the terms other amounts payable by the Borrower hereunder, including required payments to the Rebate of the Indenture, and the successive respective Owners of the Bonds, by taking and Fund, this Loan Agreement shall terminate except as otherwise provided herein. holding the same, shall be conclusively deemed to have so appointed the Trustee, the true and lawful attorney in fact of the respective Owners of the Bonds, with authority to make Section 11.02. Prepayment Credits. In the event of prepayment by the Borrower of the or file, in the respective names of the Owners of the Bonds or on behalf of all Owners of Loans in whole, and premium, if any, the amounts then contained in any account of the Debt the Bonds, as a class, any proof of debt, amendment to proof of debt, petition or other Service Reserve Fund related to the Series 2017 Bonds and the amounts of the Borrower’s documents and to execute any other papers and documents and to do and perform any payments on the Series 2017 Promissory Notes contained in the Bond Fund shall be credited first and all acts and things for and on behalf of all Owners of the Bonds as a class, as may be to the Rebate Fund so that it is fully funded for the final payment to the federal government and necessary or advisable in the opinion of the Trustee, in order to have the respective claim then against the Borrower’s prepayment obligation. of the Owners of the Bonds against the Issuer, the Borrower or any other obligor allowed in receivership, insolvency, liquidation, bankruptcy or other proceeding, to which the Section 11.03. Notice of Prepayment. In order to exercise the option granted by this Issuer, the Borrower or any other obligor, as the case may be, shall be a party. The Article, the Borrower shall give written notice to the Trustee specifying the date of making the Trustee shall have full power of substitution and delegation in respect of any such prepayment, which date shall be not less than 45 days nor more than 90 days from the date the powers. notice is mailed. In the case of any prepayment pursuant to this Article XI, the Borrower shall

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make arrangements with the Trustee for giving the required notice of redemption, if any, with Trustee may, by notice hereunder, designate any further or different addresses to which respect to any Series 2017 Bonds to be redeemed and shall pay to the Trustee an amount of subsequent notices, certificates or other communications shall be sent. money sufficient to redeem all of the Series 2017 Bonds to be called for redemption at the appropriate price prior to the redemption date. Section 12.02. Binding Effect. This Loan Agreement shall inure to the benefit of and shall be binding upon the Issuer and the Borrower, and their respective successors and assigns, Section 11.04. Use of Prepayment Moneys. By virtue of the assignment of the rights subject, however, to the limitations contained in Sections 8.02, 9.01 and 12.10 hereof. of the Issuer (except for the Issuer’s Unassigned Rights) under this Loan Agreement to the Trustee, the Borrower agrees to and shall pay any amount required to be paid by it under this Section 12.03. Severability. In the event any provision of this Loan Agreement shall be Article XI directly to the Trustee (other than amounts to be paid to the Issuer with respect to the held invalid or unenforceable by any court of competent jurisdiction, such holding shall not Issuer’s Unassigned Rights). The Trustee shall use the moneys so paid to it by the Borrower invalidate or render unenforceable any other provision hereof. (other than amounts to be paid to the Trustee for its own account) as provided in this Loan Agreement and in the Indenture. Section 12.04. Third-Party Beneficiaries. It is specifically acknowledged and agreed that, to the extent of their rights hereunder (including, without limitation, their rights to immunity and exculpation from pecuniary liability) each Issuer Indemnified Party is a Third-Party Beneficiary of this Loan Agreement entitled to enforce such rights in his, her, its or their own MISCELLANEOUS name. Each of the Trustee Indemnified Parties and the Registered Owners of the Series 2017 Bonds are also intended “Third-Party Beneficiaries” of this Loan Agreement. Nothing in this Section 12.01. Notices. All notices, certificates or other communications hereunder Loan Agreement shall confer any right upon any Person other than parties hereto, and those shall be sufficiently given and shall be deemed given when mailed by certified mail, return specifically designated as Third-Party Beneficiaries of this Loan Agreement. receipt requested, postage prepaid, facsimile, email, or overnight courier, addressed as follows: Section 12.05. Amounts Remaining in Funds. It is agreed by the parties hereto that to the Issuer: Public Finance Authority any amounts remaining in the Funds upon termination of this Loan Agreement, provided the 22 East Mifflin Street Series 2017 Bonds have been fully retired and all amounts due hereunder have been paid in full, Suite 900 shall belong to and be paid to the Borrower by the Trustee, as provided in the Indenture. Madison, WI 53703 Facsimile: (608) 237-2368 Section 12.06. Amendments, Changes and Modifications. Except as otherwise E-mail: [email protected] and provided in this Loan Agreement or in the Indenture, this Loan Agreement may not be [email protected] effectively amended, changed, modified, altered or terminated without the written consent of the Attention: Scott Carper and Michael LaPierre Issuer and the Borrower.

to the Borrower: Uwharrie Green School, Inc. Section 12.07. Execution in Counterparts. This Loan Agreement may be executed in 5326 U.S. Highway 220 South several counterparts, each of which shall be an original and all of which shall constitute but one Asheboro, NC 27205 and the same instrument. E-mail: [email protected] Attention: Heather Soja Section 12.08. Governing Law. This Loan Agreement shall be governed by and construed in accordance with the laws and judicial decisions of the State of North Carolina to the Trustee: U.S. Bank National Association provided, that, with respect to the existence, corporate powers, legal capacity, rights (including, 214 N. Tryon Street, 27th Floor without limitation, rights to indemnification and exculpation from liability), privileges, powers, CN-NC-H27A obligations and liabilities of the Issuer and the Issuer Indemnified Parties, as applicable, this Charlotte, North Carolina 28202 Loan Agreement shall be governed by the laws of the State, excluding conflicts of law Email: [email protected] principles. All claims of whatever character arising out of this Loan Agreement, or under any Attention: Global Corporate Trust Services statute or common law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings between the Issuer and any other party hereto, if and to the extent that such claim A duplicate copy of each notice, certificate or other communication given hereunder by potentially could or actually does involve the Issuer, shall be brought in any state or federal court the Issuer or the Borrower shall also be given to the Trustee. The Issuer, the Borrower or the of competent jurisdiction located in Dane County, Wisconsin. By executing and delivering this Loan Agreement, each party hereto irrevocably, with respect to the claims referenced in the

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preceding sentence: (a) accepts generally and unconditionally the exclusive jurisdiction and Section 12.13. Limitation of Liability of Issuer. venue of such courts; (b) waives any defense of forum non conveniens; and (c) agrees not to seek removal of such proceedings to any court or forum other than as specified above. The foregoing (a) The Issuer shall not be obligated to pay the principal of, or premium, if shall not be deemed or construed to constitute a waiver by the Issuer of any prior notice or any, or interest on the Bonds or any costs incidental thereto, except from the Trust Estate. procedural requirements applicable to actions or claims against or involving governmental units Neither the faith and credit nor the taxing power of any Member, the State or any other of the State that may exist at the time of and in connection with such matter. political subdivision thereof or any political subdivision approving the issuance of the Bonds, nor the faith and credit of the Issuer or any Sponsor, is pledged to the payment of Section 12.09. Filing. The Borrower shall cause the security interest in the Premises the principal of, premium, if any, or interest on the Bonds or any costs incidental thereto. granted by the Deed of Trust to be recorded with the Register of Deeds for Randolph County, The Issuer has no taxing power. The Issuer shall not be directly, indirectly, contingently North Carolina. In addition, the Borrower shall cause the security interest in the rights to receive or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any the Pledged Revenues, the Funds and trust accounts referred to in Section 5.01 hereof granted to conceivable kind on any conceivable theory, under or by reason of or in connection with the Issuer, the assignment of such security interest to the Trustee and the security interest in the this Loan Agreement, the Bonds or the Indenture, except only to the extent amounts are Deed of Trust granted to the Trustee to be perfected by the filing of financing statements which received for the payment thereof from the Borrower under this Loan Agreement, and shall fully comply with the applicable Uniform Commercial Code in the office of the Secretary except as may result solely from the Issuer’s own willful misconduct. of State of North Carolina or the office of the Register of Deeds of Randolph County, North Carolina, as applicable, and in such other office as is at the time provided by law as the proper (b) The Borrower hereby acknowledges that the Issuer’s sole source of place for the filing thereof. The parties hereto further agree that all necessary continuation moneys to repay the Bonds is the Trust Estate, and hereby agrees that if the payments to statements shall be filed by the Borrower within the time prescribed by the North Carolina be made under this Loan Agreement shall ever prove insufficient to pay all principal, Uniform Commercial Code in order to continue such security interests. premium, if any, and interest on the Bonds as the same shall become due (whether by maturity, redemption, acceleration or otherwise) or any costs incidental thereto, then Section 12.10. Cancellation at Expiration of Term of Loan Agreement. Upon the upon notice or demand from the Trustee, the Borrower shall pay such amounts as are termination of this Loan Agreement, and provided the Bonds have been fully retired and all required from time to time to prevent any deficiency or default in the payment of such amounts due hereunder have been paid in full, the Issuer shall deliver to the Borrower any principal, premium, if any, or interest when due, including, but not limited to, any documents and take or cause the Trustee to take such actions as may be necessary to evidence deficiency or default caused by acts, omissions, nonfeasance or malfeasance on the part the termination of this Loan Agreement and the discharge of the Lien hereof and of the Deed of of the Trustee, the Issuer, the Borrower or any third party, subject to any right of Trust. reimbursement from the Trustee, the Issuer or any such third party, as the case may be, therefor. Section 12.11. [Reserved]. (c) Anything in this Loan Agreement to the contrary notwithstanding, it is Section 12.12. No Personal Liability of Officials of the Borrower, Issuer or the expressly understood and agreed by the parties hereto that the Issuer may rely Trustee. conclusively on the truth and accuracy of any certificate, opinion, notice, or other instrument furnished to the Issuer by the Borrower, the Trustee or Bond Counsel, in (a) None of the covenants, stipulations, promises, agreements and obligations either case without any obligation by the Issuer to verify as to the existence of any fact or of the Issuer, the Trustee or the Borrower contained herein shall be deemed to be state of affairs required hereunder to be noticed by the Issuer. covenants, stipulations, promises, agreements or obligations of any Indemnified Party or any director, officer, employee or agent of the Borrower in his or her individual capacity, (d) No recourse shall be had for the enforcement of any obligation, covenant, and no recourse shall be had for the payment of the principal of or premium, if any, or promise, or agreement of the Issuer contained in any Issuer Documents, or in any Bond interest on the Bonds or for any claim based thereon or any claim hereunder against any or for any claim based hereon or otherwise in respect hereof or upon any obligation, Indemnified Party or any director, officer, employee or agent of the Borrower. covenant, promise, or agreement of the Issuer contained in any agreement, instrument, or certificate executed in connection with the Facilities or the issuance and sale of the (b) No Issuer Indemnified Party shall be individually or personally liable for Bonds, against any Issuer Indemnified Parties, whether by virtue of any constitutional the payment of any principal of, premium, if any, or interest on the Bonds or any costs provision, statute, or rule of law, or by the enforcement of any assessment or penalty or incidental thereto or any sum hereunder or under the Indenture or be subject to any otherwise; it being expressly agreed and understood that no personal liability whatsoever personal liability or accountability by reason of the execution and delivery of this Loan shall attach to, or be incurred by, any Issuer Indemnified Party, either directly or by Agreement or the Indenture. reason of any of the obligations, covenants, promises, or agreements entered into by the Issuer with the Borrower or the Trustee to be implied therefrom as being supplemental

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hereto or thereto, and that all personal liability of that character against each and every upon by the Issuer as an inducement to issue the Series 2017 Bonds, and that if any such Issuer Indemnified Party is, by the execution of the Bonds, this Loan Agreement, and the statements, representations and warranties were false at the time they were made or (with respect other Issuer Documents, and as a condition of, and as part of the consideration for, the to those representations and warranties which are to continue) are materially breached during the execution of the Bonds, this Loan Agreement, and the other Issuer Documents, is term hereof, such misrepresentation or breach shall constitute a breach of this Loan Agreement expressly waived and released. which may give rise to an event of default hereunder. This subsection shall not apply to any misrepresentation or breach that was not intentionally made by Borrower, does not have a (e) None of the provisions of this Loan Agreement shall require the Issuer to material effect on the Loan if not remedied, does not constitute a material breach, and Borrower expend or risk its own funds or to otherwise incur financial liability in the performance of reasonably remedies any such misstatement or breach upon notice of such. any of its duties or in the exercise of any of its rights or powers hereunder, unless payable from the Trust Estate under the Indenture, or the Issuer shall first have been adequately Section 12.16. Captions. The captions and headings in this Loan Agreement are for indemnified to its satisfaction against the cost, expense, and liability which may be convenience only and in no way define, limit, or describe the scope or intent of any provisions or incurred thereby. The Issuer shall not be under any obligation hereunder to perform any sections of this Loan Agreement. administrative service with respect to the Bonds or the Project (including, without limitation, any record keeping or legal services), it being understood that such services Section 12.17. Payments Due on Holidays. If the date for making any payment or the shall be performed or provided as arranged by the Trustee or the Borrower. The Issuer last date for performance of any act or the exercise of any right, as provided in this Loan covenants that it will faithfully perform at all times any and all covenants, undertakings, Agreement, is not a Business Day such payments may be made or act performed or right stipulations, and provisions expressly contained in this Loan Agreement, the Indenture, exercised on the next succeeding Business Day unless otherwise provided herein, with the same and in any and every Bond executed, authenticated, and delivered under the Indenture; force and effect as if done on the nominal date provided in this Loan Agreement. provided, however, that the Issuer shall not be obligated to take any action or execute any instrument pursuant to any provision hereof unless and until it shall have (i) been Section 12.18. Provision of General Application. Any consent or approval of the requested to do so by the Borrower or the Trustee; (ii) received from the party requesting Issuer required pursuant to this Loan Agreement shall be in writing and shall not be such action or execution assurance satisfactory to the Issuer that the Issuer’s reasonable unreasonably withheld, conditioned or delayed. expenses incurred or to be incurred in taking such action or executing such instrument have been or will be paid or reimbursed to the Issuer; and (iii) if applicable, received in a Section 12.19. Survival. The provisions of this Loan Agreement and the Indenture and timely manner the instrument to be executed, in form and substance satisfactory to the any other document in connection with the issuance of the Bonds to which the Issuer is a party Issuer. In complying with any provision herein or in the Indenture requiring the Issuer to concerning (a) the tax-exempt status of the Tax-Exempt Bonds (including, but not limited to, “cause” another Person to take or omit any action, the Issuer shall be entitled to rely provisions concerning rebate); (b) the interpretation of this Loan Agreement; (c) the governing conclusively (and without independent investigation or verification) (i) on the faithful law, jurisdiction and venue; (d) the Issuer’s right to rely on written representations of others performance by the Trustee or the Borrower, as the case may be, of their respective contained herein or in any other document regardless of whether the Issuer is a party thereto; (e) obligations hereunder and under the Indenture and (ii) upon any written certification or the indemnification rights and exculpation from pecuniary liability of the Issuer and the Issuer opinion furnished to the Issuer by the Trustee or the Borrower, as the case may be. In Indemnified Parties; and (f) any other provision of this Loan Agreement not described or acting, or in refraining from acting under this Loan Agreement or the Indenture, the enumerated above that expressly provides for its survival, shall survive and remain in full force Issuer may conclusively rely on the advice of its counsel. The Issuer shall not be and effect notwithstanding the payment or redemption in full, or defeasance of the Bonds, the required to take any action hereunder or under the Indenture that it reasonably believes to discharge of the Indenture, and the termination or expiration of this Loan Agreement. be unlawful or in contravention hereof of thereof. Section 12.20. Notice of Change in Fact. The Borrower will notify the Issuer and the Section 12.14. No Obligation of the State of North Carolina. No indebtedness of any Trustee promptly after the Borrower becomes aware of (a) any change in any fact or kind incurred or created by the Borrower shall constitute an indebtedness of the State of North circumstance represented or warranted by the Borrower in this Loan Agreement or in connection Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be with the issuance of the Bonds which would make any such representation or warranty false secured by the faith, credit, or taxing power of the State of North Carolina or its political when made, if such changed fact or circumstance could reasonably be expected to have a subdivisions. Material Adverse Effect; and (b) any default or event which, with notice or lapse of time or both, could become an Event of Default under the Indenture or any Borrower Document, specifying in Section 12.15. Covenant by the Borrower With Respect to Statements, each case the nature thereof; and what action the Borrower has taken, is taking, and/or proposes Representations and Warranties. It is understood by the Borrower that all such statements, to take with respect thereto; and (c) any Internal Revenue Service audit of the Borrower or the representations and warranties made in this Loan Agreement shall be deemed to have been relied Bonds; and (d) any material litigation affecting the Bonds, the Borrower or the Facilities which

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could reasonably be expected to have a Material Adverse Effect; and (e) any default in any IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan Indebtedness of the Borrower. Agreement to be executed in their respective corporate names by their duly authorized signatories, all as of the date first above written.

[Remainder of page intentionally left blank] PUBLIC FINANCE AUTHORITY

By Name: Title: Assistant Secretary

UWHARRIE GREEN SCHOOL, INC.

By Board President

By Executive Director

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EXHIBIT A Agreement are, by this reference thereto, incorporated herein as part of this Note, and shall control in the interpretation and enforcement of this Note. FORM OF SERIES 2017A PROMISSORY NOTE In addition to the foregoing, the Borrower hereby promises to pay to the full extent $[PRINCIPALA] [November __, 2017] required by the Indenture and the Loan Agreement: (a) the amount required to be deposited into the Rebate Fund in accordance with Section 3.20 of the Indenture; (b) all of the payments and FOR VALUE RECEIVED, the undersigned, Uwharrie Green School, Inc., a North additional charges set forth in Section 5.01 of the Loan Agreement; and (c) all costs and Carolina nonprofit corporation (the “Borrower”), hereby promises to pay to the order of expenses of collection incurred in connection with any default by the Borrower hereunder and all PUBLIC FINANCE AUTHORITY (together with its successors and assigns, the “Issuer”), the other payments required to be made by the Borrower pursuant to the Indenture and the Loan principal sum of [______DOLLARS] ($[PRINCIPALA]), together with interest Agreement including without limitation those payments referred to in Section 8.06 of the Loan thereon, in installments, on the dates and in the amounts as described in the Loan Agreement, Agreement. dated as of November 1, 2017 (the “Loan Agreement”), by and between the Borrower and the Issuer. The Borrower further agrees to pay as the premium hereon the amount of the premium In the event the Borrower fails to make any of the payments required in this Note, such due, if any, upon any prepayment hereof in accordance with the Loan Agreement. payment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon (to the This Note has been issued to evidence a loan made by the Issuer to the Borrower in extent legally enforceable) until paid. accordance with the Loan Agreement. Pursuant to the Loan Agreement, the Issuer has loaned the Borrower the proceeds of the Issuer’s $[PRINCIPALA] aggregate principal amount of Public The principal of this Note is subject to optional and mandatory prepayment by the Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A Borrower from time to time as set forth in the Loan Agreement. (the “Series 2017A Bonds”). The Series 2017A Bonds are issued by the Issuer pursuant to and in accordance with an Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by The Borrower shall have the option to prepay the unpaid balance hereof in whole or in and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”). part only as provided in and in accordance with the provisions of the Loan Agreement and the Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto Indenture. in the Loan Agreement and the Indenture. In the event an installment is required under this Note on a date that is not a Business Day Interest on and principal of this Note shall be due on the first day of each month, (as defined in the Indenture), such installment shall be due on the next succeeding Business Day. commencing [January 1, 2018], or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017A Bonds shall be available for The Borrower agrees that if, and as often as, this Note is placed in the hands of any payment by the Trustee in the amounts and on dates set forth on Schedule I attached to this Note; attorney for collection or to defend or enforce any of the Issuer’s and/or the Trustee’s rights provided, however, that the Borrower shall receive a credit against such payments of interest to hereunder, the Borrower will pay to the Issuer and/or the Trustee its reasonable attorneys’ fees, the extent funds are on deposit in the Capitalized Interest Account or otherwise on deposit in the together with all court costs and other expenses actually paid or incurred by the Issuer and/or the Bond Fund in addition to funds deposited pursuant to Section 5.01(a) of the Loan Agreement and Trustee. available to pay interest on the Series 2017 Bonds on the next Interest Payment Date or principal on the Series 2017 Bonds on the next Principal Payment Date, as applicable. The Borrower and all other persons who may become liable for all or part of this obligation severally waive presentation for payment, demand, notice of nonpayment and protest, Payments of both principal and interest are to be irrevocably assigned by the Issuer to the all pleas of division and discussion and consent to any extension of time (whether one or more) Trustee pursuant to the Indenture. Such assignment is to be made as security for the payment of or renewal hereof. Any such extension or renewal may be made without notice and without the Bonds of the Issuer to the extent provided in the Indenture. All of the terms, conditions and discharging liability hereunder. provisions of the Indenture are, by this reference thereto, incorporated herein as part of this Note. Upon default in any of the terms or conditions of this Note or upon the occurrence and Payments hereon are to be made in immediately available funds at the designated trust continuation of an “Event of Default” under the Loan Agreement, at the option of the holder office of the Trustee or at such other place as the Trustee may direct in writing, in accordance hereof, the entire indebtedness hereby evidenced shall become due and payable then and with the terms hereof and of the Indenture. thereafter as the holder may elect, regardless of the date of maturity hereof, but subject to the provisions of the Loan Agreement. Prior to the exercise of such option, the Trustee shall give This Note is issued pursuant to the Loan Agreement and is entitled to the benefits and is written notice to the Borrower. subject to the conditions thereof. All the terms, conditions and provisions of the Loan

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During the existence of any such Event of Default, the Trustee may apply any payments IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date received on any amount due hereunder or under the terms of the Loan Agreement or the first above written. Indenture pursuant to and in accordance with the Loan Agreement and the Indenture. Uwharrie Green School, Inc. The obligations of the Borrower to make payments hereunder, under the Indenture and the Loan Agreement and to perform and observe all agreements on its part contained herein and therein shall be absolute and unconditional. Until this Note is terminated and paid in full and all By amounts due or to become due under the Loan Agreement are paid in full and the Loan Name Agreement is terminated, the Borrower (a) will not suspend or discontinue any payments under Title the Loan Agreement or neglect to perform any of its duties required thereunder or hereunder; (b) will perform and observe all of its obligations set forth in the Loan Agreement, the Deed of Trust (defined in the Indenture) and this Note; and (c) except as provided in the Loan Agreement, will not terminate the Loan Agreement, the Deed of Trust or this Note for any cause.

