This Preliminary Offering Memorandum and the information contained herein are subject to change without notice and to completion or amendment in a final Offering Memorandum. 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 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. Section 3(a)(4)oftheSecuritiesAct1933,asamended. STATED FEDERALINCOMETAXCONSIDERATIONS.” the Bonds”and“ANNUALDEBTSERVICEREQUIREMENTS.” Such additionalindebtedness,ifissued,maybeeithersecuredorunsecured.See“THEBONDS–SecurityProvisionsRelating to outstanding. Moreover, theSchoolis not restricted by theTrust Agreement orotherwisefromincurring additional indebtedness. Redemption.” the beneficialownersofBonds.See“THEBONDS–Book-EntryOnlySystem.” owner oftheBonds,referenceshereintoholdersorregisteredownersBondsshallmeanCede&Co.and notmean (as definedherein)forsubsequentdisbursementtothebeneficialownersofBonds.SolongasCede&Co.is registered made toCede&Co.,whichwillinturnremitsuchpaymentsDirectParticipants(asdefinedherein)andIndirect Cede &Co.istheregisteredownerofBonds,paymentsprincipalorRedemptionPriceandinterestonBondswillbe Trust Company(“DTC”),NewYork,orsuchothernameasmayberequestedbyanauthorizedrepresentativeofDTC. When issued,theBondswillberegisteredunderabook-entrysysteminnameofCede&Co.,asnomineeTheDepository Bonds will be made in book-entry form only, and individual purchasers will not receive physical delivery of bond certificates. various capitalprojectsontheSchool’scampus,andtopaycostsofissuingBonds. Internal RevenueCodeof1986,asamended,includingtofinanceandrefinance(includingthroughreimbursementtheSchool) purposes, whichpurposeswouldnotadverselyaffecttheSchool’squalificationasanentitydescribedinSection501(c)(3)of Mellon, as Bond Trustee (the “Bond Trustee”). The Schoolintendstouse the proceeds of the Bonds for its generalcorporate pursuant toaTrustAgreement,datedasofJuly1,2017(the“TrustAgreement”),betweentheSchoolandTheBankNewYork † * July __,2017 July __,2017. Boston, Massachusetts.ItisexpectedthattheBondswill be availablefordeliverythroughthefacilitiesofDTConorabout New York,York.Certainlegalmatterswillbepassed uponfortheUnderwriterbyitscounsel,GreenbergTraurig,LLP, its SpecialFinancingCounsel,DentonsUSLLP,NewYork, NewYork,anditsGeneralCounsel,SchulteRoth&ZabelLLP, sale, withdrawalormodificationoftheofferwithoutnotice. CertainlegalmatterswillbepasseduponfortheSchoolby of aninformedinvestmentdecision. issue. Investors are advised to read this entire Offering Memorandum to obtain information essential to the making Dated: DateofDelivery NEW ISSUE–BOOK-ENTRYONLY

CUSIP numbers printedherein. Underwriter has agreed to,noristhereanydutyor obligationto,updatethisOffering Memorandumtoreflectanychange orcorrectioninthe subsequent actions including,butnotlimitedto,a refundinginwholeorpartof theBonds.NoneofSchool, the BondTrusteeor of theCUSIPnumbers setforthabove.TheCUSIP numbers are subjecttobeingchangedafter the issuance of the Bonds asaresult of various convenience of the bondholders. None of the School, the Bond Trustee or the Underwriter shall be responsible for the selection or correctness assigned byanindependentcompany notaffiliatedwiththeSchool,BondTrusteeorUnderwriter andareincludedsolelyforthe herein arenotintendedtocreate adatabaseanddonotserveinanywayassubstituteforCUSIP service.TheCUSIPnumbershavebeen Bankers AssociationbyS&PGlobal MarketIntelligence.Copyright©2017CUSIPGlobalServices. Allrightsreserved.TheCUSIPnumbers CUSIP isaregisteredtrademark of theAmericanBankersAssociation.CUSIPGlobalServices(CGS) ismanagedonbehalfoftheAmerican Preliminary, subjecttochange. The Bondshavenotbeenregisteredunderfederalsecuritieslawsinrelianceuponanexemptionfromregistration Interest ontheBondsisnotexcludablefromgross income forfederaltaxpurposes.See“CERTAINUNITED The BondsconstituteunsecuredgeneralobligationsoftheSchool.Schoolhasother The Bondsaresubjecttooptionalredemptionpriormaturityasdescribedherein.See“THEBONDS – Interest ontheBondsispayableJanuary1,2018,andsemiannuallythereaftereachJuly11.Solongas The Bondsareissuableasfullyregisteredbondsindenominationsof$1,000oranywholemultiplethereof.Purchases Horace MannSchoolTaxableBonds,Series2017A(the“Bonds”)arebeingissuedby“School”) The Bondsarebeingofferedwhen,asandifissuedbythe SchoolandacceptedbytheUnderwriter,subjecttoprior This coverpagecontainscertaininformationforquickreferenceonly.Itisnotintendedtobeasummaryof this Maturity (July 1) 2047 2027 2024 2022 * PRELIMINARY OFFERING MEMORANDUM DATED JUNE 29, 2017

Principal Amount

Taxable Bonds,Series2017A HORACE MANN SCHOOL J.P. Morgan $40,000,000 Interest Rate

* Price Due: July1,asshownbelow See “RATING”herein. RATING: S&P:“AA-” CUSIP †

No dealer, broker, salesperson or other person has been authorized to give any information or to make any representation other than those contained in this Offering Memorandum in connection with the offering described herein, and, if given or made, such other information or representation must not be relied upon as having been authorized by the School or the Underwriter. This Offering Memorandum does not constitute an offer to sell or the solicitation of any offer to buy any securities other than the Bonds offered hereby, nor shall there be any offer or solicitation of such offer or sale of the Bonds in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The Underwriter has provided the following sentence for inclusion in this Offering Memorandum. The Underwriter has reviewed the information in this Offering Memorandum in accordance with, and as part of, its responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

All quotations from and summaries and explanations of laws and documents herein do not purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Offering Memorandum involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Offering Memorandum nor any sale of the Bonds shall under the circumstances create any implication that there has been no change in the affairs of the School since the date hereof.

This Offering Memorandum contains statements which, to the extent they are not recitations of historical fact, constitute “forward-looking statements”. In this regard, the words “may,” “will,” “plan,” “expect,” “estimate,” “budget,” “intend,” “project,” “forecast,” and similar expressions are intended to identify forward-looking statements. Such statements are based on the current expectations of the party making such statements as well as assumptions based on the information currently available to such party. A number of important factors, including factors affecting the School’s financial condition and factors which are otherwise unrelated thereto, could cause actual results to differ materially from those stated in such forward-looking statements. THE SCHOOL HAS NO OBLIGATION TO, AND DOES NOT PLAN TO, ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS, CONDITIONS OR CIRCUMSTANCES THAT OCCUR THAT DIFFER FROM THE EXPECTATIONS OR ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED.

Upon issuance, the Bonds will not be registered under the Securities Act of 1933, as amended, in reliance upon an exemption under Section 3(a)(4) of such act and the Trust Agreement has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon an exemption under Section 304(a)(4) of such act. The Bonds will not be listed on any stock or other securities exchange.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND OTHERS AT A PRICE LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

TABLE OF CONTENTS

INTRODUCTORY STATEMENT ...... 1 THE BONDS ...... 1 USE OF PROCEEDS ...... 4 ONGOING DISCLOSURE ...... 4 ANNUAL DEBT SERVICE REQUIREMENTS ...... 5 BONDHOLDERS’ RISKS ...... 6 LITIGATION ...... 7 LEGAL MATTERS ...... 7 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS ...... 7 CERTAIN ERISA CONDITIONS ...... 9 RATING ...... 10 UNDERWRITING ...... 11 INDEPENDENT AUDITORS ...... 11 MISCELLANEOUS ...... 11

APPENDIX A – Information Concerning Horace Mann School ...... A-1 APPENDIX B – Combined Financial Statements of Horace Mann School and The John Dorr Nature Laboratory of Horace Mann School, Inc...... B-1 APPENDIX C – Summary of Certain Provisions of the Trust Agreement ...... C-1 APPENDIX D – Book-Entry Only System ...... D-1

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OFFERING MEMORANDUM

Relating to

$40,000,000* HORACE MANN SCHOOL Taxable Bonds, Series 2017A

INTRODUCTORY STATEMENT

This Offering Memorandum, including the cover page and the appendices, is provided to furnish information regarding the $40,000,000* Horace Mann School Taxable Bonds, Series 2017A (the “Bonds”) being issued by Horace Mann School (the “School”) pursuant to a Trust Agreement, dated as of July 1, 2017 (the “Trust Agreement”), between the School and The Bank of New York Mellon, as Bond Trustee (the “Bond Trustee”). The Bonds are unsecured general obligations of the School. The School expects to use the proceeds of the Bonds for its general corporate purposes, which purposes would not adversely affect the School’s qualification as an entity described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), including to finance and refinance (including through reimbursement to the School) various capital projects on the School’s campus, and to pay the costs of issuing the Bonds. See “USE OF PROCEEDS.”

The School, founded in 1887, is a coeducational, college preparatory day school located in New York City for students from Nursery through Grade 12. The main campus for students in the Middle and Upper Divisions (grades 6 through 12) is located on an 18-acre site in Riverdale, New York. The School operates separate sites for its Nursery Division (Nursery-Kindergarten) in the Borough of Manhattan and its Lower Division (Kindergarten through grade 5) in Riverdale, New York, as well as a facility on 305 acres in Washington, Connecticut for programs coordinated with the Lower Division, Middle Division and Upper Division. In academic year 2016-17, 1,791 students were enrolled at the School. For further information concerning the School, see APPENDIX A – “Information Concerning Horace Mann School” and APPENDIX B – “Combined Financial Statements of Horace Mann School and The John Dorr Nature Laboratory of Horace Mann School, Inc.”

Unless otherwise defined herein, capitalized terms used in this Offering Memorandum have the meanings ascribed to them in APPENDIX C under the heading “Definitions of Certain Terms.” The descriptions herein of the Trust Agreement and other documents relating to the Bonds do not purport to be complete and are qualified in their entirety by reference to such documents, and the description herein of the Bonds is qualified in its entirety by the form thereof and the information with respect thereto included in such documents. See APPENDIX C – “Summary of Certain Provisions of the Trust Agreement” for a brief summary of the Trust Agreement.

THE BONDS

Description

The Bonds will be dated the date of delivery. Interest on the Bonds will be payable on January 1, 2018, and semiannually thereafter on each July 1 and January 1 at the rates set forth on the cover page of this Offering Memorandum. The Bonds will mature, subject to the redemption provisions described below, on the dates set forth on the cover page of this Offering Memorandum.

The Bonds are issuable in fully registered form in denominations of $1,000 or any whole multiple thereof. The Bank of New York Mellon will serve as Bond Trustee for the Bonds.

Book-Entry Only System

The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s

* Preliminary, subject to change.

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partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of the Bonds of such maturity, as set forth on the front cover hereof, and will be deposited with DTC. Additional information about DTC and the book-entry system is included in APPENDIX D.

Certificated Bonds

DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the School and the Bond Trustee. In addition, the School may determine that continuation of the system of book-entry transfers through DTC (or a successor securities depository) is not in the best interest of the School. If, for either reason, the book-entry system is discontinued, certificated Bonds will be delivered to and registered in the name of the Beneficial Owners as described in the Trust Agreement. Thereafter, Bonds may be exchanged for an equal aggregate principal amount of Bonds in any denomination authorized by the Trust Agreement and of the same maturity and bearing interest at the same rate, upon surrender thereof at the principal office of the Bond Trustee. The transfer of any Bond may be registered on the books maintained by the Bond Trustee for such purpose only upon assignment in form satisfactory to the Bond Trustee. No service charge will be made for any registration, registration of transfer, or exchange of Bonds, but the School and the Bond Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange. Neither the School nor the Bond Trustee will be required to exchange or transfer (i) any Bond during the 15 days preceding the mailing of a notice of redemption of Bonds, or (ii) any Bond called for redemption.

Redemption

Optional Redemption.

The Bonds maturing on July 1, 20__ are subject to redemption prior to maturity, at the option of the School, as a whole or in part on any date on or after July 1, 20__, at a Redemption Price equal to 100% of their principal amount, without premium, plus accrued interest to the date fixed for redemption.

The Bonds maturing on July 1, 20__ , July 1, 20__ and July 1, 20__ are subject to redemption prior to their maturity at the option of the School, in whole or in part on any date, at a Redemption Price equal to the greater of:

(1) 100% of the principal amount of the Bonds to be redeemed; or

(2) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of the Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the Bonds are to be redeemed, discounted to the date on which the 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, plus ___ basis points,

plus, in each case, accrued interest on the Bonds to be redeemed to the redemption date.

“Treasury Rate” means, with respect to any redemption date for a particular Bond, 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 Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business 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 Bond 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.

At the request of the Bond Trustee to the School, the Redemption Price of the Bonds to be redeemed at the option of the School shall be determined by an independent accounting firm, investment banking firm or financial advisor retained by the School at the School’s expense to calculate such Redemption Price. The Trust Agreement

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provides that the Bond Trustee and the School may conclusively rely on the determination of such Redemption Price by such independent accounting firm, investment banking firm or financial advisor and shall not be liable for such reliance.

General Redemption Provisions. If less than all of the Bonds are to be redeemed, the particular maturities of Bonds to be redeemed at the option of the School will be determined by the School in its sole discretion.

If the Bonds are registered in book-entry form and so long as DTC or a successor securities depository is the sole registered owner of such Bonds, if less than all of the Bonds of a maturity are called for redemption prior to maturity, the particular Bonds or portions thereof to be redeemed shall be allocated on a pro rata pass-through distribution of principal basis in accordance with DTC procedures, provided that, so long as the Bonds are held in book-entry form, the selection for redemption of such Bonds shall be made in accordance with the operational arrangements of DTC then in effect, and, if the DTC operational arrangements do not allow for redemption on a pro rata pass-through distribution of principal basis, the Bonds will be selected for redemption, in accordance with DTC procedures, by lot.

The School intends that redemption allocations made by DTC be made on a pro rata pass-through distribution of principal basis as described above. However, neither the School nor the Underwriter can provide any assurance that DTC, DTC’s direct and indirect participants or any other intermediary will allocate the redemption of Bonds on such basis.

In connection with any repayment of principal, the Bond Trustee will direct DTC to make a pass-through distribution of principal to the holders of the Bonds. For purposes of calculation of the pro rata pass-through distribution of principal, “pro rata” means, for any amount of principal to be paid, the application of a fraction to each denomination of the respective Bonds where (a) the numerator of such fraction is equal to the amount due to the respective bondholders on a payment date, and (b) the denominator of such fraction is equal to the total original par amount of the respective Bonds.

If the Bonds are no longer registered in book-entry form, each owner will receive an amount of Bonds equal to the original face amount then beneficially held by that owner, registered in such investor’s name. Thereafter, any redemption of less than all of the Bonds of any maturity will continue to be paid to the registered owners of such Bonds on a pro-rata basis, based on the portion of the original face amount of any such Bonds to be redeemed.

Notice of redemption will be mailed (or sent by Electronic Means if so required or requested by a Holder) not less than 30 or more than 60 days prior to the redemption date to each registered owner of Bonds called for redemption at the address shown on the registration books. After notice has been given and funds for such redemption are on deposit with the Bond Trustee, interest on the Bonds so called for redemption will cease to accrue from and after the redemption date, such Bonds will cease to be entitled to any benefit or security under the Trust Agreement and the registered owners of such Bonds will have no rights in respect thereof except to receive payment of the Redemption Price and accrued interest to the redemption date.

In the case of an optional redemption, the redemption notice may state that (a) it is conditioned upon the deposit of moneys by the School, in an amount equal to the amount necessary to effect the redemption, with the Bond Trustee no later than the scheduled redemption date or (b) the School retains the right to rescind such notice on or prior to the scheduled redemption date (in either case, a “Conditional Redemption”), and such notice and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described in the Trust Agreement. In the case of a Conditional Redemption subject to the deposit of moneys, the failure of the School to make funds available in part or in whole on or before the scheduled redemption date shall not constitute an Event of Default under the Trust Agreement and any Bonds subject to such Conditional Redemption shall remain Outstanding. Any Conditional Redemption subject to rescission may be rescinded in whole or in part at any time on or prior to the scheduled redemption date if a School Representative instructs the Bond Trustee in writing to rescind the redemption notice. Any Bonds subject to Conditional Redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event of Default under the Trust Agreement.

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Security Provisions Relating to the Bonds

General. The Bonds are unsecured general obligations of the School. The School has other unsecured general obligations outstanding. See “Outstanding Indebtedness” below. Moreover, the School is not restricted by the Trust Agreement or otherwise from incurring additional indebtedness. Such additional indebtedness, if issued, may be either secured or unsecured and may be entitled to payment prior to payment on the Bonds.

Trust Agreement Funds and Accounts. The Trust Agreement establishes the Cost of Issuance Fund, the Bond Fund, in which there is established a Principal Account and an Interest Account, and the Redemption Fund. Each of these funds and accounts will be held by the Bond Trustee in trust and will be subject to a lien and charge in favor of the Holders of the Bonds until paid out or transferred as provided in the Trust Agreement. See APPENDIX C – “Summary of Certain Provisions of the Trust Agreement.”

Outstanding Indebtedness. Prior to the issuance of the Bonds, the School’s only outstanding long-term indebtedness is the loan of the proceeds of the Build NYC Resource Corporation Tax-Exempt Revenue Refunding Bonds, Series 2014 (Horace Mann School Project (the “2014 Bonds”)), which will be outstanding in the principal amount of $27.4 million following the principal payment due July 1, 2017. See APPENDIX A – “Information Concerning Horace Mann School – Outstanding Indebtedness.”

USE OF PROCEEDS

The School expects to use the proceeds of the Bonds for its general corporate purposes, which purposes would not adversely affect the School’s qualification as an entity described in Section 501(c)(3) of the Code, including to finance and refinance (including through reimbursement to the School) various capital projects on the School’s campus, and to pay the costs of issuing the Bonds. See APPENDIX A – “Information Concerning Horace Mann School – Facilities and Physical Plant.”

ONGOING DISCLOSURE

The School has entered into a continuing disclosure undertaking (the “Continuing Disclosure Undertaking”) in connection with the 2014 Bonds. Holders and prospective purchasers of the Bonds may obtain copies of the information provided by the School under that Continuing Disclosure Undertaking from the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”). The Continuing Disclosure Undertaking will terminate when the 2014 Bonds are paid or deemed paid in full.

