The Corporation of Gonzaga University

This Preliminary Offering Memorandum and the information contained herein are subject to completion and amendment. The 2016A Bonds may not be sold, nor may offers to buy be accepted, prior to the time this Preliminary Offering Memorandum is delivered in final form. Under no circumstances shall this Preliminary Offering Memorandum constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the 2016A Bonds, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. and encumberthePledgedRevenues,allasdescribedherein. See“ National Association;and(5)the2016BBonds.Inaddition, theUniversityhasreservedrighttoincuradditionaldebt evidenced byCreditAgreementsbetweentheUniversity and eachofU.S.BankNationalAssociationWellsFargoBank, and aconfirmationdatedJune28,2007,fortransaction withaneffectivedateofOctober1,2012;(4)twolinescredit 2006,evidenced by a confirmation datedMay 24, June11, 2007,for atransaction2014, withan effectivedate ofOctober 1, rate swaptransactionsbetweentheUniversityandBank ofAmerica,N.A.,underanISDAMasterAgreementdatedas Taxable RevenueBonds(GonzagaUniversityProject), Series2013B(collectively,the“2013Bonds”);(3)twointerest pursuant to which the Authority issued its Revenue Bonds (Gonzaga University Project), Series 2013A and the Authority’s (1) acertainloanagreementpursuanttowhichtheAuthorityissuedits2009BBonds;(2) the provisionsofanintercreditoragreement,PledgedRevenuesalsosecureobligationsUniversity under: of whichtheUniversityhaspledgedcertainitsUnrestrictedGrossRevenues(the“PledgedRevenues”).Subject to Fast AutomatedSecuritiesTransfer. or aboutOctober __, 2016,atthefacilitiesofDTCinNewYork, ortotheBondRegistraronbehalfofDTCby by theircounsel,FosterPepper PLLC,Seattle,Washington.Itisexpectedthatdelivery ofthe2016ABondswilloccuron passed uponfortheUniversity byitsSpecialCounsel,KutakRockLLP,Spokane,Washington, andfortheUnderwriters decision. must readtheentireOfferingMemorandumtoobtain information essentialtothemakingofaninformedinvestment BOOK‑ENTRY ONLY * Preliminary; subjectto change. prices andunderthecircumstancesdescribed“ commencing April1,2017,totheirrespectivedatesofmaturityorearlierredemption. entry form,principalandinterestpaymentswillbemadeasdescribedherein. and transferagent(the“BondRegistrar”)forthe2016ABonds.ForsolongasBondsareheldbyDTC inbook- representing theirinterestinthe 2016A Bonds,exceptasdescribed herein. TheTrusteewill serve as registrar, paying agent multiples thereof within a single maturity and will be in book-entry form only. Purchasers will not receive certificates the 2016ABonds.IndividualpurchasesofBondswillbemadeinprincipalamount$1,000eachor integral as nomineeofTheDepositoryTrustCompany,NewYork,York(“DTC”),whichwillactsecuritiesdepository for Revenue andRefundingTaxableBonds,Series2016B(the“2016BBonds”). to the University’s facilities; and (7) paying all of the costs of issuing the 2016A Bonds and the University’s $35,575,000 (the “2012B Bonds”); (6) paying for the planning, designing, constructing, installing and furnishing of capital improvements 2012A (the“2012ABonds”);(5)redeemingalloftheAuthority’sRevenueBonds(GonzagaUniversityProject),Series 2012B Series 2010A(the“2010ABonds”);(4)redeemingalloftheAuthority’sRevenueBonds(GonzagaUniversityProject), Series 2009B (the“2009BBonds”);(3)redeemingalloftheAuthority’sRefundingRevenueBonds(GonzagaUniversityProject), “2009A Bonds”);(2)redeemingaportionoftheAuthority’sRefundingRevenueBonds(GonzagaUniversityProject),Series Facilities Authority(the“Authority”)RevenueandRefundingBonds(GonzagaUniversityProject),Series2009 dated asofOctober1,2016,betweentheUniversityandU.S.BankNationalAssociation(the“Trustee”). Bonds”), pursuant to an Indenture of Trust (the “Indenture”) 2016A, in the principal amount of $96,625,000* (the “2016A Dated: DateofDelivery M NEW ISSUE atters The obligationsoftheUniversityunderIndentureconstituteageneralobligationtopayment The 2016ABondsareoffered when,asandifissuedacceptedbytheUnderwriters. Certainlegalmatterswillbe This coverpagecontainscertaininformationforquickreference onlyandisnotasummaryofthisissue.Investors The 2016ABondsaresubjecttooptionalandmandatorysinkingfundredemptionpriormaturityatthe The 2016ABondswillaccrueinterestfromtheirdateddate,payablesemiannuallyoneachApril1andOctober 1, The 2016A Bonds will be issued as fully registered bonds under a book-entry system, initially registered to Cede & Co., The proceedsofthe2016ABondswillbeusedforpurposeof:(1)redeemingallWashingtonHigherEducation The CorporationofGonzagaUniversity(the“University”)isissuingitsRevenueandRefundingTaxableBonds,Series Interest onthe2016ABondsisnotexcludedfromgrossincomeforfederaltaxpurposes.See“ ” herein. Barclays

PRELIMINARY OFFERING MEMORANDUM DATED OCTOBER 6, 2016

THE CORPORATION OF GONZAGA UNIVERSITY

Revenue andRefundingTaxableBonds, $96,625,000* Series 2016A T he 2016AB onds S ecurity

– RedemptionProvisions.” Maturity: April1,asshownoninsidecover

for

the 2016AB Piper Jaffray &Co. onds RATINGS: Moody’s:A3 .” (See “ Fitch: A R atings T ax ”)

THE CORPORATION OF GONZAGA UNIVERSITY REVENUE AND REFUNDING TAXABLE BONDS, SERIES 2016A

∗ $96,625,000 ___% Term Bond due April 1, 2046* at yield of ___ CUSIP No.(1) ______.

(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein are provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of the bondholders, and neither the University nor the Underwriters make any representation with respect to such numbers or undertake any responsibility for their accuracy. The CUSIP numbers are subject to change after the issuance of the 2016A Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of the 2016A Bonds. * Preliminary; subject to change.

∗ Preliminary; subject to change.

THE INFORMATION SET FORTH HEREIN HAS BEEN FURNISHED BY THE UNIVERSITY AND CERTAIN OTHER SOURCES THAT THE UNIVERSITY BELIEVES TO BE RELIABLE BUT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS BY, AND IS NOT TO BE CONSTRUED AS A REPRESENTATION BY, THE UNDERWRITERS. THE INFORMATION AND EXPRESSIONS OF OPINION CONTAINED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE. IN CONNECTION WITH THE OFFERING OF THE 2016A BONDS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2016A BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. NO DEALER, BROKER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE UNIVERSITY OR THE UNDERWRITERS TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFERING OF THE 2016A BONDS OTHER THAN THOSE CONTAINED HEREIN; AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE UNIVERSITY OR THE UNDERWRITERS. THIS OFFERING MEMORANDUM IS NOT TO BE CONSTRUED AS A CONTRACT WITH THE PURCHASERS OF THE 2016A BONDS. STATEMENTS IN THIS OFFERING MEMORANDUM THAT ARE NOT HISTORICAL INFORMATION ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS. THESE FORWARD-LOOKING STATEMENTS INCLUDE THE DISCUSSIONS OF THE UNIVERSITY’S EXPECTATIONS REGARDING THE OPERATIONS OF THE UNIVERSITY AND OTHER MATTERS. IN THIS RESPECT, THE WORDS “ESTIMATE,” “PROJECT,” “ANTICIPATE,” “EXPECT,” “INTEND,” “BELIEVE,” “FORECAST” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ALTHOUGH THE UNIVERSITY BELIEVES ITS EXPECTATIONS REGARDING FUTURE EVENTS ARE BASED ON REASONABLE ASSUMPTIONS WITHIN THE SCOPE OF ITS KNOWLEDGE, THE UNIVERSITY CAN GIVE NO ASSURANCE THAT ITS GOALS WILL BE ACHIEVED OR THAT ITS EXPECTATIONS REGARDING FUTURE DEVELOPMENTS WILL BE REALIZED. THE FORWARD-LOOKING STATEMENTS IN THIS OFFERING MEMORANDUM, INCLUDING THOSE SET FORTH IN APPENDIX A, ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE STATEMENTS. THE UNDERWRITERS HAVE PROVIDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS OFFERING MEMORANDUM. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFERING MEMORANDUM IN ACCORDANCE WITH, AND AS PART OF, THEIR RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. THE 2016A BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(A)(4) OF THE SECURITIES ACT OF 1933, AS AMENDED. FOR STATE OF WASHINGTON RESIDENTS: (1) OFFERS AND SALES OF THE 2016A BONDS TO RESIDENTS OF THE STATE OF WASHINGTON MAY BE MADE (A) ONLY IF THE WASHINGTON ADMINISTRATOR OF SECURITIES DOES NOT DISALLOW THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF WASHINGTON WITHIN TEN FULL BUSINESS DAYS FOLLOWING A NOTICE FILING WITH RESPECT TO THE 2016A BONDS AND (B) THEREAFTER, ONLY TO PERSONS WHO, PRIOR TO THE DATE OF THIS OFFERING MEMORANDUM, WERE MEMBERS OF, CONTRIBUTORS TO, OR LISTED AS PARTICIPANTS IN, THE UNIVERSITY, OR THEIR RELATIVES. (2) THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY AS OF AND FOR THE FISCAL YEARS ENDED MAY 31, 2016 AND MAY 31, 2015, ARE INCLUDED AS APPENDIX B TO THIS OFFERING MEMORANDUM. (3) RECEIPT OF NOTICE OF EXEMPTION BY THE WASHINGTON ADMINISTRATOR OF SECURITIES DOES NOT SIGNIFY THAT THE ADMINISTRATOR HAS APPROVED OR RECOMMENDED THE 2016A BONDS, NOR HAS THE ADMINISTRATOR PASSED UPON OFFERING OF THE 2016A BONDS. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. (4) THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE 2016A BONDS IS DEPENDENT UPON THE FINANCIAL CONDITION OF THE UNIVERSITY. THE UNIVERSITY HAS UNDERTAKEN TO PROVIDE CONTINUING DISCLOSURE ON CERTAIN MATTERS, INCLUDING ANNUAL FINANCIAL INFORMATION AND SPECIFIC EVENTS, AS MORE FULLY DESCRIBED HEREIN. SEE “CONTINUING DISCLOSURE” HEREIN. INFORMATION ON WEBSITE ADDRESSES SET FORTH IN THIS OFFERING MEMORANDUM IS NOT INCORPORATED INTO THIS OFFERING MEMORANDUM AND CANNOT BE RELIED UPON TO BE ACCURATE AS OF THE DATE OF THIS OFFERING MEMORANDUM, NOR CAN IT BE RELIED UPON IN MAKING INVESTMENT DECISIONS REGARDING THE 2016A BONDS.

502 East Boone Avenue Spokane, Washington 99258 (800) 986-9585 www.gonzaga.edu*

UNIVERSITY OFFICIALS

President ...... Thayne McCulloh, Ph.D. Chancellor ...... Bernard J. Coughlin, S.J. Academic Vice President ...... Patricia O’Connell Killen, Ph.D. Vice President for Finance...... Charles J. Murphy Vice President for Student Development ...... Judith Biggs Garbuio, Ph.D. Vice President for Mission & Ministry ...... Pat Lee, S.J. Vice President for University Advancement ...... Joseph Poss Vice President ...... Frank Case, S.J. Vice President for Policy, Planning and Administration ...... Robert Myers General Counsel ...... Maureen McGuire, J.D.

ADVISORS AND CONSULTANTS

Special Counsel ...... Kutak Rock LLP Financial Advisor ...... Prager & Co., LLC Trustee ...... U.S. Bank National Association

* The University’s website is not part of this Offering Memorandum, and investors should not rely on information presented in the University’s website in determining whether to purchase the 2016A Bonds. This inactive textual reference to the University’s website is not a hyperlink and does not incorporate the University’s website by reference.

TABLE OF CONTENTS

INTRODUCTION ...... 1 Financial Aid ...... 12 Purpose ...... 1 Gifts, Grants and Bequests ...... 12 The University ...... 1 Investment Performance and Earnings ...... 12 Security and Sources for Payment ...... 1 Other Factors Affecting the Financial Additional Information ...... 2 Performance of the University ...... 13 Possible Limitations on Enforceability of THE 2016A BONDS ...... 2 Obligations and Remedies ...... 13 General ...... 2 Amendments to Indenture ...... 14 Payments on the 2016A Bonds ...... 2 Secondary Market and Prices ...... 14 Redemption Provisions ...... 3 No Seasoned Funds ...... 14 Book-Entry System ...... 4 TAX MATTERS ...... 14 ESTIMATED SOURCES AND USES OF FUNDS ... 4 General ...... 14 THE REFUNDING PLAN ...... 6 Federal Tax Matters ...... 14 Escrow Account ...... 7 Tax Consequences to United States Verification of Mathematical Bondowners ...... 15 Computations ...... 7 Tax Consequences to Foreign Bondowners ...... 16 SECURITY FOR THE 2016A BONDS ...... 7 FATCA ...... 17 Pledge Under the Indenture ...... 7 State, Local and Foreign Taxes ...... 18 Outstanding Obligations and Expected ERISA Considerations ...... 18 Issuance of Additional Debt ...... 8 Intercreditor and Collateral Agency ENFORCEABILITY OF REMEDIES ...... 20 Agreement ...... 8 FINANCIAL ADVISOR ...... 20 No Debt Service Reserve Fund for the 2016A Bonds ...... 9 UNDERWRITING ...... 20 Certain Covenants of the University ...... 9 INDEPENDENT AUDITOR’S REPORT ...... 20 THE UNIVERSITY ...... 9 CONFLICTS OF INTEREST ...... 20 THE TRUSTEE ...... 10 RATINGS ...... 20 CERTAIN BONDOWNERS’ RISKS ...... 10 MATERIAL LITIGATION ...... 20 General ...... 11 Early Redemption ...... 11 CERTAIN LEGAL MATTERS ...... 21 Adequacy of Revenues ...... 11 CONTINUING DISCLOSURE ...... 21 Swap Agreement Interest Rate Risk ...... 12 Enrollment ...... 12 MISCELLANEOUS ...... 21 Tuition ...... 12

Appendix A: Selected Information Concerning the University Including Unaudited Financial Information Appendix B: Audited Consolidated Financial Statements of the University Appendix C: Form of Indenture of Trust Appendix D: Book-Entry System

[THIS PAGE INTENTIONALLY LEFT BLANK]

PRELIMINARY OFFERING MEMORANDUM

THE CORPORATION OF GONZAGA UNIVERSITY REVENUE AND REFUNDING TAXABLE BONDS, SERIES 2016A

INTRODUCTION

This Offering Memorandum, which includes the cover page, the appendices hereto and the documents incorporated herein by reference, is being provided by The Corporation of Gonzaga University (the ”University”) to furnish information in connection with the sale by the University of its Revenue and Refunding Taxable Bonds, Series 2016A, in the aggregate principal amount of $96,625,000* (the “2016A Bonds”). Unless otherwise defined in this Offering Memorandum, capitalized terms used herein will have the meanings set forth in Appendix C – “FORM OF INDENTURE OF TRUST.”

Purpose

The 2016A Bonds are being issued under an Indenture of Trust (the “Indenture”) dated as of October 1, 2016, between the University and U.S. Bank National Association, as trustee (the “Trustee”). The proceeds of the 2016A Bonds will be used for: (1) redeeming all of the Washington Higher Education Facilities Authority (the “Authority”) Revenue and Refunding Revenue Bonds (Gonzaga University Project), Series 2009 (the “2009A Bonds”); (2) redeeming a portion of the Authority’s Refunding Revenue Bonds (Gonzaga University Project), Series 2009B (the “2009B Bonds”)1; (3) redeeming all of the Authority’s Refunding Revenue Bonds (Gonzaga University Project), Series 2010A (the “2010A Bonds”); (4) redeeming all of the Authority’s Revenue Bonds (Gonzaga University Project), Series 2012A (the “2012A Bonds”); (5) redeeming all of the Authority’s Revenue Bonds (Gonzaga University Project), Series 2012B (the “2012B Bonds”) (the 2009A Bonds, the 2010A Bonds, the 2012A Bonds and the 2012B Bonds, and the portion of the 2009B Bonds being redeemed by proceeds of the 2016A Bonds being collectively referred to as the “Refunded Bonds”); (6) paying for the planning, designing, constructing, installing and furnishing of capital improvements to the University’s facilities; and (7) paying all of the costs of issuing the 2016A Bonds and the University’s $35,575,000 Revenue and Refunding Taxable Bonds, Series 2016B (the “2016B Bonds”). See “ESTIMATED SOURCES AND USES OF FUNDS.”

The University

The University is a Washington nonprofit corporation and an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). The University is a coeducational, privately endowed university offering undergraduate liberal arts, professional and graduate degrees. The University was incorporated in 1894 as Gonzaga College and changed its name to Gonzaga University in 1912. The University is located on a 152-acre campus in a residential area near the heart of downtown Spokane, Washington, and currently serves approximately 7,500 students. The University is governed by a Board of Trustees currently consisting of 34 elected Trustees and one ex officio Trustee, as well as a 68 member Board of Regents that serves in an advisory capacity. See “THE UNIVERSITY,” Appendix A – “SELECTED INFORMATION CONCERNING THE UNIVERSITY INCLUDING UNAUDITED FINANCIAL INFORMATION” and Appendix B – “AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY.”

Security and Sources for Payment

The 2016A Bonds are general obligations of the University to the payment of which the University has pledged certain of its Unrestricted Gross Revenues (the “Pledged Revenues”) in amounts and at times sufficient to pay the principal of and premium, if any, and interest on the 2016A Bonds when due pursuant to their terms or upon the redemption or acceleration thereof. The 2016A Bonds are secured by a security interest in the Pledged Revenues and (i) money held in all Funds and accounts under the Indenture (excluding the Cost of Issuance Fund), together with investment earnings thereon received by the Trustee, and (ii) all income, revenues, proceeds, obligations, securities and other amounts received by the Trustee and derived from or in connection with the 2016A Bonds, the Intercreditor and Collateral Agency Agreement and the Security Agreement, but excluding amounts payable as the Rating Agency Surveillance Fee, the Trustee Fee and the indemnification and reimbursement of the Trustee (collectively, the “Revenues”). See “SECURITY FOR THE 2016A BONDS” and Appendix C – “FORM OF INDENTURE OF TRUST.”

1 The outstanding principal amount of the 2009B Bonds not refunded with proceeds of the 2016A Bonds will be refunded with proceeds of the 2016B Bonds and any necessary contributions from the University. * Preliminary; subject to change.

Pursuant to the Fifth Amended and Restated Intercreditor and Collateral Agency Agreement dated as of October 1, 2016, among Bank of America, N.A., as the Swap Counterparty (as hereinafter defined); U.S. Bank National Association in its capacity as bond trustee for the 2009B Bonds, the 2013 Bonds (as hereinafter defined), the 2016A Bonds and the 2016B Bonds; U.S. Bank National Association and Wells Fargo Bank, National Association, as lenders under the Credit Agreements (as hereinafter defined); the purchasers of the 2016B Bonds; and U.S. Bank National Association, as the collateral agent (the “Intercreditor and Collateral Agency Agreement”), the pledge of the Pledged Revenues and certain pledged accounts (the ”Collateral”) with respect to the University’s obligations under the Indenture is on a parity with the pledges that secure the repayment of the 2009B Bonds, the Authority’s Revenue Bonds (Gonzaga University Project), Series 2013A and the Authority’s Taxable Revenue Bonds (Gonzaga University Project), Series 2013B (collectively the “2013 Bonds”) (currently outstanding in an aggregate principal amount of $53,000,000) and the 2016B Bonds (when issued); the University’s obligations under the Swaps (as hereinafter defined); and the University’s obligations to U.S. Bank National Association under a Credit Agreement, dated as of December 1, 2013 in connection with a line of credit and the University’s obligations to Wells Fargo Bank, National Association under a Credit Agreement dated December 18, 2013 in connection with a line of credit (as the same may be amended or modified from time to time, including amendments and restatements thereof in its entirety, collectively, the Credit Agreements”). The Intercreditor and Collateral Agency Agreement contemplates that additional secured parties may become parties to such agreement and that additional indebtedness may, in the future, be secured by interests in the Collateral on parity with the 2016A Bonds. All parties to the Intercreditor and Collateral Agency Agreement will share in the Collateral on a pooled basis on the terms and conditions described in the Intercreditor and Collateral Agency Agreement. See “SECURITY FOR THE 2016A BONDS – Outstanding Obligations” and “– Intercreditor and Collateral Agency Agreement.”

Additional Information

Included in this Offering Memorandum is information concerning the University, the sources of payment for the 2016A Bonds and the expected uses of proceeds of the 2016A Bonds, together with summaries of the terms of the 2016A Bonds and certain provisions of the Indenture, the Intercreditor and Collateral Agency Agreement and certain documents related thereto. All references herein to agreements or documents are qualified in their entirety by the definitive forms thereof, copies of which are available for inspection at the corporate trust office of the Trustee at 1420 Fifth Avenue, 7th Floor, Seattle, Washington 98101, Attention: Corporate Trust Services.

THE 2016A BONDS

General

The 2016A Bonds will be dated as of their date of initial delivery, will be issued in denominations of $1,000 or any integral multiple thereof within a single maturity (each an “Authorized Denomination”), and will bear interest from their dated date (or the most recent date to which interest has been paid thereon) until the 2016A Bonds mature or are duly called for redemption prior to maturity. Interest on the 2016A Bonds will be payable semiannually on each April 1 and October 1, commencing April 1, 2017 (each, an “Interest Payment Date”). Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The 2016A Bonds will bear interest at the rates, and will mature on the dates and in the amounts set forth on the inside front cover of this Offering Memorandum.

Payments on the 2016A Bonds

The 2016A Bonds will be issued as fully registered bonds under a book-entry system, initially registered to Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the 2016A Bonds. Individual purchases of 2016A Bonds will be made in the principal amount of $1,000, or integral multiples thereof within a single maturity, and will be in book-entry form only. Purchasers will not receive certificates representing their interest in the 2016A Bonds, except as described herein. See “Book-Entry System” herein. The University and the Trustee, in its capacity as Bond Registrar (the “Bond Registrar”) may deem and treat the Registered Owner of each 2016A Bond as the absolute owner of such 2016A Bond for the purpose of receiving payments of principal and interest due on such 2016A Bond and for all other purposes, and neither the University nor the Bond Registrar shall be affected by any notice to the contrary. See “Book-Entry System” and Appendix D – “BOOK-ENTRY SYSTEM.”

If the 2016A Bonds are no longer held in fully immobilized form, the principal of, premium, if any, and interest on each 2016A Bond will be payable upon the presentation and surrender of such 2016A Bond, when due, at the Principal Office of the Bond Registrar. Payment of interest on each 2016A Bond will be made to the Registered Owner thereof as specified on the records of the Bond Registrar on the Record Date with respect to such Interest Payment Date irrespective of the cancellation of such 2016A Bond upon any transfer or exchange thereof subsequent to such Record Date and prior to such Interest Payment Date, unless the University shall default in the payment of interest due on such Interest Payment Date.

Each interest payment of each 2016A Bond will be paid: (1) by check or draft mailed first-class mail to such Registered Owner on the Interest Payment Date at his address as it appears on the Bond Register on the Record Date; or (2) at the option of any Registered Owner, by wire transfer to an account designated in writing by such Registered Owner prior to the Record Date with an acknowledgement that the then applicable wire fee of the Trustee will be deducted from the wire; or (3) by Automated Clearinghouse Transfers at no cost to the Registered Owner in next day funds if such Registered Owner shall have requested in writing a payment by such method and shall have provided the Bond Registrar with an account number in a bank within the United States and other necessary information for such purposes prior to the Record Date. In the event of any default in the payment of interest, such defaulted interest shall be payable to the Registered Owner of such 2016A Bond on a Special Record Date for the payment of such defaulted interest established by notice mailed by or on behalf of the University to Registered Owners.

Redemption Provisions∗

Optional Redemption. The 2016A Bonds are subject to redemption prior to maturity by written direction of the University, in whole or in part, on any Business Day, at the Make-Whole Redemption Price. The “Make-Whole Redemption Price” is the greater of (i) 100% of the principal amount of the 2016A Bonds to be redeemed; or (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of the 2016A Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the 2016A Bonds are to be redeemed, discounted to the date on which the 2016A Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate (as defined below) plus ___ basis points, plus, in each case, accrued and unpaid interest on the 2016A Bonds to be redeemed to the redemption date. The "Treasury Rate” is, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent weekly Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days, but not more than 45 calendar days, prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the maturity date of the 2016A Bonds to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year , the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

Mandatory Sinking Fund Redemption. The 2016A Bonds scheduled to mature on April 1, 2046*, are subject to mandatory sinking fund redemption at a price of par plus interest accrued to the date fixed for redemption, on April 1, in the years and amounts as follows:

2016A Bonds Scheduled to Mature on April 1, 2046* Years Principal Amounts 2044 $30,860,000 2045 32,190,000 2046(1) 33,575,000 (1) Final Maturity.

In the event that such 2016A Bonds have been optionally redeemed, defeased or purchased for cancellation, the remaining mandatory sinking fund redemptions will be reduced pro rata in Authorized Denominations.

Notice of Redemption. For so long as the 2016A Bonds are held in book-entry form by DTC or its nominee, notices of redemption will be given by the Trustee solely in accordance with the Letter of Representations. See “Book- Entry System” and Appendix D – “BOOK-ENTRY SYSTEM.”

If the 2016A Bonds are no longer held in fully immobilized form by DTC, the Trustee is required to give notice of redemption by first-class mail, postage prepaid, not less than 20 days and not more than 60 days prior to the date fixed for redemption, to the Registered Owner of each 2016A Bond to be redeemed at the address of such Registered Owner as shown on the Bond Register. Neither the failure of a Bondowner to receive notice by mail, nor any defect in such notice, will affect the validity of the proceedings for redemption.

∗ Preliminary; subject to change.

Notice of redemption may be given on a conditional basis if redemption is subject to the issuance of refunding bonds. Notice of redemption may also be rescinded by written notice given to the Trustee by the University no later than five Business Days prior to the date fixed for redemption. The Trustee shall give notice of such rescission as soon thereafter as practicable in the same manner as notice of such redemption was given.

Effect of Redemption. Once a notice of redemption has been given, unless the notice of redemption was duly rescinded or was conditioned upon the issuance of refunding bonds that were not issued, the 2016A Bonds designated for redemption will become due and payable on the date fixed for redemption and, unless the University defaults in the payment of the principal of or interest on such 2016A Bonds, such 2016A Bonds will cease to bear interest from and after the date fixed for redemption whether or not such 2016A Bonds are presented and surrendered for payment on such date. If any 2016A Bond called for redemption is not paid upon presentation and surrender thereof for redemption, such 2016A Bond will continue to bear interest at the rate set forth thereon until paid or until due provision is made for payment.

Partial Redemption. All or a portion of any 2016A Bond may be redeemed, but only in a principal amount equal to an Authorized Denomination. The maturities of 2016A Bonds to be redeemed are to be selected by the University, and in the case of partial redemption of 2016A Bonds of a particular maturity, on a “pro rata pass-through distribution of principal” basis or, if the 2016A Bonds are no longer in book-entry only form, on a pro rata basis. If any certificated 2016A Bond is to be redeemed in part, it must be surrendered to the Bond Registrar and the University will execute and the Bond Registrar will authenticate and deliver a new 2016A Bond or 2016A Bonds of Authorized Denominations of the same maturity and in the aggregate principal amount of the unredeemed 2016A Bond to the owner thereof.

Purchase of the 2016A Bonds. The University may acquire and sell 2016A Bonds in the open market from available funds of the University at any price the University deems reasonable. All 2016A Bonds so purchased need not be cancelled.

Defeasance of the 2016A Bonds. If the University pays or causes to be paid, or makes provisions for payment of the principal of, premium, if any, and interest due or to become due on the 2016A Bonds at the times and in the manner stipulated therein, and if the University has observed all the covenants and promises in the 2016A Bonds and in the Indenture to be observed on its part, and pays to the Trustee all money due or to become due according to the provisions of the Indenture, the Indenture and the lien, rights, estate and interest created thereby will cease, terminate and become null and void (except as to any rights of registration, transfer or exchange of 2016A Bonds provided for in the Indenture). Any 2016A Bonds, prior to the maturity or redemption thereof, will be deemed to be paid and defeased when payment of the principal of, and premium, if any, on such 2016A Bonds, plus interest thereon to the due date thereof, has been made or has been provided for, by irrevocably depositing with the Trustee any combination of money sufficient to make such payment when due and/or non-prepayable Government Obligations purchased with such money maturing as to principal and interest in such amounts and at such times as will insure the availability of sufficient money to make such payment. See “TAX MATTERS.”

Book-Entry System

When delivered, the 2016A Bonds will be registered in the name of Cede & Co., the nominee of DTC. DTC will act as the securities depository for the 2016A Bonds. Purchases of the 2016A Bonds may be made in book-entry form only, through brokers and dealers who are, or who act through, DTC Participants. Beneficial Owners of the 2016A Bonds will not receive physical delivery of certificated securities (except under certain circumstances described in the Indenture). Payment of the principal or redemption price of and interest on the 2016A Bonds are payable by the Trustee to DTC, which will in turn remit such payments to the DTC Participants, which will in turn remit such payments to the Beneficial Owners of the 2016A Bonds. In addition, so long as Cede & Co. is the Registered Owner of the 2016A Bonds, the right of any Beneficial Owner to receive payment for any 2016A Bond will be based only upon and subject to the procedures and limitations of the DTC book-entry system. The information set forth in Appendix D has been provided by DTC. Beneficial Owners should confirm the information contained in Appendix D with DTC or the Participants, as defined in Appendix D.

ESTIMATED SOURCES AND USES OF FUNDS

The 2016A Bonds are being issued for the purpose of: (1) redeeming the Refunded Bonds; (2) paying for the planning, designing, constructing, installing and furnishing of capital improvements to the University’s facilities; and (3) paying costs of issuing the 2016A Bonds and the 2016B Bonds.

The estimated sources and uses of funds in connection with the issuance of the 2016A Bonds are as follows:

SOURCES OF FUNDS: Principal of the 2016A Bonds: $ Debt Service Reserve Fund Release:

TOTAL: $ USES OF FUNDS: Deposit to Refunding Fund: Deposit to the University for Capital Improvements: Issuance Costs:(1) TOTAL: ______(1) Including, but not limited to, the initial fees of the Trustee, certain fees of the rating agencies, legal fees, financial advisory fees, Refunding Trustee fees, underwriters’ discount and costs of issuing the 2016B Bonds.

(Remainder of page intentionally left blank)

THE REFUNDING PLAN

A portion of the proceeds of the 2016A Bonds will be used to pay, redeem and retire the Refunded Bonds. The 2009A Bonds, 2010A Bonds and the portion of the 2009B Bonds being refunded with proceeds of the 2016A Bonds will be defeased through the purchase of Government Obligations to be held in escrow by U.S. Bank National Association, Seattle, Washington, as Refunding Trustee. The 2012A Bonds and the 2012B Bonds are expected to be redeemed and paid on the date of delivery of the 2016A Bonds. The escrow will be sufficient to redeem or retire the Refunded Bonds on the dates and at the prices in the schedule set forth below. The Refunded Bonds bear interest and are callable in accordance with the schedule set forth below. The University shall irrevocably deposit such Government Obligations as described above with the Refunding Trustee in a sufficient amount to pay the interest on the applicable Refunded Bonds up to and including the date the Refunded Bonds are redeemed and retired and to redeem and retire the Refunded Bonds on the dates and at the prices set forth below:

2009A Refunded Bonds Original Principal Interest CUSIP Redemption Maturity Date Amount Rate Number Date Redemption Price 4/1/2017 $1,650,000 5.250% 939781B90 4/1/2018 1,650,000 5.000 939781C24 4/1/2019 1,440,000 5.125 939781C32 4/1/2020 2,445,000 5.375 939781C40 4/1/2019 100.00% 4/1/2021 2,560,000 5.500 939781C57 4/1/2019 100.00 4/1/2022 2,690,000 5.625 939781C65 4/1/2019 100.00 4/1/2029 21,010,000 6.250 939781C73 4/1/2019 100.00 2009B Refunded Bonds1 Original Principal Interest CUSIP Redemption Maturity Date Amount Rate Number Date Redemption Price 4/1/2029 $13,790,000 5.000% 939781E71 4/1/2019 100.00% 2010A Refunded Bonds Original Principal Interest CUSIP Redemption Maturity Date Amount Rate Number Date Redemption Price 4/1/2017 $2,975,000 4.500% 939781H45 4/1/2018 2,365,000 5.000 939781H52 4/1/2019 2,375,000 5.000 939781H60 4/1/2020 1,335,000 4.000 939781H94 4/1/2019 100.00% 4/1/2021 1,375,000 4.125 939781J27 4/1/2019 100.00 4/1/2022 1,440,000 4.250 939781J35 4/1/2019 100.00 4/1/2023 1,505,000 4.300 939781J43 4/1/2019 100.00 4/1/2024 1,550,000 4.500 939781H86 4/1/2019 100.00 4/1/2029 8,895,000 4.875 939781H78 4/1/2019 100.00 2012A Refunded Bonds Original Principal Interest CUSIP Redemption Maturity Date Amount Rate Number Date* Redemption Price 4/1/2022 $7,305,000 VAR N/A 10/20/2016 100.00% 2012B Refunded Bonds Original Principal Interest CUSIP Redemption Maturity Date Amount Rate Number Date* Redemption Price 4/1/2017 $ 190,000 VAR N/A 10/20/2016 100.00% 4/1/2018 200,000 VAR N/A 10/20/2016 100.00 4/1/2019 210,000 VAR N/A 10/20/2016 100.00 4/1/2020 220,000 VAR N/A 10/20/2016 100.00 4/1/2021 230,000 VAR N/A 10/20/2016 100.00 4/1/2022 1,700,000 VAR N/A 10/20/2016 100.00

Escrow Account

Upon issuance of the 2016A Bonds, the Refunding Trustee will invest a portion of the 2016A Bond proceeds in certain U.S. government obligations (the “Government Obligations”), pursuant to an Escrow Agreement entered into by and between the University and the Refunding Trustee. The Government Obligations and initial cash balance, if any, shall be held by the Refunding Trustee in the Escrow Account and the money and securities therein shall be used solely to defease, pay, redeem and retire the 2009A Bonds, the 2010A Bonds and the portion of the 2009B Bonds being refunded with proceeds of the 2016A Bonds. The 2012A Bonds and the 2012B Bonds are expected to be redeemed and paid on the date of delivery of the 2016A Bonds. The refunding of the Refunded Bonds will discharge the pledge of the funds securing the Refunded Bonds, and the owners of the Refunded Bonds will no longer be entitled to the security of the indentures executed in connection with the Refunded Bonds, except for the right to payments from the amounts held by the Refunding Trustee under the Escrow Agreement.

Verification of Mathematical Computations

Causey Demgen & Moore P.C., a nationally recognized independent firm of certified public accountants (the “Verification Agent”), will verify the arithmetical accuracy of certain computations included in the schedules provided by the Underwriters on behalf of the University relating to: (1) forecasted receipts of principal of and interest on the Government Obligations; and (2) the payment of the principal of and interest on the Refunded Bonds. Such computations will be based solely on assumptions and information supplied by the Underwriters. The Verification Agent will restrict its procedures to verifying the arithmetical accuracy of such computations and will not independently study or evaluate the assumptions and information upon which the computations were based. Accordingly, the Verification Agent will not express an opinion on the data used, the reasonableness of the assumptions, or the achievability of the forecasted outcome. The receipt of the report is a condition to the issuance of the 2016A Bonds.

SECURITY FOR THE 2016A BONDS

Pledge Under the Indenture

By means of the Indenture, the University will pledge the Trust Estate to the Trustee for purposes of securing the University’s obligations under the Indenture. The “Trust Estate” includes: (1) the Pledged Revenues, which consist of the University’s Unrestricted Gross Revenues; (2) all Revenues (subject to disbursement and application in accordance with the Indenture), which are defined in the Indenture to include money held in the Funds and accounts created under the Indenture (except the Cost of Issuance Fund and any money collected pursuant to fees, reimbursement or indemnification of the Trustee), together with investment earnings thereon; and (3) any and all other property hereafter pledged or assigned as and for additional security under the Indenture.

The 2016A Bonds are general obligations of the University to the payment of which the University has pledged the Pledged Revenues in amounts and at times sufficient to pay the principal of and premium, if any, and interest on the 2016A Bonds when due pursuant to their terms or upon the redemption or acceleration thereof. The 2016A Bonds are secured by a security interest in such Pledged Revenues and the other Revenues.

As defined in the Indenture, Unrestricted Gross Revenues means all moneys, fees and tuition (net of institutional financial aid and other discounts or waivers), rates, receipts, rentals, licensing fees, charges, issues and income received or derived by the University, the operation of the University, or its facilities or any other source whatsoever, as reported on the University’s audited financial statement of activities, including, without limitation, gifts, bequests, grants, devises, contributions, moneys received from the operation of the University’s business or the possession of its properties, insurance proceeds or condemnation awards, and all rights to receive the same, whether in the form of accounts, accounts receivable, contract rights or other rights, and the proceeds of the same whether now owned or held or hereafter coming into being, but excluding gifts, grants, devises, bequests and contributions designated by the maker to a specific purpose inconsistent with their use for payment of principal of, premium, if any, and interest on Indebtedness or for the payment of operating expenses of the University and further excluding any gifts, grants, devises, bequests or contributions received by any foundation or other legal entity created by but separate from the University. For purposes of calculating Unrestricted Gross Revenues with respect to the covenants contained in the Indenture, “Unrestricted Gross Revenues” means the sum of the University’s Unrestricted Total Operating Revenues plus the Unrestricted Net Assets Released from Restrictions in the Nonoperating Activities section of the University’s Audited Financial Statements-Consolidated Statement of Activities. From and after such time as the 2009A Bonds are redeemed, paid and defeased, and are no longer outstanding under the Intercreditor and Collateral Agency Agreement and the Swaps are terminated or amended to conform, for purposes of Pledged Revenues, the definition of Unrestricted Gross Revenues will exclude revenues from facilities constructed or

7 acquired after October 1, 2009, which revenues are pledged to obligations (other than Additional Bonds or Indebtedness having a parity lien on the Unrestricted Gross Revenues with the 2016A Bonds) incurred to finance such new facilities.

Outstanding Obligations and Expected Issuance of Additional Debt

The pledge of the Collateral with respect to the University’s obligations under the Indenture will be on parity with the pledges that secure the repayment of the 2009B Bonds, the 2013 Bonds, the University’s obligations under the Swaps and the University’s obligations under the Credit Agreements. The Intercreditor and Collateral Agency Agreement contemplates that additional secured parties may become parties to such agreement and that additional indebtedness may, in the future, be secured by interests in the Collateral on parity with the 2016A Bonds and the 2016B Bonds. All parties to the Intercreditor and Collateral Agency Agreement will share in the Collateral on a pooled basis on the terms and conditions described in the Intercreditor and Collateral Agency Agreement. See “Intercreditor and Collateral Agency Agreement.”

Interest Rate Swap Agreements. The University and Bank of America, N.A. (the ”Swap Counterparty”) entered into a forward-start interest rate swap agreement in connection with the issuance of the Authority’s Refunding Revenue Bonds (Gonzaga University Project), Series 2007B, effective October 1, 2014 (the ”2007B Swap”) and a forward-start interest rate swap agreement in connection with the issuance of the Authority’s Refunding Revenue Bonds (Gonzaga University Project), Series 2007C, effective October 1, 2012 (the ”2007C Swap” and, together with the 2007B Swap, the ”Swaps”).

The Swaps had an initial notional amount of $42,875,000 and have a $35,575,000 outstanding notional amount as of May 31, 2016. See the discussion of derivative financial instruments under Note 6 in Appendix B – “AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY” and Appendix A – “SELECTED INFORMATION CONCERNING THE UNIVERSITY INCLUDING UNAUDITED INFORMATION – Interest Rate Swap Agreements” for additional information regarding the Swaps. Under the Swaps, the University is obligated to pay a fixed rate on the notional amount and in exchange the Swap Counterparty is obligated to pay the University a variable rate on the notional amount based on the One-Month London Interbank Offered Rate (LIBOR).

The Swaps are subject to early termination by the University at any time or the Swap Counterparty upon the occurrence of an additional termination event.

The pledge of the Pledged Revenues under the Indenture is on parity with the pledge that secures University’s obligations under the Swaps and any future swap transactions between the University and the Swap Counterparty. See “Intercreditor and Collateral Agency Agreement.”

Additional Indebtedness. The University anticipates issuing the 2016B Bonds in the principal amount of $35,575,000 for the purpose of: (1) redeeming the portion of the 2009B Bonds not refunded by the 2016A Bonds (along with any necessary contributions from the University); and (2) paying for the planning, designing, constructing, installing and furnishing of capital improvements to the University’s facilities.

The 2016B Bonds will be issued pursuant to a separate indenture of trust between the University and U.S. Bank National Association, as trustee. The University anticipates issuing the 2016B Bonds and selling the 2016B Bonds directly to one or more financial institutions by October 31, 2016.

Intercreditor and Collateral Agency Agreement

In connection with the issuance of the 2016A Bonds and the 2016B Bonds, Bank of America, N.A., as the Swap Counterparty; the Trustee in its capacity as bond trustee for the 2009B Bonds, the 2013 Bonds, the 2016A Bonds and the 2016B Bonds; the purchasers of the 2016B Bonds; U.S. Bank National Association and Wells Fargo Bank, National Association as lenders under the Credit Agreements; and U.S. Bank National Association, as the collateral agent (the “Collateral Agent”) will enter into the Intercreditor and Collateral Agency Agreement to amend and restate a Fourth Amended and Restated Intercreditor and Collateral Agency Agreement dated as of August 1, 2013, which had amended and restated a Third Amended and Restated Intercreditor and Collateral Agency Agreement dated as of August 1, 2012, which had amended and restated an Intercreditor and Collateral Agency Agreement dated as of January 1, 2010, which had amended and restated an Intercreditor and Collateral Agency Agreement dated as of September 30, 2009, which had amended and restated an Intercreditor and Collateral Agency Agreement dated as of September 1, 2008.

Pursuant to the Intercreditor and Collateral Agency Agreement, the Collateral Agent is appointed as the agent of the parties thereto with respect to the Collateral. The Collateral Agent is authorized to enforce rights and remedies of the secured

8 parties under a Fifth Amended and Restated Security Agreement dated as of October 1, 2016 (the “Security Agreement”), made by the University in favor of the Collateral Agent, for the benefit of Bank of America, N.A., U.S. Bank National Association, as bond trustee, U.S. Bank National Association, Wells Fargo Bank, National Association, the purchasers of the 2016B Bonds and additional bond trustees and secured creditors (collectively, the “Secured Creditors”). Under the Intercreditor and Collateral Agency Agreement, the parties have agreed that the security interests and liens granted to the Collateral Agent will secure Indebtedness (as defined therein) on a pari passu basis for the benefit of the Collateral Agent and the Secured Creditors, notwithstanding the relative priority or the time of grant, creation, attachment or perfection of any security interest and liens, if any, of any of the Collateral Agent or any such Secured Creditor.

For purposes of the Intercreditor and Collateral Agency Agreement, “Indebtedness” includes: (1) payment obligations of the University under the Swaps and any swap contracts that may in the future be entered into between the University and Bank of America, N.A.; (2) obligations of the University to repay the loan with respect to the 2009B Bonds; (3) obligations of the University to repay the loan with respect to the 2013 Bonds; (4) obligations of the University pursuant to the Indenture in connection with the 2016A Bonds; (5) the obligations of the University to repay amounts in connection with the 2016B Bonds and additional bonds issued by the Authority for the benefit of the University; (6) any indebtedness for borrowed money incurred by the University and secured by the Security Agreement; (7) obligations of the University or any Secured Creditor to pay, reimburse or indemnify the Collateral Agent; (8) obligations owing by the University to the administrative agent and the lenders pursuant to the Credit Agreements; (9) certain liabilities of the University owing to lenders under the Credit Agreements or their affiliates arising out of transactions involving accounts of the University maintained with such parties or other deposit, disbursement and cash management services afforded to the University by such lenders and affiliates; (10) liability of the University to any lender under the Credit Agreements or their affiliates, in respect of certain hedging arrangements that may be entered into from time to time; (11) other present or future indebtedness, liabilities or obligations of the University owed to any or all of the Collateral Agent or any other Secured Creditor; and (12) other future indebtedness of the University secured by a parity lien on the Collateral.

The Intercreditor and Collateral Agency Agreement contemplates that additional parties may become secured parties thereunder in the future and that additional indebtedness may be secured by the Pledged Revenues on a parity with the liens or security interests of the original Secured Parties. The rights and remedies of the Trustee, on behalf of Bondowners, under the Indenture with respect to the Pledged Revenues are governed by and subject to the terms and conditions of the Intercreditor and Collateral Agency Agreement. All parties to the Intercreditor and Collateral Agency Agreement share in the Collateral on a pooled basis, on the terms and conditions set forth therein. See “SECURITY FOR THE 2016A BONDS” and Appendix C – “FORM OF INDENTURE OF TRUST.”

No Debt Service Reserve Fund for the 2016A Bonds

The 2016A Bonds are not secured by any debt service reserve fund.

Certain Covenants of the University

The University has agreed to certain covenants for the protection of the Bondowners. For a more detailed description of these and other covenants of the University, see Appendix C – “FORM OF INDENTURE OF TRUST – Article VII Payment; Further Agreements.” Section 717 of the Indenture contains a negative pledge on the University’s Core Campus and conditions for securing additional Indebtedness; Section 718 of the Indenture sets forth conditions for the issuances of additional Indebtedness; and Section 719 of the Indenture sets forth an Expendable Net Asset Ratio and a Debt Service Coverage Ratio. From and after such time as the Refunded Bonds and the remaining 2009B Bonds are redeemed, paid and defeased, and are no longer outstanding under the Intercreditor and Collateral Agency Agreement and the Swaps are terminated or amended to eliminate the covenants contained in Sections 717, 718 and 719 of the Indenture, the covenants contained in Sections 717, 718 and 719 of the Indenture shall no longer apply to the University.

THE UNIVERSITY

Founded in Spokane, Washington, by members of the Society of Jesus in 1887, the University is an independent Roman Catholic and Jesuit University. The University was incorporated in 1894 as Gonzaga College and changed its name to Gonzaga University in 1912. The University does not receive financial support from the Roman Catholic Church, but rather it depends on tuition revenues, gifts and the income from its endowment for its operational needs. The University is a Washington nonprofit corporation and an organization described under Section 501(c)(3) of the Code. The University’s educational philosophy is based upon the 450-year-old Ignatian model that aims to educate the whole person: mind, body and spirit – an integration of science and art, faith and reason, action and contemplation. The University is routinely recognized in national publications as one of the West’s best comprehensive regional universities.