No recourse shall be had for the payment of the principal of, premium, if any, or interest on the Bonds or for any claim based thereon or arising under the Loan Agreement, the Deed of Trust or this Note or upon any obligation, covenant or agreement herein against any past, present or future officer, director, trustee, member, employee or agent of the Borrower, whether directly or indirectly and all such liability of any such individual as such is hereby expressly waived and released as a condition of and in consideration for the execution hereof and the issuance of the Bonds.

The records of the Trustee shall be prima facie evidence of the amount owing on this Note.

This Note is to be construed according to the laws of the State of North Carolina without regard to any conflicts of law provisions contained therein.

No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions.

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PAY TO THE ORDER OF U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, SCHEDULE I WITHOUT RECOURSE AGAINST PUBLIC FINANCE AUTHORITY BUT WITH RECOURSE AGAINST UWHARRIE GREEN SCHOOL, INC. Series 2017A Payment Schedule

PUBLIC FINANCE AUTHORITY Interest on and principal of this Note shall be due on the first day of each month, commencing [January 1, 2018], or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017A Bonds shall be available for By payment by the Trustee in the amounts and on dates set forth below. Name: Title: Assistant Secretary Payment Date Principal Interest Total $ % $

Total $[PRINCIPALA] $[______] $[______]

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EXHIBIT B This Note is issued pursuant to the Loan Agreement and is entitled to the benefits and is subject to the conditions thereof. All the terms, conditions and provisions of the Loan FORM OF SERIES 2017B PROMISSORY NOTE Agreement are, by this reference thereto, incorporated herein as part of this Note, and shall control in the interpretation and enforcement of this Note. $[PRINCIPALB] [November __, 2017] In addition to the foregoing, the Borrower hereby promises to pay to the full extent required by the Indenture and the Loan Agreement: (a) all of the payments and additional FOR VALUE RECEIVED, the undersigned, Uwharrie Green School, Inc., a North charges set forth in Section 5.01 of the Loan Agreement; and (b) all costs and expenses of Carolina nonprofit corporation (the “Borrower”), hereby promises to pay to the order of collection incurred in connection with any default by the Borrower hereunder and all other PUBLIC FINANCE AUTHORITY (together with its successors and assigns, the “Issuer”), the payments required to be made by the Borrower pursuant to the Indenture and the Loan principal sum of [______DOLLARS] ($[PRINCIPALB]), together with interest Agreement including without limitation those payments referred to in Section 8.06 of the Loan thereon, in installments, on the dates and in the amounts as described in the Loan Agreement, Agreement. dated as of November 1, 2017 (the “Loan Agreement”), by and between the Borrower and the Issuer. The Borrower further agrees to pay as the premium hereon the amount of the premium In the event the Borrower fails to make any of the payments required in this Note, such due, if any, upon any prepayment hereof in accordance with the Loan Agreement. payment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon (to the This Note has been issued to evidence a loan made by the Issuer to the Borrower in extent legally enforceable) until paid. accordance with the Loan Agreement. Pursuant to the Loan Agreement, the Issuer has loaned the Borrower the proceeds of the Issuer’s $[PRINCIPALB] aggregate principal amount of Public The principal of this Note is subject to optional and mandatory prepayment by the Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Borrower from time to time as set forth in the Loan Agreement. Series 2017B (the “Series 2017B Bonds”). The Series 2017B Bonds are issued by the Issuer pursuant to and in accordance with an Indenture of Trust, dated as of November 1, 2017 (the The Borrower shall have the option to prepay the unpaid balance hereof in whole or in “Indenture”), by and between the Issuer and U.S. Bank National Association, as trustee (the part only as provided in and in accordance with the provisions of the Loan Agreement and the “Trustee”). Capitalized terms used herein and not otherwise defined shall have the meanings Indenture. ascribed thereto in the Loan Agreement and the Indenture. In the event an installment is required under this Note on a date that is not a Business Day Interest on and principal of this Note shall be due on the first day of each month, (as defined in the Indenture), such installment shall be due on the next succeeding Business Day. commencing [January 1, 2018] or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017B Bonds shall be available for The Borrower agrees that if, and as often as, this Note is placed in the hands of any payment by the Trustee in the amounts and on dates set forth on Schedule I attached to this Note; attorney for collection or to defend or enforce any of the Issuer’s and/or the Trustee’s rights provided, however, that the Borrower shall receive a credit against such payments of interest to hereunder, the Borrower will pay to the Issuer and/or the Trustee its reasonable attorneys’ fees, the extent funds are on deposit in the Capitalized Interest Account or otherwise on deposit in the together with all court costs and other expenses actually paid or incurred by the Issuer and/or the Bond Fund in addition to funds deposited pursuant to Section 5.01(a) of the Loan Agreement and Trustee. available to pay interest on the Series 2017 Bonds on the next Interest Payment Date or principal on the Series 2017 Bonds on the next Principal Payment Date, as applicable. The Borrower and all other persons who may become liable for all or part of this obligation severally waive presentation for payment, demand, notice of nonpayment and protest, Payments of both principal and interest are to be irrevocably assigned by the Issuer to the all pleas of division and discussion and consent to any extension of time (whether one or more) Trustee pursuant to the Indenture. Such assignment is to be made as security for the payment of or renewal hereof. Any such extension or renewal may be made without notice and without the Bonds of the Issuer to the extent provided in the Indenture. All of the terms, conditions and discharging liability hereunder. provisions of the Indenture are, by this reference thereto, incorporated herein as part of this Note. Upon default in any of the terms or conditions of this Note or upon the occurrence and Payments hereon are to be made in immediately available funds at the designated trust continuation of an “Event of Default” under the Loan Agreement, at the option of the holder office of the Trustee or at such other place as the Trustee may direct in writing, in accordance hereof, the entire indebtedness hereby evidenced shall become due and payable then and with the terms hereof and of the Indenture. thereafter as the holder may elect, regardless of the date of maturity hereof, but subject to the provisions of the Loan Agreement. Prior to the exercise of such option, the Trustee shall give written notice to the Borrower.

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During the existence of any such Event of Default, the Trustee may apply any payments IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date received on any amount due hereunder or under the terms of the Loan Agreement or the first above written. Indenture pursuant to and in accordance with the Loan Agreement and the Indenture. Uwharrie Green School, Inc. The obligations of the Borrower to make payments hereunder, under the Indenture and the Loan Agreement and to perform and observe all agreements on its part contained herein and therein shall be absolute and unconditional. Until this Note is terminated and paid in full and all By amounts due or to become due under the Loan Agreement are paid in full and the Loan Name Agreement is terminated, the Borrower (a) will not suspend or discontinue any payments under Title the Loan Agreement or neglect to perform any of its duties required thereunder or hereunder; (b) will perform and observe all of its obligations set forth in the Loan Agreement, the Deed of Trust (defined in the Indenture) and this Note; and (c) except as provided in the Loan Agreement, will not terminate the Loan Agreement, the Deed of Trust or this Note for any cause.

No recourse shall be had for the payment of the principal of, premium, if any, or interest on the Bonds or for any claim based thereon or arising under the Loan Agreement, the Deed of Trust or this Note or upon any obligation, covenant or agreement herein against any past, present or future officer, director, trustee, member, employee or agent of the Borrower, whether directly or indirectly and all such liability of any such individual as such is hereby expressly waived and released as a condition of and in consideration for the execution hereof and the issuance of the Bonds.

The records of the Trustee shall be prima facie evidence of the amount owing on this Note.

This Note is to be construed according to the laws of the State of North Carolina without regard to any conflicts of law provisions contained therein.

No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State of North Carolina or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State of North Carolina or its political subdivisions.

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PAY TO THE ORDER OF U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, SCHEDULE I WITHOUT RECOURSE AGAINST PUBLIC FINANCE AUTHORITY BUT WITH RECOURSE AGAINST UWHARRIE GREEN SCHOOL, INC. Series 2017B Payment Schedule

PUBLIC FINANCE AUTHORITY Interest on and principal of this Note shall be due on the first day of each month, commencing [January 1, 2018], or as otherwise provided in Section 5.01(a) of the Loan Agreement, such that interest on and principal of the Series 2017B Bonds shall be available for By payment by the Trustee in the amounts and on dates set forth below. Name: Title: Assistant Secretary Payment Date Principal Interest Total $ % $

Total $[PRINCIPALB] $[______] $[______]

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EXHIBIT C Authorized Representative

FORM OF PROJECT FUND REQUISITION CERTIFICATE [This section applies only to the initial draw request; paragraphs 1 and 2 apply only to the Request No. first draw request for a hard cost: The undersigned Construction Administrator hereby certifies that there have been delivered to the Construction Administrator in connection with the Date: Construction Project: PROJECT FUND REQUISITION CERTIFICATE 1. if required by the construction contract for the Construction Project, payment and TO: U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE (THE "TRUSTEE"), UNDER performance bonds issued by a responsible bonding company licensed to do THE INDENTURE OF TRUST, DATED AS OF NOVEMBER 1, 2017 (THE business in the State of North Carolina and rated at least "A" by S&P or A.M. "INDENTURE"), BY AND BETWEEN THE PUBLIC FINANCE AUTHORITY (THE Best Company, Inc. in an amount not less than the guaranteed maximum price "ISSUER"), AND THE TRUSTEE, AND THE LOAN AGREEMENT, DATED AS OF under the construction contract for the Construction Project; NOVEMBER 1, 2017 (THE "LOAN AGREEMENT"), BY AND BETWEEN THE 2. a copy of the building permit and/or grading permit, as applicable, authorizing the ISSUER AND UWHARRIE GREEN SCHOOL, INC. (THE "BORROWER"). construction and/or grading, as applicable, of the Construction Project; and The undersigned Authorized Representative of the Borrower (as defined in the Indenture) 3. a lien agent has been established and all filings under the State of North Carolina hereby requests that the following amounts be transferred to the following payees for the lien law have been made.] following Costs of the Project (as defined in the Loan Agreement) (the "Costs"), the aggregate amount of which is $[______] (the "Requested Amount"): The undersigned Construction Administrator hereby [further] states and certifies that:

Payee Amount Description of Work 1. the estimated completion date for the Construction Project is now ______;

2. the cost of that portion of the improvements completed since the last disbursement The undersigned Authorized Representative of the Borrower hereby states and certifies is $______; that: 1. these Costs are valid costs under the Act (as defined in the Indenture) and no part 3. all construction completed prior to the date of this draw request has been thereof has been included in any other Requisition Certificate previously filed performed and completed in accordance with the plans and specifications; with the Trustee under the provisions of the Indenture or reimbursed to the Borrower from Bond (as defined in the Indenture) proceeds; 4. [for all draw requests after the initial draw request: all amounts previously drawn have been paid to the Payee named in the next preceding requisition and lien 2. no Event of Default currently exists (or with the passage of time, will exist) under waivers or partial lien waivers and/or paid invoices evidencing such payment the Borrower Documents (as defined in the Loan Agreement); [and] have been received;]

3. the estimated completion date for the Construction Project (as defined in the Loan 5. payment of all Costs requisitioned herein shall satisfy all outstanding claims for Agreement) is now ______; [paragraph 4 applies only to the final draw labor, materials and fixtures and any lien waivers or partial lien waivers and/or request: and paid invoices evidencing such payment shall be obtained; 4. The Construction Project was completed on ______, and has been acquired, 6. the undisbursed amount on deposit in the Project Fund created under the constructed/renovated and equipped by the Borrower in substantial compliance Indenture related to the Construction Project is sufficient to pay the cost of with the plans and specifications relating thereto.] completing the construction of improvements in accordance with the plans and specifications for the Construction Project payment of any retainages then owed; UWHARRIE GREEN SCHOOL, INC., [and] a North Carolina nonprofit corporation, as Borrower

By:

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7. we have received the executed certificate entitled "Architect's Certificate for EXHIBIT D Payment" contained on the "Application and Certificate for Payment" (AIA Document G702) from the architect for the Construction Project; FORM OF COSTS OF ISSUANCE FUND REQUISITION CERTIFICATE

8. [paragraphs 8 and 9 apply only to the final disbursement: the Construction Request No. Project was completed on ______, and has been acquired, constructed/renovated and equipped by the Borrower in substantial compliance Date: with the plans and specifications relating thereto; and COSTS OF ISSUANCE FUND REQUISITION CERTIFICATE 9. a permanent certificate of occupancy has been issued and all so-called "punch- list" items have been completed.] TO: U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE (THE “TRUSTEE”), UNDER THE INDENTURE OF TRUST, DATED AS OF NOVEMBER 1, 2017, BY AND The Construction Administrator hereby authorizes the Trustee to make a disbursement BETWEEN PUBLIC FINANCE AUTHORITY (THE “ISSUER”) AND THE from the Project Fund in the amount of the Requested Amount. TRUSTEE, AND THE LOAN AGREEMENT, DATED AS OF NOVEMBER 1, 2017 (THE “LOAN AGREEMENT”), BY AND BETWEEN THE ISSUER AND THE [______] BORROWER (AS DEFINED THEREIN).

The undersigned Authorized Representative of the Borrower hereby requests that the following amounts be transferred to the following payees for the following costs of issuance (as By: described in Section 4.04 of the Loan Agreement) (the “Issuance Costs”): Name: Title: Payee Amount Description Wiring Instructions

$

The undersigned Authorized Representative of the Borrower hereby states and certifies that:

(i) these Issuance Costs were properly incurred in connection with the issuance of the Series 2017 Bonds;

(ii) these Issuance Costs are valid costs under the Act;

(iii) no part of these Issuance Costs has been included in any other Requisition Certificate previously filed with the Trustee under the provisions of the Indenture or reimbursed to the Borrower from Series 2017 Bond Proceeds; and

(iv) no Event of Default currently exists (or with the passage of time, will exist) under the Borrower Documents.

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Uwharrie Green School, Inc., EXHIBIT E

FORM OF COMPLETION CERTIFICATE By Name $[PRINCIPALA] $[PRINCIPALB] Title PUBLIC FINANCE AUTHORITY PUBLIC FINANCE AUTHORITY Education Revenue Bonds Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) (Uwharrie Charter Academy Project) Series 2017A Series 2017B

Pursuant to Section 4.03 of the Loan Agreement dated as of November 1, 2017 (the “Loan Agreement”) by and between Public Finance Authority and Uwharrie Green School, Inc. (the “Borrower”), the undersigned Authorized Representative of the Borrower hereby represents without prejudice to any rights against those parties which then exist or subsequently may come into being, that:

(i) the Construction Project was substantially completed on ______, 201_ (the “Completion Date”); and

(ii) the New Facility has been acquired, constructed, improved and/or equipped by the Borrower in substantial compliance with the plans and specifications relating thereto.

Any moneys (including investment proceeds) on deposit in the Project Fund are hereby directed to [pay remaining Costs of the Project][deposited in the Bond Fund]. All capitalized terms, not otherwise defined herein, shall have such meanings as set forth in the Loan Agreement.

Uwharrie Green School, Inc.,

By Name Title

______, 201_ [to be mailed to the Trustee]

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EXHIBIT F Uwharrie Green School, Inc., a North Carolina nonprofit corporation FORM OF BORROWER CERTIFICATE

THIS BORROWER CERTIFICATE (this “Certificate”) is furnished to U.S. Bank By National Association (the “Trustee”), as trustee under the Indenture of Trust dated as of Name November 1, 2017 (the “Indenture”), by and between the Public Finance Authority (the “Issuer”) Title and the Trustee, pursuant to the Loan Agreement dated as of November 1, 2017 (the “Agreement”), by and between the Issuer and Uwharrie Green School, Inc. (the “Borrower”). Unless otherwise defined herein, the terms used in this Certificate shall have the meanings assigned thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the ______of the Borrower;

2. I am familiar with the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower during the ______period ended ______, 20__;

3. [I am familiar with the provisions of this Loan Agreement and the Tax Certificate, and to the best my knowledge, based on such review and familiarity, the Borrower has fulfilled all of its obligations thereunder throughout the fiscal year][For annual reports only];

4. [The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes an Event of Default during or at the end of the period described in paragraph 2 or as of the date of this Certificate][Use if no default];

5. [The examinations described in paragraph 2 disclosed an event or events which constitute an Event of Default during or at the end of the period described in paragraph 2 or as of the date of this Certificate. On Schedule I hereto are listed, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event][Use upon a default].

The foregoing certifications delivered with this Certificate in support hereof are made this ____ day of ______, 20__.