The School will covenant in the Trust Agreement that unless otherwise available on EMMA or any successor thereto or to the functions thereof, copies of the School’s annual audited financial statements will either be posted on the School’s website or filed with the Bond Trustee, in each case, within 180 days after the end of each fiscal year of the School.

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ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth the amounts required to be made available by the School for payment of principal of (including sinking fund installments, if applicable) and interest on its outstanding long-term indebtedness, including the Bonds (excludes capital leases), for the 12-month period ending on July 1 in the respective years shown below.

Total Debt

Bonds Outstanding Indebtedness Service July 1 Principal Interest Principal Interest 2018 $ 1,990,000 $1,222,550 2019 2,070,000 1,142,950 2020 2,130,000 1,080,850 2021 2,235,000 974,350 2022 2,350,000 862,600 2023 2,445,000 768,600 2024 2,565,000 646,350 2025 2,690,000 518,100 2026 2,830,000 383,600 2027 2,970,000 242,100 2028 3,120,000 93,600 2029 - - 2030 - - 2031 - - 2032 - - 2033 - - 2034 - - 2035 - - 2036 - - 2037 - - 2038 - - 2039 - - 2040 - - 2041 - - 2042 - - 2043 - - 2044 - - 2045 - - 2046 - - 2047 - - Total $27,395,000 $7,935,650

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BONDHOLDERS’ RISKS

The following is a discussion of certain risks that could affect payments to be made by the School with respect to the Bonds. Such discussion is not, and is not intended to be, exhaustive and should be read in conjunction with all other parts of this Offering Memorandum, and such discussion should not be considered to be a complete description of all risks that could affect such payments. Prospective purchasers of the Bonds should carefully analyze the information contained in this Offering Memorandum, including the Appendices hereto, and in the documents summarized herein, copies of which are available as described herein.

General

The Bonds are unsecured general obligations of the School. Payment on the Bonds will be made from the revenues derived by the School from its operations and from other nonoperating revenues received by the School, including income from the investment of funds held on behalf of the School. No representation or assurance is made that revenues will be realized by the School in the amounts necessary to make payments due under the Trust Agreement and the Bonds. The amount of the School’s future revenues and expenses are subject to, among other things: (i) competition from other educational institutions; (ii) the continuation of support from private contributions and changing charitable contributions from the School’s donor base; (iii) endowment and investment performance; (iv) the capabilities of management of the School; and (v) future economic and other conditions, all of which are unpredictable and which may affect the School’s revenues and thereby payment of the principal or Redemption Price of, and interest on the Bonds.

Matters Relating to Security

None of the property or revenues of the School are pledged as security for the Bonds. Upon the occurrence of an Event of Default and the exercise by the Bond Trustee of remedies available to it, the Bond Trustee would be an unsecured creditor with no rights to any specific facilities, property or revenues of the School.

Matters Relating to Enforceability of Remedies

The remedies available under the Trust Agreement upon the occurrence of an Event of Default are in many respects dependent upon 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 Federal Bankruptcy Code), the remedies provided in the Trust Agreement may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the 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 judicial principles of equity.

Amendments to Trust Agreement

Certain amendments to the Trust Agreement may be made without notice to or the consent of the owners of the Bonds, and other amendments may be made with the consent of the owners of not less than a majority in aggregate principal amount of all Bonds Outstanding under the Trust Agreement. Such amendments may affect the security for the Bonds and will be binding on all bondholders, whether or not they have consented to the amendment. See APPENDIX C – “Summary of Certain Provisions of the Trust Agreement – Modification of the Trust Agreement.”

Maintenance of the School’s 501(c)(3) Status

The School has been determined by the IRS to be a tax-exempt organization described in Section 501(c)(3) of the Code. To maintain that status, the School must conduct its operations in a manner consistent with the representations it previously made to the IRS and with the current and proposed Treasury Regulations (the “Regulations”) and rulings governing tax-exempt education facilities. Failure to comply with the Regulations and rulings of the IRS currently or in the future could result in the loss of tax-exempt status. Loss of that status could impair the School’s ability to generate the revenues necessary to provide for payment of the debt service on the

6

Bonds and could also adversely affect the ability of the School to finance or refinance the School’s outstanding prior indebtedness issued on a tax-exempt basis. The School has covenanted to maintain its status as a tax-exempt organization and has warranted that it is currently in compliance with the representations previously made to the IRS and all applicable Regulations and rulings of the IRS.

Investment Performance

The School invests its endowment in various types of investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the value of the School’s endowment and other amounts reported in the audited financial statements annexed hereto.

No Restriction on Additional Indebtedness

The Trust Agreement does not place any limitation on the amount of additional indebtedness that the School may incur in the future.

Bond Rating

There is no assurance that the rating assigned to the Bonds on the date of issue will not be lowered or withdrawn at any time, the effect of which could adversely affect the market price for, and marketability of, the Bonds. See “RATING.”

Redemption and Acceleration The Bonds are subject to optional redemption in advance of their stated maturities as described under the caption “THE BONDS – Redemption.” In addition, upon the occurrence of certain events of default under the Trust Agreement, the Bonds may become subject to acceleration. If Bonds are either redeemed or accelerated prior to their stated maturity, the owners of such Bonds will not receive the rate of interest indicated.

Secondary Market and Prices

No assurance can be given that there will be a secondary market for the Bonds. Even if a secondary market exists, there can be no assurance as to the price for which the Bonds may be sold. Such price may be lower than the price paid by the current owner of the Bonds, depending on existing market conditions and other factors.

LITIGATION

There is no litigation pending or, to the School’s knowledge, threatened against the School or its officers or trustees contesting or questioning the validity of the issuance or sale of the Bonds, or the ability of the School to perform its obligations under the Trust Agreement. See APPENDIX A – “Information Concerning Horace Mann School – Litigation.”

LEGAL MATTERS

Certain legal matters will be passed upon for the School by its Special Financing Counsel, Dentons US LLP, New York, New York, and its General Counsel, Schulte Roth & Zabel LLP, New York, New York. Certain legal matters will be passed upon for the Underwriter by its counsel, Greenberg Traurig, LLP, Boston, Massachusetts.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of certain anticipated federal income tax consequences relating to the purchase, ownership, and disposition of the Bonds. This summary is based on the provisions of the Code, the Regulations and the judicial and administrative rulings and decisions now in effect, all of which are subject to

7

change or differing interpretations, possibly even retroactively. This summary does not purport to address all aspects of federal income taxation that may affect particular purchasers of the Bonds in light of their individual circumstances, nor to certain types of buyers of the Bonds subject to special treatment under the federal income tax laws. This summary focuses primarily on purchasers of the Bonds who will hold them as “capital assets” (generally property held for investment within the meaning of Code Section 1221), but much of the discussion is applicable to other purchasers of the Bonds. Potential purchasers of the Bonds should consult their own tax advisors in determining the federal, state or local tax consequences to them of the purchase, holding and disposition of the Bonds.

Taxability of Stated Interest and Principal

In general, interest payable to holders of the Bonds who are not exempt from federal income taxation will be treated as ordinary income in the year paid, in the case of cash basis taxpayers, or in the year accrued, in the case of accrual basis taxpayers. Principal payments on the Bonds, other than those attributable to any market discount, will be treated as a return of capital.

Acquisition Premium

The purchaser of a Bond will be treated as having amortizable bonds premium to the extent (if any) by which the purchaser’s initial basis in the Bond exceeds the outstanding principal amount of the Bond. Provided that the purchaser makes an election under Code Section 171(c) (or made such an election after October 22, 1986), the amount of any amortizable bond premium may be amortized over the term of the Bond and treated as a reduction of the Bondholder’s taxable income from the Bond each year. The election made under Code Section 171(c) to amortize bond premium applies to all taxable debt obligations then owned or thereafter acquired by a holder of the Bond, and may be revoked only with the consent of the IRS. PURCHASERS OF THE BONDS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE ADVISABILITY OF MAKING AN ELECTION TO DEDUCT AMORTIZABLE BOND PREMIUM AND THE APPROPRIATE METHOD OF MAKING SUCH AN ELECTION.

Sale or Redemption of the Bonds

A holder’s tax basis for a Bond is the price that holder pays for the Bond, reduced by (a) payments received other than “qualified periodic interest” and (b) amortized bond premium. Gain or loss recognized on a sale, exchange or redemption of a Bond, measured by the difference between the amount realized and the Bond’s basis as so adjusted, will generally give rise to capital gain or loss if the Bond is held as a capital asset. In the case of a subsequent purchaser, a portion of any gain will be treated as ordinary income to the extent of any market discount accrued to the date of disposition which was not previously reported as ordinary income.

Backup Withholding

A holder of a Bond may, under certain circumstances, be subject to “backup withholding” at the applicable rate prescribed by the Code with respect to interest on the Bond. This withholding generally applies if the holder of a Bond (a) fails to furnish the payor with its taxpayer identification number (“TIN”); (b) furnishes the payor with an incorrect TIN; (c) fails to report properly interest, dividends or other “reportable payments” as defined in the Code; or (d) under certain circumstances, fails to provide the payor or its securities broker with a certified statement, signed under penalty of perjury, that the TIN provided is his correct number and that the holder is not subject to backup withholding. Backup withholding will not apply, however, with respect to payments made to certain holders of the Bonds, including payments made to certain recipients (such as certain exempt organizations) and to certain Nonresidents (as defined below). Holders of the Bonds should consult with their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining the exemption.

The payor will report to the holders of the Bonds and to the IRS for each calendar year the amount of any “reportable payments” made with respect to the Bonds during such year and the amount of tax withheld, if any.

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Foreign Bondholders

Under the Code, interest paid with respect to Bonds held by nonresident alien individuals, foreign corporations or other non-United States persons (“Nonresidents”) generally will not be subject to the thirty percent (30%) United States withholding tax if the payor (or other person who would otherwise be required to withhold tax from such payments), is provided with an appropriate statement that the beneficial owner of the Bond is a nonresident. The withholding tax, if applicable, may be reduced or eliminated by an applicable tax treaty. However, interest that is effectively connected with a United States business conducted by a Nonresident holder of a Bond will generally be subject to the regular United States income tax.

PURCHASERS OF BONDS WHO ARE NONRESIDENTS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF OWNING BONDS.

THE FOREGOING SUMMARY AS TO THE BONDS IS NOT INTENDED AS AN EXHAUSTIVE RECITAL OF THE POTENTIAL TAX CONSEQUENCES OF HOLDING THE BONDS. PROSPECTIVE PURCHASERS OF THE BONDS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE AND LOCAL CONSEQUENCES OF THE OWNERSHIP OF THE BONDS.

Changes In Federal And State Tax Law

From time to time, there are Presidential proposals, proposals of various committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Bonds. Further, such proposals may impact the marketability or market value of the Bonds simply by being proposed. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such proposal would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed , and litigation is threatened or commenced which, implemented or concluded in a particular manner, could adversely affect the marketability or market value of the Bonds. It cannot be predicted whether and such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Bonds would be impacted thereby Prospective purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation.

CERTAIN ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the purchase of the Bonds by employee benefit plans that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA (collectively, “Similar Laws”), and entities whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”).

General Fiduciary Matters

ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

In considering an investment in the Bonds of a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

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Prohibited Transaction Issues

Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans and other plans such as individual retirement accounts that are subject to Section 4975 but not Title I of ERISA, including entities whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement, from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engaged in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of Bonds by an ERISA Plan with respect to which the issuer or the underwriter is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to the acquisition and holding of the Bonds. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers. In addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provide relief from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions, provided that neither the issuer of the securities nor any of its affiliates (directly or indirectly) have or exercise any discretionary authority or control or render any investment advice with respect to the assets of any ERISA Plan involved in the transaction and provided further that the ERISA Plan pays no more than adequate consideration in connection with the transaction. There can be no assurance that all of the conditions of any such exemptions will be satisfied.

Because of the foregoing, the Bonds should not be acquired or held by any person investing “plan assets” of any Plan, unless such acquisition and holding will not constitute a non-exempt prohibited transaction under ERISA and the Code or a similar violation of any applicable Similar Laws.

Representation

Accordingly, by acceptance of a Bond, each purchaser and subsequent transferee of a Bond will be deemed to have represented and warranted that either (A) (i) no portion of the assets used by such purchaser or transferee to acquire or hold the Bonds constitutes assets of any Plan or (ii) the acquisition, holding and disposition of the Bonds by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a similar violation under any applicable Similar Laws and (B) the purchaser will not transfer the Bonds to any person or entity, unless such person or entity could itself truthfully make the foregoing representations and covenants.

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 the Bonds on behalf of, or with the assets of, any 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 Bonds.

RATING

S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC, has assigned a rating of “AA-” to the Bonds. Any explanation of the significance of such rating may only be obtained from the rating agency as follows: S&P Global Ratings, 55 Water Street, New York, New York 10041. There is no assurance that such rating will remain in effect for any given period of time or that it may not be lowered, suspended or withdrawn entirely by the rating agency. Any such downward change in or suspension or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

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UNDERWRITING

The Bonds will be purchased for reoffering by J.P. Morgan Securities LLC, as underwriter of the Bonds (the “Underwriter”), pursuant to a bond purchase contract to be entered into by and between the School and the Underwriter. The Underwriter will agree, subject to certain conditions, to purchase the Bonds at a price equal to the principal amount thereof, less an underwriter’s discount of $______. The bond purchase contract will provide that the Underwriter will purchase all of the Bonds if any are purchased, and that the School will indemnify the Underwriter and certain other parties against losses, claims, damages, and liabilities arising out of any incorrect statements of information, including the omission of material facts, contained in this Offering Memorandum and other specified matters. The public offering price set forth on the cover page of this Offering Memorandum may be changed after the initial offering by the Underwriter.

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

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

The Underwriter has entered into negotiated dealer agreements (the “Dealer Agreements”) with Charles Schwab & Co., Inc. (“CS&Co.”) and LPL Financial LLC (“LPL”) for the retail distribution of certain securities offerings at the original offering prices. Pursuant to each Dealer Agreement (if applicable to this transaction), CS&Co. and LPL will purchase Bonds from the Underwriter at the original offering price less a negotiated portion of the selling concession applicable to any Bonds that such firm sells.

INDEPENDENT AUDITORS

The consolidated financial statements of the School as of and for the year ended June 30, 2016, included in APPENDIX B to this Offering Memorandum, have been audited by Loeb & Troper LLP, independent auditors, as stated in their report appearing in APPENDIX B. Loeb & Troper LLP, the School’s independent auditors, have not been engaged to perform and have not performed, since the date of their report included in APPENDIX B, any procedures on the financial statements addressed in that report. Loeb & Troper LLP also have not performed any procedures relating to this Offering Memorandum.

MISCELLANEOUS

The references herein to the Trust Agreement and the Bonds are brief summaries of certain provisions thereof. Such summaries do not purport to be complete, and reference is made to the Trust Agreement and the Bonds for full and complete statements of their provisions. The agreements of the School with the owners of the Bonds are fully set forth in the Trust Agreement, and neither any advertisement of the Bonds nor this Offering Memorandum is to be construed as constituting an agreement with the purchasers of the Bonds. Copies of the documents mentioned in this paragraph are on file at the offices of the Bond Trustee.

APPENDIX A to this Offering Memorandum contains certain information relating to the School. While such information contained therein is believed to be reliable, the Underwriter does not make any representations or warranties whatsoever with respect to such information.

APPENDIX B to this Offering Memorandum contains the consolidated financial statements of the School as of and for the fiscal year ended June 30, 2016, with summarized comparative information as of and for the fiscal

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year ended June 30, 2015, and have been audited by Loeb & Troper LLP, independent auditors, as stated in their report appearing therein.

The Underwriter has relied on the information contained in APPENDIX A and the financial statements contained in APPENDIX B.

APPENDIX C contains a brief summary of certain provision of the Trust Agreement and definitions of certain terms contained therein.

APPENDIX D contains certain information relating to DTC and the book-entry system that is based on information furnished by DTC and is believed to be reliable, but neither the Underwriter nor the School makes any representations or warranties whatsoever with respect to such information.

All appendices are incorporated as integral parts of this Offering Memorandum.

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The School has duly authorized the execution and delivery of this Offering Memorandum.

HORACE MANN SCHOOL

By: Head of School

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APPENDIX A

INFORMATION CONCERNING HORACE MANN SCHOOL

General

Horace Mann School (“Horace Mann” or the “School”) is a coeducational, college preparatory day school for students from Nursery through grade 12. The School is a nonprofit corporation organized under the laws of the State of New York. The School has a more than 129-year history of educational achievement. The main campus for students in the Middle and Upper Divisions (grades six through 12) is an 18-acre site at 231 West 246th Street, in the primarily residential Riverdale-Fieldston section of the Bronx, New York. The School’s Lower Division (Kindergarten through grade five) is located at 4440 Tibbett Avenue, also in the Riverdale-Fieldston section of the Bronx, and its Nursery Division (Nursery-Kindergarten) is housed at 55 East 90th Street in the Carnegie Hill section of Manhattan. The School also owns and maintains the John Dorr Nature Laboratory, a comprehensive outdoor education facility on 305 largely wooded acres in Washington, Connecticut, for programs hosting students across all divisions. For a detailed description of each Division’s physical plant, see “Facilities and Locations” below.

Horace Mann ranked among the nation’s top six private schools in the United States in a May, 2017, Advisory HQ study and was one of only three private day schools in the top six. The School also ranked as the best private high school in New York in a 2017 niche.com survey. Forbes Magazine listed the School as the second-best private school in the United States in its latest private school survey, published in April, 2010. Horace Mann is one of the nation’s 10 largest independent day schools, with a 1,791- student enrollment in fall 2016 (142 in the Nursery Division; 464 in the Lower Division; 451 in the Middle Division; and 734 in the Upper Division). Over the past five years, the School has recorded a 97% annual retention rate for students and a 93% retention rate for all faculty and other employees. Among the notable accomplishments and achievements reflecting the School’s innovation and enriched classical approach to education, the Royal Shakespeare Company has been in residence at the School since 2014. This represents the first time the prestigious theatre company has made such a commitment to any Nursery-grade 12 educational institution. Additionally, the School’s Lower and Nursery Divisions faculty and students are working with the Yale Center for Emotional Intelligence and the RULER (Recognizing emotions in self and others; Understanding the causes and consequences of emotions; Labeling emotions accurately; Expressing emotions appropriately; and Regulating emotions efficiently) Program.