The University is located on a 152-acre campus in a residential area near the heart of downtown Spokane, Washington, currently serving approximately 7,500 students. The state of Washington (the “State”) accorded the University status as a university in 1912, the same year the School of Law began. The School of Business Administration was established in 1921, the School of Education in 1928, the Graduate School in 1931, the School of Engineering and Applied Science in 1934, the School of Professional Studies in 1975 and the School of Nursing and Human Physiology in 2013. The University maintains contact with more than 48,000 alumni, through its quarterly alumni publication and other methods.

The University offers 7 bachelor’s degrees in 75 majors and programs; master’s degrees in 26 programs and doctorate degrees in Nursing Practice and Nurse Anesthesia Practice programs, in addition to primary and secondary education credential programs. Programs are offered through the Colleges of Arts and Sciences and the Schools of Business Administration, Education, Engineering and Applied Science, Professional Studies, Nursing and Human Physiology, and Law. The University is governed by a Board of Trustees currently consisting of 34 elected Trustees and one ex officio Trustee, as well as a 68-member Board of Regents that serves in an advisory capacity.

For additional information regarding the University, please see Appendix A – “SELECTED INFORMATION CONCERNING THE UNIVERSITY INCLUDING UNAUDITED FINANCIAL INFORMATION” and Appendix B – “AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY.”

THE TRUSTEE

The information under this heading has been provided solely by the Trustee and is believed to be reliable, but has not been verified independently by the University or the Underwriters. No representation whatsoever as to the accuracy, adequacy or completeness of such information is made by the University or the Underwriters.

U.S. Bank National Association is the Trustee under the Indenture. The Trustee is a national banking association organized and existing under the laws of the United States of America, having all of the powers of a bank, including fiduciary powers, and is a member of the Federal Deposit Insurance Corporation and the Federal Reserve System. The mailing address of the Trustee is U.S. Bank National Association, 1420 Fifth Avenue, Seventh Floor, Seattle, Washington 98101, Attention: Corporate Trust Services.

The Trustee is to carry out such duties as are assigned to it under the Indenture. Except for the contents of this section, the Trustee has not reviewed or participated in the preparation of this Offering Memorandum and assumes no responsibility for the nature, contents, accuracy or completeness of the information set forth in this Offering Memorandum or for the recitals contained in the Indenture or the 2016A Bonds (except for the certificate of authentication on each 2016A Bond), or for the validity, sufficiency, or legal effect of any of such documents.

Furthermore, the Trustee has no oversight responsibility, and is not accountable, for the use or application by the University of any of the 2016A Bonds authenticated or delivered pursuant to the Indenture or for the use or application of the proceeds of such 2016A Bonds by the University. The Trustee has not evaluated the risks, benefits, or propriety of any investment in the 2016A Bonds and makes no representation, and has reached no conclusions, regarding the value or condition of any assets or revenues pledged or assigned as security for the 2016A Bonds, the technical or financial feasibility of the expected uses of proceeds of the 2016A Bonds or the investment quality of the 2016A Bonds, about all of which the Trustee expresses no opinion and expressly disclaims the expertise to evaluate.

Additional information about the Trustee may be found at its website at http://www.usbank.com/corporatetrust. Neither the information on U.S. Bank’s website, nor any links from that website, is part of this Offering Memorandum, and such information cannot be relied upon to be accurate as of the date of this Offering Memorandum, nor should any such information by relied upon to make investment decisions regarding the 2016A Bonds.

CERTAIN BONDOWNERS’ RISKS

The purchase of the 2016A Bonds will involve a number of risks. Each prospective purchaser of the 2016A Bonds should make an independent evaluation of all of the information presented in this Offering Memorandum to make an informed investment decision. The following is a summary, which does not purport to be comprehensive or definitive, of some of such risk factors.

General

An investment in the 2016A Bonds involves certain risks, including the risk of nonpayment of interest or principal due to Bondowners and the risk that the 2016A Bonds will be redeemed prior to maturity. The enforceability of the University’s obligations pursuant to the Indenture may be limited by the laws of the State and the United States with respect to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies. See “SECURITY FOR THE 2016A BONDS.” The risk of nonpayment or that the 2016A Bonds will be redeemed prior to maturity is affected by the following factors, among others, which should be considered by prospective investors, along with other information presented in this Offering Memorandum, in judging the suitability of an investment in the 2016A Bonds. The 2016A Bonds may not be a suitable investment for all prospective purchasers. Prospective purchasers should consult their investment advisors before making any decisions as to the purchase of the 2016A Bonds.

Early Redemption

Purchasers of 2016A Bonds, including those who purchase the 2016A Bonds at a price in excess of their principal amount or who hold such a 2016A Bond trading at a price in excess of par, should consider the fact that certain maturities of the 2016A Bonds are subject to redemption at a price equal to their principal amount plus accrued interest in the event such 2016A Bonds are redeemed prior to maturity upon mandatory sinking fund redemption. See the description herein under the heading “THE 2016A BONDS – Redemption Provisions.”

Adequacy of Revenues

The future financial condition of the University and the University’s ability to perform its obligations under the Indenture are subject, among other things, to the capabilities of University management and future economic and other conditions which are unpredictable. In addition to the obligations of the University under the Indenture, the existing obligations of the University under the 2009B Bonds, the 2013 Bonds, the Swaps and the Credit Agreements, the University expects to issue the 2016B Bonds, may incur other additional indebtedness on a parity lien with the 2016A Bonds and may incur indebtedness on a subordinated basis. See “SECURITY FOR THE 2016A BONDS.” These factors may adversely affect the University’s revenues and the performance by the University of its obligations under the Indenture. The future financial condition of the University could be adversely affected by, among other things, detrimental State or federal legislation, detrimental State or federal regulatory actions, increased competition from other educational institutions, including State institutions of higher education, decreased demand for higher education services because of higher costs or other reasons, demographic changes, increased costs beyond the ability of the University to control or to increase revenue to offset such increased costs, natural disasters, reduced availability of student financial aid and tax law changes.

From and after such time as the 2009A Bonds are redeemed, paid and defeased, and are no longer outstanding under the Intercreditor and Collateral Agency Agreement and the Swaps are terminated or amended to conform, for purposes of Pledged Revenues, the definition of Unrestricted Gross Revenues will exclude revenues from facilities constructed or acquired after October 1, 2009, which revenues are pledged to obligations (other than Additional Bonds or Indebtedness having a parity lien on the Unrestricted Gross Revenues with the 2016A Bonds) incurred to finance such new facilities

The ability of the University to generate sufficient revenues to meet its obligations under the Indenture depends on a number of factors, including: (1) the University’s ability to achieve enrollment, tuition and fundraising at levels sufficient to consistently enjoy operating surpluses; and (2) the University’s ability to continue to provide financial aid to its students at sufficient levels in attractive combinations of scholarships, grants, loans and work-study (if applicable). These factors are in turn affected by numerous future economic and other conditions which could include possible adverse effects such as the loss by the University of its accreditations; destruction or loss of a substantial portion of the University’s facilities; litigation; competition; discontinuation of favorable governmental policies and programs with respect to post-secondary education; changes in direction of demographic trends determining the number of college-aged persons in the general population; changes in prospective levels of regional and national economic prosperity; the occurrence of natural, national or international calamities; changes in the competitive appeal and perceived quality of the University’s curriculum; changes in the demand for post-high school education and for certain degrees; the ability and energy of the faculty and administration; a reduction in the amounts received by the University through fundraising efforts; or a reduction in the value of the University’s assets. There can be no assurance that the University’s income and receipts will not decrease.

Swap Agreement Interest Rate Risk

The University uses the Swaps to manage its exposure to interest rate fluctuations. There are a number of risks associated with swaps that could affect the value of the Swaps, the ability of the University to accomplish its objectives in entering into the Swaps and the ability of the University to meet its obligations under the Swaps and with respect to the 2016A Bonds. These risks include, among others: counterparty risk – the failure of the counterparty to make required payments; credit risk – the occurrence of an event modifying the credit rating of the University or its counterparty; termination risk – the need to terminate the transaction in a market that dictates a termination payment by the University; and tax risk – the risk created by potential tax events that could affect swap payments. If the University’s bond rating falls below BBB+ by S&P Global Ratings or Baa1 by Moody’s Investors Service, the swap counterparty has the ability to require the University to post collateral. Swap agreements are subject to periodic “mark-to-market” valuations. The Swaps (and any similar future agreements) may, at any time, have a positive or negative value to the University. If the University chooses to terminate a swap agreement or if a swap agreement is terminated pursuant to an event of default or a termination event as described in the swap agreement, the University may be required to pay a termination payment to the swap provider, and such payment may adversely affect the University’s financial condition.

Enrollment

The University believes that the strength of its academic programs, faculty and facilities will cause the demand for its educational programs overall to remain stable; however, no assurance can be given that demand for its educational programs will remain constant. A number of economic, demographic and other circumstances not controllable or presently foreseeable by the University could materially adversely affect its future enrollment and expenses of operation. Declining enrollment would decrease the University’s income and adversely impact its ability to meet its obligations under the Indenture, as would any significant increase in its operating costs or its inability to decrease operating costs in the face of declining enrollments. No assurances can be given regarding the University’s projected future enrollment or its ability to adequately control its operating costs and expenses.

Tuition

A significant portion of the University’s operating revenue is provided through tuition and related fees. Although the University has in the past been able to raise tuition and related fees without adversely affecting enrollment, there can be no assurance that it will continue to be able to do so in the future, or that the increase will be in amounts sufficient to offset expenses. Future tuition increases and any adverse change in enrollment could adversely affect the University’s financial position and its results of operations.

Financial Aid

A significant percentage of the University’s students receive financial support in the form of federally supported loans and scholarships and grants from the University. There can be no assurance that the amount of federally supported loans or other financial aid will remain stable or increase in the future. If the amount of those loans or other financial aid decreases in the future, there can be no assurance that the University will be able to increase the amount of financial aid provided by it. Changes in the availability of financial aid could likely adversely affect the University’s enrollment, and could therefore adversely affect the University’s financial position and its results of operations.

Gifts, Grants and Bequests

The University is continuously involved in fund raising activities of various types. Given actual and possible reductions in federal educational and student assistance programs and the increasing cost of operating a quality university, an inability by the University to raise substantial amounts of money from alumni and other private sources would have a depressing effect on the University’s programs with possible adverse consequences for enrollment and results from operations.

Investment Performance and Earnings

The University’s various investment accounts include fixed income securities, equity holdings and alternative investments. The past performance and gains in such investments cannot be used as a basis to predict future results. The results in subsequent fiscal years will depend upon the state of general economic conditions and market results of both fixed income and equity securities, which may be held by the University from time to time for its investment purposes.

Other Factors Affecting the Financial Performance of the University

One or more of the following factors or events, or the occurrence of other unanticipated factors or events, could adversely affect the University’s operations and financial performance to an extent that cannot be determined at this time:

(1) Changes in Management. Changes in key management personnel could affect the capability of the management of the University.

(2) Future Economic Conditions. Increased unemployment, adverse economic conditions, changes in the demographics of the service area of the University and the cost and availability of energy, an inability to control expenses in periods of inflation, and difficulty in increasing charges and other fees while maintaining the quality of educational services could all affect the financial performance of the University.

(3) Competition. Increased competition from other institutions of higher education could adversely affect the enrollment at or revenues of the University, which could force the University to offer discounted rates, or which could adversely affect the ability of the University to attract faculty or other staff.

(4) Organized Labor Efforts. Efforts to organize employees of the University into collective bargaining units could result in adverse labor actions or increased labor costs.

(5) Environmental Matters. Legislative, regulatory, administrative or enforcement action involving environmental controls could adversely affect the operation of the facilities of the University. For example, if property of the University is determined to be contaminated by hazardous materials, the University could be liable for significant clean-up costs even if it were not responsible for the contamination.

(6) Natural Disasters. The occurrence of natural disasters could damage the facilities of the University, interrupt services or otherwise impair the operations and ability of the University to produce revenues.

Possible Limitations on Enforceability of Obligations and Remedies

General. The enforceability of the University’s obligations pursuant to the Indenture may be limited by the laws of the State and the United States with respect to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies. The opinions of Special Counsel will so state. The practical realization of any rights upon any default will depend upon the exercise of various remedies specified in the Indenture. These remedies, in certain respects, may require judicial action which is often subject to discretion and delay. Under existing law, certain of the remedies specified in the Indenture may not be readily available or may be limited. A court may decide not to order the specific performance of these covenants.

Security Interest in Pledged Revenues. The effectiveness of the Indenture and the security interest in the Pledged Revenues granted therein may be limited by a number of factors, including but not limited to: (1) commingling of Pledged Revenues with other money of the University not so pledged; (2) statutory liens; (3) rights arising in favor of the United States of America or any agency thereof; (4) constructive trusts and equitable or other rights impressed or conferred by a federal or State court in the exercise of its equitable jurisdiction; (5) federal bankruptcy laws that may affect the enforceability of the Indenture or the security interest in the Pledged Revenues received by the University within 90 days preceding and after any effectual institution of bankruptcy proceedings by or against the University; (6) rights of third parties in Pledged Revenues converted to cash and not in the possession of the Trustee; (7) claims that might arise if appropriate financing or continuation statements are not filed in accordance with the Washington Uniform Commercial Code from time to time in effect; and (8) delay and/or unwillingness of a court to compel the University to transfer or assign its Pledged Revenues to the Trustee. In addition, federal bankruptcy law permits adoption of a reorganization plan even though it has not been accepted by the Bondowners of a majority in aggregate principal amount of the 2016A Bonds, if the Bondowners are provided with the benefit of their original lien or the “indubitable equivalent.” Further, if the bankruptcy court concluded that such Bondowners had “adequate protection,” it could: (a) substitute other security for the security provided by the Indenture for the benefit of the Bondowners; and (b) subordinate the lien of the Bondowners (i) to claims by persons supplying goods and services to the debtor after bankruptcy, and (ii) to the administrative expenses of the bankruptcy proceeding. In the event of the bankruptcy of the University, the amount realized by the Bondowners might depend on the bankruptcy court’s interpretation of the “indubitable equivalent” and “adequate protection” under the then- existing circumstances.

In addition, the University may incur additional obligations to which its Pledged Revenues and other Collateral are pledged in accordance with the terms of the Indenture and the Intercreditor and Collateral Agency Agreement. See “SECURITY FOR THE 2016A BONDS.”

Amendments to Indenture

The Indenture may be amended with or without the consent of Bondowners. The Indenture permits amendments thereto, without the consent of Bondowners, to provide for the release of Revenues, Pledged Revenues and all other property and collateral pledged to the Trust Estate in exchange for a master trust indenture obligation to be issued pursuant to a master trust indenture of the University. See Appendix C – “FORM OF INDENTURE OF TRUST – Article X Supplemental Indentures.” From and after such time as the Refunded Bonds and the remaining 2009B Bonds are redeemed, paid and defeased, and are no longer outstanding under the Intercreditor and Collateral Agency Agreement and the Swaps are terminated or amended to eliminate the covenants contained in Sections 717, 718, and 719 of the Indenture, the covenants contained in Sections 717, 718 and 719 of the Indenture shall no longer apply to the University.

Secondary Market and Prices

The Underwriters are not obligated to engage in secondary trading or to repurchase any of the 2016A Bonds at the request of the owners thereof. No assurance can be given that a market will exist for the resale of the 2016A Bonds. Because of general market conditions or because of adverse history or economic prospects connected with a particular issue or issuer, secondary marketing activity in connection with a particular issue may be suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. THERE CAN BE NO GUARANTEE THAT THERE WILL BE A SECONDARY MARKET FOR THE 2016A BONDS, OR IF A SECONDARY MARKET EXISTS, THAT THE 2016A BONDS CAN BE SOLD FOR ANY PARTICULAR PRICE.

No Seasoned Funds

There is no requirement in the Indenture that seasoned funds be provided by the University in connection with the optional redemption of the 2016A Bonds. If any such payments are made to Bondowners with funds that are not seasoned funds at a time when the University is insolvent, which determination may occur up to one year after the payment is made, then Bondowners may be required by a bankruptcy court to refund those payments to the bankruptcy court.

TAX MATTERS

THE MATERIAL UNDER THIS CAPTION “TAX MATTERS” CONCERNING THE TAX CONSEQUENCES OF OWNERSHIP OF THE 2016A BONDS WAS WRITTEN TO SUPPORT THE MARKETING OF THE 2016A BONDS, AND EACH BONDOWNER SHOULD SEEK ADVICE BASED ON THE BONDOWNER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. THIS MATERIAL WAS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY ANY TAXPAYER, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER.

General

Interest on and profit, if any, on the sale of the 2016A Bonds are not excludable from gross income for federal, state or local income tax purposes.

Federal Tax Matters

The following discussion summarizes the material United States federal income tax consequences generally applicable to the purchase, ownership and disposition of the 2016A Bonds by the beneficial owners thereof (“Bondowners”). The discussion is generally limited to the tax consequences to the initial Bondowners of the 2016A Bonds who purchase the 2016A Bonds at the issue price within the meaning of Section 1273 of the Code, and generally does not address the tax consequences to subsequent purchasers of the 2016A Bonds. The discussion does not purport to be a complete analysis of all of the potential United States federal income tax consequences relating to the purchase, ownership and disposition of the 2016A Bonds, nor does this discussion describe any estate or gift tax consequences. Furthermore, the discussion does not address all aspects of taxation that might be relevant to particular purchasers in light of their individual circumstances. For instance, the discussion does not address the alternative minimum tax provisions of the Code or special rules applicable to certain categories of purchasers including dealers in securities or foreign currencies, insurance companies, regulated investment companies, real estate mortgage investment conduits, financial institutions, tax-exempt entities,

Bondowners whose functional currency is not the United States dollar and, except to the extent discussed below, Foreign Bondowners (as defined below). The discussion does not address the special rules applicable to purchasers who hold the 2016A Bonds as part of a hedge, straddle, conversion, constructive ownership or constructive sale transaction or other risk reduction transaction. The discussion does not address foreign taxes.

The discussion is based on the provisions of the Code, the regulations of the Department of the Treasury, and administrative and judicial interpretations, all as in effect today and all of which are subject to change, possibly on a retroactive basis. The discussion assumes that the 2016A Bonds are held as capital assets within the meaning of Section 1221 of the Code.

Tax Consequences to United States Bondowners

Interest on the 2016A Bonds is taxable to a United States Bondowner as ordinary income at the time the interest accrues or is received in accordance with the United States Bondowner’s method of accounting for United States federal income tax purposes. A “United States Bondowner” is a Bondowner of a 2016A Bond that is, for United States federal income tax purposes: (1) a citizen or resident of the United States, (2) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (3) an estate, the income of which is subject to United States federal income taxation regardless of its source, or (4) a trust, the administration of which is subject to the primary supervision of a court within the United States and which has one or more United States persons with authority to control all substantial decisions, or a certain type of trust that was in existence on August 20, 1996, and has elected to continue to be treated as a United States person. If a partnership (or an entity taxable as a partnership) holds the 2016A Bonds, the United States federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership.

Original Issue Discount. Any 2016A Bond issued at an issue price less than its principal amount will have “original issue discount,” a portion of which will accrue as taxable income to the Bondowner in each taxable year in addition to taxation of regular stated interest, regardless of whether the Bondowner uses the cash or accrual method of accounting and regardless of the fact that the Bondowner receives no actual payment of the original issue discount until the maturity of the 2016A Bond. Taxation of original issue discount in this manner is subject to a de minimis exception based on the amount of the original issue discount in relation to the maturity of the 2016A Bond. Bondowners should consult their tax advisors regarding the accrual of original issue discount or amortization of any original issue premium and the effect of accruals or amortization on their tax basis for their 2016A Bonds.

Tax-Exempt Organizations. Income or gain realized from 2016A Bonds held by a tax-exempt organization will be subject to the tax on unrelated business taxable income if the 2016A Bonds are “debt-financed property” of the organization under Section 514(b) of the Code.

Sale, Exchange, Redemption or Retirement of the 2016A Bonds. In general, upon the sale, exchange, redemption or retirement of a 2016A Bond, a United States Bondowner will recognize capital gain or loss equal to the difference between the amount realized on such sale, exchange, redemption or retirement (not including any amount attributable to accrued but unpaid interest that the United States Bondowner has not already included in gross income) and such United States Bondowner’s adjusted tax basis in the 2016A Bond. Any amount attributable to accrued but unpaid interest that the Bondowner has not already included in gross income will be treated as a payment of interest. A United States Bondowner’s adjusted tax basis in a 2016A Bond generally will equal the cost of the 2016A Bond to such United States Bondowner, reduced by any payments of principal or accrued original issue discount received by such United States Bondowner and increased by any accrued but unpaid interest (including original issue discount) the United States Bondowner has included in taxable income.

Backup Withholding. Bondowners will be subject to “backup withholding” of Federal income tax in the event they fail to furnish a taxpayer identification number to the Paying Agent or there are other, related compliance failures.

Market Discount. A United States Bondowner that acquires a 2016A Bond in a secondary market transaction may be subject to Federal income tax rules providing that accrued market discount will be taxed as ordinary income when realized on the sale or other disposition of a “market discount bond”. Dispositions subject to this rule include a redemption or retirement of a 2016A Bond. The market discount rules may limit a United States Bondowner’s deduction for interest expense for debt that is incurred or continued to purchase or carry a 2016A Bond. A market discount bond is defined generally as a debt obligation purchased subsequent to issuance, at a price that is less than the principal amount of the obligation, subject to a de minimis rule. The Code allows a taxpayer to compute the accrual of market discount for any 2016A Bond by using a ratable accrual method or a constant interest rate method. Also, a taxpayer may elect to include the accrued market discount in gross income each year as an alternative to including the total accrued discount in gross income

15 at the time of a disposition, in which case the tax basis of the 2016A Bond will be increased by the amount of discount included in gross income and the interest expense for debt that is incurred or continued to purchase or carry a 2016A Bond will not be limited.

Bond Premium. A holder who purchases such a 2016A Bond at a cost greater than its then principal amount (or, in the case of a 2016A Bond issued with original issue premium, at a price in excess of its adjusted issue price) will have amortizable bond premium. If the holder elects to amortize the premium under Section 171 of the Code (which election will apply to all 2016A Bonds held by the holder on the first day of the taxable year to which the election applies, and to all 2016A Bonds thereafter acquired by the holder), such a purchaser must amortize the premium using constant yield principles based on the purchaser’s yield to maturity. Amortizable bond premium is generally treated as an offset to interest income, but a reduction in basis is required for amortizable bond premium even though the premium has been applied to reduce interest payments. Purchasers of any 2016A Bonds who acquire such 2016A Bonds at issue or in a secondary market transaction at a premium should consult with their own tax advisors with respect to the determination and treatment of such premium for federal income tax purposes and with respect to state and local tax consequences of owning such 2016A Bonds.

Unearned Income Tax. A United States Bondowner that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to an additional 3.8% tax on the lesser of: (1) the United States Bondowner’s “net investment income” for the relevant taxable year and (2) the excess of the United States Bondowner’s adjusted gross income (increased by certain amounts of excluded foreign income) for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’s circumstances) (the “Unearned Income Tax”). A United States Bondowner’s net investment income will generally include its interest income and net gain from the disposition of the 2016A Bonds, unless such interest income and net gain is derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). Net investment income may, however, be reduced by properly allocable deductions to such income. United States Bondowners that are individuals, estates or trusts are urged to consult their tax advisors regarding the applicability of the Unearned Income Tax to their income and gains from the 2016A Bonds.

Tax Consequences to Foreign Bondowners

Payments of interest on a 2016A Bond to a Bondowner that is not a United States Bondowner (a “Foreign Bondowner”) are not subject to United States federal income tax or withholding tax, provided that:

• the Foreign Bondowner is not actually or constructively a “10-percent shareholder” under Section 871(h) or 881(c)(3)(B) of the Code; • the Foreign Bondowner is not, for United States federal income tax purposes, a controlled foreign corporation with respect to which the University is a “related person” within the meaning of Section 881(c)(3)(C) of the Code; • the Foreign Bondowner is not a bank receiving interest described in Section 881(c)(3)(A) of the Code; • the certification requirements under Section 871(h) or 881(c) of the Code and regulations (summarized below) are met; and • the 2016A Bond interest is not effectively connected with the conduct by the Foreign Bondowner of a trade or business in the United States under Section 871(b) or Section 882 of the Code.

In order to obtain the exemption from income and withholding tax, either (1) the Foreign Bondowner must provide its name and address, and certify, under penalties of perjury on Internal Revenue Service Form W-8BEN, W-8BEN-E, W- 8IMY or W-8EXP, as applicable, to the University, its paying agent, or other applicable withholding agent as the case may be, that such Bondowner is a Foreign Bondowner or (2) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business (“Financial Institution”) and holds a 2016A Bond on behalf of the Foreign Bondowner must certify, under penalties of perjury, to the University or its paying agent that such certificate has been received from the Bondowner by it or by any intermediary Financial Institution and must furnish the University or its paying agent with a copy of the certificate. A certificate is effective only with respect to payments of interest made to the certifying Foreign Bondowner after issuance of the certificate in the calendar year of its issuance and the two immediately succeeding calendar years. A Foreign Bondowner who does not satisfy the exemption requirements is generally subject to United States withholding tax on payments of interest or accrual of original issue discount.

Interest on a 2016A Bond that is effectively connected with the conduct of a United States trade or business by the Foreign Bondowner is generally subject to United States federal income tax in the same manner as with a United States Bondowner, except to the extent otherwise provided under an applicable tax treaty. Effectively connected interest income received by a corporate Foreign Bondowner may also, under certain circumstances, be subject to an additional branch profits tax. Effectively connected interest income will not be subject to withholding tax if the Foreign Bondowner delivers a properly completed Internal Revenue Service Form W-8ECI to the University or its paying agent.

Sale, Exchange, Redemption or Retirement of the 2016A Bonds. In general, a Foreign Bondowner of a 2016A Bond will not be subject to United States federal income or withholding tax on the receipt of payments of principal on a 2016A Bond and will not be subject to United States federal income tax on any gain recognized on the sale, exchange, redemption, retirement or other taxable disposition of such 2016A Bond unless:

• the Foreign Bondowner is a nonresident alien individual who is present in the United States for 183 or more days in the taxable year of disposition and certain other conditions are met under Section 871(a)(2) of the Code; • the Foreign Bondowner is required to pay tax pursuant to the provisions of United States tax law applicable to certain United States expatriates; or • the gain is effectively connected with the conduct of a United States trade or business by the Foreign Bondowner (or pursuant to an applicable tax treaty is attributable to a United States permanent establishment of the Foreign Bondowner).

FATCA

Under the Foreign Account Tax Compliance Act (“FATCA”), foreign financial institutions (which generally include hedge funds, private equity funds, mutual funds, securitization vehicles and other investment vehicles regardless of their size) that are not otherwise exempt from FATCA must comply with information reporting rules with respect to their U.S. account holders and investors or, regardless of the treatment of payments on the 2016A Bonds under the general income tax rules applicable to Foreign Bondowners that are discussed above, confront a separate withholding tax. Specifically, FATCA requires that foreign financial institutions enter into an agreement with the United States government to collect and provide the IRS substantial information regarding U.S. account holders of such foreign financial institution, comply with the terms of an applicable intergovernmental agreement between the United States and such foreign financial institution’s jurisdiction of formation (an “IGA”), or establish an exemption from FATCA. Additionally, FATCA requires certain foreign entities that are not financial institutions to provide the withholding agent with a certification identifying the substantial U.S. owners of such foreign entity, if any. For this purpose, “withholdable payments” include U.S. source payments of taxable interest and the entire gross proceeds from the sale of any debt instruments of U.S. issuers. FATCA withholding on gross proceeds generally will apply to payments of gross proceeds made after December 31, 2018. The FATCA withholding tax applies regardless of whether the payment would otherwise be exempt from U.S. nonresident withholding tax (e.g., under an income tax treaty, the portfolio interest exemption or as capital gain). FATCA withholding does not apply to withholdable payments made directly to foreign governments, international organizations, foreign central banks of issue and individuals, and the Treasury is authorized to provide additional exceptions.

The IRS announced in Notice 2014-33, I.R.B. 2014-41 released on May 2, 2014, that calendar years 2014 and 2015 would be regarded as a transition period for purposes of IRS enforcement and the administration of FATCA’s due diligence, reporting, and withholding provisions. The IRS will take into account the extent to which a foreign financial institution or other foreign entity has made good faith efforts to comply with the requirements in determining whether to provide enforcement relief during this transition period. The IRS further announced in Notice 2015-66, I.R.B. 2015-41 released on September 18, 2015, that consistent with the IRS transition period treatment, foreign financial institutions resident in jurisdictions that have signed IGAs or reached an agreement in substance on the text of an IGA, but have not brought the IGA into force will be treated as complying with FATCA’s provisions so long as the partner jurisdiction continues to demonstrate firm resolve to bring the IGA into force and any information that would have been reportable under the IGA on September 30, 2015, is exchanged by September 30, 2016, together with any information that is reportable under the IGA on September 30, 2016. Likewise, the IRS announcement states that the foreign financial institution resident in jurisdictions that do not have an IGA in force will not be subject to withholding under FATCA even if the partner jurisdiction has not exchanged 2014 information by September 30, 2015, as the long as the partner jurisdiction notifies the U.S. competent authority before September 30, 2015, of the delay and provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible.

The 2016A Bonds are subject to the above FATCA provisions. Accordingly, holders (particularly Foreign Bondowners) should consult their tax advisors regarding the applicability of the FATCA requirements.

Other Matters. Special rules not discussed in this summary may apply to certain Foreign Bondowners that are classified for federal income tax purposes as “controlled foreign corporations,” “passive foreign investment companies,” “expatriates,” “surrogate foreign corporations,” “personal holding companies,” or corporations that accumulate earnings to avoid United States federal income tax.

State, Local and Foreign Taxes

Bondowners may be subject to state, local, or foreign taxes with respect to an investment in the 2016A Bonds. Prospective investors are urged to consult their tax advisors with respect to the state, local and foreign tax consequences of an investment in the 2016A Bonds.

ERISA Considerations

The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), imposes certain fiduciary obligations and prohibited transaction restrictions on employee pension and welfare benefit plans subject to ERISA (“ERISA Plans”). Section 4975 of the Code imposes essentially the same prohibited transaction restrictions on tax-qualified retirement plans described in Section 401(a) and 403(a) of the Code, which are exempt from tax under section 501(a) of the Code, other than governmental and church plans as defined herein (“Qualified Retirement Plans”), on Individual Retirement Accounts (“IRAs”) described in Section 408 and 408(a) of the Code, and on certain other plans described in Section 4975(e)(1) of the Code (collectively, “Tax-Favored Plans”).

Certain employee benefit plans, such as governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA or Section 4975(g)(3) of the Code) for which no election has been made under Section 410(d) of the Code, and non-U.S. benefit plans (as described in Section 4(b)(4) of ERISA), are not subject to the requirements of ERISA or Section 4975 of the Code. While assets of such plans may be invested in the 2016A Bonds without regard to the ERISA and Code considerations described below, they may be nevertheless subject to the provisions of applicable federal, state, local or foreign law that are similar to these ERISA and Code provisions. Accordingly, fiduciaries of such plans should consult with their counsel in considering whether to purchase the 2016A Bonds.

In addition to the imposition of general fiduciary obligations, including those of investment prudence and diversification and the requirement that a plan’s investment be made in accordance with the documents governing the plan, Section 406 of ERISA and Section 4975 of the Code prohibit a broad range of transactions involving assets of ERISA Plans and Tax- Favored Plans and entities whose underlying assets include plan assets by reason of ERISA Plans or Tax-Favored Plans investing in such entities (collectively, “Benefit Plans”) and persons who have certain specified relationships to the Benefit Plans (“Parties in Interest” or “Disqualified Persons”), unless a statutory or administrative exemption is available. The definitions of “Party in Interest” and “Disqualified Person” are expansive. While other entities may be encompassed by these definitions, they include, most notably: (1) a fiduciary with respect to a plan; (2) a person providing services to a plan; and (3) an employer or employee organization any of whose employees or members are covered by the plan. Certain Parties in Interest (or Disqualified Persons) that participate in a prohibited transaction may be subject to a penalty (or an excise tax) imposed pursuant to Section 502(i) of ERISA (or Section 4975 of the Code) unless a statutory or administrative exemption is available.

Plan Asset Issues. Certain transactions involving the purchase, holding or transfer of the 2016A Bonds might be deemed to constitute prohibited transactions under ERISA and the Code if assets of the University were deemed to be assets of a Benefit Plan. The United States Department of Labor has promulgated regulations at 29 C.F.R. section 2510.3- 101, as modified by Section 3(42) of ERISA (the “Plan Asset Regulation”) describing what constitutes the assets of a Benefit Plan with respect to the Benefit Plan’s investment in an entity for purposes of certain provisions of ERISA and Section 4975 of the Code, including the fiduciary responsibility provisions of Title I of ERISA and Section 4975 of the Code. Under the Plan Asset Regulations, the assets of the University would be treated as plan assets of a Benefit Plan for purposes of ERISA and the Code only if the Benefit Plan acquires an “equity interest” in the University and none of the exceptions contained in the Plan Asset Regulation is applicable. An equity interest is defined under the Plan Asset Regulation as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features.

Although there is little statutory or regulatory guidance on this subject, and there can be no assurances in this regard, it appears that the 2016A Bonds should be treated as debt without substantial equity features for purposes of the Plan Assets Regulation. Accordingly, the assets of the University should not be treated as the assets of plans investing in the 2016A Bonds. If the University’s assets were deemed to constitute “plan assets” pursuant to the Plan Asset Regulation, transactions that the University might enter into, or may have entered into in the ordinary course of business, might constitute non-exempt prohibited transactions under ERISA and/or Section 4975 of the Internal Revenue Code.

Prohibited Transaction Exemptions. However, without regard to whether the 2016A Bonds are treated as an equity interest for such purposes, the acquisition or holding of 2016A Bonds by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the University, its affiliates and other parties connected with the offering (such as the Underwriters), or any of their respective affiliates, is or becomes a Party in Interest or a Disqualified Person with respect to such Benefit Plan. In such case, certain status-based exemptions from the prohibited transaction rules could be applicable depending on the type and circumstances of the plan fiduciary making the decision to acquire a 2016A Bond. Included among these exemptions are:

• Prohibited Transaction Class Exemption (“PTCE”) 96-23, which exempts certain transactions effected on behalf of a Benefit Plan by an “in-house asset manager”; • PTCE 90-1, which exempts certain investments by “insurance company pooled separate accounts”; • PTCE 95-60, which exempts certain investments by “insurance company general accounts”; • PTCE 91-38, which exempts certain investments by bank collective investment funds; and • PTCE 84-14, which exempts certain transactions effected on behalf of a Benefit Plan by a “qualified professional asset manager.”

Note that IRAs (and certain other plans described in Section 4975(e)(1)) are typically not represented by banks, insurance companies or registered investment advisors so that, practically speaking, these status-based exemptions may be unavailable.

There is also a statutory exemption in Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code (which may be available to IRAs as well as to other Benefit Plans) (the “Statutory Exemption”). The Statutory Exemption covers transactions involving “adequate consideration” with persons who are Parties in Interest or Disqualified Persons solely by reason of their (or their affiliate’s) status as a service provider to the Benefit Plan involved and none of which is a fiduciary with respect to the Benefit Plan assets involved (or an affiliate of such a fiduciary).

The availability of each of these PTCEs and/or the Statutory Exemption is subject to a number of important conditions which the Benefit Plan’s fiduciary must consider in determining whether such exemptions apply. There can be no assurance that any class or other exemption will be available with respect to any particular transaction involving the 2016A Bonds, or that, if available, the scope of relief provided by these exemptions will necessarily cover all acts that might be construed as prohibited transactions.

Any ERISA Plan fiduciary considering whether to purchase 2016A Bonds on behalf of an ERISA Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and the Code to such investment and the availability of any of the exemptions referred to above. Persons responsible for investing the assets of employee benefit plans that are not subject to the requirements of ERISA or Section 4975 of the Code should seek similar counsel with respect to the prohibited transaction provisions of the Code and the applicability of any similar federal, state, local or foreign law.

Representation. It is the responsibility of each purchaser (and each subsequent transferee) of the 2016A Bonds to ensure that its purchase, holding and transfer of such 2016A Bonds is not a prohibited transaction. Each purchaser of a 2016A Bond will be deemed to have represented and warranted that either under ERISA or applicable Similar Laws (1) it is not a Benefit Plan, such as an IRA, and no portion of the assets used to acquire or hold the 2016A Bonds constitutes assets of any Benefit Plan or (2) the acquisition, holding and disposition of a 2016A Bond will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws for which there is no applicable statutory, regulatory or administrative exemption.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing 2016A Bonds on behalf of, or with the assets of, any Benefit Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any similar laws to such investment and whether an exemption would be applicable to the purchase and holding of the 2016A Bonds. The acquisition, holding and, to the extent relevant, disposition of 2016A Bonds by or to any Benefit Plan is in no respect a representation by the University (or any affiliate or representative of the University) that such an investment meets all relevant legal requirements with respect to investments by such Benefit Plans generally or any particular Benefit Plan, or that such an investment is appropriate for Benefit Plans generally or any particular Benefit Plan.

ENFORCEABILITY OF REMEDIES

The remedies available to the Trustee upon an Event of Default under the Indenture or other documents described herein are in many respects dependent upon regulatory and judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code, the remedies specified by the federal bankruptcy laws, the Indenture and the various related documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the 2016A Bonds will be qualified as to the enforceability of the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by principles of equity.

FINANCIAL ADVISOR

The University has retained Prager & Co., LLC, San Francisco, California, as financial advisor (the “Financial Advisor”) in connection with the issuance of the 2016A Bonds.

In connection with this Offering Memorandum, the Financial Advisor has relied upon University officials and other sources that have access to relevant data to provide accurate information for this Offering Memorandum, and the Financial Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Financial Advisor is not a public accounting firm and has not been engaged by the University to compile, review, examine or audit any information in this Offering Memorandum in accordance with accounting standards.

UNDERWRITING

The Underwriters have agreed, subject to certain conditions, to purchase the 2016A Bonds from the University. The Underwriters will be obligated to purchase all of the 2016A Bonds, if any are purchased, and intend to make a bona fide offering of the 2016A Bonds to purchasers in accordance with applicable law at the prices set forth therein.

INDEPENDENT AUDITOR’S REPORT

The consolidated financial statements of the University as of and for the fiscal years ended May 31, 2015 and May 31, 2016, included in Appendix B to this Offering Memorandum, have been audited by Moss Adams LLP, independent public accountants, as indicated in its report thereon. Moss Adams LLP has not been engaged to perform and has not performed, since the date of the report included herein, any procedures on the consolidated financial statements addressed in that report. Moss Adams LLP has also not performed any procedures relating to this Offering Memorandum.

CONFLICTS OF INTEREST

From time to time, Kutak Rock LLP serves as counsel to the Underwriters in matters unrelated to the University or the 2016A Bonds.

RATINGS

Moody’s Investors Service and Fitch Ratings Inc. have assigned their ratings of A3 and A, respectively, to the 2016A Bonds. Such ratings and outlooks reflect only the views of such rating agencies. The University has furnished such rating agencies with certain information and materials relating to the 2016A Bonds that have not been included in this Offering Memorandum. Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions made by the rating agencies themselves. There is no assurance that the ratings mentioned above will remain in effect for any given period of time or that they might not be lowered, suspended or withdrawn entirely by such rating agency, if in its judgment circumstances so warrant. Any such downward change in, suspension of or withdrawal of any ratings might have an adverse effect on the market price or marketability of the 2016A Bonds.

MATERIAL LITIGATION

There are no actions, suits or claims pending or, to the knowledge of the officers of the University pending or threatened which would restrain or enjoin the issuance, sale, execution or delivery or the 2016A Bonds or in any way contesting or affecting the validity of the 2016A Bonds, any action of the University taken with respect to the issuance or sale thereof, the power of the University to pay the principal, premium, if any and interest on the 2016A Bonds, the existence or powers of the University relating to the issuance of the 2016A Bonds, or the power of the University to: (1) pledge its Unrestricted Gross Revenues; or (2) make a negative pledge on the Core Campus as security for the 2016A Bonds.

CERTAIN LEGAL MATTERS

Legal matters incident to the authorization, issuance and sale of the 2016A Bonds by the University are subject to the legal opinion of Kutak Rock LLP, Spokane, Washington, Special Counsel to the University. Special Counsel has reviewed this Offering Memorandum only to confirm that the portions of it describing the 2016A Bonds and the authority to issue them conform to the 2016A Bonds and the applicable laws under which they are issued.

Certain legal matters will be passed upon by Foster Pepper PLLC, Seattle, Washington, Counsel to the Underwriters. Any opinion of Underwriters’ counsel will be delivered solely to the Underwriters, will be limited in scope, and cannot be relied upon by investors. Certain legal matters pertaining to the redemption, payment and defeasance of the Refunded Bonds will be passed upon by the Pacifica Law Group LLP, Counsel to the Washington Higher Education Facilities Authority.

CONTINUING DISCLOSURE

Because the 2016A Bonds are not municipal securities, the University is not required to undertake continuing disclosure with respect to the 2016A Bonds under Rule 15c2-12 promulgated by the Securities and Exchange Commission (the “Rule”). However, the University has agreed in the Indenture to make available to existing and potential holders of the 2016A Bonds, on a voluntary basis, information substantially identical to that required under the continuing disclosure undertaking it has previously entered into in connection with the 2013 Bonds to ensure compliance with the Rule. Holders and potential holders of the 2016A Bonds may obtain copies of the information provided by the University under such undertaking on Electronic Municipal Market Access, a service of the Municipal Securities Rulemaking Board (“EMMA”). Such undertaking terminates when the 2013 Bonds are paid or deemed paid in full. The University has covenanted in the Indenture that unless otherwise available on EMMA or any successor thereto or to functions thereof, copies of the University’s audited financial statements will either be posted on the University’s website or filed with the Trustee. Failure to provide the information described in this paragraph will not constitute an Event of Default under the Indenture.

MISCELLANEOUS

All of the summaries or descriptions of provisions of the Indenture, the Intercreditor and Collateral Agency Agreement, the Security Agreement and other documents are made subject to all of the provisions of law and such documents, and these summaries do not purport to be complete statements of such provisions. Reference is hereby made to such documents for further information in connection therewith. Copies of the aforementioned documents may be obtained from the Trustee in Seattle, Washington.

The agreements of the University with the Bondowners are fully set forth in the Indenture. This Offering Memorandum is not to be construed as a contract with the purchasers of the 2016A Bonds. Any statements herein involving matters of opinion or estimates, whether or not expressly so stated, are intended merely as such and not as representations of fact.

The execution and delivery of this Offering Memorandum has been duly authorized by the University.

Dated as of October ___, 2016.

THE CORPORATION OF GONZAGA UNIVERSITY

By: Vice President for Finance

21 [THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX A

SELECTED INFORMATION CONCERNING THE UNIVERSITY INCLUDING UNAUDITED FINANCIAL INFORMATION

The information within this Appendix A has been provided solely by the University and is believed to be accurate, but has not been verified independently by the Underwriters. No representation whatsoever as to the accuracy, adequacy or completeness of such information is made by the Underwriters.

General

The Corporation of Gonzaga University (the “University” or “Gonzaga”) is a non-profit Washington corporation that owns and operates a coeducational university emphasizing undergraduate liberal arts as well as professional and graduate education in the Catholic, Jesuit tradition. The University is one of 28 Jesuit affiliated colleges and universities across the country. Members of the Society of Jesus, called Jesuits (“S.J.”), founded the University in 1887, two years before Washington became a state. The University was incorporated in 1894 as Gonzaga College and changed its name to Gonzaga University in 1912. The 2012-13 fiscal year marked the University’s 125th anniversary and the 100th anniversary of The Gonzaga School of Law (the “School of Law”). The 2013-14 fiscal year marked the 50th anniversary of the Gonzaga in Florence program.

The University has, since its founding, been affiliated with the Catholic Church. The University, however, welcomes persons of all religious persuasions, and large numbers of non-Catholics are at the University as members of the student body, faculty, staff and administration.

University headcount enrollment for the fall term of the 2016-2017 academic year is 7,572 students. Of these, 5,160, or approximately 68%, are enrolled as undergraduates. Of the graduate students, 312, or approximately four percent of total student enrollment, are enrolled in the School of Law. The remaining 2,100 graduate students are enrolled in master’s degree programs in business administration, education, organizational leadership, communication leadership, nursing, engineering, or liberal arts or in the three doctorate programs, one Ph.D. in leadership studies and two nursing practice doctorates.

The University is located on a 152-acre campus in a residential area of Spokane, Washington. The undergraduate student body represents 47 states and 35 foreign countries. Approximately 52% of the undergraduate student body comes from outside Washington State. The University also owns and operates a campus in Florence, Italy with academic capacity for approximately 175 students.

For the fall semester 2015, there were 426 full-time Jesuit, religious and lay faculty, with all classes taught by professors. The University has a faculty to student ratio of 12 to 1 and average class size was approximately 24 students.

Approximately 31% of gross operating revenue is returned to students in the form of financial aid, with approximately 98% of undergraduate students receiving some form of need or merit-based financial aid.

On March 31, 2016, the University entered into an agreement with the University of Washington, an institution of higher education and an agency of the State of Washington, School of Medicine to provide faculty, student support services, and facilities for the University of Washington School of Medicine – Gonzaga University, beginning in July 2016. The program will expand the University of Washington’s Washington, Wyoming, Alaska, Montana and Idaho (“WWAMI”) medical education program in Spokane, with an emphasis on meeting the needs of rural and medically underserved communities in eastern Washington. Washington State University has also announced plans to establish a new medical school in Spokane, Washington.

Among others, current national rankings include:

• U.S. News & World Report lists the University as the fourth best regional university (west region), second best in the region for first-year student retention and graduation rate, and the thirteenth best value in the region.

• USA Today ranked the University among the 10 best Roman Catholic colleges and universities in the nation.

A-1

• Kiplinger ranked the University No. 18 in its list of the 25 best college values in the west/southwest.

• Money Magazine lists the University as the best value among private colleges and universities in the Pacific Northwest (Alaska, Idaho, Montana, Oregon, and Washington) and No. 8 best private university in the nation for merit aid.

Mission Statement

The University’s Mission Statement:

Gonzaga University is an exemplary learning community that educates students for lives of leadership and service for the common good. In keeping with its Catholic, Jesuit, and humanistic heritage and identity, Gonzaga models and expects excellence in academic and professional pursuits and intentionally develops the whole person -- intellectually, spiritually, physically and emotionally.

Through engagement with knowledge, wisdom and questions informed by classical and contemporary perspectives, Gonzaga cultivates in its students the capacities and dispositions for reflective and critical thought, lifelong learning, spiritual growth, ethical discernment, creativity, and innovation.

The Gonzaga experience fosters a mature commitment to dignity of the human person, social justice, diversity, intercultural competence, global engagement, solidarity with the poor and vulnerable, and care for the planet. Grateful to God, the Gonzaga community carries out this mission with responsible stewardship of our physical, financial and human resources.