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SCHEDULE I

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F-3 4848-1712-4171.15 D-49 Table of Contents

Page

ARTICLE 1 PARTIES, PROPERTY AND DEFINITIONS 1.1 After-Acquired Property ...... 1 1.2 Beneficiary ...... 1 1.3 Chattels ...... 1 1.4 Fixtures ...... 1 1.5 Improvements ...... 1 Prepared by, recording requested by, and after recording return to: 1.6 Intangible Personalty ...... 2 1.7 Loan Documents ...... 2 Kutak Rock LLP 1.8 Premises ...... 2 303 Peachtree Street N.E., Suite 2750 1.9 Secured Obligations ...... 3 Atlanta, Georgia 30308 1.10 Trustee...... 3 Attention: Andrew D. Egan, Esq. 1.11 Trustor ...... 3 DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING ARTICLE 2 GRANTING CLAUSE Dated as of November 1, 2017 2.1 Grant in Trust ...... 4 by UWHARRIE GREEN SCHOOL, INC. ARTICLE 3 TRUSTOR’S TITLE AND AUTHORITY; REPRESENTATIONS AND WARRANTIES (“Trustor”) to 3.1 Warranty of Title...... 4 3.2 Waiver of Homestead and Other Exemptions; Commercial Obligation ...... 4 INVESTORS TITLE INSURANCE COMPANY 3.3 Due Authorization ...... 4 (“Trustee”) 3.4 Priority Lien ...... 4 3.5 Representations and Warranties ...... 4 for the benefit of U.S. BANK NATIONAL ASSOCIATION, as Trustee ARTICLE 4 (“Beneficiary”) TRUSTOR’S AFFIRMATIVE COVENANTS 4.1 Payment of Secured Obligations under the Loan Documents; Future Advances ...... 5 4.2 Maturity Date ...... 6 COLLATERAL IS OR INCLUDES FIXTURES (THIS DOCUMENT SERVES AS A FIXTURE FILING UNDER SECTION 9-502 OF THE NORTH CAROLINA UNIFORM COMMERCIAL CODE AND IS TO BE 4.3 Performance of Other Obligations ...... 6 FILED IN THE REAL PROPERTY RECORDS.) 4.4 Other Encumbrances ...... 6 4.5 Payment of Taxes ...... 7 THIS DEED OF TRUST SECURES FUTURE ADVANCES 4.6 Maintenance of Insurance ...... 7 NOTICE: THIS INSTRUMENT COVERS REAL PROPERTY AND PERSONAL PROPERTY AND FIXTURES 4.7 Maintenance and Repair of Premises and Chattels ...... 7 ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE DEEDS OF TRUST ON REAL ESTATE ARE RECORDED. IN ADDITION, THIS INSTRUMENT 4.8 Reserved ...... 7 SHOULD BE APPROPRIATELY INDEXED NOT ONLY AS A DEED OF TRUST, BUT ALSO AS A 4.9 Mechanics’ Liens ...... 7 FINANCING STATEMENT COVERING PERSONAL PROPERTY AND GOODS THAT ARE TO BECOME 4.10 Defense of Actions ...... 7 FIXTURES (EXCEPT AS EXPRESSLY EXCLUDED HEREIN) ON THE REAL PROPERTY DESCRIBED 4.11 Expenses of Enforcement ...... 8 HEREIN. THE MAILING ADDRESS OF THE TRUSTOR (DEBTOR) AND BENEFICIARY (SECURED 4.12 Assembly of Chattels ...... 8 PARTY) ARE SET FORTH IN THIS INSTRUMENT. 4.13 Further Assurances; Estoppel Certificates ...... 8

4.14 Correction of Errors ...... 8

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Table of Contents Table of Contents (continued) (continued) Page Page

ARTICLE 5 8.16 Severability ...... 23 TRUSTOR’S NEGATIVE COVENANTS 8.17 Entire Agreement ...... 23 8.18 No Partnership or Joint Venture ...... 24 5.1 Zoning and Private Covenants ...... 8 8.19 Inspection ...... 24 5.2 Interference with Lease ...... 9 8.20 Concerning Trustee ...... 24 5.3 Transfer of Premises ...... 9 8.21 Waiver ...... 24 5.4 Further Encumbrance of Premises ...... 9 8.22 Instrument Under Seal ...... 24 5.5 Improper Use of Premises or Chattels ...... 9 8.23 Review by North Carolina Counsel ...... 25 5.6 Inclusion in District...... 9 8.24 No State Indebtedness ...... 25 ARTICLE 6 8.25 USDA ...... 25 EVENTS OF DEFAULT EXHIBIT A LEGAL DESCRIPTION OF ENCUMBERED PROPERTY 6.1 Events of Default ...... 10 EXHIBIT B PERMITTED ENCUMBRANCES 6.2 Grace Periods for Certain Defaults ...... 11

ARTICLE 7 BENEFICIARY’S REMEDIES 7.1 Performance of Defaulted Obligations ...... 11 7.2 Specific Performance and Injunctive Relief ...... 12 7.3 Suit for Monetary Relief ...... 12 7.4 Possession of Premises ...... 12 7.5 Enforcement of Security Interests ...... 12 7.6 Acceleration; Foreclosure; Power of Sale ...... 12 7.7 Appointment of Receiver ...... 16 7.8 Exercise of Rights ...... 17

ARTICLE 8 MISCELLANEOUS PROVISIONS 8.1 Assignment of Leases and Rents ...... 17 8.2 Further Instruments ...... 19 8.3 Security Agreement ...... 19 8.4 Indemnification ...... 21 8.5 Time of the Essence ...... 21 8.6 Joint and Several Obligations ...... 21 8.7 Rights and Remedies Cumulative ...... 21 8.8 No Implied Waivers ...... 22 8.9 Dealings with Successor Owners ...... 22 8.10 No Third Party Rights ...... 22 8.11 Preservation of Liability and Priority ...... 22 8.12 Waiver of Jury Trial ...... 22 8.13 Notices and Agency ...... 23 8.14 No Merger of Estates ...... 23 8.15 Release ...... 23

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DEED OF TRUST, 1.5 Improvements. All buildings, structures and improvements now or hereafter ASSIGNMENT OF LEASES AND RENTS, located in, on or about the Premises. SECURITY AGREEMENT AND FIXTURE FILING 1.6 Intangible Personalty. The Pledged Revenues (as defined in the Indenture) and all accounts and all plans, specifications, licenses, permits, and other general intangibles This DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY (whether now owned or hereafter acquired, and including proceeds thereof) relating to or arising AGREEMENT AND FIXTURE FILING (this “Deed of Trust”) is given as of November 1, from Trustor’s ownership, use, operation, leasing, or sale of all or any part of the Premises. 2017, by the Trustor named below to the Trustee named below, for the benefit of the Beneficiary named below. 1.7 Loan Documents. The Loan Agreement, the Indenture, the Note, this Deed of Trust, any financing statements executed or otherwise authorized in connection herewith, and ARTICLE 1 each other document executed or delivered by Trustor as security for the Secured Obligations PARTIES, PROPERTY AND DEFINITIONS under the Loan Documents or in connection with the transactions under the Loan Documents have been completed and the Note have been executed and delivered. The term “Loan Capitalized terms used in this Deed of Trust shall have the meanings given such terms where Documents” also includes all modifications, extensions, renewals, and replacements of each parenthetically defined or as set forth in this Article 1 and if not defined herein, shall have the document referred to above. meanings set forth in the Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), by and between the Public Finance Authority (the “Authority”) and Trustor, or the 1.8 Premises. The Premises shall mean all of Trustor’s right, title and interest in and Indenture (defined below). The following terms and references shall have the meanings to real property located in Randolph County, State of North Carolina more particularly described indicated: on Exhibit A attached hereto and incorporated herein by this reference (the “Real Property”), subject to the Permitted Encumbrances listed in the Indenture and on Exhibit B hereto (the 1.1 After-Acquired Property. All buildings and improvements located on the “Permitted Encumbrances”), together with the following: Premises hereafter acquired or constructed by the Trustor (i) as an addition to or in replacement of or substitution for the Improvements (buildings and improvements being deemed to be an 1.8.1 All Improvements, as well as all rights-of-way, easements, and other addition to the Improvements if they comprise facilities that are functionally related to, and appurtenances thereto. operated on an integrated basis with, the Improvements), or (ii) for which Bonds are issued pursuant to the Indenture to acquire or finance such buildings or improvements 1.8.2 All plans, permits, contracts, agreements, and entitlements in or relative to the Real Property or the Improvements. 1.2 Beneficiary. U.S. Bank National Association, as Trustee under the Indenture of Trust, dated as of November 1, 2017 (the “Indenture”) by and between the Authority and the 1.8.3 All machinery, apparatus, equipment, fittings, materials, and fixtures Trustee, whose notice address is 214 N. Tryon Street, 27th Floor CN-NC-H27A Charlotte, North (whether actually or constructively attached, and including all trade, domestic, and Carolina 28202, together with any future Trustee under the Indenture. ornamental fixtures) now or hereafter located in, upon, or under the Real Property or improvements on the Real Property and used or usable in connection with any present or 1.3 Chattels. All goods, including equipment, fixtures, building and other materials, future operation thereof, including, but not limited to, all heating, air-conditioning, supplies, and other tangible personal property of every nature now owned or hereafter acquired freezing, lighting, laundry, incinerating and power equipment, engines, pipes, pumps, by Trustor and used, intended for use, or usable in the construction and development of the tanks, motors, conduits, switchboards, plumbing, lifting, cleaning, fire prevention, fire Premises, together with all accessions thereto, replacements and substitutions therefor, and extinguishing, refrigerating, ventilating, and communications apparatus, boilers, water proceeds thereof. heaters, ranges, furnaces and burners, appliances, vacuum cleaning systems, elevators, escalators, shades, awnings, screens, storm doors and windows, stoves, refrigerators, 1.4 Fixtures. All fixtures now or hereafter acquired and owned by Trustor and attached cabinets, partitions, ducts and compressors, rugs and carpets, draperies, surface attached to the Premises or After-Acquired Property that have become so related to the Premises and subsurface irrigation and sprinkler system equipment, and all additions thereto and that an interest in them arises under real property law, including, but not limited to, all replacements therefor and excluding any personal property or fixtures owned by any equipment, apparatus, machinery, motors, elevators, fittings, awnings, shades, screens, blinds, tenant leasing the Real Property. carpeting, and all plumbing, heating, lighting, electrical, ventilating, refrigerating, incinerating, air-conditioning, fire-protection, theft-protection and fire-sprinkler equipment, including all 1.8.4 All of Trustor’s right, title, and interest in any award or payment, renewals and replacements thereof and all additions thereto, and all substitutions thereof, and all including interest thereon, resulting from the exercise of any right of eminent domain or proceeds of all the foregoing in whatever form. any other public or private taking of, injury to, or decrease in the value of, any of such property and any proceeds of insurance.

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1.8.5 All other or greater rights and interests of every nature in the Real ARTICLE 2 Property and in the possession or use thereof and income therefrom, whether now owned GRANTING CLAUSE or subsequently acquired by Trustor. 2.1 Grant in Trust. FOR AND IN CONSIDERATION OF the sum of Ten and 1.8.6 All other personal property, revenues (including the Pledged Revenues), No/100 Dollars ($10.00) and other valuable consideration, the receipt and sufficiency whereof interests and intangibles pledged to or for the benefit of Beneficiary by or on behalf of are hereby acknowledged, and as security for the Secured Obligations, Trustor hereby Trustor under the Loan Documents. irrevocably grants, bargains, sells, conveys, assigns, transfers, pledges and sets over unto Trustee and the successors and assigns of Trustee, in trust for the benefit of Beneficiary and the 1.8.7 All proceeds of any of the foregoing, which term “proceeds” shall have successors and assigns of Beneficiary, WITH POWER OF SALE, all of Trustor’s present and the meaning given to it under the Code and shall additionally include whatever is future estate, right, title and interest in, to and under the Premises, under and subject to all received upon the use, lease, sale, exchange, transfer, collection or other utilization or any provisions of this Deed of Trust and the other Loan Documents, TO HAVE AND TO HOLD the disposition or conversion of any of the foregoing, voluntary or involuntary, whether cash Premises and all parts, rights, members and appurtenances thereof, unto Trustee and the or non-cash, including proceeds of issuance, rental or lease payments, accounts, chattel successors and assigns of Trustee, for the benefit of Beneficiary and the successors and assigns paper, instruments, documents, contracts, rights, general intangibles, equipment and of Beneficiary, IN FEE SIMPLE, FOREVER. inventory. ARTICLE 3 1.8.8 All water and water rights, contracts with water districts, ditches and ditch TRUSTOR’S TITLE AND AUTHORITY; rights, reservoir rights, stock or interests in irrigation or ditch companies, minerals, oil REPRESENTATIONS AND WARRANTIES and gas rights, royalties, lease or leasehold interests owned by Trustor, now or hereafter used or useful in connection with, appurtenant to or related to the Real Property. 3.1 Warranty of Title. Trustor represents and warrants to Beneficiary that (a) it is well and truly seized of good and marketable title in fee simple to the Premises and is the lawful 1.8.9 All right, title and interest of Trustor now owned or hereafter acquired in owner of the Premises; (b) that the Premises are subject only to the matters of record; and (c) that an to all streets, , alleys and public places, and all easements and rights of way, no interest in the Premises, Chattels, Intangible Personalty and Fixtures has been pledged, leased, public or private, now or hereafter used in connection with the Real Property. or conveyed to any third party other than the Permitted Encumbrances. The warranties contained in this section shall survive foreclosure of this Deed of Trust, and shall inure to the benefit of and 1.9 Secured Obligations. All present and future obligations of Trustor to the be enforceable by any person who may acquire title to the Premises pursuant to any such Authority or Beneficiary evidenced by or contained in the Loan Agreement, this Deed of Trust foreclosure and Trustor and its successors and assigns shall forever warrant and defend the same and the other Loan Documents to which Trustor is a party, whether stated in the form of unto Trustee, its successors and assigns, against all claims whatsoever, subject to the Permitted promises, covenants, representations, warranties, conditions, or prohibitions or in any other form. Encumbrances. If this Deed of Trust is foreclosed, either by the power of sale or through the courts, the Secured Obligations shall include an amount equal to any prepayment fees or premiums which would be 3.2 Waiver of Homestead and Other Exemptions; Commercial Obligation. payable under the terms of the Secured Obligations due and owing under the Loan Agreement Trustor hereby waives all rights to any homestead or other exemption to which Trustor would and the other Loan Documents to which Trustor is a party as if the Secured Obligations under the otherwise be entitled under any present or future constitutional, statutory, or other provision of Loan Agreement and the other Loan Documents to which Trustor is a party were prepaid in full the State of North Carolina or other state or federal law. Trustor confirms and agrees that the on the date of the foreclosure sale, and together with all costs of collection and enforcement and Secured Obligations represent a commercial lending relationship and not a consumer loan. any damages resulting from any such default. 3.3 Due Authorization. Each individual who executes this document on behalf of 1.10 Trustee. Investors Title Insurance Company, whose notice address is [121 North Trustor represents and warrants to Beneficiary that such execution has been duly authorized by Columbia Street, Chapel Hill, North Carolina 27514], together with any future deed of trust all necessary corporate action on the part of Trustor. trustee under this Deed of Trust. 3.4 Priority Lien. This Deed of Trust shall be prior to any and all leases of the 1.11 Trustor. Uwharrie Green School, Inc., a North Carolina nonprofit corporation, Premises. Any and all leases shall be expressly subordinated to the lien of this Deed of Trust. whose notice address is 5326 U.S. Highway 220 South, Asheboro, North Carolina 27205, and whose North Carolina organizational identification number is 1180565, and whose employer 3.5 Representations and Warranties. Trustor makes the following representations identification number is 45-2400428, together with any future owner of the Premises or any part and warranties to Beneficiary: thereof or interest therein. (a) Trustor is duly organized, validly existing and in good standing under the laws of the state in which it is organized. Trustor is qualified to do business and is in

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good standing under the laws of the state in which the Premises are located and in each the parties hereto that this Deed of Trust is made and executed to comply with the state in which it is doing business. Trustor has full power and authority to own its provisions of N.C. Gen. Stat. § 45-67, et seq. properties and assets and to carry on its business as now conducted. Trustor is fully authorized and permitted to execute and deliver this Deed of Trust. The execution, 4.1.2 The amount of the present obligations secured by this Deed of Trust is delivery and performance by Trustor of this Deed of Trust and all other documents and [______Dollars] ($[PRINCIPAL]), and the total amount, including present and instruments relating to the Secured Obligations will not result in any breach of the terms future obligations, that may be secured by this Deed of Trust at any one time is or conditions or constitute a default under any agreement or instrument under which [______Dollars][2X THE PRINCIPAL AMOUNT] ($[______]). The period within Trustor is a party or is obligated. Trustor is not in default in the performance or which future obligations under the Loan Documents may be incurred shall not extend observance of any covenants, conditions or provisions of any such agreement or more than thirty (30) years from the date of this Deed of Trust. If the maximum amount instrument. secured by this Deed of Trust has not been advanced or if any obligation secured hereby is paid or is reduced by partial payment, further advances may be made and additional (b) The liens, security interests and assignments created hereby will be valid, Indebtedness by this Deed of Trust may be incurred from time to time within the time effective, properly perfected and enforceable liens, security interests and assignments. limit fixed by this Deed of Trust as set forth above, and such further advances and obligations, together with interest thereon, shall be secured by this Deed of Trust to the (c) All financial statements, profit and loss statements, statements as to same extent as original advances and indebtedness and obligations hereunder. If the ownership and other statements or reports previously or hereafter given to Beneficiary by aggregate outstanding principal balance of the obligations or indebtedness secured by this or on behalf of Trustor are and shall be true, complete and correct as of the date thereof. Deed of Trust exceeds the maximum principal amount that may be secured by this Deed of Trust at any one time as provided above, then such amount in excess and interest on (d) Trustor has filed all federal, state and local tax returns and has paid all of the amount in excess shall be secured by this Deed of Trust but the priority of the lien of its current obligations before delinquent, including all federal, state and local taxes and this Deed of Trust with respect to the amount in excess shall be determined in the manner all other payments required under federal, state or local law. provided in N.C. Gen. Stat. § 45-70 et seq. All payments made, sums advanced, and expenses incurred by the Beneficiary or Authority or a secured for the purposes (e) All representations and warranties made herein shall survive the execution described in N.C. Gen. Stat. § 45-70 shall be secured by this Deed of Trust and shall hereof, the execution and delivery of all other documents and instruments in connection have priority as described in N.C. Gen. Stat. § 45-70. The provisions of this Section are with the Secured Obligations, and until the Secured Obligations have been fully paid and intended to comply with Article 7 of Chapter 45 of the North Carolina General Statutes, performed. as amended.

ARTICLE 4 4.2 Maturity Date. If not earlier paid in full, the Secured Obligations under the Loan TRUSTOR’S AFFIRMATIVE COVENANTS Agreement shall be paid in full on or before [June 15, 20__] (the “Maturity Date”).