History of the School

Horace Mann was founded by Nicholas Murray Butler in 1887 as a coeducational experimental and developmental unit of Teachers College, Columbia University. In 1947, it became an independent day school for boys in grades seven through 12. The reestablishment of coeducation was accomplished through mergers with the New York School for Nursery Years (founded 1954) in 1968, the Barnard School (founded 1886) in 1972, and the enrollment of girls in the high school beginning in 1975.

Horace Mann School holds a charter from the New York State Board of Regents and is a 501(c)3 organization as determined by the Internal Revenue Service. The School is governed by a Board of Trustees whose 34 members include alumni and parents.

Prominent alumni include Robert Caro, William Carlos Williams, Pedro Alvarez, William Barr, Josh Bernstein, Roy Cohn, Mark Fisher, Gil Shaham, Mark Penn, Generoso Pope, Gideon Rose, Jon Rubinstein, James Salter, Barry Scheck, Alexandra Guarnaschelli and Allard Lowenstein, among others.

A-1 APPENDIX A

Education Philosophy

The School seeks to stretch the imagination, intellect, and perception of its students while developing the moral characteristics that impart identity and purpose. Education in the lower grades builds upon the natural desire of children to learn. It is designed to teach basic skills and the joy of the pursuit of knowledge in a noncompetitive, supportive environment. The goal of the Middle and Upper Divisions is to provide a rigorous liberal arts education through the intellectual, moral and physical development of each student.

Divisions and Curricula

The Nursery-Kindergarten program uses a developmentally appropriate early-childhood curriculum to create a nurturing and stimulating learning environment. With a focus on reading, writing and mathematics readiness, positive self-esteem, problem solving, and creativity, the program is designed to build a foundation for academic success. The School believes that the quality of group life is a crucial factor in the learning that takes place. Teachers, with the support and involvement of parents, create an environment of acceptance and mutual respect, which is intended to foster a sense of community through which children have the opportunity to develop to their fullest potential.

The Lower Division program features both a solid core curriculum and extensive enrichment activities. In addition to the core subjects, all children are involved in art, music, foreign language, library, computer science, robotics, physical education, and health. Instruction in grades four and five is departmentalized by subject, with teachers working together as part of a cohesive team. The Lower Division maintains support services in speech/language, reading and mathematics, a Science Center, a computer/robotics lab, an Art Enrichment program, and electives in the performing arts.

The Middle Division and Upper Division academic programs provide a balanced liberal arts education that combines a strong traditional curriculum with new and innovative courses. Courses for students in grades six through eight are designed to facilitate the transition to more advanced study. Students in those grades participate either in a music program or in a rotating visual arts program. Students have the option of earning their first high school credit with three years of study in Latin beginning in grade six. Eighth graders may earn graduation credits in algebra, French, Spanish or Japanese. All Middle Division students must complete requirements in computing education/robotics and health. In addition to their academic studies, Middle Division students have the option of participating in varied club offerings, including those in the areas of mathematics, robotics, debate, science, and photography, to name a few. Athletic opportunities are available for both boys and girls beginning in grade seven.

To graduate from the Upper Division, students in grades nine through 12 must complete four years of English; a three-year sequence in a foreign language; three years of mathematics through Intermediate Algebra and Trigonometry; two years of laboratory science (Biology required); two years of history (Modern World and American required); one and one-half credits of visual arts, performing arts, or music; two years of health; one-half credit in computing and communications; and four years of physical education or participation in team sports. There is also an 80-hour community service requirement. The overwhelming majority of students in the Upper Division exceed the minimum graduation requirements in more than one area of concentration.

Middle Division and Upper Division students have access to Horace Mann’s state-of-the-art computer network, electronic mail, and uncensored campus wide wireless internet access. Most classrooms in the Middle Division and Upper Division are equipped with SmartBoards, and iPads are an integral part of the Middle Division program.

A-2 APPENDIX A

A partial selection of courses available to Upper Division students in grades nine through 12 includes senior English trimester electives such as Dickinson and Joyce, Chaucer and New York Poets; mathematics courses in Geometry, Algebra II and Trigonometry, Pre-Calculus, Calculus, Advanced Placement Calculus, Advanced Placement Statistics and Mathematics Seminar; Advanced Placement Psychology; Computer Science, Media and Culture, Introduction to Microcontrollers and Robotics, and Advanced Placement Computer Science with Data Structures; foreign language offerings in French, Italian, Japanese, Latin, Mandarin and Spanish; history work in Advanced Placement Modern European History, Advanced Placement United States History, East Asian History, Advanced Placement Economics, and History of the Islamic World; science courses in Biology, Advanced Placement Chemistry, Advanced Placement Physics, Advanced Placement Environmental Science, Biotechnology, and Science Research; arts study in Music Theory, History of Music, Music Technology, Orchestra, instrumental instruction in winds, percussion, strings and steel drums, Glee Club, Seminar in Acting, Theater Design and Production, Playwriting and Production, The Art of Film, Dance Workshop, Ceramics, Drawing and Painting, Photography, Video Production, Introduction to Art History, and Advanced Placement Art History; and independent study coursework including Independent Interdisciplinary Research Seminar and Senior Initiative Projects.

In addition to a student’s formal studies in the Upper Division, extensive opportunities exist for enrichment. These opportunities include more than 60 interscholastic athletic teams and more than 60 co- curricular clubs, including 21 publications, many of which are nationally recognized. Additional opportunities also exist through participation in the School’s theatre and dance productions and musical group performances throughout each year.

The John Dorr Nature Laboratory of Horace Mann School, Inc. (“Dorr”), an affiliated entity located on approximately 305 acres in Washington, Connecticut, conducts programs lasting from one to eight days for students in grades pre-kindergarten through 12. The programs vary in content with some dealing with environmental science and others with community building, problem solving, and group dynamics. Dorr faculty members travel to the Bronx to work with students in pre-kindergarten through grade one, with programs including Bug Explorers, an introduction to backpacking and camping, and the annual Applefest program. Beginning in grade two, students travel to Dorr, and from grades three through eight the students stay overnight. Programs explore Native American history and culture, weather patterns, composting and sustainability, and astronomy. The annual trips culminate with the seven-night grade eight program, including orienteering and overnight hiking. In grades nine through 12, students visit Dorr for orientation, peer counseling training, programs specific to one’s course selections or extra-curriculars, and the grade 12 Searchers Program, also referred to as Advanced Placement Dorr.

Governance

The property, affairs and business of Horace Mann are managed by a Board of Trustees (the “Board”). The Board is composed of no fewer than 20 and no more than 35 members, approximately one-third of who are elected by the existing members annually in June for a three-year term. Each Board member must be at least 21 years of age, at least two-thirds of the Board must be citizens of the United States, and at least one Board member must be a resident of the State of New York. Currently, there are 32 sitting members. The By-Laws of the School provide for the establishment of an Executive Committee to exercise the powers of the Board in the management and direction of the property, affairs and business of the School during the intervals between meetings of the Board, and as otherwise provided by the By- Laws or by resolution of the Board. The School’s By-Laws provide that the Executive Committee consists of the Chair, the Head of School, and a minimum of seven Board members elected by the Board at its annual meeting.

A-3 APPENDIX A

The School’s By-Laws also provide for the establishment of a Finance Committee responsible for the general supervision of all funds and securities of the School, the maintenance of accounting records, and the periodic preparation of appropriate financial reports. Additional Board committees include: Committee on Trustees and Governance, Academic Affairs, Audit, Communications, Development, John Dorr Nature Laboratory, Enrollment and Student Life, Investment, Physical Facilities and Real Estate, and Technology. The By-Laws provide for the School’s officers to be a Chair, two Vice-Chairs, a Secretary and a Treasurer. Information regarding the current Board members, including for each Member the respective year of appointment and of term expiration, and primary affiliation is set forth below.

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A-4 APPENDIX A

Board of Trustees of Horace Mann School *Michael D. Colacino ‘75 2008 2018 Savills Studley, New York, NY Chair *Carolyn Okin 2004 2019 Formerly of Ketchum Public Relations, New York, NY Vice-Chair *Edward Levy 2006 2018 Rand Logistics Inc., New York, NY Vice-Chair *Matthew Mark ‘90 2009 2018 Jet Capital Management, New York, NY Treasurer *Amanda R. Salzhauer, 2011 2017 Amanda R. Salzhauer, LMSW, PC, Riverdale, NY Secretary *Glenn August 2009 2018 Oak Hill Advisors, L.P., New York, NY Michael Bennett 2013 2019 Lazard Asset Management, New York, NY Daniel Benton 2013 2019 Andor Capital Management, New York, NY Steven C. Bussey ‘85 2005 2017 Alvarez & Marsal, New York, NY Chul Chung 2014 2017 Baltra Consulting LLC, New York, NY Ronald Dickerman 2009 2018 Madison International Realty, New York, NY Brian L. Eizenstat 2015 2018 Lone Pine Capital, New York, NY Winston C. Fisher 2015 2018 Fisher Brothers, New York, NY Laurence S. Grafstein 2008 2017 UBS Securities LLC, New York, NY *Lawrence Otis Graham 2008 2017 Formerly of Cuddy & Feder LLP, White Plains, NY Michael Heller 2010 2019 Formerly of Argus Information & Advisory Service, White Plains, NY Bonnie Jonas 2013 2019 Pallas Global Group LLC, New York, NY Howard P. Kagan 2012 2018 New York, NY Wesley Mittman Le Patner ‘99 2014 2017 The Blackstone Group, New York, NY Justin D. Lerer ‘95 2008 2017 Paul, Weiss, Rifkin, Wharton & Garrison, LLP, New York, NY Howard W. Lutnick 2003 2018 Cantor Fitzgerald, New York, NY Jan Frasier Maltby 2015 2017 Riverdale, NY Monica M. Mandelli 2013 2019 KKR, New York, NY Eric Mindich 2006 2018 Eton Park Capital Management, LP, New York, NY Manish Mittal 2011 2017 Formerly Pine River Capital Management, New York, NY Stephen Mong 2016 2019 Orien Capital Management, LLC, New York, NY *Andrea L. Olshan ‘98 2011 2017 Olshan Properties, New York, NY Robert O. Owens ‘67 2013 2019 Owens Group Ltd., Inc., Englewood Cliffs, NJ *Michael A. Pruzan ‘83 2004 2019 Parkstone Capital, Mt. Kisco, NY Thomas Shapiro ‘84 2013 2019 GTIS Partners, New York, NY Vinayak Singh 2015 2018 Evercore ISI, New York, NY Catherine Goodstein Wallace, 2008 2017 Downtown Women OB/GYN Assocs. LLP, New York, NY M.D. ‘87 * Member of Executive Committee.

A-5 APPENDIX A

Accreditation, Memberships and Affiliations

The School is accredited by the New York State Association of Independent Schools. The 10-year accreditation was last performed in the 2010-2011 academic year.

The School and/or its faculty are affiliated with many organizations, including the following:

• American Association for the Advancement of • National Association of Biology Teachers Science • National Association of Education of Young • American Association of Teachers of French Children • American Council of Learned Societies • National Association of Independent Schools • American Council of Teachers of Foreign • National Association of Science, Technology, Languages and Society • American Historical Association • National Council of Teachers of English • American Library Association • National Council of Teachers of Mathematics • American School Nurses Association • National Middle School Association • Association of College Counselors in • National School Nurses Association Independent Schools • National Science Teachers Association • Association of Experiential Education • New York City Parents-in-Action • Association of Independent School Admission • New York State Association for College Professionals Admissions Counseling • Association of Teachers of Independent Schools • New York State Association of Foreign • Council for Advancement and Support of Languages Education • New York State Association of Independent • Cum Laude Society Schools • Early Steps • New York State Athletic Trainers Association • Educational Records Bureau • The Oliver Scholars Program • Fieldston Property Owners Association • Prep for Prep • Green Schools Alliance • Secondary School Admission Test Board • Green Restaurant Association (FLIK) • The College Board • Guild of Independent Schools of New York • The Fulbright Association • Independent Educational Services Ivy • The Hundred Year Association of New York Preparatory School League (Athletics) • The Inter-School Program - Diversity • Modern Language Association of America • The Parents League of New York • Museum of Modern Art • World History Association • National Association for College Admissions Counseling

Administration

The principal administrative personnel of the School and their respective backgrounds are as follows:

Thomas M. Kelly, Head of School, was appointed to his current position in 2005. Dr. Kelly was previously Superintendent of Schools of the Valhalla Union Free School District in Westchester County, New York. He also served as Director of Pupil Personnel and later High School Principal of Hendrick Hudson Central School District in New York State. Dr. Kelly has held the rank of Adjunct Assistant Professor at Teachers College, Columbia University and at the City College of New York. He is also a sitting commissioner for accreditation for the New York State Association of Independent Schools. Dr. Kelly received his B.A. from Fairfield University, his M.A.

A-6 APPENDIX A

and M.Ed. from Teachers College, Columbia University, and his M.Phil. and Ph.D. from Columbia University, Graduate School of Arts and Sciences.

Edward L. Sinclair, Jr., Chief Financial Officer, assumed his current position in 1995. Mr. Sinclair was previously Vice President-Finance and Administration and Treasurer of Manhattanville College, located in Purchase, New York. He also served as Treasurer of Nestle Foods Corporation, having worked in various management positions in accounting and finance for Nestle for nearly 16 years. Prior to that, Mr. Sinclair was with the accounting firm of KPMG Peat Marwick and was active in corporate for-profit and not-for-profit client auditing/consulting. Mr. Sinclair received his B.A. from Lafayette College, and his M.B.A. from Columbia University, Graduate School of Business.

Faculty and Staff

For the 2016-2017 school year, Horace Mann contracted with 256 faculty members (248.4 full-time equivalents (“FTEs”)), 193 of whom have advanced degrees, and 78 of whom have taught at Horace Mann for more than 15 years. The student teacher ratio is approximately 8:1. Faculty members are contracted for one year, with no tenure. In addition, the School employs 40 administrators, 57 administrative support staff, 19 maintenance staff, 16 security staff, three psychologists, and three nurses. Many of the School’s administrators also teach. The School’s food service and cleaning services are provided by independent contractors. No School employees are unionized.

Facilities and Physical Plant

Over the past decade (ending with fiscal year 2016), Horace Mann has invested more than $57 million in its facilities and physical plant. This investment represents approximately $4 million from fundraising for current new construction and $53 million in self-funded physical plant and other capital improvements. The following chart details the Horace Mann facilities and physical plant projects over the past 10 fiscal years ended June 30, 2016:

Horace Mann School Facilities and Physical Plant Projects and Improvements Fiscal Years 2007-2016 (Ending June 30)

Totals Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 10 years

Land $2,162,106 $ 2,322,149 -- $ 665,317 $ 536,000 $ 827,782 ------$ 971,209 $ 7,484,563 Land Improvements 1,309,837 182,328 $ 130,847 139,032 273,449 656,449 $ 405,566 $ 453,006 $ 176,424 283,52 $ 4,010,462 Buildings 741,783 -- 476,900 1,356,087 -- 827,782 -- 39,110 -- 2,028,738 $ 5,470,400 Building Improvements 715,262 607,932 326,827 258,293 1,231,914 1,162,665 1,007,979 1,521,809 667,508 2,233,961 $ 9,734,150 Furniture and Equipment 231,298 422,052 572,165 217,492 276,692 1,453,676 551,088 1,059,356 757,771 692,019 $ 6,233,609 Vehicles 44,364 26,170 61,719 37,100 75,652 142,964 138,860 118,616 $ 645,445 Computer Equipment 1,071,614 1,055,191 955,085 101,863 1,222,499 1,322,089 1,041,075 1,232,605 1,102,197 1,062,519 $10,166,737 Construction in progress -- 2,052,617 4,913,790 134,153 193,656 980,733 81,394 24,357 929,949 4,021,548 $13,332,197 Fiscal Year Totals $6,276,264 $6,668,439 $7,375,614 $2,872,237 $3,795,929 $7,268,276 $3,162,754 $4,473,207 $3,772,709 $11,412,134 $57,077,563

A-7 APPENDIX A

The Middle Division and Upper Division campus overlooks Van Cortlandt Park in the Riverdale-Fieldston neighborhood of the Bronx. Campus buildings include Tillinghast Hall, which houses classrooms, computer laboratory facilities, and the Katz Library. Alfred Gross Hall (rebuilt in 2005 as Mullady Hall) contains the 650-seat Gross Theatre, along with Upper Division administrative and guidance offices. Pforzheimer Hall and the Gratwick Science Wing include classrooms and facilities for science, as well as Middle Division offices. The Middle Division moved into Rose Hall in September 1999, adding the sixth grade to the existing seventh and eighth grades. Rose Hall contains classrooms, an atrium, and division offices. The Friedman College Counseling Office is located in Pforzheimer Hall. Prettyman Gymnasium, the oldest unrenovated building on the Middle Division and Upper Division campus, contains basketball courts, exercise and training rooms, an indoor track, and a swimming pool. Outdoor facilities include the Main Field, Four Acres Field, and tennis and handball courts. Van Cortlandt Park provides additional space for athletics. Fisher Hall includes studios for the visual arts, music classrooms, the Gallery, Sanders Recital Hall, the Cohen Dining Commons and the Berger Faculty Dining Room.

The Lower Division campus in the Fieldston-Riverdale neighborhood of the Bronx occupies the site of the former Barnard School. The main Lower Division building houses classrooms for grades one through five, as well as the library, gymnasium, cafeteria, arts and technology center, music room, Music Annex, Nurse’s office, modern language classrooms, literacy center, math lab, speech lab, science center, and administrative offices. Kindergarten classes are housed in free-standing “cottages” that are nevertheless an integral part of the Lower Division. Facilities that contribute to the Lower Division program include the “Grasshopper” (a synthetic play surface) and the O’Neil Arboretum. The campus is also home to the Alumni and Development Office.

Horace Mann is one of the largest property owners in its Fieldston community and is a member of the Fieldston Property Owners’ Association. Horace Mann also owns nine houses in the immediate area. Three are used for administrative services, including the Business Office, Office of Alumni and Development, and Summer on the Hill; two are used for instructional purposes as kindergarten cottages; and four provide housing for administrators. The School also owns six vacant properties, two in the immediate vicinity of existing School buildings and the remainder on Broadway. These properties are held for future instructional and other uses.

The Nursery Division is located in a landmark building on Manhattan’s Upper East Side that was originally the carriage house of the Andrew Carnegie estate. The original three-story structure was renovated and expanded to six floors in 1961 and became the New York School for Nursery Years. In addition to the nine classrooms in the Nursery Division, the building houses a library, a studio, a yard with climbing equipment and a rooftop playground.