Spokane and the Inland Northwest

Spokane, Washington, forms the hub of the “Inland Northwest,” a region encompassing parts of four states and southern Canada and relying on the area’s business, service and transportation facilities. With a population of approximately 475,000 in the metropolitan area, the City of Spokane (the “City”) offers many opportunities for work and relaxation for University students.

The campus is adjacent to the Spokane River, where the Washington Centennial Trail extends 39 miles between northwest Spokane and Coeur d’Alene, Idaho. Students enjoy biking, rollerblading, running and walking along the trail. The University is one of six colleges and universities that together comprise the Spokane University District of Spokane (the “University District”), a master planned corridor along the north and south sides of the Spokane River that concentrate current and future education and research activities adjacent to downtown Spokane. The downtown area of the City is just a few blocks from the campus, and the City’s skywalk system, the nation’s second largest, provides easy access to shopping, dining and entertainment. A 12,000-seat civic entertainment arena is also within walking distance of the campus.

The City boasts many parks, including the 100-acre Riverfront Park in the heart of the City. In addition, there are 15 area public golf courses, skating rinks, theaters and art galleries. A symphony orchestra, civic theater and professional athletic teams add to the cultural and entertainment opportunities of the region.

Nearby recreation areas are easily accessible to students. Seventy-six lakes and five ski areas provide swimming, water skiing and winter sports activities.

Corporate Structure

The University is governed by a Board of Trustees (each individually a “Trustee” and collectively the “Board of Trustees” or “Trustees”), which is responsible for the management of the affairs of the University. The University is a non-profit member corporation established under chapter 24.03 of the Revised Code of Washington. Under the University’s Articles of Incorporation and Bylaws, a separate Board of Members exists with responsibility for the University’s mission and for spiritual guidance (each individually a “Member” and collectively the “Board of Members”).

A-2

The Corporation of Gonzaga University is a nonprofit corporation, incorporated under the laws of the State of Washington, governed by a Jesuit Board of Members and the predominantly lay Board of Trustees. The Boards work collegially and collaboratively with one another and the President of the University (the “President”) who is appointed by the Board of Trustees.

The Board of Trustees currently consists of 34 elected Trustees. In addition, the President is an ex officio voting member of the Board of Trustees. Term limits apply.

The Board of Members currently consists of eight Jesuits. Three Members are elected by a majority vote of the members of the Jesuit Community active in and missioned to the University. According to the University’s Bylaws, the Rector of the Gonzaga Jesuit Community and these three elected persons then elect three to five additional persons to complete the Board of Members.

The Board of Members has the right to elect three Jesuits to the Board of Trustees. The Board of Trustees elects the remainder of the Board of Trustees. At least 22% of the total number of Trustees must be Jesuits. The University’s Board of Trustees currently includes seven Jesuits.

Most Jesuits employed by the University are assigned or “missioned” to the University by the Provincial of the Oregon Province. The remaining Jesuits employed by the University are missioned to the University by one of the Provincials of the other nine Jesuit Provinces in the United States.

Consent by a majority vote of the Board of Members and the Board of Trustees is required for transactions involving University assets, including acquisitions, sales, transfers, gifts, loans, pledges, mortgages, encumbrances, or capital expenditures, where the value of the transaction is greater than $15,000,000.

Under its Articles of Incorporation, no part of the net earnings of the University shall inure to the benefit of the University’s Trustees, Members, officers or other private persons, except that the University may pay reasonable compensation for services rendered and make payments and distributions in furtherance of its tax-exempt purposes.

As of July 2016, the members of the Board of Trustees, and their principal occupations and their primary residences were as follows:

Scott Morris, Board Chair Paul W. Brajcich, Board Vice Chair President and CEO, Avista Corp Retired, Partner, KPMG, LLP Spokane, Washington Seattle, Washington

Timothy Barnard Fred A. Brown CEO, Barnard Construction Company Inc. CEO, Next IT Corporation Bozeman, Montana Spokane, Washington

Rebecca Cates Timothy Clancy, S.J. Retired, Vice- President/Treasurer, Expeditors Professor of Philosophy, Gonzaga University International Spokane, Washington Cle Elum, Washington

Gerri Craves Donald Curran Co-founder, College Success Foundation Attorney at Law, Delay, Curran, Thompson, Seattle, Washington Pontarolo, & Walker , P.S. Spokane, Washington

John Fitzgibbons, S.J. Theresa Gee President, Regis University Co-Owner, Gee Automotive Group Denver, Colorado Post Falls, Idaho

Michael Graham, S.J. Carl Grether President, Xavier University Owner, Thomas Grether Farms Cincinnati, Ohio Somis, California

A-3

John Hemmingson Mary Herche Chairman, Lakeside Capital Group, LLC Seattle, Washington Liberty Lake, Washington

Christine Johnson Christy Larsen Chancellor, Community Colleges of Spokane San Miguel, California Spokane, Washington

David J. Leigh, S.J. Rita Illig Liebelt Professor of English, Seattle University President, Illig Construction Company Seattle, Washington Los Angeles, California

John Luger Jack McCann President, JDL Enterprises President, Jack McCann Company Bellevue, Washington Kent, Washington

Thomas McCarthey Thayne M. McCulloh, D.Phil. Salt Lake City, Utah President, Gonzaga University Spokane, Washington

Kevin D. McQuilkin Jim Powers Managing Director, Wells Fargo Securities Partner, Powers Energy Group New Canaan, Connecticut Denver, Colorado

Edward Reese, S.J. D. Michael Reilly President, St. Ignatius College Preparatory Attorney at Law, Director, Lane Powell PC San Francisco, California Medina, Washington

Kathleen Magnuson Sheppard Peter F. Stanton Spokane, Washington Chairman & CEO, Washington Trust Bank Spokane, Washington

William Stempsey, S.J. Edward Taylor Professor of Philosophy Vice Provost & Dean, Undergraduate Academic College of the Holy Cross Affairs Worchester, Massachusetts University of Washington Seattle, Washington

Thatcher Thompson Dr. Diane Timberlake Capital World Investors Physician/Clinical Associate Professor San Francisco, California University of Washington Seattle, Washington

Robert Tomlinson James Voiss, S.J. President & CEO, Tomlinson Consulting Assistant Vice President, Mission & Ministry Spokane, Washington Gonzaga University Spokane, Washington

Alvin J. Wolff, Jr. Chairman, The Wolff Company, LLC Scottsdale, Arizona

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

A-4

The University also has a Board of Regents presently comprised of 68 persons, most of whom are otherwise unaffiliated with the University. The function of the Regents is to serve as regional ambassadors for the University, to advise the University and its Board of Trustees on financial and other affairs, and to be active in financial support of the University.

Officers and Senior Administrators of the University

The following table sets forth the names of the President of the University and the President’s Cabinet, a body of senior administrative leaders and principal executive officers of the University, along with their positions and tenure in office. A brief statement of the duties and background of each of the individuals appears following the table (alphabetical order following the President).

Position Name Position Since Thayne M. McCulloh, D. Phil* President 2009 Judith Biggs Garbuio, Ph.D. Vice President for Student Development 2013 Frank Case, S.J. Vice President of the University 2011 Bernard J. Coughlin, S.J. Chancellor of the University 1996 Patricia O’Connell Killen, Academic Vice President 2010 Ph.D.* Pat Lee, S.J. Vice President for Mission & Ministry 2016 Maureen McGuire, J.D.* General Counsel 2013 Charles J. Murphy* Vice President for Finance 1985 Robert “Skip” Myers Vice President for Policy, Planning and 2015 Administration Joseph Poss Vice President for University Advancement 2011 Raymond F. Reyes, Ph.D. Associate Academic Vice President & Chief 1998 Diversity Officer Michael L. Roth Athletic Director 1997 John D. Sklut, J.D. Chief of Staff 2015 Joseph P. Smith Associate Vice President for Finance 2010 Borre B. Ulrichsen Chief Information Officer 2016 Kirk J. Wood-Gaines Assistant Vice President for Human Resources 2013

*Officer of the University, as defined by the Bylaws

Thayne McCulloh, D.Phil, President. Dr. McCulloh was appointed President in July 2010, after serving one year as Interim President upon the retirement of Fr. Robert Spitzer, S.J. in July 2009. Prior to his selection as President, Dr. McCulloh served the University as the Interim Academic Vice President, Vice President for Administration and Planning, Associate Academic Vice President, Dean of Student Financial Services, Dean of Student Academic Services, Assistant Dean of Students, Director of Housing and Residence Life, and Coordinator of Residence Life. Dr. McCulloh holds a D.Phil.in experimental social psychology from Oxford University and a B.A. in psychology and sociology from the University.

Judith Biggs Garbuio, Ph.D., Vice President for Student Development. Dr. Garbuio was appointed Vice President for Student Development in July 2013. She came to the University from the University of Southern California (“USC”), where she worked in a succession of student affairs positions since 1990. Her educational background includes a B.S. in education from Emporia State University, an M.A. in college student personnel from Bowling Green State University, and a Ph.D. in educational policy planning and administration from USC.

Rev. Frank Case, S.J., Ph.D., Vice President of the University. Fr. Frank Case, S.J. is the Vice President of the University, having previously served as the Vice President for Mission from 2011 to January 2016. He studied economics at Washington University in St. Louis, receiving a Ph.D. in 1980. He taught in the Economics Department at Seattle University from 1975 until 1986 as an assistant and then associate professor. In 1981 he was appointed the Superior of the Seattle University Jesuit Community and in 1986 Provincial of the Oregon Province. In 1990 Fr. Peter- Hans Kolvenbach, the General Superior of the Jesuits, invited him to Rome to serve as the Regional Assistant for the A-5

United States, a role in which he served for 15 years. In 2005, he was asked to take the position of General Secretary of the Society of Jesus for the years leading up to a general Congregation in 2008. He returned to the United States at the end of the Congregation. After a sabbatical year at Seattle University, he served two years there as the Jesuit Assistant for the Business and Law Schools prior to joining the University.

Rev. Bernard J. Coughlin, S.J., Chancellor of the University. Fr. Coughlin became Chancellor of the University in September 1996. Prior to that he was President of the University from 1974 to 1996. He previously served as a professor and Dean of the School of Social Service at Saint Louis University; Fulbright Lecturer, Universidad Javeriana, Bogata, Columbia and Universidad Bolivariana, Medellin, Colombia; a social work educational consultant in Ecuador, Peru, Chile and Guatemala; a research assistant for the Juvenile Probation Project, Los Angeles, California; a counselor at a boys’ industrial school in Topeka, Kansas; and an Instructor and Senior Director of Campion High School, Prairie du Chien, Wisconsin. Fr. Coughlin graduated from Saint Louis University with a B.A.. He holds additional degrees from Saint Louis University in philosophy and theology. He also holds a master’s degree in social welfare from Brandeis University.

Patricia O’Connell Killen, Ph.D., Academic Vice President. Dr. Killen joined the University as its chief academic officer in July of 2010. Prior to assuming this position she served for four years as Provost and Dean of Graduate Studies at Pacific Lutheran University, where she had taught for 17 years, and held multiple faculty and academic administrative leadership positions. She also is tenured at the rank of professor in the University’s Department of Religious Studies. Dr. Killen is widely published and consults nationally on religion in public life, faculty development and student learning. In 2006 she received the American Academy of Religion Teaching Excellence Award and also holds an Arnold and Lois Graves Foundation Award for Outstanding Humanities Teachers. Dr. Killen received a B.A. from the University in religious studies and an M.A. and Ph.D. in religious studies from Stanford University.

Rev. Pat Lee, S.J., Ed.D., Vice President for Mission and Ministry. Fr. Lee was appointed Vice President for Mission and Ministry in June 2016. Most recently, Fr. Lee served the Society of Jesus as the Superior of Community of the Holy Land in Jerusalem, Israel. Fr. Lee previously served as Provincial of the Oregon Province of the Society of Jesus from 2008 to 2014 and as the University’s Vice President for Mission from 2005 to 2008. Fr. Lee received a B.A. and M.Ed. from the University, an M.Div. from Weston School of Theology, and an Ed.D. from the University of San Francisco.

Maureen McGuire, J.D., General Counsel. Ms. McGuire began serving as General Counsel in January 2013. She received her Juris Doctor from the School of Law after graduating from the University of Washington with a B.A. in Political Science. Following a judicial clerkship at the Washington State Court of Appeals, Ms. McGuire enjoyed a long career in the Washington State Attorney General’s Office, Spokane Division, from 1983 until 2013. During that time, she worked 24 years in the Education Division representing public colleges and universities. In 1998 she was appointed the Spokane Interdivisional Section Chief and supervised attorneys and staff in six Divisions of the Attorney General’s Office while continuing to represent higher education clients and other state agencies.

Charles J. Murphy, Vice President for Finance. Mr. Murphy was appointed Vice President for Finance in 1985. He had been Controller at the University since 1978. Prior to coming to the University, his professional experience included public accounting and private industrial accounting positions. He received a B.A. from the University.

Robert “Skip” Myers, Ph.D., Vice President for Policy, Planning and Administration. Dr. Myers joined the University in September 2015, initially serving as the Interim Vice President for Planning and Administration. Dr. Myers was later named the Vice President for Policy, Planning and Administration. Dr. Myers has over 30 years of leadership experience in private and public higher education, including as Executive Vice President and Chief Operating Officer of the University of Maryland University College, Chancellor at Embry-Riddle Aeronautical University Worldwide, and President of Daniel Webster College. Dr. Myers earned a B.A. and M.A. in journalism and a Ph.D. in higher education policy, planning and leadership from the University of Maryland.

Joseph Poss, Vice President for University Advancement. Mr. Poss was appointed to this leadership role in October 2011. He oversees the University’s Development, Alumni Relations and Marketing/Communications operations. He joined University Relations in 1998 and served in several positions in the Development office during his nearly 15 years as a member of the University Relations (later renamed University Advancement) team. Mr. Poss received a B.A. in criminal justice from the University.

Raymond F. Reyes, Ph.D., Associate Academic Vice President and Chief Diversity Officer. Dr. Reyes joined the University in 1988. Prior to coming to the University he served in various leadership positions in service to a wide A-6 array of educational and development initiatives for Native American tribal organizations supporting indigenous communities. Dr. Reyes has taught both undergraduate and graduate courses in Education, Sociology, Religious Studies, Philosophy, Leadership Studies and Business. He received a B.A. in psychology from Eastern Washington University, an M.P.A. from City University of New York Baruch School of Business, and a Ph.D. in leadership studies from the University.

Michael L. Roth, Athletic Director. Mr. Roth joined the University in 1986 and was named Athletic Director in 1997. Mr. Roth previously served as the Assistant Athletic Director. Mr. Roth was named the 2008-2009 Under Armour AD of the Year for the Division I West Region. Mr. Roth earned a bachelor’s degree from Willamette University and a master’s degree from the University.

John D. Sklut, J.D., Chief of Staff. Mr. Sklut was appointed Chief of Staff in September 2015. Mr. Sklut previously served as the University’s interim Vice President of Administration and Planning as well as Assistant General Counsel. He joined the University as Assistant Dean of the School of Law in 2008. He has more than 20 years of legal experience and earned a bachelor’s degree from the University of California, San Diego and a juris doctorate from Loyola Law School, Los Angeles.

Joseph P. Smith, Associate Vice President for Finance. Mr. Smith joined the University in 2010 after spending nine years as a financial statement auditor with two large public accounting firms. Mr. Smith earned a Bachelor of Business Administration - Accounting from the University. Mr. Smith is a Certified Public Accountant (CPA) and Chartered Global Management Accountant (CGMA).

Borre B. Ulrichsen, Chief Information Officer. Mr. Ulrichsen joined the University in June 2016 as Chief Information Officer. Prior to joining the University, Mr. Ulrichsen served as Chief Information Officer and Associate Vice President at California State University, East Bay. Mr. Ulrichsen has over 25 years of leadership experience in higher education and the technology industry. Mr. Ulrichsen earned an MBA in finance from the University of California, Berkeley and Master of Science in naval architecture from Norwegian University of Science and Technology.

Kirk J. Wood-Gaines, Assistant Vice President for Human Resources. Mr. Wood-Gaines joined the University in 2013 after serving as the Vice President of Human Resources and Communications at a worldwide manufacturer of pharmaceuticals for 13 years. Mr. Wood-Gaines has over 30 years of experience as a leader in the human resources field. Mr. Wood-Gaines earned a B.A. in business with a minor in economics from Washington State University. Mr. Wood-Gaines is a member of the Society for Human Resource Management and is a lifetime accredited Senior Professional in Human Resources.

Faculty and Staff

The following table reflects the number of full-time and part-time faculty (excluding adjunct faculty) for the past five fall semesters, together with the number of tenured full-time faculty members. There are no unions representing members of the faculty.

FACULTY SUMMARY

Tenured Other Fall Semester Full-Time Full-Time Part-Time Total 2015 227 195 13 435 2014 227 199 9 436 2013 219 202 13 434 2012 210 198 21 429 2011 201 202 19 422

Source: The University. Fall 2016 numbers not yet available.

Members of the Society of Jesus constitute approximately two percent of the full-time faculty. They receive compensation from the University comparable to that received by other members of the faculty. The majority of the faculty who are members of the Society of Jesus live in facilities located on the University’s campus.

Eighty-three percent of the full-time faculty has obtained a Ph.D. or other terminal degree appropriate to their disciplines.

A-7

In addition to its faculty, the University employs approximately 815 administrative, professional, and staff members. There are no unions representing administrative, professional, or staff members.

Academic Programs

The University reflects the centuries-old tradition of Catholic and Jesuit education, whose goals include a dedicated commitment to academic and professional excellence, Christian and humanistic traditions, and community service. Among the University’s numerous achievements with respect to service to others, for the fourth year in a row it was ranked number one nationwide among small colleges and universities whose graduates serve in the Peace Corps.

The University’s educational programs are organized into six major academic divisions and the School of Law. Undergraduate and graduate instruction is provided by the College of Arts and Sciences and the Schools of Business Administration, Education, Engineering and Applied Science, and Nursing and Human Physiology. The School of Professional Studies houses Master’s and Ph.D. programs in leadership studies, with the majority of classes offered online. The School of Law offers a Juris Doctor degree. In addition, the University offers several study abroad programs, including a campus in Florence, Italy. In total, the University offers seven bachelor’s degrees in 75 majors and programs, master’s degrees in 26 programs and doctorate degrees in nursing practice and nurse anesthesia practice, in addition to primary and secondary education credential programs. Some undergraduate students are enrolled in multiple majors, minors, and/or concentrations.

Undergraduate and Graduate Education

College of Arts and Sciences. The College of Arts and Sciences is the central component of the University’s undergraduate program. Every student, whatever his or her major, takes a variety of courses in the College of Arts and Sciences, including courses in literature, mathematics, science, social science, global studies, history, philosophy and religious studies. The purpose of this core curriculum is to develop a well-rounded and well-educated adult with a firm grounding in the humanistic traditions. Through the University’s core curriculum, the College of Arts and Sciences provides all its students with the foundation upon which they build further studies in their chosen academic discipline or field of study. The University’s core curriculum was developed to challenge each student to read, write, analyze, reflect, discuss and persuade; to evaluate learning with discernment and compassionate understanding; to explore the past for the light it casts on the present and the future; to create works of the imagination; to practice ethical decision making; and to develop a foundation for a career. The University has adopted a revised core curriculum beginning with academic year 2016-17. Among other revisions introduced with the newly adopted core structure, elements of the core curriculum are integrated throughout all four years of undergraduate education, regardless of major, including a core integration seminar during the senior year. The College of Arts and Sciences confers the degrees of Bachelor of Arts (B.A.) (Honors and General), and Bachelor of Science (B.S.) (Honors and General). The College of Arts and Sciences includes 21 departments and had 235 full-time and seven part-time faculty members in the fall of the 2015-16 academic year. In the fall of the 2015-16 academic year, 2,486 undergraduates and 26 graduate students were enrolled in the majors and fields of concentration offered by the College of Arts and Sciences.

School of Business Administration. The School of Business Administration was established in 1921 and is accredited by the Association to Advance Collegiate Schools of Business. As expressed in its Mission Statement, the School of Business Administration strives to develop professionally competent and intellectually curious graduates who exemplify the humanistic, ethical and moral values of a Jesuit institution. A personal learning environment, quality students and a faculty dedicated to teaching, advising, scholarship and service mark the University’s excellence. As part of a dynamic and global business environment, the University promotes relationships with the regional, national and international communities. In 2015 USA Today ranked the School of Business Administration among the Top 10 Schools to Study Business. The School of Business Administration confers the degree of Bachelor of Business Administration (“BBA”) (Honors and General), Master of Business Administration (“MBA”), Master of Accountancy (“MACC”), Master of Science in Taxation (“MTAX”), and MBA in American Indian Entrepreneurship. In the fall of the 2015-16 academic year, there were 1,335 undergraduate and 172 graduate students under the instruction and guidance of 45 full-time faculty members affiliated with the School of Business Administration.

School of Education. The mission of the School of Education is to prepare socially responsive and discerning practitioners to serve their communities and profession. This mission is accomplished by directing available human and physical resources toward the establishment of knowledge bases and professional competencies needed to be an effective leader within a variety of organizational settings. The School of Education offers three undergraduate degrees: Bachelors of Education (“B.Ed.”) in Special Education, Sport Management, and Kinesiology and Physical Education. The School of Education also offers 11 separate Master’s degrees, in the areas of education, special education, initial teaching, various counseling programs, leadership and administration, sport and athletic administration and teaching English as a second language. Additionally, there is a comprehensive Teacher Certification Program, which enables A-8 students to obtain initial as well as continuing certification, at the elementary or secondary level. All degree and certification programs in the School of Education are accredited by the National Council for Accreditation of Teacher Education. The School of Education is a member of the American Association of Colleges of Teacher Education and is recognized by the Washington State Office of the Superintendent of Public Instruction as having approved programs for the preparation of teachers, counselors, special education teachers, principals and superintendents. In the fall of the 2015-16 academic year, there were 181 undergraduate students and 380 on-campus and off-campus graduate students receiving instruction from 25 full-time and one part-time faculty member. Faculty in the School of Education also work closely with accrediting bodies, professional standards entities, and other organizations within the community to meet the educational training needs of current teachers and administrators in K-12 educational settings. Certificate programs are offered in Principal, Program Administrator, Teacher and School Counselor. Conferences, institutes, and seminars are developed to meet the needs of these professionals.

School of Engineering and Applied Science. One of the key goals of the undergraduate programs in the School of Engineering and Applied Science is to prepare the students with a baccalaureate degree to be professional engineers. In addition, the programs provide a base both for graduate study and for lifelong learning in support of evolving career objectives, which include being informed, effective and responsible participants in the engineering profession and society. The School of Engineering and Applied Science offers four-year Bachelor of Science degrees in Civil Engineering (“BSCE”), Electrical Engineering (“BSEE”) and Mechanical Engineering (“BSME”). All three Bachelor of Science degree programs are fully accredited by the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology. The Civil Engineering program is offered with two options. One option is a traditional Civil Engineering program and the other option is an Environmental Engineering program. The Electrical Engineering program is also offered with two options. One option is a traditional Electrical Engineering program and the other is a Computer Engineering program. The School also offers a Bachelor of Science degree in Computer Science. The Center for Engineering Design is intended to enhance the design content of the engineering programs at the University by promoting interaction between the industrial and academic communities. The Center’s mission is to organize, support and provide guidance to student teams that undertake design projects defined by industry sponsors. In addition to its undergraduate programs of study, in fall 2015 approximately 49 graduate students were enrolled in the Transmission and Distribution program through which the University offers a Certificate in Transmission and Distribution, and a Master of Engineering degree in Transmission and Distribution. The School of Engineering and Applied Science is currently ranked the twenty-eighth best undergraduate engineering program in the nation (among engineering schools without a Ph.D. degree program) by U.S. News and World Report. In the fall of the 2015-16 academic year, 33 full-time faculty provided instruction to 952 undergraduate students in the School of Engineering and Applied Science.

School of Professional Studies. The School of Professional Studies strives to create, educate, and support leaders and to be of service in meeting the learning needs of a complex society. Ethics, excellence, spirit, and community are guiding values for all aspects of the School. Faculty scholarship and research contribute positively to the professions, the global community, and the classroom. Through a spirit of inquiry and lifelong learning, students expand their capacity to transform thinking, and engage in ethical problem solving and decision-making. The teaching strategies meet the needs of diverse student groups by utilizing dynamic program delivery formats, including technology and flexible scheduling. Traditional age undergraduate students, as well as adults returning to complete their degree, enrich the learning environment. The School of Professional Studies confers Master’s degrees in Organizational Leadership as well as Communication and Leadership Studies, and the University’s only Ph.D. degree in Leadership Studies. In the fall of the 2015-16 academic year, 694 students took leadership classes from 16 full-time faculty through a variety of course delivery platforms.

School of Nursing and Human Physiology. The School of Nursing and Human Physiology was established in 2013, in response to growing demand for programmatic offerings in health-related professions. Prior to 2013, these two units and their programs resided in the School of Professional Studies. Undergraduate degrees in Nursing and in Human Physiology as well as graduate degrees in Nursing, including a new Doctor of Nurse Anesthesia Practice degree, are offered. In the fall of the 2015-16 academic year, there were 23 full-time and one part-time faculty who work closely with 1,282 undergraduate, graduate, and doctoral students.

The Gonzaga School of Law. The School of Law was established in 1912 by the Board of Trustees with the active support of many prominent members of the bench and bar in Washington State. It is one of only three law schools in Washington State. It is fully accredited by the American Bar Association and is also a member of the Association of American Law Schools. The School of Law has a long and distinguished tradition of humanistic Jesuit education. The School of Law seeks to challenge its students to incorporate the knowledge of the past with the innovations of the present in order to better serve society. The Law Library collection totals more than 250,000 volumes of legal and law-related materials of hard copy or microform equivalents. The School of Law confers the degree of Juris Doctor (“J.D.”). In cooperation with the School of Business Administration, a combined program is A-9 offered for the MBA/J.D. and MACC/J.D. and the School of Law currently offers a full range of courses dealing with federal, state and international law. In addition to the traditional methods of legal education, the School of Law is committed to the value of clinical experiences as an integral part of modern legal education. The student body at the School of Law publishes the Gonzaga Law Review four times per year, and conducts an extensive moot court program. In the fall of the 2015-16 academic year, there were 339 students enrolled in, and 29 full-time faculty members affiliated with, the School of Law.

Summer Session

To provide students with further opportunities to expand or accelerate their studies, the University offers a summer session, which is an extension of its normal academic programs. During the summer of 2016, 1,062 undergraduate and 1,805 graduate students furthered their academic studies at the University. The enrollment figures contained in this Appendix do not include the summer sessions.

Accreditation

The University is accredited by the Northwest Commission on Colleges and Universities (“NWCCU”), an accrediting body recognized by the Council for Higher Education Accreditation (the “Council”) and the Secretary of the U.S. Department of Education. In addition, the University’s schools and some academic programs are also accredited by the following professional accrediting bodies:

• The School of Business Administration is accredited by AACSB International - The Association to Advance Collegiate Schools of Business, a specialized accrediting board recognized by the Council and the Secretary of the U.S. Department of Education.

• The School of Law is accredited by Council of the Section of Legal Education and Admissions to the Bar of the American Bar Association (“ABA Council”). The U.S. Department of Education has recognized the ABA Council as the national agency for the accreditation of programs leading to the first professional degree in law.

• Programs in English as a Second Language are accredited by the Commission on Accreditation of Teachers and Speakers of Other Languages (“TESOL”), a specialized accrediting board recognized by the Council and the Secretary of the U.S. Department of Education.

• Programs in the Department of Nursing are accredited by the Commission on Collegiate Nursing Education (“CCNE”), a specialized accrediting board recognized by the Council and the Secretary of the U.S. Department of Education.

• Programs in Civil, Electrical, Computer, and Mechanical Engineering are accredited by the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology (“EAC/ABET”), a specialized accrediting board recognized by the Council and the Secretary of the U.S. Department of Education.

• Programs for the certification of elementary, secondary, and Special Education teachers at the bachelor’s level; and Special Education, Initial Teaching (elementary and secondary levels), Principal and Superintendents (Leadership Formation), at the graduate level; and for the certification of post- licensure teachers and administrators (i.e., “professional certification”), are accredited both by the National Council for Accreditation of Teacher Education (“NCATE”), a specialized accrediting board recognized by the Council and the Secretary of the U.S. Department of Education, and by the Washington State Board of Education through its Office of the Superintendent of Public Instruction (“OSPI”).

• The School Counseling and Counseling Psychology master’s programs are accredited by the Council for Accreditation of Counseling and Related Education Program (“CACREP”), a specialized accrediting board recognized by the Council and the Secretary of the U.S. Department of Education.

• The Special Education, Sports Management, and Physical Education bachelor’s programs, and the Special Education, Sport & Athletic Administration, Leadership & Administration, Master of Teaching At-Risk Youth, Counseling Psychology, Reading & Literacy, and Anesthesiology Education master’s programs, are accredited both by NCATE, a specialized accrediting board recognized by the A-10

Council and the Secretary of the U.S. Department of Education, and by the Washington State Board of Education through OSPI.

• The Doctor of Nurse Anesthesia Practice program is accredited by the Council of Accreditation of Nurse Anesthesia Education Programs (“COA”). The COA is a specialized accrediting board recognized by the Council and the Secretary of the U.S. Department of Education.

The Campus

The University’s campus has grown from one building, which housed both students and Jesuit faculty in its founding years, to 105 buildings spread over 152 landscaped acres. The University is located along the north bank of the Spokane River and includes its own small lake, providing an attractive campus setting for students, faculty and staff. Some highlights of the campus include the following:

Student Housing provides living options for more than 3,000 undergraduate students, including men’s, women’s and coeducational residence halls with capacities ranging from 15 to 422. Apartment-style living units are another housing option for students. The University owns several houses and apartment complexes in the campus neighborhood, which are rented to upper-division students. Residence halls are staffed by professional staff and trained students who provide services ranging from personal counseling to activities planning. Full-time first and second year students under age 21, unmarried and not living at home, must live in on-campus residence halls.

The John J. Hemmingson University Center, the University’s newest facility, was completed in 2015. The 167,000 square-foot facility houses a modern two-level board dining area with six restaurant style dining platforms, four retail eateries, conference, meeting, lounge and banquet facilities, and an array of student, staff and faculty functions including student government, mission and ministry, student clubs, the Center for Global Engagement, and the Center for Community Action and Service Learning. The Hemmingson Center adds significant ongoing physical capacity for academic and extra-curricular programming, studying and dining.

Martin Centre and the Rudolf Fitness Center, the University’s modern sports and recreational facilities, include an intercollegiate volleyball competition arena, dance studio, weight and exercise rooms, and a fieldhouse offering three full sized courts for intramural basketball and volleyball, four racquetball and handball courts, an elevated running track and an indoor swimming pool. The Princeton Review lists the University as No. 8 for “Everyone Plays Intramural Sports” in its most recent edition of Best 381 Colleges.

Foley Center, opened in the fall of 1992, provides sophisticated online computer access to libraries across the United States. In addition, students enjoy abundant individual study spaces, a computer lab, an audio/visual resource room, and one of the finest rare book collections in the country. The Foley Center has undergone a significant remodel over the past two years to incorporate central information technology services and expanded student support functions, including a writing lab.

St. Aloysius Church and the student chapel offer students a place for solitude and reflection as well as daily masses. The twin spires of St. Aloysius Church are a landmark of the Spokane area. The primary student chapel is located in College Hall, the University’s primary administration building. There are other smaller student chapels and reflections spaces located throughout campus, including an outdoor candlelight grotto located adjacent to St. Aloysius Church.

The McCarthey Athletic Center, a 6,000-seat arena, opened in the fall of 2004, and is home to the University’s men’s and women’s basketball teams and other University-sponsored events. The McCarthey Athletic Center, also known as “The Kennel,” has been sold out for every men’s basketball game since its opening, and the attendance per capacity for regular season games ranks third in the nation for women’s basketball. In January 2016, NCAA.com named “The Kennel” on its college basketball list of “5 venues every hoops fan must attend.”

In addition to the Hemmingson Center, other recent and pending projects include:

• The Woldson Performing Art Center, a 57,500 square foot facility that will serve as the cornerstone of a new arts district on the west end of campus. The facility is expected to be completed in winter 2018, with site preparation currently underway, and will feature a 750 seat performance theatre, a 150 seat recital/rehearsal hall for music and dance, a two-story lobby and box office, make-up rooms, an orchestra pit designed to rise and create a “thrust” stage area, and other supporting studios and

A-11

instructional space. The Woldson Performing Arts Center has an estimated cost of $45 million and is fully gift funded.

• The Volkar Center for Athletic Achievement, a 51,000 square foot addition to the athletics complex that will house student athlete academic support services, a weight room, nutrition center, basketball practice court, offices, a new Gonzaga Athletics Hall of Fame, and meeting areas. The Volkar Center for Athletic Achievement, scheduled for completion in fall 2017, with site preparation to begin in the coming months, has an estimated cost of $24 million and is fully gift funded via current gifts, pledges and expectancies.

• The Jesuit Residence, a 36,100 square foot home for Jesuits in residence, including reflective space to serve Jesuits seeking retreat, suite-style living quarters, offices and work space, and a new chapel. The Jesuit Residence, scheduled for completion in fall 2017, with site preparation currently underway, will functionally replace the existing Jesuit House, a dorm-style facility that no longer meets the contemporary needs of the Jesuit community. The Jesuit Residence has an estimated cost of $12.3 million, with gift funding from current gifts and pledges currently addressing approximately 50% of the project costs. Fundraising is ongoing.

• The Stevens Center, opened in January 2014, is a 72,000 square foot indoor tennis and golf facility. The Stevens Center includes six regulation tennis courts, putting green, chipping area, four “TrackMan” golf simulators, locker rooms, lounges, offices and seating. The Stevens Center was fully gift funded.

• The Boone Avenue Retail Center (BARC), a four-level mixed use parking/retail structure, with approximately 650 parking spaces and 36,000 square-foot of retail and office space, was completed in the summer of 2013. The BARC is home to the Zag Shop campus book/apparel store. The BARC was recently renovated to include a new central mail/package facility and will be renovated in the coming year to house selected administrative functions of the University.

Cultural Activities

The University offers a wide variety of cultural events on campus, including films, speakers, concerts, dramatic presentations and art displays. The University has a choral program that enjoys a national reputation. University students write, edit and publish a student newspaper and a literary magazine that includes works of poetry and fiction and operate KAGU, a radio station that offers an extensive broadcast schedule devoted to music, fine arts and public affairs programming. Gonzaga University English Professor Tod Marshall, an award-winning poet, has been appointed the fourth Washington State Poet Laureate by Governor Jay Inslee. He is the first Eastern Washington resident to hold the position.

Athletics

The University sponsors eight intercollegiate sports for men: baseball, basketball, crew, cross country, golf, soccer, tennis and track. Women’s teams compete in eight intercollegiate sports: basketball, crew, cross country, golf, soccer, tennis, volleyball and track. The University’s teams compete on the NCAA Division I level. Men’s teams compete in the West Coast Conference (“WCC”) in baseball, basketball, cross country, golf, soccer and tennis, and women’s teams compete in the WCC in basketball, cross country, soccer, golf, tennis, crew and volleyball. This past year, Gonzaga Athletics was recognized by the NCAA for having the nation’s highest percentage of teams – 80% - earn Academic Progress Rate (APR) Public Recognition Awards, which combined for the best APR average in the nation (tie, Dartmouth). The men’s basketball team made its eighteenth consecutive appearance in the NCAA tournament in March 2016 and its second straight “Sweet Sixteen” appearance. During the 2015-2016 season, the men’s basketball team was featured in an all-access five part HBO series titled “Gonzaga: The March to Madness.” In 2013, the men’s basketball team finished the regular season ranked No. 1 in The Associated Press Top 25 poll.

The University also sponsors a popular recreational sports program that offers a wide variety of structured and unstructured sports and activities. The intramural sports program offers participants the opportunity to play in structured sports such as flag football, softball, soccer, volleyball and basketball. Informal sports allow students to participate on their own in activities such as weight lifting, basketball and table tennis. The sports club program provides opportunities for participation on a more competitive level. These clubs include ice hockey, men’s and women’s rugby, alpine skiing and lacrosse.

A-12

FINANCIAL CONDITION OF THE UNIVERSITY

Presentation of Financial Statements

The most recent audited consolidated financial statements of the University are presented in Appendix B entitled “Audited Consolidated Financial Statements of the University.” The statements provide information as of and for the fiscal years ended May 31, 2016 and 2015. The University maintains its accounts in accordance with accounting principles generally accepted in the United States of America applicable to colleges and universities.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

A-13

The University provides certain summary financial information below, including a Summary Statement of Unrestricted Activities as of May 31, 2016, 2015, 2014, 2013, and 2012.

The Corporation of Gonzaga University Summary Statement of Unrestricted Activities for the Years Ended May 31

2016 2015* 2014* 2013* 2012* Changes in unrestricted net assets: Revenues and other additions: Student tuition and fees, net of institutional financial aid $151,410,590 $142,769,604 $138,903,331 $135,707,142 $134,351,349 Contributions 4,047,051 2,618,438 3,717,527 3,735,574 3,411,431 Grants and contracts 2,059,267 2,234,349 2,029,815 1,880,835 2,465,596 Return on investments designated for operations 659,646 1,218,302 1,085,167 58,099 327,351 Return on investments, net of amounts designated for operations (894,230) 318,428 1,834,581 2,414,494 (1,476,239) Auxiliary enterprises 30,260,775 26,810,141 26,524,221 25,574,998 27,420,107 Other sources 11,585,292 14,656,880 10,144,195 9,626,874 9,490,063 Net assets released from restrictions 40,146,516 11,159,639 16,871,066 13,582,513 9,301,955 Total revenues and $239,274,907 $201,785,781 $201,109,903 $192,580,529 $185,291,613 additions

Expenses and transfers: Instruction $81,539,829 $79,503,792 $77,235,770 $75,184,860 $73,339,884 Libraries 5,443,457 5,710,506 5,901,513 5,922,918 5,847,701 Student services 19,728,781 17,290,380 13,406,418 11,446,634 10,102,149 Organized activities 22,845,025 21,541,945 19,593,874 18,434,071 18,583,972 General administration and institutional 39,560,291 36,431,680 34,041,162 33,441,568 31,957,956 Operations and maintenance of plant 11,742,600 10,675,896 11,022,711 10,446,744 10,305,493 Auxiliary enterprises 28,429,124 23,729,124 22,950,832 21,714,436 25,731,251 Loss (Gain) on disposal of equipment 15,432 226,439 (31,099) (52,033) 12,736 Change in value of interest rate swaps (244,571) 579,878 129,611 (1,076,287) 4,502,777 Transfers out (in) (6,946,676) 4,906,282 424,399 49,122 925,300 Total expenses and transfers $202,113,292 $200,595,922 $184,675,191 $175,512,033 $181,309,219 Increase in unrestricted net assets 37,161,615 1,189,859 16,434,712 17,068,496 3,982,394 Unrestricted net assets, beginning of year 167,172,129 165,982,270 149,547,558 132,479,062 128,496,668 Unrestricted net assets, end of $204,333,744 $167,172,129 $165,982,270 $149,547,558 $132,479,062 year ______* Reclassifications: Certain reclassifications were made to prior periods to conform with the May 31, 2016 financial statement presentation, with such reclassification having no impact on total net assets in any period presented. The information listed herein is derived from those years’ audited financial statements.

Note: The amounts reported above represent a summary of the University’s Unrestricted Activities. For complete details, please see the University’s audited Financial Statements set forth in Appendix B. Source: Audited consolidated financial statements of the University.

A-14

ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth, for each fiscal year ending May 31, the amount required for the payment of the University’s Outstanding Indebtedness, principal of the 2013A Bonds, 2013B Bonds, 2016A Bonds, 2016B Bonds and other notes at their stated maturity and the payment of interest on such bonds, other notes, and the Swaps.

Fiscal 2013A Bonds, Net Interest 2016A Bonds and 2016B Bonds(3) Total Debt Year 2013B Bonds, Payments for the Service Ending and other Swaps(2) Principal Interest Total Requirements May 31 notes(1) 2017 $3,094,182 $ 1,310,667 $3,500,000 $ $ $ 2018 3,094,182 1,181,290 3,175,000 2019 3,094,182 1,061,704 3,275,000 2020 2,932,500 934,753 3,950,000 2021 2,932,500 785,351 4,125,000 2022 2,932,500 629,371 4,300,000 2023 2,932,500 489,998 775,000 2024 2,932,500 460,900 800,000 2025 2,932,500 430,712 850,000 2026 2,932,500 398,813 875,000 2027 2,932,500 365,825 925,000 2028 2,932,500 331,126 950,000 2029 2,932,500 295,337 1,000,000 2030 2,932,500 257,992 1,000,000 2031 2,932,500 220,336 1,050,000 2032 2,932,500 180,812 1,100,000 2033 2,932,500 139,421 1,150,000 2034 2,932,500 86,360 2,775,000 2035 2,932,500 - - 2036 2,932,500 - - 2037 2,932,500 - - 2038 2,932,500 - - 2039 12,642,500 - - 2040 12,639,900 - - 2041 12,172,500 - - 2042 12,174,400 - - 2043 12,177,425 - - 2044 - - 30,860,000 2045 - - 32,190,000 2046 - - 33,575,000 $126,806,772 $ 9,560,769 $ 132,200,000 $ $ $

(1) Washington Higher Education Facilities Authority Revenue Bonds (Gonzaga University Project), Series 2013A (the “2013A Bonds”), Washington Higher Education Facilities Authority Taxable Revenue Bonds (Gonzaga University Project), Series 2013B (the “2013B Bonds”), and other notes. (2) Estimated net interest payments on the Swaps. Interest is calculated using one month LIBOR of 0.50% for all periods presented. Net interest payments associated with the Swaps are not included for purposes of determining the Debt Service Coverage Ratio, as defined in the Indenture. (3) Refer to the following page for details of the 2016A Bonds and the 2016B Bonds. Preliminary, subject to change.

Source: The University

A-15

Fiscal 2016A Bonds* 2016B Bonds* 2016A Bonds Year and 2016B Bonds Ending Total Debt Service May 31 Principal Interest Principal Interest Requirements 2017 $ - $ $ 3,500,000 $ $ 2018 - 3,175,000 2019 - 3,275,000 2020 - 3,950,000 2021 - 4,125,000 2022 - 4,300,000 2023 - 775,000 2024 - 800,000 2025 - 850,000 2026 - 875,000 2027 - 925,000 2028 - 950,000 2029 - 1,000,000 2030 - 1,000,000 2031 - 1,050,000 2032 - 1,100,000 2033 - 1,150,000 2034 - 2,775,000 2035 - - 2036 - - 2037 - - 2038 - - 2039 - - 2040 - - 2041 - - 2042 - - 2043 - - 2044 30,860,000 - 2045 32,190,000 - 2046 33,575,000 - $ 96,625,000 $ $ 35,575,000 $ $

* Preliminary, subject to change. Source: The University

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

A-16

Interest Rate Swap Agreements

In connection with previously refunded Washington Higher Education Facilities Authority (“Authority”) bonds, the University entered into the following interest rate swap agreements with Bank of America N.A., described herein as the 2007C Swap and 2007B Swap, and together, the “Swaps.”

2007C Swap 2007B Swap

University Pays 4.1680% 4.1195%

University Receives 70% of one month 67% of one month LIBOR LIBOR if LIBOR is 3.5% or greater or 77% of one month LIBOR if LIBOR is less than 3.5%

Effective Date October 1, 2012 October 1, 2014

Expiration April 1, 2022 April 1, 2034

Notional Amounts Outstanding on: April 1, 2016 $ 4,825,000 $ 30,750,000 April 1, 2017 3,925,000 28,150,000 April 1, 2018 3,450,000 25,450,000 April 1, 2019 3,000,000 22,625,000 April 1, 2020 2,050,000 19,625,000 April 1, 2021 1,050,000 16,500,000 April 1, 2022 -0- 13,250,000 April 1, 2023 12,475,000 April 1, 2024 11,675,000 April 1, 2025 10,825,000 April 1, 2026 9,950,000 April 1, 2027 9,025,000 April 1, 2028 8,075,000 April 1, 2029 7,075,000 April 1, 2030 6,075,000 April 1, 2031 5,025,000 April 1, 2032 3,925,000 April 1, 2033 2,775,000 April 1, 2034 -0-

In prior years, the University utilized variable-rate debt to refinance certain outstanding debt and finance the construction and acquisition of property, plant, and equipment. The University entered into the Swaps in order to obtain a synthetic fixed rate and to hedge the risk of changes in interest payments on the variable-rate bonds caused by changes in the market rates. All of the University’s variable-rate Authority bonds that were paired with the Swaps have been previously refunded with proceeds of fixed rate Authority bonds. As such, the Swaps are no longer directly paired with any outstanding debt. However, all of the 2007C Swap and a portion of the 2007B Swap together currently provide an indirect synthetic fixed rate on the privately placed 2012A Bonds and 2012B Bonds. As of May 31, 2016, the total principal balance outstanding on the combined 2012A Bonds and 2012B Bonds was $10,055,000. The University intends to refund the 2012A Bonds and 2012B Bonds in conjunction with the issuance of the 2016A Bonds. The University intends to issue the variable rate 2016B Bonds through a private placement with one or more financial institutions, with principal payments closely matching the amortizing notional amounts of the Swaps.

The Swaps can each be terminated at market rates at any time during the term of the swap. As of August 31, 2016, the 2007C Swap and 2007B Swap have estimated derivative liabilities of $572,000 and $7,176,000, respectively, with such amounts representative of the termination price of each swap. The University does not enter into derivative instruments for any purpose other than cash flow hedging purposes and does not speculate for investment purposes

A-17

using derivative instruments. If the University’s bond rating falls below BBB+ by S&P Global Ratings or Baa1 by Moody’s Investors Service, the swap counterparty has the ability to require the University to post collateral.

Comments on the University’s Financial Condition

Student Tuition and Fee Revenues

The main component of the University’s revenues is student tuition and fees. Tuition revenues are a function of tuition rates and enrollments, net of institutional financial aid. The University has raised its tuition rates in each of the past five years and believes that its tuition rates remain attractive compared to those of other private institutions with which it competes for students.

The following table sets forth the tuition charged to full-time students, as well as the room charges for the majority of University accommodations combined with the full board charges for each of the last five academic years, inclusive of the current academic year.

TUITION RATES, ROOM AND BOARD* Undergraduate Full-time School of Law Full-time Academic Year Tuition Tuition Room and Board 2016-17 $38,980 $37,080 $10,930 2015-16 37,480 36,360 10,835 2014-15 36,040 36,360 9,580 2013-14 34,570 36,360 9,120 2012-13 33,160 35,310 8,730 ______* Excludes non-law graduate student tuition rates (see “Undergraduate and Graduate Education” on page [A-9] for a description of those programs). Students in such graduate programs pay tuition on a per-credit-hour basis, which for the 2016-17 academic year ranged from $920-$975 per-credit-hour. Undergraduate full-time tuition above excludes mandatory fees of ranging from $482 to $750 per year. Room and Board amounts are based on the typical lower division student housing configuration and meal plan selection. Source: The University.