4.1 Payment of Secured Obligations under the Loan Documents; Future 4.3 Performance of Other Obligations. Trustor will promptly and strictly perform Advances. and comply with all other covenants, conditions, and prohibitions required of Trustor by the terms of the Loan Documents. 4.1.1 Trustor will pay all principal, interest, and other Secured Obligations payable under the Loan Agreement and the other Loan Documents to which Trustor is a 4.4 Other Encumbrances. Trustor will promptly and strictly perform and comply party, on the date when each such payment is due, without notice or demand. This Deed with all covenants, conditions, and prohibitions required of Trustor in connection with any other of Trust also secures all future advances. The making of future advances is subject to the encumbrance affecting the Premises, the Chattels, or the Intangible Personalty, or any part terms and conditions of the Indenture, the Loan Agreement and applicable law, including, thereof, regardless of whether such other encumbrance is superior or subordinate to the lien but not limited to, North Carolina General Statutes (“N.C. Gen. Stat.) § 45-67 et seq. It is hereof, if the failure to perform the same shall materially adversely affect the lien of this Deed of understood and agreed that this Deed of Trust shall also secure payment of not only the Trust or Trustor’s ability to perform the Secured Obligations. Trustor covenants and agrees to payment by the Trustor of its obligations under the Loan Documents but also any and all provide Beneficiary with written notice of any default or breach, whether or not such matters are substitutions, replacements, renewals and extensions thereof, any and all indebtedness timely cured, of any covenants, conditions or prohibitions required in any of the foregoing arising pursuant to the terms hereof and any and all indebtedness arising pursuant to the encumbrances including copies of any notices of such defaults or breaches received by Trustor terms of any other agreement or instrument executed or delivered in connection with the in connection therewith. Loan Documents, all of which indebtedness is equally secured with and has the same priority as any amounts advanced to Trustor as of the date hereof. It is the intention of

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4.5 Payment of Taxes. Beneficiary in such property or in the Secured Obligations, and will indemnify and hold Beneficiary harmless from all loss, damage, cost, or expense, including reasonable attorneys’ 4.5.1 Property Taxes. Trustor will pay or cause to be paid, before delinquency, fees, which Beneficiary may incur in connection therewith. all taxes and assessments, general or special, which may be levied or imposed at any time against the Premises (if any) as required under the Loan Agreement. 4.11 Expenses of Enforcement. Trustor will pay all reasonable costs and expenses, including reasonable attorneys’ fees, which Beneficiary and/or Trustee may incur in connection 4.5.2 Intangible Taxes. If by reason of any statutory or constitutional with any effort or action (whether or not litigation or foreclosure is involved) to enforce or amendment or judicial decision adopted or rendered after the date hereof, any tax, defend Beneficiary’s rights and remedies under any of the Loan Documents including, but not assessment, or similar charge is imposed against the Beneficiary as a result of this Deed limited to, all reasonable attorneys’ fees and other expenses incurred by Beneficiary and/or of Trust, or against any interest of Beneficiary in any real or personal property Trustee in securing title to or possession of, and realizing upon, any security for the Secured encumbered hereby, Trustor will pay such tax, assessment, or other charge before Obligations. delinquency and will indemnify Beneficiary against all loss, expense, or diminution of income in connection therewith. In the event Trustor is unable to do so, either for 4.12 Assembly of Chattels. Upon the occurrence of any Event of Default hereunder, economic reasons or because the legal provision or decision creating such tax, Trustor will, at Beneficiary’s request, assemble the Chattels and make them available to assessment, or charge forbids Trustor from doing so, then the Secured Obligations under Beneficiary at any place designated by Beneficiary, which is reasonably convenient to both the Loan Documents will, at Beneficiary’s option, become due and payable in full upon parties. thirty (30) days’ notice to Trustor. 4.13 Further Assurances; Estoppel Certificates. Trustor will, at its sole cost and 4.6 Maintenance of Insurance. expense, do, execute, acknowledge and deliver to Beneficiary or Trustee upon demand, all and every such further acts, documents and assurances which Beneficiary may reasonably request to 4.6.1 Coverages Required, Application of Proceeds. Insurance requirements confirm or perfect the liens and security interests created or intended to be created hereby, or to and the application of any proceeds therefrom shall be governed by the terms of the Loan confirm or perfect any evidence of the Secured Obligations, including, without limitation, Agreement. financing statements and other security instruments. Beneficiary is hereby expressly authorized to file any and all financing statements deemed necessary by Beneficiary to perfect the security 4.6.2 Successor’s Rights. Any person who acquires title to the Premises or the interests granted to Beneficiary hereunder. Trustor will also, within fifteen (15) Business Days Chattels upon foreclosure hereunder will succeed to all of Trustor’s rights under all (as defined in the Indenture) after any request by Beneficiary, deliver to Beneficiary a signed and policies of insurance maintained pursuant to this section, to the extent that such policies acknowledged statement certifying to Beneficiary, or to any proposed transferee of the Secured provide coverage to such successor and are otherwise assignable. Obligations, (a) the principal, interest, and other sums owing by Trustor under the Loan Documents, and (b) whether Trustor claims to have any defenses with respect to the Secured 4.7 Maintenance and Repair of Premises and Chattels. Trustor will cause the Obligations and, if so, the nature of such offsets or defenses. Trustor’s failure to provide such a Premises and the Chattels to be maintained in good condition and repair as set forth in the Loan statement within such fifteen (15) day period will result in Trustor’s being conclusively bound by Agreement. any representation which Beneficiary may make as to those matters so long as that representation is consistent with Beneficiary’s records of this transaction. 4.8 Reserved. 4.14 Correction of Errors. Trustor, upon request of Beneficiary, shall promptly 4.9 Mechanics’ Liens. Except for Permitted Encumbrances, Trustor will keep the correct any defect, error or omission that may be discovered in the content of this Deed of Trust Premises free and clear of all liens and claims of liens by contractors, subcontractors, mechanics, or in the execution or acknowledgment hereof. In addition, Trustor shall do such further acts as laborers, materialmen, and other such persons directed to perform services or provide materials may be necessary or that Beneficiary may reasonably request to carry out more effectively the by Trustor, and will cause any recorded statement of any such lien arising by or through Trustor purposes of this Deed of Trust, to subject any property intended to be encumbered hereby to the to be released of record within thirty (30) days after the recording thereof. Notwithstanding the lien and security interest hereof, and to perfect and maintain the lien and security interest hereof. preceding sentence, however, to the extent allowed under the Loan Agreement, Trustor will not be deemed to be in default under this section if and so long as Trustor (a) contests in good faith ARTICLE 5 the validity or amount of any asserted lien and diligently prosecutes or defends an action TRUSTOR’S NEGATIVE COVENANTS appropriate to obtain a binding determination of the disputed matter; and (b) provides Beneficiary with such security as required under the terms of the Loan Agreement. 5.1 Zoning and Private Covenants. Trustor will not initiate, join in, or consent to any change in any zoning ordinance or classification, any change in any approved zoning plan or 4.10 Defense of Actions. Trustor will defend, at Trustor’s expense, any action, in any “zone lot” or “zone lots” (or similar zoning unit or units) presently comprising the Real proceeding or claim which affects any property encumbered hereby or any interest of

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Property, any transfer of development rights, any change in any private restrictive covenant, or to Beneficiary of any notification or advice that Trustor may receive from any municipality or any change in any other public or private restriction limiting or defining the uses which may be other third party of any intent or proposal to include all or any part of the Premises in a District. made of the Real Property or any part thereof unless and only to the extent permitted under the Beneficiary shall have the right to file a written objection to the inclusion of all or any part of the terms of the Loan Agreement. If under applicable zoning provisions the use of all or any part of premises in a District, either in its own name or in the name of Trustor, and to appear at, and the Real Property is or becomes a nonconforming use, Trustor will not cause or permit such use participate in, any hearing with respect to the formation of any District. to be discontinued or abandoned unless and only to the extent permitted under the terms of the Loan Agreement. ARTICLE 6 EVENTS OF DEFAULT 5.2 Interference with Lease. Trustor will not, unless and only to the extent permitted under the terms of the Loan Agreement (a) collect rent from all or any part of the 6.1 Events of Default. Each of the following events will constitute an Event of Premises for more than two months in advance; (b) assign the rents from the Premises or any Default under this Deed of Trust and under each of the other Loan Documents: part thereof other than to Beneficiary; (c) consent to the cancellation or surrender of all or any part of any Property Lease, except that Trustor may in good faith and with the consent of 6.1.1 Failure to Pay Secured Obligations under the Loan Documents. Trustor’s Beneficiary terminate any such Property Lease for nonpayment of rent or other material breach failure to make any payment of any of the Secured Obligations when such payment is due by the tenant thereunder; or (d) in any other manner impair the value of the Premises or the under the terms of the Loan Documents, and such failure is not cured within any grace or security of this Deed of Trust. cure period provided therein;

5.3 Transfer of Premises. Trustor will not sell, transfer, convey, lease, assign, or 6.1.2 Violation of Other Covenants. Trustor’s failure to perform or observe any otherwise dispose of, or further encumber, either voluntarily or involuntarily, by operation of law other covenant, condition, or prohibition contained in any of the Loan Documents or in or otherwise, the Premises or any part thereof or interest therein, unless and only to the extent any of the documents evidencing and securing the Permitted Encumbrances for a period permitted under the terms of the Loan Agreement. Any such transfer shall be subject to this of thirty (30) days after written notice, specifying such failure and requesting that it be Deed of Trust and any other documents which evidence or secure the loan secured hereby, and remedied, shall have been given to Trustor by Beneficiary; provided, with respect to any any such transferee shall assume all of Trustor’s obligations hereunder and thereunder and agree such failure covered by this Section 6.1.2, no Event of Default shall be deemed to be to be bound by all provisions and perform all obligations contained herein and therein. As used continuing so long as a course of action adequate to remedy such failure shall have been herein, “transfer” shall include, without limitation, any sale, assignment (including, without commenced within such thirty (30) day period and shall thereafter be diligently limitation, any collateral or security assignment or transfer), ground lease or conveyance except prosecuted to completion and the failure shall be remedied thereby; and provided further, leases entered into after the date hereof for occupancy subordinate to this Deed of Trust. Any however, that if any such Loan Document provides for a grace or cure period for the permitted transfer shall also comply with any private covenants and restrictions of record or performance of the defaulted obligation, Beneficiary shall not be required to provide binding upon the Trustor or the Premises. For avoidance of doubt, absent the occurrence and notice and opportunity to cure under this Section 6.1.2; continuation of an Event of Default, Trustor may expend cash and sell and/or liquidate “investment property” as defined in Section 148 of the Internal Revenue Code of 1986, as 6.1.3 Misrepresentation or Breach of Warranty. Beneficiary’s determination amended, without a requirement for Beneficiary consent. that any statement or warranty contained in any of the Loan Documents is untrue or misleading in any material respect; 5.4 Further Encumbrance of Premises. Trustor will neither create nor permit any encumbrance, either voluntarily or involuntarily, against the Premises or any part thereof or 6.1.4 Unpermitted Transfer or Encumbrance. Trustor’s transfer or further interest therein, unless and only to the extent permitted under the terms of the Loan Agreement. encumbrance of the Premises in violation of Sections 5.3 and 5.4; As used herein, “encumber” shall include, without limitation, the placing or permitting the 6.1.5 Assertion of Priority. The assertion (except by the owner of an placing of any mortgage, deed of trust, assignment of leases and rents or other security device. encumbrance expressly excepted from Trustor’s warranty of title herein) of any claim of 5.5 Improper Use of Premises or Chattels. Trustor will not use the Premises or the priority over this Deed of Trust, by title, lien, or otherwise, unless Trustor within thirty Chattels for any purpose or in any manner which violates any applicable law, ordinance, or other (30) days after such assertion either causes the assertion to be withdrawn or provides governmental requirement (collectively, “Applicable Laws”), the requirements or conditions of Beneficiary with such security as Beneficiary may require to protect Beneficiary against any insurance policy, or any private covenant that is a Permitted Encumbrance. all loss, damage, or expense, including attorneys’ fees, which Beneficiary may incur in the event such assertion is upheld; 5.6 Inclusion in District. Without obtaining the prior written consent of Beneficiary, Trustor shall not consent to, or vote in favor of, the inclusion of all or any part of the Premises in 6.1.6 Dissolution, Insolvency, or Bankruptcy. The dissolution, termination, or any special improvement or similar district (a “District”). Trustor shall immediately give notice liquidation of Trustor or of any other person or entity directly or indirectly liable for the Secured Obligations, or the making by any such person of any assignment for the benefit

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of creditors, or the appointment of a receiver, liquidation, or trustee of the property of any Agreement), from the date paid or incurred until repaid, will be part of the Secured Obligations such person, or the filing of any petition for the bankruptcy, reorganization, or and will be immediately due and payable by Trustor to Beneficiary. In lieu of advancing arrangement of any such person pursuant to the federal Bankruptcy Code or any similar Beneficiary’s own funds for such purposes, Beneficiary may use any funds of Trustor which may state or federal statute, or the adjudication of any such person as bankrupt or insolvent; be in Beneficiary’s possession including, but not limited to, insurance or condemnation proceeds and amounts deposited for taxes, insurance premiums or other purposes. 6.1.7 Default Under Any Other Encumbrance or Obligation under the Loan Documents. Trustor’s breach or default under any other covenant, condition, restriction, 7.2 Specific Performance and Injunctive Relief. Notwithstanding the availability obligation or encumbrance affecting the Premises, including, without limitation any event of legal remedies, Beneficiary will be entitled to obtain specific performance, mandatory or of default or breach under the Loan Documents; prohibitory injunctive relief, or other equitable relief requiring Trustor to cure or refrain from repeating any default. 6.1.8 Abandonment. The abandonment by Trustor of all or any part of the Premises; 7.3 Suit for Monetary Relief. With or without accelerating the maturity of the Secured Obligations, Beneficiary may sue from time to time for any payment due under any of 6.1.9 Encroachment. The existence of any encroachment upon the Premises the Loan Documents, or for money damages resulting from Trustor’s default under any of the that has occurred unless and only to the extent permitted under the terms of the Loan Loan Documents. Agreement that is not removed or corrected within thirty (30) days after its creation; or 7.4 Possession of Premises. Beneficiary may enter and take possession of the 6.1.10 Destruction or Demolition of Premises or Personal Property. The Premises, in accordance with State law, may employ a managing agent for the Premises, may demolition or destruction of, or any substantial damage to, any portion of the Premises continue any and all construction of the Premises in accordance with any approved plans and that is not adequately covered by insurance, or the loss, theft or destruction of, or any specifications therefor, and may lease or rent all or any part of the Premises, either in substantial damage to, any portion of the personal property or any other collateral or Beneficiary’s name or in the name of Trustor, and may collect the rents, issues, and profits of the security for the Secured Obligations, that is not adequately covered by insurance. Premises. Any revenues collected by Beneficiary under this section will be applied first toward payment of all expenses (including reasonable attorneys’ fees) incurred by Beneficiary, together 6.2 Grace Periods for Certain Defaults. In the event of any default under this Deed with interest thereon at the Default Rate from the date incurred until repaid, and the balance, if of Trust which does not involve failure to pay a sum of money when due, failure to maintain any any, will be applied against the Secured Obligations. required insurance, any prohibited transfer or further encumbrance of the Premises, Beneficiary will not accelerate the maturity of the Secured Obligations if such failure is being cured in the 7.5 Enforcement of Security Interests. Beneficiary may exercise all rights of a manner and under the time frame set forth in the Loan Agreement. secured party under the State of North Carolina Uniform Commercial Code (the “Uniform Commercial Code”) with respect to the Chattels, Intangible Personalty and Fixtures, including, ARTICLE 7 but not limited to, taking possession of, holding, and selling the Chattels, Intangible Personalty BENEFICIARY’S REMEDIES and Fixtures and enforcing or otherwise realizing upon any accounts and general intangibles. Any requirement for reasonable notice of the time and place of any public sale, or of the time Subject to the cure rights set forth herein, upon the occurrence of any Event of Default after which any private sale or other disposition is to be made, will be satisfied by Beneficiary’s hereunder, Beneficiary may exercise any remedy available at law or in equity including, but not giving of such notice to Trustor at least ten (10) days prior to the time of any public sale or the limited to, those listed below and those listed in the other Loan Documents, in such sequence or time after which any private sale or other intended disposition is to be made. combination as Beneficiary may determine in Beneficiary’s sole discretion: 7.6 Acceleration; Foreclosure; Power of Sale. 7.1 Performance of Defaulted Obligations. If Trustor fails to perform any of its covenants and agreements herein or in the other Loan Documents, and such failure is not 7.6.1 Acceleration. Subject to the cure rights contained in the Loan Agreement remedied prior to the expiration of any grace and cure period provided in the document at issue, and this Deed of Trust, upon an Event of Default by Trustor, at Beneficiary’s option, all Beneficiary may, but shall not be obligated to, make any payment or perform any other of the sums secured by this Deed of Trust shall be immediately due and payable. obligation required by Trustor in any form and manner deemed expedient. Pursuant to N.C. Gen. Stat. § 25-9-604, Beneficiary is expressly authorized and empowered to sell, together with 7.6.2 Foreclosure; Power of Sale. Subject to the cure rights contained in the the Improvements and fixtures, any portion of the Premises that constitutes personal property. Loan Agreement and this Deed of Trust, upon an Event of Default by Trustor, at Trustor hereby irrevocably appoints Beneficiary as the true and lawful attorney-in-fact for Beneficiary’s option, and in addition to any other remedies permitted by law, Beneficiary Trustor to make any such payment and perform any such obligation in the name of Trustor. All may direct Trustee to exercise the power of sale granted hereunder and upon such payments made and expenses (including reasonable attorneys’ fees) incurred by Beneficiary in direction, it shall be lawful for and the duty of Trustee, and Trustee is hereby authorized this connection, together with interest thereon at the “Default Rate” (as defined in the Loan

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and empowered, to expose to sale and to sell or to cause the Premises to be sold to satisfy 7.6.4 Application of Proceeds of Sale. Unless otherwise required under North the Secured Obligations. As a condition precedent to any such sale, Trustee shall give Carolina law, under the Indenture or under the Loan Agreement, the proceeds of the sale and record such notice as the law then requires. When the minimum period of time shall be applied, in whatever order Beneficiary in its sole discretion may decide, to (a) the required by law after such notice has elapsed, Trustee, without notice to or demand upon expenses of such sale and of all proceedings in connection therewith, including trustee’s Trustor except as required by law, shall sell the Premises at the time and place of sale fees and reasonable attorneys’ fees, (b) insurance premiums, liens, assessments, taxes and fixed by it in the notice of sale, at one or several sales, either as a whole or in separate charges including utility charges advanced by Beneficiary, (c) payment of the outstanding parcels and in such manner and order, all as Beneficiary in its sole discretion may principal balance of the Secured Obligations, or (d) the accrued interest on all of the determine, at public auction to the highest bidder for cash, in lawful money of the United foregoing; and the remainder, if any, shall be paid to Trustor, or to the person or entity States, payable at time of sale. Trustee shall have the right to designate the place of sale lawfully entitled thereto. Trustee fees to be collected by Trustee shall not be based upon in compliance with applicable law and the sale shall be held at the place designated by a percentage calculation, but shall be calculated based upon time actually spent by the notice of sale. Neither Trustor nor any other person or entity other than Beneficiary Trustee and/or persons hired by the Trustee to assist in its duties, at customary rates in the shall have the right to direct the order in which the Premises are sold. Trustee may jurisdiction where the property is located for either legal or accounting professionals to require the successful bidder at any sale to deposit immediately with Trustee cash or perform such services. certified check or cashier's check in an amount up to five percent (5.0%) of the bid provided notice of such deposit requirement is published as required by law. The bid 7.6.5 Trustor as Tenant at Sufferance. In the event of any such foreclosure sale may be rejected if the deposit is not immediately made. Such deposit shall be refunded in or sales under power herein, Trustor shall be deemed a tenant at sufferance and shall case of an upset bid or if Trustee is unable to convey the portion of the Premises so sold forthwith deliver possession to the purchaser or purchasers at such sale or be summarily to the bidder because the power of sale has been terminated in accordance with applicable dispossessed according to provisions of law applicable to tenants at sufferance. law. If the purchaser fails to comply with its bid, the deposit may, at the option of Trustee be retained and applied to any damages incurred by reason of such default 7.6.6 Conflict with State of North Carolina Law. Nothing in this Section 7.6 (including, without limitation, liability to the extent that the final sales price is less than dealing with foreclosure procedures or specifying particular actions to be taken by the bid plus all the costs of resale as provided in N.C. Gen. Stat. § 45-21.30) or may be Beneficiary shall be deemed to contradict or add to the requirements and procedures now deposited with Clerk of Superior Court. In all other cases, the deposit shall be applied to or hereafter specified by State of North Carolina law, and any such inconsistency shall be the purchase price. Subject to requirements and limits imposed by law, Trustee may from resolved in favor of State of North Carolina law applicable at the time of foreclosure. time to time postpone sale of all or any portion of the Premises by public announcement at such time and place of sale. Trustee shall deliver to the purchaser at such sale a deed 7.6.7 Waiver of Appraisement, Valuation, Etc. Trustor agrees, to the full extent conveying the Premises or portion thereof so sold, but without any covenant or warranty, permitted by law, that in case of an Event of Default hereunder, neither Trustor nor express or implied. The recitals in the deed of any matters or facts shall be conclusive anyone claiming through or under Trustor will set up, claim or seek to take advantage of proof of the truthfulness thereof. Any person, including Trustee, Trustor or Beneficiary any moratorium, reinstatement, forbearance, appraisement, valuation, stay, extension, may purchase at the sale. In the event of any sale under this Deed of Trust by virtue of homestead, exemption or redemption laws now or hereafter in force, in order to prevent the exercise of the powers herein granted, or pursuant to any order in any judicial or hinder the enforcement or foreclosure of this Deed of Trust, or the absolute sale of the proceeding or otherwise, the Premises may be sold as an entirety or in separate parcels Premises, or the delivery of possession thereof immediately after such sale to the and in such manner or order as Beneficiary in its sole discretion may elect, and one or purchaser at such sale, and Trustor, for itself and all who may at any time claim through more exercises of the powers herein granted shall not extinguish nor exhaust such or under it, hereby waives to the full extent that it may lawfully so do, the benefit of all powers, until the entire Premises are sold or the Secured Obligations are paid in full. If such laws, and any and all right to have the assets subject to the lien, security title and the Secured Obligations are now or hereafter further secured by any chattel mortgages, security interest of this Deed of Trust marshaled upon any foreclosure or sale under the pledges, contracts of guaranty, assignments of leases or other security instruments, power herein granted. Beneficiary may at its option exhaust the remedies granted under any of said security 7.6.8 Leases. Beneficiary, at its option, is authorized to cause Trustee to instruments either concurrently or independently, and in such order as Beneficiary may foreclose this Deed of Trust subject to the right of any tenants of the Premises, and the determine. Beneficiary shall be entitled to collect all reasonable costs and expenses failure to make any such tenants parties to any such foreclosure proceedings and to incurred by Beneficiary or Trustee in pursuing the remedies provided in this Deed of foreclose their rights will not be, nor be asserted to be by Trustor, a defense to any Trust, including, but not limited to, reasonable attorney’s fees. proceedings instituted by Beneficiary to collect the Secured Obligations. 7.6.3 Purchase by Beneficiary. Upon any foreclosure sale or sales of all or any 7.6.9 Discontinuance of Proceedings. In case Beneficiary shall have proceeded portion of the Premises under the power herein granted, Beneficiary may bid for and to enforce any right, power or remedy under this Deed of Trust by foreclosure, entry or purchase the Premises and shall be entitled to apply all or any part of the Secured otherwise or in the event Beneficiary commences or causes Trustee to commence Obligations as a credit to the purchase price.