Dorr encompasses 305 acres of fields, streams and ponds in which students can explore nature and engage in outdoor pursuits. Dorr’s resident faculty instructs students in environmental science, conservation, and outdoor living. Student visits begin in the second grade, with overnight programs beginning in the third grade. The eight- day program for eighth graders includes a three-day backpacking trip along the Appalachian Trail. An $8 million capital project completed in August, 2009, resulted in the creation of a new access road, the purchase of an additional parcel of land on which a new faculty residence is situated, the construction of a new bunkhouse, and the building of a new lodge and multi-purpose barn. The project also upgraded mechanicals and utilities.

The new facilities insure greater sustainability and provide more space for programming. Dorr has been awarded LEED® Gold certification for sustainable design that substantially reduces both energy and water consumption and greenhouse gas emissions. LEED (Leadership in Energy and Environmental Design) is the nation’s preeminent program for the design, construction, and operation of high performance green buildings; the ratings system is established by the U.S. Green Building Council and verified by the Green Building Certification Institute. Gold is the second-highest rating attainable.

A-8 APPENDIX A

Comprehensive Physical Plant

Middle & Upper Divisions Lower Division Nursery Division Dorr Nature Laboratory (300,000+ square feet) (69,000+ square feet) (10,000+ square feet) (26,000+ square feet and 305 acres)

. Spence Cottage . Main School Building . Six story . Main Lodge townhouse . Rose Hall . Music Annex . Barn – Classroom . Rooftop . Kindergarten Cottage 1 . Pforzheimer Hall Playground . Annexed Lodge . Kindergarten Cottage 2 . Fisher Hall . Rear Playground . Boys Bunkhouse . Prettyman Gymnasium & Pforzheimer . Playground . Girls Bunkhouse Natatorium . Grasshopper Field . Green Cabin Mullady Hall, Katz Library . . 1 private home used for . MacGregor Cabin . Gross Theatre, Sanders Recital Hall, housing Black Box, Dance Studio . New, more accessible . Faculty Residences (x3) 305 acres of woodlands, . Tillinghast Hall Alumni House . . Other open meadows, ponds, . Playdeck and climbing/challenge . Maintenance Facility structures . Athletic Fields . Tennis Courts

A map of the current Bronx campus (Lower, Middle and Upper Divisions) is set forth on the inside back cover of this Offering Memorandum.

The Board adopted a five-year Master Plan for the School’s Bronx campus in November, 2015, designed to improve the athletics, physical education and science facilities used by the Middle Division and Upper Division and create a campus center with meeting and gathering spaces. In order to fulfill the goals and opportunities for improvement identified in the planning process, the Master Plan includes the renovation of Prettyman Gymnasium, the construction of a new entrance vestibule to the east and a new aquatics center to the north of the gym, the construction of a new combined Campus Center/Science Building, the renovation of Pforzheimer Hall to provide additional classroom and lab space, and the construction of a new maintenance building. The Master Plan is expected to be phased in over several years and financed with Bond proceeds, gifts and funds from operations. See “Development and Fundraising – HM in Motion” herein.

Student Applications, Admissions, Enrollments and Attrition

The School’s students enrolled for the fall 2016 term come from 146 culturally and economically diverse zip codes, extending from Greenwich Village in Manhattan to Greenwich, Connecticut, and from Long Island to New Jersey. The School is certified by the Student and Exchange Visitor Program (SEVP) to issue I-20 forms for F1 visas to an increasing international population. Based on fall 2016 enrollment data, the largest percentage of enrolled students (approximately 70%) travels from Manhattan. Approximately 10% travel from the Bronx, eight percent from New Jersey, less than one percent from other New York City boroughs, and nearly 10% from other New York State locations, among others. The School’s Middle and Upper Divisions are two of the most selective private school divisions in the tri-state New York area. Application, admission and enrollment trends for the main entry points -- Nursery, Kindergarten, sixth grade and ninth grade – for the five most recently completed academic years and for the 2017-18 academic year are set forth in the table below.

A-9 APPENDIX A

Applications, Admissions and Enrollment Trends

Nursery (3’s) New Academic % Student % Total Year Applications Admits Admitted Enrollments Yield1 Enrollment2 2012-13 272 45 17% 41 91% 41 2013-14 234 49 21% 43 88% 43 2014-15 191 51 27% 43 84% 43 2015-16 176 48 27% 42 88% 42 2016-17 172 49 28% 42 86% 42 2017-183 156 46 29% 43 93% 43

Kindergarten New Academic % Student % Total Year Applications Admits Admitted Enrollments Yield1 Enrollment2 2012-13 429 74 17% 37 50% 88 2013-14 363 45 12% 34 76% 83 2014-15 340 65 19% 37 57% 86 2015-16 312 74 24% 37 50% 87 2016-17 333 68 20% 33 49% 84 2017-183 357 71 20% 38 54% 88

6th Grade New Academic % Student % Total Year Applications Admits Admitted Enrollments Yield1 Enrollment2 2012-13 226 97 43% 70 72% 147 2013-14 213 83 39% 57 69% 139 2014-15 227 90 40% 63 70% 140 2015-16 189 84 44% 57 68% 138 2016-17 241 85 35% 63 74% 141 2017-183 261 72 28% 57 79% 144

9th Grade New Academic % Student % Total Year Applications Admits Admitted Enrollments Yield1 Enrollment2 2012-13 359 132 37% 58 44% 194 2013-14 360 62 17% 44 71% 182 2014-15 371 62 17% 34 55% 183 2015-16 331 74 22% 42 57% 187 2016-17 369 83 22% 50 60% 185 2017-183 410 54 13% 35 65% 186 ______1 Percent yield is calculated by dividing the number of new student enrollments by the number of students admitted to the School. 2 Total enrollment comprises new student enrollments as well as students who had previously been enrolled in the lower grade(s) at the School. 3 Based on data available at June 1, 2017.

A-10 APPENDIX A

Applications for kindergarten increased again for the 2017-2018 entry year. Applications remain higher than the 10-year average of 346 (for approximately 36 spaces annually). Applications for the Nursery Threes program continued to decline but matriculations remained relatively constant. Other “like” schools reported similary declines at nursery entry points; Horace Mann charges signifcantly higher tuition at these age levels.

The School has never lacked for qualified applicants at key entry points. Demand has historically exceeded the number of seats available, among all entry points, as detailed in the table below for the five most recently completed academic years and for the 2017-18 academic year. Over the five most recent years, including the upcoming fall 2017 term, the total waiting list at key entry points has increased to 487 from 446, or by approximately 9.2%. The waiting list increased to 108 students from 53 students, or by nearly 104%, for the sixth grade, and to 223 students from 200 students, or by 11.5%, for the ninth grade. Wait List Pool at Key Entry Points 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18* Nursery Threes 93 47 56 46 44 28 Pre-Kindergarten 11 6 22 17 21 19 Kindergarten 141 140 134 97 95 109 Sixth 41 53 56 31 75 108 Ninth 130 200 189 168 163 223 Total 416 446 401 359 398 487 ______* Based on data available at June 1, 2017.

For the years in which Pre-Kindergarten wait pool applicants dipped below 20, the School had actively limited applications as a result of few spaces available and a near-100% yield, thereby prohibiting an unrealistically large wait list.

Total enrollment (male/female) for the five most recently completed academic years and for the 2017-18 academic year is set forth in the following table.

Total Enrollment (Male/Female) Academic % Total Year Male % Male Female Female Students 2012-13 933 51.4% 883 48.6% 1,816 2013-14 910 51.1% 872 48.9% 1,782 2014-15 904 50.7% 878 49.3% 1,782 2015-16 903 50.4% 888 49.6% 1,791 2016-17 922 51.5% 869 48.5% 1,791 2017-18* 905 50.6% 884 49.4% 1,790 ______* Based on data available at June 1, 2017.

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A-11 APPENDIX A

Student attrition for the five most recently completed academic years is set forth in the following table.

Historical Attrition Academic Number of % of all Total 2012-13 66 3.6% 1,816 2013-14 44 2.5% 1,782 2014-15 38 2.1% 1,782 2015-16 56 3.1% 1,791 2016-17* 49 2.7% 1,791 ______* Based on data available at June 1, 2017.

Competition for Applicants

Horace Mann’s primary admissions entry points are at Nursery, Kindergarten, sixth grade and ninth grade. In the Nursery and Lower Divisions, competition for applicants includes single-sex schools in Manhattan, particularly for girls, and other highly competitive independent day schools in Manhattan. At sixth grade, the School competes with top rated public schools and other independent schools in the New York area and New Jersey. At ninth grade, the School competes primarily with Stuyvesant High School, the Bronx High School of Science and other top rated public schools, and also with private schools located in New York City, including The Dalton School, Trinity School, Ethical Culture-Fieldston School, Collegiate School, The Brearley School, and Riverdale Country School.

College Enrollment

In the School’s 10 most recent graduating classes of 2008 through 2017, at least 34 Horace Mann graduates entered each of the following colleges and universities:

Number of Horace Mann College/University Graduates Enrolled University of Chicago 124 Columbia University 108 University of Pennsylvania 97 Cornell University 87 Harvard University 74 Yale University 65 New York University 59 Georgetown University 55 Washington University 49 Brown University 44 University of Michigan 43 Northwestern University 37 Dartmouth College 36 Stanford University 35 Princeton University 34

For the School’s Class of 2017, 69% of Horace Mann graduates will be attending schools within the US News & World Report Top 25 Liberal Arts Colleges or Top 25 Universities.

A-12 APPENDIX A

For the Class of 2017, students with the 20 lowest grade point averages will attend: Carnegie Mellon University; City College of New York CUNY; Duke University; Lafayette College; New York University; Rensselaer Polytechnic Institute; Rutgers University-New Brunswick; State University of New York – Albany; Syracuse University; The Ohio State University; The University of Alabama; Tulane University; University of Wisconsin, Madison and Washington University in St. Louis.

Scholastic Aptitude and Achievement Test Scores

For the five most recently completed academic years, Horace Mann students received the mean scores listed below on the SAT-I and ACT tests.

Scholastic Aptitude Test – 1 Scores Horace Mann School Means National Means Academic Year ended Reading Math Writing Total Reading Math Writing Total 2012 709 707 722 2138 496 514 488 1498 2013 717 709 723 2149 496 514 488 1498 2014 715 718 735 2168 497 513 487 1497 2015 719 720 727 2166 495 511 484 1490 2016 715 726 732 2173 494 508 482 1484 20171 703 716 703 2122 * * * * 20171 710 750 -- 1460 * * * * ______* Data not yet available as of the date of this Offering Memorandum. 1 In spring 2016, The College Board offered a redesigned SAT 1, which moved from Critical Reading to Evidence Based Reading and Writing, eliminating the Writing score.

ACT Test Scores Horace Mann School Means National Means Academic Year ended English Math Reading Science Comp English Math Reading Science Comp 2012 32.4 31.6 31.4 30.2 31.3 20.5 21.1 21.3 20.9 21.1 2013 31.9 30.9 31.1 29.4 30.8 20.2 20.9 21.1 20.7 20.9 2014 32.8 31.7 31.6 30.9 31.5 20.3 20.9 21.3 20.8 21.0 2015 33.5 32.3 32.4 31.8 32.4 20.4 20.8 21.4 20.9 21.1 2016 33.4 31.6 32.6 31.3 32.1 20.1 20.6 21.3 20.8 20.8 2017 34.3 32.8 33.5 32.7 33.2 * * * * * ______* Data not yet available as of the date of this Offering Memorandum.

Financial Results

The following table sets forth the activity in the School’s unrestricted net assets for the five most recent fiscal years for which audited financial statements are available. The data in the table below for fiscal year 2016 are consistent with the audited financial statements included in Appendix B to this Offering Memorandum, although the table format differs slightly from the audited financial statements format. The audited financial statements format is designed to demonstrate that tuition and fees do not cover the School’s expenses, and to assist the reader in understanding the importance to the School of both contributions and investment income.

A-13 APPENDIX A

Changes in Unrestricted Net Assets FYE FYE FYE FYE FYE 06/30/12 06/30/13 06/30/14 06/30/15 06/30/16 Revenues Academic year tuition and fees $67,485,595 $72,639,912 $74,795,508 $78,841,906 $82,612,165 Financial aid (8,407,117) (8,968,219) (9,240,829) (9,719,547) (10,264,832) Net academic year tuition and fees 59,078,478 63,671,693 65,554,679 69,122,359 72,347,333

Auxiliary revenues 129,659 130,788 175,159 179,042 239,266 Other program revenue 836,569 733,620 736,578 762,766 696,992 New York State nonpublic school aid 938,520 904,247 898,017 1,081,932 2,409,787 Other revenues 307,752 409,292 435,082 477,806 297,029 Contributions 5,061,307 5,268,260 5,325,910 5,806,898 5,801,197 Parents Association, net 146,166 483,311 526,916 445,532 107,408 Net investment income (1,760,166) 9,359,498 11,636,733 1,862,254 (4,146,133) Net assets released from restrictions 2,352,460 1,634,348 1,439,873 1,363,701 5,606,428 Total $67,090,745 $82,595,057 $86,728,947 $81,102,290 $83,359,307 Expenses Total payroll and benefits $45,577,443 $49,343,081 $51,588,418 $52,954,858 $55,583,012 Education 4,517,864 4,601,807 4,494,377 5,199,303 5,869,533 Auxiliary activities 1,797,860 1,676,999 1,739,600 1,841,456 1,958,124 Other programs 814,068 816,896 910,812 934,451 967,936 Plant services 3,850,652 4,222,951 4,507,854 4,392,477 4,357,457 General and administrative 4,674,985 3,736,182 4,061,701 5,358,048 5,290,070 Depreciation and amortization 5,283,174 5,612,917 5,533,911 6,528,232 5,994,608 Interest 2,046,950 1,983,250 1,909,750 1,293,872 710,841 Total $68,562,996 $71,994,083 $74,746,423 $78,502,697 $80,731,581

Change in unrestricted net assets, before other changes ($1,472,251) $10,600,974 $11,982,524 $2,599,593 $2,627,726 Other changes in unrestricted net assets Settlement cost ($6,638,371) ($1,380,131) $(1,850,000) Post retirement benefit adjustment (3,978,911) 1,475,970 (3,326,852) (5,150,096) (3,308,529) Change in value of split interest agreements (7,198) (2,688) (4,347) 7,000 (6,207) Unrestricted endowment (26,922) Reclassification (4,336,424) 69,218 Total (8,349,455) (5,095,871) (4,711,330) (6,993,096) (3,314,736)

Change in unrestricted net assets (9,821,706) 5,505,103 7,271,194 (4,393,503) (687,010)

Unrestricted net assets beginning of period 102,177,959 92,356,253 97,861,356 105,132,550 100,739,047

Unrestricted net assets end of period $92,356,253 $97,861,356 $105,132,550 $100,739,047 $100,052,037 ______Note: In accordance with generally accepted accounting principles (“GAAP”), unrestricted contributions, received initially as pledges, are recorded as temporarily restricted revenue when the pledges are received, and are shown in the above Statement of Changes in Unrestricted Net Assets as released from restrictions only as collections are received.

A-14 APPENDIX A

The following table sets forth the School’s net assets at June 30 for the five most recent fiscal years for which audited financial statements are available. Fund balances reflect market conditions on the indicated dates and should not be viewed as indicative of fund balances on any subsequent date.

Net Assets 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 Unrestricted Undesignated $9,184,488 $6,158,431 $1,100,826 $604,969 $185,962 Board designated 17,028,025 26,541,248 38,197,501 35,072,278 26,933,640 Limited use assets 2,323,525 2,491,625 2,724,875 3,182,375 2,508,775 Investment in plant 63,820,215 62,670,052 63,109,348 61,879,425 70,423,660 Total unrestricted 92,356,253 97,861,356 105,132,550 100,739,047 100,052,037 Temporarily restricted 12,428,710 14,095,066 16,988,233 20,882,555 35,999,040 Permanently restricted 20,335,776 20,597,493 21,072,814 21,676,568 24,427,623 Total net assets $125,120,739 $132,553,915 $143,193,597 $143,298,170 $160,478,700

Management’s Discussion

Revenues. Over an extended period, the School has successfully managed its tuition levels up to competitive market levels thereby allowing it to provide financial aid to those with demonstrated financial need. The School targets in its operating budget aggregate financial aid at 11.5% of tuition supplemented by available restricted funds, as discussed below. The School continues to attract and retain a strong and representative cross section of academically qualified students in turn enriching the academic experience for all. The School believes in the value of education at all levels and, accordingly, several years ago the School took a leadership role in leveling tuition across all grades. This approach is now the norm for a growing number of top-tier independent day schools in New York City.

In fiscal year 2016, unrestricted contributions totaled $5,908,605. Unrestricted annual fund giving was approximately even with fiscal year 2015, demonstrating the continued commitment to the School and the quality education it offers. The Parents Association separately raised an additional $644,504 in fiscal year 2016, further evidencing this commitment.

Investment income for fiscal year 2016 was ($5,019,903). The School uses a 4.5% spending rate applied to an average of 20 quarters’ trailing portfolio market values to smooth investment returns and applies the result to that portion of the portfolio which is directly applicable to the permanently restricted funds and the cumulative earnings thereon (approximately 18% of the managed portfolio at June 30, 2016). The remainder of the investment income (loss) is added to (subtracted from) net unrestricted assets. For fiscal year 2016, the spending formula generated $978,470 of investment income released from restrictions as follows:

Investment Income Released From Restriction for Support General $141,642 Library $22,147 Financial assistance $628,838 Faculty $144,927 Capital Improvements $40,916

A-15 APPENDIX A

Expenses. Salaries and benefits drive the expense budget. The School endeavors to provide competitive compensation, thus enabling it to attract, motivate and retain highly qualified faculty, administrators and staff. The School offers a post-retirement benefit package, the costs of which are accrued in accordance with GAAP.

Budgeting Principles and Process

Principles. The budgeting process is a planning process, not a mandate to spend or a limitation on spending. The School strives to anticipate its operational and capital needs in advance of those needs, in order to prioritize them in the context of reasonably anticipated available resources. The operating budget includes those items considered essential to the continued operation of the School without sacrificing the quality of the educational product it is known for delivering, while maintaining competitive tuition, financial aid, and compensation levels.

The budget intentionally includes reserve funds to enhance or enrich programs as opportunities present themselves, thereby allowing the School to continue to enjoy its academic leadership position. Every attempt is made to grow by substitution rather than by addition, striving to maintain as efficient an organization as possible, in turn prioritizing available resources to fund programs.