Financial Aid Programs

Approximately 98% of the undergraduate student body receives some form of merit or need-based financial assistance from the University. The following table shows the University’s total student assistance programs for all students, graduate and undergraduate, for the last five academic years.

FINANCIAL AID PROGRAMS

Grants Loans Federal and Washington Private University Federal and Total Grants Academic Year State Programs Assistance Expenditures Private and Loans 2015-16 $ 3,055,838 $ 5,899,103 $ 95,188,676 $ 64,904,882 $ 169,048,499 2014-15 3,050,877 5,857,368 86,778,352 64,106,410 159,793,007 2013-14 3,221,202 6,212,912 82,715,658 68,270,264 160,420,036 2012-13 3,270,054 5,998,348 79,685,006 73,272,314 162,226,722 2011-12 2,541,147 4,437,584 75,977,295 77,034,927 159,993,953 Source: The University.

A significant number of the University’s students depend on student financial aid from sources other than the University to pay tuition fees and expenses. The majority of such aid comes from State and federal governmental sources. The continued availability of those funds is contingent upon continued legislative support.

A-18

Student Enrollment

The undergraduate enrollment for academic year 2016-17 grew 5.2% from 2012-13, stemming from overall new student enrollment growth and improved retention. The state of Washington is the University’s primary feeder state, accounting for 44% of the total freshmen enrollment in academic year 2016-17. The University maintains ongoing efforts to strengthen its position in out-of-state markets through focused marketing efforts and financial aid strategies to maintain or increase its undergraduate revenue. The fall 2015 entering freshmen class of 1,338 was the largest in University history. Matriculation for fall 2016 is 1,271 students representing the second largest class in University history and a class size intentionally smaller than the prior year due to academic and space capacity considerations.

Graduate enrollment has experienced some decline over the past five years, with fall 2016 enrollments approximately 13% below a high point in fall 2012. Enrollment has softened in areas such as organizational leadership and communication leadership, while enrollments are extremely strong in nursing, taxation, and sport administration. Nevertheless, due to the quality, mix and reputation of the University’s graduate programs, demand continues to be good overall for programs offered both on campus and off campus including online distance education programs, particularly in light of national trends for graduate enrollment. Overall, the University anticipates a slight decline in graduate enrollment in the coming year.

The School of Law enrollment is following the national declining trend of applications and enrollment. Historically, there is generally a 10-year cycle of peaks and valleys associated with law school enrollment. The School of Law has taken active steps to manage through this downward cycle, including a voluntary early termination program for tenured faculty.

The following table sets forth the University’s enrollment headcount for the fall semester for each of the past five academic years, inclusive of the current academic year, and the number of degrees conferred in each such year completed.

ENROLLMENT AND DEGREES

Fall Enrollments Degrees Awarded Academic Under- Year graduate Graduate Law Total Bachelor Graduate Law Total 2016-17 5,160 2,100 312 7,572 * * * * 2015-16 5,041 2,111 339 7,491 1,112 787 112 2,011 2014-15 4,837 2,178 339 7,354 1,172 801 121 2,094 2013-14 4,896 2,322 387 7,605 1,125 835 157 2,117 2012-13 4,906 2,417 460 7,783 1,255 828 161 2,244 *Data not yet available. Source: The University.

The following table sets forth applications, admissions and new enrollments for the undergraduate, law and other graduate programs for the last five academic years, including estimated figures for the current academic year.

APPLICATION POOL

Undergraduate (Freshmen only) School of Law Other Graduate* Fall Offered New Offered New Offered New Semester Applications Admission Enrollments Applications Admission Enrollments Applications Admission Enrollments 2016 7,324 4,928 1,271 796 452 108 1042 583 450 2015 6,728 4,951 1,338 740 521 130 960 706 492 2014 7,162 4,835 1,048 479 447 128 795 513 361 2013 7,030 4,790 1,238 551 511 108 950 602 458 2012 6,985 4,649 1,096 1,157 723 132 1,291 987 649 ______*Head count. Does not include transfers. Source: The University.

A-19

RETENTION RATES AND GRADUATION RATES OF INCOMING FRESHMEN

Year of Entry 2009 2010 2011 2012 2013 2014 Entering Freshmen 1,238 1,119 1,131 1,096 1,238 1,048 Returned 2nd Year 92.1% 90.8% 93.5% 94.3% 92.4% 94.6% 4-Year Graduation 72.9% 74.3% 77.5% 5-Year Graduation 81.7% 82.5% 6-Year Graduation 82.7%

Source: The University

Income on Endowment Funds

The University has adopted an investment and spending policy for endowment assets that attempts to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner that is intended to produce an acceptable level of return while assuming a moderate level of investment risk on a total portfolio basis. The University’s goal for its endowment funds, over time, is to provide an average annualized return of the annual endowment spending amount plus inflation, as measured by the Higher Education Price Index (“HEPI”) over a market cycle of three to five years. To satisfy its long-term rate of return, the University relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends), and maintains a diversified asset allocation that places a greater emphasis on equity-based and alternative investments to achieve its long-term return objectives within prudent risk constraints.

Contributions and Other Support

The University is currently in the public phase of a multi-year fundraising campaign called “Gonzaga Will,” largely focused on growing student financial aid endowments, academic program endowments, and signature capital projects, including The John J. Hemmingson University Center, Myrtle Woldson Performing Arts Center, Volkar Center for Athletic Achievement, and Jesuit Residence. Begun in July 2011 and launched publically in October 2015, the current campaign has a published goal of $250 million. As of September 30, 2016, the University has raised $226 million in the form of cash contributions, pledges, bequests, and other support, the majority of which support capital projects. The University’s last public fundraising campaign, which ended in October 2005, raised a total of $149 million, exceeding a goal of $119 million. The University continues to be successful in its fund-raising efforts for a variety of purposes and projects.

Auxiliary Enterprise Revenues

Auxiliary enterprise revenues are principally from room and board fees and campus bookstore sales. The University attempts to operate its auxiliary enterprises on a “break-even” basis, after including charges for principal and interest on debt and setting aside reserves for renewal and replacement of these facilities. In June 2012, the University transitioned the operations of the campus bookstore to a third party.

Other Income

Sources of other income to the University include interest income, rental income and miscellaneous sales and services income.

Expenditures

The most significant categories of expenditures are instruction, libraries, student services, general administration and institutional, operation and maintenance of plant, and auxiliary enterprises. Instruction and libraries expenses include principally faculty and academic staff salaries and other expenses related to the operations of the major academic divisions. Student services expenses include registration, admissions, counseling, career advising, and health center operations. The general administration and institutional category includes expenses related to such operations as data processing, University advancement activities, alumni activities, legal, accounting and audit functions, employee benefits and other similar expenses that benefit the University as a whole. The operation and maintenance of plant category includes costs for utilities, staff, repairs and maintenance, grounds, and housekeeping. A-20

Auxiliary enterprises expenses include the costs of providing room and board to students and of operating the campus bookstore (through May 2012).

Liabilities

The University’s liabilities at May 31, 2016, are shown on the Audited Consolidated Statement of Financial Position included in the University’s financial statements, set forth in Appendix B. Such liabilities amounted to $241,287,658, including long-term indebtedness of $170,249,828, excluding government student loans and obligations under the Swaps. The remainder of the liabilities other than long-term indebtedness consisted of accounts payable, accruals, reserves, student advances and deposits and assets held for others.

The University provides retirement benefits to all employees working a minimum of 1,000 hours per year under a 403(b) defined contribution plan. Beginning the first day of the month following one year of service, eligible employees are required to contribute 5% of their salary and the University contributes 8.5%. All contributions vest immediately. The University expense for the 403(b) retirement plan was $6,566,050 for the year ended May 31, 2016. There are no defined benefit retirement plans or other defined benefit post-employment benefit plans, and as such there are no unfunded benefit plan liabilities.

The University is subject to legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the results of these matters will not have a significant impact on the consolidated financial statements.

Cash and Investments

The following table sets forth the University’s cash and investment balances for each of the past five fiscal years.

CASH AND INVESTMENTS As of May 31

2016 2015 2014 2013 2012 Cash and Cash $ 17,085,515 $ 37,537,813 $ 34,283,365 $ 74,794,802 $ 56,813,622 Equivalents Short-Term 57,833,387 39,581,247 23,534,629 -0- -0- Investments Long-Term 230,320,609 231,621,526 217,266,267 180,823,866 154,524,432 Investments* Deposits with Bond 12,810,952 13,363,244 55,476,052 13,210,134 13,390,817 Trustees Total $318,050,463 $322,103,830 $330,560,313 $268,828,802 $224,728,871

*Includes beneficial interests in trusts for all periods presented. Source: Audited consolidated financial statements of the University.

Cash and cash equivalents are comprised of highly liquid bank demand deposits and money market funds. Short-term Investments are comprised of operating funds, externally managed as a laddered portfolio, and mutual fund investments. Deposits with bond trustees are largely comprised of debt service reserve funds for the 2009A Bonds, 2009B Bonds, and 2010A Bonds. With the planned refunding of the 2009A Bonds, the 2009B Bonds, the 2010A Bonds, the 2012A Bonds and the 2012B Bonds, debt service reserve funds will be used, in conjunction with refunding proceeds from the 2016A Bonds and 2016B Bonds, to fund an escrow account to defease the 2009A Bonds, the 2009B Bonds and the 2010A Bonds. Amounts are invested in fixed income securities.

The Investment Committee of the Board of Trustees oversees the University’s Investments. The primary component within Investments is the pooled endowment fund, which represents approximately 85% of the Investments balance in each of the years presented above. The pooled endowment fund is largely invested in actively managed assets, and generates earnings used primarily for scholarship, endowed faculty positions and other restricted purposes. The target asset allocation for the pooled endowment fund, as set forth in the Investment Policy approved by the Board of Trustees, is as follows:

A-21

54% Equities (including domestic small, mid and large cap, international small, mid, and large cap, and emerging markets)

21% Fixed income (including domestic, international, and high yield)

15% Alternative investments (including venture capital, private equity, absolute return, and others funds)

10% Real Assets (including real estate funds)

The one-year total net return on the University’s pooled endowment fund for the periods indicated are as follows:

POOLED ENDOWMENT FUND TOTAL RETURN ONE YEAR RETURN AS OF JUNE 30

2016 2015 2014 2013 2012 Pooled Endowment Funds (2.2%) 4.0% 19.7% 13.7% (0.4%) Source: The University.

As of August 31, 2016, the University’s pooled investment fund was up approximately 3.8% since June 30, 2016. This data is based upon data supplied by investment managers, and does not include current valuations from some alternative asset categories that are not priced on a monthly basis. The University’s pooled endowment funds achieved annualized net returns ranking among the top 10 percent of higher education institutions nationwide for the past three and five-year periods ending June 30, 2015, among participants in the NACUBO Commonfund Study of Endowments® (NCSE). The University also achieved annualized net investment returns ranking among the top 22% of participating schools for the past 10 years and among the top 21% for the past year. The ten-year annualized return was 7.0% as of June 30, 2015, or 70 basis points higher than the NCSE average for all participants.

Property, Plant, and Equipment

The following table sets forth the Property, Plant, and Equipment of the University at the end of each of the last five fiscal years.

PROPERTY, PLANT, AND EQUIPMENT As of May 31

2016 2015 2014 2013 2012 Land ...... $ 8,071,843 $ 8,023,680 $ 7,490,521 $ 6,827,355 $ 6,827,355 Buildings and Improvements ...... 353,857,737 292,878,318 291,481,990 266,814,399 265,661,241 Construction in Progress ...... 6,674,713 66,101,075 19,123,634 18,939,867 2,008,906 Equipment and Furniture ...... 33,447,955 21,835,563 23,819,250 23,934,976 24,471,054 Library Books and Artwork ...... 9,185,082 8,786,088 8,589,499 8,148,110 7,792,856 Subtotal ...... 411,237,330 397,624,724 350,504,894 324,664,707 306,761,412 Accumulated Depreciation...... (114,279,849) (105,928,338) (100,613,443) (95,770,221) (88,647,650)

Property Plant and Equipment, Net $ 296,957,481 $ 291,696,386 $ 249,891,451 $ 228,894,486 $ 218,113,762

Source: Audited consolidated financial statements of the University.

The University currently maintains a full complement of insurance coverages as described herein, although these coverages may change from time to time. See “Appendix C – FORM OF INDENTURE OF TRUST.” These coverages currently include blanket property and extra expense coverages in the amount of $449 million, general and excess liability coverages totaling $22 million, educator’s legal liability in the amount of $26 million and certain professional liability coverage. In addition, the University secures automobile coverage, crime coverage, workers compensation coverage and assorted accident coverages.

Bondholders’ Risks

For a discussion of Bondholders’ Risks, see “CERTAIN BONDHOLDER RISKS” and “MATERIAL LITIGATION” in the Offering Memorandum. A-22

APPENDIX B

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE UNIVERSITY

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[THIS PAGE INTENTIONALLY LEFT BLANK] GONZAGA UNIVERSITY FINANCIAL REPORT 2015-16

B-1 B-2 Table of Contents

Letter from the Vice President for Finance ...... 2

Selected Data ...... 5

Report of Independent Auditors ...... 6

Consolidated Financial Statements

Consolidated Statements of Financial Position ...... 8

Consolidated Statements of Activities ...... 9

Consolidated Statements of Cash Flows ...... 11

Notes to Consolidated Financial Statements ...... 12

Supplementary Information

...... 31

B-3 Letter from the Vice President for Finance

Gonzaga University. Fiscal year 2015-16 started with the grand opening of The John J. Hemmingson University Center, just in time to welcome the largest freshman class in Gonzaga’s 128 year history. The Hemmingson Center houses a modern two-level board dining area with six restaurant style dining platforms, four retail eateries, conference, meeting, and ministry, student clubs, the Center for Global Engagement, and the Center for Community Action and Service !X$ programming, studying and dining. In 2016, the Board of Trustees approved a new Strategic Plan for Gonzaga University, anchored by four institutional commitments: foster responsibility for shared mission, animate academic excellence across the institution, provide an integrative Jesuit educational experience for our students, and optimize institutional stewardship and sustainability. Each institutional commitment, in turn, contains strategic objective and supporting goals that serve as declarations of continuous institutional improvement. Unlike past strategic plans, the new Strategic Plan embeds an annual review process to ensure the plan remains informed by new and emerging considerations. In October 2015, we launched the public phase of the University’s next major fundraising campaign, “Gonzaga Will: !%O'()*+X3 impressive start – at launch the campaign had raised $183M, already exceeding the most recent campaign ending in 2005 by $34 million. Campaign initiatives, among many, include the 750 seat Myrtle Woldson Performing Arts Center, a new Jesuit Residence, and the Center for Athletic Achievement – all scheduled for completion in the coming three years. In March 2016, the University of Washington and Gonzaga University agreed to a collaborative agreement, making +<=>X$$ education program referred to as WWAMI. Beginning in academic year 2016-17, Gonzaga will provide faculty, student support services, and facilities for the University of Washington School of Medicine – Gonzaga University, hosting ?**X=@ Beginning in the fall of 2016, the University will introduce a new academic core intended to more fully animate our Catholic, Jesuit and humanistic traditions throughout each of the four years of education. And of course, with the passing of each academic year, we have the distinct pleasure to support and serve a group of $X@ knowledgeable practitioners, and imaginative problem-solvers. %XX>D?(*?K

Consolidated Statement of Financial Position

Assets +Q'N(Q)>D?(*?K'KK*VXX year. Total assets are comprised largely from cash and short-term investments, contributions receivable, long-term investments (primarily related to the endowment) and campus facilities. Cash and cash equivalents and short-term investments totaled $74.9 million as of May 31, 2016, a decrease of $2.2 million (VXX maintain campus facilities, and satisfy debt service payments. Additionally, the funds support strategic plan initiatives and fund needed contingencies and reserves. Contributions receivable of $81.7 million represents 11.3% of total assets at May 31, 2016. Contributions receivable ')*Q>X X]^! endowed scholarship program. $X'(D*D 31.8% of Gonzaga’s total assets as of May 31, 2016. Long-term investments are substantially comprised of Gonzaga’s +QX$(*XX

2 FINANCIAL REPORT 2015-16 B-4 Investment return, coupled with new endowment gifts of $5.2 million, and an annual spending distribution of $7.3 '(*QV?XX`K*X Gonzaga’s endowment is designated for merit and need based scholarships. The pooled endowment is invested on a total return basis to provide a long-term annual return equal to, or in excess Y |(NX}|(NX}X|(?X}|?)X}|?*X} Gonzaga’s pooled endowment achieved annualized returns ranking among the top 10 percent of higher education X$~D*(*?)|}1. Gonzaga also achieved annualized net investment returns ranking among the top 22 percent of participating schools for the past 10 years and among the top 21 percent for the past year. The ten-year annualized return was 7.0% as of June 30, 2015, or 70 basis points higher than the NCSE average for all participants. Property, plant, and equipment, net, totaled $297.0 million as of May 31, 2016, up $5.3 million or 1.8% over the prior X<@ X(*?K<! Additionally, planning and design began for the Woldson Performing Arts Center, a new Jesuit Residence, and the Center for Athletic Achievement. The University incorporates renewal and replacement spending within its annual operating budget in order to maintain a 152 acre main campus of more than 100 buildings. 1 Source: NACUBO Commonfund Study of Endowments® (NCSE), 2015

Liabilities +Q'(Q?D>D?(*?K'?*(Q?XX year. In addition to shorter-term obligations to vendors and employees, and deferred revenues and refundable advances, XX property, plant and equipment. As of May 31, 2016, notes and bonds payable decreased $5.8 million or 3.3% from the X` outstanding as of May 31, 2016 (prior to unamortized net premium, unamortized debt issuance costs and excluding }VQXX X$ rates are not subject to variability. Further, Gonzaga’s currently scheduled annual debt service through 2029 remains largely unchanged each year, subject to variability from the 6% of notes and bonds payable with interest that are variable in nature. Selected bonds are rated by Moody’s Investor Service and Fitch Ratings, and carry an “A3” (outlook stable) and “A” (outlook stable), respectively.

Net Assets Gonzaga’s net assets were $483.2 million as of May 31, 2016, an increase of $16.8 million or 3.6%. The three primary drivers of annual changes in net assets are 1) the net change from operating activities; 2) investment net return of the endowment after the annual spending distribution, and 3) contributions towards non-operating activities, such as capital and endowment contributions. Unrestricted nets assets increased $37.2 million to $204.3 million with $6.8 million of this increase resulting from X$X 2016 was the $24.1 million release from restrictions for acquisition of capital assets and the $6.9 million in transfers from temporarily restricted net assets for other designated uses. '?*K'?K(QX(*?K primarily to net assets released from restriction related to capital assets placed in service and operations totaling $40.1 million '( restricted contributions for the acquisition of capital assets and operations of $24.5 million, and transfers in of $8.0 million. ]'VN'??KQX(*?K ')('?)* to a change in estimate related to the cost to design, construct and furnish the Woldson Performing Arts Center.

FINANCIAL REPORT 2015-16 3 B-5 Consolidated Statement of Activities

Operations For the year ended May 31, 2016, total operating activities resulted in a $5.4 million increase in net assets, compared with a $9.1 million increase in the year prior. Gonzaga’s operating budget is prepared on a conservative basis with the intent of generating a modest 3.0% to 5.0% margin as a percentage of operating revenues. Such margin provides opportunity to utilize funds for further investment in facilities, programmatic expansion, and other strategic plan initiatives. For the years ended May 31, 2016 and 2015, the operating margin percentages were 2.5% and 4.4%, respectively. The change in net assets from X$$ cash items, Gonzaga generated cash from operating activities of $2.0 million and $14.3 million (which included a one- time '?**X(*?Q$?)}>D?(*?K(*?) %>D?(*?K'?*N)(XX X'K or 6.0%. The change is driven by an increase in undergraduate tuition of $6.6 million stemming from a 4.0% rate increase, an ?V* discount rate. In addition to tuition and fees, the total of all other operating revenue categories increased over the prior X'(?DQX'(? 'D)'D?^ VX$$X revenues come largely from student tuition and fees, endowment distributions and contributions are important revenue X+X For the year ended May 31, 2016, total operating expenses increased $14.4 million or 7.4% from the prior year. Instructional DVX()XX X^ notable increases of 19.8% and 14.1%, respectively, driven largely by higher enrollment including the largest freshman class +Q+@XX )V*X(XX X compensation is the largest driver of the 8.6% increase in general administrative and institutional expenses.

Nonoperating Activities In addition to operations, Gonzaga reports other changes in net assets from those activities that are not directly attributable to the annual operations. Most notably, contributions for the acquisition of capital assets and for endowments together were $22.1 million for the year ended May 31, 2016. The net loss on investment activity beyond '?*)$(*XX'QD K)XX

Closing Remarks ^(*?)$?KX< educates students for lives of leadership and service for the common good. With the expected second largest freshman class entering the University for the 2016-17 academic year, a new strategic plan, and the launch of our new core curriculum, Gonzaga will continue its deep tradition to intentionally develop the whole person -- intellectually, %X+< Y =~X

Charles J. Murphy Vice President for Finance August 2016

4 FINANCIAL REPORT 2015-16 B-6 Selected Data (Dollars in thousands)

YX$XXX^ XB

As of May 31 2016 2015* 2014* 2013* 2012* Consolidated Statement of Financial Position Data Cash, cash equivalents, and short-term investments $ 74,919 $ 77,119 $ 57,818 $ 74,794 $ 56,813 Contributions receivable, net 81,665 78,719 25,381 23,061 9,540 Long-term investments (1) 230,321 231,621 217,267 180,823 154,524 Property, plant, and equipment, net 296,957 291,696 249,891 228,894 218,114 Total assets 724,478 717,879 633,433 547,713 480,091

Notes and bonds payable 170,250 176,097 181,829 133,391 130,102 Total liabilities 241,287 251,512 250,588 203,463 192,125

Unrestricted net assets 204,334 167,172 165,982 149,547 132,479 Temporarily restricted net assets 162,444 173,038 121,536 107,441 73,333 Permanently restricted net assets 116,413 126,157 95,327 87,262 82,154 Total net assets $ 483,191 $ 466,367 $ 382,845 $ 344,250 $ 287,966

For the year ended May 31 2016 2015 2014 2013* 2012* Consolidated Statement of Activities and Other Data $ 151,410 $ 142,770 $ 138,903 $ 135,707 $ 134,351 Total operating revenues (2) 214,689 203,956 193,096 189,586 185,767 Total operating expenses (2) 209,289 194,883 184,152 176,591 175,868 Increase in net assets from operations (2) 5,400 9,073 8,944 12,995 9,899 Increase (decrease) in net assets from nonoperating activities (3) 11,424 74,449 29,651 43,289 (6,066) Increase in total net assets 16,824 83,522 38,595 56,284 3,833

Pooled investment fund return -2.0% 6.5% 15.6% 18.1% -3.1%

2016 2015 2014 2013 2012 Other Data Enrollment by Headcount Undergraduate 5,041 4,837 4,896 4,906 4,865 Graduate 2,111 2,178 2,322 2,417 2,392 Law 339 339 387 460 507 Total enrollment 7,491 7,354 7,605 7,783 7,764 Employees (4) Faculty 435 436 434 428 421 Staff and administration 815 811 780 761 737 Total employees 1,250 1,247 1,214 1,189 1,158

!!"#&'*&+/ (1):!!/ (2);'!!!</= / (3);'!!!></= / (4)>>/

FINANCIAL REPORT 2015-16 5 B-7

REPORTOFINDEPENDENTAUDITORS 0#1'"#,2 ," - 0"-$0312##1 -,8 % ,'4#01'27 ReportontheFinancialStatements # & 4# 3"'2#" 2&# !!-+. ,7',% !-,1-*'" 2#" $', ,!' * 12 2#+#,21 -$ -,8 % ,'4#01'27 1&',%2-,,-,.0-$'2!-0.-0 2'-,Q5&'!&!-+.0'1#2&#!-,1-*'" 2#"12 2#+#,21-$$', ,!' *.-1'2'-, 1 -$" 7USQTRSX ,"TRSWQ ,"2�#* 2#"!-,1-*'" 2#"12 2#+#,21-$ !2'4'2'#1 ,"! 1&$*-51$-02&# 7# 012&#,#,"#"Q ,"2�#* 2#",-2#12-2&#!-,1-*'" 2#"$', ,!' *12 2#+#,21T Management’sResponsibilityfortheFinancialStatements " , %#+#,2 '1 0#1.-,1' *# $-0 2&# .0#. 0 2'-, ," $ '0 .0#1#,2 2'-, -$ 2# !-,1-*'" 2#" $', ,!' * 12 2#+#,21', !!-0" ,!#5'2& !!-3,2',%.0',!'.*#1%#,#0 **7 !!#.2#"',2&#,'2#"*2 2#1-$++#0'! R 2&'1 ',!*3"#1 2&# "#1'%,Q '+.*#+#,2 2'-,Q ," + ',2#, ,!# -$ ',2#0, * !-,20-* 0#*#4 ,2 2- 2&# .0#. 0 2'-, ," $ '0 .0#1#,2 2'-, -$ !-,1-*'" 2#" $', ,!' * 12 2#+#,21 2& 2 0# $0## $0-+ + 2#0' * +'112 2#+#,2Q5�"3#2-$0 3"-0#00-0T Auditor’sResponsibility -30 0#1.-,1' '*'27 '1 2- #6.0#11 , -.','-, -, 2# !-,1-*'" 2#" $', ,!' * 12 2#+#,21 1#" -, -30 3"'21T#!-,"3!2#"-30 3"'21', !!-0" ,!#5'2& 3"'2',%12 ," 0"1%#,#0 **7 !!#.2#"',2&#,'2#" *2 2#1-$++#0'! T&-1#12 ," 0"10#/3'0#2& 25#.* , ,".#0$-0+2&# 3"'212-- 2 ',0# 1-, *# 1130 ,!# -325&#!-,1-*'" 2#"$', ,!' *12 2#+#,21 0#$0##$0-++ 2#0' *+'112 2#+#,2T +, 3"'2',4-*4#1.#0$-0+',%.0-!#"30#12-- 2 ', 3"'2#4'"#,!# -322&# +-3,21 ,""'1!*-130#1', 2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21T &# .0-!#"30#1 1#*#!2#" "#.#," -, 2&# 3"'2-0_1 (3"%+#,2Q ',!*3"',%2&# 11#11+#,2-$2�'1)1-$+ 2#0' *+'112 2#+#,2-$2&#!-,1-*'" 2#"$', ,!' *12 2#+#,21Q 5�"3#2-$0 3"-0#00-0T3,+ )',%2&-1#0'1) 11#11+#,21Q2&# 3"'2-0!-,1'"#01',2#0, *!-,20-* 0#*#4 ,2 2- 2&# #,2'27_1 .0#. 0 2'-, ," $ '0 .0#1#,2 2'-, -$ 2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21 ', -0"#02-"#1'%, 3"'2.0-!#"30#12& 2 0# ..0-.0' 2#',2&#!'0!3+12 ,!#1Q 32,-2$-02&#.30.-1#-$ #6.0#11',% ,-.','-,-,2&##$$#!2'4#,#11-$2&##,2'27_1',2#0, *!-,20-*T+!!-0"',%*7Q5##6.0#11,- 13!&-.','-,T+, 3"'2 *1-',!*3"#1#4 *3 2',%2&# ..0-.0' 2#,#11-$ !!-3,2',%.-*'!'#131#" ,"2&# 0# 1-, *#,#11 -$ 1'%,'$'! ,2 !!-3,2',% #12'+ 2#1 + "# 7 + , %#+#,2Q 1 5#** 1 #4 *3 2',% 2&# -4#0 **.0#1#,2 2'-,-$2&#!-,1-*'" 2#"$', ,!' *12 2#+#,21T

B-8 REPORTOFINDEPENDENTAUDITORS (continued) # #*'#4#2& 22&# 3"'2#4'"#,!#5#& 4#- 2 ',#"'113$$'!'#,2 ," ..0-.0' 2#2-.0-4'"# 1'1$-0 -30 3"'2-.','-,T Opinion 3, -30 -.','-,Q 2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21 0#$#00#" 2- -4# .0#1#,2 $ '0*7Q ', ** + 2#0' * 0#1.#!21Q2&#!-,1-*'" 2#"12 2#+#,21-$$', ,!' *.-1'2'-,-$-,8 % ,'4#01'27 1-$" 7USQTRSX ," TRSWQ ,"2&#!& ,%#1','21,#2 11#21 ,"'21! 1&$*-51$-02# 012&#,#,"#"', !!-0" ,!#5'2& !!-3,2',%.0',!'.*#1%#,#0 **7 !!#.2#"',2&#,'2#"*2 2#1-$++#0'! T OtherMatters ReportonSupplementaryInformation -30 3"'25 1!-,"3!2#"$-02&#.30.-1#-$$-0+',% ,-.','-,-,2&#!-,1-*'" 2#"$', ,!' *12 2#+#,21 1 5&-*#T &# 1!&#"3*# -$ 3,0#120'!2#" -.#0 2',% #6.#,1#1 !-+ ',#" 7 , 230 * #6.#,"'230# '1 .0#1#,2#" $-0 .30.-1#1 -$ ""'2'-, * , *71'1 ," '1 ,-2 0#/3'0#" . 02 -$ 2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21T *3!& ',$-0+ 2'-, '1 2&# 0#1.-,1' '*'27 -$ + , %#+#,2 ," 5 1 "#0'4#" $0-+ ," 0#* 2#1 "'0#!2*7 2- 2&# 3,"#0*7',% !!-3,2',% ," -2� 0#!-0"1 31#" 2- .0#. 0# 2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21T&#',$-0+ 2'-,& 1 ##,13 (#!2#"2-2&# 3"'2',%.0-!#"30#1 ..*'#"',2&# 3"'2-$2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21 ," !#02 ', ""'2'-, * .0-!#"30#1Q ',!*3"',% !-+. 0',% ," 0#!-,!'*',%13!&',$-0+ 2'-,"'0#!2*72-2,"#0*7',% !!-3,2',% ,"-2�#!-0"131#"2-.0#. 0# 2&#!-,1-*'" 2#"$', ,!' *12 2#+#,21Q-02-2&#!-,1-*'" 2#"$', ,!' *12 2#+#,212&#+1#*4#1 ,"-2� ""'2'-, *.0-!#"30#1Q', !!-0" ,!#5'2& 3"'2',%12 ," 0"1%#,#0 **7 !!#.2#"',2&#,'2#"*2 2#1-$ ++#0'! T 3, -30 -.','-,Q 2&# ',$-0+ 2'-, '1 $ '0*7 12 2#"Q ', ** + 2#0' * 0#1.#!21Q ', 0#* 2'-, 2- 2&# !-,1-*'" 2#"$', ,!' *12 2#+#,21 1 5&-*#T OtherInformation -30 3"'25 1!-,"3!2#"$-02&#.30.-1#-$$-0+',% ,-.','-,-,2&#!-,1-*'" 2#"$', ,!' *12 2#+#,21 1 5&-*#T &# 5#22#0 $0-+ 2&# 6'!# 0#1'"#,2 $-0 7', ,!# ," 2&# *#*#!2#" 8 2 0# .0#1#,2#" $-0 .30.-1#1 -$ ""'2'-, * , *71'1 ," 0# ,-2 0#/3'0#" . 02 -$ 2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21T *3!&',$-0+ 2'-,& 1,-2 ##,13 (#!2#"2-2&# 3"'2',%.0-!#"30#1 ..*'#"',2&# 3"'2-$2&# !-,1-*'" 2#" $', ,!' * 12 2#+#,21 ," !!-0"',%*7Q5#"-,-2#6.0#11 ,-.','-,-0.0-4'"# ,7 1130 ,!#-,2&#+T *.-) ,#Q 1&',%2-, +3%312TWQTRSX

B-9 Consolidated Statements of Financial Position (Dollars in thousands)

Assets May 31 2016 2015 Cash and cash equivalents $ 17,086 $ 37,538 Short-term investments 57,833 39,581 Accounts and interest receivable, net 8,397 7,994 Prepaid expenses 3,485 1,994 Contributions receivable, net 81,665 78,719 Student loans receivable, net 15,923 15,373 Deposits with bond trustees 12,811 13,363 Long-term investments 222,766 224,097 ?!! 7,555 7,524 Property, plant, and equipment, net 296,957 291,696 Total assets $ 724,478 $ 717,879

Liabilities And Net Assets

LIABILITIES Accounts and other payables $ 8,599 $ 11,793 = 17,363 16,571 Interest payable 1,551 1,608 Deferred revenues and refundable advances 20,075 21,274 Split-interest agreement obligations 5,376 5,762 Federal student loan program 10,864 10,953 Obligation under interest rate swaps 7,209 7,454 Notes and bonds payable 170,250 176,097 Total liabilities 241,287 251,512

NET ASSETS Unrestricted 204,334 167,172 Temporarily restricted 162,444 173,038 Permanently restricted 116,413 126,157 Total net assets 483,191 466,367 Total liabilities and net assets $ 724,478 $ 717,879

See accompanying notes.

8 FINANCIAL REPORT 2015-16 B-10 Consolidated Statements of Activities (Dollars in thousands)

Year Ended May 31, 2016 Year Ended Temporarily Permanently May 31, Unrestricted Restricted Restricted Total 2015 Total Operating Revenues Student tuition and fees, net $ 240,924 $ - $ - $ 240,924 $ 223,123 @ (89,514) - - (89,514) (80,353) 151,410 - - 151,410 142,770

Contributions 4,047 7,461 - 11,508 9,369 Grants and contracts 2,059 - - 2,059 2,234 R eturn on investments designated for operations 660 7,155 - 7,815 8,066 Auxiliary enterprises 30,261 - - 30,261 26,810 Other sources 11,585 51 - 11,636 14,707 200,022 14,667 - 214,689 203,956 Net assets released from restrictions 16,049 (16,049) - - - Total operating revenues 216,071 (1,382) - 214,689 203,956

Operating Expenses Instruction 81,540 - - 81,540 79,504 Libraries 5,443 - - 5,443 5,710 Student services 19,729 - - 19,729 17,290 Organized activities 22,845 - - 22,845 21,542 General administrative and institutional 39,560 - - 39,560 36,432 Operation and maintenance of plant 11,743 - - 11,743 10,676 Auxiliary enterprises 28,429 - - 28,429 23,729 Total operating expenses 209,289 - - 209,289 194,883 Increase in net assets from operations 6,782 (1,382) - 5,400 9,073

Nonoperating Activities C ontributions for acquisition of capital assets, net - 16,956 - 16,956 41,670 Contributions to endowment funds, net - - 5,153 5,153 28,874 Loss on disposal of equipment (15) - - (15) (226) Return on investments, net of amounts designated for operations (894) (9,934) 315 (10,513) 4,255 Change in value of interest rate swaps 244 - - 244 (580) Change in value of split interest agreements - (149) (252) (401) 456 Net assets released from restrictions for acquisition of capital assets 24,098 (24,098) - - - Transfers 6,947 8,013 (14,960) - -

Total nonoperating activities 30,380 (9,212) (9,744) 11,424 74,449

Increase (decrease) in net assets 37,162 (10,594) (9,744) 16,824 83,522

Net assets at beginning of year 167,172 173,038 126,157 466,367 382,845 Net assets at end of year $ 204,334 $ 162,444 $ 116,413 $ 483,191 $ 466,367

See accompanying notes.

FINANCIAL REPORT 2015-16 9 B-11 Consolidated Statements of Activities (Dollars in thousands)

Year Ended May 31, 2015

Temporarily Permanently Unrestricted Restricted Restricted Total Operating Revenues Student tuition and fees, net $ 223,123 $ - $ - $ 223,123 @ (80,353) - - (80,353) 142,770 - - 142,770

Contributions 2,618 6,751 - 9,369 Grants and contracts 2,234 - - 2,234 Return on investments designated for operations 1,218 6,848 - 8,066 Auxiliary enterprises 26,810 - - 26,810 Other sources 14,657 50 - 14,707 190,307 13,649 - 203,956

Net assets released from restrictions 10,549 (10,549) - - Total operating revenues 200,856 3,100 - 203,956

Operating Expenses Instruction 79,504 - - 79,504 Libraries 5,710 - - 5,710 Student services 17,290 - - 17,290 Organized activities 21,542 - - 21,542 General administrative and institutional 36,432 - - 36,432 Operation and maintenance of plant 10,676 - - 10,676 Auxiliary enterprises 23,729 - - 23,729 Total operating expenses 194,883 - - 194,883 Increase in net assets from operations 5,973 3,100 - 9,073

Nonoperating Activities Contributions for acquisition of capital assets, net - 41,670 - 41,670 Contributions to endowment funds, net - - 28,874 28,874 Loss on disposal of equipment (226) - - (226) Return on investments, net of amounts designated for operations 318 3,754 183 4,255 Change in value of interest rate swaps (580) - - (580) Change in value of split interest agreements - 182 274 456 Net assets released from restrictions for acquisition of capital assets 611 (611) - - Transfers (4,906) 3,407 1,499 - Total nonoperating activities (4,783) 48,402 30,830 74,449 Increase in net assets 1,190 51,502 30,830 83,522 Net assets at beginning of year 165,982 121,536 95,327 382,845 Net assets at end of year $ 167,172 $ 173,038 $ 126,157 $ 466,367

See accompanying notes.

10 FINANCIAL REPORT 2015-16 B-12 Consolidated Statements Of Cash Flows (Dollars in thousands)

Years Ended May 31, CASH FLOWS FROM OPERATING ACTIVITIES 2016 2015 Increase in net assets $ 16,824 $ 83,522 Adjustments to reconcile increase in net assets to net cash from operating activities Depreciation and amortization 10,966 9,268 Provision for uncollectible receivables 959 528 @ 15 226 Contributions restricted for long-term purposes (22,109) (70,544) Interest and dividends restricted for long-term investment (3,457) (3,896) Net realized and unrealized loss (gain) on investments 7,685 (7,106) Change in value of interest rate swaps (244) 580 Change in value of split interest agreements 401 (456) Other change in assets and liabilities, net (9,022) 2,189 Net cash from operating activities 2,018 14,311

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant, and equipment (12,864) (45,615) Proceeds from sale of property and equipment 83 29 Proceeds from sale of investments 47,747 59,660 Purchase of investments (66,057) (82,172) Issuance of student loans receivable (3,035) (2,451) Repayment of student loans receivable 2,304 2,379 Reimbursements from deposits held with bond trustees - 41,949 Net cash used by investing activities (31,822) (26,221)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from contributions restricted for long-term purposes 12,098 17,492 Proceeds from contributions for split interest agreements 275 112 Payments on notes and bonds (6,155) (5,942) Payments on split-interest agreements (234) (359) Interest and dividends restricted for long-term investment 3,457 3,896 Net change in student loan liability (89) (34) !< 9,352 15,165 NET CHANGE IN CASH AND CASH EQUIVALENTS (20,452) 3,255 CASH AND CASH EQUIVALENTS, beginning of year 37,538 34,283 CASH AND CASH EQUIVALENTS, end of year $ 17,086 $ 37,538 SUPPLEMENTAL DISCLOSURES Interest paid (includes capitalized interest of $553 and $1,957 for 2016 and 2015, respectively) $ 9,763 $ 8,514 Noncash acquisition of property, plant, and equipment 3,087 5,127 Noncash gifts of investments and property, plant, and equipment 6,779 426

See accompanying notes.

FINANCIAL REPORT 2015-16 11 B-13 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 1 – Organization Gonzaga University is an independent, accredited coeducational higher education institution founded in 1887 by the Society of Jesus. The Corporation of Gonzaga University (Corporation) was incorporated in the state of Washington in ?VQ$=@X include the accounts of the Corporation, the Gonzaga Law School Foundation (Foundation), and Immobiliare Gonzaga =|<}%X<Q School. Immobiliare Gonzaga Srl. is an Italian corporation formed to purchase and remodel a classroom/administration building used in the University’s Florence, Italy, program. The primary source of revenue is tuition from undergraduate, graduate, and law programs through the college of Arts & Sciences, and schools of Business, Engineering & Applied Science, Education, Nursing & Human Physiology, Professional Studies, and Law. Other sources of revenue include room, board, dining, contributions, return on investments, fees, athletic tickets, and sponsorships.

<Y <=^|+^^]}=X Basis of presentation – X X$ <XX3 Unrestricted net assets – Net assets are not subject to donor-imposed restrictions. Unrestricted net assets may be X^ temporarily or permanently restricted net assets are considered unrestricted. Temporarily restricted net assets – Net assets are subject to donor-imposed restrictions that will be met by actions of the University or the passage of time. This includes gifts as well as income and net gains and losses accruing on those gifts, whose use by the University is subject to donor-imposed stipulations. Permanently restricted net assets – Net assets are subject to donor-imposed restrictions that are permanently maintained by the University. Generally, the donors of these assets permit the University to use all or part of the X donor restriction require the corpus be invested in perpetuity. Consolidation –^X$ X<3

For the Year ended May 31, 2016 Immobiliare Inter-entity Consolidated Corporation Foundation Gonzaga Srl. Elimination Total Assets $ 723,467 $ 20,069 $ 5,098 $ (24,156) $ 724,478

Liabilities $ 260,934 $ 5 $ 4,504 $ (24,156) $ 241,287 Net Assets Unrestricted 203,740 2,372 594 (2,372) 204,334 Temporarily restricted 151,578 8,494 - 2,372 162,444 Permanently restricted 107,215 9,198 - - 116,413 Total net assets 462,533 20,064 594 - 483,191 Total liabilities and net assets $ 723,467 $ 20,069 $ 5,098 $ (24,156) $ 724,478

12 FINANCIAL REPORT 2015-16 B-14 Notes to Consolidated Financial Statements (Dollars in thousands)

Cash and cash equivalents – Cash and cash equivalents consist of cash balances and short-term, highly liquid investments with remaining maturities at the date of purchase of 90 days or less. Amounts also include money market mutual funds, all of which comply with Rule 2a-7 of the Investment Company Act of 1940 that seeks to limit the risk of money market funds. <X may exceed the amounts insured by the Federal Depository Insurance Corporation (FDIC). Assets with the characteristics of cash and cash equivalents that are held in donor-restricted endowment funds are reported as long-term investments. Included in cash and cash equivalents are assets restricted for investment in property, plant, and equipment of $11,765 and $9,974 as of May 31, 2016 and 2015, respectively. Deposits with Bond Trustees – Amounts consist of bond funds held in investments as permitted under the Washington Higher Education Facilities Authority (Authority or WHEFA) documents. The funds are restricted to the purpose designated in the bond documents. These investment securities are exposed to various interest rate, market, and credit @@X Investments – The University manages its investments by using external investment managers. These investment <QX <X$$ investment time horizon, liquidity considerations, and intended purpose and use of the assets. X<Q$ term assets for investment purposes to the fullest extent possible as permitted by gift agreements and any applicable government regulations. In the limited cases when a donor has prohibited a gift from being pooled for investment purposes, those assets are separately invested and managed. <QX including unrealized and realized gains or losses, as well as all dividends, interest, and other investment income, is shown in the consolidated statements of activities. Return on investments is reported as an increase in unrestricted, temporarily restricted, or permanently restricted net assets, depending on donor-imposed restrictions. Investments contributed to the University are recorded at the fair value at the date of contribution. Investments are exposed to various risks, such as interest rate, market, foreign currency, credit, and regulatory risk. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of X <X income or the residual interest of assets in charitable split interest agreements held by outside entities. At the date of <X X X <QX ]XY recognized as change in value of split-interest agreements. The University has legal title, as trustee, to irrevocable charitable remainder trusts and also receives contributions in connection with charitable gift annuity contracts. Actuarial methods are used to record these annuities and trusts using discount rates ranging from 4% to 6%. When a gift is received, the present value of future expected X the remainder is recorded as a contribution. Annuity and trust assets are reported at fair value and included within long-term XX of funds management are charged to the liability accounts, with periodic adjustments made between the liability and the net assets to record actuarial gains or losses resulting from changes in fair value and life expectancy. The University maintains separate funds adequate to meet future payments under its charitable gift annuity contracts as required by state laws. The total investments held in separate funds were $3,220 and $3,474 as of May 31, 2016 and 2015, respectively. The corresponding amount included in split-interest agreement obligations to meet future payments under gift annuity contracts was $1,570 and $1,571 as of May 31, 2016 and 2015, respectively.