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advertising of the intended exercise of the sale under power provided hereunder, and such UNITED STATES OF AMERICA (INCLUDING, WITHOUT LIMITATION, THE proceeding or advertisement shall have been withdrawn, discontinued or abandoned for FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS any reason, or shall have been determined adversely to Beneficiary, then in every such PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY case, (a) all rights, powers and remedies of Beneficiary shall continue as if no such REASON OF ANY OTHER APPLICABLE LAW, (1) TO NOTICE AND TO proceeding had been taken, (b) each and every Event of Default declared or occurring JUDICIAL HEARING PRIOR TO THE EXERCISE BY BENEFICIARY OR prior to or subsequent to such withdrawal, discontinuance or abandonment shall and shall TRUSTEE OF ANY RIGHT OR REMEDY HEREIN PROVIDED TO BENEFICIARY be deemed to be a continuing Event of Default, and (c) neither this Deed of Trust, nor the OR TRUSTEE, EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIALLY REQUIRED other Loan Documents, nor the Secured Obligations, nor any other instrument concerned TO BE GIVEN UNDER THE PROVISIONS OF THIS DEED OF TRUST, AND (2) therewith, shall be or shall be deemed to have been released, terminated or otherwise CONCERNING THE APPLICATION, RIGHTS OR BENEFITS OF ANY STATUTE affected by such proceeding or the withdrawal, discontinuance or abandonment thereof; OF LIMITATION OR ANY MORATORIUM, REINSTATEMENT, MARSHALING, and Trustor hereby expressly waives the benefit of any statute or rule of law now FORBEARANCE, APPRAISEMENT, VALUATION, STAY, EXTENSION, provided, or which may hereafter be provided, which would produce a result contrary to HOMESTEAD, EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES or in conflict with the above. THAT TRUSTOR HAS READ THIS DEED OF TRUST AND ANY AND ALL QUESTIONS OF TRUSTOR REGARDING THE LEGAL EFFECT OF THIS DEED 7.6.10 Remedies Not Exclusive. Beneficiary shall have all powers, rights and OF TRUST AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO remedies under applicable law whether or not specifically or generally granted or TRUSTOR, AND TRUSTOR HAS CONSULTED WITH COUNSEL OF TRUSTOR’S described in this Deed of Trust. Nothing contained herein shall be construed to impair or CHOICE PRIOR TO EXECUTING THIS DEED OF TRUST; AND (D) to restrict such powers, rights and remedies or to preclude any procedures or process ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF otherwise available to holders of deeds of trust or mortgages or beneficiaries under deeds TRUSTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND of trust in the state in which the Land is located. Beneficiary shall be entitled to enforce WILLINGLY BY TRUSTOR AS PART OF A BARGAINED-FOR LOAN the payment and performance of the Secured Obligations and to exercise all rights and TRANSACTION AND THAT THIS DEED OF TRUST IS VALID AND powers under this Deed of Trust or under the other Loan Documents or any other ENFORCEABLE BY BENEFICIARY AGAINST TRUSTOR IN ACCORDANCE agreement or any laws now or hereafter in force, notwithstanding the fact that some or all WITH ALL THE TERMS AND CONDITIONS HEREOF. of the Secured Obligations may now or hereafter be otherwise secured, whether by deed of trust, mortgage, pledge, lien, assignment or otherwise. Neither the acceptance of this 7.7 Appointment of Receiver. Beneficiary shall be entitled, as a matter of absolute Deed of Trust nor its enforcement, whether by court action or other powers contained right and without regard to the value of any security for the Secured Obligations or the solvency herein, shall prejudice or in any manner affect Beneficiary’s right to realize upon or of any person liable therefor, and on an ex parte basis, without notice, to the appointment of a enforce any other rights or security now or hereafter held by Beneficiary. Beneficiary receiver for the Premises upon application to any court of competent jurisdiction. Trustor shall shall be entitled to enforce this Deed of Trust and any other rights or security now or have the right to a hearing or notice of hearing prior to the appointment of a receiver. Such hereafter held by Beneficiary in such order and manner as it may in its absolute discretion receiver and his agents shall be empowered (a) to take possession of the Premises and any determine. No remedy herein conferred upon or reserved to Beneficiary is intended to be businesses conducted by Trustor or any other person thereon and any business assets used in exclusive of any other remedy contained herein or by law provided or permitted, but each connection therewith; (b) to exclude Trustor and Trustor’s agents, servants and employees from shall to the extent permitted by law be cumulative and in addition to every other remedy the Premises, or, at the option of the receiver, in lieu of such exclusion, to collect a fair market given hereunder or now or hereafter existing at law or in equity. Every power or remedy rental from any such persons occupying any part of the Premises; (c) to lease or re-lease the given by any of the foregoing to Beneficiary, or to which Beneficiary may be otherwise Premises and to collect the rents, issues, profits and income therefrom and to enforce the such entitled, may be exercised, concurrently or independently, from time to time and as often lease(s) (or terminate the Lease or take any other allowed remedies under such lease(s) if the as may be deemed expedient by Beneficiary, and it may pursue inconsistent remedies. lease is then in default); (d) to complete any construction which may be in progress; (e) to do such maintenance and make such repairs and alterations as the receiver deems necessary; (f) to 7.6.11 WAIVER OF TRUSTOR’S RIGHTS. BY EXECUTION OF THIS use all stores of materials, supplies and maintenance equipment on the Premises and replace such DEED OF TRUST, TRUSTOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT items at the expense of the receivership estate; (g) to pay all taxes and assessments against the OF BENEFICIARY TO ACCELERATE THE SECURED OBLIGATIONS AND THE Real Property and the Chattels, all premiums for insurance thereon, all utility and other operating RIGHT OF TRUSTEE TO SELL THE PREMISES BY NON-JUDICIAL expenses, and all sums due under any prior or subsequent encumbrance; (h) to borrow from FORECLOSURE UPON AN EVENT OF DEFAULT WITHOUT ANY JUDICIAL Beneficiary, if applicable, funds as may reasonably be necessary to the effective exercise of the HEARING AND WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE (IF ANY) receiver’s powers, on such terms as may be agreed upon by the receiver and Beneficiary; and AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF (i) generally to do anything which Trustor could legally do if Trustor were in possession of the THIS DEED OF TRUST OR APPLICABLE LAW; (B) WAIVES ANY AND ALL Premises. All expenses incurred by the receiver or his agents, including obligations to repay RIGHTS WHICH TRUSTOR MAY HAVE UNDER THE CONSTITUTION OF THE funds borrowed by the receiver, shall constitute a part of the Secured Obligations. Such receiver

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shall be entitled to enter upon, take possession of and manage the Premises and to collect the upon the execution of this Deed of Trust and is not conditioned upon the occurrence of rents of the Premises, including those past due. Any revenues collected by the receiver shall be any Event of Default hereunder or any other contingency or event; provided, however, applied first to the expenses of the receivership, including reasonable attorneys’ fees incurred by Beneficiary hereby grants to Trustor a license to collect and retain Rents prior to the the receiver and by Beneficiary, together with interest thereon at the default rate allowed under occurrence of any Event of Default hereunder, which license shall be revocable by the Loan Agreement from the date incurred until repaid, next to the payment of the costs of Beneficiary without notice to Trustor at any time after the occurrence of an Event of preservation and management of the Premises, and then the balance shall be applied toward the Default, and immediately upon any such revocation, Beneficiary shall be entitled to Secured Obligations or in such other manner as the court may direct. Beneficiary and the receive, and Trustor shall deliver to Beneficiary, any and all Rents theretofore collected receiver shall be liable to account only for those rents actually received. Unless sooner which remain in the possession or control of Trustor. In furtherance of this Deed of terminated with the express consent of Beneficiary, any such receivership will continue until the Trust, and not in lieu hereof, Beneficiary may require a separate assignment of leases and Secured Obligations have been discharged in full, or until title to the Premises has passed after rents and/or separate specific assignments or rents and leases covering one or more of the foreclosure sale and all applicable periods of redemption have expired, or until a court of Property Leases; the terms of all such assignments are incorporated herein by reference. competent jurisdiction orders the receiver discharged. (b) Trustor hereby authorizes and directs the lessees and tenants under the 7.8 Exercise of Rights. All rights, powers and remedies granted Beneficiary herein, Property Leases that, upon written notice from Beneficiary, all Rents shall be paid or otherwise available to Beneficiary, are for the sole benefit and protection of Beneficiary, and directly to Beneficiary as they become due. Trustor hereby relieves the lessees and Beneficiary may exercise any such right, power or remedy at its option and in its sole and tenants from any liability to Trustor by reason of the payment of the Rents to Beneficiary. absolute discretion without any obligation to do so. In addition, if, under the terms hereof, Beneficiary is hereby authorized to give such notification upon the occurrence of an Beneficiary is given two or more alternative courses of action, Beneficiary may elect any Event of Default and at any time thereafter while such Event of Default is continuing. alternative or combination of alternatives, at its option and in its sole and absolute discretion. All Receipt and application of the Rents by Beneficiary shall not constitute a waiver of any moneys advances by Beneficiary under the terms hereof and all amounts paid, suffered or right of Beneficiary under this Deed of Trust or applicable law, shall not cure any Event incurred by Beneficiary in exercising any authority granted herein, including reasonable of Default hereunder, and shall not invalidate or affect any act done in connection with attorneys’ fees, shall be added to the Secured Obligations, shall be secured by this Deed of Trust, such Event of Default, including, without limitation, foreclosure proceedings. shall bear interest at the highest rate payable on any of the Secured Obligations until paid, and shall be due and payable by Trustor to Beneficiary immediately without demand. (c) All Rents collected by Trustor shall be applied in the manner set forth in the Loan Documents. ARTICLE 8 MISCELLANEOUS PROVISIONS (d) Trustor represents and warrants that: (i) Trustor has delivered to Beneficiary all Property Leases that have been executed as of the date of this Deed of 8.1 Assignment of Leases and Rents. Trust, and such Property Leases are in full force and effect and have not been modified or amended, except as previously disclosed to Beneficiary; (ii) the Rents have not been (a) To facilitate and secure payment and performance of the Secured waived, discounted, compromised, setoff or paid more than one month in advance; Obligations, Trustor hereby absolutely and presently transfers and assigns to Beneficiary (iii) there are no other assignments, transfers, pledges or encumbrances of any Property all right, title and interest of Trustor in and to: (i) all existing and future leases, subleases, Leases or Rents; and (iv) neither Trustor nor the lessees and tenants are in default under licenses and other agreements for the construction, use, occupancy or possession of all or any executed Property Leases. any part of the Premises, whether written or oral and whether for a definite term or month to month, together with all guarantees of the lessee’s obligations thereunder and together (e) Trustor shall: (i) fulfill or perform each and every term, covenant and with all extensions, modifications and renewals thereof (hereinafter called the “Property provision of the Property Leases to be fulfilled or performed by the lessor thereunder; Leases”); and (ii) all income, receipts, revenues, rents, issues and profits now or hereafter (ii) give prompt notice to Beneficiary of any notice received by Trustor of default arising from or out of the Property Leases or from or out of the Premises or any part thereunder or of any alleged default or failure of performance that could become a default thereof, including, without limitation, room rents, minimum rents, additional rents, thereunder, together with a complete copy of any such notice; and (iii) enforce, short of percentage rents, occupancy and user fees and charges, license fees, tax and insurance termination thereof, the performance or observance of each and every term, covenant and contributions, proceeds of the sale of utilities and services, cancellation premiums, claims provision of each Property Lease to be performed or observed by the lessees and tenants for damages arising from any breach of the Property Leases, proceeds from any sale or thereunder. other disposition of all or any portion of the Premises, and all other benefits arising from the use or enjoyment of, or the lease, sale or other disposition of, all or a portion of the (f) Trustor, unless and only to the extent permitted under the terms of the Premises, together with the immediate and continuing right to receive all of the foregoing Corporation Documents or the Indenture, shall not: (i) cancel, modify or alter, or accept (hereinafter called the “Rents”). The aforesaid assignment shall be effective immediately the surrender of any Property Lease; (ii) assign, transfer, pledge or encumber, the whole

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or any part of the Property Leases and Rents to anyone other than Beneficiary; (iii) accept “Personalty”). Cumulative of all other rights of Beneficiary hereunder, Beneficiary shall any Rents more than one month in advance of the accrual thereof; (iv) do or permit have all of the rights conferred upon secured parties by the Uniform Commercial Code. anything to be done, the doing of which, or omit or refrain from doing anything, the Trustor hereby agrees that the Beneficiary may file all financing statements that may omission of which, could be a breach or default under the terms of any Property Lease or from time to time be required by Beneficiary to establish and maintain the validity and a basis for termination thereof; or (v) enter into any new tenant leases. priority of the security interest of Beneficiary, or any modification thereof, and all costs and expenses of any searches required by Beneficiary. Beneficiary may exercise any or (g) Beneficiary does not assume and shall not be liable for any obligation of all of the remedies of a secured party available to it under the Uniform Commercial Code the lessor under any of the Property Leases and all such obligations shall continue to rest with respect to such property, and it is expressly agreed that if upon an Event of Default upon Trustor as though this assignment had not been made. Beneficiary shall not be Beneficiary should proceed to dispose of such property in accordance with the provisions liable for the failure or inability to collect any Rents. of the Uniform Commercial Code, ten (10) days’ written notice by Beneficiary to Trustor shall be deemed to be reasonable notice under any provision of the Uniform Commercial (h) Neither the assignment of leases and rents contained herein or in any Code requiring such notice; provided, however, that Beneficiary may at its option dispose separate assignment nor the exercise by Beneficiary of any of its rights or remedies or cause Trustee to dispose of such property in accordance with Beneficiary’s rights and thereunder or in connection therewith, prior to Beneficiary obtaining actual possession of remedies with respect to the Real Property pursuant to the provisions of this Deed of the Premises, shall constitute Beneficiary a “mortgagee in possession” or otherwise make Trust, in lieu of proceeding under the Uniform Commercial Code. Beneficiary responsible or liable in any manner with respect to the Premises or the occupancy, operation or use thereof. 8.3.3 Trustor shall give advance notice in writing to Beneficiary of any proposed change in Trustor’s name, identity, or business form or structure and will 8.2 Further Instruments. The Trustor agrees that it will, upon closing the execute and deliver to Beneficiary, prior to or concurrently with the occurrence of any acquisition of or prior to construction of After-Acquired Property, register in the office of the such change, all additional financing statements that Beneficiary may reasonably require Register of Deeds of Randolph County, North Carolina, a notice of extension as specified in to establish and maintain the validity and priority of Beneficiary’s security interest with N.C. Gen. Stat. § 47-20.5 containing a description of the real property covered thereby and all respect to any of the Premises described or referred to herein. other information required under N.C. Gen. Stat. § 47-20.5. Upon demand, the Trustor shall execute and deliver to the Beneficiary any further instrument or instruments, including, but not 8.3.4 This Deed of Trust is intended to be a security agreement for the Fixtures limited to, deeds of trust, security agreements, financing statements, assignments, notices of pursuant to the Uniform Commercial Code. For purposes of this Section, Trustor shall be extension, or renewal or substitution obligations necessary to reaffirm, correct or perfect the the “debtor”, the Beneficiary shall be the “secured party”, the Fixtures shall be the evidence of the obligations hereby secured and the legal security title and lien of this Deed of “collateral”, and Trustor is the record owner of the Real Property to which the Fixtures Trust upon all or any part of the Premises intended to be given or conveyed hereby whether now are attached. In order to further secure (a) the payment when due of the principal of, given or conveyed or acquired and conveyed subsequent to the date of this Deed of Trust. redemption premium, if any, and the interest on all Secured Obligations and all other sums required to be paid under this Deed of Trust, the other Loan Documents, and any 8.3 Security Agreement. other document or instrument pursuant to which the Secured Obligations are secured, and (b) the performance by the Trustor of all the covenants, provisions, terms and conditions 8.3.1 This Deed of Trust constitutes a security agreement under the applicable of the Loan Agreement, any other document or instrument pursuant to which the Secured provisions of the Uniform Commercial Code, as the same may be amended from time to Obligations are secured and this Deed of Trust to be observed and performed by Trustor time, with respect to the Chattels, Intangible Personalty, Fixtures and such other of the or Trustor hereby grants to the Beneficiary a security interest in the Fixtures. Trustor Premises which is personal property or otherwise governed by the Uniform Commercial agrees that the Beneficiary may file this Deed of Trust, or a reproduction thereof, as a Code. Trustor has additionally granted security interests securing the Secured financing statement for the Fixtures, and the security interest in the Fixtures granted in Obligations as specified in the Loan Agreement. This Deed of Trust is a “construction this paragraph shall be in addition to, and not in lieu of, any lien upon and security title in mortgage” as defined in the Uniform Commercial Code. the Fixtures acquired by real property law. Trustor agrees to execute and deliver to the Beneficiary, upon request of the Beneficiary, financing statements in such form as the 8.3.2 With respect to any portion of the Premises which constitutes Chattels, Beneficiary may require to perfect the security interests hereunder. Upon the occurrence Intangible Personalty, Fixtures, and such other personal property as are granted to a of an Event of Default, the Beneficiary shall be entitled to exercise all rights and secured party under the Uniform Commercial Code, including, without limitation, taking remedies of a secured party under the Uniform Commercial Code and may proceed as to possession of, holding and selling the Chattels, Intangible Personalty, Fixtures and such the Fixtures in the same manner as provided herein for the real property to the extent other personal property, this Deed of Trust shall constitute a security agreement between permitted by applicable law. Trustor as the debtor and Beneficiary as the secured party, and Trustor hereby grants to Beneficiary a security interest in such portion of the Premises (such portion being the