The School chooses not to depend on investment income for its ongoing operating budget, but instead chooses to build a financial cushion enabling it to weather periodic financial downturns, without jeopardizing the School’s ability to deliver its quality education. This reserve, coupled with the generosity of the School’s donor base, also allows the School to budget and self-finance significant ongoing capital expenditures ($57 million over the 10-year period ended June 30, 2016), including major projects such as the new Gold LEED-certified facilities at Dorr (approximately $8 million) and purchases of adjacent properties as they become available.

Process. The development of the annual operating budget begins in the fall with a request for departmental and divisional input for anticipated staffing and expenses for the upcoming year. Based on this and the current and prior years’ operating data, the Chief Financial Officer, working under the guidance of the Finance Committee of the Board, has the responsibility to construct a proposed preliminary budget for the Head of School. The budget is then presented for approval through the Finance Committee to the Executive Committee, and finally to the Board for approval (generally in January) as the preliminary budget for the following academic year. This preliminary budget is used to set, among other items, the main drivers of the School’s operating performance: tuition rates, aggregate financial aid awards, salary and benefit adjustments, and the rate of spending from certain investment accounts. In the fall, based on actual enrollment and staffing, a final budget is assembled and similarly presented for approval. This document then forms the basis for starting the next cycle of requests and recommendations for the subsequent academic year operating budget. A similar and parallel process takes place in respect of the annual capital budget. Items with a value of $1,000 or more, and with an estimated useful life of three years or more, are budgeted as capital, and classified as Facilities, Security, Technology or Other.

Tuition

The School believes its annual tuition and fees remain competitive in comparison to its peer institutions. Horace Mann School charges only what it needs to operate programs at a targeted level. The 2016-17 academic year stated tuition of selected New York City independent schools are set forth in the table below. Stated tuition at several schools is inclusive of fees.

A-16 APPENDIX A

2016-2017 Comparative Tuition*

The The Culture Riverdale Horace Brearley Collegiate Dalton Fieldston Country Trinity Mann School School School Schools School School School $45,600 $47,500 $44,640 $47,000 $49,805 $45,310 $46,800 ______* Data set forth in this table was compiled by the School’s administration based on publicly available information.

The table below sets forth tuition financial aid information for the five most recently completed academic years and the 2017-18 academic year.

Tuition Financial Aid

Total # As a % Academic Average # of of % of all Total Related Total of Year Award Recipients Students Students Awards Tuition Tuition 2012-13 $28,416 293 1,816 16.1% $8,325,967 $70,685,440 11.8% 2013-14 $30,278 283 1,782 15.9% $8,568,716 $72,969,080 11.7% 2014-15 $32,329 281 1,782 15.8% $9,084,348 $76,781,780 11.8% 2015-16 $33,777 281 1,791 15.7% $9,491,445 $80,201,369 11.8% 2016-17 $35,253 264 1,791 14.6% $9,306,775 $83,422,560 11.0% 2017-18* $36,397 260 1,790 14.5% $9,463,200 $86,048,169 11.0% ______* Based on data available at June 1, 2017.

Development and Fundraising

The School’s Development Office is staffed with eight full-time employees. The Director of Development works closely with the Head of School and the Chair and the Development Committee of the Board in implementing the School’s Annual Fund and capital campaign solicitations. The Development Office also coordinates closely with the Parents Association and the Alumni Council in their efforts to maximize fundraising initiatives.

Annual Giving. Annual Fund contributions support the School’s annual operating budget and are available to enhance academic and co-curricular programming, attract and retain talented faculty and staff, provide financial aid for an economically diverse student body, and maintain the School’s four campuses. The School also receives restricted, annual gifts where the donor wishes to direct the use of the donation for a particular use.

For the past decade, the School has set the Annual Fund goal to match, and ideally exceed, the previous year’s actual receipts. The School has realized an increase in annual giving in nine out of the past 10 fiscal years, with the exception of fiscal year 2009, when the financial crisis contributed to the School missing its target by eight percent. In each of the other nine fiscal years, the School has seen growth ranging from a low of less than 1% in fiscal year 2012 to a high of 9.4% in fiscal year 2015. Over the past 10 fiscal years, the School has realized an overall unrestricted cash growth to approximately $5.8 million from $4.3 million, an increase of nearly 35%. Average gift size over the same period increased by 41%, from $1,656 in fiscal year 2008 to $2,343 in fiscal year 2016.

The generous support of the greater Horace Mann community has contributed to the School’s steady growth in annual giving. In fiscal year 2016, almost 2,500 individuals demonstrated their commitment to Horace Mann by donating to Annual Fund 2016, representing more than 78% of parents and 16% of alumni. Since fiscal year 2013, the number of young alumni contributing increased by 29% and the number of faculty and staff members contributing increased by 25%.

A-17 APPENDIX A

Final Year-end Annual Fund Actual v. Goal (Dollars in Millions) Final Yearly Year (Unrestricted) Goal 2012 $5.0 $5.0 2013 5.3 5.0 2014 5.3 5.3 2015 5.8 5.3 2016 5.8 5.8

Annual Fund Support By Donor Group (By Percent) Foundations/ Year Parents Alumni Matching Gifts Other 2012 57% 32% 4% 7% 2013 63 27 3 7 2014 62 38 3 7 2015 62 26 4 8 2016 64 26 3 7

To assist in its fundraising endeavors, the School utilizes a volunteer network of 13 Trustee Captains, 181 Parent Grade Representatives, 199 Alumni Class Agents (including eight from the graduating Class of 2016), 27 Faculty and Staff Volunteers and a Grandparent Chair. Mass-marketing support includes four mailed solicitations to the School’s parents, alumni, grandparents, current and former faculty and staff, and parents of graduates, two campaign promoting videos sent via email, twice yearly phone-a-thons, and a fiscal-year-end calling initiative by Development Officers of the School.

Community Support. Each year Horace Mann’s Parents Association sponsors a gala benefit dinner to support financial aid and the Student Assistance Fund. In fiscal year 2016, the event raised over $100,000. The School’s Alumni Council also hosts an annual fundraising event with funds raised being restricted to financial aid. The Council’s 2016 benefit raised $94,478.

The table below contains a summary of the Consolidated Statement of Gifts derived from the School’s audited financial statements for the five most recent fiscal years for which audited financial statements are available. Consolidated Statement of Gifts Academic Unrestricted Parents’ Restricted Endowment Year Gifts Association Gifts* Gifts Total Gifts 2011-12 $5,061,307 $146,166 $4,423,225 $136,742 $9,767,440 2012-13 5,268,260 483,311 1,044,936 261,717 7,058,224 2013-14 5,325,910 526,916 751,509 475,321 7,079,656 2014-15 5,806,898 445,532 4,836,301 603,754 11,692,485 2015-16 5,801,197 107,408 21,646,961 2,701,104 30,256,670 ______* 2015-2016 restricted gifts includes $644,504 raised by the Parents’ Association

HM in Motion. Horace Mann publicly launched a new $100 million campaign on September 15, 2016 – “HM in Motion.” The School established the goals for the campaign after consulation with an outside consulting firm. The quiet phase of the campaign generated gifts and pledges totaling $64.2 million from 152 leadership donors. At June

A-18 APPENDIX A

23, 2017, campaign pledges totaled $77.6 million, $27.8 million of which has been received, from 253 leadership donors, including 25 seven-figure gifts and 99 six-figure gifts. The School announced recently that it received a $7.5 million pledge from one family, the largest in its history. The campaign has been supported across the Horace Mann community with the three largest pledges ($7.5 million and two of $5 million) donated across multiple constituencies – parents, alumni and grandparents. The School has experienced strong response across its community with a high attendance and close rate at solicitation events. More than 150 pending “asks” currently are being manged by School administrators and Trustees. The diversity and size of gifts and pledges received reflects strong and expansive donor base support and ongoing finanical commitment, with the average leadership gift and pledge size to date of approximately $306,000. The following chart details capital campaign pledges by size at June 23, 2017.

Capital Campaign Pledges By Size Pledges to Date Gift Level Number Amount Cumulative Total $7,500,000 1 $7,500,000 $7,500,000 $5,000,000 2 $10,000,000 $17,500,000 $2,000,000 5 $12,300,000 $29,800,000 $1,000,000 17 $18,750,000 $48,550,000 $500,000 24 $13,188,723 $61,738,723 $250,000 26 $7,226,799 $68,965,522 $100,000 49 $6,116,853 $75,082,375 $50,000 25 $1,359,750 $76,442,126 $25,000 27 $726,257 $77,168,382 <$25,000 82 $482,329 $77,650,711 Totals 258 $77,650,711 $77,650,711

The School has succesfully completed several prior campaigns. These include:

Foundations for Excellence: In 2005, the School closed this campaign, which generated nearly 104% of its $25 milion target, with $25,874,068 raised from 611 donors. This successful campaign reflected strong commitment across all donor groups at all category size levels. There were 79 major gifts with a $275,000 average size, and 543 smaller gifts with a $7,830 average size. This campaign had a three-year timeline. Foundations for Excellence funded certain renovations and construction, including for the Upper Division the renovation Tillinghast Hall and the construction of Mullady Hall (library, theatre and administrative offices), and for the Lower Division the renovation, modernization and expansion of the library, the creation of a first grade suite, and the addition of space for technology and art departments to nurture creative academic growth.

Inherit the Future: In 2001, the School closed this campaign 28 months after kickoff, raising $31.69 million. The campaign funded two new buildings – Rose Hall (new Middle Division), and Fisher Hall (arts and dining center), and funded renovations for science facilities in Pforzeheimer Hall.

Investment Policy

The Investment Committee of the Board is authorized and directed: a) to define investment objectives, policies and guidelines for the School’s endowment and working capital funds, b) to hire and replace investment managers and other professionals, c) to monitor the methodology and investment performance of the School’s investment managers, and d) to report to the Board on a regular basis.

A-19 APPENDIX A

Working with the School’s investment consultant, Prime Buchholz, the Investment Committee has updated the School’s formal investment policy to reflect the requirements of the Uniform Prudent Management of Institutional Funds Act and to the New York Prudent Management of Institutional Funds Act with respect to spending policy.

The Investment Committee reviews and updates the Investment Policy periodically as appropriate, and meets regularly to assess performance and rebalance the portfolio as needed.

At June 30, 2016, the period for which the most recent audited financial statements are available, the School reported a $134,455,268 market value for its investment portfolio, representing a -3.5% one-year annualized return from the prior fiscal year end. The School reported an approximately 3.7% annualized return for its investments over the five fiscal years ended June 30, 2016. The table below sets forth the actual and target investment allocation percentages at June 30, 2016 and the market value for each component by portfolio.

Market Value of Investment Portfolio Target Percent of Percent of One-year Market Value Portfolio Portfolio Portfolio Return $134,455,268 100.0% Total Managed Funds -3.5%

$17,813,040 13.2% 12.5% Domestic Equity 2.1% $17,738,200 13.2% 12.5% International Equity -12.3% $28,751,506 21.4% 25.0% Absolute Return -4.1% $38,172,498 28.4% 25.0% Direct Hedge Strategies -4.3% $31,980,024 23.8% 25.0% Fixed Income 0.9%

At March 31, 2017, the School reported a 9.4% return for the 12-months then ended on its investment portfolio, and an aggregate market value of $145,268,708.

Retirement Plans and Benefits

After one year of service at Horace Mann, all permanent employees working at least 50% of a full time schedule may participate in the School’s 403b plan with Teachers Insurance and Annuity Association of America - College Retirement Equities Fund (TIAA-CREF). The total premium is 15%, of which the School contributes 10% and the employee contributes five percent. In addition, an employee age 55 or older retiring after serving the School for 25 years or more is granted a retirement bonus equivalent to six months’ pay at the employee’s final salary rate. A reduced benefit is available for those employees who are 60 years old and retire with fewer than 25 but more than 10 years of service. The School has a post-retirement health plan covering substantially all employees (and spouses) who were hired prior to July 1, 1996.

Information regarding the accounting for the above described benefits is included in the notes to the fiscal year 2016 audited financial statements included in Appendix B to this Offering Memorandum.

Outstanding Indebtedness

Prior to the issuance of the 2017 Bonds, the School’s only outstanding long-term indebtedness is the loan of the proceeds of the Build NYC Resource Corporation Tax-Exempt Revenue Bonds, Series 2014 (Horace Mann School Project), which will be outstanding in the principal amount of $27.4 million following the principal payment due July 1, 2017.

A-20 APPENDIX A

Insurance

The School’s risk management program is the responsibility of the Chief Financial Officer, under the oversight of the Executive Committee of the Board. The School self-insures those risks that it can reasonably and responsibly self-insure. The School carries standard industry insurance policies, including real and personal property, general comprehensive liability, workers’ compensation, educators’ legal liability, excess liability and automobile liability.

Litigation

There are no actions, claims, suits, proceedings or governmental investigations (to which the School is a party) at law or in equity pending or, to the School’s knowledge, overtly threatened in writing against the School that seek to prevent the consummation of the execution, sale or delivery of the Series 2017 Bonds or in any way question the validity or enforceability of the Series 2017 Bonds or the Trust Agreement. The performance by the School of its obligations under the Series 2017 Bonds and the Trust Agreement does not contravene any order or decree of any court or governmental authority of the State of New York or of the United States applicable to the School.

Pursuant to Note 16 in the 2016 audited financial statements included in this Offering Memorandum as Appendix B, articles have been published alleging that, between the 1960s and mid-1990s, certain students were sexually abused by former employees of the School. Subsequent to such articles being published, a number of former students of the School retained counsel and claimed that they were sexually abused while they were students at the School. At June 1, 2017, all but two claims were settled. The two claims that were not settled remain inactive and, to date, neither former student has filed any legal action against the School. The School retains its rights to assert that all such claims and actions are barred by the statute of limitations, and will defend any action vigorously if litigation is commenced. Accordingly, management cannot assess at this time the potential liability as a result of such claims.

The School is not a party to any other litigation which, in the opinion of management, will have a material adverse impact on its financial position.

A-21

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APPENDIX B

HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

COMBINED FINANCIAL STATEMENTS AND AUDITOR’S REPORT

JUNE 30, 2016

HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

TABLE OF CONTENTS

Independent Auditor’s Report

Exhibit

A - Combined Balance Sheet

B - Combined Statement of Activities

C - Combined Statement of Cash Flows

Notes to Combined Financial Statements

Independent Auditor’s Report

Board of Trustees Horace Mann School and The John Dorr Nature Laboratory of Horace Mann School, Inc.

Report on the Combined Financial Statements

We have audited the accompanying combined financial statements of Horace Mann School and The John Dorr Nature Laboratory of Horace Mann School, Inc., which comprise the combined balance sheet as of June 30, 2016, and the related combined statements of activities, and cash flows for the year then ended and the related notes to the combined financial statements.

Management’s Responsibility for the Combined Financial Statements

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

Auditor’s Responsibility

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

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

Auditors and Consultants 655 Third Avenue, 12th Floor, New York, NY 10017 Serving the Health Care & Not for Profit Sectors (212) 867-4000 / Fax (212) 867-9810 / www.loebandtroper.com 2.

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

Opinion

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Horace Mann School and The John Dorr Nature Laboratory of Horace Mann School, Inc. as of June 30, 2016, and the changes in their net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Report on Summarized Comparative Information

We have previously audited Horace Mann School and The John Dorr Nature Laboratory of Horace Mann School, Inc.’s June 30, 2015 combined financial statements and we expressed an unmodified audit opinion on those audited financial statements in our report dated December 16, 2015. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2015 is consistent, in all material respects, with the audited financial statements from which it has been derived.

November 2, 2016 EXHIBIT A

HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

COMBINED BALANCE SHEET

JUNE 30, 2016 AND 2015

2016 2015

ASSETS

Current assets Cash $ 339,779 $ 596,487 Investments (Note 3) 136,826,521 142,440,789 Tuition receivable (less allowance for doubtful accounts of $150,000 and $160,000 in 2016 and 2015, respectively) 225,996 100,290 Annual fund and benefit receivable 198,213 250,339 Contributions receivable (Note 12) 4,953,796 838,142 Other receivables 301,942 96,402 Bookstore inventory 69,550 67,162 Due from Summer on the Hill 115,196 Prepaid expenses and other assets 897,552 915,057

Total current assets 143,813,349 145,419,864

Limited use assets - investments (Note 3) 2,508,775 3,182,375 Investments (Note 3) 21,789,946 21,288,891 Contributions receivable (Note 12) 16,205,280 1,566,063 Deferred financing costs 840,474 966,104 Fixed assets - net (Note 4) 104,175,966 98,632,810

Total assets $ 289,333,790 $ 271,056,107

-continued- EXHIBIT A -2- HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

COMBINED BALANCE SHEET

JUNE 30, 2016 AND 2015

2016 2015 LIABILITIES AND NET ASSETS Current liabilities Accounts payable and accrued expenses $ 3,173,994 $ 5,255,734 Accrued payroll and employee benefits 3,063,949 2,836,371 Accrued interest payable 703,775 752,375 Accrued retirement bonuses (Note 5) 900,323 584,728 Accrued postretirement benefits payable (Note 5) 1,114,568 1,049,790 Long-term debt (Note 6) 1,805,000 2,430,000 Bond issuance premium 617,856 699,997 Student tuition advance payments and other fees (Note 9) 48,008,493 46,282,636 Annuities payable (Note 14) 14,130 15,130 Other liabilities 636,268 592,335 Total current liabilities 60,038,356 60,499,096 Long-term liabilities Accrued retirement bonuses (Note 5) 6,009,792 5,427,935 Accrued postretirement benefits payable (Note 5) 30,593,818 27,063,064 Long-term debt (Note 6) 29,290,000 31,095,000 Bond issuance premium 2,879,924 3,494,492 Student tuition advance payments and other fees (Note 9) 43,200 178,350 Total long-term liabilities 68,816,734 67,258,841 Total liabilities 128,855,090 127,757,937 Net assets (Exhibit B) Unrestricted Undesignated 185,962 604,969 Board designated 26,933,640 35,072,278 Plant funds (Note 13) 72,932,435 65,061,800 Total unrestricted net assets 100,052,037 100,739,047 Temporarily restricted (Note 10) 35,999,040 20,882,555 Permanently restricted (Note 15) 24,427,623 21,676,568 Total net assets 160,478,700 143,298,170 Total liabilities and net assets $ 289,333,790 $ 271,056,107

See independent auditor's report.