FINANCIAL REPORT 2015-16 13 B-15 Notes to Consolidated Financial Statements (Dollars in thousands)

Accounts receivable from students included in accounts and interest X ^ Contributions, including unconditional promises to give, are recognized as revenue when the donor’s commitment is <Y rates, net of allowances for doubtful accounts. The discounts are determined using a rate that is commensurate with the risks involved and applicable to the years that the promises are received. Based upon historical pledge payments and ^ allowance when collection is considered remote. Promises made that are designated for future periods or restricted by X Student loans receivable primarily consist of amounts due from students under the <QX bear interest ranging from 5% to 6% and are generally repayable to the University over a period not to exceed 10 years. Property, plant, and equipment are stated at cost at the date of acquisition or fair value at the date of donation. The cost of improvements in excess of $100 and all other property, plant, and equipment in excess of $5 are capitalized. Property, plant, and equipment purchased in connection with a building acquisition or construction project but less than $5, is also capitalized. Normal repair and maintenance expenses and minor equipment costs are expensed as incurred. Depreciation, except for land and artwork, is provided for on a straight-line basis over the estimated useful lives of the respective assets as follows: Building and improvements 25 - 50 years Equipment and furniture 3 - 5 years Library books 10 years Student tuition, fees, room, and board dining are recognized in the period that the services are provided. Grant revenue is recognized when the services are provided for performance grants or when the funds are expended for cost-reimbursement grants. Interest income on student loans is recognized when charged. Costs expensed for the years ended May 31, 2016 and 2015, were $4,353 and $3,834, respectively. ! Costs related to fund-raising are expensed as incurred and for the years ended May 31, 2016 and 2015, were $4,551 and $4,554, respectively. # GAAP establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated YX $The Internal Revenue Service (IRS) has recognized the Corporation and Foundation as exempt from tax under the provisions of Section 501(c)(3) of the Internal Revenue Code, except to the extent of unrelated business income under Sections 511 through 515. Unrelated business income tax, if any, is immaterial. As of May 31, 2016 and 2015, the University had no uncertain tax positions requiring accrual. The University may be subject to routine audit by the IRS; however, there are currently no audits for any tax periods in progress. % The University’s measure of operating activities, presented in the consolidated statements of activities, includes all transactions that are incurred in the course of the normal business operations of the University. Operating expenses are reported by functional categories, after allocating costs for interest on long- term indebtedness and depreciation. Nonoperating activities presented in the consolidated statements of activities include transactions that result from something other than the on-going day-to-day activity of the University. &'^X<X <=X<@ eligibility, and other requirements. Failure to comply with such U.S. government requirements could result in the loss of U.S. X<Q< Use of estimates – X+^^]@ ^

14 FINANCIAL REPORT 2015-16 B-16 Notes to Consolidated Financial Statements (Dollars in thousands)

In March 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2015-03, Simplifying the Presentation of Debt Issuance Costs. This update changes X<^=< balance sheet as a direct deduction from the recognized liability rather than as an asset. Amortization of the costs is <>D?(*?K^ ^=<<XX included these costs in the Bonds and Notes Payable disclosure (Note 10). In May 2015, FASB issued ASU 2015-07, Fair Value Measurement (Topic 820) – Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or its Equivalent), which eliminated the requirement to categorize investments in the fair value hierarchy, if their fair value is measured at net asset value (NAV) per share, or its equivalent, %^=Q<^=< >D?(*?K^^=<<X|?)} !X(*?)X (*?KX The University has evaluated subsequent events through August 25, 2016, which is the date the X X

Note 3 – Accounts and Interest Receivable, Net Accounts and interest receivable, net consisted of the following as of May 31:

2016 2015 Government grants and loan funds $ 5,648 $ 5,709 Student receivables 1,436 1,121 "< 1,150 992 Accrued interest receivable 263 272 8,497 8,094 Less allowance for doubtful accounts (100) (100) $8,397 $7,994 Note 4 – Contributions Receivable, Net Contributions receivable, net, at May 31 are expected to be realized in the following periods: 2016 2015 In one year or less $ 58,285 $ 58,257 ?< 18,240 14,811 "!< 17,722 16,818 Less present value discounts (11,265) (10,390) Less allowance for doubtful accounts 82,982 79,496 (1,317) (777) $ 81,665 $ 78,719

Contributions receivable, net, at May 31 are designated as follows:

2016 2015 Unrestricted $ 3 $ 23 B! 3,717 4,249 Temporarily restricted for property, plant, and equipment 64,093 44,385 ! 13,852 30,062 $ 81,665 $ 78,719

FINANCIAL REPORT 2015-16 15 B-17 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 5 – Student Loans Receivable, Net <@X= federal government loan programs and institutional resources. Student loans, net consisted of the following as of May 31:

2016 2015 Federal government programs $ 14,626 $ 14,262 Institutional programs 1,616 1,425 16,242 15,687 Less allowance for doubtful accounts (319) (314) Student loans receivable, net $ 15,923 $ 15,373

The University participates in the Perkins and Nursing federal revolving loan programs. The availability of funds for new loans under the programs is dependent on reimbursements to the programs from repayments on outstanding loans. Funds advanced by the federal government are ultimately refundable to the government. Outstanding loans cancelled under the programs result in a reduction of the funds available for new loans and a decrease in the liability to the government. The net liability due to the government was $10,864 and $10,953 at May 31, 2016 and 2015, respectively. At May 31, 2016 and 2015, the following amounts were past due under all student loan programs: 120-179 180-729 1-59 Days 60-89 Days 90-119 Days Days Days 730+ Days Total May 31, Past Due Past Due Past Due Past Due Past Due Past Due Past Due 2016 $ 128 $ 9 $ 1 $ 18 $ 444 $ 689 $ 1,289 2015 637 236 35 52 405 573 1,938

Allowances for doubtful accounts are established based on prior collection experience and current economic factors, QY

Note 6 – Investments Short-term investments, at market, at May 31 are as follows: 2016 2015 Fixed income securities $ 57,833 $ 39,581

Short-term investments are comprised of operating funds, managed as a laddered portfolio and mutual fund investments, with the objectives of preserving principal, maintaining an appropriate degree of liquidity, and generating an appropriate risk-adjusted return. The remaining weighted-average maturity of the nonmutual fund short-term investment portfolio was 1.20 years as of May 31, 2016. Long-term investments, at market, at May 31 are as follows: 2016 2015 Cash and cash equivalents $ 3,051 $ 1,679 Equity securities 95,785 97,394 Fixed income securities 33,474 41,410 Alternatives (see below) 73,237 70,945 Split-interest agreements 10,307 11,246 Other 6,912 1,423 $222,766 $224,097

16 FINANCIAL REPORT 2015-16 B-18 Notes to Consolidated Financial Statements (Dollars in thousands)

!"# Included in long-term investments, measured at net asset value practical expedient, are alternative investments as follows: 2016 2015 "<> $ 38,585 $ 37,367 Private credit funds 10,941 8,126 Hedge and other funds 10,504 7,661 Real estate funds 8,433 10,480 J< 4,774 7,311 $ 73,237 $ 70,945

Long-term investments are largely comprised of donor-restricted and board-designated funds, and also include excess unrestricted operating funds. Long-term investments are managed within various investment portfolios. See Note 7 for return objectives and risk parameters for such funds. For the years ended May 31 the University’s total return on investments and cash and cash equivalents includes:

2016 2015 Net unrealized and realized gain (loss) on investments held at market $ (7,685) $ 7,106 Interest income and dividends 4,987 5,215 Total return on investments and cash and cash equivalents $ (2,698) $ 12,321 Amounts withdrawn under spending policy $ 7,347 $ 6,643

Note 7 – Endowment The University’s endowment consists of individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the Board to function as endowments. As required by GAAP, net assets associated with endowment funds, including funds designated by the Board to function as X$ Endowment net asset composition by type of fund is summarized as follows:

As of May 31, 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ (290) $ 55,256 $ 116,413 $ 171,379 Board-designated funds* 20,454 12,127 - 32,581 $ 20,164 $ 67,383 $ 116,413 $ 203,960

As of May 31, 2015 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ (200) $ 63,961 $ 126,157 $ 189,918 Board-designated funds* 14,548 19,848 - 34,396 $ 14,348 $ 83,809 $ 126,157 $ 224,314

*Amounts shown as temporarily restricted Board-designated funds have a donor-restriction as to purpose but were not donor-endowed.

FINANCIAL REPORT 2015-16 17 B-19 Notes to Consolidated Financial Statements (Dollars in thousands)

$%& Interpretation of relevant law – Under the Washington Uniform Prudent Management of Institutional Funds Act (WUPMIFA), the Board has adopted as policy for donor-restricted endowment funds the requirement to preserve the original fair value of the initial gift and any subsequent gifts (as of the respective gift date), along with any accumulations to the permanent endowment made at the direction of the donor, absent explicit donor stipulations to the contrary. Together, these amounts become the permanently restricted value of the funds. Net endowment earnings that have not been appropriated for expenditure become the temporarily restricted value of the funds. In accordance with WUPMIFA, the University considers the following factors in making a determination to appropriate or accumulate income from donor-restricted endowment funds: • The duration and preservation of the fund • The purposes of the University and the donor-restricted endowment fund • General economic conditions - YY • The expected total return from income and the appreciation of investments • Other resources of the University • The investment policies of the University ()The University has adopted an investment and spending policy for endowment assets that attempts to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. The University’s goal for its endowment funds, over time, is to provide an average annualized return of approximately 5% in excess of the Higher Education Price Index (HEPI) @X< investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest }<X$ alternative investments to achieve its long-term return objectives within prudent risk constraints. The University has a policy of appropriating for expenditure each year based upon a hybrid rate that is the sum of two components: } N*X]]X b) 30% based upon a rate of 4% to 5% of a three-year rolling average of the fund’s total market value, measured quarterly. Absent donor stipulations to the contrary, the University will not appropriate for expenditure from a permanent endowment fund if such expenditure will result in the fair value of the fund falling below the permanently restricted >D?X

18 FINANCIAL REPORT 2015-16 B-20 Notes to Consolidated Financial Statements (Dollars in thousands)

$%& !*From time to time, the fair value of assets associated with individual donor-restricted <X of this nature reported in unrestricted net assets were $290 and $200 as of May 31, 2016 and 2015, respectively. Changes in endowment net assets are summarized as follows:

For the Year Ended May 31, 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Net assets, beginning of year $ 14,348 $ 83,809 $ 126,157 $ 224,314 Investment return Investment income 251 3,187 19 3,457 Net realized and unrealized gain (loss) (581) (6,338) 44 (6,875) Total investment return (330) (3,151) 63 (3,418) Contributions - - 5,153 5,153 Amount distributed for operating activities (567) (6,780) - (7,347) 1 Transfers 6,713 (6,495) (14,960) (14,742) Net assets, end of year $ 20,164 $ 67,383 $ 116,413 $ 203,960

1Transfer from the permanently restricted endowment net assets of $15,000 represents a change in estimate of the cost to design, construct, and furnish a performing arts center based on the donor’s designation. The balance of the original gift is to remain in endowment.

For the Year Ended May 31, 2015 Temporarily Permanently Unrestricted Restricted Restricted Total Net assets, beginning of year $ 15,973 $ 79,346 $ 95,327 $ 190,646 Investment return Investment income 297 3,580 19 3,896 Net realized and unrealized gain 553 6,237 438 7,228 Total investment return 850 9,817 457 11,124 Contributions - - 28,874 28,874 Amount distributed for operating activities (531) (6,112) - (6,643) Transfers (1,944) 758 1,499 313 Net assets, end of year $ 14,348 $ 83,809 $ 126,157 $ 224,314

FINANCIAL REPORT 2015-16 19 B-21 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 8 – Property, Plant, and Equipment, Net Components of property, plant, and equipment, net, at May 31 are as follows:

2016 2015 Land $ 8,072 $ 8,024 Buildings and improvements 353,858 292,878 Equipment and furniture 33,448 21,835 Artwork 3,911 3,614 Library books 5,273 5,172 Construction in progress 6,675 66,101 411,237 397,624 Less accumulated depreciation (114,280) (105,928) $ 296,957 $ 291,696

Construction in progress was comprised of the following major projects during the years ended May 31:

Cost to Date Current Year Placed into Cost to Date Project May 31, 2015 Additions Service May 31, 2016 The John J. Hemmingson University Center $ 60,744 $ 3,241 $ (63,985) $ - Network Replacement 3,667 690 (4,357) - Foley Renovations 289 1,438 - 1,727 "WX= 15 1,159 - 1,174 Jesuit Residence - 1,159 - 1,159 All other projects 1,386 6,411 (5,182) 2,615 Total $ 66,101 $ 14,098 $ (73,524) $ 6,675

Cost to Date Current Year Placed into Cost to Date Project May 31, 2014 Additions Service May 31, 2015 The John J. Hemmingson University Center $ 17,376 $ 43,368 $ - $ 60,744 Network Replacement - 3,667 - 3,667 Foley Renovations - 289 - 289 "WX= - 15 - 15 All other projects 1,747 1,170 (1,531) 1,386 Total $ 19,123 $ 48,509 $ (1,531) $ 66,101

Note 9 – Deferred Revenues and Refundable Advances Deferred revenues and refundable advances consisted of the following as of May 31:

2016 2015 Deferred revenues $ 10,614 $ 10,897 Refundable advances 9,461 10,377 $ 20,075 $ 21,274

Deferred revenues include amounts received for tuition, fees, certain auxiliary activities, grants, and contracts that have not yet been earned, as well as student deposits. Refundable advances consists of vendor incentive payments that will be recognized as a reduction of operating expenses during the term of the agreement that expires in 2029.

20 FINANCIAL REPORT 2015-16 B-22 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 10 – Bonds and Notes Payable Notes and bonds payable consisted of the following as of May 31:

2016 2015 Tax Exempt Bonds issued through the Authority Series 2013 A $ 33,000 $ 33,000 Series 2012 A 7,305 7,305 Series 2010 A 23,815 27,170 Series 2009 B 49,365 50,705 Series 2009 A 33,445 34,495 Taxable Bonds issued through the Authority Series 2013 B 20,000 20,000 Convertible Rate Bonds issued through the Authority Series 2012 B 2,750 2,940 Other notes 985 958

170,665 176,573 Unamortized net premium 1,572 1,715 Unamortized debt issuance costs (1,987) (2,191) $ 170,250 $ 176,097

The Series 2013 A bonds have an original issuance of $33,000 and were issued in conjunction with the Series 2013 B X)()X](*Q?X(*QD callable at par in 2023. The Series 2012 A bonds have an original issuance of $7,305 and were issued in conjunction with the Series 2012 B bonds as a private placement with a national bank. Interest is variable and calculated monthly based on 70% of one-month `V(?((NX?*QKX>D?(*?K(*?) Repayment is based on a 30 year amortization, and the private placement matures in 2022 with a bank option to extend. The bonds are pre-payable without penalty. =(*?*^'Q(Q(*X()*X)**X X(*(V(*?V =(**V')DQK*XD**X )**XX(*(V(*?V =(**V^'DVQ)XQ**XK()X X(*(V(*?V The Series 2013 B bonds are taxable, have an original issuance of $20,000, and were issued in conjunction with the Series (*?D^XK**X](*DVX(*Q* bonds have an optional make whole call. The Series 2012 B bonds have an original issuance of $3,320, and were issued in conjunction with the Series 2012 A bonds as a private placement with a national bank. The Series 2012 B bonds were tax exempt at issuance and as of May 31, 2016 and 2015, and may be converted to taxable at the discretion of the University. Tax exempt interest is variable and N*X$`V(?((NX 1.046% as of May 31, 2016 and 2015, respectively. Upon rate conversion, taxable interest will be variable and calculated monthly based on one-month LIBOR plus 120 basis points. Repayment is based on a 16-year amortization, and the private placement matures in 2022 with a bank option to extend. The bonds are pre-payable without penalty. Other notes are due in various installments through 2093. Interest rates range from 5.00% to 7.75%.

FINANCIAL REPORT 2015-16 21 B-23 Notes to Consolidated Financial Statements (Dollars in thousands)

'() The Tax Exempt Bonds, Taxable Bonds, and Convertible Rate Bonds (together, the WHEFA bonds) are secured on a X University’s interest in certain funds and reserves held by the Bond Trustee. In relation to the WHEFA bonds, the University has agreed to certain covenants, including covenants to maintain its accredited status, limit its ability to incur additional indebtedness, limit encumbrances on parts of its campus, and XX The Series 2009 A, Series 2009 B, and Series 2010 A bonds require a debt service reserve fund, which is funded and included in the University’s deposit with the bond trustee. Deposits with bond trustees at May 31 consist of the following:

2016 2015 Debt service reserve funds $ 12,761 $ 12,889 Interest costs and debt service funds 50 474 $ 12,811 $ 13,363

Amounts remitted directly out of deposits with bond trustee accounts for interest payments associated with the Series 2013 B bonds were $653 and $1,732 for the years ended May 31 2016 and 2015, respectively. Scheduled principal payments on notes and bonds payable are as follows:

Years ending May 31, Principal 2017 $ 6,426 2018 6,709 2019 6,959 2020 7,145 2021 7,500 Thereafter 135,926 170,665 Unamortized net premium 1,572 Unamortized debt issuance costs (1,987) $ 170,250

The University has committed lines of credit, each with separate banks. There were no outstanding advances against the line of credit as of May 31, 2016 and 2015. The lines of credit consist of the following:

Available Line of Credit Rate Term Security Credit Revolving operating One-month LIBOR plus 1.00% 3/1/2017 Parity lien on unrestricted $ 10,000 gross revenue Revolving capital One-month LIBOR plus 1.50% 12/18/2016 Parity lien on unrestricted 5,000 gross revenue and certain deposit and security accounts Revolving capital One-month LIBOR plus 2.00% 12/20/2016 Unsecured 5,000

22 FINANCIAL REPORT 2015-16 B-24 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 11 – Derivative Instruments and Hedging Activities <Y does not speculate for investment purposes using derivative instruments. In connection with previously refunded WHEFA bonds, the University entered into the following interest rate swap agreements (swaps):

Notional Amount Effective Date Maturity Date University Pays University Receives $ 30,750 10/1/2014 4/1/2034 4.1195% 67% of one-month LIBOR if 3.50% or greater or 77% of one-month LIBOR if less than 3.50%

4,825 10/1/2012 4/1/2022 4.1680% 70% of one-month LIBOR

<$X <X@ in interest payments on the bonds caused by changes in the market rates. The swaps are secured on a parity basis with the WHEFA bonds. The above swaps can be terminated by the University at market rates at any time during the term of the respective swap. The swap transactions involve both credit and market risk. The notional amounts do not represent direct credit paid. If the University’s bond rating falls below BBB+ by S&P or Baa1 by Moody’s Investor Service (Moody’s), the swap counterparty can require the University to post collateral equal to the liability for the University’s obligation under the swaps. The current credit rating on selected bonds payable, as provided by Moody’s, is A3 with a stable outlook. The swaps were issued at market terms so they had no fair value at inception. The carrying amount of the swaps has X'N(*V $7,454 as of May 31, 2016 and 2015, respectively. Net realized losses associated with the swaps were $1,491 and $1,201 for the years ended May 31, 2016 and 2015, |X} the accompanying consolidated statement of activities. The unrealized changes in value associated with the swaps were $244 and ($580) for the years ended May 31, 2016 and 2015, respectively.

Note 12 – Retirement Plans X|}@?*** Q*D|}X|]}X eligible employees are required to contribute 5% of their salary and the University contributes 8.5%. All contributions =3 TIAA-CREF and Fidelity Investments. The University’s expense for the Plan was $6,566 and $6,280 for the years ended May 31, 2016 and 2015, respectively. Voluntary employee contributions and accumulated earnings to the 457(b) plan of $2,376 and $2,182 as of May 31, 2016 (*?)$X= funds are considered to be assets of the University until distributed to participants.

FINANCIAL REPORT 2015-16 23 B-25 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 13 – Net Assets The University’s net assets were available for the following purposes at May 31:

2016 2015 Unrestricted Available for operations $ 49,640 $ 32,310 Invested in property, plant, and equipment 125,936 112,195 Board-designated quasi-endowment funds 20,454 14,548 Board-designated for investment in property, plant, and equipment 8,304 8,119 Total unrestricted $ 204,334 $ 167,172

Temporarily Restricted Unappropriated donor-restricted endowment earnings $ 55,256 $ 63,961 Board-designated quasi-endowment funds 12,127 19,848 Property, plant, and equipment 62,141 59,517 Financial aid 3,221 3,917 Program support 23,916 19,931 Academic chairs 1,486 1,499 Split-interest agreements 4,076 4,143 Student loan program 221 222 Total temporarily restricted $ 162,444 $ 173,038

Permanently Restricted Financial aid $ 80,772 $ 91,771 Program support 16,103 16,106 Academic chairs 14,577 12,673 Split-interest agreements 4,015 4,659 Student loan program 946 948 Total permanently restricted $ 116,413 $ 126,157

Note 14 – Commitments and Contingencies Commitments – As of May 31, 2016, the University had outstanding, but not yet payable, purchase commitments in the amount of $3,564 related to the construction of campus facilities. On March 31, 2016, Gonzaga University entered into an agreement with the University of Washington, an institution of higher education and an agency of the State of Washington, School of Medicine to provide faculty, student support services, and facilities for the University of Washington School of Medicine – Gonzaga University, beginning in July 2016. The program will expand the University of Washington’s Washington, Wyoming, Alaska, Montana, and Idaho medical education program in Spokane, with an emphasis in meeting the needs of rural and medically underserved ~D*(*(* year terms thereafter, unless the parties terminate the Agreement via written mutual agreement or written notice of termination, by either party, twenty-four months in advance. &The University is subject to legal proceedings and claims that arise in the ordinary course of its X X The University receives and expends monies under federal grant programs and is subject to audits by governmental agencies. The University believes that any liabilities resulting from such audits would not have a material impact on the X<

24 FINANCIAL REPORT 2015-16 B-26 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 15 – Fair Value of Financial Instruments %X|} the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques utilized maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are developed based on market data obtained from sources independent of the <<Y<Q@ ^X3 Level 1 Inputs consist of quoted market prices in active markets for identical assets or liabilities the University has the ability to access at the measurement date. Level 2 Inputs consist of valuations other than quoted prices included in Level 1 that are observable by the University for the related asset or liability. Level 3 Inputs consist of unobservable valuations related to the asset or liability. Transfers between the levels are recognized on the actual date of the transaction or circumstance that caused the transfer. <X3 Level 1 assets include: • Mutual funds, index funds, and publically traded stocks valued using active market exchange values at the last reported sales price. These investments can be traded daily with trades settling between one and three days. Level 2 assets and liabilities include: • Investments in U.S. government and agency obligations, corporate bonds, municipal bonds, and asset-backed obligations. These investments use other observable inputs to measure fair value such as dealer market prices for comparable investments based on interest rates, spreads, and trade activity in the market. • Investments in international and emerging market commingled equity funds valued using the fund managers’ respective net asset values, derived from active market exchange values of the underlying fund investments at the last reported sales price. • Investments in privately held stock valued using the market approach using recent sales. • Investments in real property assets valued using appraised or tax assessed values that approximate market values. • Interest rate swaps valued using estimates of the related LIBOR rates and the BMA municipal swap index rates during the term of the swap agreements. Level 3 assets include: • Privately held stock valued based on the net asset value of the investment that approximates market value. - XY Y X@$@ @X interest agreements are the applicable discount rates that range from 1.8% to 6.0%, and applicable life expectancies that range from 6 to 27 years. A 1.0% increase in each of the underlying discount rates would decrease the fair value by approximately $859. A 1.0% decrease in each of the underlying discount rates would increase the fair value by '?*VQX Alternative investments that are not readily marketable or redeemable are valued utilizing the most current information provided by the fund managers using the net asset value (NAV) per share of the respective fund as a practical expedient to estimate the fair value of the University’s interest in the respective fund.

FINANCIAL REPORT 2015-16 25 B-27 Notes to Consolidated Financial Statements (Dollars in thousands)

'/:;:" The following tables present assets and liabilities that are measured and carried at fair value on a recurring basis.

May 31, 2016 Level 1 Level 2 Level 3 Total Short-term investments J $ 5,033 $ - $ - $ 5,033 U.S. government and agency obligations - 27,008 - 27,008 Corporate bonds - 21,425 - 21,425 Asset-backed obligations - 4,367 - 4,367 Total short-term investments 5,033 52,800 - 57,833 Deposits with bond trustees "\ 3,067 - - 3,067 U.S. government and agency obligations - 2,402 - 2,402 Corporate bonds - 7,342 - 7,342 Total deposits with bond trustees 3,067 9,744 - 12,811 Long-term investments Cash and cash equivalents 3,051 - - 3,051 Equity securities " Domestic 34,459 - - 34,459 International 29,858 11,521 - 41,379 Direct ownership - public and privately held stock 17,667 1,445 835 19,947 Fixed income securities " Domestic 27,996 - - 27,996 International 5,240 - - 5,240 Corporate bonds - 238 - 238 Assets held under split interest agreements Cash and cash equivalents 314 - - 314 Equity mutual funds 6,364 - - 6,364 Equity-direct ownership 657 - - 657 Fixed income mutual funds 2,972 - - 2,972 Other 410 6,502 - 6,912 Total long-term investments in fair value hierarchy 128,988 19,706 835 149,529 ?!! - - 7,555 7,555 Total assets in fair value hierarchy $ 137,088 $ 82,250 $ 8,390 $ 227,728 Obligation under interest rate swaps $ - $ (7,209) $ - $ (7,209) Total liabilities in fair value hierarchy $ - $ (7,209)$ - $ (7,209) Long-term investments measured at NAV practical expedient1 $ 73,237

26 FINANCIAL REPORT 2015-16 B-28 Notes to Consolidated Financial Statements (Dollars in thousands)

'/:;:"

May 31, 2015 Level 1 Level 2 Level 3 Total Short-term investments J $ 5,008 $ - $ - $ 5,008 U.S. government and agency obligations - 17,106 - 17,106 Corporate bonds - 15,815 - 15,815 " - 520 - 520 Asset-backed obligations - 1,132 - 1,132 Total short-term investments 5,008 34,573 - 39,581 Deposits with bond trustees "\ 187 - - 187 U.S. government and agency obligations - 12,751 - 12,751 Corporate bonds - 425 - 425 Total deposits with bond trustees 187 13,176 - 13,363 Long-term investments Cash and cash equivalents 1,679 - - 1,679 Equity securities " Domestic 31,837 - - 31,837 International 25,835 17,419 - 43,254 Direct ownership - public and privately held stock 20,376 1,126 801 22,303 Fixed income securities " Domestic 35,469 - - 35,469 International 5,591 - - 5,591 Corporate bonds - 350 - 350 Assets held under split interest agreements Cash and cash equivalents 277 - - 277 Equity mutual funds 7,120 - - 7,120 Equity-direct ownership 658 - - 658 Fixed income mutual funds 3,191 - - 3,191 Other 374 1,049 - 1,423 Total long-term investments in fair value hierarchy 132,407 19,944 801 153,152 ?!! - - 7,524 7,524 Total assets in fair value hierarchy $ 137,602 $ 67,693 $ 8,325 $ 213,620 Obligation under interest rate swaps $ - $ (7,454) $ - $ (7,454) Total liabilities in fair value hierarchy $ - $ (7,454)$ - $ (7,454) Long-term investments measured at NAV practical expedient1 $ 70,945

1In accordance with Subtopic 820-10, certain investments that are measured at net asset value per share, using the practical expedient

FINANCIAL REPORT 2015-16 27 B-29 Notes to Consolidated Financial Statements (Dollars in thousands)

'/:;:" %>D?(*?K(*?)XD ) in split interest Privately Held agreements held by Stock others Total ?"#&'*&] $ 801 $ 7,664 $ 8,465 Net unrealized gains - 550 550 Return of capital/transfers to income - (690) (690) ?"#&'*&^ 801 7,524 8,325

Net unrealized gains 34 338 372 Return of capital/transfers to income - (307) (307)

?"#&'*&+ $ 835 $ 7,555 $ 8,390

Redemption, funding commitments, restrictions, and other information associated with the nature and valuation of applicable investments are as follows: Investment Redemption Redemption Strategies Fair Value at Unfunded Cash Frequency Notice and Other May 31, 2016 Commitments % Period Restrictions Commingled funds (Level 2) $ 11,521 $ - (a) (a) (a) Limited partnership investments "< multi-asset fund 38,585 - (b) (b) (b) Private credit funds 10,941 9,501 (c) n/a (c) J< 4,774 215 (d) n/a (d) Real estate funds 8,433 - (e) (e) (e) Hedge and other funds 10,504 4,121 (f) (f) (f) Total long-term investments measured at NAV practical expedient 73,237 13,837 $ 84,758 $ 13,837

a) The commingled equity fund in this category can be redeemed monthly with 15 days notice, unless any withdrawal Q$ appreciation by investing in a portfolio of primarily international market companies. b) The University may receive up to 5% of this capital account balance in the fund as an automatic annual distribution. Currently, the University has elected to retain this 5% of its capital balance in the fund. The University may change this XX year to which the distribution applies, and amounts will be distributed within 90 days of the end of the calendar year, or ?*QX For distributions in excess of the automatic annual distribution, the University may request the withdrawal of all or a portion of its capital account, with a minimum withdrawal of at least $1,000, on the last day of any calendar year by providing a withdrawal request at any time during the fourth quarter of the preceding calendar year. The amount requested to be withdrawn will be apportioned between the liquid portion and limited liquidity portion of the University’s capital account, as determined based on the liquidity attributes of the underlying fund investments. As of May 31, 2016, 'Q??D@D*

28 FINANCIAL REPORT 2015-16 B-30 Notes to Consolidated Financial Statements (Dollars in thousands)

'/:;:" date in an amount not less than 90% of the liquid portion, with the remaining liquid portion amount paid subsequent to QX% will be made within 45 days after the realization or deemed realization of assets held in that account. Distributions may be made in cash or in fund assets (or both). The fund general partner can also suspend the rights of the University and other limited partners to make withdrawals or receive distributions for all or part of any period of market disruption. The fund general partner may also limit withdrawals such that they do not exceed 15% of the liquid subaccount balance. The fund’s objective is to manage and grow long-term capital with equity-like annual returns of 10-12% over time, with lower @X c) This category includes four private credit funds, including a mezzanine debt fund, a special opportunities fund, a domestic mid-stream energy fund, and a European direct fund. Each fund has the objective to invest in debt and debt- like preferred securities of companies, primarily to generate interest income, within the mandate of the respective fund. Each fund, with the exception of the domestic mid-stream energy fund, is nonredeemable and can be sold only on the secondary market as long as the respective fund general partner receives an opinion from counsel that such a transfer is not in violation of certain sanctions of the Securities Act, Investment Company Act, and/or federal tax laws. Distributions are received through the liquidation of the underlying assets of the funds. It is estimated the underlying assets of these funds will be liquidated between 2018 and 2024. The domestic mid-stream energy fund is redeemable on the last day of each month with thirty days written notice. d) This category includes four private equity funds, with underlying investments in domestic equity, buyout, venture capital, and private equity funds. Each fund has the objective to generate capital appreciation at a rate in excess of that historically generated by investments in publically traded equity securities. The funds can only be redeemed through the liquidation of underlying assets, and as underlying assets are liquidated, distributions are received. It is estimated that the underlying assets of the illiquid funds will be liquidated between 2016 and 2024. e) This category includes two real estate funds that are primarily invested in U.S. commercial and residential real estate with the objective to invest in real estate assets to generate capital appreciation and operating income. Investments representing 97% of the investments in this category can be redeemed with at least 90 day notice, as liquid assets in the fund permits. The remaining portion of real estate funds can only be redeemed through liquidation of the underlying assets, which is anticipated to occur by the end of 2016. } |KQX}|DKX}@B X can be withdrawn with 75 days notice. The three private equity funds invest in privately-held entities with potential for X@ as long as the respective fund general partner receives an opinion from counsel that such a transfer is not in violation of certain sanctions of the Securities Act, Investment Company Act, and/or federal tax laws. It is estimated that the underlying assets of the funds will be liquidated between 2016 and 2024. Valuation limitations – The methods described above may produce a fair value calculation that may not be indicative of Y< @ X X liabilities that are disclosed, but not carried at fair value: +Carrying value approximates fair value for notes receivable that are primarily federally sponsored <=X their transfer or disposition. &Carrying value approximates fair value based on the present value of expected future cash Y ,-.!/045%Y %^ at May 31, 2016, were approximately $188,847 and $169,265, respectively. The fair value and the carrying value of the WHEFA bonds payable at May 31, 2015, were approximately $194,720 and $175,139, respectively.

FINANCIAL REPORT 2015-16 29 B-31 Notes to Consolidated Financial Statements (Dollars in thousands)

Note 16 – Related Parties Contributions receivable and contributions revenue includes amounts from members of the Board as listed below: 2016 2015 Contributions receivable, net $ 12,980 $ 11,423 Contributions revenue 555 1,783

The University has bank deposits and a line of credit with a bank whose chairman and CEO is a member of the Board.

30 FINANCIAL REPORT 2015-16 B-32 (Dollars in thousands)

The University’s unrestricted operating expenses in the statements of activities are combined by natural expenditures as of May 31 as follows:

2016 2015 $ 123,553 $ 120,161 Employee early termination expense 1,823 37 "<! 12,645 11,391 Depreciation 10,904 9,057 Dining expenses 9,142 8,225 Occupancy, telephone, utilities, and insurance 9,718 9,846 " 9,393 8,744 Interest 9,868 8,418 Professional fees and contracted services 6,451 4,988 " 5,087 4,217 Advertising, promotion, and recruitment 4,353 3,881 Other expenses 6,352 5,918 $ 209,289 $ 194,883

FINANCIAL REPORT 2015-16 31 B-33 Mission Statement ! "#$

& # ' (

& )

Vision Statement Gonzaga is a premier liberal-arts based university recognized

502 E Boone Ave, Spokane, WA 99258

B-34

APPENDIX C

FORM OF INDENTURE OF TRUST

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[THIS PAGE INTENTIONALLY LEFT BLANK]

TABLE OF CONTENTS Page INDENTURE OF TRUST ARTICLE I DEFINITIONS; INTERPRETATION; INDENTURE TO CONSTITUTE CONTRACT ...... 3 between Section 101. Definitions...... 3

ARTICLE II THE 2016A BONDS ...... 12 THE CORPORATION OF GONZAGA UNIVERSITY Section 201. Authorized Amount of 2016A Bonds ...... 12 Section 202. Issuance of the 2016A Bonds ...... 13 Section 203. Registration, Transfer and Exchange ...... 15 and Section 204. Execution ...... 16 Section 205. Authentication ...... 17 Section 206. Form of 2016A Bonds ...... 17 U.S. BANK NATIONAL ASSOCIATION, Section 207. Mutilated, Destroyed, Lost or Stolen 2016A Bonds ...... 17 as Trustee Section 208. Temporary 2016A Bonds ...... 18 Section 209. Cancellation and Destruction of Surrendered 2016A Bonds ...... 18 Section 210. Delivery of the 2016A Bonds ...... 18 $______Section 211. Additional Bonds; Additional Indebtedness ...... 19 The Corporation of Gonzaga University ARTICLE III REVENUES AND FUNDS ...... 19 Revenue and Refunding Taxable Bonds, Series 2016A C-1 Section 301. Source of Payment of 2016A Bonds ...... 19 Section 302. Creation of Funds ...... 19 Section 303. Initial Deposits ...... 20 Section 304. Refunding Fund ...... 20 Section 305. Cost of Issuance Fund ...... 21 Section 306. Debt Service Fund...... 22 Section 307. Final Balances ...... 22 Section 308. Nonpresentment of 2016A Bonds ...... 22

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE UNIVERSITY ...... 23

Section 401. General ...... 23

Section 402. Tax ...... 25

ARTICLE V INVESTMENT OF MONEY ...... 26 Section 501. Investment of Money ...... 26 Section 502. Earnings and Losses ...... 27 ARTICLE VI REDEMPTION OF BONDS BEFORE MATURITY ...... 28 Section 601. Limitation on Redemption ...... 28 Section 602. Redemption Dates, Amounts and Prices ...... 28 Dated as of October 1, 2016 Section 603. Partial Redemption...... 29 Section 604. Notice of Redemption ...... 29 Section 605. Payment Upon Redemption ...... 30 Section 606. Effect of Redemption ...... 30 Section 607. Purchase of 2016A Bonds ...... 30 ARTICLE VII PAYMENT; FURTHER AGREEMENTS ...... 30 Section 701. Payment by the University ...... 30

-i-

Section 702. Power to Issue 2016A Bonds and Make Pledge and Assignment ...... 31 Section 907. Communications Among Owners ...... 51 Section 703. Additional Instruments...... 31 ARTICLE X SUPPLEMENTAL INDENTURES ...... 52 Section 704. Extension of Payment of 2016A Bonds ...... 32 Section 1001. Amendments Requiring Consent of Bondowners...... 52 Section 705. Against Encumbrances ...... 32 Section 1002. Amendments Not Requiring Consent of Bondowners ...... 53 Section 706. Payment of Taxes and Claims ...... 32 Section 1003. Reserved ...... 54 Section 707. Documents ...... 32 Section 1004. Effect of Supplemental Indenture ...... 54 Section 708. List of Bondowners ...... 33 Section 1005. Endorsement of 2016A Bonds; Preparation of New 2016A Bonds ...... 54 Section 709. Compliance With Indenture, Contracts ...... 33 Section 1006. Amendment of Particular 2016A Bonds ...... 55 Section 710. Books and Records ...... 33 Section 1007. Required Opinion of Special Counsel...... 55 Section 711. Notice of Certain Events ...... 34 Section 1008. Trustee Consent with Respect to Release of Collateral ...... 55 Section 712. Compliance with Usury Laws ...... 34 Section 713. Payment of Taxes ...... 35 ARTICLE XI DEFEASANCE...... 55 Section 714. No Untrue Statements ...... 35 Section 1101. Defeasance ...... 55 Section 715. Insurance ...... 35 ARTICLE XII MISCELLANEOUS ...... 57 Section 716. Other Covenants of the University ...... 36 Section 1201. Consents, Etc., of Bondowners ...... 57 Section 717. Negative Pledge; Security for Additional Indebtedness; Release Section 1202. Limitation of Rights ...... 57 Provisions ...... 36 Section 1203. Severability ...... 58 Section 718. Indebtedness; Additional Indebtedness; Release Provisions ...... 38 Section 1204. Notices ...... 58 Section 719. Debt Covenants; Release Provisions ...... 38 Section 1205. Payments Due on Other Than Business Days ...... 59 Section 720. Maintenance of Corporate Existence; Consolidation, Merger, Sale or Section 1206. Counterparts ...... 59 C-2 Transfer Under Certain Conditions ...... 39 Section 1207. Applicable Law ...... 59 Section 721. Financial Accounting Matters ...... 39 Section 1208. Captions ...... 59 Section 722. Intercreditor and Collateral Agency Agreement and Security Section 1209. Compliance Certificates and Opinions ...... 60 Agreement ...... 40 Section 1210. Conflict with Indenture Act ...... 60 Section 723. Definition and Pledge of Unrestricted Gross Revenues ...... 40 Section 1211. Successors ...... 60 ARTICLE VIII DEFAULT PROVISIONS, NONPAYMENT EVENTS AND Section 1212. Records ...... 60 REMEDIES OF TRUSTEE AND BONDOWNERS ...... 41 Section 1213. Voluntary Compliance with Secondary Disclosure Requirements of Section 801. Defaults; Events of Default ...... 41 the SEC ...... 60 Section 802. Acceleration of Maturity ...... 41 Section 1214. Intercreditor Agreement ...... 61 Section 803. Enforcement of Covenants and Conditions ...... 42 Section 804. Application of Money ...... 43 Exhibit A - Form of 2016A Bonds Section 805. Remedies Vested in the Trustee ...... 44 Exhibit B - Map of Core Campus Section 806. Limitation on Rights and Remedies of Bondowners ...... 44 Exhibit C – Initial Deposits Section 807. Termination of Proceedings ...... 45 Exhibit D - Certificate Regarding Compliance with Debt Covenants Section 808. Remedies Cumulative, Delay Not to Constitute Waiver ...... 45 Section 809. Waivers of Events of Default ...... 45 Section 810. Obligation of University ...... 46 ARTICLE IX THE TRUSTEE ...... 46 Section 901. Appointment, Duties, Immunities and Liabilities of Trustee; Successor Trustee...... 46 Section 902. Fees, Charges and Costs of Trustee ...... 48 Section 903. Liability of Trustee ...... 48 Section 904. Right of Trustee to Rely on Documents ...... 50 Section 905. Intervention By Trustee ...... 50 Section 906. Reports of the Trustee ...... 50 -ii- -iii-

INDENTURE OF TRUST WHEREAS, the 2016A Bonds and the Trustee’s certificate of authentication endorsed thereon shall be in substantially the form presented in Exhibit A hereto, with such necessary and THIS INDENTURE OF TRUST (the “Indenture”), is made and entered into as of appropriate variations, omissions and insertions as are permitted or required by this Indenture; October 1, 2016, by and between THE CORPORATION OF GONZAGA UNIVERSITY, a and Washington nonprofit corporation with its principal place of business located in Spokane, Washington (the “University”), and U.S. BANK NATIONAL ASSOCIATION, a national WHEREAS, all things necessary to make the 2016A Bonds, when executed by the banking association, duly organized, existing and authorized to accept and execute trusts of the University and when authenticated and delivered by the Trustee, duly issued, valid and binding, character herein set out under and by virtue of the laws of the United States of America, with a general obligations of the University, and all other acts and things necessary to constitute this corporate trust office in Seattle, Washington, being qualified to accept and administer the trusts Indenture a valid, binding and legal instrument for the security of the 2016A Bonds have been hereby created (together with any successor trustee and any separate or co-trustee serving as such done and performed; pursuant to this Indenture, the “Trustee”). NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH: W I T N E S S E T H: That the University, in consideration of the premises, the acceptance by the Trustee of the WHEREAS, the University is a Washington nonprofit corporation and an organization trusts hereby created, the purchase and acceptance of the 2016A Bonds by the purchasers described under Section 501(c)(3) of the Code (as hereinafter defined); thereof, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure the payment of the principal of, premium, if any, WHEREAS, the University desires to issue its $______Revenue and Refunding and interest on all 2016A Bonds outstanding hereunder from time to time, according to their Taxable Bonds, Series 2016A (the “2016A Bonds”) for the purposes of: (1) redeeming all of the tenor and effect, and to secure the observance and performance by the University of all the Washington Higher Education Facilities Authority (the “Authority”) Revenue and Refunding covenants expressed or implied herein and in the 2016A Bonds, does hereby pledge and assign Revenue Bonds (Gonzaga University Project), Series 2009 (the “2009A Bonds”); (2) redeeming unto the Trustee, and unto its successors and assigns forever and does hereby grant to it and them a portion of the Authority’s Refunding Revenue Bonds (Gonzaga University Project), Series all of its right, title and interest in: 2009B (the “2009B Bonds”)1; (3) redeeming all of the Authority’s Refunding Revenue Bonds C-3 (Gonzaga University Project), Series 2010A (the “2010A Bonds”); (4) redeeming all of the GRANTING CLAUSE FIRST Authority’s Revenue Bonds (Gonzaga University Project), Series 2012A (the “2012A Bonds”); (5) redeeming all of the Authority’s Revenue Bonds (Gonzaga University Project), Series 2012B All the Pledged Revenues (as hereinafter defined), the present and continuing right to (the “2012B Bonds”); (6) paying all or a portion of the costs of terminating the two interest rate receive, receipt for, collect or make claim for any of the Revenues (as hereinafter defined), and swap transactions that comprise part of the Existing Obligations (as hereinafter defined), if whether payable under the Security Agreement (as hereinafter defined), or otherwise, to bring deemed appropriate by the University; (7) paying for the planning, designing, constructing, actions and proceedings thereunder for the enforcement thereof; installing and furnishing of capital improvements to the University’s facilities; (8) paying capitalized interest, if deemed appropriate by the University; and (9) paying certain expenses GRANTING CLAUSE SECOND incurred in connection with the issuance of the 2016A Bonds and the University’s $35,575,000 Revenue and Refunding Taxable Bonds, Series 2016B (the “2016B Bonds”) (collectively, the All Revenues which may from time to time hereafter be conveyed, assigned, “Project”); hypothecated, endorsed, pledged, mortgaged, granted or delivered to the Trustee, or held by the Trustee in any Fund (as hereinafter defined) or account established pursuant to the terms of this WHEREAS, the 2016A Bonds constitute a general obligation of the University to which Indenture, together with investment earnings thereon, but excluding (a) money held by the certain of the University’s Unrestricted Gross Revenues (as hereinafter defined) are pledged in Trustee in the Cost of Issuance Fund and (b) money collected pursuant to fees, reimbursement or amounts and at times sufficient to pay the principal of and premium, if any, and interest on the indemnification of the Trustee; and 2016A Bonds when due pursuant to their terms or upon the redemption or acceleration thereof; GRANTING CLAUSE THIRD WHEREAS, the execution and delivery of this Indenture and the issuance, execution and delivery of the 2016A Bonds have been in all respects duly and validly authorized by the Any and all other property of any name and nature from time to time hereafter by University; delivery or by writing of any kind pledged or assigned as and for additional security hereunder, by the University or by anyone on its behalf or with its written consent, to the Trustee, 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; 1 The portion of the 2009B Bonds not redeemed with proceeds of the 2016A Bonds will be redeemed with proceeds of the 2016B Bonds and University contributions, if necessary.

-2-

TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or words of similar import refer to this Indenture as a whole and not to any particular hereafter acquired, unto the Trustee and its respective successors in such trusts and assigns Article, Section or other subdivision. forever; (iii) The terms defined in this article have the meanings assigned to them in IN TRUST, upon the terms and trusts herein set forth, as to the money and investments, if this article and include the plural as well as the singular. any, in the Debt Service Fund (until such money and investments have been expended or transferred as provided herein) for the protection and benefit of the Bondowners ratably, without (iv) All accounting terms not otherwise defined herein have the meanings preference, priority or distinction of any such Bondowner over any other such Bondowner by assigned to them in accordance with generally accepted accounting principles in effect reason of priority in issuance or acquisition or otherwise, as if all the 2016A Bonds at any time from time to time. Outstanding had been sold, executed, authenticated, delivered and negotiated simultaneously with the execution and delivery hereof. (v) Every “request,” “order,” “demand,” “application,” “appointment,” “notice,” “statement,” “certificate,” “consent,” or similar action hereunder by the PROVIDED, HOWEVER, that if the University, its successors or assigns, shall well and University shall, unless the form thereof is specifically provided, be in writing signed by truly pay, or cause to be paid, the principal of the 2016A Bonds and the interest and premium, if a duly authorized officer or agent of the University. any, due or to become due thereon, at the times and in the manner mentioned in the 2016A Bonds, according to the true intent and meaning thereof, and shall cause the payments to be (vi) A reference to any gender shall be deemed to include another gender, if made into the Debt Service Fund as required hereunder or shall provide, as permitted by appropriate. Article XI hereof, for the payment thereof, 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 (b) For all purposes of this Indenture, except as otherwise expressly provided or observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to unless the context otherwise requires: become due to it in accordance with the terms and provisions hereof, then this Indenture and the “Acceleration Date” means the date specified in a Declaration of Acceleration pursuant to rights hereby granted shall cease, determine and be void, otherwise this Indenture is to be and Section 802(b) hereof.

C-4 remain in full force and effect. “Act of Bankruptcy” means notice to the Trustee of the filing of a petition in bankruptcy THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly (or other commencement of a bankruptcy or similar proceeding) by or against the University, declared, that all 2016A Bonds issued and secured hereunder are to be issued, authenticated and under any applicable bankruptcy, insolvency or similar law now or hereafter in effect. delivered and the Revenues hereby assigned and pledged are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses “Annual Debt Service” means the amount of scheduled principal of (including mandatory and purposes as hereinafter expressed, and the University has agreed and covenanted, and does sinking fund payments) and interest on Long Term Debt in the most recent Fiscal Year. hereby agree and covenant, with the Trustee and with the respective Registered Owners from Scheduled principal shall be the amount of required principal reductions on Long Term Debt time to time of the 2016A Bonds, as follows: according to the amortization schedule in effect for the applicable debt.