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8.4 Indemnification. Trustor shall defend, indemnify and hold harmless Trustee, 8.8 No Implied Waivers. Beneficiary shall not be deemed to have waived any Beneficiary, any successors to Trustee’s or Beneficiary’s interest in the Premises, any purchaser provision of any Loan Document unless such waiver is in writing and is signed by Beneficiary. of the Premises upon foreclosure, the Authority, the Authority Indemnified Persons (as defined Without limiting the generality of the preceding sentence, neither Beneficiary’s acceptance of in the Loan Agreement), and all shareholders, directors. officers, employees and agents of all of any payment with knowledge of a default by Trustor, nor any failure by Beneficiary to exercise the foregoing and their heirs, personal representatives, successors and assigns from and against any remedy following a default by Trustor, shall be deemed a waiver of such default, and no all claims, costs, expenses, actions, suits, proceedings, losses, damages and liabilities of any kind waiver by Beneficiary of any particular default on the part of Trustor shall be deemed a waiver whatsoever, including but not limited to all reasonable amounts paid in settlement of, and all of any other default or of any similar default in the future. reasonable costs and expenses (including reasonable attorneys’ fees) incurred in defending or settling, any actual or threatened claim, action, suit or proceeding, directly or indirectly arising 8.9 Dealings with Successor Owners. If the Premises or any interest in the Premises out of or relating to Trustor’s acts or omissions regarding the Secured Obligations, this Deed of are transferred to any person other than Trustor, whether voluntarily or involuntarily and whether Trust, or the Premises, including but not limited to (i) any violation of or claim of violation of the or not Beneficiary has consented to such transfer, then Beneficiary may deal with such successor Americans with Disabilities Act with respect to the Premises; (ii) any violation of applicable owner in all matters relating to the Secured Obligations, and no such dealings, including, but not environmental laws, rules, regulations, and court or administrative orders; or (iii) any breach of limited to, any change in the terms of the Secured Obligations, will be deemed to discharge or any of the warranties, representations and covenants contained herein. This indemnity provision impair the obligations of Trustor to Beneficiary under the Loan Documents. shall continue in full force and effect and shall survive the payment and performance of the Obligation, the release of record of the lien of this Deed of Trust, any foreclosure (or deed in lieu 8.10 No Third Party Rights. No person shall be a third party beneficiary of any of foreclosure) of this Deed of Trust, the exercise by Beneficiary of any other remedy under this provision of any of the Loan Documents, except as expressly provided for therein. All Deed of Trust or any other document or instrument evidencing or securing the Secured provisions of the Loan Documents favoring Beneficiary or the Authority are intended solely for Obligations, and any suit, proceeding or judgment against Trustor by Beneficiary hereon. the benefit of Beneficiary and the Authority (including the Authority Indemnified Persons as provided for therein), and no third party (other than the Bondholders) shall be entitled to assume Notwithstanding anything to the contrary contained in this Section 8.4 of this Deed of or expect that Beneficiary or the Authority will not waive or consent to modification of any such Trust, it is understood and agreed that nothing in this section or elsewhere in this Deed of Trust provision in Beneficiary’s and the Authority’s sole discretion. shall be deemed or construed as a modification of or limitation on the rights of the Authority and the Authority Indemnified Persons to indemnification from the Trustor under the Loan 8.11 Preservation of Liability and Priority. Without affecting the liability of Trustor Agreement (including, without limitation, the provisions thereof relating to choice of law, or of any other person (except a person expressly released in writing) for payment and jurisdiction and venue), which rights shall be considered to be in addition to (but without performance of all of the Secured Obligations, and without affecting the rights of Beneficiary duplication of) the Authority's and the Authority Indemnified Personsʼ rights under this with respect to any security not expressly released in writing, and without impairing in any way Section 8.4. The Authority Indemnified Persons shall be considered to be intended third party the priority of this Deed of Trust over the interests of any person acquired or first evidenced by beneficiaries of this Deed of Trust for purposes of indemnification and exculpation from liability, recording subsequent to the recording hereof, Beneficiary may, either before or after the maturity the provisions of which shall be IN ADDITION TO all liability that the Trustor may otherwise of the Secured Obligations, and without notice or consent: (a) release any person liable for have and shall survive any termination of this Deed of Trust, the offering and sale of the Bonds, payment or performance of all or any part of the Secured Obligations; (b) [reserved]; (c) exercise and the payment or provision for payment of the Bonds. or refrain from exercising, or waive, any right or remedy which Beneficiary may have under any of the Loan Documents; (d) accept additional security of any kind for any of the Secured 8.5 Time of the Essence. Time is of the essence with respect to all provisions of the Obligations; or (e) release or otherwise deal with any real or personal property securing the Loan Documents. Secured Obligations. Any person acquiring or recording evidence of any interest of any nature in the Premises, the Chattels, the Intangible Personalty or the Fixtures shall be deemed, by 8.6 Joint and Several Obligations. If Trustor is more than one person or entity, then acquiring such interest or recording any evidence thereof, to have agreed and consented to any or all persons or entities comprising Trustor are jointly and severally liable for all of the Secured all such actions by Beneficiary. Obligations. 8.12 Waiver of Jury Trial. TRUSTOR AND BENEFICIARY KNOWINGLY, 8.7 Rights and Remedies Cumulative. Beneficiary’s rights and remedies under IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER each of the Loan Documents are cumulative of the rights and remedies available to Beneficiary MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR under each of the other Loan Documents and those otherwise available to Beneficiary at law or COUNTERCLAIM BASED ON THIS DEED OF TRUST, OR ARISING OUT OF, UNDER in equity. No act of Beneficiary shall be construed as an election to proceed under any particular OR IN CONNECTION WITH THIS DEED OF TRUST, OR ANY COURSE OF CONDUCT, provision of any Loan Document to the exclusion of any other provision in the same or any other COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR Loan Document, or as an election of remedies to the exclusion of any other remedy, which may ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT then or thereafter be available to Beneficiary.

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FOR TRUSTOR AND BENEFICIARY TO ENTER INTO THE LOAN TRANSACTION 8.18 No Partnership or Joint Venture. Nothing contained herein or the acts of the EVIDENCED BY THE LOAN DOCUMENTS. parties hereto, shall be construed to create a partnership or joint venture between Trustor and Beneficiary. The relationship between Trustor and Beneficiary is the relationship of “debtor” 8.13 Notices and Agency. Any notice required or permitted to be given by Trustor or and “creditor.” Beneficiary under any of the Loan Documents must be in writing and will be deemed given upon personal delivery or on the second Business Day after the mailing thereof, by registered or 8.19 Inspection. Beneficiary shall have the right to inspect the Premises at all certified United States mail, postage prepaid, to the appropriate party at its address shown on the reasonable times upon reasonable prior notice. first page of this Deed of Trust or on the date of delivery by any courier service. Either party may change such party’s address for notices by giving notice to the other party in accordance 8.20 Concerning Trustee. with this section, but no such change of address will be effective as against any person without actual knowledge thereof. 8.20.1 Rights and Obligations of Trustee. Trustee accepts the trusts hereby created and agrees to perform its duties herein for the benefit of Beneficiary. 8.14 No Merger of Estates. Unless expressly provided otherwise, in the event that ownership of this Deed of Trust and title to the fee estate in the Premises encumbered hereby 8.20.2 Resignation of Trustee. Trustee may resign and be discharged of the shall become vested in the same person or entity, this Deed of Trust shall not merge in said title trusts by giving notice thereof to Beneficiary and Trustor (or any subsequent owner of but shall continue to be and remain a valid and subsisting lien and/or trust deed on said estates in Trustor’s interest in the Premises) specifying the date (not less than ninety (90) days after the Premises for the amount secured hereby. such notice) when such resignation shall take effect. Such resignation shall take effect on the appointment and acceptance of a successor trustee pursuant to Section 8.20.3. 8.15 Release. Upon payment and performance in full of all of the Secured Obligations, Beneficiary shall execute and deliver to Trustor such documents as may be required 8.20.3 Removal of Trustee. Trustee may be removed at any time by notice from to release this Deed of Trust of record. Beneficiary, and Beneficiary may appoint a successor trustee by recording a substitution trustee in the office of the register of deeds of the county in which the Premises are 8.16 Severability. Wherever possible, each provision of the Loan Documents shall be located. If Trustee shall have given notice of its intention to resign, shall resign, be interpreted so as to be effective and valid under State of North Carolina law. If any provision of removed or otherwise be incapable of acting, or if Trustee shall be taken under the any Loan Document is, for any reason and to any extent, invalid or unenforceable, then neither control of any public officer or a receiver appointed by a court, or be adjudged a bankrupt the remainder of the Loan Document in which such provision appears, nor any other Loan or insolvent, then a successor may be appointed by Beneficiary. Document, nor the application of the provision to other persons or in other circumstances, shall be affected by such invalidity or unenforceability. 8.20.4 Successor Trustee. Any successor to Trustee shall execute, acknowledge and deliver to its predecessor and Trustor (or any subsequent owner of Trustor’s interest 8.17 Entire Agreement. The Loan Documents set forth all the covenants, promises, in the Premises) an instrument accepting such appointment, and thereupon such agreements, representations, conditions, statements and understandings between Trustor and successor, without any further act, deed or conveyance, shall become vested with all the Beneficiary, and there are no representations, either oral or written between the parties other than estate, properties, rights, powers, duties and trusts of its predecessor in the trusts those in this Deed of Trust and the Loan Documents, without limiting the foregoing, Trustor, hereunder with like effect as if originally named as trustee herein. hereby specifically waives any claims, rights, or defenses based on any warranties, representations or guarantees, whatever their form, made at any time, by any party, negligently 8.20.5 Liability of Trustee. No trustee hereunder shall be personally liable by made or otherwise, except those warranties, representations or guarantees contained in the Loan reason of any act or omission of any other trustee hereunder. Documents. This Deed of Trust shall not be amended or modified except in a writing signed by both parties. Failure to exercise any right in one or more instance shall not be construed as a 8.20.6 Payment of Trustee’s Compensation. Trustor shall pay or cause to be paid waiver of the right to strict performance or as an amendment to or modification of this Deed of the compensation to which Trustee is entitled hereunder and all proper disbursements and Trust. The Trustor hereby covenants and agrees well and truly to abide by, perform and be expenses incurred by Trustee hereunder. governed and restricted by each and all of the matters provided for by the Corporation 8.21 Waiver. Trustor hereby waives any rights or remedies on account of any Documents and the Indenture and so incorporated herein to the same extent and with the same extensions of time, releases granted or other dealings between Beneficiary and any subsequent force and effect as if each and all of said representations, warranties, terms, provisions, owner of the Premises as said activities are contemplated or otherwise addressed in N.C. Gen. restrictions, covenants and agreements so incorporated hereby by reference were set out and Stat. § 45-45.1 or any similar or subsequent law repeated herein at length. Any provisions governing the rights, immunities and protections of the trustee under the Loan Documents are incorporated by reference into this Deed of Trust as being 8.22 Instrument Under Seal. This Deed of Trust is intended to be and shall be applied to the Beneficiary as though fully set forth herein. construed as an instrument under seal.

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8.23 Review by North Carolina Counsel. This Deed of Trust was reviewed by a Signed and delivered under seal as of the date first referenced above. licensed North Carolina attorney as to compliance with North Carolina law and prepared out-of- state by Andrew D. Egan, Esq., Kutak Rock LLP, 303 Peachtree Street N.E., Suite 2750, Atlanta, TRUSTOR: Georgia 30308. UWHARRIE GREEN SCHOOL, INC., 8.24 No State Indebtedness. In accordance with State law, the parties acknowledge a North Carolina nonprofit corporation and agree that no indebtedness of any kind incurred or created by the Trustor shall constitute an indebtedness of the State or its political subdivisions, and no indebtedness of the Trustor shall involve or be secured by faith, credit, or taxing power of the State or its political subdivisions. By: ______(Seal) 8.25 USDA. The terms of this Deed of Trust relating to the Pledged Revenues are Name: subject to the terms of the USDA Documents (as defined in the Loan Agreement). Title:

STATE OF NORTH CAROLINA ) ) ss. COUNTY OF ______) [SIGNATURE PAGES FOLLOW]

I certify that the following person(s) personally appeared before me this day, each acknowledging to me that he or she voluntarily signed the foregoing document for the purpose stated therein and in the capacity indicated: [NAME].

Date:______Notary Public

(Official Seal) My Commission Expires:______

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EXHIBIT A EXHIBIT B

LEGAL DESCRIPTION OF ENCUMBERED PROPERTY PERMITTED ENCUMBRANCES

[To be inserted] Those certain items appearing in Schedule B of that certain Loan Policy of Title Insurance issued by First American Title Insurance Company to Beneficiary, with an effective date equal to the date and time of recording of this Deed of Trust, insuring the lien of this Deed of Trust.

4824-8149-1019.10 4824-8149-1019.10 D-57 STATE OF NORTH CAROLINA note to Trustee described above, shall hereinafter sometimes be called the “Government Loan” COUNTY OF RANDOLPH and the “Trustee Loan,” respectively; and,

WHEREAS, Government and Trustee have agreed that their security agreements described above shall be of equal priority, with each having the same priority as if they were executed and/or recorded simultaneously; and, PARITY AGREEMENT WHEREAS, Government and Trustee also agree to share, on a pro rata basis as set forth below, all loan payments made to the Government and the Trustee under the Government THIS AGREEMENT is made and entered into as of the [TBD] day of November, 2017, by Loan and the Trustee Loan and certain other items as hereinafter set forth; and and between the UNITED STATES OF AMERICA, acting through the United States Department of Agriculture Rural Housing Service (formerly the Farmers Home Administration) WHEREAS, the undersigned parties execute this Agreement to put their agreements (“Government”), U.S. BANK NATIONAL ASSOCIATION, as trustee (“Trustee”), and concerning the aforesaid matters in writing. UWHARRIE GREEN SCHOOL, INC. (“Borrower”);

NOW, THEREFORE, for an in consideration of the loans by Authority and Government to WITNESSETH: the Borrower which are evidenced by the aforesaid notes to Trustee and Government and in WHEREAS, the Borrower executed and delivered to Government a note dated consideration of the mutual promises and covenants herein contained and other good and October 19, 2016 in the amount of $8,827,000; and, valuable consideration, the receipt and sufficiency of which hereby acknowledged, the parties hereto do agree as follows: WHEREAS, subsequent to the execution and delivery of the aforementioned Government note, the Borrower executed and delivered to Trustee (as assignee of the Public 1. Government and Trustee agree that their security agreements and financing Finance Authority (the “Authority”)) a note dated of even date herewith in the amount of $[TBD]; statements referenced above shall have equal priority as if they were executed and/or recorded and, simultaneously, with each of said security agreements and financing statements being equal in priority to the other. WHEREAS, the Borrower executed and delivered to Government a financing statement and security agreement each dated October 19, 2016, the financing statement being recorded 2. Government, Trustee and Borrower agree that a default in the terms of the note, as file number 20160107205F of the Secretary of State of North Carolina on October 24, 2016 security agreement or any other loan documents evidencing or securing either Government’s or (a copy of each of which is attached as Schedule I hereto); and, Authority’s loans to the Borrower (hereinafter called “loan documents”) shall constitute a default in the terms of the loan documents for the other Loan. Each party (Government and Trustee) will apprise the other, in writing, in the event of a default with respect to its loan, specifying its WHEREAS, the Borrower also executed and delivered to Government a Real Estate exact nature and will provide to the other party, a copy of all notices or demands to the Borrower Deed of Trust dated October 19, 2016, recorded in the real property records of Randolph as a result of such default. Government and Trustee agree that their loan documents will not be County, North Carolina at Book 2529, Page 686 on October 21, 2016; and, subordinated to any other indebtedness of the Borrower without the prior written consent of the

Government and Trustee. WHEREAS, subsequent to the execution and delivery aforementioned Government financing statement and security agreement, the Borrower executed and delivered to Trustee a 3. Government and Trustee agree that in the event of a default under either the financing statement and security agreement (in the form of a Deed of Trust, Assignment of Government Loan or the Trustee Loan, Government and Trustee shall cooperate with each Leases and Rents, Security Agreement and Fixture Filing) each dated of even date herewith, other with respect to the repossession, collection and sale of the Revenues. If either the financing statement being recorded as file number [TBD] of the Secretary of State of North Government or Trustee sells or collects any Revenues following default in connection with which Carolina on [DATE] and the Deed of Trust, Assignment of Leases and Rents, Security either the Government Loan or the Trustee Loan is accelerated, the sales proceeds and/or Agreement and Fixture Filing being recorded in the real property records of Randolph County, amounts collected shall be shared by Government and Trustee in the same percentage as the North Carolina at Book [TBD], Page [TBD] on [DATE] (a copy of each of which is attached as debt owed under the loan documents to each such party bears to the total debt owed to Schedule II hereto); and, Government and Authority and the Trustee under the loan documents. If either Government or

Trustee sells or collects any Revenues following default in connection with which the WHEREAS, each security agreement described above conveys an interest in the Government Loan and Trustee Loan are not accelerated, the sales proceeds and/or amounts property of Borrower generally described in Exhibit A attached hereto, the same being the collected shall be shared by Government and Trustee ratably for application toward principal, revenues and income of the Borrower (the “Revenues”); and, interest and other payments due from time to time with respect to the Government Loan and

Trustee Loan. In furtherance of the foregoing, the Trustee shall enter into a control agreement WHEREAS, the loan to Borrower from Government evidenced by the note to with the bank at which the Revenues are deposited such that the Trustee, in the event of a Government described above, and the loan to Borrower from the Authority evidenced by the default under either the Government Loan or the Trustee Loan, may exercise exclusive control of such Revenues for application in accordance with this Agreement.

Agreement and take such further actions as in each case are necessary and appropriate to 4. Government and Trustee agree that all payments made to Government and reflect the parity nature of such permitted future indebtedness. Trustee under the Government Loan and the Trustee Loan, prior to an event of a default under either the Government Loan or the Trustee Loan, shall be applied by Government and Trustee in accordance with the terms of the Government Loan and the Trustee Loan. [Remainder of page intentionally left blank]

5. In the event of a default under either the Government Loan or the Trustee Loan, and, as a result thereof, either Government or Trustee, or both, advance funds for protection of collateral such as for repairs, payment of real estate or other taxes, insurance premiums or utilities, Government and Trustee shall share such expenses, pro rata, based upon the percentage described in Paragraph 3 above, and any lender who advances more than its pro rata share of such expenses shall be entitled to be reimbursed from the other lender for any payment in excess of its pro rata share.

6. The Borrower hereby does (a) consent to all the provisions of this Agreement; (b) acknowledge and agree that a default by the Borrower in either the Government loan documents or the Trustee loan documents shall constitute a default under both loan documents; and (c) agree that in the event of foreclosure, the sales procedures set forth above may be followed.

7. Government, Trustee, and Borrower agree that the loan documents referenced above hereby are amended to reflect the agreements set forth herein.

8. Government, Trustee, and Borrower also agree that any land, buildings or improvements, including any related furniture, fixtures and equipment (collectively the “Assets”), separately financed by the Government Loan and the Trustee Loan (and encumbered by the respective deeds of trust in favor of Government and Trustee) shall not be subject to this Agreement and any rights and remedies of Government and Trustee with respect to the applicable Assets shall be unaffected by the parity arrangement that only relates to the Revenues as set forth herein. The Trustee shall have no interest in insurance awards or condemnation proceeds relating to Assets financed by the Government Loan and the Government shall have no interest in insurance awards or condemnation proceeds relating to Assets financed by the Trustee Loan. In addition, any reserves or escrows required by the Government Loan shall not secure the Trustee Loan and any reserves or escrows required by the Trustee Loan shall not secure the Government Loan.

9. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. No amendment, supplement, modification, waiver or termination of this Agreement shall be effective unless all parties hereto have consented in writing to such amendment, supplement, modification, waiver or termination. This Agreement sets forth the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, written or oral, relating thereto. If one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect, the remaining provisions shall not in any way be affected or impaired.

10. In connection with any future indebtedness of the Borrower permitted to be incurred by Government and Trustee in accordance with the terms of the respective loan documents and that is proposed to be secured by the Revenues on parity with the Government Loan and Trustee Loan, Government and Trustee will enter into such amendments to this

D-58 IN WITNESS WHEREOF, each party has caused this instrument to be properly executed, as of the date first above written.

EXHIBIT A UNITED STATES OF AMERICA, acting through the United States Department of Agriculture, Rural Housing Service To the extent permitted by law, all revenues, rentals, fees, third-party payments, receipts, BY: ______accounts, or other income of the Borrower, including the rights to receive such revenues (each subject to Permitted Encumbrances), all as calculated in accordance with Generally Accepted Title: ______Accounting Principles, including, without limitation, proceeds derived from insurance, condemnation proceeds, accounts, contract rights and other rights and assets, whether now or hereafter owned, held or possessed by the Borrower; and all gifts, grants, bequests, donations UWHARRIE GREEN SCHOOL, INC. and contributions (including income and profits therefrom) to the extent permitted by the terms thereof and by law. BY: ______

Title: ______

ATTEST:

______

Title: ______

U.S. BANK NATIONAL ASSOCIATION

BY: ______

Title: ______

ATTEST:

______

Title: ______

SCHEDULE I SCHEDULE II

D-59 [THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX E FORM OF BOND COUNSEL OPINION

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[November __, 2017]

Public Finance Authority Madison, Wisconsin

$[PRINCIPALA] Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

and

$[PRINCIPALB] Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Ladies and Gentlemen:

We have acted as Bond Counsel to the Public Finance Authority (the “Authority”), a public body corporate and politic organized pursuant to the laws of the State of Wisconsin (the “State”), in connection with the issuance of its $[PRINCIPALA] Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A (the “Series 2017A Bonds”) and its $[PRINCIPALB] Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B (the “Series 2017B Bonds” and, together with the Series 2017A Bonds, the “Series 2017 Bonds”).