The accompanying notes are an integral part of these statements. HORACE MANN SCHOOL EXHIBIT B AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

COMBINED STATEMENT OF ACTIVITIES

YEAR ENDED JUNE 30, 2016 (With Summarized Financial Information for the Year Ended June 30, 2015)

Unrestricted Plant Board Limited Investment Temporarily Permanently Total Undesignated Designated Use Assets Unexpended in Plant Total Restricted Restricted 2016 2015 Revenues Academic year tuition before financial aid $ 80,399,300 $ 80,399,300 $ 80,399,300 $ 76,832,309 Other fees (includes mandatory facility improvement fees of $1,521,550 in 2016 and $1,337,200 in 2015) 2,212,865 2,212,865 2,212,865 2,009,597 Financial aid (Note 8) (10,264,832) (10,264,832) (10,264,832) (9,719,547)

Net academic year tuition and fees 72,347,333 72,347,333 72,347,333 69,122,359

Auxiliary revenues (Note 11) 239,266 239,266 239,266 179,042 Other program revenues (Note 11) 696,992 696,992 696,992 762,766 New York State non-public-school aid 1,099,644 1,099,644 1,099,644 892,820 New York State non-public-school aid-prior year 1,310,143 1,310,143 1,310,143 189,112 Other revenues 297,029 297,029 297,029 477,806

Total revenues 75,990,407 75,990,407 75,990,407 71,623,905

Expenses Payroll and employee benefits 55,583,012 55,583,012 55,583,012 52,954,858 Education 5,869,533 5,869,533 5,869,533 5,199,303 Auxiliary activities (Note 11) 1,958,124 1,958,124 1,958,124 1,841,456 Other programs (Note 11) 967,936 967,936 967,936 934,451 Plant services 4,357,457 4,357,457 4,357,457 4,392,477 General and administrative 5,290,070 5,290,070 5,290,070 5,358,048 Depreciation $ 5,868,978 5,868,978 5,868,978 5,832,793 Amortization of deferred financing cost 125,630 125,630 125,630 695,439 Interest expense $ 1,407,550 (696,709) 710,841 710,841 1,293,872

Total expenses 74,026,132 1,407,550 5,297,899 80,731,581 80,731,581 78,502,697

Excess (deficiency) of revenues over expenses before investment income, contributions and other changes in net assets 1,964,275 (1,407,550) (5,297,899) (4,741,174) (4,741,174) (6,878,792)

Contributions and other changes Contributions 5,801,197 5,801,197 $ 21,002,457 $ 2,701,104 29,504,758 10,920,757 Parents Association revenues 400,600 $ 21,205 421,805 644,504 1,066,309 1,095,478 Parents Association expenses (300,687) (13,710) (314,397) (314,397) (323,750) Net assets released from restrictions (Note 10) 1,584,880 $ 4,021,548 5,606,428 (5,606,428)

Total contributions and other changes 7,485,990 7,495 4,021,548 11,515,033 16,040,533 2,701,104 30,256,670 11,692,485

-continued- HORACE MANN SCHOOL EXHIBIT B AND THE JOHN DORR NATURE LABORATORY -2- OF HORACE MANN SCHOOL, INC.

COMBINED STATEMENT OF ACTIVITIES

YEAR ENDED JUNE 30, 2016 (With Summarized Financial Information for the Year Ended June 30, 2015)

Unrestricted Plant Board- Limited Investment Temporarily Permanently Total Undesignated Designated Use Assets Unexpended in Plant Total Restricted Restricted 2016 2015 Excess (deficiency) of revenues over expenses before investment income and other changes in net assets $ 9,450,265 $ 7,495 $ (1,407,550) $ 4,021,548 $ (5,297,899) $ 6,773,859 $ 16,040,533 $ 2,701,104 $ 25,515,496 $ 4,813,693

Investment income Interest and dividends 1,089,334 1,089,334 217,037 1,306,371 1,604,505 Realized gain on investments 228,179 228,179 43,729 271,908 1,445,542 Unrealized loss on investments (5,376,752) (5,376,752) (1,117,221) (6,493,973) (454,311) Investment advisory and custody fees (86,894) (86,894) (17,315) (104,209) (105,760)

Net investment income (4,146,133) (4,146,133) (873,770) (5,019,903) 2,489,976

Change in net assets before other changes in net assets 9,450,265 (4,138,638) (1,407,550) 4,021,548 (5,297,899) 2,627,726 15,166,763 2,701,104 20,495,593 7,303,669

Other changes in net assets Nonmandatory transfers to unexpended plant (7,390,586) 7,390,586 Purchase of fixed assets - ongoing capital purchases (7,390,586) 7,390,586 Construction in progress (4,021,548) 4,021,548 Change in value of split-interest agreements (6,207) (6,207) (6,207) 7,000 Principal payment on long-term debt (2,430,000) 2,430,000 Debt service (1,358,950) 1,358,950 Bond sinking fund (1,805,000) 1,805,000 Bad debt loss (327) (327) (206,000) Settlement cost (Note 16) (1,850,000) Postretirement benefit adjustment (3,308,529) (3,308,529) (3,308,529) (5,150,096) Appropriation of Board-designated funds 4,000,000 (4,000,000) Reclassification (Note 2) (49,951) 49,951

Change in net assets (Exhibit C) (419,007) (8,138,638) (673,600) - 8,544,235 (687,010) 15,116,485 2,751,055 17,180,530 104,573

Net assets - beginning of year 604,969 35,072,278 3,182,375 61,879,425 100,739,047 20,882,555 21,676,568 143,298,170 143,193,597

Net assets - end of year (Exhibit A) $ 185,962 $ 26,933,640 $ 2,508,775 $ - $ 70,423,660 $ 100,052,037 $ 35,999,040 $ 24,427,623 $ 160,478,700 $ 143,298,170

See independent auditor's report.

The accompanying notes are an integral part of these statements. EXHIBIT C

HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

COMBINED STATEMENT OF CASH FLOWS

YEARS ENDED JUNE 30, 2016 AND 2015

2016 2015

Cash flows from operating activities Change in net assets (Exhibit B) $ 17,180,530 $ 104,573 Adjustments to reconcile change in net assets to net cash provided by operating activities Net realized and unrealized loss (gain) on investments 6,222,065 (991,231) Amortization of bond issuance premiums (696,709) (493,837) Amortization of deferred financing cost 125,630 695,439 Depreciation 5,868,978 5,832,793 Contributions restricted to long-term investment (2,701,104) (603,754) Actuarial change in value of split-interest agreements 6,207 (7,000) Decrease (increase) in assets Tuition receivable (125,706) 10,188 Annual fund and benefit receivable 52,126 18,777 Contributions receivable (16,504,871) (1,803,169) Other receivables (205,540) 80,722 Bookstore inventory (2,388) (6,383) Due from Summer on the Hill 115,196 18,470 Prepaid expenses and other assets 17,505 197,880 Increase (decrease) in liabilities Accounts payable and accrued expenses (2,081,740) 2,392,920 Accrued payroll and employee benefits 227,578 12,706 Accrued interest payable (48,600) (202,500) Accrued retirement bonuses 897,452 (108,059) Accrued postretirement benefits payable 3,595,532 5,733,134 Student tuition advance payments and other fees 1,590,707 2,725,045 Other liabilities 43,933 (21,429)

Net cash provided by operating activities 13,576,781 13,585,285

-continued- EXHIBIT C -2- HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

COMBINED STATEMENT OF CASH FLOWS

YEARS ENDED JUNE 30, 2016 AND 2015

2016 2015

Cash flows from investing activities Purchase of investments $ (13,171,082) $ (17,240,190) Proceeds from sales of investments 12,735,830 5,600,044 Fixed asset acquisitions (11,412,134) (3,772,709)

Net cash used by investing activities (11,847,386) (15,412,855)

Cash flows from financing activities Proceeds from permanently restricted contributions 451,104 603,754 Proceeds from long-term debt 33,525,000 Principal payments on long-term debt (2,430,000) Payments on annuity obligations (7,207) (6,242) Proceeds from bond premium 4,688,326 Deferred financing cost (1,050,089) Principal payments on capital lease obligations (38,195,000)

Net cash used by financing activities (1,986,103) (434,251)

Net change in cash (256,708) (2,261,821)

Cash - beginning of year 596,487 2,858,308

Cash - end of year $ 339,779 $ 596,487

Supplemental disclosure of cash flow information Cash paid during the year for interest $ 1,456,150 $ 1,990,209

See independent auditor's report.

The accompanying notes are an integral part of these statements.

HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 1 - NATURE AND PURPOSE OF ORGANIZATION

Horace Mann School (the School) is located in Riverdale and Manhattan, New York. The School provides a continuous education program for boys and girls from nursery through high school. The John Dorr Nature Laboratory of Horace Mann School, Inc. (John Dorr) is located in Washington, Connecticut. John Dorr holds title to certain land and real property.

The School and John Dorr are not-for-profit organizations exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. The School is supported primarily by tuition and fees. John Dorr is supported by the School.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting - The financial statements are prepared on the accrual basis of accounting.

Principles of combination - The financial statements include the activities of Horace Mann School and The John Dorr Nature Laboratory of Horace Mann School, Inc. Inter-entity balances have been eliminated. John Dorr holds title to certain land and buildings being utilized by the School and has no operations.

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Investments - Investments in securities are recorded at fair value. The fair value of the investment in the off-shore investments is determined by the investment manager. The methods and procedures used to value these investments may include, but are not limited to: (1) performing comparisons with prices of comparable or similar securities; (2) obtaining valuation-related information from issuers; and/or (3) other analytical data relating to the investment and using other available indications of value. However, because of the inherent uncertainty of valuation, the estimated fair values for the aforementioned securities and interests may differ from the values that would have been used had a ready market for the investments existed, and the differences could be material. The School commingles the investments of all funds in a common investment pool to achieve a higher return on its investments. Investment management fees are netted against investment income in the accompanying combined statement of activities.

-continued- 2. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The School invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term, based upon the markets’ fluctuations, and that such changes could materially affect the School’s financial statements.

Tuition and other receivables - Tuition receivable consists of unpaid tuition balances. Other receivables consist of other charges earned but not yet received. Receivables are presented net of allowances for doubtful accounts. Interest is not accrued or recorded on outstanding receivables.

Contributions receivable (including annual fund and benefit receivable) - Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on these amounts are computed using risk-adjusted interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue. Conditional promises to give are not included as support until the conditions are substantially met.

Allowance for doubtful accounts - The School determines whether an allowance for uncollectibles should be provided for all receivables. Such estimates are based on management’s assessment of the aged basis of its receivables, current economic conditions, subsequent receipts and historical information. Receivables are written off against the allowance for doubtful accounts when all reasonable collection efforts have been exhausted.

Inventory - Inventory is stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. Inventory consists of books and supplies.

Limited use assets - Limited use assets consist of assets set aside under the terms of the lease agreement, under the control of the lessor, to be used for capital replacements, acquisitions and debt service.

Deferred financing costs - Financing costs are deferred and amortized over the term of the related debt.

Fixed assets - Fixed assets are recorded at cost. Depreciation is recorded on the straight-line method over the estimated useful lives of the assets. Items with a cost of $1,000 or more and an estimated useful life of greater than one year are capitalized.

-continued- 3. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cost of borrowing - Interest costs incurred on borrowed funds during the period of construction of capital assets are capitalized as a component of the cost of acquiring those assets.

Tuition advance payments and other fees - The School receives deposits and prepayments from students in advance. These deposits are recorded as a liability and are applied against the students’ tuition in the period in which it is earned. Deposits are expected to be earned within the next three fiscal years.

Tuition revenues - Tuition is recognized on the accrual basis. Students are billed in advance of services rendered, and revenues are recognized as earned.

Financial aid and scholarships - The policy of the School has been to award financial aid and scholarships to deserving students in lieu of accepting only students who have the ability to pay full tuition.

Contributions - Unconditional contributions, including promises to give cash and other assets, are reported at fair value at the date the contribution is received. The gifts are reported as temporarily restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the combined statement of activities as net assets released from restrictions.

Advertising and marketing costs - All advertising and marketing costs are expensed in the year they are incurred.

Unrestricted net assets - Unrestricted net assets include funds having no restriction as to use or purpose imposed by donors. In addition, resources which are set aside for board-designated purposes are unrestricted.

Plant - The plant net assets consist of three funds, which are unrestricted. The investment in plant consists of capital assets and their underlying liabilities. The unexpended plant consists of investments designated by the Board for future capital purchases and repayment of underlying debt, and limited use assets designated for the same purposes.

-continued- 4. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Temporarily and permanently restricted net assets - Temporarily restricted net assets are those whose use by the School has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained by the School in perpetuity.

Functional allocation of expenses - The costs of providing services have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

Prior-year summarized comparative information - The financial statements include certain prior- year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the financial statements for the year ended June 30, 2015, from which the summarized information was derived.

Fair Value Measurements Fair Value Measurements establishes a framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below. Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the School has the ability to access. Level 2 inputs to the valuation methodology include:

 Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in inactive markets;  Inputs other than quoted prices that are observable for the asset or liability;  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

-continued- 5. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value Measurements (continued) If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, 2016 as compared to those used at June 30, 2015.

U.S. Government obligations - Valued at the closing price reported on the active market on which the individual securities are traded.

State of Israel bonds - Valued based on yields currently available on comparable securities of issuers with similar credit ratings.

Mutual funds (including money market mutual funds) - Valued at the net asset value (NAV) of shares held at year end.

Off-shore investments - These funds invest in securities and options. Securities, including options, that are listed on a stock exchange and are freely transferable are valued at their last sales price on the date of determination on the stock exchange which is the principal exchange for such securities or, if no sales occurred on such day, at the “bid” (for long positions) and “ask” (for short positions) prices on such exchange at the close of business on such day. Securities and options traded over the counter which are freely transferable are valued at the last sales price on the date of determination or, if no sales occurred on such day, at “bid” (for long positions) and “ask” (for short positions) prices at the close of business on such day. Notwithstanding the foregoing, if in the reasonable judgment of the investment manager, in its sole discretion, the listed price of any security held by such company does not accurately reflect the value of such security, the investment manager may value such security at a price which is greater or less than the quoted market price for such security.

-continued- 6. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value Measurements (continued) The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the School believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Level 1 Level 2 Level 3 Total

Mutual funds Money market funds $ 26,605,901 $ - $ - $ 26,605,901 Developed Markets Index 10,482,119 - - 10,482,119 Emerging Markets Stock Index 5,128,998 - - 5,128,998 Total Stock Market Index 17,813,040 - - 17,813,040 Hedged Equity Fund 6,233,819 - - 6,233,819 U.S. Government obligations - 31,980,025 - 31,980,025 State of Israel bonds - 66,000 - 66,000 Off-shore investments - - 62,815,340 62,815,340

Total assets at fair value $ 66,263,877 $ 32,046,025 $ 62,815,340 $ 161,125,242

-continued- 7. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value Measurements (continued) Level 3 Gains and Losses The table below sets forth a summary of changes in the fair value of the Level 3 assets for the year ended June 30, 2016:

Off-Shore Investments

Balance, beginning of year $ 74,819,803 Losses (3,017,479) Sales (8,986,984)

Balance, end of year $ 62,815,340

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets still held at the reporting date $ (2,898,462)

(a) Archstone Offshore Fund, Ltd. - The fund was formed primarily with the purpose of achieving long-term growth of capital with reduced volatility by allocating its capital among various money managers that, as a group, employ a variety of investment techniques and strategies.

(b) Forester Offshore A. Ltd. - The investment objective is to provide investors with maximum appreciation of capital while incurring reasonable risk by investing primarily in a diversified group of investment funds.

(c) Farallon Capital, Ltd. (FCOI II Special Situation Accounts) - The fund invests globally across asset classes, seeking to achieve superior risk-adjusted returns through a process of bottom- up fundamental analysis that emphasizes capital preservation.

(d) Och Ziff Overseas Fund II, Ltd. - The fund’s investment objective is to achieve consistent, positive, absolute returns with low volatility primarily by seeking to exploit pricing inefficiencies in equity and debt securities.

-continued- 8. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value Measurements (continued) (e) Highfields Capital Ltd. - The fund’s objective is to invest primarily in marketable equity securities, debt instruments, convertible securities, options, warrants, futures, swaps, other derivatives and nonpublic securities.

(f) Silver Point Capital Offshore Fund, Ltd. - The fund was formed to acquire a portfolio of primarily below investment grade debt, generally consisting of secured term and revolving loans.

(g) Anchorage Capital Partners Offshore, D. Ltd. - The fund is a debt-focused special situations fund that seeks to earn superior risk-adjusted returns while emphasizing preservation of capital.

(h) The Canyon Value Realization Fund Cayman Ltd. - The fund seeks capital appreciation and current income by investing in financial instruments that are perceived to be inefficiently priced as a result of business, financial, or legal uncertainties.

(i) Crestwood Capital International, Ltd. - The investment objective is to achieve attractive returns on its investment portfolio by employing fundamental research and analysis of a select number of securities.

(j) Hoplite Capital A IY, Ltd. - Seeks to achieve superior risk-adjusted returns primarily through investment in mispriced equities, fixed income securities and capital structure arbitrage.

(k) Fir Tree Offshore Value Fund, Ltd. - The fund’s objective is to maximize long-term absolute gains that exceed those of broader market averages and to minimize risk and volatility of returns through a global long/short investment strategy.

(l) Coatue Offshore Fund, Ltd. - The fund was organized for the purpose of trading and investing in securities.

(m) Valinor Capital Partners Offshore B. Ltd. - The fund invests in public equity markets.

(n) Davidson Kempner Institutional Partners, L.P. - Davidson Kempner utilizes a conservative investment philosophy as it seeks to produce absolute returns with a high priority on capital preservation by investing in merger arbitrage and distressed securities.

(o) Lakewood Capital Offshore Fund Ltd. - The fund invests in public equity markets.

-continued- 9. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value Measurements (continued) June 30, 2016 Fair Value Lock-up Inception Redemptions Notice

(a) $ 4,667,097 1 year 1/1/2007 Quarterly 90 days (b) 9,033,005 2 years 1/1/2010 Annually 95 days (c) 208,910 None N/A Illiquid N/A (d) 6,555,515 2 years 7/1/2007 Annually 45 days (e) 7,527,672 2 years 1/01/2008 Annually 60 days (f) 7,485 None N/A Illiquid N/A (g) 5,002,723 1 year 6/1/2010 Annually 90 days (h) 6,425,439 No lock-up 1/11/2011 Quarterly 60 days (i) 2,740,257 1 year 11/1/2011 Quarterly 60 days (j) 2,644,302 1 year 7/1/2013 Quarterly 45 days (k) 2,585,873 2 years 3/1/2014 Rolling 2 YRS 90 days (l) 3,660,782 1.5 years 1/1/2013 Quarterly 45 days (m) 2,593,060 1 year 9/1/2013 Annually 60 days (n) 6,098,722 No lock-up 7/1/2012 Quarterly 65 days (o) 3,064,498 1 year 4/1/2015 Quarterly 60 days

$ 62,815,340

Uncertainty in income taxes - The School has determined that there are no material uncertain tax positions that require recognition or disclosure in the combined financial statements. Periods ending June 30, 2013 and subsequent remain subject to examination by applicable taxing authorities.