ARTICLE I “Audited Financial Statements” means the University’s annual financial statements, DEFINITIONS; INTERPRETATION; prepared in accordance with GAAP, which financial statements shall have been audited by a firm INDENTURE TO CONSTITUTE CONTRACT of independent certified public accountants. Section 101. Definitions. “Authority” means the Washington Higher Education Facilities Authority, a public body (a) For all purposes of this Indenture, except as otherwise expressly provided or corporate and politic and an agency of the State, and its successors and assigns. unless the context otherwise requires: “Authorized Denomination” means $1,000 and any integral multiple thereof within a (i) This “Indenture” means this instrument as originally executed and as it single maturity. may from time to time be supplemented or amended by one or more indentures “Board of Trustees” means the Board of Trustees of the University. supplemental hereto entered into pursuant to the applicable provisions hereof. “Bond Closing” means the date upon which there is an exchange of the 2016A Bonds for (ii) All references in this Indenture to designated “Articles,” “Sections” and the proceeds representing the purchase price of the 2016A Bonds by the initial purchasers other subdivisions are to the designated Articles, Sections and other subdivisions of this thereof. Indenture. The words “herein,” “hereof,” “hereto,” “hereby” and “hereunder” and other

-3- -4-

“Bond Register” means the books for the registration and transfer of the 2016A Bonds “Cost of Issuance Fund” means such Fund created by Section 302 hereof. required to be maintained pursuant to Section 203 hereof. “Counsel” means an attorney at law or a firm of attorneys (who may be an employee of “Bond Registrar” means the party so appointed pursuant to Section 203 hereof. or counsel to the University, the Underwriter or the Trustee) duly admitted to the practice of law before the highest court of any state of the United States of America or of the District of “Bondowner” or “Owner” or “Registered Owner” means the person or persons in whose Columbia. name or names a 2016A Bond shall be registered on books of the Bond Registrar kept for that purpose in accordance with the terms of this Indenture. “Credit Agreements” means collectively, the Credit Agreement, dated as of December 1, 2013, between the University and U.S. Bank National Association in connection with a line of “Bullet Indebtedness” means any Indebtedness designated as such in writing by the credit and the Credit Agreement, dated December 18, 2013, between the University and Wells University to the Trustee upon the incurrence of such Indebtedness, the aggregate principal Fargo Bank, National Association in connection with a line of credit (as either of the same may amount of which becomes due and payable, either at maturity, by mandatory redemption, or by be amended or modified from time to time, including amendments and restatements thereof in its written requirement for the exercise by the University of optional redemption, in any Fiscal Year entirety). in an amount that constitutes 25 percent or more of the initial aggregate principal amount of such Indebtedness. “Debt Service Coverage Ratio” means, with respect to any Long Term Debt for any period, Annual Debt Service with respect to such Long Term Debt for such period divided by “Business Day” means any day other than (i) a Saturday or a Sunday, or (ii) a day on Unrestricted Gross Revenues for such period. which commercial banks in the city (or cities) in which are located the Principal Office(s) of the Trustee, Bond Registrar or any other paying agent are authorized or required by law or executive “Debt Service Fund” means such Fund created by Section 302 hereof. order to close. “Declaration of Acceleration” means the written notice of the acceleration of the “Code” means the Internal Revenue Code of 1986, as amended, together with principal of the 2016A Bonds and the interest accrued thereon, given by the Trustee as provided corresponding and applicable final, temporary or proposed regulations and revenue rulings in Section 802(b) hereof. C-5 issued or amended with respect thereto by the United States Treasury or Internal Revenue Service, to the extent applicable to the 2016A Bonds. All references herein to sections, “Documents” means the Intercreditor and Collateral Agency Agreement, the Purchase paragraphs or other subdivisions of the Code or the regulations promulgated thereunder shall be Contract and the Security Agreement. deemed to be references to correlative provisions of any predecessor or successor code or regulations promulgated thereunder. “DTC” means The Depository Trust Company, New York, New York.

“Core Campus” means the real property described in the map attached hereto as “Event of Default” means an occurrence or event specified in and defined by Section 801 Exhibit B, except the following buildings and associated real property: hereof.

(i) Building JH, Jesuit House and Chapel; “Existing Obligations” means (a) the 2009A Bonds and (b) two interest rate swap transactions between the University and Bank of America, N.A., under an ISDA Master (ii) new buildings constructed with proceeds of the 2013 Bonds, or on Agreement dated as of May 24, 2006, evidenced by a confirmation dated June 11, 2007 for a currently unimproved land, or on land currently undeveloped or being used for other transaction with an effective date of October 1, 2014, and a confirmation dated June 28, 2007 for purposes; a transaction with an effective date of October 1, 2012.

(iii) real property described on the map that is not presently owned by the “Expendable Net Assets” means the Unrestricted Net Assets, plus any portion of the University including Buildings BEA, BW, MD, MX, RL, SAL, SAR and ST; and University’s assets designated as “Quasi-Endowment” by its Board of Trustees, plus net endowment gains shown as Temporarily Restricted Net Assets on the Audited Financial (iv) real property described on the map as the future sites of the new Jesuit Statements. House (JR), the Myrtle Woldson Performing Arts Center (WPAC) and the Center for Athletic Achievement (CAA). “FDIC” means the Federal Deposit Insurance Corporation.

“Core Campus” does not include any real property owned by the University or any “Federal Reserve” means the United States Federal Reserve System. affiliate of the University, other than as described above.

-5- -6-

“Fiscal Year” means the fiscal year of the University, initially the period from June 1 “Issuance Costs” means all costs and expenses of issuance of the 2016A Bonds and the through May 31 of each year. 2016B Bonds, including, but not limited to:

“Fitch” means Fitch Ratings, Inc., a corporation organized and existing under the laws of (i) counsel fees and expenses, including Special Counsel, Underwriter’s the State of Delaware, its successors and assigns and, if such corporation shall be dissolved or counsel, counsel to any purchasers of the 2016B Bonds, as well as any other specialized liquidated or shall no longer perform the functions of a securities rating agency, "Fitch" shall be counsel fees incurred in connection with the issuance of the 2016A Bonds or the 2016B deemed to refer to any other nationally recognized securities rating agency designated by the Bonds; University by notice to the Trustee. (ii) financial advisor fees and expenses incurred in connection with the “Fund” means any one or more of the separate special trust funds created by Article III issuance of the 2016A Bonds and the 2016B Bonds; hereof. (iii) initial fees and expenses of the Trustee, including Trustee counsel fees and “GAAP” means the generally accepted accounting principles applicable to colleges and expenses, in connection with the issuance of the 2016A Bonds and the 2016B Bonds; universities. (iv) costs of posting and printing (if applicable) the preliminary Offering “Government Obligations” means noncallable, direct, general obligations of the United Memorandum and the final Offering Memorandum for the 2016A Bonds; States of America (including the obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or any obligations (v) publication or copying costs associated with the financing proceedings unconditionally guaranteed as to the full and timely payment of principal and interest by the full relating to the 2016A Bonds or the 2016B Bonds; faith and credit of the United States of America. Obligations guaranteed as to payment of interest only are Government Obligations only with respect to such interest payments. (vi) initial fees and expenses, if any, of the Rating Agency relating to the 2016A Bonds or the 2016B Bonds; and “Indebtedness” means any obligation of the University for the payment of money to any C-6 Person, including without limitation (i) indebtedness for money borrowed, (ii) purchase money (vii) notice and other filing fees, if any, in connection with the issuance of the obligations, (iii) leases evidencing the acquisition of capital assets, (iv) reimbursement 2016A Bonds or the 2016B Bonds, including but not limited to, accountant’s fees, obligations provided, however, that reimbursement obligations supporting credit or liquidity verification agent fees and refunding trustee fees. facilities shall not constitute Indebtedness until such time as a reimbursement payment becomes due and payable under the agreement entered into in connection with such reimbursement “Letter of Representations” means the Blanket Issuer Letter of Representations, signed by obligations, and (v) guarantees, but excluding (A) obligations under contracts for supplies, the University and accepted by DTC with respect to the immobilization of University bonds, services and pensions allocable to current operating expenses during the current or future Fiscal including the 2016A Bonds. Years in which the supplies are to be delivered, the services rendered, or the pensions paid, “Long Term Debt” means Indebtedness with a stated term greater than one year or with a (B) rentals payable in the current or future Fiscal Years under leases not intended to evidence the term that may be extended beyond one year at the option of the University. For purposes of acquisitions of capital assets and not required to be included under GAAP, and (C) bonds or calculating the Expendable Net Assets, Annual Debt Service and the Debt Service Coverage other indebtedness which have been legally defeased in accordance with their authorizing Ratio, (i) the outstanding principal amount of any Bullet Indebtedness shall be assumed to documents or are payable from any separate foundation. become due and payable in equal installments in each Fiscal Year from the date of issuance of “Indenture Act” means the Trust Indenture Act of 1939 (Act of August 3, 1939, such Bullet Indebtedness to the final scheduled maturity of such Bullet Indebtedness (or, if 53 Stat. 1149, 15 U.S.C., Secs. 77aaa-77bbbb), as amended. later, the last date to which such Bullet Indebtedness has been authorized by the University to remain outstanding), and to bear interest at the rate for such Bullet Indebtedness, and (ii) any “Intercreditor and Collateral Agency Agreement” means the Fifth Amended and Restated Indebtedness for which the University has received a written commitment from a financial Intercreditor and Collateral Agency Agreement dated as of October 1, 2016, as such agreement institution to underwrite or provide refunding Indebtedness shall be assumed to become due and may further be amended from time to time. payable on the terms provided in such written commitment for such Indebtedness.

“Interest Payment Date” means (i) April 1 and October 1 of each year, commencing “Maximum Annual Debt Service” means the maximum amount of scheduled principal of April 1, 2017, or (ii) any other day upon which interest and/or principal on the 2016A Bonds is (including mandatory sinking fund payments) and interest on Long Term Debt payable or due and payable, whether by maturity, acceleration, prior redemption or otherwise. accruing in the then-current or any future Fiscal Year.

-7- -8-

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing “Rating Agency” means Moody’s and/or Fitch, or its successors and assigns or, if either under the laws of the State of Delaware, its successors and assigns and, if such corporation shall such corporation shall be dissolved or liquidated or shall no longer perform the functions of a be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, securities rating agency, any other nationally recognized rating agency or agencies designated by “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency the University, which maintains a rating on any of the 2016A Bonds. designated by the University by notice to the Trustee. “Rating Agency Surveillance Fee” means the annual fee, if any, of the Rating Agency to “Outstanding” or “2016A Bonds Outstanding,” in connection with the 2016A Bonds maintain a rating on any of the 2016A Bonds. means, as of the time in question, all 2016A Bonds authenticated and delivered under this Indenture, except: “Record Date” means, except for payment of defaulted interest, the opening of business on the fifteenth day of the month preceding a scheduled Interest Payment Date. With respect to (i) 2016A Bonds theretofore cancelled or required to be cancelled under any payment of defaulted interest, a Special Record Date shall be established by the Trustee in Section 209 hereof; accordance with the provisions of Section 202 hereof.

(ii) 2016A Bonds which are deemed to have been paid in accordance with “Refunded Bonds” means the 2009A Bonds, the 2010A Bonds, the 2012A Bonds and the Article XI hereof; and 2012B Bonds; and a portion of the 2009B Bonds.

(iii) 2016A Bonds in substitution for which other 2016A Bonds have been “Refunding Fund” means such Fund created by Section 302 hereof. authenticated and delivered pursuant to Article II hereof. “Registered Owner” or “Bondowner” or “Owner” means the person or persons in whose “Paying Agent” means the Trustee, its successors and assigns, unless the Trustee shall name or names a 2016A Bond shall be registered on books of the Bond Registrar kept for that designate another entity as Paying Agent, with the consent of the University. purpose in accordance with the terms of this Indenture.

“Permitted Investments” means any of the following, to the extent permitted by law for “Regulations” means the applicable proposed, temporary or final Income Tax C-7 the money held hereunder then proposed to be invested therein: Regulations promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue Code of 1954, as such regulations may be amended or supplemented from time (i) Any investment not inconsistent with the University’s Investment Policy, to time. as such Investment Policy may be amended from time to time. “Resolution” means the resolution duly adopted and approved by the Board of Trustees (ii) Any other investment which will not cause the rating on the 2016A Bonds on September 2, 2016, authorizing, inter alia, the issuance and sale of the 2016A Bonds and the to be reduced below the third highest rating category of the Rating Agency. execution of this Indenture.

“Person” means any natural person, firm, partnership, association, corporation, trust or “Revenues” means the amounts pledged hereunder to the payment of the principal of, public body. redemption premium, if any, and interest on the 2016A Bonds, including the following: (i) money held in all Funds and accounts hereunder (excluding the Cost of Issuance Fund), “Pledged Revenues” means Unrestricted Gross Revenues. together with investment earnings thereon received by the Trustee which the Trustee is authorized to receive, hold and apply pursuant to the terms of this Indenture; and (ii) all income, “Principal Office” means (i) when used with respect to the Trustee, the agency office of revenues, proceeds, obligations, securities and other amounts received by the Trustee and the Trustee located in Seattle, Washington, at the address shown in Section 1204 hereof, derived from or in connection with the 2016A Bonds or the Documents, but excluding amounts provided that with respect to the Bond Registrar and payments on the 2016A Bonds and any payable as the Rating Agency Surveillance Fee, the Trustee Fee and the indemnification or exchange, transfer or surrender of the 2016A Bonds, means c/o U.S. Bank National Association, reimbursement of the Trustee. 60 Livingston Avenue, St. Paul, Minnesota 55107 or such other or additional offices as may be specified to the University with respect to either the Trustee or Bond Registrar; and (ii) when “Security Agreement” means the Fifth Amended and Restated Security Agreement dated used with respect to any paying agent, means the office of such paying agent as designated by as of October 1, 2016, as further amended, restated, supplemented or otherwise modified from notice given by the Trustee to the Bondowners. time to time.

“Purchase Contract” means the Bond Purchase Agreement, dated October __, 2016, “Special Counsel” means an attorney at law or a firm of attorneys who is or are selected relating to the 2016A Bonds, between the University and the Underwriter. by the University and is or are duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.

-9- -10-

“Special Record Date” means, with respect to the payment of any defaulted interest on Gross Revenues with respect to the covenants contained herein, “Unrestricted Gross Revenues” the 2016A Bonds, a date fixed by the Trustee pursuant to Section 202 hereof. shall mean the sum of the University’s Unrestricted Total Operating Revenues plus the Unrestricted Net Assets Released from Restrictions in the Nonoperating Activities section of the “State” means the state of Washington. Audited Financial Statements - Consolidated Statement of Activities. From and after such time as all of the Existing Obligations have been repaid in full or defeased, are no longer secured “Supplemental Indenture” means any agreement hereafter authorized and entered into under the Intercreditor and Collateral Agency Agreement or their respective governing between the University and the Trustee, which amends, modifies or supplements and forms a documents are amended to conform herewith, for purpose of Pledged Revenues, the definition of part of this Indenture. Unrestricted Gross Revenues will exclude revenues from facilities constructed or acquired after October 1, 2009, which revenues are pledged to obligations (other than Additional Bonds or “Trust Estate” means the property conveyed to the Trustee pursuant to the Granting Indebtedness having a parity lien on the Unrestricted Gross Revenues with the 2016A Bonds) Clauses hereof. incurred to finance such new facilities.

“Trustee” means U.S. Bank National Association, or any successor trustee or co-trustee “Unrestricted Net Assets” means the University’s Unrestricted Net Assets as reported on appointed in accordance with the terms of this Indenture. the Audited Financial Statements, less (i) any amounts of Unrestricted Net Assets attributable to fixed assets, and (ii) plus the fair market value of any reserve fund held by a trustee with respect “Trustee Fee” means, with respect to the 2016A Bonds an amount payable on an annual to Long Term Debt (but shall not include any other funds held by a trustee with respect to any basis on each October 1 in advance (except that the first payment accrued through the next Long Term Debt including any construction or project fund which does not constitute a debt annual payment date shall be made on the Bond Closing) in accordance with the letter agreement service reserve), and (C) any gifts, grants, bequests, donations and contributions which have dated ______, 2016, between the Trustee and the University as amended from time to been both received by the University and pledged to the repayment of Long Term Debt. time, with respect to the payment of all fees and expenses. “2013 Bonds” means the Authority’s Revenue Bonds (Gonzaga University Project), “Underwriter” means Barclays Capital Inc. and Piper Jaffray & Co., as the initial Series 2013A and the Authority’s Taxable Revenue Bonds (Gonzaga University Project), Series purchasers of the 2016A Bonds.

C-8 2013B. “United States Treasury” means the United States Department of the Treasury. “2016B Bond Closing” means the date upon which there is an exchange of the 2016B “University” means The Corporation of Gonzaga University, a Washington nonprofit Bonds for the proceeds representing the purchase price of the 2016B Bonds by the initial corporation and an organization described under Section 501(c)(3) of the Code, and its purchasers thereof. successors and assigns. “2016B Bonds” means the University’s $35,575,000 Revenue and Refunding Taxable “University Representative” means the person or persons at the time designated by the Bonds, Series 2016B, expected to be issued on or about October __, 2016, the proceeds of which University to act on behalf of the University by written certificate furnished to the University and shall be used (i) (along with any necessary contributions from the University), to redeem the the Trustee containing the specimen signature(s) of such person or persons. portion of the 2009B Bonds not redeemed with proceeds of the 2016A Bonds; and (ii) to pay for the planning, designing, constructing, installing and furnishing of capital improvements to the “Unrestricted Gross Revenues” means all moneys, fees and tuition (net of institutional University’s facilities. financial aid and other discounts or waivers), rates, receipts, rentals, licensing fees, charges, issues and income received or derived by the University, the operation of the University, or its ARTICLE II facilities or any other source whatsoever, as reported on the University’s audited financial THE 2016A BONDS statement of activities, including, without limitation, gifts, bequests, grants, devises, Section 201. Authorized Amount of 2016A Bonds. contributions, moneys received from the operation of the University’s business or the possession of its properties, insurance proceeds or condemnation awards, and all rights to receive the same, No 2016A Bonds may be issued under the provisions of this Indenture, except in whether in the form of accounts, accounts receivable, contract rights or other rights, and the accordance with this article. The total principal amount of 2016A Bonds that may be issued is proceeds of the same whether now owned or held or hereafter coming into being, but excluding hereby expressly limited to $______, and any Additional Bonds (as defined in Section gifts, grants, devises, bequests and contributions designated by the maker to a specific purpose 211 of this Indenture). inconsistent with their use for payment of principal of, premium, if any, and interest on Indebtedness or for the payment of operating expenses of the University and further excluding any gifts, grants, devises, bequests or contributions received by any foundation or other legal entity created by but separate from the University. For purposes of calculating Unrestricted

-11- -12-

Section 202. Issuance of the 2016A Bonds. Owner on the Interest Payment Date at his/her address as it appears on the Bond Register on the Record Date or, (ii) at the option of any Registered Owner, by wire transfer to an account (a) Description of the 2016A Bonds. The University may issue the 2016A Bonds designated in writing by such Registered Owner prior to the Record Date with an following the execution of this Indenture, and the Bond Registrar shall, at the University’s acknowledgment that the then applicable wire fee of the Trustee will be deducted from the wire, request, authenticate such 2016A Bonds and deliver them as specified in such request. No or (iii) by Automated Clearinghouse Transfers at no cost to the Owner in next day funds if such 2016A Bonds may be issued under this Indenture in addition to those authorized by Section 201, Owner shall have requested in writing a payment by such method and shall have provided the except 2016A Bonds issued on transfer or exchange as provided in Sections 203 or 208, or Bond Registrar with an account number in a bank within the United States and other necessary 2016A Bonds issued in replacement of lost, stolen, mutilated or destroyed 2016A Bonds information for such purposes prior to the Record Date. In the event of any default in the pursuant to Section 207. payment of interest, such defaulted interest shall be payable to the Registered Owner of such 2016A Bond on a Special Record Date for the payment of such defaulted interest established by The 2016A Bonds shall be designated “The Corporation of Gonzaga University Revenue notice mailed by or on behalf of the University to Registered Owners. and Refunding Taxable Bonds, Series 2016A” and shall be issued initially in Authorized Denominations in the aggregate principal amount of not to exceed $______. Unless the (c) Book-Entry Only. Notwithstanding anything herein to the contrary, the 2016A University shall otherwise direct, the 2016A Bonds shall be numbered as determined by the Bonds initially shall be held in fully immobilized form by DTC acting as depository pursuant to Bond Registrar. the terms and conditions set forth in the Letter of Representations. Neither the University, the Trustee nor the Bond Registrar shall have any responsibility or obligation to DTC participants or The 2016A Bonds shall be dated as of the Bond Closing. Interest on the 2016A Bonds the persons for whom they act as nominees with respect to the 2016A Bonds regarding accuracy shall be payable on April 1 and October 1 of each year commencing April 1, 2017, and shall be of any records maintained by DTC or DTC participants of any amount in respect of principal or calculated on the basis of a 360 day year of twelve 30-day months. Each 2016A Bond shall bear redemption price of or interest on the 2016A Bonds, or any notice which is permitted or required interest from the later of the Bond Closing, or the most recent Interest Payment Date to which to be given to Registered Owners hereunder (except such notice as is required to be given by the interest has been paid or made available for payment pursuant to this Indenture. The Bond University, the Bond Registrar or the Trustee to DTC). Registrar shall insert the date of registration and authentication of each 2016A Bond in the place provided for such purpose in the form of the Bond Registrar’s certificate of authentication to be C-9 The 2016A Bonds initially shall be issued in denominations equal to the aggregate printed on each 2016A Bond. Each 2016A Bond shall bear interest on overdue principal at the principal amount of each maturity of each series and initially shall be registered in the name of rate then in effect on such 2016A Bond. CEDE & CO. as the nominee of DTC. The 2016A Bonds so registered shall be held in fully immobilized form by DTC as depository. For so long as any 2016A Bonds are held in fully Subject to prior redemption as provided in Article VI hereof, the 2016A Bonds shall be immobilized form, DTC, its successor or any substitute depository appointed by the University, issued as a Term Bond maturing on April 1, 2046 and bearing interest at the rate of ___% per as applicable, shall be deemed to be the Registered Owner of such 2016A Bonds for all purposes annum. hereunder and all references to Registered Owners, Bondowners or Owners of such 2016A Bonds shall mean DTC or its nominees and shall not mean the owners of any beneficial interests The form of the 2016A Bonds, including the Bond Registrar’s certificate of in such 2016A Bonds. Registered ownership of such 2016A Bonds, or any portions thereof, may authentication to be endorsed thereon, and the form of assignment to be endorsed on such 2016A not thereafter be transferred except: Bonds are to be in substantially the form set forth in Exhibit A, and hereby made a part hereof, with necessary and appropriate variations, omissions and insertions as permitted or required by (i) to any successor of DTC or its nominee, if that successor shall be qualified this Indenture or by a Supplemental Indenture. under any applicable laws to provide the services proposed to be provided by it;

The 2016A Bonds may be in printed, engraved, or typewritten form. (ii) to any substitute depository appointed by the University pursuant to this subsection or such substitute depository’s successor; or (b) Payment of 2016A Bonds. The principal of, premium, if any, and interest on the 2016A Bonds shall be payable in lawful money of the United States of America. The principal (iii) to any Person as herein provided if the 2016A Bonds are no longer held in and premium, if any, of each 2016A Bond will be payable upon the presentation and surrender of immobilized form. such 2016A Bond, when due, at the Principal Office of the Bond Registrar. Payment of interest on each 2016A Bond shall be made to the Registered Owner thereof as specified on the records Upon the resignation of DTC or its successor (or any substitute depository or its of the Bond Registrar on the Record Date with respect to such Interest Payment Date irrespective successor) from its functions as depository, or a determination by the University to discontinue of the cancellation of such 2016A Bond upon any transfer or exchange thereof subsequent to the system of book entry transfers through DTC or its successor (or any substitute depository or such Record Date and prior to such Interest Payment Date, unless the University shall default in its successor), the University may appoint a substitute depository. Any such substitute the payment of interest due on such Interest Payment Date. Each interest payment on each 2016A Bond shall be paid (i) by check or draft mailed by first-class mail to such Registered

-13- -14-

depository shall be qualified under any applicable laws to provide the services proposed to be not be required to transfer or exchange any 2016A Bonds after notice calling such 2016A Bonds provided by it. for redemption has been given as provided in Section 604 hereof, nor during the period between a Record Date and the next succeeding Interest Payment Date for such 2016A Bonds. In the case of any transfer pursuant to clause (a) or (b) of the second preceding paragraph, the Trustee, upon receipt of all outstanding 2016A Bonds together with a written request on As to any 2016A Bond, the Bondowner shall be deemed and regarded as the absolute behalf of the University, shall issue a single new 2016A Bond for each maturity of 2016A Bonds owner thereof for all purposes. Payment of principal of and premium, if any, on any 2016A then outstanding, registered in the name of such successor or such substitute depository, or their Bonds shall be made only to or upon the order of the Bondowner or his/her attorney duly nominees, as the case, may be, all as specified in such written request of the University. authorized in writing as of the date of such payment. Payment of the interest on any 2016A Bonds shall be made only to or on the order of the Bondowner or his/her attorney duly In the event that DTC or its successor (or substitute depository or its successor) resigns authorized in writing as of the Record Date or, if applicable, Special Record Date established from its functions as depository, and no substitute depository can be obtained; or the University pursuant to Section 202 hereof for such payment, as hereinabove provided. All such payments determines that the beneficial owners of the 2016A Bonds should be able to obtain 2016A Bond shall be valid and effectual to satisfy and discharge the liability upon such 2016A Bonds to the certificates, the ownership of 2016A Bonds may be transferred to any person as herein provided, extent of the sum or sums so paid. and the 2016A Bonds shall no longer be held in fully immobilized form. The University shall deliver a written request to the Bond Registrar, together with a supply of definitive 2016A The University and the Bond Registrar shall not charge Bondowners for any exchange or Bonds, to issue 2016A Bonds as herein provided in any Authorized Denomination. Upon receipt transfer of 2016A Bonds, except pursuant to Section 207 hereof and except that in each case the of all then Outstanding 2016A Bonds by the Bond Registrar, together with a written request on Bond Registrar shall require the payment by Bondowners requesting exchange or transfer of any behalf of the University to the Bond Registrar, new 2016A Bonds shall be issued in such tax or other governmental charge required to be paid with respect thereto. The cost of printing denominations and registered in the names of such persons as are requested in such a written any new 2016A Bonds shall be paid to the Trustee by the University. request. Section 204. Execution. For so long as Outstanding 2016A Bonds are registered in the name of CEDE & CO., or

C-10 its registered assigns, as nominee of DTC, payments of principal of, premium, if any, and interest The 2016A Bonds shall be prepared, executed and delivered in the name and on behalf of on such 2016A Bonds shall be made at the place and in the manner provided in the Letter of the University, which 2016A Bonds shall be lithographed or printed with steel engraved or Representations. lithographed borders. The 2016A Bonds shall be executed on behalf of the University by the manual or facsimile signature of the President, shall be attested by the manual or facsimile Section 203. Registration, Transfer and Exchange. signature of the Vice President for Finance of the University and shall have the seal of the University impressed or imprinted thereof. Any facsimile signature shall have the same force The University shall cause the Bond Register to be kept by the Trustee, which is hereby and effect as if the President or the Vice President for Finance of the University, as the case may constituted and appointed the Bond Registrar of the University as of the Bond Closing. The be, had manually signed each of such 2016A Bonds. registration of ownership of the 2016A Bonds may be transferred only in the Bond Register. Upon surrender for transfer of any 2016A Bonds at the Principal Office of the Bond Registrar In case any officer of the University whose signature or a facsimile of whose signature duly endorsed for transfer or accompanied by an assignment duly executed, by the Registered shall appear on the 2016A Bonds shall cease to be such officer before the delivery of such Owner or his/her attorney duly authorized in writing, the University shall cause to be executed, 2016A Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all and the Bond Registrar shall authenticate and deliver in the name of the transferee or transferees, purposes, the same as if he had remained in office until delivery. a new 2016A Bond or 2016A Bonds in Authorized Denomination(s) in the aggregate principal amount, series and maturity shown on the books and records of the Bond Registrar. No recourse shall be had for the payment of the principal of, or premium, if any, or interest on, any of the 2016A Bonds or for any claim based thereon or upon any obligation, 2016A Bonds may be exchanged at the Principal Office of the Bond Registrar for 2016A covenant or agreement in this Indenture contained, against any past, present or future member of Bonds of Authorized Denomination(s) and of the same series and maturity in the aggregate the University, officer, employee or agent of the University, or member or officer, employee or principal amount shown on the books and records of the Bond Registrar. The University shall agent of any successor entity, as such, either directly or through the University or any successor cause to be executed and the Trustee shall authenticate and deliver 2016A Bonds, which the entity, under any rule of law or penalty or otherwise, and all such liability of any such member of Registered Owner making the exchange is entitled to receive, bearing numbers not then the University, officer, employee or agent as such is hereby expressly waived and released as a outstanding. The execution by the manual or facsimile signatures of the President and the Vice condition of, and in consideration for, the execution of this Indenture and the issuance of any of President for Finance of the University of any 2016A Bonds of any Authorized Denomination the 2016A Bonds. shall constitute full and due authorization of such denomination and the Bond Registrar shall thereby be authorized to authenticate and deliver such 2016A Bonds. The Bond Registrar shall The 2016A Bonds constitute a general obligation of the University secured by a security interest in the Revenues and the other security pledged herein for such purpose, which Revenues,

-15- -16-

together with any such other security provided herein, are hereby specifically and irrevocably payment of mutilated, destroyed, lost or stolen 2016A Bonds, and preclude any and all other granted, bargained, sold, conveyed, transferred, alienated, assigned and pledged to such purposes rights or remedies. in the manner and to the extent provided herein. Section 208. Temporary 2016A Bonds. Section 205. Authentication. Pending preparation of definitive 2016A Bonds or by agreement with the purchasers of No 2016A Bond shall be valid for any purpose until the certificate of authentication on all 2016A Bonds, the University may issue and, upon the University’s request, the Bond such 2016A Bond shall have been duly executed by the Bond Registrar, and such authentication Registrar shall authenticate, in lieu of definitive 2016A Bonds, one or more temporary printed or shall be conclusive proof such 2016A Bond has been duly authenticated and delivered under this typewritten 2016A Bonds in any Authorized Denominations and of substantially the tenor recited Indenture and that the Registered Owner thereof is entitled to the benefits of the trust hereby above. Upon request of the University, the Bond Registrar, without any additional charge to the created. The Bond Registrar’s certificate of authentication on any 2016A Bond shall be deemed Registered Owners thereof, shall authenticate definitive 2016A Bonds in exchange for and upon to have been executed by the Bond Registrar if (a) signed by an authorized officer of the Bond surrender of an equal principal amount of temporary 2016A Bonds. Until so exchanged, Registrar, but it shall not be necessary that the same officer sign the certificate of authentication temporary 2016A Bonds shall have the same rights, remedies and security hereunder as on all of the 2016A Bonds issued hereunder, and (b) the date of registration and authentication of definitive 2016A Bonds. the 2016A Bond is inserted in the place provided therefor on the Bond Registrar’s certificate of authentication. Section 209. Cancellation and Destruction of Surrendered 2016A Bonds.

Section 206. Form of 2016A Bonds. Whenever any Outstanding 2016A Bond shall be delivered to the Bond Registrar for cancellation pursuant to this Indenture, for payment of the principal amount represented thereby, The 2016A Bonds issued under this Indenture shall be substantially in the form set forth or for replacement pursuant to Sections 203, 207, 208 or Article VI hereof, such 2016A Bond in Exhibit A attached hereto and incorporated by reference herein, with such appropriate shall be promptly cancelled and cremated or otherwise destroyed by the Trustee. variations, omissions and insertions as are permitted or required by this Indenture or the Purchase Contract. Section 210. Delivery of the 2016A Bonds. C-11 Section 207. Mutilated, Destroyed, Lost or Stolen 2016A Bonds. Upon the execution and delivery of this Indenture, the University shall execute and deliver to the Bond Registrar, and the Bond Registrar shall authenticate the 2016A Bonds and the In the event any 2016A Bond or temporary 2016A Bond is mutilated, lost, stolen or Trustee shall deliver or cause to be delivered such 2016A Bonds to the purchasers as directed by destroyed, the University may cause to be executed and, thereupon, the Bond Registrar shall the University as hereinafter in this Section 210 provided. authenticate a new 2016A Bond of like date, maturity, interest rate and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated 2016A Bond, such Prior to the delivery by the Trustee of any of the 2016A Bonds there shall have been filed mutilated 2016A Bond shall first be surrendered to the Bond Registrar, and in the case of any with the Trustee: lost, stolen or destroyed 2016A Bond, there shall be furnished to the Trustee evidence of such loss, theft or destruction satisfactory to the Bond Registrar, together with indemnity satisfactory (a) A copy, duly certified by the University, of the Resolution. to the Trustee. In the event any such 2016A Bond shall have matured, instead of issuing a replacement 2016A Bond as provided above, the Trustee may pay the same upon receipt by the (b) Original executed counterparts of this Indenture and all other materials Bond Registrar and University of indemnity satisfactory to it. The University and the Bond required herein. Registrar may charge the owner of such 2016A Bond their reasonable fees and expenses in this (c) An opinion of Special Counsel that the issuance of the 2016A Bonds and connection. the execution of this Indenture and the Security Agreement have been duly and validly Every substituted 2016A Bond issued pursuant to this Section 207 shall constitute an authorized, that all requirements under this Indenture precedent to the delivery of the additional contractual obligation of the University, whether or not the 2016A Bond alleged to 2016A Bonds have been satisfied, and that the 2016A Bonds, this Indenture and the have been mutilated, destroyed, lost or stolen shall be at any time enforceable by anyone, and Security Agreement are valid and binding obligations, enforceable against the University shall be entitled to all the benefits of this Indenture equally and proportionately with any and all in accordance with their terms (subject to any applicable bankruptcy, insolvency, other 2016A Bonds duly issued hereunder. reorganization, moratorium and other similar laws or equitable principles affecting creditors’ rights heretofore or hereafter enacted, and provided that no opinion is All 2016A Bonds shall be held and owned upon the express condition that the foregoing expressed as to the availability of equitable remedies are sought) and that the Refunded provisions are, to the extent permitted by law, exclusive with respect to the replacement or Bonds have been defeased under the resolutions under which they were issued and are no

-17- -18-

longer deemed to be outstanding under such resolutions, subject to such assumptions and The Trustee shall keep and maintain adequate records pertaining to each Fund, and all qualifications as Special Counsel may deem appropriate. disbursements therefrom.

(d) A request and authorization to the Trustee on behalf of the University The Trustee shall be entitled to establish other trust funds and accounts as the Trustee directing the Trustee as to the amounts required to be deposited into the various Funds. shall deem necessary in order to properly administer the Trust Estate.

(e) A request and authorization to the Trustee on behalf of the University to Section 303. Initial Deposits. authenticate and deliver the 2016A Bonds in its capacity as Bond Registrar to the purchasers therein identified upon payment to the Trustee, but for the account of the On the Bond Closing, the Trustee shall deposit a portion of the proceeds received from University, of a sum specified in such request and authorization. The proceeds of such the sale of the 2016A Bonds, and money, if any, received from the University, as set forth in payment shall be transferred and deposited pursuant to Article III hereof and as indicated Exhibit C. A portion of the proceeds received from the sale of the 2016A Bonds shall be in such request and authorization. deposited directly with the University, as set forth in Exhibit C.

Section 211. Additional Bonds; Additional Indebtedness. Section 304. Refunding Fund.

Without the consent of or notice to the Bondowners, the University or the Authority may On the Bond Closing, the Trustee shall deposit a portion of the proceeds received from issue additional bonds (“Additional Bonds”) having a parity of lien on the Trust Estate pursuant the sale of the 2016A Bonds into the Refunding Fund in the amounts described in Exhibit C to the terms of this Indenture with prior written confirmation from the Rating Agency that the hereof. Such money shall immediately be disbursed, without the necessity of a funding rating on the 2016A Bonds will not be withdrawn solely as a result of the issuance of any such requisition, by the Trustee to U.S. Bank National Association, as the refunding trustee for the Additional Bonds. If Additional Bonds are issued pursuant to this Section 211, all references in Refunded Bonds, to pay the redemption prices of the Refunding Bonds on the dates set forth this Indenture to the 2016A Bonds shall be deemed to refer to the 2016A Bonds and any below. Upon completion of such disbursements, the Trustee shall close the Refunding Fund. Additional Bonds. Nothing herein shall preclude the University or the Authority from issuing [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

C-12 additional bonds having a subordinate lien on the Trust Estate or separately secured under a different indenture regardless of effect of such issuance on the ratings of the 2016A Bonds.

ARTICLE III REVENUES AND FUNDS

Section 301. Source of Payment of 2016A Bonds.

The 2016A Bonds and all payments required of the University hereunder constitute a general obligation of the University, secured by a security interest in the Revenues and Funds pledged in the Granting Clauses hereof, and as provided herein.

Section 302. Creation of Funds.

The following Funds of the University are hereby created and established with the Trustee:

(a) the Refunding Fund;

(b) the Cost of Issuance Fund; and

Each Fund shall be maintained by the Trustee as a separate and distinct trust fund or account to be held, managed, invested, disbursed and administered as provided in this Indenture. All money deposited in the Funds shall be used solely for the purposes set forth in this Indenture.

-19- -20-

2009A Refunded Bonds Any money remaining in the Cost of Issuance Fund on the 180th day following the 2016B Original Principal Interest CUSIP Redemption Redemption Bond Closing shall be transferred to the University and the Cost of Issuance Fund shall be Maturity Date Amount Rate Number Date Price closed; provided, that any requests for payments of additional fees and costs incurred in 4/1/2017 $ 1,650,000 5.250% 939781B90 connection with the issuance of the 2016A Bonds or the 2016B Bonds received after the 180th 4/1/2018 1,650,000 5.000 939781C24 day following the 2016B Bond Closing shall be immediately paid for by the University. 4/1/2019 1,440,000 5.125 939781C32 4/1/2020 2,445,000 5.375 939781C40 04/1/2019 100.00% Section 306. Debt Service Fund. 4/1/2021 2,560,000 5.500 939781C57 04/1/2019 100.00 4/1/2022 2,690,000 5.625 939781C65 04/1/2019 100.00 4/1/2029 21,010,000 6.250 939781C73 04/1/2019 100.00 The Trustee shall deposit into the Debt Service Fund: (a) money, if any, representing 2009B Refunded Bonds1 accrued interest at the Bond Closing in the amount specified in Exhibit C hereto; (b) money Original Principal Interest CUSIP Redemption Redemption received with respect to principal and interest from the University on deposit with the Trustee Maturity Date Amount Rate Number Date Price pursuant to the 2016A Bonds or Section 303 hereof; (c) investment earnings on the money 4/1/2029 $13,790,000 5.000% 939781E71 04/1/2019 100.00% therein; and (d) any other Revenues collected by the Trustee and available to pay principal of or 2010A Refunded Bonds interest on the 2016A Bonds in an amount sufficient to pay the principal of, and premium, if any, Original Principal Interest CUSIP Redemption Redemption and interest becoming due and payable on the 2016A Bonds on the next Interest Payment Date, Maturity Date Amount Rate Number Date Price at scheduled maturity, upon acceleration or by prior redemption. 4/1/2017 $2,975,000 4.500% 939781H45 4/1/2018 2,365,000 5.000 939781H52 Money on deposit in the Debt Service Fund shall be applied to pay the principal of, 4/1/2019 2,375,000 5.000 939781H60 premium, if any, and interest on the 2016A Bonds as the same becomes due and payable. 4/1/2020 1,335,000 4.000 939781H94 04/1/2019 100.00% 4/1/2021 1,375,000 4.125 939781J27 04/1/2019 100.00 On each scheduled Interest Payment Date on the 2016A Bonds, the Trustee shall remit or 4/1/2022 1,440,000 4.250 939781J35 04/1/2019 100.00 cause to be remitted in accordance with Section 202 hereof to the Bondowners as of the Record 4/1/2023 1,505,000 4.300 939781J43 04/1/2019 100.00 C-13 4/1/2024 1,550,000 4.500 939781H86 04/1/2019 100.00 Date for such interest payment, an amount from the Debt Service Fund sufficient to pay the 4/1/2029 8,895,000 4.875 939781H78 04/1/2019 100.00 interest on the 2016A Bonds becoming due and payable on such date. 2012A Refunded Bonds On each date on which any principal or premium becomes payable on the 2016A Bonds, Original Principal Interest CUSIP Redemption Redemption Maturity Date Amount Rate Number Date Price the Trustee shall set aside and hold in trust, an amount from the Debt Service Fund sufficient to 4/1/2022 $7,305,000 VAR N/A 10/20/2016 100.00% pay the amount of principal of and premium, if any, on the 2016A Bonds becoming due and payable on such date. 2012B Refunded Bonds Original Principal Interest CUSIP Redemption Redemption Section 307. Final Balances. Maturity Date Amount Rate Number Date Price 4/1/2017 $ 190,000 VAR N/A 10/20/2016 100.00% Upon the deposit with the Trustee of money sufficient to pay all principal of, premium, if 4/1/2018 200,000 VAR N/A 10/20/2016 100.00 any, and interest on the 2016A Bonds, and upon satisfaction of all claims against the University 4/1/2019 210,000 VAR N/A 10/20/2016 100.00 4/1/2020 220,000 VAR N/A 10/20/2016 100.00 hereunder, including all fees, charges and costs of the Trustee which are properly due and 4/1/2021 230,000 VAR N/A 10/20/2016 100.00 payable hereunder, or upon the making of adequate provisions for the payment of such amounts 4/1/2022 1,700,000 VAR N/A 10/20/2016 100.00 as permitted hereby, all money remaining in all Funds, except money necessary to pay principal of, premium, if any, and interest on the 2016A Bonds, which money shall be held and disbursed Section 305. Cost of Issuance Fund. by the Trustee pursuant to Section 306 hereof, shall be remitted to the University.

On the Bond Closing, the Trustee shall deposit into the Cost of Issuance Fund the Section 308. Nonpresentment of 2016A Bonds. amounts set forth in Exhibit C of this Indenture. Money on deposit in the Cost of Issuance Fund shall be applied to pay Issuance Costs set forth in a closing memorandum prepared by the In the event any 2016A Bond shall not be presented for payment when the principal Underwriter and approved by the University. thereof becomes due, either at maturity, or at the date fixed for redemption thereof, or otherwise, if funds sufficient to pay the principal and interest accrued thereon to such date shall have been made available to the Trustee for the benefit of the owner thereof, the Trustee shall hold such 1 The outstanding principal amount of the 2009B Bonds not refunded with proceeds of the 2016A Bonds will be refunded with proceeds of principal and interest accrued thereon to such date without liability to the Bondowner or any the 2016B Bonds and contributions from the University, if necessary. other party for further interest thereon, for the benefit of the Registered Owner of such 2016A

-21- -22-

Bond, for a period of five years from the date such 2016A Bond shall have become due, either at document, instrument or commitment to which the University is a party or by which the maturity or upon earlier redemption, and thereafter the Trustee shall remit such funds pursuant to University or any of its property is bound. the Uniform Unclaimed Property Act, chapter 63.29 RCW, as amended, or its successor. In the event the Uniform Unclaimed Property Act, as amended, or its successor, should require by law (e) Except as disclosed in the Offering Memorandum with respect to the 2016A other action to be taken by the Trustee, then the Trustee shall comply with such law and this Bonds, there is no action, suit, proceeding, inquiry or investigation by or before any court, Section 308 shall be deemed amended. After the payment pursuant to the Uniform Unclaimed governmental agency or public board or body pending against the University or, to the Property Act as herein provided, the Trustee’s liability for payment to the owner or Registered knowledge of the University, threatened against the University which (i) affects or seeks to Owner of such 2016A Bond shall forthwith cease, terminate and be completely discharged and prohibit, restrain or enjoin the issuance, sale or delivery of the 2016A Bonds or the execution and thereafter the Registered Owner shall be restricted exclusively to his or her rights of recovery delivery of this Indenture or the Documents, (ii) affects or questions the validity or enforceability provided under the Uniform Unclaimed Property Act. of the 2016A Bonds, this Indenture or the Documents, or (iii) questions the power or authority of the University to carry out the transactions contemplated by, or to perform its obligations ARTICLE IV contemplated by, or to perform its obligations under the 2016A Bonds, this Indenture or the REPRESENTATIONS AND WARRANTIES OF THE UNIVERSITY Documents.

As of the date of the Bond Closing, the University hereby represents and warrants as follows: (f) The University is not in material default under any document, instrument or commitment to which the University is a party or to which it or any of its property is subject Section 401. General. which default would or could materially adversely affect the ability of the University to carry out its obligations under the 2016A Bonds, this Indenture or the Documents. (a) The University has full legal right, power and authority under its articles of incorporation and the laws of the State (i) to enter into this Indenture and the Documents, (ii) to (g) Any certificate signed by a University Representative and delivered pursuant to issue and sell the 2016A Bonds as contemplated by this Indenture and the Documents, (iii) to the Documents or this Indenture shall be deemed a representation and warranty by the University perform its obligations hereunder and thereunder, and (iv) to consummate the transactions as to the statements made therein.

C-14 contemplated by this Indenture and the Documents. (h) In the event the proceeds of the sale of the 2016A Bonds are not sufficient to (b) The University has duly authorized (i) the execution and delivery of the 2016A finance the Project, the University will furnish any additional money necessary to effect the Bonds, this Indenture and the Documents, (ii) the performance by the University of its purposes set forth herein. obligations hereunder and thereunder, and (iii) the consummation of the transactions contemplated by the 2016A Bonds, this Indenture and the Documents. (i) Neither this Indenture nor the Documents, the Offering Memorandum with respect to the 2016A Bonds, or any other document, certificate or statement (including but not (c) This Indenture has been duly executed and delivered by the University and limited to information and estimates with respect to the Project or the construction thereof) constitutes a legal, valid and binding obligation of the University, enforceable in accordance with relating to the issuance of the 2016A Bonds contains to the knowledge of the University any its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium materially untrue statement of a material fact or omits to state a material fact necessary in order and other similar laws or equitable principles affecting creditors’ rights heretofore or hereafter to make the statements contained herein and therein not misleading or incomplete as of the date enacted, and provided that no opinion is expressed as to the availability of equitable remedies hereof and as of the Bond Closing. (regardless of whether such enforceability is considered in a proceeding in equity or at law). Upon the execution and delivery thereof, the 2016A Bonds and each of the Documents will (j) The Board of Trustees approved the Project and the issuance of the 2016A Bonds constitute legal, valid and binding obligations of the University, enforceable in accordance with in action taken on September 2, 2016. their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or judicial decision affecting creditors’ rights generally and by general principles of (k) The Audited Financial Statements for the Fiscal Year ending May 31, 2016, and equity. any information from such Audited Financial Statements included in the Offering Memorandum with respect to the 2016A Bonds present fairly the financial position of the University as of the (d) To the knowledge of the University, the execution and delivery of the 2016A dates indicated and the results of its operations for the periods specified, and such financial Bonds, this Indenture and the Documents, the performance by the University of its obligations statements have been prepared in conformity with GAAP consistently applied in all material hereunder and thereunder, and the consummation of the transactions contemplated hereby and respects to the periods involved, except as otherwise stated in the notes thereto or the reports thereby do not and will not violate any law, regulation, rule or ordinance or any order, judgment accompanying such financial statements, and except as disclosed in the Offering Memorandum, or decree of any federal, state or local court, and do not and will not conflict with or constitute a since May 31, 2016, there has been no material adverse change in the financial condition of the material breach of, or a material default under, the University’s articles of incorporation or any University.