The Series 2017 Bonds are being issued by the Authority pursuant to the provisions of (i) Sections 66.0301, 66.0303 and 66.0304 of the Wisconsin Statutes, as amended (the “Act”); (ii) the Indenture of Trust, dated as of November 1, 2017 (the “Indenture”), by and between the Authority and U.S. Bank National Association, as trustee (the “Trustee”); and (iii) a resolution duly adopted by the Authority on August 9, 2017. The proceeds of the Series 2017 Bonds will be used to make a loan to Uwharrie Green School, Inc. (the “Corporation”) pursuant to a Loan Agreement, dated as of November 1, 2017 (the “Loan Agreement”), by and between the Authority and the Corporation. Capitalized terms used herein which are not otherwise defined shall have the meanings ascribed thereto in the Indenture and the Loan Agreement.

The Series 2017 Bonds are dated, mature on the dates and bear interest at the rates set forth in the Indenture. The Series 2017 Bonds are subject to redemption prior to maturity in the manner and upon the terms set forth in the Indenture.

As Bond Counsel, we have examined and relied on originals or copies, certified or otherwise identified to our satisfaction, of such instruments, certificates and documents (including all documents constituting the record of proceedings with respect to the issuance of the Series 2017 Bonds), as we have deemed necessary or appropriate for the purposes of the opinions rendered below. In such examination we have assumed the genuineness of all

E-1 4824-3461-6908.5

signatures, the authenticity of all documents submitted to us as originals and the conformity to the original documents of all documents submitted to us as copies. As to any facts material to our opinion, we have relied upon the aforesaid instruments, certificates and documents and various representations of the Authority, the Trustee, the Underwriter, the Corporation and others contained therein, including those contained in the Tax Certificate, dated [November __, 2017] (the “Tax Certificate”), without undertaking to verify the same by independent investigation.

Based on the foregoing, we are of the opinion that:

1. The Loan Agreement, the Tax Certificate and the Indenture constitute valid and binding agreements of the Authority and are enforceable against the Authority in accordance with their terms. The Indenture creates a lien on the Trust Estate to secure the payment of the principal of, premium, if any, and interest on the Series 2017 Bonds, subject to the provisions of the Indenture.

2. The Series 2017 Bonds have been duly issued by the Authority in accordance with applicable law, and are valid and binding special limited obligations of the Authority, the principal of, premium, if any, and interest on which are payable solely from the Trust Estate pledged therefor pursuant to the Indenture. The Series 2017 Bonds are enforceable in accordance with their terms and are entitled to the benefit of the Act and the Indenture.

3. The Series 2017 Bonds do not constitute or give rise to a general obligation or liability of the Authority or a charge against its general credit. Neither the faith and credit nor the taxing power of the State, any public agency, any Sponsor or any member of the Authority is pledged to the payment of the principal of or interest or any redemption premium on the Series 2017 Bonds. The Authority has no taxing power. Payment of the principal of or interest or any redemption premium on the Series 2017 Bonds does not constitute a debt, liability or obligation of the State or any public agency (other than the Authority) or any member of the Authority.

4. Under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2017A Bonds is excludable from gross income for federal income tax purposes and is not a specified preference item for purposes of the federal alternative minimum tax; however, for the purpose of computing the alternative minimum tax imposed on certain corporations, interest on the Series 2017A Bonds will be included in the “adjusted current earnings” of such corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporation’s adjusted current earnings over its alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses). The opinions set forth in the preceding sentence assume the accuracy of certain representations of the Authority, the Corporation and others, and are subject to the condition that such entities continuously comply with all the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Series 2017A Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The inaccuracy of such representations, or the failure to comply with such requirements, may cause the interest on the Series 2017A Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2017 Bonds. Interest on the Series 2017B Bonds is included in gross income for federal income tax purposes. We express no opinion with respect to the treatment of interest on the Series 2017 Bonds under the laws of any state.

Although we have rendered an opinion that interest on the Series 2017A Bonds is excludable from gross income for federal income tax purposes, the accrual or receipt of interest on the Series 2017A Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences. Purchasers of the Series 2017A Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property and casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of social security or railroad retirement benefits, taxpayers otherwise entitled to claim the earned income credit, taxpayers entitled to claim the refundable credit in Section 36B of the Code for coverage under a qualified health plan, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations should consult their tax advisors as to the tax consequences of purchasing or holding the Series 2017A Bonds.

E-2 4824-3461-6908.5

The Corporation has represented that it is an organizations described in Section 501(c)(3) of the Code. The inaccuracy of such representation, or the failure of the Corporation to maintain such status, could result in the loss of the exemption of interest on the Series 2017A Bonds from federal income taxation.

The foregoing opinion is qualified to the extent that the enforceability of the Series 2017 Bonds, the Indenture and the other instruments enumerated above may be subject to valid bankruptcy, insolvency, reorganization, moratorium, liquidation, readjustment of debt and other laws affecting creditors’ rights and laws affecting the remedies for the enforcement of the rights and security provided for therein, including the remedy of specific performance, and that their enforcement may also be subject to the exercise of the sovereign police powers of the State, or its governmental bodies, and the exercise of judicial discretion in appropriate cases.

In rendering the foregoing opinions, we are not passing upon the matters of: (i) the legal entity status of the Corporation; (ii) the power of the Corporation to execute and deliver any document; or (iii) the accuracy, completeness or sufficiency of the Limited Offering Memorandum distributed in connection with the Series 2017 Bonds, or any other statements made in connection with the offer and sale of the Series 2017 Bonds. In addition, we have relied upon, and assumed the accuracy of, the opinion, dated this date, of Lex-Is School Law Services, Durham, North Carolina, counsel to the Corporation, with respect to the Corporation being an organization described in Section 501(c)(3) of the Code, and the other matters set forth in such opinion. In connection therewith, we express no opinion with respect to such matters and are relying solely on the opinions of Corporation’s counsel, and the representations of the Corporation.

The scope of our engagement as Bond Counsel has not extended beyond the examinations and the rendering of the opinions expressed herein. Our engagement as Bond Counsel with respect to the transactions referred to herein terminates upon the date of this letter. We assume no obligation to review or supplement this letter subsequent to this date, whether by reason of a change in current laws, by legislative or regulatory action, by judicial decision or for any other reason.

This opinion is based solely upon existing federal and state laws, regulations, rulings and judicial decisions. We express no opinion as of any subsequent date or with respect to any pending legislation. This letter is issued to and for the sole benefit of the above addressee and is issued for the sole purpose of the transaction specifically referred to herein. No person other than the above addressee may rely upon this letter without our express written consent. This letter may not be utilized by you for any other purpose whatsoever and may not be quoted by you without our express prior written consent.

Respectfully submitted,

E-3 4824-3461-6908.5 [THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT [THIS PAGE INTENTIONALLY LEFT BLANK] CONTINUING DISCLOSURE AGREEMENT

This CONTINUING DISCLOSURE AGREEMENT (the "Disclosure Agreement") is executed and delivered by and between UWHARRIE GREEN SCHOOL, INC., a North Carolina nonprofit corporation (the "Borrower") and DIGITAL ASSURANCE CERTIFICATION, LLC, as dissemination agent (the "Dissemination Agent"), in connection with the issuance by the Public Finance Authority (the "Issuer") of its $14,660,000* Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A and its $670,000* Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B (together, the "Series 2017 Bonds"). The Series 2017 Bonds are being issued pursuant to an Indenture of Trust, dated as of November 1, 2017 (the "Indenture"), between the Issuer and U.S. Bank National Association, as trustee (the "Trustee"). The proceeds of the Series 2017 Bonds are being loaned to the Borrower pursuant to a Loan Agreement, dated as of November 1, 2017 (the "Loan Agreement"), by and between the Issuer and the Borrower. Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Indenture and the Loan Agreement. The Dissemination Agent and the Borrower covenant and agree as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Borrower and the Dissemination Agent for the benefit of the Registered Owners and Beneficial Owners of the Series 2017 Bonds and in order to assist BB&T Capital Markets, a division of BB&T Securities, LLC (the "Underwriter") in complying with the Rule (as defined below), as it may be applicable from time to time. The Borrower and the Dissemination Agent acknowledge that the Issuer has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Disclosure Agreement, and has no liability to any Person, including any Registered Owner or Beneficial Owner of the Series 2017 Bonds, with respect to the Rule (as defined below).

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Disclosure Agreement, the following capitalized terms shall have the following meanings:

"Annual Financial Information" means annual financial information as such term is used in paragraph (i) of the Rule and specified in Section 4(b) of this Disclosure Agreement.

"Annual Report" shall mean any Annual Report provided by the Borrower pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

"Audited Financial Statements" means the audited financial statements and other financial information of the Borrower for the prior fiscal year, certified by an independent auditor as prepared in accordance with accounting principles generally accepted in the United States or otherwise, as such term is used in paragraph (i) of the Rule and specified in Section 4(a) of this Disclosure Agreement.

"Beneficial Owner" shall mean any Person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Series 2017 Bonds

* Preliminary, subject to change

CO\5642584.5 F-1 (including any Person holding Series 2017 Bonds through nominees, depositories or other intermediaries).

"Borrower" means Uwharrie Green School, Inc., a North Carolina nonprofit corporation.

"Disclosure Representative" shall mean the Executive Director of the Borrower or his or her designee, or such other person as the Borrower shall designate in writing to the Dissemination Agent from time to time.

"Dissemination Agent" shall mean Digital Assurance Certification, LLC, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Borrower and which has filed with the Trustee and the Borrower a written acceptance of such designation.

"EMMA" means the Electronic Municipal Market Access system for municipal securities disclosure established by the MSRB and accessible at http://emma.msrb.org/.

"Fiscal Year" means each fiscal year of the Borrower ending on or after June 30, beginning with the Fiscal Year ending June 30, 2017.

"Indenture" means the Indenture of Trust, dated as of November 1, 2017, between the Issuer and the Trustee.

"Limited Offering Memorandum" shall mean the Limited Offering Memorandum, dated ______, 2017, relating to the Series 2017 Bonds.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

"Loan Agreement" means the Loan Agreement, dated as of November 1, 2017, between the Issuer and the Borrower.

"MSRB" means the United States Municipal Securities Rulemaking Board or any successor to its functions, or any successor to its functions as a nationally recognized municipal securities information repository.

"Rule" shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time.

"School" means the charter school operated by the Borrower, known as Uwharrie Charter Academy.

"State" shall mean the State of North Carolina.

"Underwriter" shall mean BB&T Capital Markets, a division of BB&T Securities, LLC.

CO\5642584.5 F-2 SECTION 3. Provision of Annual Reports.

(a) The Borrower shall or, upon delivery to the Dissemination Agent pursuant to paragraph (b) below, the Dissemination Agent shall, not later than December 31 following the end of the Borrower's Fiscal Years, commencing with the report for the fiscal year ended June 30, 2017, provide to EMMA, in a PDF or other electronic format as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. 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 4 of this Disclosure Agreement; provided that the Audited Financial Statements may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Borrower's Fiscal Year changes, the Borrower shall give notice of such change in the same manner as for a Listed Event under Section 5(e).

(b) Not later than five (5) Business Days prior to the date specified in subsection (a) for providing the Annual Report to EMMA, the Borrower shall provide the Annual Report to the Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Borrower pursuant to this Disclosure Agreement, and shall have no duty or obligation to review any notice or report.

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a notice to EMMA in substantially the form attached hereto as Exhibit A.

(d) If the Borrower has provided the Annual Report to the Dissemination Agent, the Dissemination Agent shall file such report with the Trustee and certify that the Annual Report has been provided to EMMA pursuant to this Disclosure Agreement and set forth the date it was provided; provided, however, that this subsection (i) shall only apply if the Dissemination Agent is not the Trustee.

SECTION 4. Content of Annual Reports.

(a) Audited Financial Statements: Each Annual Report shall contain Audited Financial Statements, as provided pursuant to Section 3(a). If Audited Financial Statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the Audited Financial Statements, and the Audited Financial Statements shall be filed in the same manner as the Annual Report when they become available. Audited or unaudited financial statements of the Borrower shall be delivered as provided herein only if otherwise prepared.

(b) Additional Annual Report Information: The Annual Report for each Fiscal Year ending June 30, 2018, and thereafter shall also contain (i) actual enrollment and waiting list data for the current year, of the sort and in the format (but excluding projected information) initially provided in the charts under the headings "THE SCHOOL – Demographics and Enrollment – Historical and Projected Enrollment" and " – Waitlist," in APPENDIX A – "THE BORROWER, THE SCHOOL AND THE PROJECT" and (ii) a copy of the audit report certified

CO\5642584.5 F-3 by independent public accountants. The Annual Report shall also contain a certificate showing calculation of the Debt Service Coverage Ratio (as defined in the Indenture) for the previous Fiscal Year and a certificate showing calculation of Days Cash on Hand (as defined in the Indenture) as of the preceding June 30, prepared by an Authorized Representative of the Borrower (as defined in the Indenture), which certificates may be delivered concurrently with the Audited Financial Statements provided pursuant to Section 3(a).

(c) Inclusion by Reference: The items listed above may be included by specific reference to other documents, including materials which have been submitted to EMMA or the SEC. The Borrower shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Listed Events.

(a) Pursuant to the provisions of this Section 5, the Borrower shall give, or upon delivery of the information to the Dissemination Agent, the Dissemination Agent shall give, notice of the occurrence of any of the following events with respect to the Series 2017 Bonds, under applicable federal securities laws:

(1) Principal and interest payment delinquencies;

(2) Nonpayment 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) (i) Adverse tax opinions, (ii) the issuance by the Internal Revenue Service of proposed or final determinations of taxability of the Series 2017A Bonds, (iii) Notices of Proposed Issue (IRS Form 5701-TEB), (iv) other material notices or determinations with respect to the tax status of the Series 2017A Bonds, or (v) other material events affecting the tax-exempt status of the Series 2017A Bonds;

(7) Modifications to rights of Bondholders, if material;

(8) (i) Bond calls, if material, and (ii) tender offers;

(9) Defeasances;

(10) Release, substitution, or sale of property securing repayment of the Series 2017 Bonds, if material;

CO\5642584.5 F-4 (11) Rating changes;

(12) Failure to provide any Annual Report or Annual Financial Information as required;

(13) Bankruptcy, insolvency, receivership or similar event of the Borrower, which is considered to occur when any of the following occur: the appointment of a receiver, , or similar officer for the Borrower in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Borrower, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders or a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental entity having supervision or jurisdiction over substantially all of the assets or business of the Borrower;

(14) The consummation of a merger, consolidation, or acquisition involving the Borrower or the sale of all or substantially all of the assets of the Borrower, 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

(15) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

(b) The Borrower agrees that its determination of whether any event listed in subsection (a) above is material shall be made in accordance with federal securities law.

(c) The Borrower shall promptly notify the Dissemination Agent in writing of the occurrence of any of the Listed Events.

(d) If the Listed Event must be reported without regard to whether or not it is material under applicable federal securities laws, such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (g).

(e) If materiality is a condition precedent to the requirement that the Listed Event be reported, and the Borrower determines that knowledge of the occurrence of the Listed Event is material under applicable federal securities laws, such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (g).

(f) If materiality is a condition precedent to the requirement that the Listed Event be reported, and the Borrower determine that knowledge of the occurrence of the Listed Event is not material under applicable federal securities laws, such notice shall instruct the Dissemination Agent not to report the occurrence pursuant to subsection (g).

CO\5642584.5 F-5 (g) If the Dissemination Agent has been instructed by the Borrower to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with EMMA.

SECTION 6. Termination of Reporting Obligation. The Borrower's and the Dissemination Agent's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Series 2017 Bonds. If such termination occurs prior to the final maturity of the Series 2017 Bonds, the Borrower shall give notice of such termination in the same manner as for a Listed Event under Section 5(g). If the Borrower's obligations under the Loan Agreement are assumed in full by some other entity, such entity shall be responsible for compliance with this Disclosure Agreement relating thereto in the same manner as if it were the Borrower and the Borrower shall have no further responsibility hereunder with respect thereto.

The Dissemination Agent shall be fully discharged at the time any such termination is effective. Also, this Disclosure Agreement shall terminate automatically upon payment or provisions for payment of the Series 2017 Bonds. This Disclosure Agreement shall terminate when all of the Series 2017 Bonds are or are deemed to be no longer outstanding by reason of redemption or legal defeasance or at final maturity. SECTION 7. Dissemination Agent. The Borrower may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Digital Assurance Certification, LLC. The Dissemination Agent shall have no obligation to disclose information about the Series 2017 Bonds except as expressly provided herein. The Dissemination Agent may resign at any time by providing at least thirty (30) days written notice to the Borrower and the Trustee.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Borrower and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Borrower, provided that the Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations) and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:

(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an "obligated person" (as defined in the Rule) with respect to the Series 2017 Bonds, or the type of business conducted;

(b) This Disclosure Agreement, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original execution and delivery of the Series 2017 Bonds after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

CO\5642584.5 F-6 (c) The amendment or waiver either (i) is approved by the Registered Owners of the Series 2017 Bonds in the same manner as provided in the Indenture for amendments to such Indenture with the consent of Registered Owners, or (ii) does not, in the opinion of Bond Counsel, materially impair the interests of the Registered Owners or Beneficial Owners of the Series 2017 Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Borrower shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Borrower. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(d), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Borrower from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Borrower chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Disclosure Agreement, the Borrower shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 10. Default. In the event of a failure of the Borrower or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the right of any Registered Owner to challenge the timely filing, failure to file or the adequacy of the information furnished pursuant to this Disclosure Agreement shall be limited to an action by or on behalf of Registered Owners representing at least 25% of the aggregate outstanding principal amount of the Series 2017 Bonds. This Disclosure Agreement is also enforceable on behalf of the Registered Owners of the Series 2017 Bonds by the Trustee, and the Trustee may, and upon the written direction of the Registered Owners of not less than 25% of the aggregate outstanding principal amount of the Series 2017 Bonds or the Underwriter shall, proceed to protect and enforce the rights of the Registered Owners of the Series 2017 Bonds pursuant to this Disclosure Agreement; provided that in all cases the Trustee shall be entitled to the indemnification and other provisions of the Indenture with regard to any actions, and prior to proceeding at the request or direction of the Underwriter the Trustee may require the same types of indemnification and related protections from the Underwriter to which the Trustee would otherwise be entitled under the Indenture if so requested or directed by the Registered Owners. Any failure by the Borrower to comply with the provisions of this Disclosure Agreement shall not be an Event of Default under the Loan Agreement or the Indenture. In no event shall any violation of this Disclosure Agreement, by itself, constitute a violation of any other laws, including other applicable securities laws.

CO\5642584.5 F-7 The Registered Owners' and the Trustee's rights to enforce the provisions of this Disclosure Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel the Borrower to perform under this Disclosure Agreement, and their directors, officers and employees shall incur no liability under this Disclosure Agreement by reason of any act or failure to act hereunder. Without limiting the generality of the foregoing, neither the commencement nor the successful completion of an action to compel performance under this Section shall entitle the Trustee or any other person to attorneys' fees, financial damages of any sort or any other relief other than an order or injunction compelling performance; provided that the Trustee shall nevertheless be entitled to attorneys' fees and such other rights and amounts as provided in the Indenture.

SECTION 11. Duties, Immunities and Liabilities of the Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and no further duties or responsibilities shall be implied. The Borrower agree to indemnify and save the Dissemination Agent and its 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 reasonable attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's gross negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Borrower for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Borrower from time to time. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Borrower hereunder and shall not be deemed to be acting in any fiduciary capacity for the Borrower, the Registered Owners, Beneficial Owners or any other party. The obligations of the Borrower under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Series 2017 Bonds.