Subsequent events - Subsequent events have been evaluated through November 2, 2016, which is the date the combined financial statements were available to be issued.

Reclassification - Certain contributions have been reclassified from temporarily restricted based on revision of donor intent.

-continued- 10. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 3 - INVESTMENTS

The investment portfolios consist of the following: 2016 2015 Mutual funds Money market funds $ 24,097,126 $ 23,881,712 Developed Markets Index 10,482,119 11,449,609 Emerging Markets Stock Index 5,128,998 5,835,810 Total Stock Market Index 17,813,040 17,441,443 Hedged Equity Fund 6,233,819 3,125,666 Leveraged Loan Index 8,401,212 U.S. Government obligations 31,980,025 18,708,425 State of Israel bonds 66,000 66,000 Off-shore investments 62,815,340 74,819,803

158,616,467 163,729,680 Limited use assets Mutual funds - Money market funds 2,508,775 3,182,375

Total investments $ 161,125,242 $ 166,912,055

NOTE 4 - FIXED ASSETS

Estimated 2016 2015 Useful Lives

Land $ 8,125,312 $ 7,154,103 Land improvements 6,739,099 6,757,634 5 - 20 years Building and improvements 130,777,260 127,053,190 10 - 40 years Equipment, furniture and fixtures 10,600,721 10,354,583 3 - 20 years Vehicles 741,327 684,431 5 years Construction in progress 6,365,792 2,344,244

163,349,511 154,348,185 Accumulated depreciation (59,173,545) (55,715,375)

$ 104,175,966 $ 98,632,810

-continued- 11. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 5 - POSTRETIREMENT BENEFITS AND RETIREMENT PLANS

Postretirement Benefits The School has a noncontributory postretirement health and life insurance plan which covers substantially all employees (including spouses) who were hired prior to July 1, 1996. The following table sets forth the plan’s unfunded status and amounts recognized in the combined balance sheet at June 30, 2016 and 2015.

2016 2015

Accumulated postretirement benefit obligation $ (31,708,386) $ (28,112,854) Plan assets at fair value - -

Funded status (31,708,386) (28,112,854) Unrecognized transition obligation - - Unrecognized net loss - - Unrecognized prior service cost - -

Accrued postretirement benefit cost $ (31,708,386) $ (28,112,854)

Net periodic benefit cost $ 1,490,403 $ 1,137,624

Employer contribution $ 721,987 $ 671,736 Plan participants’ contribution - - Benefits paid (721,987) (671,736)

Postretirement benefit adjustment $ 2,827,116 $ 5,267,246

Weighted-average assumptions Discount rate 3.8% 4.7% Expected return on plan assets - - Health cost trend rate 4.5% to 8.40% 4.5% to 8.35%

-continued- 12. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 5 - POSTRETIREMENT BENEFITS AND RETIREMENT PLANS (continued)

Postretirement Benefits (continued) Contributions The School will contribute $1,114,568 in 2017.

Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, are expected to be paid as follows:

2017 $ 1,114,568 2018 1,211,442 2019 1,303,483 2020 1,386,331 2021 1,493,102 2022-2025 8,606,059

Retirement Plan

Eligible full-time teachers and staff participate in a retirement annuity plan which provides for contributions by the School of 7% to 10% of the earnings of such employees. Contributions by the School for the years ended June 30, 2016 and 2015 were $3,248,247 and $3,098,428, respectively.

Retirement Bonuses

In addition, a teacher or employee retiring after serving the School 25 years or more is granted a retirement bonus equivalent to six months’ pay at his or her final salary rate. Teachers or employees who have attained their 60th birthday and who retire after serving the School at least ten years are granted a retirement bonus of two months’ pay plus 20% of a month’s salary for each of the 11th through 24th years of service. The amount estimated to be payable to those teachers or employees who are eligible for retirement is reflected in the accompanying combined financial statements.

-continued- 13. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 5 - POSTRETIREMENT BENEFITS AND RETIREMENT PLANS (continued)

Actuarial Changes

As a result of the required changes in the mortality basis (RP 2014), which is based on a generational basis computation (MP 2015) and the change in morbidity basis, the postretirement benefits increased significantly in 2016.

In 2016 and 2015, the School had an actuarial valuation on this plan, which included the following liability and expenses:

2016 2015

Accumulated retirement bonus obligation $ (6,910,115) $ (6,012,663) Plan assets at fair value - -

Funded status (6,910,115) (6,012,663) Unrecognized transition obligation - - Unrecognized net loss - -

Accrued retirement bonus cost $ (6,910,115) $ (6,012,663)

Net periodic benefit cost $ 656,959 $ 637,236

Employer contribution $ 240,920 $ 628,745 Plan participants’ contribution - - Benefits paid (240,920) (628,745)

Postretirement benefit adjustment $ 481,413 $ (116,550)

Weighted-average assumptions Discount rate 4.7% 4.5% Expected asset return - - Salary scale 4.0% 4.0%

-continued- 14. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 5 - POSTRETIREMENT BENEFITS AND RETIREMENT PLANS (continued)

Actuarial Changes (continued)

Contributions The School will contribute $900,323 in 2017.

Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, are expected to be paid as follows:

2017 $ 900,323 2018 689,134 2019 490,645 2020 495,949 2021 548,370 2022-2025 2,421,306

NOTE 6 - LONG-TERM DEBT

On November 10, 2014, the School issued serial bonds through Build NYC Resource Corporation New York as the issuer, and The Bank of New York Mellon as the trustee. The bonds are tax- exempt revenue refunding bonds, 2014 series. The bonds are payable upon maturity. Interest is payable semi-annually. The bonds are secured by all assets, contributions, and operating revenues of the School. The School received $38,213,326. This included $33,525,000 of bond proceeds and a net bond issuance premium of $4,688,326. The net bond issuance premium is amortized over the life of the debt as a reduction of interest expense. As of June 30, 2016, unamortized bond issuance premiums were $3,497,780. As of June 30, 2016, the balance of long-term debt was $31,095,000.

The School used these funds to pay-off their capital lease obligation.

-continued- 15. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 6 - LONG-TERM DEBT (continued)

The bonds mature as follows:

Maturity Date Amount Rate

7/1/2016 $ 1,805,000 5.00% 7/1/2017 1,895,000 5.00% 7/1/2018 1,990,000 4.00% 7/1/2019 2,070,000 3.00% 7/1/2020 2,130,000 5.00% 7/1/2021 2,235,000 5.00% 7/1/2022 2,350,000 4.00% 7/1/2023 2,445,000 5.00% 7/1/2024 2,565,000 5.00% 7/1/2025 2,690,000 5.00% 7/1/2026 2,830,000 5.00% 7/1/2027 2,970,000 5.00% 7/1/2028 3,120,000 3.00%

Total $ 31,095,000

NOTE 7 - FUNCTIONAL EXPENSES

The School provides a continuous education program for boys and girls from nursery school through high school. Expenses related to providing these services are as follows:

2016 2015 Program Education $ 68,195,266 $ 66,508,889 Auxiliary 2,029,969 1,902,828 Parents Association 314,397 323,750 Management and general 8,067,677 8,122,587 Fundraising (includes alumni and development) 2,542,878 2,074,153

$ 81,150,187 $ 78,932,207

-continued- 16. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 8 - FINANCIAL AID AND TUITION REMISSION

The policy of the School has been to award financial aid to deserving students in lieu of accepting only students who have the ability to pay full tuition. During the years ended June 30, 2016 and 2015, the School undertook the responsibility of awarding financial aid and tuition remission in the amount of $10,264,832 and $9,719,547, respectively. Tuition remission is reported as an employee benefit.

Amounts consist of the following:

2016 2015

Financial aid award (need-based) $ 10,264,832 $ 9,719,547 Tuition remission provided to employees 685,500 635,096

Total financial aid and tuition remission $ 10,950,332 $ 10,354,643

NOTE 9 - STUDENT TUITION ADVANCE PAYMENTS AND OTHER FEES

2016 2015

Tuition deposits for subsequent academic years $ 47,637,102 $ 45,880,420 Tuition payments for later academic years 43,200 178,350 Summer camp and summer school fees 371,391 402,216

$ 48,051,693 $ 46,460,986

-continued- 17. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 10 - TEMPORARILY RESTRICTED NET ASSETS

Temporarily restricted net assets are available for the following purposes:

2016 2015 Programs Education $ 4,046,190 $ 4,630,025 Financial aid 1,491,892 2,367,031 Summer tutoring 29,995 35,070 Construction projects 11,909,561 11,774,272

17,477,638 18,806,398 Time restrictions 18,521,402 2,076,157

Total $ 35,999,040 $ 20,882,555

Net assets were released from donor restrictions by incurring expenses satisfying the following temporarily restricted purposes:

2016 2015 Programs Education $ 677,701 $ 547,759 Financial aid 907,179 815,942 Construction projects 4,021,548

$ 5,606,428 $ 1,363,701

NOTE 11 - AUXILIARY REVENUES AND EXPENSES AND OTHER PROGRAM REVENUES AND EXPENSES

Auxiliary revenues and expenses are for the bookstore and vending machine.

Other program revenues and expenses include summer school, day camp, after-school programs and John Dorr Nature Laboratory expenses.

-continued- 18. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 12 - CONTRIBUTIONS RECEIVABLE

The School received promises to give restricted by time. Noncurrent contributions receivable have been discounted over the payment period using a discount rate of 2-5%. Contributions receivable are due as follows:

Total ITF FFE HMM 2016 2015

2015-2016 $ 1,168,142 2016-2017 $ 22,565 $ 415,793 $ 6,202,938 $ 6,641,296 471,665 2017-2018 4,959,360 4,959,360 1494,728 2018-2019 4,693,560 4,693,560 2019-2020 4,056,893 4,056,893 2020-2021 1,682,143 1,682,143 Thereafter 862,784 862,784

22,565 415,793 22,457,678 22,896,036 3,134,535

Less discount to present value (1,099,460) (1,099,460) (92,830) Less allowance for doubtful accounts (337,500) (300,000) (637,500) (637,500)

$ 22,565 $ 78,293 $ 21,058,218 $ 21,159,076 $ 2,404,205

ITF - Inherit the Future FFE - Foundations for Excellence HMM - HM in Motion

-continued- 19. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 13 - PLANT FUNDS

Investment in plant consists of:

Limited Use Investment Assets in Plant Total

Limited use assets - investments $ 2,508,775 $ 2,508,775 Deferred financing costs $ 879,934 879,934 Fixed assets - net 104,175,966 104,175,966 Bond issuance premium (3,537,240) (3,537,240) Long-term debt (31,095,000) (31,095,000)

Net assets $ 2,508,775 $ 70,423,660 $ 72,932,435

NOTE 14 - SPLIT-INTEREST AGREEMENTS

The School’s split-interest agreements with donors consist of charitable gift annuities, for which the School serves as trustee. Assets are invested and payments are made to the respective donors and/or other beneficiaries in accordance with the respective agreements.

Contribution revenues for charitable gift annuities are recognized at the date the agreement is established, net of the liability recorded for the present value of the estimated future payments to be made to the respective donors and/or beneficiaries. The annuity liability is revalued annually based upon actuarially computed present values using a discount rate of 4.5% per year. Investments of $14,130 were held for split-interest agreements at June 30, 2016 and invested in money market funds. The change in the value of the split-interest agreements is recognized as unrestricted revenues.

-continued- 20. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 15 - ENDOWMENT FUNDS

General The School’s permanently restricted net assets consist of 152 endowment funds to be held in perpetuity. The income from the assets can be used to support the School’s education, library, and capital improvements.

As required by GAAP, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

Interpretation of Relevant Law The Board of Trustees of the School has adopted the New York Prudent Management of Institutional Funds Act (NYPMIFA). NYPMIFA moves away from the “historic dollar value” standard, and permits charities to apply a spending policy to endowments based on certain specified standards of prudence. The School is now governed by the NYPMIFA spending policy, which establishes a maximum prudent spending limit of 7% of the average of its previous five years’ balance. As a result of this interpretation, the School classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the organization in a manner consistent with the standards of prudence prescribed by NYPMIFA.

Return Objectives, Strategies Employed and Spending Policy The objective of the School is to maintain the principal endowment funds at the original amount designated by the donor. The investment policy to achieve this objective is to invest in low-risk securities. Interest earned in relation to the endowment funds is recorded as temporarily restricted income and released from restriction upon expenditure for the program for which the endowment fund was established.

Funds with Deficiencies The School does not have any funds with deficiencies.

-continued- 21. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 15 - ENDOWMENT FUNDS (continued)

Endowment Net Asset Composition by Type of Fund as of June 30, 2016 and 2015 The endowment net asset composition is:

2016 2015

Education $ 23,042,330 $ 20,291,275 Library 568,379 568,379 Capital improvements 816,914 816,914

Total $ 24,427,623 $ 21,676,568

Changes in Endowment Net Assets for the Year Ended June 30, 2016 Temporarily Permanently Restricted Restricted Total

Endowment net assets, beginning of year $ 3,620,422 $ 21,676,568 $ 25,296,990 Contributions 2,701,104 2,701,104 Appropriation (979,408) (979,408) Interest and dividends 217,037 217,037 Realized gain 43,729 43,729 Unrealized loss (1,117,221) (1,117,221) Investment fees (17,315) (17,315) Reclassification 49,951 49,951

Endowment net assets, end of year $ 1,767,244 $ 24,427,623 $ 26,194,867

-continued- 22. HORACE MANN SCHOOL AND THE JOHN DORR NATURE LABORATORY OF HORACE MANN SCHOOL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2016

NOTE 16 - COMMITMENTS AND CONTINGENCIES

Articles have been published alleging that, between the 1960s and mid-1990s, certain students were sexually abused by former employees of the School. Subsequent to such articles being published, a number of former students of the School have retained counsel and have claimed that they were sexually abused while they were students at the School. As of June 30, 2016, all but three claims were settled via mediation. Two (2) claims that were not settled during mediation remain inactive and, to date, neither former student has filed any legal action against the School. The remaining claim is scheduled to begin a voluntary mediation with the School. The School retains its rights to assert that all such claims and actions are barred by the statute of limitations, and will defend any action vigorously if litigation is commenced. Accordingly, management cannot assess at this time the potential liability as a result of such claims.

In addition, the School is party to unrelated litigation which, in the opinion of management, will not have a material adverse impact on its financial position.

The School is currently in the preliminary stages of a substantial construction project at the Riverdale campus. The School projects the cost of the project to be approximately $110 million. The project will be financed by contributions and long-term debt financing. At June 30, 2016 the School is committed to approximately $3.8 million in contracted costs.

NOTE 17 - CONCENTRATIONS

Financial instruments which potentially subject the School to a concentration of credit risk are cash accounts with financial institutions in excess of FDIC insurance limits.

APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT

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APPENDIX C

DEFINITIONS OF CERTAIN TERMS

The following is a summary of the definitions of certain terms used in this Offering Memorandum which correspond to terms contained in the Trust Agreement.

“Act” means the Not-for-Profit Corporation Law of the State of New York, as amended, or any successor statute.

“Beneficial Owner” means, for any Bond which is held by a nominee, the beneficial owner of such Bond.

“Bond Fund” means the Horace Mann School Taxable Bonds Series 2017A Bond Fund created and so designated by Section 501 of this Trust Agreement.

“Bond Purchase Agreement” means the Purchase Contract dated July __, 2017 by and between the School and the Underwriter.

“Bond Trustee” means the Bond Trustee at the time serving as such under this Trust Agreement whether the original or a successor trustee.

“Bonds” means the Bonds so designated by and issued under Section 208 of this Trust Agreement.

“Book Entry Bonds” means Bonds for which a Securities Depository or its nominee is the Holder.

“Business Day” means any day other than (i) a Saturday or a Sunday, (ii) any day on which banks located in the city or cities where the Designated Corporate Trust Office and Principal Office of the Bond Trustee are located and New York, New York are required or authorized by law to remain closed, or (iii) a day on which the New York Stock Exchange is closed.

“Closing Date” means the date of the delivery of the Bonds against payment therefor.

“Code” means the Internal Revenue Code of 1986, as amended.

“Conditional Redemption” has the meaning given such term in Section 308 hereof.

“Cost of Issuance Fund” means the Horace Mann School Taxable Bonds Series 2017A Cost of Issuance Fund created and so designated by Section 401 of this Trust Agreement.

“Defaulted Interest” means Defaulted Interest as defined in Section 203 of this Trust Agreement.

“Defeasance Obligations” means (i) Government Obligations, (ii) evidences of ownership of a proportionate interest in specified Government Obligations, which Government Obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian, (iii) Defeased Municipal Obligations, (iv) evidences of ownership of a proportionate interest in specified Defeased Municipal Obligations, which Defeased Municipal Obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian, and (v) full faith and credit obligations of state or local government municipal bond issuers which are rated in the highest rating category by S&P and Moody’s.

C-1 APPENDIX C

“Defeased Municipal Obligations” means obligations of state or local government municipal bond issuers which are rated in the highest rating category by S&P and by Moody’s, provision for the payment of the principal of and interest on which shall have been made by deposit with a trustee or escrow agent of (i) Government Obligations or (ii) evidences of ownership of a proportionate interest in specified Government Obligations, which Government Obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian, and the maturing principal of and interest on such Government Obligations or evidences of ownership, when due and payable, shall provide sufficient money to pay the principal of, premium, if any, and interest on such obligations of state or local government municipal bond issuers.

“Designated Corporate Trust Office” means, so long as The Bank of New York Mellon is serving as Bond Trustee hereunder, the Bond Trustee’s corporate trust office in New York, New York, and as to any successor Bond Trustee, its designated corporate trust office.

“DTC” has the meaning given such term in Section 211 hereof.

“Electronic Means” shall mean the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Bond Trustee, or another method or system specified by the Bond Trustee as available for use in connection with its services hereunder.