-23- -24-

(l) All tax returns (federal, state and local) required to be filed by or on behalf of the (e) With the exception of the payment of compensation (and the payment or University have been filed (taking into account all applicable extensions), and all taxes shown reimbursement of expenses) which is not excessive and is for personal services which are thereon to be due, including interest and penalties, except such, if any, as are being actively reasonable and necessary to carrying out the purposes of the University, no individual who contested by the University, have been paid or adequate reserves have been made for the would be a “foundation manager” within the meaning of Section 4946(b) of the Code with payment thereof, which reserves, if any, are reflected in the financial statements described in respect to the University, nor any Person controlled by any such individual or individuals or any Sections 401(k) and 401(l) hereof. of their Affiliates, nor any Person having a personal or private interest in the activities of the University has acquired or received, directly or indirectly, any income or assets, regardless of (m) The University is a private, nonprofit educational institution, situated in the State, form, of the University during the current Fiscal Year and the five Fiscal Years preceding the is open to residents of the State, and provides programs of education beyond high school leading current Fiscal Year, other than as reported to the IRS by the University and as disclosed in the at least to the baccalaureate degree. Audited Financial Statements.

(n) The University is fully accredited by the Northwest Commission on Colleges and (f) The University has not received any indication or notice whatsoever to the effect Universities. that its federal tax exemption under Section 501(a) of the Code by virtue of being an organization described under Section 501(c)(3) of the Code has been revoked or modified, or (o) The University is not, nor has it been at any time during the 90-day period that the IRS is considering revoking or modifying such exemption, and such exemption is still in immediately prior to the date of the Bond Closing, insolvent; and there is no Act of Bankruptcy, full force and effect. nor has an Act of Bankruptcy occurred during the 90-day period immediately prior to the Bond Closing, nor, to the University’s knowledge, is an Act of Bankruptcy threatened. (g) The University has timely filed with the IRS all requests for determination, reports and returns required to be filed by it and such requests for determination, reports and (p) Except as permitted under this Indenture, the Intercreditor and Collateral Agency returns have not omitted or misstated any material fact and has timely notified the IRS of any Agreement or the other Documents, there are no liens, security interests or encumbrances against changes in its organization and operation since the date of the application for the Determination. the Core Campus or the Unrestricted Gross Revenues.

C-15 (h) The University has not devoted more than an insubstantial part of its activities in Section 402. Tax. furtherance of a purpose other than an exempt purpose within the meaning of Section 501(c)(3) of the Code. (a) The University is a Washington nonprofit corporation and (i) is an organization described in Section 501(c)(3) of the Code; (ii) is exempt from federal income taxes under (i) The University has not taken any action, nor does it know of any action that any Section 501(a) of the Code (except for unrelated business income subject to taxation under other Person has taken, nor does it know of the existence of any condition which would cause the Section 511 of the Code); and (iii) is not a “private foundation” described in Section 509(a) of University to lose its federal tax exemption under Section 501(a) of the Code. the Code. (j) All of the documents, instruments and written information supplied by or on (b) The purposes, character, activities and methods of operation of the University behalf of the University, which have been reasonably relied upon by Special Counsel in have not changed materially since its organization and are not materially different from the rendering its opinion with respect to the status of the University under Section 501(c)(3) of the purposes, character, activities and methods of operation at the time of its determination by the Code, are true and correct in all material respects, do not contain any untrue statement of a IRS to be an organization described in Section 501(c)(3) of the Code (the “Determination”). material fact and do not omit to state any material fact necessary to be stated therein to make the Since the time of the Determination, the University has amended its bylaws. information provided therein, in light of the circumstances under which such information was provided, not misleading. (c) The University has not diverted a substantial part of its corpus or income for a purpose or purposes other than the purpose or purposes (i) for which it is organized or operated (k) The University is not currently under audit by the IRS nor has the University or (ii) disclosed to the IRS in connection with the Determination. received any notice from the IRS that an audit is being considered.

(d) The University has not operated during its five most recent Fiscal Years or the ARTICLE V current Fiscal Year, as of the date hereof, in a manner that would result in it being classified as INVESTMENT OF MONEY an “action” organization within the meaning of Section 1.501(c)(3)-(1)(c)(3) of the Regulations including, but not limited to, promoting or attempting to influence legislation by propaganda or Section 501. Investment of Money. otherwise as a substantial part of its activities. Money in all Funds, except as provided in Sections 308 and 1101 hereof, shall be continuously invested and reinvested by the Trustee, at the written direction of the University, as

-25- -26-

practicable and as provided in this Section 501, until such time or times as such money shall be and any loss of principal value resulting from the investment of money in any Fund and any needed for the purposes for which it was deposited. Money on deposit in all Funds may be expenses incurred in making or disposing of investments shall be charged, when incurred, to the invested only in Permitted Investments; provided, that amounts held in the Debt Service Fund Fund from which such investments were made. (after an irrevocable call of the 2016A Bonds to be redeemed with such funds) shall be either (a) held as cash or (b) invested and reinvested by the Trustee, only in Government Obligations ARTICLE VI maturing on the earlier of 30 days or as needed. The Trustee shall have no liability or REDEMPTION OF BONDS BEFORE MATURITY responsibility for any loss or for failure to maximize earnings resulting from any investment made in accordance with the provisions of this Section 501. The Trustee shall have no liability Section 601. Limitation on Redemption. for losses incurred as a result of such reinvestment or as a consequence of the retention of any The 2016A Bonds shall be subject to redemption prior to maturity only as provided in Permitted Investment following such downgrade. The Trustee shall be entitled to assume, absent this Article VI. receipt by the Trustee of written notice to the contrary, that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter. Section 602. Redemption Dates, Amounts and Prices.

All investments shall constitute a part of the Fund from which the money used to acquire (a) Mandatory Sinking Fund Redemption. The 2016A Bonds scheduled to mature on such investments has come. The Trustee shall sell and reduce to cash a sufficient amount of April 1, 2046, are subject to mandatory sinking fund redemptions on the following dates and in investments in a Fund whenever the cash balance therein is insufficient to pay the amounts the following amounts at a price of par plus accrued interest to the date of redemption: required to be paid therefrom. The Trustee may transfer investments from any Fund to any other Fund in lieu of cash when a transfer is required or permitted by the provisions of this Indenture. Date (April 1) Amount The Trustee may make any and all investments permitted by the provisions of this 2044 $30,860,000 Section 501 through its own investment department or that of any affiliate. As and when any 2045 32,190,000 amount invested pursuant to this article may be needed for disbursement, the Trustee may cause 2046* 33,575,000 C-16 without liability for any loss thereon a sufficient amount of such investments to be sold and * Final maturity. reduced to cash to the credit of such funds. In the event that 2016A Bonds are redeemed in part in accordance with this Section 602 In computing the amount of any Fund, Permitted Investments purchased as an investment other than by mandatory sinking fund payments, the mandatory sinking fund redemptions shall of money therein shall be valued at the then market price of such obligations, excluding any be reduced proportionately with remaining amounts in Authorized Denominations. accrued interest. If the market price of such obligations is not readily available, the Trustee shall determine the value of such obligations in any reasonable manner. (b) Optional Redemption. The 2016A Bonds are subject to redemption prior to maturity by written direction of the University, in whole or in part, on any Business Day, at the The University acknowledges that to the extent the regulations of the Comptroller of the Make-Whole Redemption Price. The “Make-Whole Redemption Price” is the greater of (i) Currency or other applicable regulatory agency grant the University the right to receive 100% of the principal amount of the 2016A Bonds to be redeemed; or (ii) the sum of the present brokerage confirmations of security transactions, the University waives receipt of such value of the remaining scheduled payments of principal and interest to the maturity date of the confirmations. The Trustee shall furnish to the University periodic statements of accounts, 2016A Bonds to be redeemed, not including any portion of those payments of interest accrued which shall include details of all investment transactions made by the Trustee. and unpaid as of the date on which the 2016A Bonds are to be redeemed, discounted to the date The Shareholder Communications Act of 1985 and its regulations require that banks and on which the 2016A Bonds are to be redeemed on a semi-annual basis, assuming a 360-day year trust companies make an effort to facilitate communication between registrants of U.S. securities consisting of twelve 30-day months, at the Treasury Rate (as defined below) plus ___ basis and the parties who have the authority to vote or direct the voting of those securities regarding points, plus, in each case, accrued and unpaid interest on the 2016A Bonds to be redeemed to the proxy dissemination and other corporate communications. Unless the University notifies the redemption date. The "Treasury Rate” is, as of any redemption date, the yield to maturity as of Trustee otherwise, in writing, the Trustee will provide the obligatory information to the registrant such redemption date of United States Treasury securities with a constant maturity (as compiled upon request. Any objection will apply to all securities held for the University in the Funds and published in the most recent weekly Federal Reserve Statistical Release H.15 (519) that has unless the University notifies the Trustee in writing. become publicly available at least two Business Days, but not more than 45 calendar days, prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is Section 502. Earnings and Losses. no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the maturity date of the 2016A Bonds to be redeemed; Subject to the restrictions hereinafter set forth in this Article V, all capital gains, profits provided, however, that if the period from the redemption date to such maturity date is less than and interest earnings resulting from the investment of money in all Funds shall be deposited into,

-27- -28-

one year , the weekly average yield on actually traded United States Treasury securities adjusted practicable in the same manner, and to the same Persons, as notice of such redemption was given to a constant maturity of one year will be used. pursuant to this Section 604.

Section 603. Partial Redemption. Section 605. Payment Upon Redemption.

All or a portion of any 2016A Bond may be redeemed, but only in a principal amount Upon presentation and surrender of any such 2016A Bonds at the Principal Office of the equal to an Authorized Denomination. Bond Registrar on or after the date fixed for redemption, the Trustee shall pay the principal of, premium, if any, and interest on such 2016A Bonds to the extent of money received for such In the event of a partial redemption, the maturity of 2016A Bonds up to the allocable purpose. amount shall be selected pro rata unless other written instructions are given by the University. Within each maturity, the particular 2016A Bonds to be redeemed shall be selected randomly. Section 606. Effect of Redemption. Upon surrender of any 2016A Bond for redemption in part, the University shall execute and the Bond Registrar shall authenticate and deliver to the owner thereof a new 2016A Bond or 2016A Notice of redemption having been given as provided in Section 604 hereof, the 2016A Bonds of Authorized Denominations of the same maturity and in an aggregate principal amount Bonds or portions thereof designated for redemption shall become due and payable on the date equal to the unredeemed portion of the 2016A Bond so surrendered. fixed for redemption and, unless the University defaults in the payment of the principal thereof, premium, if any, and interest thereon or unless such redemption was conditioned upon the Money held or received by the Trustee with respect to the redemption of 2016A Bonds issuance of refunding bonds which were not issued, such 2016A Bonds or portions thereof shall shall be deposited in the Debt Service Fund and used to redeem 2016A Bonds on the dates cease to bear interest from and after the date fixed for redemption whether or not such 2016A specified. The Trustee shall provide notice of such redemption in accordance with Section 604 Bonds are presented and surrendered for payment on such date. If any 2016A Bond or portion hereof. thereof called for redemption is not so paid upon presentation and surrender thereof for redemption, such 2016A Bond or portion thereof shall continue to bear interest at the rate set Section 604. Notice of Redemption. forth thereon until paid or until due provision is made for the payment of same.

C-17 The Trustee shall give notice of redemption pursuant to this Article VI not less than Section 607. Purchase of 2016A Bonds. 20 days and not more than 60 days prior to the date fixed for redemption. The University reserves the right to acquire and sell 2016A Bonds in the open market All notices of redemption shall be sent by first-class mail, postage prepaid, to the from available funds of the University at any price the University deems reasonable. All 2016A University and the Registered Owner of each 2016A Bond to be redeemed at the address of such Bonds so purchased need not be cancelled. Registered Owner as shown on the Bond Register. Neither the failure of a Bondowner to receive notice by mail nor any defect in any notice so mailed shall affect the validity of the proceedings ARTICLE VII for such redemption. Such notice shall state the redemption date, the redemption price, the place PAYMENT; FURTHER AGREEMENTS at which the 2016A Bonds are to be surrendered for payment, that from the redemption date interest on the 2016A Bonds to be redeemed will cease to accrue so long as funds for such Section 701. Payment by the University. payment are available to the Trustee, and, if less than all of the 2016A Bonds of any series The University agrees to pay to the Trustee the principal of, premium (if any) and interest Outstanding are to be redeemed, an identification of such 2016A Bonds or portions thereof to be on the 2016A Bonds at the times, in the manner and in the amount set forth therein. redeemed and, if applicable, the substance of the last sentence of this Section 604. Any notice mailed as provided in this Section 604 shall be conclusively presumed to have been duly given, (a) The University shall pay to the Trustee until the principal of, premium (if any) whether or not the Bondowner receives such notice. The Trustee shall provide one additional and interest on the 2016A Bonds shall have been paid or provision for payment has been made in notice of redemption to Bondowners in the event 2016A Bonds are not presented for payment accordance with this Indenture the following amounts: within 60 days of the date fixed for redemption. Notice of any optional redemption may be given on a conditional basis if redemption is subject to the scheduled closing of refunding bonds. (i) On or before 4:00 p.m. Seattle time on the fifth Business Day immediately Notwithstanding the foregoing, notice to the Registered Owner of each 2016A Bond shall be before each Interest Payment Date the principal and mandatory sinking fund payments, if given in accordance with the Letter of Representations so long as such 2016A Bonds are held in any, becoming due on the 2016A Bonds on such Interest Payment Date until such time as fully immobilized form by DTC. the principal amount of the 2016A Bonds is paid in full; provided, that such amounts shall take into account amounts on deposit in or to be transferred to the Debt Service Any notice of optional redemption may be rescinded by written notice given to the Fund representing investment earnings on funds held under this Indenture; and Trustee by the University Representative no later than five Business Days prior to the date specified for redemption. The Trustee shall give notice of such rescission as soon thereafter as

-29- -30-

(ii) On or before 4:00 p.m. Seattle time on the fifth Business Day immediately such protection of the interests of the Trustee and the Bondowners, and shall furnish satisfactory before each Interest Payment Date the interest becoming due on the 2016A Bonds on evidence to the Trustee of filing and refiling of such instrument and of every additional such Interest Payment Date until such time as all principal of and interest on the instrument which shall be necessary to preserve the lien of this Indenture upon the Trust Estate Outstanding 2016A Bonds is paid in full; provided, that such amounts shall take into or any part thereof until the principal of, premium, if any, and interest on the 2016A Bonds account amounts on deposit in or to be transferred to the Debt Service Fund representing issued hereunder shall have been paid. The Trustee and the University shall, if necessary, investment earnings on funds held under this Indenture. execute or join in the execution of any such further or additional instruments and file or join in the filing thereof at such time or times and in such place or places as either of them may be (b) The University shall pay all taxes and assessments, general or special, including, advised by an opinion of Counsel (which may be obtained as an expense of the Trust Estate) will without limitation, all ad valorem taxes, concerning or in any way related to the property of the preserve the lien of this Indenture upon the Trust Estate or any part thereof until the aforesaid University, or any part thereof, and any other governmental charges and impositions whatsoever, principal, premium, if any, and interest shall have been paid. foreseen or unforeseen, and all utility and other charges and assessments; provided, however, that the University reserves the right to contest in good faith the legality of any tax or Section 704. Extension of Payment of 2016A Bonds. governmental charge concerning or in any way related to the University. The University shall not directly or indirectly extend or assent to the extension of the (c) The University shall pay (i) to the Trustee when due, the Trustee Fee, and (ii) to maturity of any of the 2016A Bonds or the time of payment of any interest thereon, and in case the Trustee, the Rating Agency Surveillance Fee, if any. the maturity of any of the 2016A Bonds or the time of payment of interest shall be extended, such 2016A Bonds shall not be entitled, in case of any default hereunder, to the benefits of this (d) The University shall pay to the Trustee, forthwith upon written notice from the Indenture, except subject to the prior payment in full of the principal of and interest on all of the Trustee, all costs and expenses incurred by the Trustee; provided, that the University shall 2016A Bonds then Outstanding and of all claims for interest thereon which shall not have been receive an itemized invoice of such fees and costs prior to its obligation to pay such fees and so extended. Nothing in this Section 704 shall be deemed to limit the right of the University to costs. issue bonds for the purpose of refunding any Outstanding 2016A Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the 2016A Bonds.

C-18 The University hereby designates the Principal Office of the Bond Registrar as the principal place of payment for the 2016A Bonds, and the Bond Registrar as paying agent for the Section 705. Against Encumbrances. 2016A Bonds, such appointment and designation to remain in effect until notice of change is filed with the Trustee pursuant to the terms of this Indenture. Neither the University nor the Trustee shall create, or knowingly permit the creation of, any pledge, lien, charge or other encumbrance upon the Trust Estate or the Documents while any Section 702. Power to Issue 2016A Bonds and Make Pledge and Assignment. of the 2016A Bonds are Outstanding, except as permitted under this Indenture and in the Intercreditor and Collateral Agency Agreement. The University is duly authorized pursuant to law to issue the 2016A Bonds and to enter into this Indenture and to pledge and assign the Trust Estate in the manner and to the extent Section 706. Payment of Taxes and Claims. provided in this Indenture and hereby does pledge and assign to the Trustee all Revenues and all other rights to the Documents to the extent set forth in the Granting Clauses hereof. The 2016A The University shall pay or cause the Trustee to pay, but only out of funds, if any, made Bonds and the provisions of this Indenture are and will be legal, valid and binding general available by or on behalf of the University expressly for such purposes, any property taxes, obligations of the University, and the Trustee (subject to the limitations contained in this assessments or other governmental charges that may be lawfully imposed upon the Trust Estate, Indenture including without limitation Section 901(g) hereof) shall at all times, to the extent when the same shall become due if not paid by the University, as well as any lawful claim which, permitted by law, defend, preserve and protect such pledge and assignment of the Trust Estate if unpaid, might by law become a lien or charge upon the Trust Estate or which might impair the and all the rights of the Bondowners under this Indenture against all claims and demands of all security of the 2016A Bonds. Persons whatsoever; provided, that the Trustee may rely on the written investment instructions of Section 707. Documents. the University.

Section 703. Additional Instruments. The Documents set forth certain covenants and obligations of the University and the Trustee and reference is hereby made to such documents for a detailed statement of such The University shall cause this Indenture or a financing statement or other similar covenants and obligations. So long as any of the 2016A Bonds remain outstanding and subject document relating thereto to be filed in such manner and at such places as may be required by to the terms of this Indenture, the University and the Trustee shall faithfully and punctually law, if any, to protect the right, title and interest of the Trustee in and to the Trust Estate or any perform and observe all obligations and undertakings on their part to be performed and observed part thereof. The University shall execute or cause to be executed any and all further instruments under the Documents to which they are a party. as may be required by law or in accordance with any opinion of Counsel provided for herein for

-31- -32-

The University and the Trustee shall take no action, shall permit no action to be taken by (b) The University will furnish the following to the Trustee, so long as any 2016A others within their control and shall not knowingly omit to take any action, which action or Bonds remain Outstanding: omission might release the University from its liabilities or obligations under the Documents or result in the surrender, termination, amendment or modification of, or impair the validity of, such (i) its financial statements as of the end of each Fiscal Year and for the year documents. ended on such date, reported on as to fairness of presentation and conformity with GAAP by Moss Adams LLP or another independent certified public accountant selected by the The Trustee shall retain possession of the executed originals of the Documents on behalf University, as soon as accepted by the Board of Trustees or the Audit Committee thereof of the University and shall release the same only in accordance with the provisions thereof and but in any event within 210 days after the end thereof, and such additional copies of the hereof. The Documents shall be available for inspection at reasonable times during regular Audited Financial Statements as the Trustee shall reasonably request; business hours, under reasonable conditions, by the University and any Registered Owner of any 2016A Bond. (ii) a copy of any notice from a Rating Agency to the effect that any of its unsecured debt is being rated or re-rated; The obligations of the Trustee under this Section 707 shall be subject to the Trustee’s rights to compensation, reimbursement and indemnification under Article IX hereof. (iii) no later than 210 days after the end of each Fiscal Year, a certificate in the form attached hereto as Exhibit D regarding the University’s compliance with the debt Section 708. List of Bondowners. covenants contained in Sections 719 (a) and (b) hereof; and

The Trustee, as the Bond Registrar, will keep on file in the Bond Register a list of names (iv) promptly upon the request of the Trustee, such other information and addresses of all Bondowners registered in the Bond Register together with the principal regarding the financial position, results of operations, business or prospects of the amount and numbers of such 2016A Bonds. At reasonable times and under reasonable University, as the Trustee may reasonably request from time to time. regulations established by the Trustee, such list may be inspected and copied by the University, or the Registered Owners of 25 percent or more in aggregate principal amount of 2016A Bonds Section 711. Notice of Certain Events.

C-19 then Outstanding (or a designated representative thereof), such ownership and the authority of any such designated representative to be evidenced to the satisfaction of the Trustee. (a) The University hereby covenants to advise the Trustee promptly in writing of the occurrence of any Event of Default hereunder or any event which, with the passage of time or Section 709. Compliance With Indenture, Contracts. service of notice, or both, would constitute an Event of Default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with The University and the Trustee shall faithfully observe and perform all the covenants, respect thereto. conditions and requirements of this Indenture, shall not issue any 2016A Bonds in any manner other than in accordance with this Indenture, and shall not suffer or permit any default to occur (b) The University hereby covenants to advise the Trustee promptly in writing of the hereunder or do or permit to be done anything that might in any way weaken, diminish or impair occurrence of any default under the Documents or of the occurrence of an Act of Bankruptcy of the security intended to be given pursuant to this Indenture except as specifically permitted the University. herein. Subject to the limitations and consistent with the covenants, conditions and requirements contained in this Indenture, the University and the Trustee shall comply with the express terms, Section 712. Compliance with Usury Laws. covenants and provisions of all contracts concerning or affecting the application of proceeds of the 2016A Bonds or Revenues to which they are a party, respectively. Notwithstanding any other provision of this Indenture, it is agreed and understood that in no event shall this Indenture, with respect to any instrument of indebtedness, be construed as Section 710. Books and Records. requiring the University or any other Person to pay interest and other costs or considerations that constitute interest under any applicable law which are contracted for, charged or received (a) The University hereby covenants to permit the Trustee or its duly authorized pursuant to this Indenture in an amount in excess of the maximum amount of interest allowed representatives, access (wherever regularly located) during normal business hours, upon under any applicable law. reasonable advance notice, to the books and records of the University pertaining to the 2016A Bonds (except student records and any other materials made private or confidential by federal or In the event of any acceleration of the payment of the principal amount of any State law or regulation), and to make such books and records available for audit, inspection and indebtedness, that portion of any interest payment in excess of the maximum legal rate of copying (at the expense of the party making the request), at reasonable times, upon reasonable interest, if any, provided for in this Indenture or related documents shall be cancelled advance notice and under reasonable conditions to the Trustee and its duly authorized automatically as of the date of such acceleration. representative.

-33- -34-

The provisions of this Section 712 shall prevail over any other provision of this Section 716. Other Covenants of the University. Indenture. The University covenants as follows so long as any 2016A Bonds are Outstanding: Section 713. Payment of Taxes. (a) Annual Budget. The University agrees that it will prepare and adopt an annual The University has filed or caused to be filed all federal, state and local tax returns or budget for each Fiscal Year, which will budget revenues of the University sufficient to pay all information returns which are required to be filed with respect to the University and of which the operating and maintenance expenses of the University reasonably anticipated for such Fiscal University has knowledge, and has paid or caused to be paid all taxes as shown on such returns Year and the debt service on all of its then outstanding indebtedness projected to be due in such or on any assessment received by it, to the extent that such taxes have become due and payable Fiscal Year and to be paid. other than those payable without penalty or interest. Notwithstanding the foregoing, the University shall not have to pay any such taxes so long as the University shall contest, in good (b) Compliance with Laws. The University will comply with all material laws, faith and at its cost and expense, in its own name and behalf, the amount or validity thereof, in an statutes, ordinances, regulations, covenants, conditions and restrictions now or hereafter affecting appropriate manner or by appropriate proceedings; and provided, further, that each such contest the University or the operations thereof, and it will not commit, suffer or permit any act to be must operate during the pendency thereof to prevent the collection of or other realization upon done in violation of any law, ordinance or regulation, except, in each case, where such such tax, and to prevent the sale, forfeiture, or loss of its property or any part thereof. noncompliance or act would not have a material adverse effect upon the University’s assets, operations or financial condition. Section 714. No Untrue Statements. Section 717. Negative Pledge; Security for Additional Indebtedness; Release Neither this Indenture, the Documents, nor any other document, certificate or statement Provisions. furnished to the Trustee, the Underwriter or Special Counsel by or on behalf of the University, contains to the best of its knowledge any untrue statement of a material fact or omits to state a (a) The University may encumber its Pledged Revenues by a lien that is equal to the material fact necessary in order to make the statements contained herein and therein not lien of this Indenture only upon compliance with the conditions of Section 718 hereof with misleading or incomplete under the circumstances in which made as of the date hereof and as of respect to the issuance of additional Indebtedness. C-20 the Bond Closing. (b) The University shall not create, or permit the creation of, any pledge, lien, charge The Trustee is hereby authorized to rely on certificates required to be provided to it by or other encumbrance upon the Core Campus, except the following Permitted Encumbrances (the the University under this Indenture and the other Documents and is under no duty or obligation “Permitted Encumbrances”): to independently investigate the accuracy of such certificates. (i) undetermined liens and charges incident to construction, renovation or Section 715. Insurance. maintenance on the Core Campus and liens and charges incident to construction or maintenance now or hereafter filed of record which are being contested in good faith and So long as any 2016A Bonds remain Outstanding, the University will maintain or cause have not proceeded to judgment, provided that the University shall have set aside to be maintained with respect to its campus, with insurance companies or by means of self- adequate reserves with respect thereto; insurance, insurance of such type, against such risks and in such amounts as are customarily carried by private universities and universities located in the State of a nature similar to that of (ii) the lien of taxes and assessments which are not delinquent or which are the University, which insurance shall include property damage, fire and extended coverage, being contested in good faith and have not proceeded to judgment; public liability and property damage liability insurance. The University shall at all times also maintain worker’s compensation coverage as required by the laws of the State. The Trustee shall (iii) easements, exceptions, reservations or other agreements for the purpose of have no responsibility for monitoring, reviewing or receiving insurance policies related to any of pipelines, conduits, cables, radio, television, telegraph, telephone and power lines, and the insurance required hereunder, except for the certification required under this Section 715. substations, roads, streets, alleys, highways, equestrian trails, walkways, drainage, irrigation, water and sewage courses, dikes, canals, culverts, laterals, ditches, the removal The University shall provide to the Trustee annually no later than 210 days after its Fiscal of water or oil, gas, coal or other minerals, and other like purposes, or for the joint or Year end a certificate from an insurance consultant, independent insurance broker or agent, that common use of real property, facilities and equipment which in the aggregate do not the insurance complies with the requirements of this Indenture. materially impair the value or the use of such property for the purposes for which it is or may reasonably be expected to be held;

(iv) rights reserved to or vested in any municipality or governmental or other public authority to control or regulate or use in any manner any portion of the Core

-35- -36-

Campus which do not materially impair the use of the Core Campus for the purpose for From and after such time as all of the Existing Obligations, the 2009B Bonds, the 2010A which it is or may reasonably be expected to be held; Bonds and the 2012 Bonds have been repaid in full or defeased, are no longer secured under the Intercreditor and Collateral Agency Agreement or their respective governing documents are (v) present or future valid zoning laws and ordinances or other valid laws and amended to conform herewith, the covenants contained in Section 717 shall no longer apply to ordinances restricting the occupancy, use or enjoyment of real property; the University.

(vi) covenants, restrictions and conditions prohibiting use of the Core Campus Section 718. Indebtedness; Additional Indebtedness; Release Provisions. for sectarian instruction, religious worship or for a school or department of divinity of any religious denomination; (a) Except as provided in subsection (b) below, the University will not issue, incur, assume, create or have outstanding any Indebtedness; provided, however, that the foregoing shall (vii) liens on any property or assets owned by the University existing on the not operate to prevent: date of this Indenture; (i) Acquiring goods, supplies or merchandise in normal course of business; (viii) liens on property of a corporation, partnership or other entity existing at the time that such corporation, partnership or other entity is merged into the University, (ii) Endorsing negotiable instruments received in the normal course of or at the time of a purchase, lease or other acquisition of the property of a corporation, business; partnership or other entity substantially as an entirety by the University, whether or not any Indebtedness secured by such lien is assumed by the University; (iii) Indebtedness in existence on the date of this Indenture disclosed in writing to the Trustee, including the indebtedness relating to the 2013 Bonds; and (ix) liens arising in connection with bonds relating to workers compensation, unemployment insurance, bids, trade contracts (other than for borrowed money) and (iv) Additional Indebtedness that does not exceed an aggregate principal leases, arising in connection with appeal on release bonds and incident to the conduct of amount of $1,000,000 outstanding at any time.

C-21 business or operation of property or assets and not incurred in connection with the obtaining of any advance or credit; (b) The University may issue, incur, assume or create additional Indebtedness notwithstanding the prohibitions in subsection (a) above or in Section 717 hereof, if it shall have (x) liens arising by operation of law in favor of any lender to the University in provided to the Trustee and the Rating Agency certificates to the effect that upon issuance of the ordinary course of business constituting a banker’s lien or right of offset in moneys of such additional Indebtedness and taking such additional Indebtedness into account (but only if the University deposited with such lender in the ordinary course of business; such Indebtedness is Long Term Debt), (1) the Debt Service Coverage Ratio (computed using the Unrestricted Gross Revenues as set forth in the Audited Financial Statements for the most (xi) liens on property received by the University through gifts, grants or recent Fiscal Year) will not be greater than 0.10:1.0 for such Fiscal Year; and (2) the covenants bequests; in Section 719 will continue to be met.

(xii) any lien in favor of a trustee on the proceeds of an Indebtedness prior to From and after such time as all of the Existing Obligations, the 2009B Bonds, the 2010A the application thereof; Bonds and the 2012 Bonds have been repaid in full or defeased, are no longer secured under the Intercreditor and Collateral Agency Agreement or their respective governing documents are (xiii) any lien arising by reason of the escrow established to pay debt service amended to conform herewith, the covenants contained in Section 718 shall no longer apply to with respect to Indebtedness; and the University

(xiv) liens arising in connection with any lease of all or any portion of any Section 719. Debt Covenants; Release Provisions. facility financed or refinanced with the proceeds of the 2016A Bonds to any Person. (a) Expendable Net Asset Ratio. The University covenants that as of the last date of (c) Subject to the limitations set forth in (a) and (b) above, the University expressly each Fiscal Year, it will maintain Expendable Net Assets equal to at least 50 percent of the reserves the right to enter into one or more other indentures for any of its corporate purposes, and aggregate outstanding principal amount of Long Term Debt. Failure to maintain this ratio shall reserves the right to issue other obligations for such purposes, reserves the right to incur constitute an Event of Default hereunder if such failure is not caused by general market additional debt and encumber the Pledged Revenues as set forth in Section 718 hereof. conditions (as evidenced by an officer’s certificate provided by the University to the Trustee Notwithstanding anything in this Indenture to the contrary, the University reserves the right to stating that such failure is caused by general market conditions and requesting that such failure pledge its property which is not a part of the Core Campus and to encumber its Pledged not be considered an Event of Default hereunder) or cured within the next 60 days. Revenues with a lien subordinate to the lien of the 2016A Bonds.

-37- -38-

(b) Debt Service Coverage Ratio. The University will not permit the Debt Service Section 722. Intercreditor and Collateral Agency Agreement and Security Coverage Ratio to exceed 0.10:1.0. Agreement.

From and after such time as all of the Existing Obligations, the 2009B Bonds, the 2010A The University hereby acknowledges that in connection with the Existing Obligations, Bonds and the 2012 Bonds have been repaid in full or defeased, are no longer secured under the the 2009B Bonds, the 2013 Bonds, the 2016A Bonds, the 2016B Bonds and the Credit Intercreditor and Collateral Agency Agreement or their respective governing documents are Agreements, it has entered into the Security Agreement with U.S. Bank National Association, as amended to conform herewith, the covenants contained in Section 719 shall no longer apply to collateral agent (the “Collateral Agent”). The University also acknowledges that the Collateral the University. Agent, Bank of America, N.A., the Trustee (in its capacity as trustee for the 2009B Bonds, the 2013 Bonds and the 2016A Bonds and any additional bonds), the Purchaser, and U.S. Bank Section 720. Maintenance of Corporate Existence; Consolidation, Merger, Sale or National Association and Wells Fargo Bank, National Association, as lenders under the Credit Transfer Under Certain Conditions. Agreements, and the purchasers of the 2016B Bonds, have entered into the Intercreditor and Collateral Agency Agreement. The University hereby acknowledges that the Trustee has entered (a) The University covenants and agrees that, so long as any of the 2016A Bonds are into such agreements to facilitate the orderly handling of the security for the Existing Outstanding, it will maintain its existence as a nonprofit corporation qualified to do business in Obligations, the 2009B Bonds, the 2013 Bonds, the 2016A Bonds, the 2016B Bonds, the Credit the State and will not dissolve, sell or otherwise dispose of all or substantially all of its assets or Agreements, certain other outstanding obligations, and any additional indebtedness incurred by consolidate with or merge into another corporation. Notwithstanding the foregoing, the the University. University may, without violating the covenants contained in this Section 720, consolidate with or merge into another corporation, or sell or otherwise transfer to another corporation all or The rights and remedies of the Trustee under this Indenture with respect to the substantially all of its assets as an entirety and thereafter dissolve, if: Unrestricted Gross Revenues shall be governed by and subject to the terms and conditions of the Intercreditor and Collateral Agency Agreement among the original secured parties thereto, as (i) The surviving, resulting or transferee corporation, as the case may be: well as possible future additional secured parties as grantees of security interests therein, as such Intercreditor and Collateral Agency Agreement may be modified, amended, extended, renewed (A) is not, after such transaction, otherwise in default under any C-22 or substituted from time to time. provisions of this Indenture; and The Intercreditor and Collateral Agency Agreement contemplates that additional future (B) is an organization described in Section 501(c)(3) of the Code, or a secured parties may become parties to such agreement, that additional indebtedness may be corresponding provision of the federal income tax laws then in effect; and secured by the Unrestricted Gross Revenues with priority on a parity with the liens or security interests of the original secured parties, and that all parties to the Intercreditor and Collateral (ii) The Trustee shall have received a certificate of the University to the effect Agency Agreement will share the collateral subject to the Intercreditor and the Collateral Agency that the covenants hereunder will be met after such consolidation, merger, sale or Agreement on a pooled basis, on the terms and conditions set forth therein. transfer. Section 723. Definition and Pledge of Unrestricted Gross Revenues. (b) If a merger, consolidation, sale or other transfer is effected, as provided in this Section 720, the provisions of this Section 720 shall continue in full force and effect, and no The University hereby acknowledges and agrees that for so long as the 2016A Bonds further merger, consolidation, sale or transfer shall be effected except in accordance with the remain Outstanding, the term “Unrestricted Gross Revenues,” for the purpose of any and all provisions of this Section 720. obligations that are to be secured under the Intercreditor and Collateral Agency Agreement, other than the Existing Obligations, shall be defined as provided in Section 101. The University Section 721. Financial Accounting Matters. hereby pledges to the payment of the 2016A Bonds the Unrestricted Gross Revenues in amounts The financial terms and covenants, if any, set out in this Indenture and the Documents are and at times sufficient to pay the principal of and premium, if any, and interest on the 2016A based upon GAAP expected to be applicable to the University for the Fiscal Year in which the Bonds when due pursuant to their terms or upon the redemption or acceleration thereof. 2016A Bonds are issued and thereafter. If GAAP applicable to the University at any time differs materially from those expectations, this Indenture and the Documents may be amended, without the prior consent of Bondowners so that the operation of such amended terms and covenants under GAAP actually applicable to the University is consistent, in the opinion of an independent certified public accountant, with the operation of the original financial terms and covenants of this Indenture and the Documents as if such expected accounting principles had been applicable.

-39- -40-

ARTICLE VIII Outstanding 2016A Bonds, or after the occurrence of any Event of Default described in DEFAULT PROVISIONS, NONPAYMENT EVENTS AND REMEDIES Section 801(d) hereof at the written request of the Owners of not less than 51 percent in OF TRUSTEE AND BONDOWNERS aggregate principal amount of Outstanding 2016A Bonds.

Section 801. Defaults; Events of Default. (b) Any acceleration of the 2016A Bonds and the interest accrued thereon by the Trustee in the circumstances described in Section 802(a) hereof shall be made by giving to the If any of the following events occurs, it is hereby defined as and declared to be and to University, a Declaration of Acceleration, which Declaration of Acceleration shall state that the constitute an Event of Default: principal of all Outstanding 2016A Bonds shall become due and payable on the Acceleration Date (which date shall not be later than 30 days after the date of the Declaration of Acceleration), (a) Failure by the University to make payment of interest upon any 2016A Bond together with all interest accrued on such Outstanding 2016A Bonds to such Acceleration Date. when the same shall have become due and payable; Each such Declaration of Acceleration shall be given to the University by telecopier or other telecommunication device capable of creating a written notice, and shall be promptly confirmed (b) Failure by the University to make due and punctual payment of the principal of or by mail or courier service. premium, if any, on any 2016A Bond, whether at the stated maturity thereof, upon proceedings for redemption thereof, or upon the maturity thereof by declaration; (c) Upon giving any such Declaration of Acceleration to the University as provided in Section 802(b) hereof, the Trustee shall give written notice forthwith of such Declaration of (c) Failure by the University to make any other required monetary payments to the Acceleration and its consequences to the Owners in the same manner and with the same effect as Trustee under this Indenture; the notice of redemption described in Section 604 hereof, except that (1) the notice required (d) Any material representation or warranty made by the University in this Indenture under this Section 802(c) shall be mailed no more than two Business Days after the date upon or the 2016A Bonds shall be determined by the Trustee to have been untrue when made or any which the Trustee gives the Declaration of Acceleration as provided in Section 802(b) hereof, failure by the University to observe and perform any covenant, condition or agreement on its part and (2) interest shall cease to accrue on the 2016A Bonds after the Acceleration Date, which fact to be observed and performed under this Indenture or the 2016A Bonds, other than as referred to shall be disclosed in the notice, if amounts are available on such date for the payment of C-23 in subsections (a) or (b) of this Section 801, shall continue for a period of 60 days after written principal of and interest to such date on the 2016A Bonds. notice specifying such breach or failure and requesting that it be remedied, is given to the (d) Any acceleration of the 2016A Bonds pursuant to this Section 802 is subject to University, and the Bondowners by the Trustee or to the University and the Trustee by the the condition that if, at any time after such Declaration of Acceleration and before the Registered Owners of not less than a majority in aggregate principal amount of the 2016A Bonds Acceleration Date, the University shall deposit with the Trustee a sum sufficient to pay all the then outstanding, unless (i) the Trustee shall agree in writing to an extension of such time prior to overdue principal of and interest on the 2016A Bonds, with interest on such overdue principal at its expiration or (ii) if the breach or failure be such that it cannot be corrected within the the rate(s) borne by the respective 2016A Bonds, and the reasonable charges and expenses of the applicable period, corrective action is instituted by the University within the applicable period Trustee (including those of its Counsel), and any and all other defaults known to the Trustee and is being diligently pursued; and (other than in the payment of principal of and interest on the 2016A Bonds which become due (e) the occurrence of any Act of Bankruptcy by the University. and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been Section 802. Acceleration of Maturity. made therefor, then and in every such case, the Owners of not less than a majority in aggregate principal amount of Outstanding 2016A Bonds may rescind and annul such declaration and its (a) If any Event of Default shall have occurred and be continuing, the Trustee shall consequences and waive such default on behalf of all such Owners, by written notice to the give a Declaration of Acceleration, and the principal of all Outstanding 2016A Bonds, and the University and the Trustee; provided that no such rescission and annulment shall extend to or interest accrued thereon, shall be subject to acceleration as follows: shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. (i) the Trustee, in its sole discretion, may declare the principal of all Outstanding 2016A Bonds and the interest accrued thereon to be due and payable Section 803. Enforcement of Covenants and Conditions. immediately after the occurrence of any Event of Default; or (a) Upon the occurrence of any Event of Default described in Section 801(d) hereof (ii) the Trustee shall declare the principal of all Outstanding 2016A Bonds and which has not been waived as permitted herein and subject to Section 901(g) hereof, the the interest accrued thereon to be due and payable immediately after the occurrence of Trustee’s remedy, in addition to those set forth above and below herein, shall be to take any Event of Default described in Sections 801(a), 801(b), 801(c) or 801(e) hereof at the appropriate action, including, but not limited to, the commencement and prosecution of written request of the Owners of not less than 25 percent in aggregate principal amount of appropriate legal or equitable proceedings, to compel the University to perform such obligations,

-41- -42-

which remedy (i) may be pursued by the Trustee in its discretion or (ii) shall be pursued upon the (B) If there has been a Declaration of Acceleration, and the principal of written request of the Owners of not less than a majority in aggregate principal amount of all Outstanding 2016A Bonds shall have become due or shall have been declared Outstanding 2016A Bonds. due and payable, to the payment of the principal and interest then due and unpaid upon such 2016A Bonds through and including the Acceleration Date, without (b) Upon the occurrence of any Event of Default which has not been waived as preference or priority of principal over interest or of interest over principal, or of permitted herein, and in addition to any other remedies available hereunder, the Trustee (i) may any installment of interest over any other installment of interest, or of any 2016A proceed in its discretion, or (ii) upon the written request of the Owners of not less than a majority Bond over any other 2016A Bond, ratably, according to the amounts due in aggregate principal amount of Outstanding 2016A Bonds shall proceed, forthwith by suit(s) at respectively for principal and interest, to the Owners entitled thereto without any law or in equity or by any other appropriate remedy to enforce payment of the 2016A Bonds; to discrimination or privilege, plus, to the extent permitted by applicable law, enforce application to such payment of the funds, revenues and income appropriated thereto by interest on overdue installments of interest or principal at the rate borne by the this Indenture and by the 2016A Bonds; to pursue all remedies of a secured creditor under the respective 2016A Bonds. applicable laws of the State; and to enforce any such other appropriate legal or equitable remedy as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of (C) Whenever all principal of and interest on all Outstanding 2016A its rights or any of the rights of the Owners of the 2016A Bonds. Notwithstanding the foregoing, Bonds have been paid under the provisions of this Section 804 and all fees, the Trustee need not proceed upon any such written request of the Owners of the Outstanding expenses and charges of the Trustee have been paid, any balance remaining with 2016A Bonds as aforesaid, unless such Owners shall have offered to the Trustee security and the Trustee or in the Debt Service Fund shall be paid to the University. indemnity satisfactory to it against the fees, costs, expenses and liabilities to be incurred therein or thereby. The University acknowledges and approves the previously executed Security Agreement which facilitates the orderly disposal of pledged collateral in the event of an event of default with Section 804. Application of Money. respect to the University’s obligations to creditors. The exercise of remedies by the Trustee in the event of an Event of Default hereunder will be subject to the provisions of the Intercreditor (a) Immediately upon giving a Declaration of Acceleration, the Trustee shall apply all and Collateral Agency Agreement.

C-24 remaining money in the Debt Service Fund to the payment of the principal and interest then due and unpaid upon the 2016A Bonds through and including the Acceleration Date, without Section 805. Remedies Vested in the Trustee. preference or priority of principal over interest or of interest over principal or of any installment of interest over any other installment of interest, or of any 2016A Bond over any other 2016A All rights of action (including the right to file proofs of claims) under this Indenture or Bond, ratably, according to the amounts due respectively for principal and interest, to the under any of the 2016A Bonds may be enforced by the Trustee without the possession of any of Persons entitled thereto without any discrimination or privilege, plus, to the extent permitted by the 2016A Bonds or the production thereof in any trial or other proceedings relating thereto and applicable law, interest on overdue installments of interest or principal at the rate borne by each any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee respective 2016A Bond. without the necessity of joining as plaintiffs or defendants any Bondowners, and any recovery or judgment shall be for the equal and ratable benefit of the Registered Owners of the Outstanding (b) All other money received by the Trustee pursuant to any right given, remedy 2016A Bonds. pursued or action taken under the provisions of this Article VIII after payment of the costs and expenses of the proceedings resulting in the collection of such money and of the fees, expenses, Section 806. Limitation on Rights and Remedies of Bondowners. liabilities and advances incurred or made by Trustee (including those of its attorneys), shall be deposited and applied as follows: No Bondowner 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 thereof or for the (i) Amounts allocable to the 2016A Bonds shall be deposited into the Debt appointment of a receiver or any other remedy hereunder unless (a) an Event of Default has Service Fund and applied as follows: occurred of which the Trustee has been notified, (b) the Registered Owners of not less than a majority in aggregate principal amount of 2016A Bonds then Outstanding shall have made (A) In case the principal of all Outstanding 2016A Bonds shall not written request to the Trustee, shall have offered the Trustee reasonable opportunity either to have become due and shall remain unpaid, to the payment of interest on proceed to exercise the powers herein granted or to institute such action, suit or proceeding in its Outstanding 2016A Bonds, in the order of the maturity of the installments of own name, and shall have offered to the Trustee indemnity satisfactory to the Trustee as interest on such 2016A Bonds, such payments to be made ratably to the Owners provided in Section 901 hereof, and (c) the Trustee shall for a period of 60 days thereafter fail or entitled thereto, without discrimination or preference and any excess remaining refuse to exercise the powers herein granted, or to institute such action, suit or proceeding in its shall be applied to the principal on any 2016A Bonds; or own name as Trustee; and such notification, request and offer of opportunity and indemnity are hereby declared in every case 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,

-43- -44-

or for the appointment of a receiver or for any other remedy hereunder. No one or more amount of the 2016A Bonds then Outstanding shall not be waived except as they may be Bondowners shall have any right in any manner whatsoever to enforce any right hereunder annulled pursuant to Section 802 hereof. In the case of any such waiver and rescission, or in except in the manner herein provided, and all proceedings at law or in equity shall be instituted, case any proceeding taken by the Trustee on account of any such default shall have been had and maintained in the manner herein provided and for the equal and ratable benefit of the discontinued or abandoned or determined adversely to the Trustee, then and in every such case Bondowners of all 2016A Bonds then Outstanding. Nothing in this Indenture contained shall, the University, the Trustee and the Registered Owners shall be restored to their former positions however, affect or impair the right of any Bondowner to enforce the payment of the principal of, and rights hereunder, respectively, but no such waiver and rescission shall extend to any and premium, if any, and interest on, any 2016A Bonds when due. subsequent or other default, or impair any right consequent thereon. All waivers under this Indenture shall be in writing and a copy thereof shall be delivered to the University. Section 807. Termination of Proceedings. Section 810. Obligation of University. In case the Trustee or the Owners of the 2016A Bonds shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such Nothing in any provision of this Indenture or in the 2016A Bonds shall affect or impair proceedings shall have been discontinued or abandoned for any reason, or shall have been the obligation of the University to pay the principal or redemption price of and interest on the determined adverse to the Trustee or the Owners of the 2016A Bonds, then and in every such 2016A Bonds to the respective Bondowners at their respective dates of maturity, or upon call for case the University, the Trustee and the Bondowners shall be restored to their former positions redemption, as herein provided or affect or impair the right of the Bondowners, which is also and rights hereunder, respectively, and all rights, remedies and powers of the Trustee shall absolute and unconditional, to enforce such payment by virtue of the contract embodied in the continue as if no such proceedings had been taken. 2016A Bonds.