The Dissemination Agent shall not have any liability to any Registered Owner or Beneficial Owner in connection with any failure to timely file any such information or report with the MSRB and the sole remedy available shall be an action by any Registered Owner or Beneficial Owner in mandamus for specific performance or similar remedy to compel performance. The only remedy for failure to file is to file. The Borrower acknowledges that it, and not the Dissemination Agent, is solely responsible for the accuracy, completeness and timeliness of any information or report provided to the Dissemination Agent. SECTION 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:

To the Borrower: Uwharrie Green School, Inc. 5326 U.S. Highway 220 South Asheboro, NC 27205 Attention: Heather Soja Email: [email protected]

CO\5642584.5 F-8 To the Trustee: U.S. Bank National Association 214 N. Tryon Street, 27th Floor CN-NC-H27A Charlotte, North Carolina 28202 Attention: Global Corporate Trust Services Email: [email protected]

To the Dissemination Agent: Digital Assurance Certification, LLC 315 East Robinson Street, Suite 300 Orlando, Florida 32801

To the Underwriter: BB&T Capital Markets 333 Clay Street, Suite 3800 Houston, Texas 77002 Telephone: (713) 344-2263 Facsimile: (704) 954-1084 Attention: Paula Permenter, Managing Director

Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.

SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Trustee, the Dissemination Agent, the Underwriter, Registered Owners and Beneficial Owners from time to time of the Series 2017 Bonds, and shall create no rights in any other person or entity.

SECTION 14. 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.

SECTION 15. Severability. If any provision hereof shall be held invalid or unenforceable by a court of competent jurisdiction, the remaining provisions hereof shall survive and continue in full force and effect.

SECTION 16. Delivery to the MSRB. Any filings required to be made with the MSRB shall be made utilizing EMMA.

SECTION 17. Choice of Law. This Disclosure Agreement shall be governed by and construed in accordance with the laws of the State, provided that to the extent this Disclosure Agreement addresses matters of federal securities laws, including the Rule, this Disclosure Agreement shall be construed in accordance with such federal securities laws and official interpretations thereof.

SECTION 18. No Obligation of the State of North Carolina. No indebtedness of any kind incurred or created by the Borrower shall constitute an indebtedness of the State or its political subdivisions, and no indebtedness of the Borrower shall involve or be secured by the faith, credit, or taxing power of the State or its political subdivisions.

[Remainder of page intentionally left blank; signature page follows.]

CO\5642584.5 F-9 Dated: as of November 1, 2017

UWHARRIE GREEN SCHOOL, INC., a North Carolina nonprofit corporation

By: Name: Title:

DIGITAL ASSURANCE CERTIFICATION, LLC, as Dissemination Agent

By: Authorized Signatory

[Signature Page to Continuing Disclosure Agreement]

CO\5642584.5 F-10 EXHIBIT A

NOTICE TO THE MSRB OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Public Finance Authority

Name of Issue: $14,660,000* Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A and $670,000* Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Name of Borrower: Uwharrie Green School, Inc.

Date of Issuance: November __, 2017

NOTICE IS HEREBY GIVEN that the Borrower has not provided an Annual Report with respect to the above-named Series 2017 Bonds as required by the Continuing Disclosure Agreement, dated as of November 1, 2017, by and between the Borrower and the undersigned, with respect to the Series 2017 Bonds. The Borrower has notified the Dissemination Agent that it anticipates that the Annual Report will be filed by ______.

Dated: ______

DIGITAL ASSURANCE CERTIFICATION, LLC, as Dissemination Agent

By: Authorized Signatory cc: Borrower

* Preliminary, subject to change

CO\5642584.5 F-11 [THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX G BOOK-ENTRY ONLY SYSTEM

The information in this section concerning The Depository Trust Company ("DTC") and DTC's book-entry-only system has been obtained from DTC. The Issuer, the Borrower, the Trustee and the Underwriter assume no responsibility for the accuracy thereof.

The Depository Trust Company, New York, New York ("DTC"), will act as securities depository for the Series 2017 Bonds. The Series 2017 Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate in typewritten form will be issued for each stated maturity of the Series 2017 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE SERIES 2017 BONDS, REFERENCES HEREIN TO BONDHOLDERS OR OWNERS OF THE SERIES 2017 BONDS (OTHER THAN UNDER THE CAPTION "TAX MATTERS" HEREIN) SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE SERIES 2017 BONDS.

DTC, the world's largest securities 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 " corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments 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 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 S&P 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 and www.dtc.org.

Purchases of the Series 2017 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2017 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 purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2017 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

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certificates representing their ownership interests in the Series 2017 Bonds, except in the event that use of the book-entry system for the Series 2017 Bonds is discontinued.

To facilitate subsequent transfers, all Series 2017 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2017 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2017 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2017 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2017 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2017 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2017 Bond documents. For example, Beneficial Owners of Series 2017 Bonds may wish to ascertain that the nominee holding the Series 2017 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 notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Series 2017 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2017 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 Borrower as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2017 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Series 2017 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 Borrower on 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 bonds held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Trustee, Issuer or the Borrower, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Borrower, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depository with respect to the Series 2017 Bonds at any time by providing reasonable notice. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2017 Bond certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository); in that event, the Bond certificates will be printed and

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delivered to the Participants for delivery to the Beneficial Owners. The information in this section concerning DTC and DTC's book entry system has been obtained from sources believed to be reliable, but neither the Issuer nor the Borrower assumes any responsibility for the accuracy thereof.

THE ISSUER, THE BORROWER, THE TRUSTEE AND THE UNDERWRITER WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS OR THE BENEFICIAL OWNERS OF THE SERIES 2017 BONDS WITH RESPECT TO (i) THE ACCURACY OF ANY RECORDS MAINTAINED BY THE DEPOSITORY OR ANY PARTICIPANT; (ii) THE PAYMENT BY THE DEPOSITORY TO ANY PARTICIPANT OR BY ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT, OR REDEMPTION PRICE OF OR INTEREST ON THE SERIES 2017 BONDS; (iii) THE DELIVERY OF ANY NOTICE BY THE DEPOSITORY TO ANY PARTICIPANT OR BY ANY PARTICIPANT TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO BONDHOLDERS UNDER THE TERMS OF THE INDENTURE; (iv) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE SERIES 2017 BONDS; OR (v) ANY OTHER ACTION TAKEN BY THE DEPOSITORY AS OWNER OF THE SERIES 2017 BONDS.

The information herein concerning DTC and DTC's book-entry system has been obtained from sources believed to be reliable, but the Issuer, the Borrower, the Trustee and the Underwriter take no responsibility for the accuracy thereof, and neither Participants nor Beneficial Owners should rely on the foregoing information with respect to such matters. Instead, they should confirm the same with DTC or the Participants, as the case may be. There can be no assurance that DTC will abide by its procedures or that such procedures will not be changed from time to time.

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APPENDIX H-1 FORM OF INVESTOR LETTER (INVESTOR)

Public Finance Authority Kutak Rock LLP Madison, Wisconsin Atlanta, Georgia

U.S. Bank National Association Atlanta, Georgia

Re: $14,660,000* Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A and $670,000* Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Ladies and Gentlemen:

The undersigned ("Investor") is the purchaser of $[______] principal amount of the [check the applicable series]: ___ Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

___ Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

(the "Bonds") issued by the Public Finance Authority (the "Issuer") pursuant to that certain Indenture of Trust, dated as of [November 1, 2017] (the "Indenture"), by and between the Issuer and U.S. Bank National Association, as Trustee (the "Trustee").

Capitalized terms not defined herein shall be given the meaning ascribed thereto in the Indenture. Investor has been informed that the Issuer will not sell or permit any Bonds to be sold to Investor unless Investor makes the representations, warranties and covenants herein and authorizes the Issuer and the Trustee to rely thereon and such representations, warranties and covenants are made by the Investor AS AN INDUCEMENT to the sale of the Bonds to Investor. In connection with the sale of the Bonds to Investor, Investor hereby makes the following covenants and representations upon which you may rely: 1. Investor has received and reviewed a copy of (a) the Limited Offering Memorandum relating to the Bonds, dated [______, 2017]; and (b) such other documents, agreements, certificates and instruments referenced therein or pertaining thereto or to the Bonds to which Investor is a party or deems necessary and appropriate in its evaluation of the Bonds, and hereby represents and warrants that the information contained therein, along with all other additional information supplied by the Borrower to the Investor, is sufficient for the Investor to decide to purchase the Bonds. The Investor acknowledges that the issuance and sale of the Bonds and the execution, delivery and performance of the Loan Agreement, the Account Control Agreement, the Note, the Bond Purchase Agreement, the Continuing Disclosure Agreement, the Deed of Trust, the Tax Certificate, the Bonds or the Indenture will be governed by and construed in accordance with the applicable laws of the State, the State of North Carolina and the United States of America, each as set forth therein.

* Preliminary, subject to change

H-1-1

2. Investor has sufficient knowledge and experience in financial and investment matters, including the purchase and ownership of municipal and other tax-exempt or taxable obligations, to be able to evaluate and understand the risks and merits of an investment in the Bonds (and is able to bear the risks of such investment for an indefinite time). 3. Investor is acquiring the Bonds solely for its own account for investment purposes, and does not presently intend to make a public distribution of, or to resell or transfer, all or any part of the Bonds, provided however, Investor reserves the right to sell or transfer the Bonds in the future in accordance with the transfer restrictions set forth in the Indenture and paragraph 7 below. 4. Investor understands that it may be required to bear the risks of this investment in the Bonds for an indefinite time, since any sale prior to maturity may not be possible. 5. The Bonds are a financially suitable investment for Investor consistent with Investor's investment needs and objectives. 6. Investor is either (a) an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the "1933 Act"); or (b) a "Qualified Institutional Buyer" as defined in Rule 144A under the 1933 Act; Investor understands that the Bonds are not registered under the 1933 Act and that such registration is not legally required as of the date hereof; and further understands that the Bonds (i) are not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (ii) may not be resold, transferred, pledged or hypothecated, in whole or in part, unless they are registered under the 1933 Act, and applicable state securities laws or unless an exemption from registration is available; (iii) will not be listed in any stock or other securities exchange, (iv) will be delivered in a form which may not be readily marketable, and (v) will not carry a rating from any rating service. 7. Investor acknowledges that (a) the Bonds are not transferable except to (i) an "accredited investor," or (ii) a "Qualified Institutional Buyer"; and (b) if the Bonds are transferred to an "accredited investor" who is not also a Qualified Institutional Buyer, such transferee must purchase and hold a minimum $25,000 in principal amount of Bonds regardless of any lower denomination provided in the Indenture; and Investor agrees to abide by such transfer restrictions. Investor shall be solely and exclusively responsible for compliance with such transfer restrictions, including having a reasonable belief that its transferee is an accredited investor or a Qualified Institutional Buyer, as the case may be. 8. Investor acknowledges that it has either been supplied with or been given access to information (including, without limitation, financial statements and other financial information and copies of the Indenture, the Loan Agreement and the Tax Certificate (as defined in the Indenture)), to which a reasonable investor would attach significance in making investment decisions, and Investor has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Borrower, the Facilities, the Project and the Bonds and the security therefor so that, as a reasonable investor, the Investor has been able to make its own independent decision to purchase the Bonds and to whether the Bonds are appropriate or proper for investment by the Investor. Investor acknowledges that it has not relied upon the Issuer or the Trustee for any information in connection with the Investor's purchase of the Bonds. 9. INVESTOR ACKNOWLEDGES THAT THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER, ANY SPONSOR, ANY ISSUER INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY,

H-1-2

OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER. 10. Investor has made its own inquiry and analysis with respect to the Bonds and the security therefor (including, without limitation, a credit evaluation of the Borrower, to the extent Investor deemed it necessary or appropriate), and other material factors affecting the security and payment of the Bonds. Investor is aware that the business of the Borrower involves certain economic variables and risks that could adversely affect the security for the Bonds. 11. The Investor hereby certifies that it is not now and has never been controlled by, or under common control, with the Borrower. The Borrower has been and is now not controlled by the Investor. 12. The Issuer and the Trustee have not undertaken and will not undertake steps to ascertain the accuracy or completeness of the information furnished to the Investor with respect to the Borrower, the Facilities, the Bonds or the Project. The Investor has not relied and will not rely upon the Issuer or its officers, directors, employees or agents or the Trustee in any way with regard to the accuracy or completeness of the information regarding the Borrower, the Facilities or the Project furnished to the Investor in connection with its purchase of the Bonds, nor have any such parties made any representation to the Investor with respect to that information.

Dated [______]

By Name Title

H-1-3 [THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX H-2 FORM OF INVESTOR LETTER (ADVISOR)

Public Finance Authority Kutak Rock LLP Madison, Wisconsin Atlanta, Georgia

U.S. Bank National Association Atlanta, Georgia

Re: $14,660,000* Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A and $670,000* Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

Ladies and Gentlemen:

In connection with the purchase on behalf of Investors (defined below) of $[______] principal amount of the [check the applicable series]: ___ Public Finance Authority Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017A

___ Public Finance Authority Taxable Education Revenue Bonds (Uwharrie Charter Academy Project) Series 2017B

(the "Bonds") issued by the Public Finance Authority (the "Issuer") pursuant to that certain Indenture of Trust, dated as of [November 1, 2017] (the "Indenture"), by and between the Issuer and U.S. Bank National Association, as Trustee (the "Trustee"), the undersigned ______("Advisor") does hereby make the representations, warranties, and covenants set forth in paragraphs 1 through 14 hereof, on its own behalf and on behalf of Investors, as applicable, upon which representations, warranties, and covenants you are authorized to rely. Capitalized terms not defined herein shall be given the meaning ascribed thereto in the Indenture.

1. Advisor is registered with the Securities and Exchange Commission as an investment advisor under the Investment Advisers Act of 1940 and is 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. 2. Advisor is the duly appointed representative of the purchasers of the above-referenced principal amount of the Bonds ("Investor"), which have been issued and delivered on this date. Investors have executed [investment management agreements] with Advisor pursuant to which, among other things, Advisor is authorized to make investment decisions and to deliver this letter on such Investors' behalf. 3. Advisor acknowledges and each Investor has been or will be informed that the Issuer will not sell or permit any Bonds to be sold to Investors unless Advisor, on its own behalf and on behalf of Investors, as applicable, makes the representations, warranties and covenants herein and authorizes the Issuer and the Trustee to rely thereon and such representations, warranties and covenants are made by the Advisor AS AN INDUCEMENT to the sale of the Bonds to Investor. 4. Advisor has received and reviewed a copy of (a) the Limited Offering Memorandum relating to the Bonds, dated [______, 2017]; and (b) such other documents, agreements, certificates

* Preliminary, subject to change

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and instruments referenced therein or pertaining thereto or to the Bonds to which Advisor deems necessary and appropriate in its evaluation on behalf of the Investors of the merits and risks of an investment in the Bonds, and hereby represents and warrants that the information contained therein, along with all other additional information supplied by the Borrower to the Advisor, is sufficient for the Advisor to decide to purchase the Bonds on behalf of the Investors. The Advisor acknowledges that the issuance and sale of the Bonds and the execution, delivery and performance of the Loan Agreement, the Account Control Agreement, the Note, the Bond Purchase Agreement, the Continuing Disclosure Agreement, the Deed of Trust, the Tax Certificate, the Bonds or the Indenture will be governed by and construed in accordance with the applicable laws of the State, the State of North Carolina and the United States of America, each as set forth therein. 5. Each Investor has sufficient knowledge and experience in financial and investment matters, including the purchase and ownership of municipal and other tax-exempt or taxable obligations, to be able to evaluate and understand the risks and merits of an investment in the Bonds (and is able to bear the risks of such investment for an indefinite time). 6. The Bonds are being purchased by Advisor for the account of Investors for investment purposes, and no Investor presently intends to make a public distribution of, or to resell or transfer, all or any part of the Bonds; provided that each Investor reserves the right to sell or transfer the Bonds in the future in accordance with the transfer restrictions set forth in the Indenture and described in the Indenture and paragraph 10 below. 7. Each Investor has been or will be informed that he, she, or it may be required to bear the risks of this investment in the Bonds for an indefinite time, since any sale prior to maturity may not be possible. 8. The Bonds are a financially suitable investment for each Investor consistent with such Investor's investment needs and objectives. 9. Each Investor is either (a) an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the "1933 Act"); or (b) a "Qualified Institutional Buyer" as defined in Rule 144A under the 1933 Act; each Investor has been or will be informed that the Bonds are not registered under the 1933 Act and that such registration is not legally required as of the date hereof; and further has been or will be informed that the Bonds ((i) are not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (ii) may not be resold, transferred, pledged or hypothecated, in whole or in part, unless they are registered under the 1933 Act, and applicable state securities laws or unless an exemption from registration is available; (iii) will not be listed in any stock or other securities exchange, (iv) will be delivered in a form which may not be readily marketable, and (v) will not carry a rating from any rating service. 10. Advisor acknowledges and each Investor has been or will be informed that the Bonds are not transferable except in Authorized Denominations to (a) an "accredited investor" (in minimum principal amount of $25,000 regardless of any lower minimum Authorized Denomination provided for by the Indenture); or (b) a "Qualified Institutional Buyer"; and Investor agrees to abide by such transfer restrictions. Investors shall be solely and exclusively responsible for compliance with such transfer restrictions, including having a reasonable belief that their transferees are accredited investors or Qualified Institutional Buyers, as the case may be, and compliance with all federal and state securities laws in connection with any such transfer. 11. Advisor acknowledges that it has either been supplied with or been given access to information (including, without limitation, financial statements and other financial information and copies of the Indenture, the Loan Agreement and the Tax Certificate (as defined in the Indenture)), to which a reasonable investor would attach significance in making investment decisions, and Advisor has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the

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Borrower, the Facilities, the Project and the Bonds and the security therefor so that, as a reasonable investor, Advisor has been able to make its own independent investigation and investigation and decision to purchase the Bonds on behalf of Investors and to whether the Bonds are appropriate or proper for investment. Advisor acknowledges that it has not relied upon the Issuer or the Trustee for any information in connection with the purchase of the Bonds on behalf of any Investor. 12. ADVISOR ACKNOWLEDGES AND EACH INVESTOR HAS BEEN OR WILL BE INFORMED THAT THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE TRUST ESTATE AND, EXCEPT FROM SUCH SOURCE, NONE OF THE ISSUER, ANY MEMBER, ANY SPONSOR, ANY ISSUER INDEMNIFIED PARTY, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST THEREON OR ANY COSTS INCIDENTAL THERETO. THE BONDS ARE NOT A DEBT OF THE STATE OR ANY MEMBER AND DO NOT, DIRECTLY, INDIRECTLY OR CONTINGENTLY, OBLIGATE IN ANY MANNER ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS TO LEVY ANY TAX OR TO MAKE ANY APPROPRIATION FOR PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF ANY MEMBER, THE STATE OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF OR ANY POLITICAL SUBDIVISION APPROVING THE ISSUANCE OF THE BONDS, NOR THE FAITH AND CREDIT OF THE ISSUER OR OF ANY SPONSOR OR ISSUER INDEMNIFIED PARTY, SHALL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THE BONDS OR ANY COSTS INCIDENTAL THERETO. THE ISSUER HAS NO TAXING POWER. 13. Advisor has made its own inquiry and analysis with respect to the Bonds and the security therefor (including, without limitation, a credit evaluation of the Borrower, to the extent Advisor deemed it necessary or appropriate), and other material factors affecting the security and payment of the Bonds. Advisor acknowledges and each Investor has been informed or will be informed that the business of the Borrower involves certain economic variables and risks that could adversely affect the security for the Bonds. 14. The Advisor hereby certifies that it is not now and has never been controlled by, or under common control, with the Borrower. The Borrower has been and is now not controlled by the Advisor. 15. The Issuer and the Trustee have not undertaken and will not undertake steps to ascertain the accuracy or completeness of the information furnished to the Advisor with respect to the Borrower, the Facilities, the Bonds or the Project. The Advisor has not relied and will not rely upon the Issuer or its officers, directors, employees or agents or the Trustee in any way with regard to the accuracy or completeness of the information regarding the Borrower, the Facilities or the Project furnished to the Advisor in connection with its purchase of the Bonds, nor have any such parties made any representation to the Advisor with respect to that information.

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Dated [______]

By Name Title

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PUBLIC FINANCE AUTHORITY • EDUCATION REVENUE BONDS (Uwharrie Charter Academy Project) SERIES 2017A and TAXABLE SERIES 2017B

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