“Event of Default” means with respect to this Trust Agreement each of those events set forth in Section 801 of this Trust Agreement.

“Government Obligations” means direct obligations of, or obligations the timely payment of the principal of and interest on which are fully and unconditionally guaranteed by, the United States of America.

“Holder” means a person in whose name a Bond is registered in the registration books provided for in Section 206 of this Trust Agreement.

“Immediate Notice” means notice in writing transmitted by telecopier or other electronic means or notice by telephone (promptly confirmed in writing by telecopier or other electronic means), and received by the party addressed.

“Interest Account” means the account in the Bond Fund created and so designated by Section 501 of this Trust Agreement.

“Interest Payment Date” means each January 1 and July 1, commencing January 1, 2018.

“Investment Obligations” means any of the following:

(i) Government Obligations;

(ii) Repurchase agreements for Government Obligations with a qualified depository bank or securities dealers fully collateralized by Government Obligations, maturing on or before the date when such funds will be required for disbursement;

C-2 APPENDIX C

(iii) Prime commercial paper rated either “P-1” by Moody’s or “A-1” by S&P and, if rated by both, not less than “P-1” by Moody’s and “A-1” by S&P; or

(iv) Interests in any money market fund or trust, the investments of which are restricted to obligations described in clauses (i) through (iii) of this definition or obligations determined to be of comparable quality by the board of directors of such fund or trust.

“Issuance Costs” means all items of cost set forth in Section 403 of this Trust Agreement.

“Letter of Representations” means, when all the Bonds are Book Entry Bonds, the Blanket Letter of Representations dated May 23, 2017, executed by the School and delivered to DTC and any amendments thereto or successor blanket agreements between the School and any successor Securities Depository, relating to a system of Book Entry Bonds to be maintained by such Securities Depository with respect to any bonds, notes or other obligations issued by the School.

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the School, by notice to the Bond Trustee.

“Officer’s Certificate” means a certificate signed by a School Representative.

“Opinion of Counsel” means an opinion in writing signed by an attorney or firm of attorneys acceptable to the Bond Trustee who may be counsel for the School or other counsel and which term includes counsel who may be employed by the School.

“Outstanding” when used with reference to Bonds means, as of a particular date, all Bonds theretofore issued under this Trust Agreement, except:

(i) Bonds theretofore canceled by the Bond Trustee or delivered to the Bond Trustee for cancellation;

(ii) Bonds for the payment of which money, Defeasance Obligations, or a combination of both, sufficient to pay, on the date when such Bonds are to be paid or redeemed, the principal or the Redemption Price, as the case may be, of, and the interest accruing to such date on, the Bonds to be paid or redeemed, has been deposited with the Bond Trustee in trust for the Holders of such Bonds; Defeasance Obligations shall be deemed to be sufficient to pay or redeem Bonds on a specified date if the principal of and the interest on such Defeasance Obligations, when due, will be sufficient to pay on such date the principal or the Redemption Price, as the case may be, of, and the interest accruing on, such Bonds to such date;

(iii) Bonds in exchange or substitution for or in lieu of which other Bonds have been authenticated and delivered pursuant to Section 205, Section 209 or Section 210 of this Trust Agreement; and (iv) Bonds deemed to have been paid in accordance with Section 1201 of this Trust Agreement.

C-3 APPENDIX C

“Predecessor Bonds” of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by such particular Bond, and, for purposes of this definition, any Bond authenticated and delivered under Section 210 of this Trust Agreement in lieu of a lost, destroyed or stolen Bond shall be deemed to evidence the same debt as the lost, destroyed or stolen Bond.

“Principal Office” means, so long as The Bank of New York Mellon is serving as Bond Trustee hereunder, the Bond Trustee’s principal office in New York, New York, and as to any successor Bond Trustee, its designated principal office.

“Redemption Fund” means the Horace Mann School Taxable Bonds Series 2017A Redemption Fund created and so designated by Section 501 of this Trust Agreement.

“Redemption Price” means, with respect to Bonds or a portion thereof, the applicable redemption price specified in Section 301 of this Trust Agreement.

“Regular Record Date” means the 15th day of the month preceding any Interest Payment Date.

“S&P” means S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC, its successors and their assigns, and, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the School, by notice to the Bond Trustee.

“School” means Horace Mann School, a not-for-profit education corporation organized and existing under the laws of the State of New York, and any successor thereto.

“School Representative” means each of the persons at the time designated to act on behalf of the School in a written certificate furnished to the Bond Trustee, which certificate shall contain the specimen signature(s) of such person(s) and shall be signed on behalf of the School by its Chief Financial Officer or other designated officer.

“Securities Depository” means The Depository Trust Company, New York, New York, or any other recognized securities depository selected in accordance with Section 211 hereof, which maintains a book-entry system in respect of the Bonds, and shall include any substitute for or successor to the securities depository initially acting as Securities Depository.

“Securities Depository Nominee” means, as to any Securities Depository, such Securities Depository or the nominee of such Securities Depository in whose name there shall be registered on the registration books maintained by the Bond Trustee the Bond certificates to be delivered to and immobilized at such Securities Depository during the continuation with such Securities Depository of participation in its book-entry system.

“Series Resolution” means the authorizing resolution of the School providing for the issuance of the Bonds that is required to be adopted prior to the issuance of the Bonds by Section 208 of this Trust Agreement.

“Special Record Date” for the payment of any Defaulted Interest on Bonds means a date fixed by the Bond Trustee pursuant to Section 203 of this Trust Agreement.

C-4 APPENDIX C

“State” means the State of New York.

“Treasury Rate” means, with respect to any redemption date for a particular Bond, 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 Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business 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 Bond 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.

“Trust Agreement” means this trust agreement, including any trust agreement amendatory hereof or supplemental hereto.

“Underwriter” means J.P. Morgan Securities LLC.

SUMMARY OF THE TRUST AGREEMENT

The following is a brief summary of certain provisions of the Trust Agreement pertaining to the Bonds. Such summary does not purport to be complete and reference is made to the Trust Agreement for full and complete statements of such and all provisions.

Establishment of Funds

The Trust Agreement creates the following funds:

(i) The Bond Fund,

(ii) The Redemption Fund, and

(iii) The Cost of Issuance Fund.

The Trust Agreement also creates accounts in the Bond Fund, which accounts are designated the “Interest Account” and the “Principal Account”. (Sec. 501)

Money in each of these funds and accounts will be held in trust, and will be subject to a lien and charge in favor of the Holders of the Bonds until paid out or transferred as provided in the Trust Agreement. (Secs. 401 and 501)

Cost of Issuance Fund

Payments from the Cost of Issuance Fund are to be made to pay Issuance Costs. (Sec. 402)

On or prior to ______1, 2017, any balance in the Cost of Issuance Fund shall be transferred by the Bond Trustee to the Interest Account of the Bond Fund to pay interest on the Bonds on ______1, 2017. (Sec. 405)

C-5 APPENDIX C

Trustee’s Application of Money Received

The School will pay to the Bond Trustee and the Bond Trustee will deposit all amounts received from the School in the following order, subject to credits provided in the Trust Agreement:

(i) into the Interest Account, on or before each Interest Payment Date, that amount which shall be equal to the interest payable on the Bonds on such Interest Payment Date;

(ii) into the Principal Account, on or before the maturity date of each Bond, that amount which shall equal the principal payable on such Bond at maturity; and

(iii) to the credit of the Interest Account or the Redemption Fund, as applicable, any amount that may from time to time be required to enable the Bond Trustee to pay the interest on and Redemption Price of Bonds as and when Bonds are called for redemption. (Sec. 502)

Interest Account of Bond Fund

Money on deposit in the Interest Account in the Bond Fund will be used to pay the interest on the Bonds when due. In the event the balance in the Interest Account on each Interest Payment Date or date upon which Bonds are to be redeemed is insufficient for the payment of interest becoming due on the Bonds on such Interest Payment Date or date upon which Bonds are to be redeemed, the Bond Trustee shall notify the School of the amount of the deficiency. Upon notification, the School shall immediately deliver to the Bond Trustee an amount sufficient to cure the same. (Sec. 503)

Principal Account of Bond Fund

All amounts in the Principal Account in the Bond Fund shall be used and withdrawn by the Bond Trustee solely to pay principal on the Bonds as it becomes due and payable. In the event the balance in the Principal Account on each date principal on the Bonds is due and payable is insufficient for the payment of principal then due on the Bonds, the Bond Trustee shall notify the School of the amount of the deficiency. Upon notification, the School shall immediately deliver to the Bond Trustee an amount sufficient to cure the same. (Sec. 504)

Redemption Fund

Money held for the credit of the Redemption Fund will be applied to the purchase or redemption of Bonds as provided in the Trust Agreement. (Sec. 505)

Investments

Money held by the Bond Trustee for the credit of all funds and accounts created under the Trust Agreement will be continuously invested and reinvested by the Bond Trustee at the written direction of the School in Investment Obligations to the extent practicable. Any such Investment Obligations will mature not later than the respective dates when the money held for the credit of such funds or accounts will be required for the purposes intended.

C-6 APPENDIX C

No Investment Obligations in any fund or account may mature beyond the latest maturity date of any Bonds Outstanding at the time such Investment Obligations are deposited.

Investment Obligations credited to any fund or account established under the Trust Agreement will be held by or under the control of the Bond Trustee and while so held will be deemed at all times to be part of such fund or account in which such money was originally held. Interest accruing on such Investment Obligations and any profit or loss resulting upon the disposition or maturity of the same will be credited to or charged against such fund or account. The Bond Trustee will sell at the most advantageous price obtainable with reasonable diligence or reduce to cash a sufficient amount of such Investment Obligations whenever it is necessary to provide moneys to make any payment or transfer of moneys from any such fund or account. The Bond Trustee will not be liable or responsible for any loss resulting from any such investment. (Sec. 602)

Events of Default

Each of the following events is an Event of Default under the Trust Agreement:

(a) payment of any installment of interest on any Series 2017A Bond shall not be made when the same shall become due and payable; or

(b) payment of the principal or the Redemption Price of any Series 2017A Bond shall not be made when the same shall become due and payable, whether at maturity or by proceedings for redemption;

(c) default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Trust Agreement or any agreement supplemental thereto and such default shall continue for 30 days (or such further time as may be granted in writing by the Bond Trustee) after receipt by the School of a written notice from the Bond Trustee specifying such default and requiring the same to be remedied, provided, however, that if such performance requires work to be done, action to be taken, or conditions to be remedied, which by their nature cannot be reasonably done, taken or remedied, as the case may be, within such 30-day period or other period, no Event of Default shall be deemed to have occurred or to exist if, and so long as, the School shall commence such performance within such period and shall diligently and continuously prosecute the same to completion;

(d) the commencement by the School of a voluntary case under the federal bankruptcy laws, or if the School shall become insolvent or unable to pay its debts as they become due, or shall make an assignment for the benefit of creditors, or shall apply for, consent to or acquiesce in the appointment of, or taking possession by, a trustee, receiver, custodian or similar official or agent for itself or any substantial part of its property;

(e) the appointment of a trustee, receiver, custodian or similar official or agent for the School or for any substantial part of its property and such trustee or receiver shall not be discharged within sixty (60) days; or

(f) an order or decree for relief in an involuntary case under the federal bankruptcy laws shall be entered against the School, or a petition seeking reorganization, readjustment, arrangement, composition, or other similar relief as to it under the federal bankruptcy laws or any similar law for the relief of debtors shall be brought against it and shall be consented to by it or shall remain undismissed for sixty (60) days (Sec. 801)

C-7 APPENDIX C

Remedies of Bondholders

Upon the happening and continuance of any Event of Default, the Bond Trustee may, and upon the written request of the Holders of not less than 25% in aggregate principal amount of the Bonds then Outstanding shall, proceed to protect and enforce its rights and the rights of the Holders. (Sec. 803)

Except as provided in the Trust Agreement, no Holder shall have any right to institute any suit, action or proceeding in equity or at law on any Series 2017A Bond or for any remedy under the Trust Agreement unless the Holders of not less than 25% in aggregate principal amount of Bonds then Outstanding previously shall have given to the Bond Trustee written notice of the Event of Default on account of which such suit, action or proceeding is to be instituted, and unless also the Holders shall have made a written request of the Bond Trustee after the right to exercise such powers or right of action as the case may be, shall have accrued, and shall have afforded the Bond Trustee a reasonable opportunity either to proceed to exercise its powers or to institute such action, suit or proceedings in its or their name, and unless, also, there shall have been offered to the Bond Trustee reasonable security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby, and the Bond Trustee shall have refused or neglected to comply with such request within a reasonable time; provided, however, the Holders of not less than 25% of the Bonds then Outstanding may institute any suit, action or proceeding in their own names for the benefit of all Holders. Except as provided in the Trust Agreement, no Holder will have any right in any manner whatsoever to enforce any right thereunder, and any individual rights given to such Holders by law are restricted by the Trust Agreement to the rights and remedies therein granted. (Sec. 808)

Notice to Bondholders

Except as described below, notice of any Event of Default when required by the Trust Agreement will be mailed to all Holders of record. The Bond Trustee shall not be subject to any liability to any Holder by reason of its failure to mail any such notice. (Sec. 813)

Except upon the happening of an Event of Default with respect to the failure to make any payment of the principal or Redemption Price of and interest on the Bonds when due, the Bond Trustee may withhold notice of any Event of Default to the Holder, if in its opinion such withholding is in the interest of the Holders. (Sec. 813)

Payment of Bond Trustee’s Fees

If the School fails to make required payments to the Bond Trustee for compensation and expenses, the Bond Trustee may make such payment from any money in its possession and will be entitled to a preference therefor over any Bonds Outstanding. (Sec. 905)

C-8 APPENDIX C

Modification of the Trust Agreement

The School and the Bond Trustee may from time to time execute supplemental trust agreements without the consent of or notice to any Holder, to effect one or more of the following: (a) cure any ambiguity or defect or omission or correct or supplement any provision in the Trust Agreement or any supplemental trust agreement thereto; (b) grant to or confer upon the Bond Trustee for the benefit of the Holders of the Bonds any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Holders or the Bond Trustee which are not contrary to or inconsistent with the Trust Agreement as then in effect or to subject to the pledge and lien of the Trust Agreement additional revenues, properties or collateral, including Defeasance Obligations; (c) add to the provisions of the Trust Agreement other conditions, limitations and restrictions thereafter to be observed which are not contrary to or inconsistent with the Trust Agreement as then in effect; (d) add to the covenants and agreements of the School in the Trust Agreement other covenants and agreements thereafter to be observed by the School or to surrender any right or power reserved to or conferred upon the School which are not contrary to or inconsistent with the Trust Agreement as then in effect; (e) permit the qualification of the Trust Agreement under any federal statute or under any state securities law, and, in connection therewith, if the School so determines, to add to the Trust Agreement or any supplemental trust agreement such other terms, conditions and provisions as may be permitted or required by such federal statute or state securities law; (f) make any other change that is determined by the Bond Trustee, who may rely upon an Opinion of Counsel, to be not materially adverse to the interests of the Holders; (g) if all of the Bonds are Book Entry Bonds, amend, modify, alter or replace the Letter of Representations or other provisions relating to Book Entry Bonds; or (h) facilitate the issuance and delivery of certificated Bonds to Beneficial Owners if the book-entry system for the Bonds is discontinued. (Sec. 1101)

The Trust Agreement may be amended in any particular form by the Holders of not less than a majority in aggregate principal amount of the Bonds Outstanding, provided that nothing contained in the Trust Agreement will permit, without the consent of the Holders of all Bonds affected thereby, (a) an extension of maturity of principal or interest, (b) a reduction in the principal amount of or the rate of interest on any Series 2017A Bond, (c) a preference or priority of any Series 2017A Bond over any other Series 2017A Bond, or (d) a reduction in the aggregate principal amount of Bonds required for consent to such supplemental trust agreement. (Sec. 1102)

Defeasance

When, among other things, the principal or Redemption Price of and interest due upon all of the Bonds is paid or sufficient money or Defeasance Obligations are held by the Bond Trustee for such purpose, then the right, title and interest of the Bond Trustee in the funds and accounts created by the Trust Agreement will cease and the Bond Trustee will release the Trust Agreement. (Sec. 1201)

Recourse Against the School Limited

The trustees, officers and employees of the School are not personally liable for any costs, losses, damages or liabilities caused or incurred by the School in connection with the Trust Agreement, or for the payment of any sum or for the performance of any obligation under the Trust Agreement. (Sec. 1307)

C-9

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APPENDIX D

BOOK-ENTRY ONLY SYSTEM

DTC and Book-Entry System

The information set forth below concerning DTC and DTC’s book-entry system has been obtained from sources that the School and the Underwriter believe to be reliable, but neither the School nor the Underwriter take any responsibility for the accuracy thereof.

The Depository Trust Company, New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered bond certificate will be issued for each maturity of the Bonds in the aggregate principal amount of such maturity and will be deposited with DTC.

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

Purchases of the 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 Participant 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 Participants 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

D-1 APPENDIX D 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 Participants 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 the Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, defaults, and proposed amendments to the security 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.

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

Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the 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 School 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).

Payments of principal, interest and redemption premium, if any, with respect to 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 School or the Bond Trustee, on the payment date in accordance with their respective holdings shown on DTC’s records. Payments by DTC 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 DTC Participant and not of DTC nor its nominee, the School or the Bond Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest, and redemption premium, if any, to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the School or the Bond Trustee, 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 Participants and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the School or the Bond Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The School may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. See “THE BONDS – Certificated Bonds.”

SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDHOLDERS OR REGISTERED OWNERS OF THE

D-2 APPENDIX D

BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS.

No Responsibility of School, Underwriter or Trustee. NONE OF THE SCHOOL, THE UNDERWRITER OR THE BOND TRUSTEE GIVES ANY ASSURANCES THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (1) PAYMENTS OF PRINCIPAL OF OR INTEREST ON OR REDEMPTION PRICE OF THE BONDS; (2) CONFIRMATIONS OF THEIR OWNERSHIP INTERESTS IN THE BONDS; OR (3) OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS PARTNERSHIP NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFERING MEMORANDUM.

NONE OF THE SCHOOL, THE UNDERWRITER OR THE BOND TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO DTC, THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS OF DTC OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC; (2) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR INTEREST ON OR REDEMPTION PRICE OF THE BONDS; (3) THE DELIVERY BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO OWNERS UNDER THE TERMS OF THE TRUST AGREEMENT; OR (4) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE REGISTERED HOLDER OF THE BONDS.

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D-3

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Planned Middle and Upper Divisions Campus

New Upper Division Campus and Science Center