Section 808. Remedies Cumulative, Delay Not to Constitute Waiver. ARTICLE IX THE TRUSTEE (a) No remedy conferred upon or reserved to the Trustee, or the Owners of the 2016A Bonds by the terms of this Indenture is intended to be exclusive of any other remedy, but each Section 901. Appointment, Duties, Immunities and Liabilities of Trustee; and every such remedy shall be cumulative and shall be in addition to any other remedy given Successor Trustee. C-25 hereunder or now or hereafter existing at law or in equity or by statute. (a) The University hereby appoints U.S. Bank National Association, as Trustee, Bond (b) No delay or omission to exercise any right or power accruing upon any default or Registrar and paying agent and designates the Principal Office of the Trustee as the principal Event of Default shall impair any such right or power or shall be construed to be a waiver of any place of payment for the 2016A Bonds. Notwithstanding any other provision of this Indenture or such default or Event of Default or acquiescence therein, and every such right and power may be any other Document, the Trustee shall, prior to an Event of Default, and after the curing of all exercised from time to time and as often as may be deemed expedient. Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations of the Trustee (c) No waiver of any default or Event of Default hereunder, whether by the Trustee shall be read into this Indenture. The Trustee shall, during the existence of any Event of Default or the Owners of the 2016A Bonds, shall extend to or shall affect any subsequent default or (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, Event of Default or shall impair any rights or remedies consequent thereon. and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of their own affairs. Section 809. Waivers of Events of Default. (b) Prior to an Event of Default, the University may remove the Trustee at any time The Trustee may, in its discretion, waive any Event of Default hereunder and rescind its with or without cause. If an Event of Default shall have occurred and then be continuing, the consequences and shall do so upon the written request of the Bondowners of not less than a University shall remove the Trustee only (i) for cause or, (ii) if requested to do so by an majority in aggregate principal amount of all 2016A Bonds then Outstanding; provided, instrument or concurrent instruments in writing signed by the Bondowners of not less than a however, that there shall not be waived (a) any Event of Default in the payment of the principal majority in aggregate principal amount of the 2016A Bonds then Outstanding (or their attorneys of any Outstanding 2016A Bonds when due (whether at maturity or by redemption or as a result duly authorized in writing) or (iii) if at any time the Trustee shall cease to be eligible in of acceleration) or (b) any Event of Default in the payment when due of the interest on any such accordance with subsection (e) of this Section 901, or shall become incapable of acting, or shall 2016A Bonds, unless prior to such waiver and rescission all arrears of interest and all arrears of be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be principal when due, as the case may be, together, in either case, with the money due and owing appointed, or any public officer shall take control or charge of the Trustee or of its property or to the Trustee, including reasonable attorneys’ fees paid or incurred, shall have been paid or affairs for the purpose of rehabilitation, conservation or liquidation; in each case by giving provided for, and the Bondowners of all 2016A Bonds then Outstanding approve such waiver. written notice of such removal to the Trustee, and the University, as applicable, and the Notwithstanding any provisions hereof to the contrary any declaration pursuant to Section 802 University thereupon shall appoint a successor Trustee by an instrument in writing. hereof made at the request of the Bondowners of 25 percent or more in aggregate principal

-45- -46-

(c) The Trustee may at any time resign by giving 60 days written notice of such (g) As a condition precedent to taking any action under this Indenture (except for resignation to the University, by registered or certified mail or by overnight courier service. making all required payments to Bondowners when due to the extent of available funds and in Upon receiving such notice of resignation, the University shall promptly appoint a successor accordance with the terms of the Indenture and causing mandatory redemption or acceleration of Trustee by an instrument in writing. maturity of the 2016A Bonds as required herein), the Trustee may require that indemnity satisfactory to it be furnished for the reimbursement of all expenses to which it may be put and to (d) Any removal or resignation of the Trustee and appointment of a successor Trustee protect it against all liability, except liability which is adjudicated to have resulted from its shall only become effective upon acceptance of appointment by the successor Trustee. Promptly negligence or willful misconduct in connection with any such action. The Trustee shall be under upon such acceptance, the University shall give notice thereof to the Registered Owners by no obligation to institute any suit, to take any proceeding under this Indenture, to enter any first-class mail postage prepaid. If no successor Trustee shall have been appointed and have appearance or in any way defend in any suit in which it may be defendant, or to take any steps in accepted appointment within 45 days of giving notice of removal or notice of resignation as the execution of the trusts hereby created or in the enforcement of any rights and powers aforesaid, the incumbent Trustee, the University or any Bondowner (on behalf of himself and all hereunder, or in the compliance with any covenant contained in Article VIII hereof, until it shall other Bondowners) may petition any court of competent jurisdiction for the appointment of a be satisfied that repayment of all costs and expenses, outlays and counsel fees and other successor Trustee, and such court may thereupon, after such notice (if any) as it may deem reasonable disbursements in connection therewith, and adequate indemnity against all risk and proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture liability, has been provided for. However, the Trustee may begin suit, or appear in and defend shall signify its acceptance of such appointment by executing and delivering to the University any suit, or intervene, or do anything else in its judgment proper to be done by it as such Trustee, and to its predecessor Trustee a written acceptance thereof, and thereupon such successor without assurance of reimbursement or indemnity. In all such cases the Trustee shall be Trustee, without any further act, deed or conveyance, shall become vested with all the money, reimbursed or indemnified for all costs and expenses, liabilities, outlays and counsel fees and estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with other reasonable disbursements properly incurred in connection therewith, unless such liability or like effect as if originally named Trustee herein; but, nevertheless at the request of the University disbursement is adjudicated to have resulted from the negligence or willful misconduct of the or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any Trustee. If the University shall fail to make such reimbursement or indemnification, the Trustee and all instruments of conveyance or further assurance and do such other things as may may reimburse itself from any money in its possession under the provisions of this Indenture, reasonably be required for more fully and certainly vesting in and confirming to such successor subject only to the provisions of this Indenture. C-26 Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee (h) The Trustee’s rights to receive compensation, reimbursement and indemnification any money or other property subject to the trusts and conditions herein set forth. Upon request of money due and owing hereunder shall survive the Trustee’s resignation or removal, the of the successor Trustee, the University shall execute and deliver any and all instruments as may payment of the 2016A Bonds and the defeasance of this Indenture. be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such money, estates, properties, rights, powers, trusts, duties and obligations. Section 902. Fees, Charges and Costs of Trustee.

(e) Any Trustee appointed under the provision of this Section 901 in succession to The Trustee shall be entitled to payment of the Trustee Fee, reimbursement or expenses the Trustee shall be a trust company or a federal savings bank or commercial bank having trust and incurred and indemnification. The Trustee’s rights to receive compensation under this powers, and be subject to supervision or examination by federal or state authority. In case at any Section 902 shall be secured by, and there is hereby granted, a lien on the Trust Estate which lien time the Trustee shall cease to be eligible in accordance with the provisions of this shall be subordinate to the lien in favor of the Bondowners for payment of the principal of, subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in premium, if any, and interest on the 2016A Bonds, except that, upon an Event of Default, but this Section 901. The Trustee shall cooperate fully in the transfer to a successor Trustee and only upon an Event of Default, the Trustee shall have a prior lien upon the Trust Estate (except shall promptly deliver to such successor all records and documents held by the Trustee with for any money set aside for payment of the redemption price of 2016A Bonds after notice of regard to the Trustee’s obligations under this Indenture. redemption) for its extraordinary fees, charges and costs (including without limitation the reasonable fees and expenses of its counsel) incurred in enforcing the provisions of this (f) Any company into which the Trustee may be merged or converted or with which Indenture or any other agreement referred to herein. it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or Section 903. Liability of Trustee. substantially all of its corporate trust business, provided such company shall be eligible under The recitals of facts herein and in the 2016A Bonds shall be taken as statements of the subsection (e) of this Section 901, shall be the successor to such Trustee without the execution or University, and the Trustee assumes no responsibility for the correctness of the same, and makes filing of any paper or further act, anything herein to the contrary notwithstanding. The Trustee no representations as to the validity or sufficiency of this Indenture or the 2016A Bonds, or for shall provide notice of any such merger, conversion or consolidation to the University. the validity, sufficiency, adequacy, enforceability or priority of any lien or security interest granted hereunder or under the Documents, and shall incur no responsibility in respect thereof.

-47- -48-

The Trustee shall not be accountable for the use or application by the University of the 2016A The Trustee shall not be responsible or liable for any failure or delay in the performance Bonds or the proceeds thereof or of any money paid to the University pursuant to the terms of of its obligations under this Indenture arising out of or caused, directly or indirectly, by this Indenture and the Documents. The Trustee shall, however, be responsible for its circumstances beyond its (reasonable) control, including, without limitation, acts of God; representations contained in its certificate of authentication on the 2016A Bonds. The Trustee earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; shall not be liable in connection with the performance of its duties hereunder except for its own riots; interruptions; loss or malfunctions of utilities, computer (hardware or software) or negligence, willful misconduct or failure by the Trustee to exercise the degree of care and skill communication services; accidents; labor disputes; acts of civil or military authority and demonstrated by a trustee acting in like capacity, in good faith. The Trustee may execute any of governmental action. the trusts or powers hereunder or perform any duties hereunder or under the Documents either directly or through agents or attorneys, and the Trustee shall not be responsible for any Section 904. Right of Trustee to Rely on Documents. misconduct or negligence on the part of any agent or attorney appointed with due care and approved by the University, which approval will not be unreasonably withheld and will be The Trustee shall be protected in acting upon any notice, resolution, request, consent, delivered in a timely fashion. The University shall not be deemed an agent of the Trustee for any order, certificate, report, opinion, bond or other paper or document believed by it to be genuine purpose, and the Trustee shall not be responsible for the compliance of the University with its and to have been signed or presented by the proper party or parties. The Trustee may consult duties hereunder or under the Documents in connection with the transactions contemplated with Counsel, who may be Counsel of or to the University, with regard to legal questions, and herein or therein. The Trustee may become the owner of 2016A Bonds with the same rights it the opinion of such counsel shall be full and complete authorization and protection in respect of would have if it were not Trustee, and, to the extent permitted by law, may (but shall not be any action taken or suffered by it hereunder in good faith and in accordance therewith. required to) act as depositary for and permit any of its officers or directors to act as a member of, Whenever in the administration of the trusts imposed upon it by this Indenture the or in any other capacity with respect to, any committee formed to protect the rights of Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking Bondowners, whether or not such committee shall represent the Bondowners of a majority in or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein principal amount of the 2016A Bonds then Outstanding. specifically prescribed) may be deemed to be conclusively proved and established by a The Trustee may act upon the opinion or advice of Counsel (who may be Counsel for the certificate of the University, and such certificate shall be full warrant to the Trustee for any C-27 University). The Trustee shall not be responsible for any loss or damage resulting from any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such action taken or omitted in good faith in reliance upon such opinion or advice. certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or The Trustee shall not be required to take notice or be deemed to have notice of any willful misconduct. The Trustee shall not be required to monitor the financial condition of the default hereunder, except for defaults arising from failure to make any required payments to the University. Unless otherwise expressly provided, the Trustee shall be under no obligation to Trustee or defaults of which the Trustee has actual knowledge, unless the Trustee is specifically analyze, review or make any credit decisions with respect to any financial statements, reports, notified in writing of such default by the University or the Registered Owners of 51 percent in notices, certificates or documents received hereunder but shall hold such financials statements, aggregate principal amount of the 2016A Bonds then Outstanding, and all such notices or other reports, notices, certificates and other documents solely for the benefit of, and review by, instruments required to be delivered to the Trustee must be delivered to the Principal Office of Bondholders and such other parties to whom the Trustee may provide such information pursuant the Trustee. to this Indenture. Section 905. Intervention By Trustee.

The Trustee shall not be personally liable for any debts contracted or for damages to In any judicial proceedings to which the University is a party and which in the opinion of persons or to personal property injured or damaged. The Trustee shall have no responsibility the Trustee and its Counsel has a substantial bearing on the interest of Owners of the 2016A with respect to any information, statement or recital in any offering memorandum or other Bonds, the Trustee may, in its discretion, intervene on behalf of Bondowners and, upon being disclosure material prepared or distributed with respect to the 2016A Bonds. indemnified to its satisfaction therefor, shall do so if requested in writing by the Owners of a majority in aggregate principal amount of all 2016A Bonds then Outstanding. The Trustee shall not be liable for actions taken at the direction of Bondowners pursuant to the provisions of Article VIII hereof. The Trustee shall not be required to expend, advance or Section 906. Reports of the Trustee. risk its own funds or incur any financial liability in the performance of its duties or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that (a) The Trustee shall keep proper books of record and account (separate from all repayment of such funds or satisfactory indemnity against such risk or liability is not assured to other records and accounts) in which complete and correct entries shall be made of its it. transactions relating to the Project, the proceeds of the 2016A Bonds, the principal amount of 2016A Bonds Outstanding, the Revenues, the Trust Estate and the Funds established by this

-49- -50-

Indenture. Such books of the Trustee shall at all reasonable times during regular business hours rights under this Indenture or under the 2016A Bonds and accompanied by a copy of the form of be subject to the inspection of the University and the Registered Owners of an aggregate of not proxy or other communication which such applicants propose to transmit, and by reasonable less than five percent in principal amount of the 2016A Bonds then Outstanding or their proof (as determined solely by the Trustee) that each such applicant has owned a 2016A Bond representatives duly authorized in writing. for a period of at least six months preceding the date of such application, the Trustee shall notify DTC of such application, and at its election, either: (b) As of each March 31, June 30, September 30 and December 31, and as of end of each Fiscal Year (May 31), on or before the fifteenth (15th) day following each such date or as (a) afford to such applicants access to all information furnished to or received by the reasonably requested, the Trustee shall submit to the University a statement for the preceding Trustee from DTC; or three month period or for the preceding Fiscal Year, as applicable, setting forth: (b) inform such applicants as to the approximate number of Participants according to (i) the amounts withdrawn or transferred by it and the amounts deposited the most recent information furnished to or received by the Trustee from DTC, and as to the with it on account of each Fund held by it under the provisions of this Indenture, and the approximate cost of mailing to the Owners the form of proxy or other communication, if any, balance held in each Fund; specified in such application.

(ii) a brief description of all obligations held by it as an investment of money The disclosure of any such information as to the names and addresses of the Owners in in each such Fund and accrued interest earned; accordance with the provisions of this Section 907, regardless of the source from which such information was derived, shall not be deemed to be a violation of any existing law or of any law (iii) the amount applied (broken down as to prepayments and interest) to the hereafter enacted which does not specifically refer to the comparable section of the Indenture purchase or redemption of 2016A Bonds under the provisions of this Indenture, and an Act, nor shall the Trustee be held accountable by reason of mailing any material pursuant to a accounting of the 2016A Bonds outstanding; and request made under this Section 907.

(iv) any other information that the University may reasonably request from The term Beneficial Owners, for purposes of this Section 907 or any other section herein

C-28 time to time, without charge if such information is required by its auditor, and is readily requiring the Trustee to deliver statements, reports or documents to or to receive requests or available from the records of the Trustee, and otherwise with such reasonable charges as instructions from Beneficial Owners, includes any Beneficial Owner who provides to the Trustee are required by the Trustee. an affidavit of beneficial ownership of 2016A Bonds. The Trustee may rely conclusively upon such affidavit and shall have no liability to the University or any Owner of 2016A Bonds, or any The reports, statements and other documents required to be furnished to or by the Trustee other person in connection with such reliance. Furthermore, the Trustee shall be entitled to pursuant to any provision of this Indenture shall be available for inspection upon reasonable prior assume that any Beneficial Owner remains a Beneficial Owner thereafter, absent receipt of notice by Bondowners during normal business hours at the office of the Trustee, and a copy of written notice or information to the contrary. such report(s) or statement(s) shall be mailed by the Trustee to each Owner of 2016A Bonds who shall file a written request therefor with the University, at the expense of the party requesting the ARTICLE X report. SUPPLEMENTAL INDENTURES

(c) All records held by the Trustee with respect to the 2016A Bonds shall be retained Section 1001. Amendments Requiring Consent of Bondowners. for a period of seven years from the termination of this Indenture. This Indenture and the rights and obligations of the University, the Bondowners and the (d) In the event that the University is required to provide information to facilitate Trustee may be modified or amended at any time by a Supplemental Indenture which shall trading of the 2016A Bonds in the secondary remarket as a result of actions taken by the become effective when signed by the parties hereto and the written consents of the Registered Securities and Exchange Commission (the “SEC”), the Trustee shall accept information provided Owners of 51 percent or more of the aggregate principal amount of 2016A Bonds Outstanding to it for this purpose from the University at the direction and the expense of the University shall shall have been filed with the Trustee; provided, that if such modification or amendment will, by submit such information to the appropriate parties as required by rules promulgated by the its terms, not take effect so long as any 2016A Bonds remain Outstanding, the consent of the Securities and Exchange Commission. Registered Owners of such 2016A Bonds shall not be required and such 2016A Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding 2016A Bonds Section 907. Communications Among Owners. under this Section 1001. No such modification or amendment shall (a) extend the fixed maturity of any 2016A Bond, or reduce the amount of principal thereof or reduce the rate of interest If the 2016A Bonds are in book-entry only form, within five Business Days after the thereon, or extend the time of payment of interest thereon, or reduce any premium payable upon receipt by the Trustee of a written application by any three or more Beneficial Owners stating the redemption thereof, without the consent of the Registered Owner of each 2016A Bond so that the applicants desire to communicate with other Beneficial Owners with respect to their affected, or (b) reduce the aforesaid percentage of the aggregate principal amount of 2016A

-51- -52-

Bonds then Outstanding the consent of the Registered Owners of which is required to effect any (c) to modify, amend or supplement this Indenture in such manner as to permit the such modification or amendment, or (c) permit the creation of any lien on the Revenues and qualification hereof under the Indenture Act or any similar federal statute hereafter in effect, and other assets pledged under this Indenture prior to or on a parity with the lien created by this to add such other terms, conditions and provisions as may be permitted by such act or similar Indenture or deprive the Bondowners of the lien created by this Indenture upon such Revenues federal statute, and which shall not materially adversely affect the interests of the Bondowners; and other assets (each except as expressly provided in this Indenture), without the consent of the Bondowners of all of the 2016A Bonds then Outstanding. For the purpose of giving consent (d) to modify, amend or supplement this Indenture in any other way which shall not under this section, the consent from the Underwriter of the 2016A Bonds upon their issuance or materially adversely affect the interests of the Bondowners; remarketing shall be deemed to be the consent of the Registered Owners thereof. (e) to provide for the delivery of 2016A Bonds in fully certificated form; If at any time the University shall request the Trustee to enter into any such Supplemental Indenture for any of the purposes allowed by this Section 1001, the Trustee shall, at the request (f) to comply with state or federal securities laws; of the University and upon being indemnified to its satisfaction with respect to costs, cause notice of the proposed execution of such Supplemental Indenture to be given to the Bondowners (g) to provide for the issuance of Additional Bonds or additional indebtedness as in substantially the manner provided in Section 604 hereof with respect to redemption of 2016A described in Section 211 hereof; or Bonds. Such notice (which shall be prepared by the University) shall briefly set forth the nature (h) to provide for the substitution of the Revenues and Pledged Revenues and all of the proposed Supplemental Indenture and shall state that copies thereof are on file at the other property and collateral pledged hereunder to the Trust Estate, with an obligation issued Principal Office of the Trustee for inspection by all Bondowners. If, within 60 days or such pursuant to a master trust indenture of the University; provided, that any such substitution shall longer period as shall be prescribed by the University following the mailing of such notice, the be accompanied by a Rating Agency confirmation of the rating of the 2016A Bonds and an Registered Owners of 51 percent or more of the aggregate principal amount of 2016A Bonds opinion of Special Counsel. then Outstanding at the time of the execution of any such Supplemental Indenture shall have consented to and approved the execution thereof as herein provided, no Registered Owner of any Section 1003. Reserved. 2016A Bond shall have any right to object to any of the terms and provisions contained therein, C-29 or the operation thereof, or in any manner to question the propriety of the execution thereof, or to Section 1004. Effect of Supplemental Indenture. enjoin or restrain the Trustee or the University from executing the same or from taking any action pursuant to the provisions thereof. The University shall have the right to extend from time From and after the time any Supplemental Indenture becomes effective pursuant to this to time the period within which such consent and approval may be obtained from Bondowners. Article X, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the University, the Section 1002. Amendments Not Requiring Consent of Bondowners. Trustee and all Registered Owners of 2016A Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, This Indenture and the rights and obligations of the University, the Bondowners and the and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part Trustee may also be modified or amended at any time by a Supplemental Indenture, without the of the terms and conditions of this Indenture for any and all purposes. consent of any Bondowners, when signed by the parties hereto, which amendment shall become effective upon execution (or such later date as may be specified in such Supplemental Indenture), Section 1005. Endorsement of 2016A Bonds; Preparation of New 2016A Bonds. but only to the extent permitted by law and only for any one or more of the following purposes: 2016A Bonds delivered after any Supplemental Indenture becomes effective pursuant to (a) to add to the covenants and agreements of the University contained in this this Article X may, and if the Trustee so determines shall, bear a notation by endorsement or Indenture other covenants and agreements thereafter to be observed, to pledge or assign otherwise in form approved by the University and the Trustee as to any modification or additional security for the 2016A Bonds, or, except as provided in this Indenture, to surrender amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the any right or power herein reserved to or conferred upon the University, provided, that no such Owners of any 2016A Bond Outstanding at such effective date and presentation of such 2016A covenant, agreement, pledge, assignment or surrender shall materially adversely affect the Bond for the purpose at the Principal Office of the Trustee or at such additional offices as the interests of the Bondowners; Trustee may select and designate for that purpose, a suitable notation shall be made on such 2016A Bond. If the University or the Trustee shall so determine, new 2016A Bonds modified as (b) to make such provisions for the purpose of curing any ambiguity, inconsistency or to conform, in the opinion of the University and the Trustee, to any modification or amendment omission, or of curing or correcting any defective provision, contained in this Indenture, or in contained in such Supplemental Indenture, shall be prepared and executed by the University and regard to matters or questions arising under this Indenture, as the University may deem necessary authenticated by the Trustee, and upon demand of the Owner of any 2016A Bond then or desirable and not inconsistent with this Indenture, and which shall not materially adversely Outstanding shall be exchanged at the Principal Office of the Trustee, without cost to any affect the interests of the Bondowners;

-53- -54-

Bondowner, for 2016A Bonds then Outstanding, upon surrender for cancellation of such 2016A Trustee for the payment of the principal of, premium, if any, and interest on the 2016A Bonds Bonds in equal aggregate principal amounts of the same maturity. and (b) any other money remaining in any Fund created pursuant to this Indenture, which money shall be delivered to the University. Section 1006. Amendment of Particular 2016A Bonds. Any 2016A Bond or portions thereof in Authorized Denominations shall, prior to the The provisions of this Article X shall not prevent any Bondowner from accepting any maturity or redemption thereof, be deemed to be paid and defeased within the meaning of this amendment as to the particular 2016A Bonds held by such Bondowner, provided that due Indenture when: notation thereof is made on such 2016A Bonds. (a) payment of the principal of, and premium, if any, on such 2016A Bonds or Section 1007. Required Opinion of Special Counsel. portion thereof, plus interest thereon to the due date thereof (whether such due date be by reason of maturity or upon redemption as provided in this Indenture, or otherwise), either shall have The University and the Trustee shall not enter into or consent to any amendment, change been made or caused to be made in accordance with the terms of Section 202 hereof or shall have or modification to this Indenture unless the University has received an opinion of Special been provided for, by irrevocably depositing with the Trustee, in trust, and irrevocably setting Counsel to the effect that such amendment will comply with this Article X. The University and aside exclusively for such payment any combination of money which shall be sufficient to make the Trustee may rely upon any such opinion of Special Counsel. Prior to the execution and such payment when due and/or non-prepayable Government Obligations purchased with such delivery of any amendment, change or modification to this Indenture, the Trustee shall send a money maturing as to principal and interest in such amounts and at such times as will insure the copy of the proposed form thereof to the Rating Agency. availability of sufficient money to make such payment; Section 1008. Trustee Consent with Respect to Release of Collateral. (b) the Trustee, not less than five Business Days prior to such defeasance, shall have Upon the request of the University, without the consent of the Bondowners, the Trustee received a certificate in a form acceptable to the Trustee from a firm of certified public and the University shall execute an instrument releasing or subordinating any lien, security accountants acceptable to the Trustee that the money so deposited will be sufficient, without interest or encumbrance in favor of the 2016A Bonds on any collateral securing the 2016A reinvestment, to pay debt service on all 2016A Bonds to be paid with the deposit described in (a) C-30 Bonds as expressly provided, and to the extent permitted, in this Indenture, the Intercreditor and above to the due date thereof; Collateral Agency Agreement and the other Documents. The Trustee may charge the University a customary processing fee in connection with any request for execution of a document or (c) all necessary and proper fees, compensation and expenses of the Trustee instrument of subordination and the University shall pay any reasonable legal fees and costs pertaining to the 2016A Bonds with respect to which such deposit is made shall have been paid incurred by the Trustee related thereto. or the payment thereof provided for to the satisfaction of the Trustee; and

ARTICLE XI (d) the Trustee shall have received an opinion of Special Counsel to the effect that all DEFEASANCE of the requirements of the Indenture for defeasance have been complied with.

Section 1101. Defeasance. A new certificate and opinion of the type specified in clause (b) of the preceding sentence shall be provided to the Trustee in the event any substitute securities are provided to the Trustee. If the University shall pay or cause to be paid, or make provisions for payment, to or for the Bondowners, of the principal of, premium, if any, and interest due or to become due on the At such time as a 2016A Bond or portion thereof shall be deemed to be paid hereunder, 2016A Bonds at the times and in the manner stipulated therein, and if the University shall have as aforesaid, it shall no longer be secured by or entitled to the benefits of this Indenture, except kept, performed and observed all the covenants and promises in the 2016A Bonds and in this for the purposes of Sections 203, 207 and 308 hereof and shall be payable only from such money Indenture expressed to be kept, performed and observed by it or on its part, and shall pay or or Government Obligations. cause to be paid to the Trustee all sums of money due or to become due according to the provisions hereof, then this Indenture and the lien, rights, estate and interests created hereby shall Any money so deposited with the Trustee as provided in this Article XI may at the cease, terminate and become null and void (except as to any rights of registration, transfer or direction of the University be invested and reinvested in non-callable, non-prepayable exchange of 2016A Bonds herein provided for, which shall survive), whereupon the Trustee Government Obligations maturing in the amounts and at the times as hereinbefore set forth, and shall take all such actions to cancel and discharge the lien of this Indenture and to terminate the all income from all such Government Obligations in the hands of the Trustee pursuant to this trust created herein, and shall, upon payment of all fees and expenses payable to the Trustee and Article XI which is not required (based upon a verification provided by a firm of certified public the University under this Indenture, release, assign and deliver unto the University any and all accountants) for the payment of the 2016A Bonds and interest thereon with respect to which the estate, right, title and interest in and to any and all rights assigned or pledged to the Trustee such money shall have been so deposited, shall be deposited in the Debt Service Fund as and or otherwise subject to this Indenture, except (a) money, obligations or securities held by the when realized and collected for use and application as is other money deposited in that Fund.

-55- -56-

Notwithstanding any provisions of any other article of this Indenture which may be equitable right, remedy or claim under or in respect to this Indenture. This Indenture and all of contrary to the provisions of this Article XI, all such money or Government Obligations set aside the covenants, conditions and provisions hereof are intended to be and are for the sole and and held in trust pursuant to the provisions of this Article XI and for the payment of 2016A exclusive benefit of the parties hereto and the Bondowners as herein provided. Bonds (including interest and premium thereon, if any) shall be applied to and used solely for the payment of the particular 2016A Bonds (including interest and premium thereon, if any) with Section 1203. Severability. respect to which such money and Government Obligations have been so set aside in trust. If any provision of this Indenture shall be invalid, inoperative or unenforceable as applied Anything in Article X hereof to the contrary notwithstanding, if such money or in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases noncallable Government Obligations have been deposited or set aside with the Trustee pursuant because it conflicts with any other provision or provisions hereof or any constitution or statute or to this Article XI for the payment of 2016A Bonds and interest and premium thereon, if any, and rule of public policy, or for any other reason, such circumstances shall not have the effect of such 2016A Bonds shall not have in fact been actually paid in full, no amendment to the rendering the provision in question inoperative or unenforceable in any other case or provisions of this Article XI shall be made without the consent of the Registered Owner of each circumstance, or of rendering any other provision or provisions herein contained invalid, 2016A Bond affected thereby. inoperative, or unenforceable to any extent whatever.

ARTICLE XII The invalidity of any one or more phrases, sentences, clauses or Sections in this Indenture MISCELLANEOUS contained, shall not affect the remaining portions of this Indenture, or any part thereof.

Section 1201. Consents, Etc., of Bondowners. Section 1204. Notices.

Any consent, approval, direction or other instrument required by this Indenture to be Except as otherwise provided herein, all notices, certificates or other communications signed and executed by the Bondowners may be in any number of concurrent writings of similar shall be sufficiently given and (except for notices to the Trustee, which shall be deemed given tenor and may be signed or executed by such Bondowners in person or by agent appointed in only when actually received by the Trustee) shall be deemed given on the second day following the date on which the same have been delivered by overnight courier (with signed receipt) or C-31 writing. Proof of the execution of any such consent, approval, direction or other instrument or of the writing appointing any such agent, if made in the following manner, shall be sufficient for mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard If to the University: The Corporation of Gonzaga University to any action taken under such request or other instrument, namely: 502 E. Boone Avenue (a) the fact and date of the execution by any Person of any such instrument or writing Spokane, Washington 99258-0096 may be proved by the certificate of any officer in any jurisdiction who by law has power to take Attention: Vice President for Finance acknowledgments within such jurisdiction that the Person signing such instrument or writing Telephone: (509) 313-6140 acknowledged before him the execution thereof, or by affidavit of any witness to such execution; Facsimile: (509) 313-6397 and With a copy to: Kutak Rock LLP (b) the fact of ownership of 2016A Bonds and the amount or amounts, numbers and Cutter Tower other identification of such 2016A Bonds, and the date of holding the same shall be proved by 510 West Riverside Ave., Suite 800 the registration books maintained by the Trustee pursuant to Section 203 hereof. Spokane, Washington 99201-0506 Telephone: (509) 747-4040 Any action taken by the Trustee pursuant to this Indenture upon the request or authority Facsimile: (509) 747-4545 or consent of any Person who at the time of making such request or giving such authority or If to the Trustee: U.S. Bank National Association consent is the Bondowner of any 2016A Bonds shall be conclusive and binding upon all future th Bondowners of the same 2016A Bonds and upon 2016A Bonds issued in exchange therefor or 1420 Fifth Avenue, 7 Floor upon transfer or in place thereof. Seattle, Washington 98101 Attention: Corporate Trust Services Section 1202. Limitation of Rights. Telephone:(206) 344-4681 Facsimile: (206) 344-46305 With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the 2016A Bonds is intended or shall be construed to give to any Person other than the parties hereto and the Owners of the 2016A Bonds any legal or

-57- -58-

If to Rating Agency: Moody’s Investors Services Section 1209. Compliance Certificates and Opinions. 7 World Trade Center 250 Greenwich Street, 23rd Floor Every certificate or opinion with respect to compliance with a condition or covenant New York, NY 10007 provided for in this Indenture shall include:

Fitch Ratings Inc. (a) a statement that the Person or Persons making such certificate or opinion have One State Street Plaza read such covenant or condition and the definitions herein relating thereto; New York, NY 10004 (b) a brief statement as to the nature and scope of the examination or investigation

upon which the statements or opinions contained in such certificate or opinion are based; A duplicate copy of each notice, certificate or other communication given hereunder by one party to another party shall also be given to the others named in this Section 1204. All other (c) a statement that, in the opinion of the signers, they have made or caused to be documents required to be submitted to any of the foregoing parties shall also be submitted to made such examination or investigation as is necessary to enable them to express an informed such party at its address set forth above. Any of the foregoing parties may, by notice given opinion as to whether or not such covenant or condition has been complied with; and hereunder, designate any further or different addresses to which subsequent notices, certificates, documents or other communications shall be sent. (d) a statement as to whether or not, in the opinion of the signers, such condition or covenant has been complied with. In addition to all other notices required by this Indenture, the Trustee and the University covenant to provide notice of the following events to the Rating Agency: (1) any change in the Section 1210. Conflict with Indenture Act. Trustee, (2) any amendment to this Indenture or the Documents, (3) any redemption of 2016A Bonds, (4) defeasance of any 2016A Bonds in accordance with Article XI hereof, or (5) any If this Indenture is required to be qualified under the Indenture Act and any provision of acceleration of the 2016A Bonds. In addition, the Trustee shall supply to the Rating Agency the Indenture Act which limits, qualifies or conflicts with another provision hereof is required to such information as the Rating Agency may reasonably request from time to time in connection be included in this Indenture by any of the provisions of the Indenture Act, such required C-32 with its ongoing surveillance of its rating on the 2016A Bonds. provision shall control.

Section 1205. Payments Due on Other Than Business Days. Section 1211. Successors.

In any case where the date of payment of principal, premium, if any, or interest on the Whenever in this Indenture either the University or the Trustee is named or referred to, 2016A Bonds or the date fixed for redemption of any 2016A Bonds shall be a day other than a such reference shall be deemed to include the successors or assigns thereof, and all the covenants Business Day, then payment of interest or principal and premium, if any, need not be made on and agreements in this Indenture contained by or on behalf of the University or the Trustee shall such date but may be made on the next succeeding Business Day with the same force and effect bind and inure to the benefit of the respective successors and assigns thereof whether so as if it had been made on the date scheduled for payment. expressed or not.

Section 1206. Counterparts. Section 1212. Records.

This Indenture may be simultaneously executed in several counterparts, each of which The Trustee shall hold in safekeeping, for seven years after no 2016A Bonds remain shall be an original and all of which shall constitute but one and the same instrument. outstanding, all documents delivered to it by the University and all documents and records with respect to the 2016A Bonds. Section 1207. Applicable Law. Section 1213. Voluntary Compliance with Secondary Disclosure Requirements of This Indenture shall be governed by and construed in accordance with the laws of the the SEC. State. The University is not required to undertake continuing disclosure with respect to the Section 1208. Captions. 2016A Bonds under Rule 15c2-12 promulgated by the Securities and Exchange Commission (the “Rule”). However, the University agrees to make available to existing and potential holders of The captions or headings in this Indenture are for convenience only and in no way define, the 2016A Bonds, on a voluntary basis, information substantially identical to that required under limit, or describe the scope or intent of any provisions or sections of this Indenture. the continuing disclosure undertaking it has previously entered into in connection with the 2013 Bonds to ensure compliance with the Rule. Bondowners and prospective Bondowners of the 2016A Bonds may obtain copies of the information provided by the University under such

-59- -60-

undertaking on the Electric Municipal Market Access, a service of the Municipal Securities U.S. BANK NATIONAL ASSOCIATION, Rulemaking Board (“EMMA”). Such undertaking terminates when the 2013B Bonds are paid or as Trustee deemed paid in full. By The University agrees that unless otherwise available on EMMA or any successor thereto ______, Vice President or to functions thereof, copies of the University’s audited financial statements will either be posted on the University’s website or filed with the Trustee. Failure to provide the information described in this Section 1213 shall not constitute an Event of Default.

Section 1214. Intercreditor Agreement.

The rights and remedies of the University and the Trustee under the Documents and this Indenture with respect to the Pledged Revenues shall be governed by and subject to the terms and conditions of the Intercreditor and Collateral Agency Agreement among the original secured parties thereto, as well as possible future additional secured parties as grantees of security interests therein, as such Intercreditor and Collateral Agency Agreement may be modified, amended, extended, renewed or substituted from time to time.

The Intercreditor and Collateral Agency Agreement contemplates that additional future secured parties may become parties to such Intercreditor and Collateral Agency Agreement, that additional indebtedness may be secured by the Pledged Revenues, as applicable, with priority on a parity with the liens or security interests of the original secured parties, and that all parties to the

C-33 Intercreditor and Collateral Agency Agreement will share the collateral subject to such Intercreditor and Collateral Agency Agreement on a pooled basis, on the terms and conditions set forth therein.

IN WITNESS WHEREOF, The Corporation of Gonzaga University has caused these presents to be signed in its name by its duly authorized officer, and U.S. Bank National Association, in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its name by its duly authorized officer, all as of the day and year first above written.

THE CORPORATION OF GONZAGA UNIVERSITY, a Washington nonprofit corporation

By Charles J. Murphy, Vice President for Finance

-61- -62-

ACKNOWLEDGMENTS

STATE OF WASHINGTON ) ) ss. STATE OF WASHINGTON ) COUNTY OF SPOKANE ) ) ss. COUNTY OF KING ) On this _____ day of October, 2016, before me, the undersigned, a Notary Public in and for the state of Washington, duly commissioned and sworn, personally appeared Charles J. On this _____ day of October, 2016, before me, the undersigned, a Notary Public in and Murphy, to me known to be the Vice President for Finance of THE CORPORATION OF for the state of Washington, duly commissioned and sworn, personally appeared GONZAGA UNIVERSITY, that executed the within and foregoing instrument, and ______, to me known to be a Vice President of U.S. BANK NATIONAL acknowledged the such instrument to be the free and voluntary act and deed of such corporation, ASSOCIATION, that executed the within and foregoing instrument, and acknowledged the such for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute instrument to be the free and voluntary act and deed of such corporation, for the uses and the such instrument. purposes therein mentioned, and on oath stated that he/she was authorized to execute the such instrument. WITNESS my hand and official seal hereto affixed the day and year in this certificate above written. WITNESS my hand and official seal hereto affixed the day and year in this certificate above written.

NOTARY PUBLIC in and for the State of Washington, residing at NOTARY PUBLIC in and for the State of Print Name: Washington, residing at Print Name: C-34 My commission expires My commission expires

EXHIBIT A in writing on or before the Record Date with an acknowledgment that the then applicable wire fee of the Trustee will be deducted from the wire or by Automated Clearinghouse Transfers at no FORM OF 2016A BOND cost to the Owner in next day funds if such Owner shall have requested in writing payment by such method and shall have provided the Trustee with an account number in a bank within the [Form of Face of 2016A Bond] United States and other necessary information for such purposes prior to the Record Date.

STATE OF WASHINGTON [For so long as the bonds of this issue are in fully immobilized form, payments of principal and interest thereon shall be made as provided in accordance with the THE CORPORATION OF GONZAGA UNIVERSITY operational arrangements of The Depository Trust Company referred to in the Blanket REVENUE AND REFUNDING TAXABLE BOND, SERIES 2016A Issuer Letter of Representations from the University to The Depository Trust Company.]

No. [CUSIP No.] This Bond is one of the University’s Revenue and Refunding Taxable Bonds, Series 2016A, in the aggregate principal amount of $______(the “2016A Bonds”), issued under Dated Date: ______and pursuant to the laws of the state of Washington and a resolution duly adopted by the Maturity Date: University. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the owners of the 2016A Bonds, of the nature and Interest Rate: _____% extent of the security for the 2016A Bonds, of the rights, duties and immunities of the Trustee and of the rights and obligations of the University thereunder, to all of the provisions of which REGISTERED OWNER: Indenture the Registered Owner of this bond, by acceptance hereof, assents and agrees.

PRINCIPAL AMOUNT: DOLLARS The 2016A Bonds constitute a general obligation of the University secured by a pledge of and lien on the Revenues (as defined in the Indenture) and the other assets pledged under the

C-35 THE CORPORATION OF GONZAGA UNIVERSITY, a Washington nonprofit Indenture. The 2016A Bonds are being issued in order to provide funds to: (1) redeem all of the corporation (the “University”), for value received, hereby promises to pay to the Registered Refunded Bonds (as defined in the Indenture); (2) pay all or a portion of the cost of terminating Owner identified above, or registered assigns, but solely from the sources and in the manner the Existing Obligations, if appropriate; (3) pay for the planning, designing, constructing, herein below provided, on the Maturity Date specified above, unless this bond shall have been installing and furnishing of capital improvements to the University’s facilities; (4) pay duly called for prior redemption and payment of the redemption price hereof shall have been capitalized interest, if appropriate; and (5) pay certain expenses incurred in connection with the duly made or provided for, the Principal Amount set forth above and to pay to such Registered issuance of the 2016A Bonds and the 2016B Bonds (collectively, the “Project”). Owner from such sources interest thereon from the later of the date hereof or the most recent date to which interest has been paid or made available for payment, at the rate per annum equal The 2016A Bonds are issuable only as fully registered 2016A Bonds without coupons in to the Interest Rate stated above, on April 1 and October 1 of each year, commencing April 1, denominations of $1,000 or any integral multiple thereof within a single maturity. Subject to the 2017 (each, an “Interest Payment Date” as defined in the Indenture). Interest on this bond shall limitations and upon payment of the charges, if any, provided in the Indenture, 2016A Bonds be computed on the basis of a 360-day year consisting of twelve 30-day months. The principal may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of of, premium, if any, and interest on the 2016A Bonds (as herein below defined) shall be payable 2016A Bonds of the same maturity of other Authorized Denominations, as defined in the in lawful money of the United States of America. Indenture.

The principal of and premium, if any, on this bond are payable, upon presentation and This bond is transferable by the Registered Owner hereof, in person, or by its attorney surrender hereof, at the Principal Office of U.S. Bank National Association or its successor, as duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject trustee (the “Trustee”) under the Indenture of Trust dated as of October 1, 2016 (the to the limitations and upon payment of the charges provided in the Indenture, and upon surrender “Indenture”), between the University and the Trustee. Payment of interest on this bond shall be and cancellation of this bond. Upon such transfer a new fully registered 2016A Bond or 2016A made to the Registered Owner hereof by check or draft mailed on the Interest Payment Date to Bonds, of the same maturity and of Authorized Denomination or denominations, for the same the person in whose name this bond is registered on the Business Day coincident with the aggregate principal amount, will be issued to the transferee in exchange herefor. The University fifteenth day of the month preceding the applicable Interest Payment Date (the “Record Date”), and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all at the address of such Registered Owner shown on the books of the Trustee. If the Interest purposes, and the University and the Trustee shall not be affected by any notice to the contrary. Payment Date is not a Business Day, the payment due on such date shall be made on the next Business Day. Payment of interest on this bond may, at the option of any Registered Owner, be The 2016A Bonds are subject to mandatory and optional redemption prior to the stated transmitted by wire transfer to such owner to the bank account number designated to the Trustee maturity as described in the Indenture.

A-1 A-2

If an Event of Default, as defined in the Indenture, shall occur, the principal of all 2016A [Form of] Bonds may be declared due and payable upon the conditions, in the manner and with the effect CERTIFICATE OF AUTHENTICATION provided in the Indenture. This is one of the 2016A Bonds described in the within-mentioned Indenture and has The Indenture contains provisions permitting the University and the Trustee to execute been registered on this date: supplemental indentures adding provisions to, or changing or eliminating any of the provisions of, the Indenture, subject to the limitations set forth in the Indenture.

All capitalized terms used but not defined herein shall have the meanings given in the U.S. Bank National Association, as Trustee Indenture. and Bond Registrar

No officer, agent or employee of the University, nor any person executing this bond, shall By in any event be subject to any personal liability or accountability by reason of the issuance of the Authorized Officer 2016A Bonds.

This bond shall not be valid or obligatory for any purpose or be entitled to any benefit under the Indenture unless this bond is authenticated by the Trustee, as Bond Registrar, by the due execution of the Trustee’s certificate endorsed hereon.

It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution and delivery of the Indenture and the issuance of this bond do exist, have happened and have been performed in due time,

C-36 form and manner as required by law.

IN WITNESS WHEREOF, The Corporation of Gonzaga University has caused this bond to be executed with the manual or facsimile signature of its President and its corporate seal or a facsimile thereof to be hereunto affixed and to be signed and attested manually or by facsimile by its Vice President for Finance, all as of the Dated Date set forth above.

THE CORPORATION OF GONZAGA UNIVERSITY, a Washington nonprofit corporation

By President

By Vice President for Finance

A-3 A-4

[Form of] ASSIGNMENT

For value received the undersigned do(es) hereby sell, assign and transfer unto ______the within 2016A Bond and do(es) hereby irrevocably constitutes and appoint ______attorney, to transfer the same on the books of the Trustee, with full power of substitution in the premises.

Dated: ______

Registered Owner

Signature Guaranteed:

______NOTICE: Signature(s) must be guaranteed pursuant to law.

NOTICE: The signature on this Assignment must correspond with the name as it appears upon the face of the within 2016A Bond in every particular, without alteration or enlargement or any change whatsoever. The Trustee will register a 2016A Bond in the name of a transferee only if provided with the information requested above. The transferee (or his designated C-37 representative) should provide as much of the information requested below as is applicable to [THIS PAGE INTENTIONALLY LEFT BLANK] him prior to submitting this bond for transfer.

The following abbreviations, when used in the inscription on the face of this bond, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM -- as tenants in common

TEN ENT -- as tenants by the entireties

JT TEN -- as joint tenants with right of survivorship and not as tenants in common

UNIF GIFT (TRANSFERS) MIN ACT -

______Custodian ______(Cust) (Minor)

under Uniform Gifts (Transfers) to Minors Act

(State)

Additional abbreviations may also be used, though not in the above list.

A-5

EXHIBIT B MAP OF CORE CAMPUS

B-1

EXHIBIT C Initial Deposit of Funds

Indenture Section 303

Refunding Cost of Sources Fund Issuance Fund To University Total 2016A Bonds(1) $ $ $ ______University Contribution Totals $ $ $ ______(1) Initial deposits reflect the par amount of the 2016A Bonds ($______), plus net original issue premium of $______, and less discount of $______.

C-1

C-38

EXHIBIT D UNIVERSITY’S COMPLIANCE WITH DEBT COVENANTS

The Corporation for Gonzaga University hereby certifies that the following debt covenants have been met for Fiscal Year 20_, as required by Section 719 of the Indenture:

(a) Expendable Net Asset Ratio. As of the last date of each Fiscal Year, it has maintained Expendable Net Assets equal to at least 50 percent of the aggregate outstanding principal amount of Long Term Debt.

(b) Debt Service Coverage Ratio. The Debt Service Coverage Ratio does not exceed 0.10:1.0.

DATED this ____ day of ______.

THE CORPORATION OF GONZAGA UNIVERSITY, a Washington nonprofit corporation

By Authorized Officer

C-39 [THIS PAGE INTENTIONALLY LEFT BLANK]

D-1 [THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX D

BOOK-ENTRY SYSTEM

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[THIS PAGE INTENTIONALLY LEFT BLANK]

BOOK-ENTRY SYSTEM

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 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 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

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

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

D-1 Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the 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 City 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or its agent on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the City, 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 City or its agent, 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 depository with respect to the Bonds at any time by giving reasonable notice to City or its agent. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered.

D-2 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK]

THE CORPORATION OF GONZAGA UNIVERSITY • Revenue and Refunding Taxable Bonds, Series 2016A